On Monday, 3rd of December, Plymouth City Council passed a motion on notice regarding legal loan sharks. Amongst other things, it noted and welcomes the UK-wide campaign to end “legal loan sharking”, and called on the government to introduce caps on the total lending rates that can be charged for providing credit.
Thankfully, the government has conceded the need to protect the most financially vulnerable in society and is set to to change the law to allow curbs on on payday loan interest rates.
Below is a copy of the speech I gave at City Council on Monday. It is also available to view as a webcast.
Some figures are available which emphasise the need for credit unions.
Household debt set to rise by 36.3% in the next three years. 39% of people concerned about the amount of debt they are in/owe. 43% of people think their personal financial situation will worsen in the next six months. Around 45% of people now say they frequently struggle to make it to payday – up 8% from Christmas 2012. Staggering.
6.2million households identified as financially vulnerable. 3.2million of these are already in “serious financial difficulty”. Scary figures.
In 2009, the payday lending industry was worth over £1.2billion. And as Cllr Evans said – of the 45% of people who struggle to make it to payday, a big proportion of these struggle because they take out payday loans to pay other loans.
Quite simply, low-income families take out these loans because they can’t afford to get to payday.
And they can’t afford to get to payday because they are paying their payday loans.
It is a vicious cycle.
I would like to personally pay tribute to Stella Creasy MP for bringing legal loan sharking to the forefront of everyone’s mind. This is an issue often brushed under the carpet and she has been incredible in making sure this issue is heard.
I wholeheartedly support this motion and would encourage every member in this chamber to do the same.