Cap the cost of credit to make life easier for those forced to turn to payday loans

Tackling the legal loan sharks.

Today, Lord Mitchell, an opposition spokesperson for Business, Innovation and Skills, will debate an amendment he has introduced to the Financial Services Bill (now in the report stage in the House of Lords) to potentially cap the total cost of credit which lenders can charge (this is different to capping interest rates in so far as interest rate caps can be sidestepped by upping other costs such as administrative fees. Total cost caps seek to address this potential loophole).

Many peers, like Lord Sugar and Baroness Thompson-Grey, the Welsh former wheelchair racer and disability campaigner, have already pledged their support for his amendment, which will give the new Financial Conduct Authority the power to apply sanctions to those who offer credit contrary to the its terms.

But it's an amendment which everyone, from all political parties, should get behind and support.

It is good for consumers

While the payday lending industry has enjoyed unprecedented growth (worth £100m in 2004, now worth over £2bn in 2012) in recent times, credit access has become tougher for consumers. Around 1.75 million UK adults go without a transactional bank account in the UK today and 9 million adults cannot access credit from mainstream banks. This spells bad news for consumers as the only option for many is expensive short-term loans. Capping the costs of credit will make borrowing less expensive for consumers, at a time when wages are stagnant and the cost of living rises.

It is good for the economy

Damon Gibbons for the Centre for Responsible Credit, in their recent report on Japan and interest rate caps, noted that, all things considered, putting a ceiling on the amount a lender can charge for a loan will make borrowing less expensive - given the rate at which over-priced short-term lending has risen over the last few years. This will have a knock-on effect on saving behaviour and investment. Reinstatement of savings initiatives like the Savings Gateway should also boost this kind of behaviour.

It doesn't contradict the Tory message

Small-c conservatives in the Tory Party have always raised concern about how financial institutions can hurt, rather than help, the finances of those most vulnerable in society. But even those of a more free market bent inside the party have started to see what a problem payday lending is. Damian Hinds MP, chair of the All-party Parliamentary Group on Credit Unions, for example, once felt the market would drive down prices in payday lending, but has now decided that “normal market rules do not apply with payday lenders”.

It will not boost illegal money lending

Important work carried out in 2010 by Professor Dr. Udo Reifner, Sebastien Clerc-Renaud, and RA Michael, for the European Commission, found no convincing evidence to back up the argument introducing interest rate ceilings leads to a growth in illegal lending “or would force people into arrears and default on bill repayments”. In fact it is found in the same report that in spite of the fact the supply of credit in France and Germany is not as abundant as in the UK, this has not been matched by an increase in illegal lending.

A shark. Not a loan shark. 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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The first godless US election

America’s evangelical right has chosen Donald Trump, who hardly even pays lip service to having faith.

There has never been an openly non-Christian president of the United States. There has never been an openly atheist senator. God, seemingly, is a rock-solid prerequisite for American political life.

Or it was, until this year.

Early in the 2016 primaries, preacher and former Arkansas governor Mike Huckabee and former senator Rick Santorum – both darlings of the evangelical far right – fell by the wayside. So did Wisconsin governor Scott Walker, the son of a preacher.

Ted Cruz, once the Republican race had thinned, tried to present himself as the last godly man, but was roundly beaten – even among evangelicals – by Donald Trump, a man whose lip service to religion was so cursory as to verge on satire.

Trump may have claimed in a televised debate that “nobody reads the Bible more than me”, but he demurred when pressed to name even a verse he liked. His pronouncements show a lack of any knowledge or interest in faith and its tenets; he once called a communion wafer his “little cracker”.

The boorish Trump is a man at whose megalomaniacal pronouncements any half-hearted glance reveals a belief in, if any god at all, only the one he sees in a mirror. The national exercise in cognitive dissonance required for America’s religious rightwingers to convince themselves that he’s a candidate with whom they have anything in common is truly staggering.

But evangelicals don’t seem troubled. In the March primary in Florida, Trump carried 49 per cent of the evangelical vote. He won Mississippi, a state where fully three-quarters of Republican primary voters are white evangelicals.

In the Democratic primary, Bernie Sanders became the first Jewish candidate ever to win a presidential primary – though he has barely once spoken about his faith – and Hillary Clinton has spoken about god on the campaign trail only occasionally, without receiving much media play. In fact, when the question of faith came up at one Democratic debate there was a backlash against CNN for even asking.

The truth is that Christian faith as a requisite for political power has drooped into a kind of virtue-signalling: the “Jesus Is My Homeboy” bumper-sticker; the crucifix tattoo; the meme on social media about footprints in the sand. It is about identity politics, tribal politics, me-and-mine versus you-and-yours politics, but it hasn’t really been about faith for a while.

What the hell happened?

Partly, there was a demographic shift. “Unaffiliated” is by far the fastest-growing religious category in the US, according to a study by the Pew Research Center, which also showed that the total proportion of Americans who define as Christian dropped almost 9 percentage points between 2007 and 2014.

There is no doubt that America is still a fairly devout nation compared with the UK, but the political mythos that developed around its Christianity is a relatively late invention. The words “under god” were only implanted into the pledge of allegiance – between the words “one nation” and “indivisible” – in 1954, by President Eisenhower.

The ascendance of the political power of the Christian right in America happened in 1979, when a televangelist called Jerry Falwell founded a pressure group called Moral Majority.

Moral Majority’s support for Ronald Reagan was widely credited for his victory in the 1980 election, which in turn secured for them a position at the top table of Republican politics. For three decades, the Christian right was the single most important voting bloc in America.

But its power has been waning for a decade, and there are greater priorities in the American national psyche now.

Trump’s greatest asset throughout the primary was what makes his religiosity or lack thereof immaterial: his authenticity. His lack of a filter, his ability to wriggle free from gaffes which would have felled any other candidate with a simple shrug. This is what not just religious voters, but all of the Republican voting base were waiting for: someone who isn’t pandering, who hasn’t focus-grouped what they want to hear.

They don’t care that he may or may not truly share their belief in god. Almost all voters in this election cycle – including evangelicals, polling suggests – prioritise the economy over values anyway.

On top of that, the Christian right is facing the beginnings of an insurgency from within its own ranks; a paradigm shift in conservatism. A new culture war is beginning, fought by the alt-right, a movement whelped on anarchic message boards like 4chan, whose philosophical instincts lean towards the libertarian and anarcho-capitalist, and to whom the antique bloviation of Christian morality politics means nothing.

Trump doesn’t pander, an approach only made possible by social media, which amplifies his voice six millionfold while simultaneously circumventing the old establishment constructs – like the media – which had previously acted as gatekeepers to power.

The Christian right – now personified in Jerry Falwell Jr and Liberty University, which Falwell senior founded in the Seventies – found itself another of those constructs. They were forced to choose: jump on board the Trump Train or be left behind.

They chose Trump.

Nicky Woolf is reporting for the New Statesman from the US. He tweets @NickyWoolf.