Cllr Matt Wright is a ConservativeHome regular and our candidate in the Vale of Clywd.
Every year the Government number crunches a set of socio-economic factors and comes up with a financial league table of wards. The Vale of Clwyd spans the full economic spectrum from grand mansions with long gravel drives to pockets of grinding poverty sadly unchanged for over a decade. As the economic malaise bites more people are feeling the pinch. The west ward of Rhyl has the unfortunate label of being the most deprived ward in Wales and one of the most deprived wards in Britain. On paper the figures look worrying, on the ground the human story can be worse.
Now there are many reasons for the problems experienced in such wards and the work facilitated by Iain Duncan-Smith and undertaken by the Centre for Social Justice has highlighted the issues and some of the solutions. What I would like to address is an issue that I believe casts a shadow on one of the key values we all share about our nation - a sense of fair play. We are all aware of the growth of debt and the pressures it has put on the majority of us. Yet too many are unaware of a much darker side to debt.
Some of the fastest growing and most profitable financial companies today are doorstep lenders. In this country they are entirely legal and yet morally they are barely one step from being described as "loan sharks". They swim in seas that are spreading wider than the most deprived wards and they prey on misery. Currently door step lenders can legally charge massive interest rates that would be illegal in other parts of the world except it seems under the current UK Govt of 2008.
Personal debt in Britain has gone through the roof in the last ten years, reaching £1.3 trillion. The UK has a third of all the debt in Western Europe. In addition to illegal doorstep lenders, there are companies allowed by the current Govt to charge average APRs between 100 and 800%. A major company, Provident, is charging an average of 180%. In some countries such a company would be prosecuted. Just four companies are believed to have 80% of the home credit market and are making massive and growing profits out of people’s misery.
Now it is sometimes argued that these companies should be tolerated because were we to act against them, then the practise would be driven underground. Apart from the fact that we don't legislate purely on such a basis, this is not the evidence from countries that do prohibit such high interest rates. Indeed we already have illegal operators and negligible effort on enforcement action. It is also argued by the larger companies that as they operate on the doorstep with agents they have additional costs they need to cover. Such excessive rates are not needed to operate a field force even in complex markets.
The time has come to cap interest rates. We are told that Gordon Brown is guided by a moral compass and it is constantly suggested to Conservatives that Labour has an exclusive right to caring and empathy. I don't care if they wish to delude themselves about their ideals but I do challenge them to right a wrong about which they should hold their heads in shame. A cap on interest rates could form part of a multiple plan, it could even allow some decent home credit operations to carry on. It could certainly form an integrated plan to deepen and widen the role of Credit Unions, a hugely beneficial and much underrated financial service.
