How Labour plans to crack down on payday loan sharks

Miliband will announce that the party would give councils new powers to limit the spread of payday lenders and betting shops on the high street.

Ed Miliband will return from holiday to launch Labour's local election campaign today and he's prepared a new policy for the occasion. Speaking in Ipswich, Miliband will announce plans to allow communities to halt the spread of payday loan sharks, bookmakers and fast food outlets along their high streets.

At present, if a high street bank closes down, councils are powerless to stop a payday lender moving in, despite the negative effect they can have on the area, because they are classed as the same kind of business. In the last year, there has been a 20 per cent rise in the number of payday loan firms as well as a significant increase in betting shops and pawnbrokers. Miliband will aim to reverse this trend by granting councils new powers to prevent such businesses opening. According to the party, Labour would reform planning laws by creating "an additional umbrella class which allows local councils to decide if they want to place some premises in a separate planning category." This would allow local authorities to refuse planning permission on the grounds that, for instance, opening a payday loan shop would constitute a change of use. In addition, it would allow councils to limit the spread of other types of outlet where there is local concern such as betting shops and fast food takeaways. 

In proposing the change, Miliband will cite the example of Chatham in Kent, where 23 payday lenders operate within a mile of the high street and where residents complain that their presence is increasing levels of personal debt in the area. He will say: 

Too many councils are finding that they don’t have the real power to stand up for local people. But that is what politics is supposed to be about: standing up for those without power and giving power to them. Currently if a bank branch closes down, there’s nothing a council can do if a payday loan shop wants to move in and open up in the same place. Even if there's another lender next door. That can’t be right.

The policy is a notable example of Miliband's embrace of Blue Labour-style small c-conservatism and he will contrast his stance with that of David Cameron. 

David Cameron’s government used to say it would give people that kind of chance. But it hasn’t delivered. In fact, it is moving in the opposite direction. Not standing up to the powerful interests. So it is up to us to give local people a proper chance to protect the places that they love. To turn their high streets around.

The crackdown on payday lenders is one of the five policies Labour has chosen to prioritise for its local election campaign. The other four are:

- Cancelling the cut in the 50p income tax rate (dubbed "the millionaires' tax cut") and protecting tax credits for low paid workers.

- Introducing a mansion tax on property values over £2m in order to fund the reintroduction of a 10p tax rate on the first £1,000 of earnings above the personal allowance.

-Reforming the energy market to break the stranglehold of the big six energy companies.

-Cracking down on train companies who are putting "the price of the daily commute further and further out of reach". 

After his absence last week, it will also be worth watching to see what Miliband has to say about George Osborne's decision to link the Philpott case to the government's welfare cuts, which he was privately appalled by. 

Miliband will say that "too many councils are finding that they don’t have the real power to stand up for local people". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.