Tories may be wrong on national debt, but some are right on personal debt

The Bright Blue conference revealed some allies in the fight against the payday lenders

Last week I attended a conference run by the Tory "Fresh" group Bright Blue. There were plenty of faces I recognised and not all of them belonging to the "left wing" of the Tory party. After a few conversations it had become apparent that there is an anger across all wings of their party regarding the continued employment of George Osborne.

For the Tories, who fancy themselves as the party of fiscal responsibility (though as a Labour party member myself, I remain skeptical), the perception of Osborne's continued weak effort is the source of much frustration.

However to suggest that Osbornomics is the sum total of the financial thinking within the Conservative party would be an error. Take the area of finance that I'm interested in for example, that of personal debt – many in the party who are driven by principle rather than pride tend to sit on the correct side of the tracks here.

Justin Tomlinson MP, for example, the member for North Swindon, is one of the most vocal critics of the payday lending industry in parliament.

Earlier this year he addressed parliament during the debate on the clauses in the Financial Services Bill in support of imposing a total cost cap on loans that lenders can deal out to consumers. This, for him, is one way to ensure exploitative companies don't make life harder of those who are most vulnerable.

But Tomlinson understands that this cannot be a single policy enacted in isolation. This was why he, along with fellow Conservative member of parliament, Andrew Percy, authored a very interesting report on financial education. For them both, more focus on finance early on, can better gear up people when they are older to make healthy financial decisions – which can be hard to come by if times are tough on the pocket with more and more payday lenders popping up on our high streets.

With Percy, his interest in bad debt stems from his own problems with it. Though he has never had to take out a payday loan, he has been in the position of owing tens of thousands of pounds – for which as of 2011 he was still paying off.

"I now pay about £600 a month to clear off all of my credit cards which I've had to roll into a loan since my election", he told the BBC last year.

Another Tory MP, Tracey Crouch, member for Chatham and Aylesford, also came into focusing on debt issues as a consequence of her own past. When I spoke to her earlier this year she told me that her debts were down to "youthful stupidity" and her £15,000 credit card and store card debt was largely the outcome of living a lifestyle she couldn’t afford, which some of her peers could.

Crouch insisted that there is a positive side to credit, indeed most regard it as the sign of a healthy economy. However she herself has seen the negative side of it. She is particularly concerned about those who are termed the "underbanked", namely those those who still have bills to manage and cashflow problems to overcome, but are restricted in their access to mainstream credit products.

Given the rate at which the payday loans industry is growing, the temptation to see this as an easy way out for the very vulnerable increases. The government has a responsibility to do what it can to ensure all consumers do not fall foul to expensive loans, but also many of the barriers of alternatives such as credit unions need to be overcome too.

For example the Association of British Credit Unions (ABCUL) still haven't tapped into social media, and trying to raise credit union membership that way, whereas payday lenders such as Wonga have done this very successfully.

One person who does know a thing or two about credit unions is Damian Hinds MP, the member for East Hampshire. He chairs the All-party Parliamentary Group (APPG) on Credit Unions, and is a vice chairman of the APPG on Debt.

His politics are perhaps most interesting because he is a self-described free-market Conservative. He told me that when he first became an MP he was convinced that market solutions would drive down expensive lenders and anything the state could do would only frustrate this process.

However, he has since changed tack on this, deciding that "normal market rules don't apply with payday lenders". Now Hinds realises that the state can play a part in helping a create a fairer lending market since all evidence points out that the invisible hand is typically absent.

The legacy of Osbornomics will be negative – and Conservatives themselves are as adamant as anyone that this is the case. David Cameron is not being a renegade, but a fool for keeping him. But the Conservative party is not without sound economic minds – and on an issue as important as personal debt this is proven most forcibly.

A payday loan company in Birkenhead. Photograph: Getty Images

Carl Packman is a writer, researcher and blogger. He is the author of the forthcoming book Loan Sharks to be released by Searching Finance. He has previously published in the Guardian, Tribune Magazine, The Philosopher's Magazine and the International Journal for Žižek Studies.
 

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Labour must unite idealists and nativists to beat Ukip

The party has no coherent economic policy, says Labour donor John Mills. 

The heart of the dilemma faced by Labour is that, by and large, its working-class supporters think that you should look after your own first and everyone else afterwards, while its more idealistic middle-class supporters don’t share these nativist views. Add to this the fact that the Labour party nowadays is more middle class, more internationalist, more public sector-orientated, more metropolitan, more intellectual and less interested in winning elections than it has ever been before, and you can see why Ukip is a huge potential threat.

Ukip started by attracting mainly disaffected Conservative voters who thought their party was weak on the EU and who didn’t like David Cameron’s liberal approach to social issues. More recently, especially during the EU referendum, Ukip picked up a huge amount of Labour support. Of the 9.3m people who voted Labour in the 2015 general election, close to 3.5m of them voted for Leave – and half of these people say they are not going to vote Labour in future. Where are they going to go?

The crucial issue is whether Ukip, having gone through all its recent traumas, will get its act together to scoop up these footloose voters. Up to now, the glue which has held Ukip together has been hostility to the EU and distrust of the political establishment. It has lacked coherent policy. This leaves Ukip still essentially a protest operation rather than as a potentially governing party. But this could change. 

With Labour now increasingly idealistic rather than nativist, Ukip may pull together a string of policies that promise support for working-class solidarity, immigration restrictions, social conservatism and a reindustrialisation plan – very much the platform which won Donald Trump the US presidency. Such a manifesto could attract sufficiently widespread working-class support to make large numbers of Labour seats vulnerable. Ukip came second in 120 constituencies during the 2015 general election. There doesn’t have to be a very large swing for Ukip to start picking up enough seats to make the prospect of a future Labour government more and more remote.

Faced with this prospect, what can Labour do? Three key strategies suggest themselves. One is to avoid alienating potential Labour supporters by trying to persuade them that they should have voted Remain. On the contrary, the party must clearly accept the referendum result, and fight hard and constructively towards getting the best possible Brexit deal. 

Second, Ukip is weak on economic policy. It is all very well to promise reindustrialisation and better jobs, but how is Ukip going to fulfil them? Populism shades very easily into protectionism. There is a principled case for open markets to produce more prosperity - but this may only be possible if there are also changes to monetary and exchange rate policy to avoid unmanageable commercial competition. Ukip may, like the Labour party, find this a hard case to make.

Third, Labour needs to change its tone. There needs to be less talk of abstract universal values and more of concrete steps to improve people’s lives. Labour must celebrate working-class attitudes to self-help, trade unionism, mutual support, patriotism and solidarity. The party must build on the huge influx of members, not least because they are the cadres for the future, but it also must avoid alienating old supporters with many years of experience and commitment. It is up to the party leadership to create such a change.

As it stands, too many Labour people are still trying to derail Brexit. The party has no coherent economic policy and it still looks too London-centric, divorced from its working-class roots. Not a good place to be if Ukip pulls itself together. 

John Mills is a businessman and a Labour donor. He founded the group Labour Leave ahead of the EU referendum and has recently published the pamphlet "Why Trump Won"