In a twist of irony, I was invited to attend a working lunch last Friday – the day I was participating in the End Hunger Fast. Even more appropriately, the lunch was part of the TUC’s Fair Pay Fortnight on the subject of low pay and payday lending, so it seemed right to go while I was fasting in order to campaign on the same issues! As well as the regional TUC and a representative from USDAW, Paul Blomfield, the local Sheffield MP, was one of the speakers.
Some interesting facts and figures were presented on the day. Low pay in the region means that workers in Yorkshire and Humberside earn £38 per week less than the national average, while 20% of people in Sheffield earn less than the Living Wage, a wage which is considered to be the minimum needed for an acceptable standard of living. No wonder The Joseph Rowntree Foundation found that more people living in poverty are working than are not.
This is a climate where high-cost lending flourishes. We were told that Wonga makes 10,400 loans every day, a figure which has risen by 70% in the last year. Wonga can make £1.2 million profit every week even though 2/5 of borrowers struggle to repay loans. In fact, people who default and roll-over their loan to the following month make more money for the lenders than those who repay on time. Additional interest, fees and default charges are where the money is, adding up to a perverse business model where the target market is those who can’t quite afford to pay.
The proliferation of payday lenders is a symptom of the wider economic climate. Over time since the 1980s there has been a shift of 8% in the make-up of GDP away from wages towards profits (and thereby dividends). The cost of living crisis is as much about falling wages as it is about rising prices. Wages have been frozen, jobs have changed from full-time to part-time, from secure to insecure, and the minimum wage has become the default norm instead of the safety net minimum (and has fallen in value as well).
This was all very interesting. But the best thing about the meeting was the chance to talk to other people in the room about our past experiences and ideas to make changes in the future. And then, the convenor of the meeting took our ideas and formulated them into a plan of action. So refreshing to move from words to actually doing something about it!
There needs to be some fleshing out of the ideas but four strands of action were suggested. Firstly to work alongside the local credit union to promote it, and encourage people from all walks of life so save and borrow with it. Secondly to launch a campaign against advertising by payday lenders, to stop advertising to children and to regulate advertisements in a similar way to how gambling adverts are regulated. Thirdly the TUC would undertake some research to find out which local businesses pay a Living Wage, so people can make an informed choice about where their money goes. And finally, to encourage people to belong to unions, as this improves their pay-bargaining strength. I hope it doesn’t take too long before a way to get involved in these actions gets back to me. In the meantime, I’m going to find out if Sheffield Diocese is a Living Wage employer.