By James Scott
In offering a vision of how the Labour Party would build a One Nation economy, Ed Miliband recently promised that a Labour government under his leadership would ‘cap interest on pay day loans’. This cap would instantly lift thousands from a situation of intense anxiety and financial hardship, loosening the stranglehold that the pay day lending industry has over the lives of many people and breaking down the system of bonded finance that has grown since 2008.
Ed Miliband’s commitment comes after a year of hard work by a large number of organisations and activists. The ‘Sharkstoppers’ campaign has been truly of the labour movement, involving a number of Labour MPs and Peers, a host of trade unions, a vast number of local Labour branches, the Cooperative Party (and bank!) and Movement for Change. Our work on the campaign began when we teamed up with Stella Creasy MP to run a listening campaign in Walthamstow. This early work showed us how deeply people felt about pay day lending, prompting us to begin building alliances of support across the capital and then across the country. This alliance now includes numerous organised communities, connected into the national campaign but each rooted in the experiences of their particular town or city. It is this combination, of the local and the national, which has created an expectation of action and which underpins Ed Miliband’s announcement last week.
The success of this campaign shows the potential for community organising to have an impact on the way the Labour Party develops policy. Ed’s announcement is in response to the hearing the voices of people who have organised to be more powerful and louder than if they had chosen to remain alone. He did not triangulate in the search for policy resonance, but responded to a new way of doing politics that asks someone what they believe and then asks what they are going to do about it.
Movement for Change have been experimenting with these new organising models, and in doing so are taking the campaign to end legal loan sharking into its next phase. Over the past four months we have had hundreds of meetings with people from the communities which flank the Kilburn High Road. Through this we now have a better understanding of the financial reality that face many families, and the complex and often surprising relationships they have with the pay day lenders. People often speak of devastating experiences in their local bank branch, turned down for a small loan in a degrading and impersonal manner, before heading to the pay day lender next door where they feel they are treated efficiently and with respect. Of course for many this illusion does not last long.
So for lots of people in Kilburn the prospect of an interest rate cap is a victory. But the depth of the relationships built through our community organising mean we know that this is only part of the story. If a cap is introduced, will any legal lenders remain in Kilburn to offer credit to families who suffer short term financial shocks? With the prospect of the mainstream banks filling the credit gap remaining so distant, would the mother that ran out of money on a Friday now be forced to go to an illegal lender to feed her children over the weekend?
It is because of such difficult questions that Movement for Change is now organising the Kilburn Fair Credit Commission. Over the coming months we will be working with a broad range of community leaders to investigate how we not only take on exploitative pay day lenders, but also improve local access to low cost, fairer forms of credit. This process will combine community organising and policy development, and show how Ed Miliband’s commitment to cap interest rates on pay day loans can be the first step in an on-going dialogue between the people whose lives are directly affected by the lack of fair credit and the politicians whose job it is to provide solutions.
Now that is a vision I could buy in to.