Tagged: low-income

Firms Flouting The Minimum Wage Not Prosecuted In The Past Year

This article  was written by Daniel Boffey, for The Observer on Saturday 22nd November 2014 20.28 UTC

The coalition’s record on low pay has come under attack as new figures revealed that not a single company has been prosecuted in the past year for paying less than the national minimum wage. Despite ministers’ claims that the government is getting tough on under-payers, the last successful criminal prosecution was in February 2013.

That was one of only two prosecutions during the government’s entire term of office to date, according to figures given to parliament. The cases involved the imposition of fines to the value of £3,696 on an opticians in Manchester and £1,000 on a security company in London.

The Annual Survey of Hours and Earnings for the Office for National Statistics recently found that about 287,000 workers were paid at less than the minimum wage in 2012, although the TUC puts the figure closer to 350,000.

Chris Mould, chairman of the Trussell Trust, the charity that runs 400 emergency food banks, said that the increasing numbers of people attending its facilities was clear evidence that ministers needed to do more to protect people who were living “on the edge”.

The number of people helped by Trussell Trust food banks in the first half of the 2014-15 financial year is 38% higher than in the same period last year. The trust reported this weekend that 492,641 people were given three days’ food and support, including 176,565 children, between April and September. That compared with 355,982 during the same period in the previous year.

Problems with the social security system continued to be the biggest overall trigger for food bank use (45%), of which “benefit delays” accounted for 30% of referrals, and “benefit changes” 15%, according to the charity.

However, an emerging trend, according to the charity, is that 22% of those helped were referred because of “low income” compared with 16% of referrals in the same period last year – meaning 51,000 more people were referred to a food bank due to low income.

Mould said:

“It is up to the democratically elected parliament to make some decisions and one route is to make it less easy for people to be exploited at the bottom of the labour market. We see people forced to cycle in and out of poverty and they are so close to the edge that it is easy for them to slip under.”

HM Revenue and Customs (HMRC) said that it prosecutes the most serious breaches of the national minimum wage “and where there is clear evidence to do so”. A spokesman said the average cost of a successful prosecution was around £50,000 and that HMRC believed it was preferable to recoup wages for workers through civil penalty powers. In 2013-14, HMRC conducted 1,455 investigations and issued 652 financial penalties.

But the shadow business secretary, Chuka Umunna MP, said that the coalition was not taking the action needed to enforce the minimum wage. Failing to pay the minimum wage was made a criminal offence in 2007. Under Labour, seven organisations were prosecuted, including Torbay council.

Ummuna said:

“The national minimum wage is one of Labour’s proudest achievements in government and it has made a huge contribution to making work pay, boosting living standards and tackling in-work poverty.

“It is clear that the Tory-led government is not going to take the action needed to properly enforce the minimum wage – so that is why Labour is clear that we need to see higher penalties for rogue companies who don’t pay employees the minimum wage and far more effective enforcement, including by giving local authorities new powers.“

An HMRC spokesman said that the number of staff enforcing the minimum wage now stood at 194 – 40 more than in 2009-10. He said:

“Paying less than the minimum wage is illegal and, as HMRC’s record shows, if employers break the law they will face tough consequences. We conducted 1,455 investigations in 2013-14, securing over £4.6m in wage arrears for over 22,000 workers.

“The vast majority of national minimum wage cases are dealt with using civil penalty powers, as this route is usually the most appropriate, ensures workers receive the wages they’re due, and provides the most cost-effective resolution for taxpayers. However, in more severe cases, HMRC will take criminal action and seek a prosecution.”

Source –  Welfare Weekly,  22 Nov 2014

http://www.welfareweekly.com/firms-flouting-minimum-wage-not-prosecuted-past-year/

UK’s Child Poverty Goals Unattainable, Says Report

This article was written by Andrew Sparrow, political correspondent, for theguardian.com on Sunday 8th June 2014

 Fresh evidence that the government will fail to hit its child poverty goals has emerged in a report showing 3.5 million children are expected to be in absolute poverty in Britain in 2020 – almost five times as many as the target.

