By Jamie Wright

The size of the issue facing the community in Kilburn becomes apparent as I walk through the high street. The bright, welcoming high street legal loan sharks in the area reflect an inability to access affordable credit at a time when wages are stagnating and prices are rising for ordinary people in communities across the country.

My mission? To see for myself the reality of accessing credit from legal loan sharks. I walk into these high street outlets, ranging from ‘The Money Shop’ to ‘Speedy Cash’ and enquire about borrowing some cash to pay my student rent at the end of the month. The place is busy. The deals sound deceptively attractive. Indeed, their relational, helpful service is so convincing that I’m almost tempted to walk out with £300 in my back pocket…

Yet what wasn’t as clear was details of the repayments that can easily build up. Staff talk of a ‘bonus payment’ if I repay the money on time, putting less emphasis on the large amounts of interest I’d be paying the company if I failed to do that.

In a month that was dubbed ‘black April’, where ordinary people risk loosing their benefits and working tax credits at the same time the government is giving a tax cut to the very richest in society, it’s no April Fools joke when it looks likely families will have to turn to pay day lenders in order to pay the bills and put food on the table.

What’s clear is that this is a familiar story on high streets across Britain. For the mother who needs to buy new school uniform for their children, or the young person who can’t meet their rent payments, there must seem little choice than to use these evermore accessible shops on their high street.

By speaking to people in charity shops and community centres it became clear that these shops would continue to be a necessity for all too many people.

I cannot claim to have experienced what would happen if I’d taken the loan and struggled to make the repayments – yet that is the experience of people across Britain, as has been proved through the grassroots SharkStoppers campaign.

The truth is that my mission came to a halt when I walked out the door. I can only imagine the feeling of powerlessness when people have nowhere else to turn. A sense that there is no alternative but to use these predatory companies and to go into debt.

There’s no chance of creating more resilient communities when these irresponsible companies are the answer to people’s economic woes.

Jamie Wright is communications officer at Goldsmiths Labour Students and an intern with Movement for Change. This piece was first published in Smiths Magazine in May 2013.

By Ryan Carter and Cllr Georgie Laming.

Southampton Sharkstoppers campaign started with a listening action

Our campaign began on the doorstep, hearing stories about the way in in which the current economic climate was affecting people in Southampton.  Many had begun turning to payday lenders in their hours of need. These organisations, which attract people with glossy advertising, had infiltrated our communities, especially Shirley High Street in the west of the city. One pay day lender had even moved into a shop that was previously held by the local credit union!

Southampton Sharkstoppers started off as a small group of local activists who wanted to see some real change in Southampton. We were all sick of the payday lenders that are filling up our high streets, and wanted to campaign for fairer forms of credit to become more available. Now, by working with Movement for Change, the local Labour party, Co-op party and interested community groups, we have achieved two innovative wins that will enable us to take on the short term, high cost lending industry in our city.

We began by becoming experts in the availability of credit in Southampton.  First we conducted online research; what was available and for how much.  We then went out and did mystery shopping of pay day lenders, pawn shops and the mainstream banks on Shirley High Street.

Role playing different scenarios in each store, we built up a first-hand understanding of how easy it is to get credit, and were surprised by our findings.  Preaching responsibility, nice workers in the local pay day lenders told our ‘pensioners in hard times’ team to use the bank and not to use them, and our ‘student’ team were rejected for a pay day loan to cover rent on the basis they only had a zero hours contract.  We also realised the banks are not trying to compete with the pay day lenders, generally offering only much larger loans.  Unsurprisingly however, many of our belongings, jewellery, phones etc, would be taken off our hands for next to nothing by the pawn shops.

We discussed our findings, and began to see that the issue at the heart of our campaign was accessible of fair credit generally, and not just the evil practices of these sharks.  A lack of access since 2008, with the contraction of bank lending, seems to have driven the explosion of pay day lenders in our communities.  We then built a strategy for taking the campaign forward.

We were pragmatic and realised our power was not yet great enough to be recognised by the huge centralised main stream banks.  Without recognition we would not be able to enter into negotiation to make a campaign ask.  Because of this we decided to focus on the local credit union; Solent Credit Union.  How could we get this small institution, which matched our own cooperative principles, to begin providing more credit to those targeted by the pay day lenders and rejected by the mainstream banks?

