Welfare services provided by Unison to its membership in the public services are being overwhelmed by members in hock to payday lenders, credit sharks and other usurers. In an attempt to combat this, the union has entered into an agreement with over 100 credit unions to try and develop alternative loan arrangements for tens of thousands of workers, not only the low paid, who are seeing their pay packets slashed by inflation, zero pay increases and vultures turning poverty into private fortunes.
Analysis by Unison has identified companies like Everyday Loans Limited, controlled by major Conservative party donor Henry Angest, which offers unsecured loans of between £500 and £10,000 at 74.8 per cent interest. At the same time Arbuthnot Latham, a private bank in which Angest owns a majority stake, has offered a £5 million loan to the Conservative party at 3.5 per cent interest. Angest, a former Conservative party treasurer, has contributed £7 million to the party in loans and donations.
Meanwhile, Conservative party donor and advisor Adrian Beecroft runs Dawn Capital Investments, a private investor fund with a major stake in high-profile payday lender Wonga. Wonga’s turnover has trebled to almost £185 million in the last year.
High-cost lending companies often rely on the high street banks for funding and set up costs – at the same time as high street banks refuse to provide credit directly to those on lower incomes. These include RBS and Lloyds TSB, recipients of billions in publicly funded bail-outs.
About seven million people on the lowest incomes – a quarter of the working population – cannot access credit from mainstream financial institutions (Department of Work and Pensions figures). The Parliamentary Commission on Banking Standards recently noted the way in which many individuals and geographical areas are poorly served by the banks, leaving many with little choice but to turn to payday and other high-cost lenders when they need to borrow.
Some payday/high cost lenders are targeting women. Get Sameday Loans, for example, offers loans at 2,957.3 per cent APR and presents these in the context of the gender struggle as making women financially independent – but totally debt-ridden! All but one of the ten largest lenders specifically offering payday loans saw their turnover more than double in just three years, according to the Bureau of Investigative Journalism – with one US-owned company growing 42 times in size in three years (see http://tinyurl.com/m25ff9k)
The ten biggest payday lending companies have a total turnover of nearly £800 million. In 2010 these companies had a combined turnover of just £313 million. At the start of the 2007-8 recession just one company had turnover of more than £50 million. Now there are four companies with turnovers substantially over £100 million. The struggle for adequate wages is the only answer. ■