Baroness Bennett of Manor Castle (GP)

As I was saying, only 6.6% of bank lending last year went towards productive industries in the real economy— I am basing this on Positive Money. The group used the Bank of England’s annual money and credit statistics to find that net lending to productive industries increased by just £9 billion last year, compared with £52 billion for mortgages and £68 billion for the finance, insurance and real estate sectors. To break that down, lending to electricity, gas and water industries made up more than half of the increase among all the productive industries. I have to slightly question the “productive” label, given that we know that the privatised water sector in particular has seen a huge amount of payments out in terms of dividends and fat-cat pay and has continued to be loaded down with debt. There is a question over how productive that actually is. Manufacturers and transportation firms did indeed see a small uptick in credit, which is encouraging, but lending to the wholesale and retail trade fell by £1.8 billion—a decline for the fourth year running. In these figures—this picks up points made by the noble Lord, Lord Eatwell—mortgages accounted for 57% of bank lending and the FIRE sectors for 28% of lending. We are seeing a real misallocation of resources if we come back to the questions with which I started: is the financial sector making sure that we can feed ourselves, house ourselves and be secure in a very uncertain world? One of the other things that this is very much associated with, as Positive Money often draws attention to, is rising inequality. For people who own assets, this lending funds further increases in the price of those assets, while people without assets are left even further behind. In fact, it is interesting that mortgages are the only type of lending that has seen significant increases in outstanding credit since the last financial crisis. This is one of the main reasons why property prices have skyrocketed. It is of course very clearly interlinked with the housing crisis that is affecting so many millions of people. I will conclude with a point that I do not believe anyone else has raised but that I think is important. It is about the importance of financial education, and I entirely agree with the committee in its recommendation on this. I note this with regard to the Department for Education, as there is now an independent curriculum review. This surely has to be part of that review in focusing on ensuring that our schools provide education for life, to help people to live rather than just for exams or just for jobs. I also agree with the recommendations— I think the Government broadly agreed too—that the Treasury must work with the FCA and the industry to support adult education about finance. There is a huge inequality of arms in the information that consumers have when they are faced with the financial sector. The noble Lord, Lord Eatwell, raised the issue of cryptocurrencies. That is perhaps a particularly extreme area where we are seeing the targeting of younger people and people from minoritised communities, but, for everybody, many feel a real fear when confronted with having to deal with the financial sector, particularly online. Increasingly, of course, most dealings are online. This is something that stresses people out. They worry about being ripped off or about being the subject of fraud—of course, we are the global fraud capital. Giving the public—consumers—the tools to try to somewhat level the playing field with the financial sector is a crucial point on which I can entirely agree with the committee.