My Lords, I thank all noble Lords who have taken part in this very important debate—indeed in all the debates that we have had on this crucial issue since Second Reading.
As noble Lords will be aware, the Government’s manifesto contains a commitment to deliver a breathing space scheme that would give heavily indebted consumers a period of respite from creditor enforcement action, further interest and charges for up to six weeks. Where appropriate, they would be offered a statutory repayment plan to help them pay back their debts in a sustainable way.
I am grateful, as I said, for the helpful contributions during all our debates from noble Lords, and from the noble Lord, Lord Stevenson, in particular, on the important topic of protecting heavily indebted consumers. Noble Lords will have seen, just last week, that the Government have taken their crucial first step towards delivering this manifesto commitment by launching an extensive call for evidence. I might just say here, as noble Lords have asked about public sector debts, that the breathing space call for evidence seeks views on that. We want to ensure that the scheme is designed in the best possible way to support consumers.
The noble Lord, Lord Kirkwood, referred to universal credit. It is right that I point out to noble Lords that all those going on to universal credit are entitled to up to 50% in advance payments, and in some cases they can receive it on the same day they sign up. So, there should not be a huge increase in debt because of those early days.
In addition to support from this House, the announcement of the call for evidence has been positively received by a wide cross-section of the debt advice sector. For instance, The Children’s Society has said it is “delighted” with the announcement, the Money Advice Trust agreed this was “good news” and Citizens Advice said:
“It’s good to see the government taking action on problem debt”.
We plan to continue to engage closely with these bodies and other stakeholders over the coming months to develop our policy.
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We all agree that a breathing space scheme must be carefully developed to ensure that it is effective in helping those who most need it. It is a complex area, as I have said in previous debates, and we want to get it right. If designed and implemented properly, it will have benefits for many vulnerable customers.
I thank the noble Lords, Lord Stevenson and Lord Sharkey, and the noble Baroness, Lady Altmann, for their amendment, and the noble Lord, Lord McKenzie, the noble Baroness, Lady Kramer, the noble Earl, Lord Listowel, and others for their hard work in developing the issue further in the House.
We are all in broad agreement with the principle of what this amendment is trying to achieve, I think, and we understand the desire to take the opportunity presented by this legislation to act now. However, we genuinely fear that the amendment might jeopardise both the effectiveness of a breathing space and the operation of the single financial guidance body.
First, under the amendment, the single financial guidance body would administer the breathing space scheme. That would not align with the body’s wider functions or sit well with its broader aims. We all agree that the body’s priority should be to provide easily accessible, targeted, high-quality advice and guidance. With respect, under the amendment those objectives would be confused and the core purpose of the single financial guidance body, which is to improve the customer journey, would be put at risk. Instead of focusing on its core challenge—extending the reach and effectiveness of financial guidance and debt advice—the body would have to divert significant resource and time to administering and enforcing a breathing space scheme.
Secondly, specifying which body should administer a breathing space could have an adverse impact on its delivery. It is a complex policy area and it is important that we take the time, with extensive consultation, to get the framework for the scheme right. We should not pre-empt that work. In particular, it is unclear whether the body is the best organisation to implement a breathing space. None of the body’s predecessors has any experience in administering a regulatory scheme such as this. Indeed, in the Scottish equivalent, the Accountant in Bankruptcy administrates the scheme. As I am sure that noble Lords are aware, that is Scotland’s insolvency service. It is an organisation with a different remit, aims and set-up to the single financial guidance body. The issue of who should administer such a scheme requires careful consideration, and that is why the Government have sought to establish a proper evidence base for discussions through our call for evidence.
There are also questions around the devolution angle to implementing a breathing space and the appropriate geographical extent, to which the noble Lord, Lord Stevenson, made reference and which the amendment is not clear on. Noble Lords know that the scheme would apply in England but, while Scotland already has its own scheme, that is not the case in Wales and Northern Ireland. It is important that we work through these complex issues, and we want to be able to listen to expert views put forward, rather than be constrained by the wording of the amendment.
For that reason, I hope that noble Lords can work with the Government to achieve consensus and ensure that this important scheme can be implemented quickly and effectively, with minimum risk to both the scheme and the single financial guidance body. Therefore, I would like to take the time between now and Third
Reading to take this issue away, review it and consider it further. For those reasons, I ask the noble Lord to withdraw his amendment.