 The Social Mobility and Child Poverty Commission said the absolute child poverty goal was “simply unattainable” and that this was on course to be the first decade since records began in 1961 not to see a fall in absolute child poverty.

It said there was a credibility gap at the heart of the government child poverty strategy and simply focusing on trying to get more people into work was not the answer.

Under the Child Poverty Act 2010, passed by Labour just before it left office, the government is committed to getting relative child poverty (the proportion of children living in households on below 60% median income) below 10% by 2020 and absolute child poverty (the proportion living in households below what 60% of median income was in 2010-11, uprated for inflation) below 5%.

The commission, chaired by the former Labour cabinet minister Alan Milburn, with Gillian Shephard, the former Conservative cabinet minister, as deputy chair, has repeatedly warned that the targets have little or no chance of being met.

On Monday, alongside its formal response to the government’s draft child poverty strategy for 2014-17, it publishes research on how many parents would have to find work for the child poverty targets to be met.

Iain Duncan Smith, the work and pensions secretary, argues that addressing poverty by just increasing benefits is flawed and the root causes must be addressed by getting more parents into jobs. But the commission says “ending poverty mainly through the labour market does not look remotely realistic by 2020″. In too many cases it simply moves children from low income workless households to low income working households.

The reality is that too many parents get stuck in working poverty, unable to command sufficient earnings to escape low income and cycling in and out of insecure, short-term and low-paid employment with limited prospects.

To hit the relative child poverty target, parental employment rates would have to reach almost 100% – “far beyond what has ever been achieved anywhere in the world”. Hours being worked would have to increase substantially. Current policies would not enable this to happen.

Even if parental employment reached almost 100%, the absolute poverty target would be unattainable because of the way earnings fell relative to inflation from 2010 to 2013.

The Department for Work and Pensions said it was committed to ending child poverty by 2020 with plans to tackle the root causes of poverty, including worklessness, low earnings and educational failure.

Source –  Welfare News Service,  09 June 2014

http://welfarenewsservice.com/uks-child-poverty-goals-unattainable-says-report/

Councils Sit On £67m In Emergency Help For Poor

This article was written by Patrick Butler, George Arnett, Sarah Marsh and Samir Jeraj, for The Guardian on Sunday 20th April 2014

A fledgling scheme to provide emergency help to the poorest in the country is in chaos, with £67m left unspent and record numbers of families being turned away.

Figures released in response to Freedom of Information Act requests indicate that by the end of January councils in England were sitting on £67m of the £136m that had been allocated to local welfare schemes. Half of local authorities had spent less than 40% of their funds.

An analysis by the Guardian shows that under the new local welfare assistance schemes, four in 10 applications for emergency funds are turned down, despite evidence that many applicants have been made penniless by benefits sanctions and delays in processing benefit claims. Under the previous system – the social fund – just two in 10 were. In some parts of the country, as few as one in 10 applicants obtain crisis help.

The schemes were designed to help low-income families in crisis, such as those in danger of becoming homeless or subjected to domestic violence. Charities and MPs have warned that those denied help are turning to food banks and loan sharks.

Gillian Guy, chief executive of Citizens Advice, which offers debt and legal advice, said the emergency financial support system was in chaos. “When the safety net fails, people are left with no way of putting food on the table, paying the rent or keeping the lights on. Confusion over what help is available and who to approach means that people who need support are left high and dry.

“People are in danger of being pushed into the arms of payday lenders and loan sharks by the chaotic emergency support system. Citizens Advice bureaux see people in desperate need of support who have nowhere else to turn when jobcentres and the local council don’t give out support.”

Under the new system, emergency funds are no longer ringfenced, meaning that councils can divert unspent cash to other budgets. Local welfare assistance schemes were created a year ago in 150 English authorities, alongside national schemes in Wales and Scotland, following the abolition of the social fund.

