Labour leader Ed Miliband is to turn his fire on Newcastle United owner Mike Ashley’s Sports Direct chain, in a major speech attacking “zero hour” contracts.
Mr Miliband will accuse the chain of “Victorian practices” in the way it treats staff.
And he will highlight plans to change the law – so that workers with regular shifts have the legal right to a regular contract, if Labour wins the next election.
It comes as the Labour leader continues his fightback following reports that some MPs had concerns about his leadership of the party.
Earlier this week he delivered a speech pledging to stand up to “vested interests”, to ensure hard work was rewarded and to stamp down on tax avoidance by the very wealthy.
Today he is set to focus particularly on zero hours contracts, in which work is not guaranteed and staff are called in as needed.
Mr Miliband is to say:
“A graphic symbol of what is wrong with the way this country is run is the army of people working on zero-hours contracts with no security while a few people at the top get away with paying zero tax.
“This zero-zero economy shows we live in a deeply unequal, deeply unfair, deeply unjust country run for a few at the top, not for most people. It is a country I am determined to change.”
And he will highlight Sports Direct, which has 400 stores and is estimated to have 17,000 people on zero hours contracts.
“Sports Direct has thousands of its employers on zero-hours contracts, the vast majority of its workforce.
“Sports Direct has predictable turnover, it is a modern company with stores on many high streets and, judging by its success, where many people shop.
“But for too many of its employees, Sports Direct is a bad place to work.
“This is not about exceptional use of zero-hours contracts for short term or seasonal work which some employers and workers may find convenient. This is the way Sports Direct employs the vast majority of its workforce.
“These Victorian practices have no place in the 21st Century.”
Mr Miliband will set out plans to legislate to give employees the legal right to a regular contract if they are working regular hours; to refuse demands that they are available over and above their contracted hours, and to compensation when shifts are cancelled at short notice.
An inquiry commissioned by Labour and conducted by businessman Norman Pickavance, former HR & Communications director at supermarket chain Morrisons, reported earlier this year:
“Sports Direct has expanded dramatically since 2008 and gained a large share of the sports retail market. About 17,000 of their 20,000 strong staff are employed on zero-hours contracts.”
Last month the firm said it would make its employment terms clearer in job adverts for zero-hours posts, following legal action brought by a former employee.
Mr Ashley, an entrepreneur who built up his business from a single sports shop in Maidenhead, bought a majority share in the club in 2007.
Meanwhile, controversial payday lender Wonga has agreed with Newcastle United to remove its logo from all children’s replica shirts and training wear from the 2016/17 season.
Wonga said it followed a review of its marketing launched by new chairman Andy Haste in July to ensure that none of it could inadvertently appeal to the very young or vulnerable.
It has already ended its puppet advertising campaign.
The company said the logo was being removed from children’s kit at the earliest possible opportunity, and that due to kit production schedules this would be from the start of the 2016/17 season – the last season of the current shirt sponsorship deal.
Darryl Bowman, Wonga marketing director said: “As a responsible lender we believe removing our logo from children’s replica shirts and training wear is the right thing to do. We appreciate the club’s support in this matter.”
Newcastle United managing director Lee Charnley said: “We understand and respect Wonga’s position and are happy to support their decision.”
Source – Newcastle Evening Chronicle, 15 Nov 2014
A drive to keep people in Jarrow out of the hands of loan sharks and payday lenders has been launched – thanks to a £20,000 Lotto grant.
The cash will help raise awareness of the town’s existing advice drop-in centre at Jarrow’s Grange Road Baptist Church.
The church currently plays host to The Bridges – Your Community Bank, the trading name of South Tyneside Credit Union.
The grant, from Big Local, part of the Big Lottery Fund, will help increase sessions at the church and encourage better money management in central Jarrow.
The two-year programme will also help people looking to escape the cycle of sky-high interest rate loans.
One key element will be the creation of four savings clubs in schools, nurseries and children’s centres, to teach youngsters about saving.
Last year the bank issued 989 loans, payable back within a year, and typically for between £800 and £1,000, and totalling around £845,800, at interest rates from 5.1 per cent APR and 43.8 per cent – far lower than any payday lender.
But bosses believe the partnership has the potential to encourage many more people to approach them for safe, well-planned and responsible financial support, and for loans which reflects their ability to repay.
Janette Wynn, manager of Bridges – Your Community Bank, said:
“This partnership is an important development in helping people to get away from using either payday lenders, or doorstep lenders.
“It will raise awareness to residents that credit unions are another alternative source of borrowing instead of using payday loans and door step lenders.
“It will help adults by offering loans at far lower interest rates than they may otherwise pay, and it will also encourage them towards more responsible borrowing.”
