THE reality about the explosion in payday lending is that it has happened at the same time as a reasonable explosion in living standards, so it is not simply about the economic downturn or people finding themselves in a more difficult position economically; culturally, something deeper is going on.
MPs have talked about the “we want things today” culture. My grandparents never had any debt in their entire lives; they saved for everything and they tried to embed that idea in their grandchildren. It failed spectacularly in my case – I listened to them on many things, but clearly not on debt.
Something deep has changed in society. We want things immediately – at three o’clock in the morning, if the money is not quite there but someone can click on a payday lending website, that is unfortunately what too many people do.
The high streets in my constituency, particularly in Goole, have seen an explosion in the number of these shops and services. I have to say I bristle when I walk down the high street.
The high street should be a place for visiting the butcher, the baker and the candlestick maker – there is still one of those not too far from my constituency.
That is how we think of our high streets, but regrettably they are today overpopulated with betting shops and payday loan companies.
I probably have more complaints in my constituency office about the behaviour of the banks than about individual payday lenders, but that does not mean there is not a problem – we should not mention banks in anybody’s defence.
Obviously there has been an explosion in personal debt, and that is a deeply ingrained cultural thing. The solutions spoken about this evening are to be welcomed, but they deal with the symptoms, not the causes.
Education is key – and not just in schools. I was happy and proud to chair the inquiry by the all-party group on financial education for young people.
We welcome the fact that the Government has taken that report on board – it is a good start – but much more still needs to be done, because far too many people simply do not understand how to handle debt, what it is, how to work out how much they will have to pay or the impact on their life.
I have spoken before about the debt troubles I got into when I was a teenager and in my early 20s, funding my way through university. I bristle when I am told on Twitter: “You’re a millionaire Tory MP who doesn’t understand real life.”
That happens too often, but it was not the case with me; I struggled with high levels of debt that I am still dealing with.
I am lucky: I am a Member of Parliament with a reasonable salary, and I can get to grips with it. I did not realise at the time, however, that I would be one of those who might struggle. I did not realise that it had to be paid back and that the interest would be huge. The minimum payments are often less than the interest accrual every month.
Until we crack that, we will not get anywhere, whatever caps on lending, roll-over caps or whatever else we introduce.
Until we get to the bottom not just of how to work this into the curriculum, but of how to demonstrate the impact of this problem on people’s lives in the longer term, we will not make real progress.
I am still dealing with the debt issues I encountered in getting myself through university. I am lucky, as I said, but others will be condemned by their debt for very many years.
This is largely because of the failure to understand that while some debt is good – politicians talk about mortgages, home ownership and so forth, perhaps as necessary evils – much debt is truly evil and life changing for so many people.
Until we crack that problem through education, I do not think that any of the other solutions will do a great deal, welcome though they are.
Financial education in schools is a good start, but we need to address the adult population if we want to make a real change.
We face a great problem with financial illiteracy in our adult population.
Without cracking the financial illiteracy that is so evident in this country, I think that everything else will be but a drop in the ocean.
*Andrew Percy is the Conservative MP for Brigg and Goole. He spoke in a House of Commons debate on personal debt.