Before approaching the credit union we needed leverage.  To get this we made an ask of Southampton City Council.  Would they introduce a new system of auto-payroll deductions for credit union contributions?  They agreed, meaning that all staff would easily be able to put money into a credit union of their choice.

Campaigning in Southampton has paid off: negotiations resulted in an innovative deal with the local Credit Union

We then made contact with Solent Credit Union.  With the knowledge of our successful ask of the City Council they agreed to meet for a negotiation about how they lend and who to.  We knew the credit union needed more high value borrowers and savers before they could begin competing against the payday loans, and we knew we had just opened up the potential for new high value savers from the Council.  But we also knew we could not just walk in there and demand that they make more loans available to people on low incomes.

In the negotiation the credit union sat and listened to the story of our campaign, and then we heard about their business plans, lending criteria and membership.  We took five minutes out to caucus, developing a specific ask based on our ability to organise in the future and their self-interest as a business.

In the following negotiation it was agreed that for every two savers recruited through our campaign, they would make available one loan to someone on a low income at risk of going to a pay day lender.  Two for one.  Of course they will not (and should not) jeopardise their safe lending criteria.  Only people who are, based on their assessments, able to pay back the loan will be provided with credit.

This agreement is a huge achievement but it is also a challenge.  It means we can help the local credit union to grow, while at the same time making it more possible for those on the low incomes in this city to borrow money in a safe and responsible way.  But we are also challenging ourselves and the labour movement in Southampton to organise their money, to join the credit union, and to make a difference locally.  It is only by organising our money that we will have the power necessary to take on the pay day lending industry.

Kezia Dudgdale MSP with Cllr Maggie Chapman, Chair of the Petitions Committee, with a petition for a Payday Loan Taskforce in April 2013

The National Award for Best Practice was presented to the Debtbusters Campaign by Anas Sarwar MP, Deputy Leader of the Scottish Labour Party, in recognition of the innovation and effectiveness of their organising work on that campaign in Scotland.

One of the key leaders of the group is Kirsty Smith, who has been working with Movement for Change, including attending our residential training weekend last November, and has since worked to build and develop community actions alongside Kezia Dudgdale MSP, a Member of Movement for Change National Committee.

“When we started the Deptbusters campaign it was really Parliament focused but then, I went on to [the Movement for Change] residential training and learned how to make it more community focused” said Kirsty at the Scottish Labour Party Conference last weekend.

“The award is a recognition to what community organising can bring to Scottish labour party politics. There’s a real energy for community organising in Scotland.”

Hear Gareth and Stuart, who also work with the campaign, talk about developing leaders and inspiring people to take part in politics through community organising.

Deptbusters Campaign

Debtbusters is a grassroots, community-led campaign launched by Kezia Dugdale MSP in 2012 to tackle the growing problem of debt caused by Payday Loans. The campaign is driven by the desire to stop Payday Loan companies exploiting the vulnerable and making millions from those who are struggling to get by.

Debtbusters has three clear aims: to crack down on Payday Loan lenders street by street, to promote Credit Unions as a viable alternative and to change the law around the issue of debt

The campaign has already made a real impact. So far, the campaign has pushed the Scottish Government into agreeing that payday lenders will have to display ‘wealth warnings’ when advertising their loans. The activists have also handed in a petition of over one thousand signatures to Edinburgh City Council calling for a Payday Loan Task Force to crack down on payday loan companies and help educate and ameliorate their effects. The campaign has also been working with Mike Dailly from the Govan Law Centre to produce a proposal for interest to be frozen when people apply for a Debt Arrangement Scheme, coming into force on July 1st this year.

Community leaders in Kilburn are fighting for better access to fair credit. With the help of Movement for Change, community leaders in Kilburn attended a hearing chaired by Lord Parry Mitchell to give testimony on problems local people are facing due to lack of access to fair credit in Kilburn in April, 2013.

Watch our video of the campaign and the hearing with Lord Mitchell:

The hearing with Lord Mitchell was a great opportunity for the local community to have a real say on not just the future of their High Street but influence policy from a grassroots level.

Parry Mitchell on tackling the scourge of payday lenders on our high streets.

Last week, I was given a tour of Kilburn High Road by the Kilburn Campaign for Fair Credit and Movement for Change. Afterwards, local councillors and I listened to testimony from local residents about the effect that the 13 – yes, 13 – payday lending shops on this one road are having on the local community. It was a timely reminder about the scale of the problem at a time when the government appears to be watering down its own commitment to cap the total cost of payday loans.

