Labour = earnest, Tories = suits. Neither support interest rate caps. Views from the party conferences.

Labour = earnest

Labour = earnest

In the last week I’ve been to both Labour and Tory party conferences (couldn’t make Lib-Dems) to chair fringe debates, on debt for the reds, and on financial education for the blues.  What’s fascinating is the classic caricatures do fit.

For those not in the know, at party conferences the fringe is where guest speakers are brought in, unlike the main floor which is for party members only. Thankfully, I’m an ‘active chair’ for both. In other words I’m allowed to run my gob off as a participant, not just an MC.

Please forgive the relatively scrappy note of this, I wanted to get it up quickly and have been pushed for time

  • Labour. Earnest people, intense debate.

    My main memory of Labour’s “The Ticking Time bomb” debate was how serious everyone was.  

    Of course the subject was debt, but even then there are elements of light and dark in a debate, and where I’d normally expect a smile or (heaven forbid) laugh, I tended to get nods.  

    This fringe was funded by insolvency trade body R3, and its president, Steven Law, was one of the panelists.

    Also, Teresa Perchard from Citizens Advice, said something that scared me more than Silence of the Lambs…  From next May Citizens Advice’s funding is uncertain… In other words the amazing one-on-one work done across the country on debt, rights, benefits, legal and other free advice may soon be cut back due to funding issues. Add to this the fact severe debt tends to follow a recession (i.e. it happens a couple of years after the worst times), and there is a really time bomb coming.

    Shadow Consumer Affairs Minister Kevin Brennan was another at the front. He was proud of some of the work the last Government did on credit card regulation in its final days (and I agree it was cracking, see credit card crackdown news), but fairly admitted it probably came too late and more could’ve been done.

    Overall I must say the outcome was relatively gloomy. When giving my view for a long term fix, the answer was the subject of my debate at the Tory conference…

  • Conservatives. Lots of people in suits

    As I walked up to the Tory conference in Birmingham, I saw two twenty-something men, with passes round their necks and dicky bows instead of ties and I must admit I thought ‘uh oh’. Thankfully once I got to the conference there were few other bow ties around, but it was nonetheless a far more formal affair and looked more like a typical business convention than the Labour conference the week before.

    The meeting itself was on Financial Education, funded by Co-Op financial services, and their Chief Exec Neville Richardson was on the panel; not a bad thing as on many issues, especially basic bank accounts, it’s been a shining light. If only others could learn from them. In fact he and I hardly disagreed on anything, quite a surprise considering he runs a financial services company! Then again, it is the most mutual of them all.

    Tories = suits

    Tories = suits

    For me the discussion was simple: after a debt-ridden crisis and 20 years educating the stigma of debt out of people, we desperately need compulsory personal financial education in schools. While just under half of schools have some form of teaching already, the problem is it’s the schools where parents are most financially illiterate – the ones that need it most – that aren’t getting it, hence the need for compulsion (for the full info see my financial education article).

    Also there were Paul Oginsky of Personal Development Point  and Tony Hobman of the new Consumer Finance Education Body who, barring some minor points, were all singing from the same song-sheet.

    The conservative member on the panel was Karen Bradley MP, a new member, who has a lot of experience advising the Tory front bench finance team. She seems to have a passion for the subject but admitted it wasn’t a legistlative priority, something I’d like to change.

    One good thing that may come out of this was chatting with Co-Op at the end. We discussed starting a collective lobbying group for compulsory financial education to target politicians. Everywhere I go I meet like-minded people from all sides of the financial world; maybe it’s time to bring them all together. This could’ve been the start of it.

    My only concern about the Tory conference group though, was that most people at the fringe seemed to be from organisations there to lobby, rather than actual Tories, but that may’ve just been the impression I got from those who asked questions.

No cap on interest rates.

The only question that came up in both debates was “should there be a cap on interest rates?”, rather interesting as it is a growing lobby campaign. Only one person on either panel came out strongly in favour, and that was Rachel Reeves MP, a newly elected Labour member.

She spoke passionately about the hideous fact that 100% interest rates are advertised and I know many agree with this disgrace.

Yet I still struggle with a legislative cap for two reasons:

  • Better legal lenders than illegal debt sharks. If we get rid of the high interest legal lenders who we can regulate and control, then some will move back into the arms of loan sharks. As Paul Oginsky said, “people will always find a way to borrow, if they need it, it’s like drugs.” In good conscience I find it worrying to regulate and risk pushing people into the arms of those who see threatening to ‘rape your children’ as a means of enforcing repayment (sadly that’s no exaggeration).
  • Interest rates are too blunt a tool.  If I lend you £20 and ask you to give me it back and buy me a pint (£3) next week, then that’s a 143,000% interest rate. Yet most people would say that’s reasonable. An 8% variable secured loan over 25 years would cost a fortune but fall within the interest rate parameters – see my 10% may be worse than 2000% blog for a full explanation.

While I won’t come out anti the rate cap campaign as I’m still undecided, I do have grave reservations, as did many of my fellow panellists, for similar reasons.

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