Most schemes do not offer cash or loans, but support in kind, such as food parcels and supermarket vouchers. The social fund provided loans repayable against future benefit payments – typically about £50 – and larger capital grants to destitute families who needed help to furnish flats or replace broken domestic appliances.

Despite charities reporting that demand for help has rocketed as a result of economic hardship and welfare cuts, some councils spent more money setting up and administering their welfare schemes than they gave to needy applicants.

Councils told the Guardian they had provided less in emergency funding than in the past because there was a lack of public awareness of the new system. Some had failed to advertise their schemes, while others set such tight eligibility criteria that many applicants – typically including low-paid working families, benefit claimants and those deemed to have not lived in their local area for long enough – were turned away.

Simon Danczuk, the Labour MP for Rochdale, who has repeatedly raised the issue of local welfare in parliament, said his constituents frequently reported struggles to get crisis help. Constituents he has helped include:

• A low-wage family with three children, including an 11-month-old baby, who applied for £35 to pay for gas, electricity and baby food to help them until payday. The council scheme initially referred the family to a food bank. After lobbying by Danczuk, they were given £20 for energy costs, but were refused money for baby food.

• A pregnant mother and her partner, who after benefit changes were left with £7 a week for food after rent and council tax. They were told that they could not apply as the scheme was for “genuine emergencies” such as fires and flood.

In each case Danczuk believes the families would have qualified for emergency support under the social fund. “Central and local government are pushing people into the hands of payday loan companies and food banks. They have in effect privatised the lender of last resort,” he said.

A spokesman for the Department for Work and Pensions, which funds local welfare schemes run by 150 local authorities across England, said: “In contrast to a centralised grant system that was poorly targeted, councils can now choose how best to support those most in need. It is for local councils to decide how they spend their budgets.”

But a Conservative council leader has called on the government to reinstate local welfare assistance funding, calling it a “cut too far”. Louise Goldsmith, leader of West Sussex county council, said the proposed cut would leave many low income families without vital support when they were going through a “tough patch in their lives”.

A briefing note prepared by the council found that 43% of 5,582 individuals and families helped by the local welfare fund to the end of February had applied because they had been left penniless by benefit sanctions and delays.

The Local Government Association has called upon the ministers to reverse the cut, and it is understood a number of councils and welfare charities are preparing to seek a judicial review of the government’s decision to cut local welfare assistance funding in April 2015.

Many councils are using part of their welfare assistance allocation to provide financial support for local food banks, which provide penniless applicants with charity food parcels.

Lady Stowell, a local government minister, told the House of Lords in January that local authorities were “doing a good job of supporting people in times of crisis and are doing it without using all the funding that has been provided so far from DWP”.

But Centrepoint, the homelessness charity said that local welfare assistance underspending meant many homeless youngsters could not get vital support when they moved from hostels into independent living. “Councils need to start using these funds to address urgent need now and ensure that young people have access to it,” said Seyi Obakin, Centrepoint’s chief executive.

Two local authorities – Labour-run Nottinghamshire county council and Tory-run Oxfordshire – have scrapped local welfare assistance altogether and plan to divert the money into social care services..

Conservative-run Herefordshire  county council had spent less than £5,000 of its annual £377,000 allocation by the end of December last year, equivalent to 1% of its local welfare budget.It said its spending reflected low demand for crisis help, a claim disputed by Hereford Citizens Advice and Hereford food bank, which said they had been inundated with requests.

Labour-run Islington council had spent 80% of its emergency funds budget by the end of December last year and had spent all its emergency funds by April. It said it had encouraged its frontline staff to refer individuals to its local welfare scheme to ensure they got crisis help and assistance with any underlying problems, such as debt.

Local authorities are anticipating further problems over local welfare in 2015 when the DWP scraps funding for the schemes. Councils, charities and MPs have called on the government to restore and ringfence the crisis support allocation.