I heard about how these loans spiral out of control, with those taking them out swiftly finding they owe many times more than they originally borrowed. I also heard about how they are being targeted at members of the community that have recently arrived in the country, and therefore may be less likely to understand the terms they’re being offered. A Somali women with two disabled children ended up with debts totally £3,000 pounds.

Several pieces of testimony were particularly interesting. One member of staff at a high street bank told us how the very act of taking out a payday loan affects people’s credit rating and makes it less likely they will be able to take out a conventional loan in future; one of many sad Catch 22s in the payday loan business.

Another concerned a different example of consumer credit terms being abused. A man with learning difficulties found he owed £2,000 to a phone company after being mis-sold a contract. They didn’t provide policy statements and essential information, and instead sold on his debt, so he found himself being harassed by debt collectors. In my own speech to the House of Lords last year I cited another worrying case of a family friend whose son had learning difficulties, and, having taken out a payday loan, saw it quickly get out of hand.

The extent to which the problem has proliferated in the past few years was clear, and I dread to think of how these predatory companies must be looking forward to the extensive cuts in benefit which began to really take effect this very month.

There were also some very encouraging developments. The Kilburn Campaign for Fair Credit are pressing council members, including those in attendance, to be able to have financial health advice right alongside the NHS health advice on Kilburn High Road. There was also the inspiring story of the man who set up a credit union on arriving in Kilburn as a teenager, just as his father had in Dublin.

Ultimately fighting the epidemic of payday loan companies will have to take different forms. It will require local initiatives such as these, which aim to educate and provide people with advice on credit. Changes to planning laws to make it harder for these shops to engulf an area are also important. I saw last year with Ed Miliband and Stella Creasy how this was happening in Walthamstow.

It was fantastic to see Ed say recently that the planning regulations now decimating our high streets need to change. Kilburn High Road has some fantastic small businesses, and more should be given the space to grow. They put money into the community; payday loan shops take it out.

Finally, we need to ensure the enabling act that I was proud to introduce last year is used. The newly formed Financial Conduct Authority now has the power to cap total costs of these loans, and no amount of prevaricating and backtracking from the government can change that.

Lord Parry Mitchell is a member of Labour’s Shadow Business team in the House of Lords

Published 15th April 2013 on Labour Lords

Kilburn community leaders gave testimony to Lord Mitchell on Kilburn High Road on problems locals are facing due to high cost credit

With the help of Movement for Change, community leaders in Kilburn attended a hearing chaired by Lord Parry Mitchell to give testimony on problems local people are facing due to lack of access to fair credit in Kilburn on Tuesday 9th of April, 2013.

“This is a national problem that needs tackling”, said Lord Mitchell.

“People caught in a financial spiral with payday lending companies are everywhere in Britain and tonight just shows how intense this problem is.”

At the hearing Lord Mitchell collected evidence relating to the causes and impacts of high cost lending in Kilburn, and will be developing a set of proposals for providing the people of Kilburn with access to affordable credit.

Hearing was chaired by Lord Parry Mitchell (middle), Cllr Mike Katz (left) and Cllr Mary Arnold (right)

“This lack of proper financial advice has led to payday loan companies, who are now doing brisk business alongside branded retail and supermarket stores, taking over the High Road in numbers“, said Ajay Kumble, Chair of Kingsgate Neighbourhood Watch.

“I have seen the damage done to people by taking on expensive debt, and if we can help people to see a better way, then we will have done something good”, continued Alistair Thom, Vicar of St Luke’s Church just off Kilburn High Road.

Both Brent and Camden Council leaders were invited to the action to discuss what has done to fulfil the leaders’ earlier pledges on the matter. Mohammed Butt, Leader of Brent Council was enthusiastic to tell the group about the latest developments.

“We’ve done an article in the Brent Magazine that highlights the risks of using pay day lenders and promotes existing helplines, financial advice services and money management courses,” said Mohammed Butt.

Community leaders in Kilburn hope that this hearing will help bring a solution to the problems caused by high cost credit

“Brent council is also committed to having a cross council meeting with Camden council in May that the group of community leaders can attend to influence what the outcome of the actions will be coming out of that meeting.”

