I have become used to feeling a heightened sense of unreality whenever I enter the Chamber to participate in debates on Government legislation, particularly on matters pertaining to the activities of banks, financial institutions and lenders. The sense of unreality, a complete disconnection between the legislative reforms discussed in the Chamber and the actuality of events in the economy for our citizens, is particularly sharp in the context of this Bill and its stated intentions. It is as if the crisis that is under way in terms of the activities of our banks and the dilemma facing approximately 180,000 families in mortgage distress are not happening.
According to the Minister, setting up a central credit register under the Bill will assist lenders in making informed lending decisions and protecting higher risk borrowers from excessive debt. One can only laugh when the Government introduces such a Bill while, as we speak, the Minister for Justice and Equality is setting out guidelines that will punish for years to come people who borrowed simply to put roofs over their heads and now find themselves unable to repay through no fault of their own. Some 180,000 families cannot repay their debts. It is not because there was not a central credit register, but because of the reckless greed and profit-driven behaviour of banks and the willingness of politicians and Governments to allow banks to be a law unto themselves.
There is little in and of itself in the Bill that is particularly objectionable. Let us have a central credit register so that we might know the overall level of borrowing in the country and so that banks cannot lend to people who have no chance to repay their significant debts.
That is fair enough. In normal times one might think this is a sort of modest, legislative reform for which one could put a fair argument and that it would cause no harm. However, let us be honest; if the legislation had been in place previously one could ask whether it would have made a blind bit of difference to the behaviour of the banks. Do we think the banks that gave 110% mortgages to people on low incomes or who helped pump up the property market because of their own greed and avarice were particularly worried about the credit history of the people to whom they were lending? They did not give a damn about the credit history. They knew in many cases that they were lending to people with poor credit histories. They did not need a register to tell them. They knew what they were doing was dangerous and they still did it because they were driven by bonuses, market share and the hunger for profit. The fact that at some point the bubble they were creating as a result of the activity would burst did not bother them in the least. It was like the game, Pass the Parcel; they just kept passing the parcel and hoped they would not be the one left holding it when the music stopped. That was the game they were playing. They knew it was madness and reckless and they knew they were lending to people who in many cases could not pay the money back. In many cases they sat down with people and I suspect the people themselves gave them enough information to let the financial institutions know that it was bordering on insanity to lend them money, but they still lent it to them.
One could ask what the Bill will do to change that. It will do virtually nothing. The real issue is why in the real world, as we speak, the Government is setting out to punish the innocent victims of the behaviour of banks rather than to punish the banks, bondholders and international financiers that lent them money into this crazy bubble that they were stoking up for their own greed and profit. That is the issue that must be addressed in the context of the utter failure of the Government to do that. In fact, the Government is moving in the opposite direction and everything it does is essentially to punish the victims, in most cases innocent borrowers who wanted to do nothing more than put a roof over their head or were encouraged by banks in some cases to get buy-to-let mortgages because the banks were telling them that was a safe place to put their money for their latter years. They were innocent people, not speculators or big capitalists but just people who had a few extra bob later in life. We have discovered that many mortgage holders are not young people but older people and, therefore, as MABS has said, the proposals the Government is putting forward on split mortgages will not deal with the crisis because for people in their 40s, 50s and 60s the idea that one could park some of the mortgage and then pay it in 20 or 30 years’ time is preposterous.
One could ask why we are not dealing with that fact. The one reform the Government will not consider is forcing the banks to write down unsustainable mortgage debt. What we will end up with on the credit register is up to 200,000 families with bad credit records who will not be able to borrow money, and who will probably go to illegal moneylenders who will not look at the credit register. Desperate people will be forced into the hands of illegal moneylenders, charging absolutely extortionate interest rates to people. Those issues must be addressed and the people concerned will be in a desperate situation precisely because the Government, the troika and all the rest of them have made a strategic political decision that the victims must pay the price of the crisis caused by the bankers in the first place. Let us begin to address the reality outside this House rather than what is an innocuous but fundamentally fake reform that will not address the urgent crisis being faced by hundreds of thousands of families.
