Warning over ‘debt disease’ as staff snap up payday loans

Research for Unite among 24,000 workers revealed the “shocking” finding that one in eight regularly turned to loan companies such as Wonga, Quick Quid and Money Shop, to tide them over in the week before getting their wages.

The union said workers faced “horrific” levels of interest of up to 4,200 per cent as they take out loans averaging £200 a month.

Unite said that at such high levels of interest, it would take people three working days a month to pay back a loan of £200.

Two fifths of those drawing loans used the money to pay their rent or mortgage and food, while a further 15 per cent spent it on utility bills.

Londoners borrowed the most for housing, while workers in Scotland were most likely to use loans to buy food.

A local authority worker from the East Midlands told researchers she would borrow up to £400 and pay back £560, adding that it was difficult to escape from the cycle of borrowing.

The study, conducted by social research firm Mass1, also showed that workers were cutting back on buying healthy food and even considered leading supermarkets too expensive.

Unite general secretary Len McCluskey said: “This is the true cost of the banking crisis and this Government’s mindless austerity addiction.

“Working men and women are under horrific strain, lumped with wage cuts and rising costs.

“Their falling wages simply do not last the month and in trying desperately to get by they are being driven into the arms of vulture lenders.”