Anne Corrigan, project co-ordinator for Big Local in Central Jarrow, added:
“This will help people to access affordable loans, reducing the numbers reliant on pay day loans and loan sharks and ultimately improving the economic stability of the community.”
Loans are typically used for home improvements, holidays, Christmas expenses, buying a car, and debt consolidation.
More information is available from Bridges – Your Community Bank on 0191 454 7677 or by emailing firstname.lastname@example.org, or from Anne Corrigan on 0191 428 1144 or by emailing email@example.com,uk
Source – Shields Gazette, 31 Oct 2014
Newcastle United sponsor, Wonga, the controversial payday lender, has reported a slump in profits as it counts the cost of a drive to clean up the image of the business.
Wonga said the 53 per cent slide in profits to £39.7m in 2013 was in part due to a one-off charge in relation to a recent scandal over fake legal letters, which were used in order to chase struggling customers into paying up.
The company said it expects that it will be “smaller and less profitable” in the near term while it builds a more sustainable business for the future.
Source – Northern Echo, 30 Sept 2014
Newcastle United sponsor Wonga is to pay more than £2.6 million in compensation to around 45,000 customers for “unfair and misleading debt collection practices”, the City regulator has announced.
The UK’s biggest payday lender was found to have sent letters to customers in arrears from non-existent law firms threatening legal action, the Financial Conduct Authority (FCA) said.
In some cases Wonga added charges to customers’ accounts to cover administration fees for sending the letters.
Wonga, which struck a controversial four-year sponsorship deal with Newcastle United in October 2012, apologised “unreservedly” for the failings, which took place between October 2008 and November 2010.
The FCA said consumers were put under “great pressure” from communications sent by fictitious law firms to make loan repayments that many could not afford.
Wonga contacted customers in arrears under the names Chainey, D’Amato & Shannon and Barker and Lowe Legal Recoveries, leading customers to believe that their outstanding debt had been passed to a law firm, or other third party. Further legal action was threatened if the debt was not repaid.
Neither of these firms existed and Wonga was using this tactic to maximise collections by piling the pressure on customers, the regulator said.
Tim Weller, interim Wonga CEO, said: “We would like to apologise unreservedly to anyone affected by the historical debt collection activity and for any distress caused as a result.
“The practice was unacceptable and we voluntarily ceased it nearly four years ago.”
Source – Newcastle Evening Chronicle, 25 June 2014
A South Tyneside Council leader has denied double standards after the authority launched a crusade against payday lenders.
At a meeting of the full council last week, a motion was passed to introduce a series of measures against high interest lenders.
Action includes blocking access to lenders’ websites from council computers, working with partners to stop the promotion of such firms and to lobby for an extension to planning and licensing powers to prevent them locating in South Tyneside.
But one of the motion’s signataries, Coun Allan West, has now been forced to defend the move after it emerged the authority, along with the four other Tyne and Wear councils, pays into a pension fund which has £233,000 invested in Wonga shares.
Today Coun West, the council’s lead member for adult social care and support services, said legal regulations prevent the authority, which administers the fund, from cutting its “indirect” ties with the payday lender.
He said: “We are raising the issue of payday lending because it is the right thing to do.
“At times of financial pressure, it can feel like payday lenders are the only option, but their extortionate rates can trap people in a vicious circle of increasing debt and interest payments.
“The council administers the Tyne and Wear Pension Fund on behalf of 140 different organisations and we are bound by some very clear legal restrictions as to how the fund is allowed to operate.
“Case law and local government pension scheme regulations specifically require the fund to seek the best possible return on its investments and only allow us to consider social and ethical issues when they have a financial impact.
“The Pension Fund has no direct investments in payday lenders, but does have a very small indirect holding via Pooled Investment Vehicles as part of its global private equity programme.
“This is similar to a private individual investing in a unit trust and having very limited influence on how those investments are made.
“These indirect holdings represent a tiny proportion of the fund’s investments – about 0.005 per cent of its total value, which currently stands at £5.6bn.
“We are very keen to invest as ethically as possible, but the pension fund issue is extremely complex, and something that all local government pension funds are grappling with on a national level.
“There is a lot we can do on a local level to make a difference and ensure that people have an alternative. We have recently reorganised our welfare rights service to ensure it can help more people with financial problems, and The Bridges Community Bank in South Shields is a non-profit service that offers far lower rates.
“There are also encouraging signs that the new Financial Conduct Authority is ready to cap the cost of loans and provide increased protection for vulnerable borrowers.
“In the long term these things will either encourage payday lenders to improve their practices or it will impact on their profits, which in turn would make it easier for pension funds to invest elsewhere while staying within the law.”
Source – Shields Gazette, 17 March 2014