Archbishop of Canterbury, Wonga and Credit Unions

The Archbishop of Canterbury, Justin Welby, has created quite a stir with his comments about payday loan company Wonga.  This is my attempt to process my positive feelings about the fact that he has spoken out about this issue, alongside other feelings of discomfort about what he said.

I agree with the Archbishop when he says that we are not aiming to “legislate” Wonga out of business. Some kind of outright ban on companies like this is not a helpful solution. For people on the most precarious of incomes, this kind of credit is often the only credit they can get. And while it might be nice to suggest that people should save up for the things that they need, unexpected outlays (such as fixing a broken down boiler), by definition, cannot be planned for, even if saving were possible.

This does not rule out some legislation which would be helpful.  Church Action on Poverty, along with MP Stella Creasy, have long campaigned for a cap on interests rates and charges and greater transparency when loans are agreed, as well as data-sharing between companies so that people can improve their credit rating and access to mainstream credit.

So while people need alternative means of borrowing money, it is great to hear the Archbishop argue that we need to expand Credit Unions, and offer the Church of England as a resource for this. And it’s clear that this is not going to happen overnight, so while Credit Unions are growing, we should continue to campaign to make payday loans better for the people who use them. For me, the worst thing about these type of lenders is the way advertise themselves. I loathe the new Wonga adverts, which normalise and sanitise a way of borrowing money which could be considered extortion. But worse is the way that people are bombarded with offers of money over and over again, without any clear explanation of what it will cost to repay.

So what’s my problem? I agree we shouldn’t ban Wonga and its like, although I think some legislation would be helpful. I agree that we should expand Credit Unions and think the church is a great resource to help do this. I think my problem is with the word “compete”. This leaves the debate firmly in the transactional frame. Yes, I know we are talking about money and debt, but the debate could be framed in terms of people instead.

Competing with payday lenders legitimises their business and puts the Church of England and Credit Unions in the marketplace. While this is a fair description of the situation on the surface, it does not deal with why the Archbishop got involved. Clearly it is not because he thinks the Church of England should be making money in this market. Rather, the church sees that people are in need, and they are suffering because of their indebtedness to payday lenders or lack of borrowing options. Churches up and down the country see this need on a daily basis, and their call to show the love of God demands that action is taken. It is not enough to feed needy people through Foodbanks, but there must be a call to change the structures that cause people to need this help in the first place. I believe the church is called, not to compete with Wonga, but show a radical alternative. To show love, and in doing so, to change the rules, to treat people with fairness and equality, and not as people whose needs make them easy to exploit. In short, I think the church should love (other people and so put) Wonga out of business.

More on Tax Payers and the Benefit Cap

More on Tax Payers and the Benefit Cap

This article picks up some of the comments I made in my two earlier blogs about “harding-working taxpayers”, and the benefit cap.

Joining the dots

I was struck by the juxtaposition of two items on the BBC lunchtime news yesterday. The first was announcing the introduction of the cap on welfare for an individual or family, and the second was about a report published by the Resolution Foundation claiming that lower income working families can no longer live in areas covering a third of Britain because they cannot afford the rent.

The news made no apparent connection between these two stories, although later editions made more of a link. But for me the link is obvious. Creating an arbitrary limit on how much benefit can be paid is fighting the wrong fire. It is a money-saving exercise to reduce the amount of money spent on benefits, but addresses only the symptom and not the cause.  The most significant portion of benefits paid is in covering housing costs, and the huge rises in rents means that the benefit bill will continue to rise. What is really needed is to deal with the chronic shortage of affordable housing and tackle rocketing rents.

Capping welfare is the solution when the problem is viewed as an escalating bill which needs to be managed. It fails to recognise that people are involved, that people live in communities with their families and friends, they have bills to pay and obligations to meet. Yes, if housing benefit no longer keeps pace with rising rents, then eventually market forces will bring rents down, and never mind the human cost and misery in the process. Recognising the connection between these two stories, the lack of affordable housing and rising welfare costs, suggests different solutions, and ones which take into account the impact on people’s lives.

Truth and Lies about Poverty

Report by the Baptists, Methodists and URC

Today I have again read something originating from the Government which talked about multigenerational worklessness. This pernicious idea that we are surrounded by families who have never worked is a myth, for which there is no evidence. To make matters worse, the reference I saw today was within information for a conference about poverty and social exclusion. So click on the link for a report which reveals the lies we believe about poverty in this country. It’s been around for a while, and now it’s time to read it.

