Miliband's Wonga tax is another trap for the Tories

Should Cameron's party oppose the levy, Labour will accuse it of again siding with predatory companies against struggling consumers.

After doing battle with the energy companies, Ed Miliband is taking on Wonga and co. The Labour leader will announce today that his party would impose a new levy on the profits of payday loan companies (call it the "Wonga tax") and use the money raised to double the public funds (currently £13m) available to credit unions and other low-cost lenders. The plan was first mooted in August shortly after Justin Welby vowed to put Wonga "out of existence" by supporting non-profit lenders, which charge a maximum interest rate of 26%. Labour says that it is currently "consulting on the rate and details of our addition to the levy" but I'm told by a party source that the rate is likely to be around 10%. 

Miliband will also announce that Stella Creasy, who was overlooked in the shadow cabinet reshuffle, will be given "special responsibility" for leading the party's campaign against abuses by payday lenders. On a visit to Peckham today with Creasy, last week appointed as shadow minister for competition and consumer affairs, he will visit the office of a credit union and meet some of those who have suffered at the hands of high-cost lenders. He will say:

The cost of living crisis afflicting millions of Britain’s families is so bad that it is creating a personal debt crisis too. The prices families have to pay keep on rising faster and faster than the wages they are paid. And, as a result, the market in payday lending has doubled in just four years. Almost a third of the payday loans taken out in Britain at the moment are to cover the cost of people’s gas and electricity bills.

For too many families the end of the month is now their own personal credit crunch. A One Nation Labour Government would deal with the causes of the cost of living crisis. But it would also act to help prevent people falling into unpayable debt with radical reform of the payday lending market. We would cap the cost of credit, halt the spread of payday lenders on our high streets and force them to fund the credit unions that can offer a real alternative for people in desperate need.

We must protect the most vulnerable people in our society from the worst of exploitation by payday lenders. And it is right that the companies that benefit from people's financial plight, accept their responsibilities to help ensure affordable credit is available.

As well as good policy, the announcement is also smart politics. Following his call for an energy price freeze, the Labour leader has again put himself on the side of consumers against predatory companies and set a trap for the Tories. Should they oppose the levy (as will be their instinct), Miliband will accuse Cameron's party of again "standing up for the wrong people" and defending the interests of its donors rather than those of the public. As Labour said last night: "this Tory-led Government stands up only up only for a privileged few and, just as it does nothing to stop energy firms overcharging families, drags its feet over uncontroversial reforms of a poorly regulated industry and is doing little of significance to boost low-cost alternatives to payday lending."

While some Tories are sympathetic to calls for action against payday lenders, others argue that state intervention will raise the cost of borrowing for consumers and push them into the arms of unregulated loan sharks. Labour has already pledged to impose a cap on the rates lenders can charge but despite having supported amendments on this issue in the Lords (after pressure from the opposition and others), the government has yet to act. Asked by Labour MP Paul Blomfield at PMQs yesterday whether he would introduce "tough regulation of payday lenders", Cameron replied: "We are still considering the issue of a cap, and I do not think we should rule it out, although we must bear in mind what has been established in other countries, and by our own research, about whether a cap would prove effective."

The PM will likely take a similar view of Miliband's Wonga tax. But having so badly misjudged their response to his proposed energy price freeze, the Tories would be wise to avoid rushing to oppose it. 

Ed Miliband speaks at the Labour conference in Brighton last month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.