Eagle calls for 'more morality' in the City

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More morality is needed in Britain's financial servicesindustry to protect the people who have been the worst victims of therecession from future problems, the minister for welfare reform said onMonday.

Speaking at a fringe event hosted by Citizens Advice and Experian,DWP minister Angela Eagle said: "We have a financial services industrywhich makes it almost a point of principle to make itself asuntransparent and difficult as possible, by creating 30,000 differenttypes of credit card for example, with rates of interest that nobodycan actually perceive because they're in the small print.

"We have a financial services industry that has been too focussed ondealing with its distribution mechanisms, which are commission-based,so its sales, and not enough, I don't think, focus on the people thatit's trying to get to save or buy its products. And so it hasdifferentiated its products in a way that makes them almost so obtusethat nobody knows what they are."

The minister for welfare reform added: "We need a much simplerapproach, and we have to get away from the idea that advertising isinformation.

"Because when all of those credit card things came through all ofour doors, extorting us to get into even more debt, they weren’tactually giving us information about what was being sold; they weregiving us screaming headlines saying zero per cent interest for life.

"So I think we've just got to realise that extorting people to get intodebt using those methods is perhaps not the most socially responsibleway for the industry to behave."

Eagle said it is "wise to remember that the victims of thisparticular recession didn't cause it", a point which was met with vocalapproval from the audience.

The discussion focussed on how government can help support thepeople who have been hit hardest by the recession. It took place in thepopular lunchtime slot, and was competing with 23 other fringe meetingsbut was still well-attended.

Citizens Advice has just celebrated its 70th anniversary - the first200 bureaux opened their doors the day after war was declared in 1939.They currently advise around two million people each year and thisfigure is rising according to their figures. Teresa Perchard, Citizens'Advice's head of policy, said that they are still seeing an increase inpeople contacting them about redundancies, unemployment, bankruptcy andfuel debt. She opened the panel discussion by asking what can be donenow to help these people.

Eagle talked about the "lagged effect" of the recession on people inUK constituencies, and that although the Treasury has forecast a returnto growth by next year, the positive effects of this on the realeconomy will come some time afterwards.

"Unemployment will not fall back until recovery is well underway.Which is why it is important that we continue to support the people whoare victims of this recession through no fault of their own," she said.

Chuka Umunna, the PPC for Streatham, said that Lambeth has some ofthe most deprived wards in the country, and that the local impact ofthe recession on the most vulnerable members of the constituency hasbeen evident in an increase in debt, a increase in redundancies,greater demand for social housing because of the drop in the housingmarket and child poverty as a result of the increase in worklessness.

Umunna, who is a specialist employment law solicitor, said thatalthough government have done a lot of good work to help support peoplewith these problems, "what I find locally is there are a lot of peoplewho aren't aware of the help available to them" and that ministers nowneed to focus on improving the channels of communication with thesepeople.

He said that Conservative national debt repayment proposals were"madness" as in his view government will need to invest in training andtackling unemployment, to get to grips with some of these problems.

The panel were agreed that the take up of benefits remains a bigconcern. Umunna pointed out that a third of pensioners are still notclaiming pension credit, whilst the minister said that £10m ofmeans-tested benefits are unclaimed.

Several audience members raised the issue of simplifying the benefitsystem in order to make it more accessible, however Eagle argued that"simple benefits are crude benefits" and they cannot target the poorthe most.

Umunna said that Labour will need some "game-changing policies" inorder to win a fourth term in government. He said his big idea would befor Labour to go further on the rate of income tax which was announcedearlier this year, reducing the threshold from £150,000 a year to£100,000, and that in terms of policy, a distinction needs to be madebetween the super-rich and those on low and middle incomes. Umunna saidthat if the money from such a move were then channelled into asignificant target, such as putting it towards reducing child povertyby 2010, it would be harder for other parties to criticise.

Gillian Key-Vice, head of data protection at credit reference agencyExperian, said she believes the solution to the financial problemsstill being experienced by victims of the recession is for adviceagencies and the government to work together to find a way to makemoney-management and budgeting interesting so that people do not findthemselves in trouble again in the future.

The minister concluded that consumer education is an importantissue, and added that in the past people have not taken enough interestin these issues.