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UK DEBT CULTURE – The Church strongly criticises loan sharks and doorstep lending companies.
ARCHBISHOP OF CANTERBURY: UK DEBT CULTURE STRAINING FABRIC OF SOCIETY

(By James Kirkup, Political Correspondent, 28/04/2008)

Britain's debt culture, the millionaire bankers who have profited from it and the ministers who have allowed it have all dangerously strained the fabric of society, the Archbishop of Canterbury has said.

In a pessimistic analysis of modern British life and the economy Gordon Brown has overseen for a decade, Rowan Williams said the Government should impose tougher rules on lenders and demanded action to close the wealth gap between rich and poor.
Dr Williams warned that an "economy built on spiralling, more or less uncontrolled, credit" is leading to "the erosion of family life and the erosion of self-confidence" for many people.

Christian charities working with the poor have found that as many as one in three of their clients are being driven to consider suicide as they struggle to pay off debts, he told the House of Lords.

Young people in particular, he said, are under greater pressure, often becoming burdened by "crippling" levels of debt because inadequate financial education leaves them unable to understand the consequences of the loans they take out.

Significantly, the Archbishop said the introduction of student loans has intensified the problem, helping persuade many young people that large debts are routine and normal.

He reserved his strongest criticism for loan sharks and "doorstep lending companies" who he said are routinely charging poorer borrowers as much as 1,000 per cent interest rates, a situation he described "indefensible".

He said: "If the historic sin of usury still has any meaning in the world of smoke and mirrors that our modern credit economy seems to have become, it is surely in this context." Amid the global credit crunch, mainstream lenders are increasing wary of lending to people on low incomes, meaning they are forced to rely on specialist loan companies that charge higher rates.

Dr Williams said he was "bothered" by such lenders profiting from charging high rates to the poorest members of society, and called for stronger regulation, and possibly even a legal cap on interest rates.

"My immediate concern is looking at the bottom of the ladder and the way in which the credit crunch impacts so disproportionately on the most disadvantaged. If we start there, at least we can do something," he told Radio Four's Today Programme.

The huge salaries and bonuses enjoyed by many bankers and financiers are breeding "envy and cynicism" and leaving less well-off people "alienated from society," Dr Williams said.

"There may be an element of 'I would like some of that' but there is also an element of 'What kind of society is this? How can I trust the system when it rewards some people so disproportionately in a way that doesn't connect at all with where I am?'" he said, The answer, he said, could be the "regulation of high salaries".

Alan Duncan, the Conservative business spokesman, yesterday backed the Archbishop's call. "Too few politicians have appreciated the plight of poorer people trapped in debt," he said.

"As the economy turns, many of us fear that the true scale of indebtedness and the pain that goes with it, is going to become more and more apparent. "We need a good hard look at the credit card industry, where too many people are transferring debt to zero interest offers without cancelling their other cards."

But Downing Street insisted that the Government was already taking steps to help people struggling with personal debt. A spokeswoman for Gordon Brown said: "This is something that the Government takes very seriously. There are measures in place to assist those who might be at risk of falling into indebtedness."

The Department for Business has introduced an advice project called Face to Face with 500 debt advisors helping 66,000 people already, she said, adding that a crackdown on loan sharks and doorstep lending is underway.

ID: 41272
Author(s): SCR
Publication date: 28/04/08
   
URL(s):

Link to Telegraph article

In full: Rowan Williams's speech on the economic downturn
 

Created: 08/05/08. Last changed: 08/05/08.
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