Affordable Credit for People on Low Incomes

Stella Creasy Excerpts

Wednesday 5th December 2018 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Thank you for letting me speak, Sir David. Do not worry: I promise I will be quick. I rise simply, and possibly at my own risk, to disagree with my right hon. Friend the Member for Birkenhead (Frank Field)—I admire him immensely for his work on poverty and perhaps, given the time of year, he can be the ghost of Christmas yet to come for the Minister—because there is a silver bullet in this circumstance. All of us deal with people in our communities who are struggling because there is too much month at the end of the money and are borrowing to put food on the table, to keep a roof over their head and to put petrol in their car to get to work. They need us to recognise the lessons of payday lending—the lessons of those interest rates. It is not about the decimal point; it is about hooking people into debt.

I know the Minister knows this in his heart. I know he recognises that payday lending is not the only spectre hanging over Christmas for people this year. Indeed, in our country now, people are better protected when taking out a payday loan than when they are using many of the other forms of credit. My right hon. Friend talked about Provident. Provident takes many incarnations in this country. Vanquis credit cards are pushed in my local community; Vanquis is also owned by Provident. Credit cards in this country are the new form of unaffordable debt for so many. The rates of interest, especially on the credit cards targeting people on a low income or with a bad credit history, lead them into higher levels of debt than they would get into with a payday loan. Guarantor loans rip apart communities and families as people get into debt and then have to tell someone else, who has guaranteed the loan, that they have got into debt. The companies are chasing two people at the same time for the same loan.

All those examples, all those scenarios, are things that we could stop if we learned the lessons of payday lending. Wonga may not exist now, but the industry carries on in this country. It has gone from 400 to 150 companies, but the point is that it is not pushing people into debt in the way that it was two or three years ago—when it caused the concern that my right hon. Friend and my hon. Friend the Member for Warrington South (Faisal Rashid) now express for other forms of credit in this country.

I know that the Financial Conduct Authority has ruled out bringing in a cap for all forms of credit, but I again ask the Minister: how much more evidence do we need about these companies and the way they are evolving before we learn the lessons of payday lending?

In the Financial Times this week, the owners of Amigo Loans boasted about how the lack of regulation and the changes in regulation have benefited their industry. By not capping all forms of credit, in essence, we are pushing people into other forms of high-cost credit and towards other legal loan sharks. How much longer do our communities have to suffer? The truth is that they are suffering. I am a Labour and Co-op MP, so I would love to see more credit unions, but they cannot compete with such companies and their rapacious behaviour, or with the way they have evolved to evade legislation.

We need comprehensive legislation. Please, let us not have another year of the Minister and me arguing, yet again, about the benefits of that silver bullet. There is no single better thing that we could do than cap the cost of all forms of credit in this country to give an even playing field, to make sure that the banks treat people fairly, to make sure that all forms of new credit treat people fairly, and to give our communities hope for 2019 when their wages do not match up.