Councils say that in some cases they have refused emergency help because benefit claimants have been wrongly referred to local authority welfare schemes by jobcentres. Some councils have refused to accept applications from those who ought to have been offered a short-term benefit advance from their local jobcentre.

Scotland and Wales have their own welfare assistance schemes and these have higher applicant success rates than in England. In Northern Ireland, which still has the social fund, 70% of applicants received help.

Source – Welfare News Service  20 April 2014

http://welfarenewsservice.com/councils-sit-on-67m-in-emergency-help-for-poor/

Food bank referrals in the North East rise 463% in one year

Nearly 60,000 people sought emergency food from the Trussell Trust in 2013-14 compared with just 10,510 in the previous financial year.

Across the country 45% said problems with benefits had driven them to claim, while 20% cited low income. And since April 2010 the total number of referrals in Britain has risen from 61,000 to over 900,000 – up by a factor of fifteen.

Trust chairman Chris Mould called the figures “shocking” and warned things were getting “worse rather than better” for the Northern poor.

He said: “This figure is just the tip of the iceberg of UK food poverty. It doesn’t include those helped by other providers, people who are too ashamed to seek help, or the large number who are only just coping by eating less and buying cheap food.

“It’s been extremely tough for a lot of people, with parents not eating properly in order to feed their children and more people than ever experiencing seemingly unfair and harsh benefits sanctions.

“Unless there is determined policy action to ensure that the benefits of national economic recovery reach people on low incomes we won’t see life get better for the poorest any time soon.”

The figures do not exclude repeat visitors but simply record the number of people cited on vouchers given by jobcentres, doctors and social services to claim food.

They are likely to inflame controversy over the link between food banks and the government’s welfare reforms. Critics claim organisations like the Trussell Trust are becoming an unacknowledged and unpaid part of the welfare system.

Changes since 2012 include raising the minimum jobseekers’ sanction from one to four weeks and the start of the so-called ‘bedroom tax’.

Margaret Nelson, the Trust’s North East spokeswoman, said benefit sanctions were behind much of the rise and that many food bank users were “suicidal” when they came in.

She claimed some had benefits stopped for missing appointments even when they had phoned and been given permission.

A spokesman for the Department for Work and Pensions said: “We’re spending £94bn a year on working age benefits so that the welfare system provides a safety net to millions of people who are on low incomes or unemployed so they can meet their basic needs.

“The OECD say there are fewer people struggling with their food bills compared with a few years ago, benefit processing times are improving and even the Trussell Trust’s own research recognises the effect their marketing activity has on the growth of their business.

“The truth is that the employment rate is the highest it’s been for five years and our reforms will improve the lives of some of the poorest families in our communities by promoting work and helping people to lift themselves out of poverty.”

He cited an ONS survey which found fewer people saying it was “difficult to get by” in 2012 than 2010 and claimed benefit clearance times are “improving year on year.”

And he said: “There is no robust evidence that welfare reforms or benefit administration are linked to increased use of food banks.”

> ?????  How can they not be ?

Tory peer David Freud told the Lords last year that food bank use was driven by “supply”, saying more people were going because the food was free and available.

But a three-year study by Sheffield University this month argued rising demand was to blame, with benefit cuts and sanctions seen as a major cause.

The DWP insists it does not “refer” people to food banks but merely “signposts” them – a distinction not made by the banks themselves.

Meanwhile over 35 Anglican bishops and 600 church leaders will call for “urgent action” from the three main party leaders.

Reverend Mark Bryant, the Anglican bishop of Jarrow, praised food banks’ efficiency and kindness but said society had “seriously got something wrong” to need them at all.

He said: “Something in a region of a third of the people they are helping are simply people whose benefits have been delayed.

“These are not people who are trying to work the system or anything like this. These are people who are entitled to benefits and the benefits system hasn’t delivered on time.

