Changes to the payday loans market could drive desperate consumers straight into the arms of loan sharks, a North-East academic has warned.
A cap on the amount that payday lenders can charge customers has been announced by the Financial Conduct Authority.
But Professor Mark Davies, of Teesside University’s school of social sciences, business and law, fears the changes will enable loan sharks to strengthen their positions in local communities.
Prof Davies, who has carried out extensive research into the payday loans market and the needs of borrowers, believes the new measures are a positive move, but will not help all borrowers.
“While this is definitely an improvement from a borrower’s perspective, there are a number of remaining issues,” he said.
“In particular, it has been speculated that many payday lenders will leave the market to set up elsewhere or change their business model.
“If legitimate payday lenders leave the industry, this will leave less choice to borrowers, with the possibility of loan sharks strengthening their positions in local communities.”
The changes by the FCA will see payday loan rates capped at 0.8 per cent per day of the amount borrowed. In total, no one will have to pay back more than twice what they borrowed, and there will be a £15 cap on default charges.
“A person in financial desperation, as many of these people are, cannot simply resist a loan,” he said.
“What is needed is a mechanism for identifying and targeting these people at much earlier points, before the pain of irreversible debt mounts up.”
Professor Davies is currently leading a research project to find out more about the types of consumers who consider payday loans and the consequences it has on their lives.
He has gathered detailed accounts from a number of third sector organisations and has held focus groups with people who have taken out payday loans.
“The new regulations are welcome but they will not help all borrowers,” he said. “Some will return to loan sharks.
The idea of ‘welfare ghettos’ full of streets where nobody works is a myth, according to research carried out in Middlesbrough by a Teesside University academic.
Professor Rob MacDonald says the concept of ‘benefits streets‘ – brought to the public’s attention by the television programme currently filming its second series in Stockton – don’t exist.
Residents of Kingston Road on Stockton’s Tilery Estate will feature in the next run of the Channel 4 show, due to be broadcast early next year.
A popular misconception of such areas, Mr MacDonald says, is that they are dominated by families who haven’t worked over generations and that unemployment is the preferred way of life.
Instead, his research found, even in deprived areas most households contain people who work and younger people want to find jobs.
The first series of Benefits Street, filmed on James Turner Street in Birmingham, was met with tabloid headlines about “90% of residents on hands-out” and “the street where 9 out of 10 households are on welfare“.
But Mr MacDonald says those figures are misleading.
His research, conducted along with Professor Tracy Shildrick from Leeds University and Professor Andy Furlong from Glasgow University, was funded by the Joseph Rowntree Foundation.
Their studies in Middlesbrough and Glasgow focused on 20 families and aimed to find out whether some popular ideas about the unemployed were actually myths.
Mr MacDonald said:
“In seeking neighbourhoods to test out the ideas, we selected areas with very high levels of worklessness – perhaps like the makers of Benefits Street.
“Even with these extreme cases, the majority of local people of working age were not on unemployment benefits. This is a far cry from the situation where an entire community sits on benefits for life.”
In James Turner Street recent statistics have shown that between 62% and 65% of households have somebody in employment – meaning that 35% to 38% of households could be described as workless.
Mr MacDonald said:
“In this sense, James Turner Street is very similar to the neighbourhoods we researched in Glasgow and Middlesbrough.”
Confirmation that Benefits Street was being filmed on Teesside caused widespread anger.
The Gazette’s photographer was egged while taking pictures of film crews on Kingston Road, Boro fans have displayed banners protesting against the series and families have started petitions against the programme.
Love Productions, the company behind the series, insists its intention is to give the communities taking part “a voice“.
In the university research, of the younger people interviewed who did not have jobs, most had brothers and sisters who were working.
Mr MacDonald added:
“This throws into doubt theories that rely on the idea that individuals are so swamped by negative role models and so bereft of positive examples of people in jobs that they learn that worklessness is the norm and to be preferred.
“The idea of ‘benefit ghettos’ where unemployment is a ‘lifestyle choice’ is a powerful one that helps justify the government’s cuts to welfare budgets. Yet our research has demonstrated that this is a myth, in the sense that it does not reflect the facts of the matter.
“If a culture of worklessness cannot be found in the extremely deprived neighbourhoods we studied, then they are unlikely to explain more general patterns of worklessness in the UK.”
In response to the research, the government insisted that “sadly, joblessness isn’t a myth”.
A spokesman for the Department of Work and Pensions said:
“In 2010, the number of families with no one working peaked at over 3.9 million.
“Latest figures show that this has fallen by 450,000 suggesting we were right to implement a radical overhaul of the welfare system.
“We are very careful about the language we use – making it clear that it is very often the system itself that has trapped people on benefits.”
The study that Mr MacDonald contributed to, ‘Benefits Street and the Myth of Workless Communities’, was published in the Sociological Research journal.
Source – Middlesbrough Evening Gazette, 12 Sept 2014
Riots similar to those which swept the country three years ago will happen again, a Teesside academic has warned.
Research carried out by Professor Simon Winlow from Teesside University‘s School of Social Sciences & Law suggests that the majority of those involved in the UK riots were not motivated by a desire for social justice.
