From the letters page of today’s Guardian:
As Christmas approaches and we enter 2011 we should not forget that countless vulnerable families and individuals will face immense pressures on their household budgets (Report, 14 December). In the struggle to put food on the table and presents under the tree, increasing numbers will be forced to turn to high-cost lenders. These are the pay-day Scrooges, some of whom charge in excess of 2,500% APRs for payday lending or up to £82 for every £100 borrowed for door-to-door lending. This means a short-term loan of just a couple of hundred pounds can result in serious financial trouble.
Then, in the new year, Britain's poorest borrowers will be faced with a double whammy with the VAT rise — a regressive tax that disproportionately hits the poorest hardest. This will pile even more of a burden on over-indebted households, just when many will run out of cash and are facing huge difficulties. This, coupled with stagnant incomes and massive cuts to public services — which next year will really begin to bite — will result in even greater hardship.
The government has committed in its coalition agreement to ban excessive lending rates for overdrafts, credit and store cards and is undergoing its consumer credit and personal insolvency review. We therefore call on the government to put an end to the modern-day Scrooges — who charge usury rates and who practice legal loan-sharking — by introducing a cap on the total cost of credit, imposing a new levy on consumer credit agencies to pay for debt counselling and advice services, and increasing access to more affordable sources of credit by further developing the idea of a Post Bank and giving more support to local credit unions, co-operatives and mutuals. At Christmas time we all have a moral duty to stand up for the vulnerable.
Gavin Hayes General secretary, Compass,
Stella Creasy MP
Jon Cruddas MP
Rachel Reeves MP
Damon Gibbons Chief executive, Centre for Responsible Credit
Professor Ruth Lister
Professor Richard Wilkinson
Rev Paul Nicolson Chairman, Zacchaeus 2000 Trust
Ann Pettifor
Fr Paul Butler Rector of St Paul's, Deptford
John Morris Chair, Human City Institute
Niall Cooper National coordinator, Church Action on Poverty
Cat Smith Chair, Compass Youth
Cllr Sam Tarry National Chair of Young Labour
Richard Murphy
Will Straw Left Foot Forward
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Now this is something I wholeheartedly agree with.
I agree with this completely. Many people in the low-income category simply don’t know what’s coming. (It’s arguable whether many middle income people know what’s coming). The rich and modestly rich are able to insulate themselves – or take evasive action. Those on the lowest incomes can do very little. Most of their costs are fixed. They have no room for manoeuvre. They manage cash flow and seasonality through short-term credit. They have no choice. Its their only way. They actually have to be better financial managers than the majority of the population – generally with less information and less understanding.
The police and trading standards should be doing more to stamp-out the loan-sharks, but there’s a much simpler way: price them out of the market. Relaible, honest, no-frills banking services should be provided by the state, supplemented by co-operatives and credit unions. It’s not difficult … if the will is there. And there lies the problem.
13 years of a Labour government and still we have this. They should hang their heads in shame
“At Christmas time we all have a moral duty to stand up for the vulnerable.”
Just at Christmas? The let-out here is if the bailiffs turn up on 25 Dec with cupasoup along with their crowbars that’s all right…