“You go to places like this, and you hear the stories, and you simply come away thinking ‘something isn’t right’. We have seriously got something wrong when people who for a whole variety of reasons are very vulnerable cannot afford either to feed themselves or to feed their families.”

Mr Bryant spoke at Gateshead Food Bank while on a joint visit with the Catholic Bishop of Hexham and Newcastle, Seamus Cunningham.

Source – Newcastle Journal   16 April 2014

Councils to be sanctioned if schemes to improve the behaviour of ‘troubled families’ flop ?

Councils  should be punished if their schemes to improve the behaviour of ‘troubled families‘ flop, MPs say..

Their report calls for “sanctions” against councils that fail to change the lives of people with social problems ranging from poverty to low skills and bad housing.

It follows criticism that fewer than 100 people across the region have found work through the scheme, launched after the 2011 summer riots.

Latest figures show councils in the North-East and North Yorkshire have started work with more than 5,000 families identified as “troubled” – up to three-quarters of the total.

But only 1,697 successes have been chalked up, including in County Durham (312), Darlington (37), Middlesbrough (126), Stockton-on-Tees (173) and North Yorkshire (238).

And the figures also show that only 93 people in those 1,697 families – just 5.5 per cent – have found permanent work.

Not a single person has found a job in Darlington or Hartlepool and very small numbers in Middlesbrough (6), Sunderland (3) and County Durham (14).

Now the Commons public accounts committee (PAC) has warned the scheme, announced by David Cameron himself, is on course to “miss its targets”.

 Across England, success has been chalked up in the lives of 22,000 families, leaving a further 98,000 to be “turned around” by May 2015.

And a parallel project, run by the Department for Work and Pensions (DWP), has put only four per cent of the expected number of people into jobs.

Margaret Hodge, the PAC’s Labour chairwoman, condemned the “baffling decision” to run two separate programmes, leading to “confusion and unnecessary duplication”.

And she said: “There have been big variations in performance, which put achieving the programmes’ objectives at risk.

“The departments must ensure that performance in each local authority, and by each contractor, is scrutinised, giving appropriate support where appropriate – but also imposing sanctions where necessary.”

The PAC report did not identify any worst offenders and its call for councils to face sanctions – for a Government scheme – is likely to be controversial.

Families are classed as ‘troubled’ if members are judged to have at least five characteristics from a seven-strong list.

They are:

  • no work, poor quality housing, no qualifications, mental health problems, long-standing disability, low income and in ability to afford food or clothing.

Councils are paid up to £4,000 for each family they help. At the start, 80 per cent – or £3,200 – was paid upfront, reducing to 40 per cent in 2014-15.

Ministers have insisted the scheme is “on track” to meet the prime minister’s pledge to transform the lives of 120,000 problem families by 2015.

> Ministers have insisted the scheme is “on track” to meet the prime minister’s pledge to transform the lives of 120,000 problem families by 2015 – to be fair, this government is transforming the lives of millions of people.

Only problem is, we were kind of hoping it’d be a transformation for the better, not the worse.

Source – Northern Echo,  04 April 2014

Poor Families Hit By Welfare Reforms ‘Running Up £52 Of Debt Every Week

This article  was written by Patrick Butler, social policy editor, for theguardian.com on Wednesday 26th March 2014

Low income families hit by welfare reforms are running up personal debt at the rate of £52 a week to cope with the rising cost of living, with many saying they have no idea if they will be able to pay it back, according to the latest instalment of a poverty research project.

The project found that the average household debt stood at just under £3,000, up by 29% since October, equivalent to £670. Families were typically spending £34 a week repaying debts, from an average income among those surveyed of £176 a week.

 The poorest families are also spending nearly four times the national average on heating and fuel – equivalent to a fifth of their income – while nearly a third of households spend less than £40 a week on food.

Almost half of the participants in the survey, all of whom have been affected by welfare reforms such as the bedroom tax, report that they have no money left to live on each week once rent, food and bills are paid for.

