As controversial payday lender Wonga announced profits of more than £1m a week in 2012, Labour Councillors have called on Westminster Council to follow other Councils, such as Plymouth, who have stopped pay day websites being accessed through any council computer, including those in libraries and community centres.
Labour Councillors say that pay day lenders like Wonga, who offer short-term loans of up to £1,000 at an annual interest rate of 5,853%, are taking unfair advantage of many local residents who find themselves in difficult financial circumstances because of the continued economic recession.
Other pay lenders have also done well out of growing unemployment and low wages. In 2009, during the economic crisis, the payday lending industry was worth £900m. Just four years later the industry is worth over £2bn. The Money Shop, had 34 staff and a turnover of £2.9m in 1998, today, with 2,300 staff, their income is £172.3m.
Labour says that the Council should be encouraging credit unions and local affordable lending as genuine alternatives to payday lenders. Labour say that the local London Mutual Credit Union offers a much cheaper service and that the Council should be encouraging residents to use the LMCU if they need an affordable short term loan http://www.creditunion.co.uk/.
Councillor Paul Dimoldenberg, Leader of the Labour Group, said;
“Nothing sums up the scale of the Conservatives’ economic failure than the growth of pay lenders along every High Street, including in Westminster, where those most vulnerable are being charged eye-watering interest rates of over 5,000%. This is a national disgrace and the Council should take a lead by stopping access to pay lender websites from Council computers in offices, libraries and elsewhere.”