We underestimate how much the money-lending business has taken over. A few years ago in Parliament, when I tried to get a new consumer credit act to include capping interest rates, the main lender was the Provident – who built up resistance on the grounds that they really helped ordinary people, particularly in poorer northern communities. Even the national Citizens’ Advice Bureaux opposed interest rate capping on the grounds that it would drive legitimate lenders like Provident out, and people would turn to unlicensed lenders. It was agreed at the time to boost funds for local debt advice workers instead.
John Battle, former National Coordinator of Church Action on Poverty, looks back on the history of our work on debt and credit.
Today, following that Consumer Credit Act, there are some 240 active registered money-lenders – but the difference today is that they are dominated by mega international (American) companies, backed by international banks. Money-lenders now take up more than 25% of all TV social media and newspaper advertising. It is reported that Wonga alone spends £80 million on TV adverts in Britain.
Not only our TVs and laptops, but our local shopping centres, are being taken over by money-lenders.
The campaign to cap interest rates led by Church Action on Poverty has now got some traction (though it is still resisted by the Coalition Government).
Meanwhile, as we press for national regulation, in Leeds we have set up a series of area Debt Forums, led by the long-standing West Leeds Debt Forum, bringing together all agencies and community groups who come into contact with people with money problems, ranging from CABs , libraries and doctors’ surgeries to tenants’ groups. We orgainise workshops and info fairs, publish helplines and advice support, and promote our credit unions as an alternative. We have put on a professional drama in the city centre and our neighbourhood to warn of the dangers of the illegal loan sharks who prey on the most vulnerable, already in debt to multiple legal lenders. Last month two illegal lenders were arrested in our neighbourhood and will be charged. Leeds City Council has been pressed to take the initiative to cut out adverts in the city for money-lending, and to provide more back-up.
But the credit union, which has traditionally helped through community savings schemes to buy major capital items such as a replacement washing machine or pram for a new baby, cannot cope with what is increasingly a weekly shortage of money to pay the incoming bills. In the absence of the high street banks, we in the West Leeds Debt Forum are actively working to set up a local ‘people’s bank’: a new social enterprise model which blends our Bramley Credit Union, a high street bank branch and the Post Office. We aim to lend at very low rates of interest, to have ATM access on a 24/7 basis, and for all money deposited and invested in the local people’s bank to be reinvested within the local community within five miles of the front door.
Community banking and Community Reinvestment will provide the jobs and services our communities need.
John Battle was the founding National Coordinator of Church Action on Poverty in 1983. He went on to serve as Member of Parliament for Leeds West, and is now involved in various campaigning work.
Church Action on Poverty is now exploring ways of promoting Fair Prices for credit through our ‘Food, Fuel, Finance’ programme.