A new campaign backed by the Borough’s MPs, Unify Credit Union Ltd, Citizens Advice and Wigan & Leigh Cooperative Party was launched on Saturday, 2nd March in Wigan, Leigh, and Ashton town centres. Over 500 people signed the Debtbusters petition at the event launches attended by MP’s Lisa Nandy, Andy Burnham and Yvonne Fovargue.
Wigan & Leigh Debtbusters is set to raise awareness of the detriment caused by payday lenders and others and that affordable loans, free help and advice is available through the Borough’s Credit Unions and Citizens Advice Bureau.
The campaign launch comes against a background of growing statistics that demonstrate the impact of debt on UK households. The Office of Budget Responsibility (OBR) sets out how Household debt is set to rise by 36.3% in the next three years. By 2015 UK households will have amassed over two trillion pounds worth of debt.
Thirty nine percent of people are concerned about the amount of debt they owe and 43% think their personal financial situation will worsen in the next six months. A staggering 45% of people now say they frequently struggle to make it to payday, up by 8% since Christmas 2010.
In November 2011, 16% of individuals had become ‘zombie debtors’ – only able to service the interest of their debt and not reduce it, whilst 27% had no savings at all.
One in three (32%) of those who took out a ‘payday loan’ couldn’t pay it off, so had to get another one (so called ‘rollovers’).
The high-cost credit sector, made up of payday lenders, home credit providers and hire purchase agreements, is growing rapidly and increasingly causing many of its customers to get into severe debt problems.
Campaigners have welcomed the news that a cap on the cost of credit is set to be introduced but they warn that this is only the ‘tip of the iceberg’ and that regulation of the industry is required.
Labour & Cooperative Councillor for Astley-Mosley Common Jo Platt is set to raise the issue at this week’s full council.
Debtbuster’s Cllr Jo Platt said:
“Residents of the Borough are calling for action against legal loan sharks. Over the past couple of years they have proliferated in our area and the tough financial times means more and more people are turning to them and the extortionate loans which they offer.
“This motion sends a message that Wigan Council is serious about supporting our residents who are facing financial hardship. We support the introduction of a limit to cap the amount these companies can charge for loans, and we are committing to doing what we can locally to support responsible lending and discourage the loan sharks.”
Lisa Nandy MP said:
“As living costs rise, more and more people are turning to legal loan sharks who charge extortionate rates of interest. These companies are parasites who prey on the vulnerable – people with low financial skills or mental health problems and people who simply have nowhere else to turn.
Wigan’s Credit Unions, Welcome and Unify, provide an affordable alternative for people struggling with debt. I’m asking people to turn their back on these pay-day lenders and use the ethical credit unions on their doorstep.
More people struggle with debt in Wigan than elsewhere. The Government must act to cap total interest on loans and stop these companies from ruining people’s lives for a quick profit.”
Andy Burnham MP said:
“A toxic mix of the rising cost of living, unemployment and wage freezes mean many Leigh households are struggling and a lack of regulation of this market by the Government means these legal loan sharks are exploiting this to push many families further into debt.
“With one in three payday loans taken out to pay off other payday loans it is clear these high cost credit products are problematic.”
Yvonne Fovargue MP has spent her working life fighting the impact of irresponsible lending and her campaigning in Parliament led to the announcement by the Office of Fair Trading (OFT) that they will introduce a ‘power to suspend’ payday lenders who are causing harm to borrowers.
Yvonne Fovargue MP said:
“For many people payday loans can be a sensible option and with proper financial planning can offer a product that meets their needs. However, there are far too many cases of payday lenders acting in a manner which is wholly inappropriate and loads debt onto people with no consideration of the customer’s needs – rollovers being the obvious example of this reckless behaviour.
“There is an alternative and our local credit unions, like Unify and Welcome offer low cost affordable loans. Likewise my advice to anybody worried about debt is don’t suffer in silence. Wigan & Leigh Citizens Advice offer free and impartial advice to people in debt.”
Pictured with Wigan Debtbuster organiser Darren Burgoyne