The personal debt bubble is fit to burst

We're almost in Wongaland already, writes Carl Packman.

Back in March 2012 the Office for Budget Responsibility (OBR) at least entertained the notion that economic growth would come from places other than an increase in household debt. Exports, investment, the lot. Today it doesn't bother, the consumer will have to go this alone, even with bank lending squeezed and wages left wanting. 

Even George Osborne, during his Mais Lecture in February 2010, offered us this gem: “The overhang of private debt in our banking system and our households weigh heavy on future prosperity”. How right he was, but his response was to lead us down the “road to Wongaland”. 

Despite the optimism of low interest rates, at least until unemployment rates are sorted out, critics have pointed out that Mark Carney's calls are really just a return to days where recovery will be fuelled by consumption and rising debt – as if we need more of that. 

Sure, people are returning to the shops, no doubt spurred on by the shiny weather, which is great for the economy, but what is the real upshot? Wages are falling in real terms and household debt is 153 per cent of GDP. On average each household in the UK is bagged with nearly £8000 in unsecured debt. Is the hope that we will get into more debt the only tool in the bag for economic growth?

Of course we should remind ourselves who the real winners are. Last year PwC said that credit cards were suffering a “mid-life” crisis as borrowers were using them less and taking out unsecured loans at a much faster rate. We're being told to spend more but we cannot afford to? The winners: who else but payday lenders.

In 2009, during the economic crisis, the payday lending industry was worth £900m. A mere four years later and the industry is worth over £2bn. One well-known player in the industry, The Money Shop, had 34 staff and a turnover of £2.9m in 1998, today with 2,300 staff their income is £172.3m. 

Not long ago the economist Tim Harford tried to allay our fears and said that compared to other forms of consumer credit lending the payday lending industry was relatively small and not to be worried about. But their rapid growth from an industry worth a measly £100m in 2004 should be better noted.

The industry is small in comparison but is growing at a far more accelerated rate than its mainstream counterparts. CityWire recently estimated that more than half (52 per cent) of new consumer credit loans are being made by "other" banking institutions and non-banks including non-standard mortgage lenders and sub-prime lenders such as pawnbrokers and payday lenders. 

And so it is, more of us are relying on high cost credit from payday lenders, personal debt profiles will grow dangerously large, less money will be circulated on the high streets, consumers will be less able to shield themselves from unseen financial shocks and the whole debt cycle starts again.

As the CityWire report notes, the OBR anticipated that a credit boom would sustain an economic recovery. But that boom is being held by fringe financial institutions such as payday lenders who are expensive and suck more money out of the economy than they put in. In turn the tune of increased payday lending, rather than being the silver bullet needed for economic growth, will be its death knell. 

If the economy is allowed to continue to run like this, with Britons being some of the most indebted in the world only able to supplement decreasing real wages and the rising cost of living with high cost credit, then a personal debt bubble will eventually burst. Osbornomics needs to change direction, fast. All the warning signs are there.

Cash Loans. 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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Morning after pill: It's time to say no to the "ultimate sexist surcharge"

A new campaign aims to put pressure on the government to reduce the cost of emergency contraception.

The British Pregnancy Advisory Service recently launched its Just Say Non! campaign to highlight the fact that British women pay up to five times more for emergency contraception than women on the continent. The justification for the UK price of up to £30 – and the mandatory consultation with a pharmacist – is that otherwise British women might use the morning-after pill as a regular method of contraception. After all, you know what us ladies are like. Give us any form of meaningful control over our reproductive lives and before you know it we’re knocking back those emergency pills just for the nausea and irregular bleeding highs.

Since BPAS announced the campaign on Tuesday, there has been much hand-wringing over whether or not it is a good idea. The Daily Mail quotes family policy researcher Patricia Morgan, who claims that “it will just encourage casual sex and a general lack of responsibility,” while Norman Wells, director of the Family Education Trust, which promotes what it calls "traditional values", fears that “there is a very real danger that [emergency contraception] could be misused or overused.”  