Despite many arguing that the riots should be understood as a political response to rising inequality, Prof Winlow believes the looting offered an endorsement of contemporary consumerism.
The Teesside academic was part of a research team which interviewed around 40 young men who took part in the riots.
He claims that anger and frustration exist in abundance in poor neighbourhoods but it shouldn’t be assumed that this represents a desire for social change.
Prof Winlow said: “People are angry, but they’re not angry at capitalism. They’re angry that they are not being provided with the opportunities to achieve within capitalism. The difference is crucial.”
As the gap between the rich and the poor continues to rise, Prof Winlow indicates that another wave of riots is likely and that it is just a matter of time.
He added: “There are very few legitimate opportunities for marginalised young people. Every night on television we see the dream of extravagant consumerism. People are told that all of this is available but for many people it’s a dream that can’t be realised.”
Professor Winlow was speaking ahead of the National Deviancy Conference which takes place on 25-26 June.
The historical conferences began in the 1960s and developed new approaches to the understanding of crime and disorder.
This year the conference will be hosted by Teesside University’s Centre for Realist Criminology for the first time and will be attended by speakers from around the world.
The Centre opened last September and has since been developing a distinct form of criminology which examines harm rather than those things judged ‘criminal’. The centre also has a commitment to charting changes in politics and consumer culture.
> He’s almost certainly right about the 2011 riots, sadly. If people were motivated by a desire for social justice, we’d have had millions taking to the streets over the past couple of years.
Source – Middlesbrough Evening Gazette, 19 June 2014
There’s no denying that the forthcoming European elections seem to be trying to be all-inclusive … in the wake of a Rotweiller dog in Norton being given the vote comes the following –
Felicity Percival, 4, of Dalton Crescent, in Shildon, County Durham, was sent the polling card this week head of the European Parliament elections on May 22.
The youngster’s bemused mother, Rebecca Currie, 24, thinks that a mix-up when the nomination form was filled in is to blame.
Miss Currie, a Teesside University student, said: “This is the first letter that Felicity has ever received. I find the whole thing amusing.
“We live with my nan, Margaret Giles, and she filled the nomination form in. I think that she must have filled it in wrongly.”
> I’ve got my voting card, but my Cat hasn’t received one. Yet.
Source – Northern Echo 15 April 2014
Universities and colleges in the North East could be stripped of millions of pounds in funding used to give students from poorer backgrounds a fairer chance of getting a degree.
The cash is at risk because the Department for Business, Innovation and Skills, which is responsible for higher education, needs to make savings of £1.4bn.
Teesside University currently receives £5.9m each year, the University of Northumbria at Newcastle receives £3.5m, University of Sunderland receives £3.3m, University of Newcastle upon Tyne receives £1.1m, University of Durham receives £660,000, Newcastle College receives £959,00 and New College Durham receives £637,000.
The money, known as Student Opportunity funding, is allocated to universities and higher education colleges which succeed in attracting students from neighbourhoods where few people have traditionally taken part in higher education.
It also goes to institutions which succeed in retaining students who would statistically be more likely to drop out, and to those that recruit students with disabilities.
Leaked documents have revealed that the Department for Business is looking for ways to save £570m this year and a further £860m after the election.
Danny Alexander, the Chief Secretary to the Treasury, is reported to be pushing for Student Opportunity funding to be abolished, while Business Secretary Vince Cable and Higher Education Minister David Willets are lobbying to keep it.
Asked to comment on the reports, the Department for Business, Innovation and Skills said in a statement: “The Department is going through the process of allocating budgets for 2014-15 and 2015-16 and will set out plans in the usual way.”
Prof Peter Fidler, Vice-Chancellor of the University of Sunderland, was one of nine university leaders across the country to write a public letter warning: “The removal of this fund will damage economic growth and have a wider impact on sectors beyond higher education.”
The letter said that axing the fund “suggests that the Government is willing to abandon the cause of social mobility in higher education.”
The future of the fund was raised in the House of Commons by Labour’s Shadow Higher Education Minister Liam Byrne as MPs discussed funding for engineering students. He said: “On top of the huge cuts for educating 18-year-olds in college, we now hear rumours that the student opportunity fund that helps poorer future engineers will be completely axed.
“Will the Secretary of State take this opportunity to promise the House that he will not sacrifice social mobility to pay for the chaos in his Department’s budget?”
In reply, Business Secretary Vince Cable highlighted £400m in funding for science, technology, engineering and maths courses – but did not comment on the future of the Student Opportunity Fund.
The National Union of Students has launched a campaign to preserve the funding.
Toni Pearce, NUS president, said: “Cutting the Student Opportunity Fund is an absolute disgrace and, in the wake of cuts to the National Scholarship Programme, looks like the Government is backtracking on its commitment to support social mobility in favour of balancing the books on the backs of the poor.”
Mr Byrne said: “The Department for Business budget is a complete mess because high paying students at private colleges got access to the state student loan system. Now it looks like help for poorer students will be axed to pay for it.”
Source – Newcastle Journal, 25 Jan 2014