Commenting on figures released by debt charity ‘StepChange’ Labour MP, Tom Blenkinsop, today (2nd July) described the trend as “extremely worrying” and echoed calls for a cap on the total cost of credit.
Figures showed that Last year, constituents in Middlesbrough South and East Cleveland owed an average of £1,462 on payday loans when they turned to StepChange Debt Charity for help, an increase of 34% on 2011.
“Families are, on average, £891 worse off because of tax and benefit changes and pay packets are £1,700 smaller than in 2010. So whilst these figures [released by StepChange] are obviously extremely concerning they are, unfortunately, not too surprising. 80% of these payday loans are being used for basic things such as food, rent and travel costs and payday lenders are taking advantage of people who are struggling in these difficult economic times.
“Whilst most other countries cap what they can charge to help prevent these loans being unaffordable many payday lenders here charge more than 4000% interest (APR) for these loans, leaving people struggling to make repayments and pushing them into deeper debt.
“If serious action isn’t taken to tackle these extortionate rates then the situation is only going to get worse. I am committed to doing whatever I can locally to support responsible lending, such as through the use of credit unions, and discouraging the use of companies that are tantamount to legal loan sharks.”