Kenny is only twenty. After two years looking he has managed
to get a job. He works 60 hours a week in a bar. They are keeping him on and he
is getting a raise. In an economy where kids just can’t find work he is someone
who deserves all the support we can give, yet when I see him as Duty Solicitor
he is in rent arrears and risks losing his home.
It turns out that when he finally got the job he took a small
pay day loan to celebrate and thank his parents for supporting him. Then, when
he had to repay the loan, which had an apr of 200% he had no money left from
his wages, and had to take another loan. Soon all his money was going to shady
companies whose dodgy representatives door-stepped him and even his parents. He looks
haunted.
Kevin is a pensioner, living with his adult son. Because his
son works in a shop and earns reasonable wages Kevin gets little in Housing Benefit
– the son is expected to contribute the rest in a part of the regulations known
as a non dependant deduction.
Yet Kenny is in rent arrears that climb steadily. He too may
be evicted. His son too has taken out pay day loans, and finds his income being
hoovered up by the lender. The son is terrified of taking time off work to get
debt advice in case he is fired. In any event the queues at the local CAB are
round the block.
Kyle is a postman separated from the mother of his six year
old daughter. Over the summer his kid started to visit more regularly and he
took out a small pay day loan so he could give her a few treats. It looks to me
as if he is trying to make sure his relationship with his daughter does not
suffer because of differences with her mother, he’s trying to do the right
thing as a responsible dad.
You guessed it. He’s in rent arrears too.
Perhaps 1/50 or 1/60
of the clients that I now see as a duty solicitor are in thrall to
brutal lending companies which may be called Wronger, or Conga or what have
you. These are working class people in social housing with modest salaries who
literally can’t put food on their table because of punitive rates of interest
on pay day loans. These are far more
deadly than crack; a small taster is enough to hook you for life.
Back in Law School they taught us that there were rules
about usury, and the legislation then in place was enough to crack down on most
of the unlicensed loan sharks that we saw in the 60’s and 70’s. Today, if you
look around your high street, you will see that pay day loan companies are a
growth industry, popping up like barnacles alongside betting shops- that other
modern mecca to despair. They will tell
you that what they are doing is selling services specifically designed for very
short periods- yet perhaps half of their income comes from repeat borrowers.
Far from being curbed by the existing legal machinery, we
see that Newcastle football club has looked at putting a pay day loan company on their shirts.
The dodgy criminal with a cosh in his pocket of old has undergone an alchemical
change, and acquired a glossy corporate face and sugared words that hide pure poison.
Standing up in court I tell the District Judge the plain
facts. How wages meant for rent and other essentials evaporate the moment they
arrive. In every case we get an adjournment so that the tenant can get debt
advice.
Yet if I have managed to achieve something today, tomorrow
paints a bleaker picture.
Firstly, although Legal Aid presently funds debt advice,
from April 2013 this will be so scarce as to be non- existent. For every 100 housing cases funded by Legal
Aid, the government is awarding 4 debt cases. We will be hamstrung before we
even start.
Secondly, alternative sources of credit for people on
benefits or low incomes will become almost non-existent. The Government Social
Fund which used to provide cheap loans and grants will soon disappear, and Credit
Unions are shutting up shop all over the country.
While the Bank of England’s interest rates are as low as at
any time since its foundation, corporate sharks are trawling the economy, and
we see no sign that Government is prepared to use any of the levers available
to it to stop this from happening.
As a child I was raised a Catholic, and I remember well the
story of Jesus scourging the money lenders from the temple for the sin of usury.
If I had been raised a Moslem the
concept of any interest rate would have been anathema- far more so these new
vampire squids that feed and feed and make corporate merchant bankers models of restraint and probity by comparison.
The truth is that anyone with a moral compass will recognise
these greedy pay day loan companies as deeply wrong. Why can’t we do something
to stop them.
