Responding to the economy and finance debate at Usdaw’s Annual Delegate Meeting in Blackpool’s Winter Gardens, Paddy Lillis – Usdaw General Secretary said: “The UK is the fifth largest economy in the world, but working people are having to rely on in-work benefits and unsecured loans to make ends meet.
 
“We saw the extent of this problem in the response to last year's ‘Time for Better Pay’ survey. Over ten and half thousand members told us about the financial difficulties they are facing every day. Years of austerity have created an economy which exploits workers. Usdaw has a clear message, our members need better pay and secure work.
 
“The call for better regulation of the rent-to-own sector and pay day loan companies is very timely because at the beginning of April the Financial Conduct Authority introduced a price cap for the rent-to-own sector, set at 100%. Meaning customers will no longer pay more interest than the original cost of the item, saving consumers nearly £22.5 million a year in total. This is a welcome step in the right direction, but it still means that people who are already struggling to buy certain items could end up paying double the price.
 
“This is yet another example of loan companies increasing their profits while pushing people further into poverty.  Usdaw is calling for better regulation of this industry. The same applies to pay day loans. Low paid workers are being forced into a cycle of debt and repayment. The ‘Time for Better Pay’ survey showed the extent of this issue, with three quarters of workers relying on loans and borrowing to pay essential bills. Low paid workers struggling to get credit are forced to turn to pay day loan companies to make ends meet.
 
“The growth of this part of the finance industry is hugely concerning. Driven by years of austerity, pay day loan companies target low paid workers and with interest rates set at ridiculous levels, even the smallest of debts can spiral out of control. This is an industry where some firms are making millions of pounds off people struggling to get by financially. At its peak in 2013, the payday loan market was worth £2.5 billion. A price cap and other regulations were introduced, but many pay day lenders continue to ignore them.
 
“Government efforts to curb payday loans companies have been minimal. Regulators need to introduce lower caps to tackle these rip-off charges. We need more transparency so borrowers have clarity on the financial impact of these loans and we need to tackle the root causes which includes years of Government austerity, low pay and insecure work.
 
Notes for editors:
 
Usdaw (Union of Shop, Distributive and Allied Workers) is the UK's fifth biggest and the fastest growing trade union with over 420,000 members. Membership has increased by more than one-third over the last couple of decades. Most Usdaw members work in the retail sector, but the union also has many members in transport, distribution, food manufacturing, chemicals and other trades.
 
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