Unions warn families need loans to live

UK Political Correspondent

Tuesday 11 September 2012

Hard-WORKING families are being forced to borrow more than £325 a month to make ends meet as the Coalition's austerity drive fails to deliver economic recovery, according to a survey launched at the TUC annual conference in Brighton.

Custom byline text:

Kate Devlin UK Political Correspondent

Unions warned many households were getting into debt and danger as they faced soaring costs of living, pay freezes and squeezes on their standard of living.

The Unite trade union also said that more than four million people were regularly forced to use payday lenders and fork out extremely high interest rates. It said many people across the UK were being forced to live in what they dubbed "Wonga World", with nowhere else to turn for cash.

The high street payday lender Wonga has faced criticism for the rates it charges those who borrow money to tide themselves over for short periods. The survey, of more than 22,000 trade union members, showed the average amount borrowed each month had soared over the past six months, by £127.88 to £327.88. Labour MP Stella Creasy, who has campaigned against payday lenders, claimed one in three payday loans was taken out to pay off a previous loan. "This kind of debt is becoming a way of life," she said as she warned of a "perfect storm of debt", pay freezes, unemployment and rising costs.The MP called for a cap on the amount any individual could receive from such companies, claiming some lenders allowed people to borrow up to three-quarters of their monthly salary. Unite is calling for an immediate £1 increase in the minimum wage to help poor people deal with day-to-day living costs. The move would raise the minimum wage for an over-21 to £7.19 an hour. The union estimates it would help more than 4.5 million low earners across the UK, including hundreds of thousands in Scotland.Len McCluskey, the Unite leader, said: "Even more people are being plunged into punishing levels of debt as they struggle to make ends meet. "This is the harsh reality for increasing numbers of working people in Osborne and Cameron's heartless Britain."The survey has followed more than 350,000 people since January 2011 – to assess their experience of the recession. It found eight in 10 relied on other sources of income to make ends meet. The same amount said they had to cut back on spending to get them through the month. Many were forced to borrow cash from friends and family or to take on second jobs. The survey also found that about 12% of those asked were in debt to payday loan companies.A spokesman for Wonga said: "Wonga has helped more than one million people in the UK and provided more than five million loans since 2008. Who uses our services and why remains one of the most regular misconceptions about the business. "All Wonga customers have a bank account, debit card and mobile phone and the vast majority have access to traditional credit products and other options available to them."We are actively engaged with our customers and industry groups, and we support a regulatory framework that suits the consumer. We're pleased to have played such a large part in the industry's Customer Charter, which was announced earlier this year, and that builds on our own attitudes to clear price transparency and responsible credit checking."

Contextual targeting label:

Finance

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules, which are available here.

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

Unions warn families need loans to live

Commenting & Moderation

MOST READ

SPONSORED LINKS

MOST COMMENTED