Sunday, December 21, 2008

Store card interest rates on crisis loans?

Is it really any surprise that cross-party MPs have lined up to attack Gordon brown and James Purnell over their proposals for interest charges on so-called crisis loans? I blogged a few weeks ago about how the uptake of these short term emergency loans had increased sharply, but I never thought I would see a Government propose pretty harsh interest charges on such things.

The whole point about a crisis loan is that you when you are up against the wall you are able to get some cash flow back thanks to a loan from the state. This is exactly the principle behind welfare, to provide a safety net. It is a short term interest free loan of a few hundred pounds which is then paid weekly as you sort yourself out. A hand-up rather than a hand-out.

At a time when the base rate of interest from the Bank of England is 2% and likely to head even further downwards, how in the name of Jehovah, Allah, Buddha or whoever, can the Government be proposing to apply a rate of 26.8% APR on crisis loans for the most cash strapped of people in society? As one Labour MP said, "Not even the Tories would try to do this".
As the graph above shows, the rate at which crisis loans have been agreed has rocketed in the last two years, and as the recession deepens, the likelihood of that rate falling is at best minimal. It's bordering on the immoral to charge store card interest rates on a loan of around £400 for someone who's back is up against the wall surely?

I'm not in the least bit surprised that Ronnie Campbell, Labour MP for Blyth Valley, is "ashamed to be a member of the Labour Party". I don't agree with Chris Grayling's comment that Brown and Purnell are "re-inventing themselves as loan sharks" because that is party political hyperbole that doesn't stand up to the scrutiny of the interest rates loan sharks actually charge.

However, what Brown and Purnell are doing is re-inventing themselves as even more complete bastards than one may or may not have thought they were before. Brown is heading for one hell of a row over this one I think, and if past performance is anything to go by he won't back down at first and will dig his heels in for a while.


Mitch said...

Have they "outsourced" the loans to one of their preferred(donors) a company like crapita perhaps or are they planning to and this makes it very profitable?

Events dear boy, events said...

Mandy would be proud of you. You have taken the bate and shallowed it. This is Labour's spin machine flying kites to get the Jaguar dilemma off the headlines as well as the Post Office proposal. The Government can not agree on what to do, so bury the problems in the news by launching a diversionary tactic.

It is the oldest trick in the book and you have fallen for it.

This stops the Tories highlighting the Labour split on Jaguar and the Post Office as they must now condemn this.

You have fallen for it. Mandy must be sipping on the bubbly as I write this.

Anonymous said...

If they want to appear to be the nasty party in the run up to the next election, let them get on with it!

Conand said...

"Not even the Tories would try to do this"

True, but we (Mrs T) did invent the 0% Social Fund loans.

re 'Loan Sharks' I think Chris Grayling isn't so much talking about the interest rate Labour are proposing to charge; he's talking about Labour preying on low income people ( i.e. in the way that loan sharks do).

re Brown's tactics:

A: It's all rubbish, it was only a proposal etc etc
B: McCavity wasn't there anyway, so nerrr!
C: He's going to stop it, and save everybody. (but but but it was your proposal you mentalist!! aggghh)
D: He has full confidence in James 'Photoshop' Purnell.
E: Pause
F: James 'Photoshop' Purnell has been quietly sidelined. His place at Gord Almighty's top table has been filled by yet another appalling ninny (It's a bottomless pit, like government borrowing).

Stop Common Purpose said...

Brown is unacceptable as a human being. Period.

Anonymous said...

Howard may have a point about it being a distraction, however you'd have to be pretty dumb to try and distract someone from the money you're burning by shooting a puppy in the face.

Surely even Labour ministers aren't that stupid - oh, hold on...

Anonymous said...

RE: Howard, I'm not so sure this is spin, but if it is the work of Mnady- he must be slipping.

Does Labour really think that reinforcing itself as the Nasty Party (following the 10p tax row) makes less worse headlines for itself than the Jaguar bail-out which I suspect a lot of natural Labour supporters would agree with.

Barnacle Bill said...

I'm inclined to agree with Howard that Mandy's got a hand in this somewhere along the line, but I think we might be being spun for something else to do with welfare reform.

Anonymous said...

It's not interest, it's usury.

Anonymous said...

So they destroy our Industries ( Westminster I mean not just Labour ) then screw us again.

The Red Flag said...

The Tories really are pathetic. OLd slap head Grayling has been on the news spouting off about this. He didn't mention how the Tories scrapped this scheme, only for it to back by 'evil' GB.

The Tories have nothing to say about the economy and never will, so they jump on non stories. They really are getting desperate.

marksany said...

It's your fault Dizzy, if you hadn't pointed out the take up of these loans, Mandy would never have known about them.

I hope you can sleep at night!

wv: wersies

Anonymous said...

Is this a fixed 28.6%? If so, Gordon's probably got it about right. That is he has got it about right if he is going to inflate the currency at 25% per annum through quantative easing. Let's face it, we would not be too happy to see the under class being able to borrow at 20%ish net negative interest rates when the prudent are seeing their savings wiped out.

Anonymous said...

Josh, the Tories really don't need to say anything on the economy anymore. We haven't got one, you see.

Gordon has taken all the money in the Treasury and set fire to it. I'm fucked, you're fucked, we are all fucked; by Gordon, and Alastair and that odious cocksocket Mandelson.

Dominic Allkins said...


I couldn't have put it more succinctly.

Thank you.

Word verification: bendi (must be referring to Mandy)

marksany said...

Gordo's not trying to stimulate the economy, he is trying to continue the simulation of an economy that we have had for a while now.

We're all fucking fucked.