The findings emerged in the third of six planned reports by a group of housing associations, which are tracking how families living in social housing in the north-west of England are coping with cuts to their income as a result of welfare changes and recession. The Real Life Reform project examines in detail the finances, views and behaviours of a group of up to 100 households.

Andy Williams, director of neighbourhood services at Liverpool Housing Trust and chair of the Real Life Reform steering group, said: “Householders are falling into more debt, including some taking money from loan sharks, and it’s a real concern that people are having to borrow to cope with the cost of everyday living.

“In our first report in September, people said they’d resist falling further into debt, yet just six months later this picture has emerged.

“Nearly eight out of 10 people in the study owe money. With an underlying average debt of £2,943, some may never pay this off given that they have, on average, as little as £3 left at the end of each day for food.”

The survey found that the number of households in debt was up four percentage points since the autumn. Over half of families said they did not know how long it would take them to repay the debt or that they would never be able to repay it. Nearly one in seven households had debts that would take more than four years to pay back.

One participant told the project: “I have just taken out a new loan from a loan shark for Christmas. It will never go down but it just about keeps my head above water.”

The report said that poorer families were increasingly reliant on debt to make ends meet. “The consequences of weekly repayments, which have more than doubled since the start of this study, alongside increasing costs in all areas, is really placing financial strain and hardship on our households.”

Household food spending by Real Life Reform participants, which had dipped to an average £2.10 a day in October rose to £3.08 in January, an increase attributed to bigger-than-usual grocery shopping bills over the Christmas holidays.

Fuel spending had gone up by 8% since the last survey was carried out in October while household fuel bills had risen by an additional £7 a week since the summer. Participants were spending an average of £141 a month on energy, compared with the UK average of £106, in part because many were on expensive payments meters charging 27p per kilowatt hour compared to 17p for those not on meters.

Source – Welfare News Service, 26 March 2014

http://welfarenewsservice.com/poor-families-hit-by-welfare-reforms-running-up-52-of-debt-every-week/

North East Labour MPs to rebel on welfare cap ?

Several North East MPs will either defy a party whip or not be at the House of Commons when Labour is told to vote in line with the coalition for a new cap on how much can be spent on state benefits.

Ed Miliband has told his MPs to back a Budget plan to cap welfare at £119bn, ending a situation in which benefit spending is increased to match the number of claimants.

While party leader Mr Miliband is keen to avoid looking soft on welfare, across the North East, MPs have called for the party to proudly stand up for low income families.

Easington MP Grahame Morris said he will not be voting for the cap. He told The Journal: “I cannot vote for the welfare cap. By implication it plays to the Tory strategy of divide and rule demonising those on benefits as the undeserving poor.

“It conveniently ignores the fact that two thirds of the welfare budget goes on pensions that people have contributed to during their working lives. Another substantial slice goes on supporting those in work on low wages.

“Once again Labour must differentiate its position from the Tories. It is shameful of the Tories to seek to set the working poor against the disabled. There are better, fairer ways to limit benefit spending for example by limiting the £20bn taxpayer spend on housing benefits which goes to private landlords through the introduction of rent controls.”

Gateshead MP Ian Mearns said he will not be in the Commons for the vote as a result of select committee business, but would not have voted for the cap.

He said: “Inherent in this is a further reduction in real terms of benefits over time. If the economy has another significant downturn this limits the capacity of the state to respond to genuine hardship.

“And let’s not forget that only about 3% of the benefits bill is for jobseekers’ allowance, the biggest single pot is for pensions.”

And Blaydon MP Dave Anderson also hit out at the plan. He said: “The welfare cap is just another piece of the Coalitions jigsaw to make the poor, the weak and the disabled pay for the failures of big business and global capitalism.

“This vote comes in the same week that Lloyds have been exposed as continuing to exploit customers over the disgraceful PPI misselling scandal. It is these rogues and many others like them who should be carrying the can for economic failure and not the most vulnerable in our country.”

