Payday Lending – Robin ‘Labour’ Hood

The Labour Party has made some rather lofty promises around regulating Payday lending if the British population will be so gracious as to vote them into power in 2015. What they propose is a bit of the old fashioned English legend of robbing the rich and giving to the poor. A special tax shall be levied on the profits of the ‘rich’ Payday lenders and used to fund credit unions and money advice services for the ‘poor’, or in effect the same people that are so desperate that they are taking out short term, high interest loans from the same Payday lenders in the first place. So how would that go? The poor giving to the rich who are then forced to give it back to the poor? And the poor don’t even get that money back, they just get some good advice. Would Robin Hood be able to get his head around that one?

Stella Creasy, Shadow business minister says that it is, “payback time for these payday lenders.”

And that they need to, “pay their share for the damage they are doing. Some of these companies are making a million pounds a week.”

One of Ms. Creasy’s arguments hinges on the fact that many industries that cause potential threats to people’s health and livelihoods carry warnings. She cites examples such as Drink Aware or Gambling Aware that ensure that people understand the dangers of taking part in these activities and the problems that these products can cause. She maintains that the Payday industry is basically hiding its head in the sand with regards to the damage it is causing to the lives of people who cannot afford to take out Payday loans and are, however, granted a short term loan anyway.

In a speech by Labour Leader Ed Milliband, he speaks of how the nationwide ‘personal debt crisis’ basically means that a third of those taking out Payday loan are doing so to basically heat their homes. He spoke about how even families in full time employment are having a hard time making ends meet and that a Payday loan is often the only place to turn. Inflation rises faster than wages can keep up.

However in the same breath, Ed Millibrand says, “We must protect the most vulnerable people in our society from the worst of exploitation of payday lenders. And it is right that the companies that benefit from people’s financial plight accept their responsibilities to help ensure affordable credit is available.”

The Labour Party will be disclosing the rate of the levy that will be imposed after consulting on the matter.

Now if Robin Hood were standing here and looking at the situation, one wonders what he would have to say. Would he ask why it is that millions of families have to turn to Payday lenders to pay their heating bills? Would he ask about what levies, caps, warning labels and bans on advertising are being implemented? Or, would he be wondering what would happen to all the poor people if the Payday lenders too were taken away and they really had absolutely nowhere to turn. Maybe they could all go live in Sherwood Forest.