Strapped for cash

18/08/13 | Posted by Ian Black

The other day, on a rainy Friday afternoon, I walked past a queue outside a payday loan shop. It was a sorry sight. They looked fed up and on their uppers. The people who use payday lenders are generally struggling with low pay, finding it hard to match the bills to their income, and have difficulty getting credit anywhere else - if that wasn't the case why would anyone turn to a lender charging such large rates of interest. Worst still are the doorstep lenders who use violence when the repayments are not met. But there are better solutions and the growth in credit unions reflects this.

image
 Payday Loan Shop

Touring Scotland recently I came across a memorial for Henry Duncan, Minister of Ruthwell Church in the first half of the 18th century, just west of Gretna Green.  He was given the accolade ‘The Father of Savings Banks’.  It reminded me that the Christian church has a long history of involvement in mutual banking, where the owners are the depositors and lenders and not faceless shareholders.  So when the Archbishop of Canterbury entered into the discussion about payday lenders he was standing in a noble tradition, and many of the modern day credit unions have been set up with church involvement.  That the Church of England turned out to have a small amount of its own wonga in Wonga.com through an investment fund was embarrassing but it didn’t diminish the pedigree behind his comments, not least because when it came to light it was reviewed. Charging excessive interest on loans to the poor is called usuary in the Old Testament.  It is extortion and immoral.  The poor should not be regarded as a source of profit. They need help and support. 

The number of people struggling at the moment does appear to be growing, with more people turning to foodbanks as well.  Talking with a manager of a Citizen’s Advice Bureau he mentioned that there is a need for money management advice as well as debt advice and emergency handouts.  When we can’t provide basics, life is tough, and part of the solution is help with household budgeting - even back to the old system of a number of pots marked ‘rent’, ‘food’, ‘gas’ etc.  Once someone slips below the surface through debt, it is so much harder to get back on track.  The quick loan tends not to be in someone’s longer term interests.

There are a number of interrelated topics here.  The minimum wage is regarded by most as being far from the minimum needed to live on.  The so called ‘living wage’ is better, but that too would require someone to work excessive hours to live on it.  Over recent decades we have been encouraged to live lives fuelled by debt and if the credit crunch teaches us anything it must be to make sure what we borrow is manageable and the repayments sustainable otherwise it is the fantasy of ‘free’ money and a road to ruin.  Justice requires that we ensure the poor and vulnerable are not oppressed though other’s greed, pay should be fair and at a level to live on.  Humility and being satisfied with enough reminds us to strive to live within our means.  Money is a spiritual and justice issue.

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