if the mountains of usurious cash being built by Wonga, The Money Shop and others seem too high for fairer lenders to scale - ask yourself: did you ever think the Tories would cap the cost of credit?
£15,000 – that was roughly the increase in the amount of savings at Swansea’s LASA Credit Union in the three months prior to the beginning of the Swansea Bay Fair Credit campaign, the branch of the national Movement for Change Sharkstoppers campaign operating in South West Wales. In the three months following the start of the campaign, that amount was around £34,000.
50 – that was the number of loan applications approved by LASA in the three months prior to Swansea Bay Fair Credit’s first wave of action. In the three months after that, that number was 73. And a further 28 were approved the month after that.
We rightly celebrated last month as the chancellor finally reacted to three years of actions and pressure from Sharkstoppers campaigners and parliamentarians. In announcing a cap on the cost of credit, George Osborne has followed the Labour movement’s lead and ensured vital progress as we fight for fair credit.
But regulation is only one part of this crucial campaign.
We know that people need credit and we know that lenders will only lend if it is viable for them. So the real danger exists that people previously exploited by high interest legal lenders have nowhere to turn. There will not even be any space between the rocks and the hard places, and the space around them is filled with options that don’t bear thinking about.
That is why Sharkstoppers has always been fighting on three fronts; for a cap on the cost of credit, increased access to fair credit, and an end to harassment at the hands of high interest lenders.
With the chancellor’s announcement, the fight for fair credit is now even more urgent and even more important. He has solved some of the problem, but made the rest of it potentially even messier. It is like trying to cover the end of a hosepipe with his thumb, rather than turn off the tap.
There are 240 payday lending companies operating in the market. The Money Shop alone had 550 branches as of October last year. That’s 150 more branches than there were credit unions in existence across Britain at the same point in time.
In 2011/12, 8.2m payday loans were taken out, contributing to the £84.5m of pre-tax profits that Wonga made in 2012. Wonga alone recorded £1.2bn in lending in its 2012 annual report. The credit union sector in its entirety recorded £807m in lending. Just from those few select statistics, the scale of the challenge we face is clear. But it is far from an unwinnable fight.
As the figures in Swansea show, campaigning for fair credit works. The trajectory of the growth of LASA indicates the situation will only get better so long as the campaign maintains its momentum. If that can be mirrored across the country, then we are onto something.
Up and down the country, Sharkstoppers and fair credit activists are campaigning to help local credit unions grow. That has to be an important part of our work but we need answers nationally too.
Ed Miliband has made a good start. At a Movement for Change action at London Mutual credit union, he pledged a windfall tax on high interest lenders, with the money raised going straight into the credit union network. This is a progressive policy; but only a start. It would turn the tap a bit, but the water would still flow.
Labour needs to say what it would do to help ensure people have access to fair credit when they need it. And as IPPR’s Mathew Lawrence outlined, the government should act now, rather than wait again for Labour to give them an idea to use.
From actions across the UK, Sharkstoppers activists will be presenting specific asks on the issue, but it is only with action – on the ground in our communities, and in councils, devolved authorities and Westminster – that we will find the answers and achieve the goal of fair credit for all.
And if those figures seem daunting – if the mountains of usurious cash being built by Wonga, The Money Shop and others seem too high for fairer lenders to scale – ask yourself: did you ever think the Tories would cap the cost of credit?
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