The Department of Health has indicated that it has no intention of changing current policy: “We are clear it is only for use in emergencies and we have no plans to change the system.” But why not? What is the worst that could happen? Wells argues that: “The health risks to women who use the morning-after pill repeatedly over a period of time are not known.” This may be true. But do you know what is known? The health risks to women who get pregnant. Pregnancy kills hundreds of women every single day. There are no hypotheticals here.  

The current understanding of risk in relation to contraception and abortion is distorted by a complete failure to factor in the physical, psychological and financial risk posed by pregnancy itself. It is as though choosing not to be pregnant is an act of self-indulgence, akin to refusing to do the washing up or blowing one’s first pay packet on a pair of ridiculous shoes. It’s something a woman does to “feel liberated” without truly understanding the negative consequences, hence she must be protected from herself. Casually downing pills in order to get out of something as trivial as a pregnancy? What next?

Being pregnant – gestating a new life – is not some neutral alternative to risking life and limb by taking the morning-after pill. On the contrary, while the UK maternal mortality rate of 9 per 100,000 live births is low compared to the global rate of 216, pregnant women are at increased risk of male violence and conditions such as depression, preeclampsia, gestational diabetes and hyperemesis. And even if one dismisses the possible risks, one has to account for the inevitabilities. Taking a pregnancy to term will have a significant impact on a woman’s mind and body for the rest of her life. There is no way around this. Refusing to support easy access to emergency contraception because it strikes you as an imperfect solution to the problem of accidental pregnancy seems to me rather like refusing to vote for the less evil candidate in a US presidential election because you’d rather not have either of them. When it comes to relative damage, pregnancy is Donald Trump.

There is only a short window in a woman’s menstrual cycle when she is at her most fertile, hence a contraceptive failure will not always lead to a pregnancy. Knowing this, many women will feel that paying £30 to avoid something which, in all probability, is not going to happen is simply unjustifiable. I’ve bought emergency contraception while conscious that, either because I was breastfeeding or very close to my period, I’d have been highly unlikely to conceive. If that money had been earmarked to spend on the gas bill or food for my children, I might have risked an unwanted pregnancy instead. This would not have been an irrational choice, but it is one that no woman should have to make.

Because it is always women who have to make these decisions. Male bodies do not suffer the consequences of contraceptive failure, yet we are not supposed to say this is unfair. After all, human reproduction is natural and nature is meant to be objective. One group of people is at risk of unwanted pregnancy, another group isn’t. That’s life, right? Might as well argue that it is unfair for the sky to be blue and not pink. But it is not human reproduction itself that is unfair; it is our chosen response to it. Just because one class of people can perform a type of labour which another class cannot, it does not follow that the latter has no option but to exploit the former. And let’s be clear: the gatekeeping that surrounds access to abortion and emergency contraception is a form of exploitation. It removes ownership of reproductive labour from the people who perform it.

No man’s sperm is so precious and sacred that a woman should have to pay £30 to reduce the chances of it leaving her with an unwanted pregnancy. On the contrary, the male sex owes an immeasurable debt to the female sex for the fact that we continue with any pregnancies at all. I don’t expect this debt to be paid off any time soon, but cheap emergency contraception would be a start. Instead we are going backwards.

This year’s NHS report on Sexual and Reproductive Health Services in England states both that the number of emergency contraception items provided for free by SRH services has “fallen steadily over the last ten years” and that the likelihood of a woman being provided with emergency contraception “will be influenced by the availability of such services in their area of residence.” With significant cuts being made to spending on contraception and sexual health services, it is unjustifiable for the Department of Health to continue using the excuse that the morning-after pill can, theoretically, be obtained for free. One cannot simultaneously argue in favour of a pricing policy specifically aimed at being a deterrent then claim there is no real deterrent at all.

BPAS chief executive Anne Furedi is right to call the price of Levonelle “the ultimate sexist surcharge.” It not only tells women our reproductive work has no value, but it insists that we pay for the privilege of not having to perform it. It’s time we started saying no

 

 

Glosswitch is a feminist mother of three who works in publishing.