---

Finance (No. 3) Bill

I absolutely agree. I am quoting research by the consultancy practice, R3. It is conducting surveys because it is worried about the mix and range of credit that people are taking out and the high-cost credit itself, which is causing people to get into debt. That is why I am passionate about tackling the problem sooner rather than later. Contrary perhaps to some of the briefings that hon. Members might have had from the payday industry, the majority of people borrowing from these companies are on comparatively low incomes. In particular, one in 10 UK payday customers has an income of less then £11,000, and 46% have incomes of less than £15,000 a year. It is evident how quickly high repayment charges eat into an already meagre wage. This debate is not just about payday lending; it is also about some of the other forms of high-cost credit equally untouched by regulation in this country, including home credit. I know that some Government Members are concerned about home credit, particularly the provision of small cash loans to be repaid by instalment to collectors who call at home. A company named Provident, with which many people in the House will be familiar, has noted that its customer base has increased by 20% since 2007. It is now lending money to nearly 1.8 million people in this country. This debate is not just about home credit either; it is also about hire purchase agreements and other methods of buying goods by instalment but under contracts that have heavy penalties written into them. BrightHouse, which has been mentioned, is also growing at a tremendous rate. In its annual report for 2009-10, it reported having had its busiest year ever, posting 13.7% growth in what it termed ““contract receivables””, standing at nearly £298 million. It has opened 21 new stores in the past year, increased its customer services by 20%, and grown fourfold since 2006-07. We know that a number of factors are driving demand for these products. I agree with those who ask what more the mainstream banks could do to service this group within our community. We need to ensure that people are lent money at affordable rates, and mainstream banks must play their part. PricewaterhouseCoopers' research notes that a growing proportion of consumers are now facing the shock of being denied credit from mainstream lenders. We know that about 5 million to 7 million people in Britain are denied credit either because they do not have a bank account or because they have no credit history. That leaves many people with only the option of unsecured lending, including from payday or doorstep lenders. We also know that the cost of living is pushing people to borrow to make ends meet. The Institute for Fiscal Studies recently warned that households are looking at the largest fall in their disposable income since 1981. Prices are rising twice as fast as income. What does that mean on an everyday basis? It means that the cost of living is rising. Asda's income tracker shows that the average UK household is £13 a week worse off than it was a year ago, as inflation eats into what is left of wage packets. We know that price-sensitive commodities are part of that mix. Petrol accounts for 12% of the average household's budget, although that is likely to change, and I suspect that energy prices might vie with petrol prices in the costs they add to households. We also know how vulnerable many in our community are to a change in interest rates. Some 30% of those buying a property in 2007-08 relied on 100% mortgages, so they are especially vulnerable to signs of change. A 2% rise in interest rates would lead to a £307 increase in monthly mortgage payments across the country, and already people are struggling to pay their mortgages and using high-cost credit to meet their costs.