The Tories’ volte-face on payday lending

Previous attempts by Labour at capping the cost of payday loans have been defeated in the Commons by...the Tories; with the aid of their Lib Dems partners, of course.

It has been announced today that the government is to introduce a cap on the cost of a payday loan.

The cap will target the overall cost of credit, and include controls on charges, penalty fees and interest rates, according to chancellor George Osborne.

The policy has been warmly welcomed by campaigners, and Tories on Twitter this morning have been warmly congratulating themselves over their chancellor’s announcement of a policy that will help to stop the poor getting fleeced by uncrupulous legal loansharks.

Tory MP 1

Tory MP 2

God bless those ‘hardworking people’.

And yet previous attempts by Labour to cap the cost of payday loans have been defeated in the Commons by…the Tories (with the aid of their Lib Dems partners, of course).

In May of last year, MPs voted by 266 to 225 – a majority of 41 – to reject Labour MP Stella Creasy’s attempt to allow the authorities to cap the total cost of credit. A Comres survey at the time also revealed that only 46 per cent of Tory MPs wanted a cap imposed on payday loan credit charges.

Only three Conservative MPs – Zac Goldsmith, Mark Reckless and Philip Hollobone – supported the proposed changes to the Financial Services Bill which would have capped the total costs that can be charged for payday loans. Not a single Lib Dem MP backed the amendment.

It’s difficult to fathon why the cap is such a good idea now but wasn’t earlier.

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