Payday Poverty

The government has a lot to answer for: cutting benefits and increasing the cost of education. The bedroom tax - which is supposed to increase the fluidity of larger properties for council and housing association tenants - has ended up inflicting poverty upon people and created a vacuum of small,  1 and 2-bedroom homes for people whose families have fled the nest. 

What it also has a lot to answer for is the increase in payday lending. It is surely no coincidence that the poorest people in society have their homes and livelihoods taken away from them and turn to a sinister, confusing, morally-void system of lending money to people. Stella Creasy MP is right; Payday loans are crippling the impoverished. And Wonga.com is offering rates of 5853% to borrow up to £400 at a time. 

This creates a dependency which is cyclical; if one month, a struggling mother needs to borrow some money to pay for food for her family (which has had its benefits drastically decreased and is being forced to fork out up to 25% of the rent they used to have covered by the state), she will likely see the allure of the payday lenders who use questionable tactics to lure their vulnerable victims into borrowing money at several hundred times the rate of a normal, high-street bank. Then the next month, faced with a £130 charge for a £400 loan, this poor single mother will be forced again to keep borrowing at several thousand percentage points. Embarrassed and desperate, she will continue this vicious cycle. 

And this may seem like a harmless way of raising money for some big-wig with his Bentley and mansion on the outskirts of London. But this is the sub-prime mortgage crisis for the working class. Debt breeds poverty, poverty breeds crime and hopelessness and crime and hopelessness are the cause of the disintegration of our communities. 

Shockingly, Wonga.com also operates in South Africa, a country with huge poverty levels and huge attributable consequences: gun crime, drugs, prostitution, HIV/AIDS. All of these are a result of the people of South Africa being exploited in a plethora of ways over a prolonged period of time. 

These companies, whether in the UK, South Africa or elsewhere are not lending a helping hand; they are lending a ticket into prolonged desperation. These are regulated loan sharks and they need to be stopped.