A compass survey has found that Britain tofay has the highest levels of personal debt in the world – a staggering £1,460bn, equal to the entire economic worth of all the products and services that Britain produces in a year.    But the levels of indebtedness become so high that debtors accept, or are forced into, any deal with private loan sharks that will roll over their debts for a few weeks or months, even though this will only make things much worse within a very short time.   When the Bank of England base rate is at the rock-bottom rate of 0.5%, loan and credit companies have been found exploiting victims with rates as high as 2500%!   So what should be done? To stave off bankruptcy, repossession of their home, of financial collapse in whatever form, some 3 million people in Britain today use ultra high-cost door-to-door loans which often charge interest and collection charges of £83 for every £100 borrowed.   Having caused the worst financial meltdown for nearly a century, financial institutions are now making huge profits from the most vulnerable and unprotected sections of society.

Government action so far does not begin to meet the horror of legalised impoverishment now being rolled out across Britain today.   The Growth Fund was set up as the official mechanism to increase affordable credit to very poor households, but its budget is just £100m.   The OFT however indicates that this is just a drop in the ocean when it estimates that the private loan sharking sector is worth some £35bn a year, 350 times larger.

What is urgently needed is a 2-prong attack to stop this.   A lending rate cap should be put on all forms of consumer credit, and at the same time more affordable, more responsible sources of credit should be made much more widely available.   The idea of a People’s Bank, which has already been much talked about, should now be rapidly introduced using the Post Office network.   In addition there should now be a big push in favour of local credit unions, CDFIs, co-operatives, and mutuals.   And all banks should now be required to provide a universal banking service.

Britain is one of very few countries worldwide that does not have a lending cap, and its current banking provision is skewed grossly in favour of the middle classes and the rich.   Reforming this would be one of the most popular goals for a Labour Party revival.

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