Changing the frame of the Benefits Discourse

I wrote this reflection in December 2012, and posted it on Facebook, so apologies if you’ve seen it before. But following a comment on my “Hard-working Taxpayers” post, I thought it was worth repeating. Sadly it still feels just as relevant, more than 6 months on.

I’m shocked by the ruthless way people on low-incomes have been treated by this Government, including in yesterday’s Autumn Statement.  I’m even more shocked that so many ordinary working people think that Government action to cut away welfare support is a good idea.  This view is summed up by the comments of Conservative MP Kris Hopkins: “There are a lot of people out there working very hard who are annoyed that there are other people who are not working and could be.”

At this point, I would like make a few observations.  Firstly, the New Statesman points out that “sixty per cent of the real-terms cut to benefits (they will rise by just 1 per cent for three years) falls on working households.  A working family on £20,000 with children will lose £279 a year from next April.”  Secondly, as pointed out in a letter from church leaders in the north to the government “structural unemployment makes it impossible for many to get the jobs they need for themselves and their families.”  And thirdly, according to the Office for National Statistics, 10.5% of those who are working would like more hours but can’t get them.  That is, 3.05 million people, a rise of nearly 1 million people since 2008.

People on benefits are not a drain on our society.  They are workers, often public sector workers looking after our health or our children, or people who would like to be, but there are not enough jobs.  The welfare system is meant to be social security, security for our society so that those in need will be taken care of.  We all provide for this safety net, and we may all one day be in need of it.  Our stretched economic resources means that, “most of us are only one or two pay packets away from having no money”, a comment repeated here by Carol Midgley from The Times following her interview with food bank organiser Julie-Anne Wanless.

Let’s treat the fellow members of our society with respect, and trust that when the time comes, and you need it, the safety net of the welfare system is still big enough to support you.

Hard-working taxpayers

I’m growing to really dislike the phrase “hard-working taxpayers”, especially when it’s used to  talk about how much money they will apparently save because of some scheme or other.  I came across it again while I was reading an article about the devastating impact of the Bedroom Tax on residents in Liverpool.  I expect I will feel moved to write about that outrage at some stage, but for now, I want to concentrate on the claim from the DWP that “This reform will save hard-working taxpayers almost £1bn”

Let’s be clear. No reform of any sort will “save” any taxpayer any money at all.  Taxpayers will still be paying exactly the same amount of tax, and even if the “reform” saves any money (which, in this case, I sincerely doubt), it will just be spent on something else.  Personally, I’d rather pay for cohesive social communities than Trident.  The current economic deficit means that it will be a long time before any reduction in Government spending has any chance of leading to tax cuts.

But this aside, I still have an issue with the phrase “hard-working taxpayers”.  It conjures up an image of people working their fingers to the bone only to have all their money taken away by the taxman.  I exaggerate, but let’s think of tax differently.  It is our contribution to the common good, our citizens’ commitment to one another.  It is one of the ways we have a share in our common humanity and support each others’ wellbeing.

And please let us remember that not everyone who works hard pays income tax.  There are plenty full-time carers, homemakers and community volunteers who do not receive any remuneration for their work.  And there are many who work hard but at low paid jobs who do not reach the income tax threshold. (This is another bugbear of mine, when politicians raise the tax threshold and then claim to have helped the poorest. No. The poorest weren’t paying tax anyway because they are poorly paid on low hours or zero-hours contracts.)

Actually, even the unpaid and low paid are still busy paying taxes every day – VAT, fuel duty etc.  These taxes have been steadily rising while income tax has been falling, yet these taxes are hidden from sight and have a greater impact on the poor than the rich.  And so to talk about raising tax thresholds to take people out of tax is nonsense, it only applies to income tax.

So let’s get away from this image of the hard-working, hard-pressed, poor old burdened taxpayer.  Instead, why not rejoice if you earn enough to pay income tax and can contribute to those things you have benefitted from, and which have enabled you to earn as you do? And let’s value people and companies who feel the same and want to contribute their fair share. I’ve come across some websites which are trying to quantify which companies are good taxpayers.  One is Tax Ticked and the other is Fair Tax, which was flagged up by 38 degrees last week.  I can’t vouch for their content – see what you think.