Iain Gray MSP has voiced his concerns about the growing scale of payday lending in the county after new figures revealed East Lothian is among the top ten constituencies for the highest levels of payday loan debt.
A report published by the StepChange Debt charity on the circumstances of the 4,500 clients it helped across Scotland last year, shows that people in East Lothian seeking debt advice are now saddled with average payday loan debt of £1864. This is over £450 more than the Scottish average and is also up on the figures for 2010 and 2011, demonstrating the growth of the problem.
The average total debt of StepChange clients in East Lothian last year was £14,633, nearly £500 above the client average across Scotland. Figures on rent and mortgage arrears for clients in East Lothian were also above average, while energy bill and Council Tax arrears were slightly better than the Scottish average.
These latest figures echo statistics released earlier this year by Haddington Citizens Advice Bureau (CAB) which showed that the number of cases relating to debt it took on increased from 43.58 per cent of the total enquiries for the quarter April-June 2012, to 51.4% in the same period for 2013.
The Scottish Government has launched the “12 Days of Debtmas” campaign to warn people against the dangers of payday lenders, promote debt advice services and highlight credit unions as a low cost alternative to these legal loan sharks. The campaign comes after concerted pressure by the ‘Debtbuster’ campaign on high cost credit led by Labour MSP for the Lothians, Kezia Dugdale.
Iain Gray MSP said:
“This new debt report makes for worrying reading in East Lothian, especially on the growing problem of payday loan debt. It shows overall debt here is nearly £500 more than the Scottish average, while payday loan debt is £466 more than average across Scotland. High levels of rent and mortgage arrears are also a real concern.
“While the figures only relate to StepChange clients in the county, I fear that they are only the tip of the iceberg and that many more county households are struggling with high levels of debt. With local families preparing for Christmas, the temptation to borrow money is ever-present and debt problems can quickly get out of control.
“I am glad that the Scottish Government have listened and acted with its “12 Days of Debtmas” campaign to warn people about the danger of payday lending and other high cost credit. There are better alternative sources of credit, such as credit unions, but we need to raise public awareness of them and try to reduce the number of people trapped in a spiral of debt.
“I also urge anyone in East Lothian who is struggling with debt or needs advice on how to manage their debt to seek immediate help from StepChange or their local CAB. Free help and advice is available by calling 0800 138 1111 or online at www.stepchange.org.”
As the worrying new debt figures came to light, the county’s MP Fiona O’Donnell has given her backing to the Charter to Stop the Payday Loan Rip-off. The Charter calls for tougher regulation of payday lenders and is supported by some of Britain’s biggest debt, consumer and anti-poverty organisations – including Which?, Citizens Advice, StepChange, Church Action on Poverty, and the Centre for Responsible Credit.
MPs from all parties and campaigners are urging the Financial Conduct Authority to back the Charter and introduce tougher regulation of payday lenders to stop millions of people being ripped-off. Over 70 MPs and Peers have backed the Charter and members of the public can add their support at www.change.org/paydayloancharter
Fiona O’Donnell MP said:
“I’ve signed the Charter because payday lenders are ripping off thousands of people, trapping them in spirals of debt. The Financial Conduct Authority’s proposals for regulation are a step in the right direction, but they don’t go far enough.
“This is a once in a generation opportunity to get the proper regulation and enforcement of payday lenders that we badly need. If the opportunity is missed then payday lenders will be able to carry on exploiting people.
“I’d encourage people in East Lothian to add their voice to the growing calls for tougher regulation of payday lenders by signing the Charter at change.org/paydayloancharter.”