It is thought other MPs will not be in Parliament for the vote, avoiding the need to rebel. Some 20 MPs nationally are thought to be ready to vote against the cap.

Labour has said that since much of the cap on spending does not include benefits linked to increased unemployment, it is happy to accept the changes.

The party has hit back at claims that there is little to differentiate its economic policy from the coalition, insisting a future Labour government would “make different choices”.

> It’s what the present Labour opposition is doing right now that really matters. And it doesn’t seem to be doing very much at all, apart from trying to make out it’ll be tougher on the poor than the current bunch.

Does ‘Red Ed’ really think that’s the way to win votes ?  If he does, he’s going to be disapointed.

Labour’s shadow work and pensions secretary, Rachel Reeves, said Labour would support the Government when voting on the welfare cap, but insisted the party would also “take tough decisions” over future spending if in office after the General Election.

Source – Newcastle Journal, March 26 2014

Beware of the loan sharks

Payday loan sharks have trapped an increasing number of Brits into unmanageable debts and new research has revealed that this problem is increasingly getting worse.

In fact, a new report from the charity StepChange showed that the number of people seeking relief from payday lenders has shot up by 82 per cent.

Worryingly most of those vulnerable people seeking help had racked up thousands of pounds worth of debt after taking out more than one loan.

According to StepChange, people seeking advice in 2013 held an average of three payday loans, but at least 13,800 had five or more. The average debt was £1,647, significantly more than the average person’s monthly income of £1,381.

Many people make the mistake of taking out a payday loan believing that it is “easy money”.

However, payday loan companies are little more than legalised loan sharks that prey on vulnerable and low-income people and trap them into a cycle of debt that they cannot get rid of.

Many firms such as Wonga charge annual percentage rates (APR) of 4214%. To put it in layman’s terms and get an idea of just how quickly debt can balloon out of control, if you took out a loan of £3000 at 20 per cent APR (way below the average) and made the minimum repayment of two per cent or £5 per month, it would take you a whopping 90 years to pay it all back.

That is just at 20 per cent APR. Not at 4214% which was correct at the time this story went to print.

Now it is worth noting that the Financial Conduct Authority (FCA) assumes responsibility for the regulation of consumer credit in April.

Mike O’Connor, Chief Executive of StepChange Debt Charity, said that he hopes the FCA will address some of these issues.

He added: “The widespread harm and misery caused by payday loans continue unabated. The industry has failed to address the problems causing untold misery and damage to financially vulnerable consumers across the UK”.
“We hope the FCA’s proposals will address some of the areas of consumer detriment, but on issues such as affordability checking, rollover and repeat borrowing, there is an urgent need for even more radical reform”.

Unfortunately that seems unlikely, when you consider the corporate interests in maintaining high debt levels.

In fact, the StepChange charity highlighted the case of one man whose original £200 debt grew to £1,851 in just three months, thanks to inflated interest rates.

And this highlights an important problem. Most people simply do not realise just how rapidly their debts can run into the thousands before they take out a loan.

Fewer people realise that payday loan firms such as Wonga have previously advised the government on how to deal with consumer debt in the UK.

This essentially means that the government is working alongside those very companies who help to trap people into debt in the first place.

Further research conducted by YouGov for StepChange Debt Charity found that at least 26.3 million people had been offered high-interest credit such as payday loans via unsolicited marketing calls or texts.

These are often taken up by vulnerable, or desperate people who are uneducated about the high costs of loans.

And in most schools across the UK, financial management is not part of the curriculum.

Therefore, if you are struggling with money problems, avoid payday loan companies at all costs. It is better to speak to an independent charity or financial advisor who will offer help and advice for free and advise you on ways that you can make your budget go further.

> Or credit unions.

Source –  Akashic Times,  28 Feb 2014

http://akashictimes.co.uk/beware-of-the-loan-sharks-charity-highlights-predatory-behaviour-of-payday-lenders/