Councillor calls for a cap on payday loan interest rates (From Haringey Independent)

Haringey Labour councillor calls for a cap on payday loan interest rates

2:50pm Wednesday 26th September 2012 in News By Emma Innes

A Haringey councillor is calling on the government to do more to regulate the interest rates charged by payday loan companies.

Cllr Joe Goldberg, a Labour councillor for Seven Sisters, is demanding that the government thinks again about its refusal to cap interest rates.

Cllr Goldberg is worried that the changes to taxes and benefits being implemented by the government next year will mean that more people are dependent upon payday loans.

According to the Haringey Labour Group, from April 2013 about 36,000 of Haringey’s lowest paid will face an average increase of £220 in their council tax bills.

This huge increase is a result of the government’s cuts to council tax benefit.

Cllr Goldberg is concerned that this will add to the number of people requiring payday loans each month.

Last year an estimated 15,000 households in the borough had to rely on payday loan companies and it is believed that this number will increase further with the council tax benefit changes.

As a consequence Cllr Goldberg believes it is vital that the government brings in an interest rate cap to prevent people being caught out by the current rates which can be as high as 3,000 per cent.

Cllr Goldberg said:  “With thousands of Haringey households facing benefit cuts and tax rises next year, there’s a real danger more people will be forced into the hands of exploitative pay day loan companies like Wonga.

“If the Government won’t change course and think again about its decision to slash council tax benefit for the lowest paid families, it’s even more urgent they take action now to cap the crippling interest rates these organisations charge and limit the damage they do to our communities.

“As a council we’re doing all we can to limit the proliferation of pay day loan shops on our high streets and promote safer alternative like the credit union, but without government support, there’s a limit to how much we can do.”