There’s a cost of living crisis – that’s something we’re all aware of, and it affects us all.
The cost of living crisis is benefiting someone – and that someone is lenders like Wonga – whose profits have soared to over £1 million A WEEK.
According to Leeds-based charity, Step Change Debt, speaking to the Yorkshire Evening Post, the number of residents in the city so desperate that they have sought help from the charity is up seven-fold in the years since 2009. As many as 60,000 people in Leeds could be forced to use high-interest lenders
People are turning to payday lenders to try to make ends meet. And StepChange report that, nationally, a depressing 42% of young people aged between 16 and 25 who come to them for help have debts to such lenders.
The payday lending industry has been one of the fastest growing parts of the financial services sector over the past five years and there are fears that it is having a significant impact on the lives of many people.
Added to this, there is growing evidence for dubious practice and exorbitant interest rates – a situation which has prompted an Office of Fair Trading Investigation into the industry and its practices.
It’s against this background that Leeds City Council has decided to take action. It has already grouped with other West Yorkshire councils – in Bradford, Calderdale, Kirklees and Wakefield – plus City of York council – to block payday lenders ads on public computers.
If people try to access highcost payday lender sites from a library or other publicly-owned computer – they’ll be sent to a site offering financial advice instead – with links to credit unions and voluntary sector organisations which will help them with cheaper, second-hand goods.
Although a few other councils across the country have also taken this step, this is the single biggest initiative in the country in the campaign against what are described as predatory lenders.
Councillor Keith Wakefield, leader of Leeds City Council and chair of the Association of West Yorkshire Councils, has been spearheading this initiative.
“We are seeing more and more evidence of people finding themselves with serious debt problems after being enticed into taking out loans from payday lenders. A recent survey of 113 lenders by the Citizen’s Advice Bureau found 9 out of 10 applicants were not asked to provide proof that they could afford the loan. It can be no surprise that this sort of irresponsible lending leaves many people facing serious hardship. This is an industry which must face greater controls over their operations, but, until they do, we feel that it is necessary to take this action.”
Leeds Labour Council is now also exploring the possibility of a ban on advertising in public spaces by such lenders. On Wednesday, in full Council, Keith Wakefield proposed a motion asking officers to explore this. The Council has called on the government to bring in a cap on interest rates charged by short-term lenders.
On 25 October, Leeds Council is organising a major national conference here in Leeds, devoted entirely to the subject of high cost lending and how to develop strategies to help citizens who find themselves trapped in a spiral of unsustainable debt. Speakers at the conference will include prominent national figures from the advice sector, the Department for Work and Pensions, Member of Parliament, Church of England and the world of sport. Final details of the conference will be issued during September.
As wages continue to stagnate and fall, and prices to rise, experts fear that the number of people taking out such loans will rocket.
Keith Wakefield believes there will be no shortage of lenders ‘exploiting people’s vulnerability’.
So the Council has taken action – and will continue to do so.
This is yet another example of the creative thinking which is coming from the grass roots of Labour Local Government.
If you are having problems, or know other people who are, the Council has set up a website giving alternatives to payday lenders
There’s also a page where you can report Loan sharks and get other advice
We need an economy which delivers decent living standards to all our citizens, and not just profits for a few. Until we get that, we have to be grateful that we have Labour government in Leeds.