At the last public meeting held by the community leaders with Brent and Camden Council leaders on the 7th of March, 2013, Brent and Camden Council made pledges to:

1. work with each other and the Kilburn Fair Credit Commission to investigate how to move forward with a Community Finance Hub on the Kilburn High Road, which would provide access to credit union services, financial advice and money management courses, and to deliver a progress report by the 9th of April.
2. arrange for the Kilburn Fair Credit Campaign to meet with managers of the existing financial advice and money management services so that they can consider together how those services can better reach out into the community to proactively find those facing financial hardship.
3. design and deliver a publicity campaign with a visual presence on the High Road, which highlights the risks of using pay day lenders and promotes existing debt helplines, financial advice services and money management courses.  This publicity campaign will include adverts in Camden Magazine & Brent Magazine delivered to every home in the Borough.

Movement for Change community organisers have been working in Kilburn on this issue for the past few months. Find out about Movement for Change’s national training offer for fair credit here.

Cllr Sarah Hayward, leader of Camden Council, and Cllr Muhammed Butt, leader of Brent Council, front, at meeting held last week

A group of community leaders came together to meet with the leaders of Brent and Camden Council, Sarah Hayward and Mohammed Butt,  to negotiate concrete commitments to improve the presence of Credit Unions in Kilburn on 7th of March.

At the meeting community leaders paid tribute to the work that both council leaders have already done to tackle this issue, including extensive investment in financial advisory services locally, but asked for further steps to be taken to improve access to fair credit on the Kilburn High Road.

Most of the asks made by the group were met. Brent & Camden Council Pledged to work with Brent Council and the Kilburn Fair Credit Commission to investigate how to move forward with a Community Finance Hub on the Kilburn High Road, which would provide access to credit union services, financial advice and money management courses, and to deliver a progress report by the 9^th of April.

The Council also pledged to arrange for the Kilburn Fair Credit Campaign to meet with managers of the existing financial advice and money management services so that they can consider together how those services can better reach out into the community to proactively find those facing financial hardship.

Finally, the Council also pledged to design and deliver a publicity campaign which highlights the risks of using pay day lenders and promotes existing debt helplines, financial advice services and money management courses.  This publicity campaign will include a special issue of Camden Magazine & Brent Magazine delivered to every home in the Borough.

Kathryn Perera, Chief Executive of Movement for Change said, “This is a fantastic example of community leaders being brought together to identify local issues and take action on them.” Movement for Change community organisers have been working in Kilburn on this issue for the past few months.

“This is a moral issue which everyone should care about. If we can make credit fairer then we will have done a good thing”, said Alistair Thom, Vicar of St Luke’s Church Kilburn.

John Kilvington who runs the local Somali Centre, showing all of the debt cases he’s had to deal with over the past few months

There are now six payday lenders within a mile of each other in Kilburn.  They offer extremely high cost short term loans. Users of these shops can quickly become trapped in cycles of unaffordable debt, as they search for a second and third lender to service the repayments from their first loan.  What starts as a £200 loan for their children’s new school uniforms in September can spiral to thousands of pounds over the following year.

In preparation for the meeting the group spoke with local residents who have used payday lenders and also carried out a research action whereby members of the group posed as ‘mystery shoppers’ using scenarios to test how easy it was for people on low income to obtain fair credit on the high road. The result was that the group decided that the priority was to look at providing viable alternatives to these high cost loans. With high street banks turning away 95% of loan applications many people are forced to turn to payday lenders. Currently there is no credit union on Kilburn High Road and the existing credit unions have little or no visibility.

“This is a great first step on the path to making fair credit more accessible on the Kilburn High Road”, said Jacky Peacock, Executive Director Brent Private Tenants’ Rights Group at the end of the meeting.

The Event made the news in Kilburn, you can read the news story here.

Find out about Movement for Change’s national training offer for fair credit here.

Movement for Change activists are celebrating a major move forward in our co-ordinated actions to secure a cap on the cost of credit.

Yesterday evening, the Government enacted a surprise U-turn in the face of sustained pressure, recognising the need for a cap on the cost of credit and announcing measures to give such powers to a new regulatory body, with further announcements next week.

This victory marks the culmination of months of focused actions by Movement for Change activists across the country, supporting the parliamentary efforts of our Vice Chair Stella Creasy MP and others. With partners Unite the Union, Community Union, the Co-Operative Party, as well as dozens of local community groups, we have built a steady momentum around the testimony of people directly affected by the devastating consequences of high-cost credit.

The work continues. From Newcastle to Norwich and Walthamstow to Wales, our activists are planning actions for the new year to push the momentum forward towards an unequivocal cap on the cost of credit. Join us now to help make the change.