Miliband's promise to clamp down on payday loans is a good first step

The start of a One Nation economy

While bloggers and columnists have focused on Ed Miliband's call for a reintroduction of the 10p tax rate, scrapped by Gordon Brown, paid for through a mansion tax on £2m properties, it should be noted that the opposition leader signalled signs of hope on personal finance as well.

In his speech, he noted that as a start to building a One Nation economy Labour would:

Break the stranglehold of the big six energy suppliers. Stop the train company price rip-offs on the most popular routes. Introduce new rules to stop unfair bank charges. And cap interest on payday loans.

The financial pinch that people are feeling will not be easy to undo, but I want to suggest two things to complement Ed Miliband's call for building the One Nation economy.

Firstly he must take seriously wages. While millions of state sector workers will see their wages freeze, the average private sector worker’s pay has risen by just 1.4 per cent. All the while, according to latest ONS figures food prices have risen by 4.5 per cent in the last year. Indeed the real wages of many workers fell to 2003 levels.

For many years wages were effectively supplemented by the relative free flow of credit. Today, access to mainstream credit is denied to people who have for a long time seen their wages stagnant, losing the battle against inflation and the rising cost of living.

As academics from the university of Bristol pointed out, while the UK may be out of a technical recession, the public’s recession has never gone away and is getting worse. People having to drive their own personal austerity measures just to get to the end of the month.

Others have not been so lucky - which brings me to my second suggestion. Last year the charity Shelter published findings showing that a million people took out a payday loan to help with their mortgage payments.

Research by Which?, also published last year, showed that 40 per cent of payday loans are being taken out to buy basics such as food and bills.

Many payday lenders can charge up to 4,214 per cent interest on amounts ranging from £50 to £800. On average a payday lender will charge £25 for every £100 borrowed on a loan of 28 days but costs can soon go up if there are missed payments, with fees anywhere from £12 to £25. Compared to authorised bank overdrafts or loans from credit unions these are extortionate figures.

What Labour should be calling for is a total cost of credit cap. Instead of just targeting interest rates a total cost of credit cap would legislate for how much a lender can charge in total, such as administration fees (in Australia, for example, lenders got around interest rate caps by obliging borrowers to buy their financial DVDs).

As I have been told time again, market rules do not seem to be working with high cost credit. Given the large amount of market entrants, prices for credit are still sky high. However when I spoke to Matthew Fulton, a key figure in the End the Legal Loansharking campaign, he told me that an internet company’s break-even point is at around 70 per cent APR, while payday lenders with a shop front can average at 130-40 per cent depending on the types of scheme and duration.

Payday lenders are in the business of ripping off the poor and hard up. So it is very encouraging that Ed Miliband has already pledged himself to place a cap on the prices that payday lenders can charge at.

But it can not be an isolated move. As Veronika Thiel put it in her report on doorstep lending: “Interest rate caps have to be levelled among a series of other regulations and interventions.”

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.
 

Helena Smith
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Can religion trump the climate change deniers? Meet the inter-faith environmentalists

The role of faith in fighting intolerance, protecting the planet, and trumping Trump.

"I need my brothers here with me - Canon Giles and Rabbi Natan," said Dr Husna Ahmad, motioning for the two men to join her at the pulpit. Taking their hands and raising them above her head, she continued:

“[I need them] to be my voice, to fight for my right to practice my religion, for my right to wear the hijab and to care for my sons and daughters and granddaughters - as they would care for their own”.

Why do I ask for this at an evening about climate change? she asked, her voice now shaking with emotion. “Because only when we think as one humanity can we save this planet.”

The meeting at St John’s church, Waterloo, saw Christian, Muslim and Jewish leaders come together for the first-ever "Faith for the Climate" event. Their message echoed the wider Interfaith movement's statement on climate change: that caring for the earth is our shared responsibility. 

As so often with environmental subjects, the effort felt at risk of being shadowed by the more tangible needs of the soup-kitchen operating in the dusk outside. Yet at a time of rising Islamophobia and anti-Semitism building cross-community connections and tackling prejudice matter more than ever.

Not least since the fledgling consensus on climate change is also under threat. In the US, one of the world's great polluters, the Republican candidate Donald Trump is a climate change denier. 

During last night's televised debate Hillary Clinton took the businessman to task for saying that climate change was "a hoax perpetrated by the Chinese". Trump denied the accusation: "I did not, I did not, I do not say that," he responded. Yet his tweet history suggests otherwise - revealing how a toxic mix of xenophobia and climate scepticism play their part in his wider message.

Prepped with tea and pitta bread, attendees bore witness to a talk by Sir David King - the Foreign secretary's special representative on climate change. By 2035 the world needs to be at net zero emissions, King explained.

Unbearable heat waves, extreme flooding and biblical-levels of crop-destruction wait on the other side of this deadline.

Last week’s UN conference in New York has seen over 30 new nations, including the UK, officially commit to the Paris climate treaty.  Yet against such optimism must be set the looming prospect of a Trump Presidency in America. 

Not only has Trump said he would “cancel” America’s commitment to the Paris agreement. He has also promised to end the “war on coal”, scrap the Environment Protection Agency, and appoint an oil executive to be the Interior secretary. Without America’s support for global action on climate change, the 1.5 degrees target would be impossible to reach.

So how can religion help? On a direct level, many faith-based bodies are already utilising their vast networks to help tackle the challenge.

Since 2004, Operation Noah, a UK-based Christian charity, has called on the church to divest from fossil fuels.

Sir King also described the Pope's 2015 environmental encyclical as an important part of the "crescendo" that set the stage for the successful negotiations on the global climate deal. On the back of such international progress, groups such as Christian Aid, Islamic Relief and the Big Church Switch are strengthening their interventions. Just last week, Christian Aid announced a new $53m fund to improve energy efficiency in developing countries. 

But there is perhaps also another, less direct, way that religion is helping. Christian evangelicals in the US have been more likely to be climate sceptics. Yet in inter-religious contexts, the multiplicity of interpretations can also be an invitation to a deeper interrogation - of the very way we form assumptions about the world. 

Just look at how many takes there have been on the Noah story within Christianity alone. Mike Hulme at Kings College London points to an American Christian evangelical coalition which supports fossil fuels for their ability to provide cheap energy for the poor. Others have claimed that God’s promise to Noah not to drastically alter the earth again means that the impact of climate change will be softened. In contrast, others read floods as a punishment for human sin. According to the Bishop of Carlisle, the 2007 floods were “the consequences of our moral degradation, as well as the environmental damage that we have caused.”

While it may be tempting to pack unpalatable viewpoints off in a "basket of deplorables", or wipe them out with an apocalyptic flood, the takeaway from events like last Wednesday's seems to be a message of expanded community and common ground.

For Canon Giles, simply watching members of different faiths united in prayer had transformative power. "In that moment, we were no longer a gathering of different faiths and dogmas," he said. "We were simply members of the muddled human species, pooling our hopes and prayers."

India Bourke is the New Statesman's editorial assistant.