Payday Loans and Gambling: Protecting the Poor from Themselves

Like Citizens Advice the Money Advice Trust that runs the Debtline has called for the OFT to intervene where these companies are not sticking to 'responsible lending' practices.

Maybe I've just become too horribly middle class to care or too suburban to notice, but it seems that the Dickensian poor are still with us. Fortunately there are charitable souls out there, at least in the thoroughly proletarian Labour Party and left-liberal commentariat, who have found time in their busy lives to pity them. Whether it's calling for kindly interventions from the coalition government to put an end to the way these helpless saps are tricked by evil types into entering their betting shops; or calling for kindly interventions from one of its Quangos to put an end to those other evil types who shamelessly (sic) offer them loans they couldn't hope to pay back. Or maybe, being a rather sensitive soul, I just read The Guardian a little too much?

According to research conducted for The Guardian the poor are so dazzled by 'high speed, high stakes gambling machines' that something must be done to rescue them and quick. In places where most people have jobs they spend £1.4bn on these these fixed odds betting terminals (FOBT). Compare this with the areas where they are so poor and workless that they are helplessly in thrall to these horrendous contraptions and shoving £5.6bn into them! The great and the good from Mary 'retail guru' Portas to the kindly and not at all aristocratic Hilary Benn are appalled by them, as are right-thinking comrades of the workless at the calculatedly nasty John Redwood MP. They are rightly outraged at his suggestion that the poor 'have time on their hands' and are stupid enough to believe that they can get rich quick with a bit of gamblers' luck. How patronising!

More seriously ... I hope you noted the touch of sarcasm so far ... there has been much up-in-armsness about Payday loans. Citizens Advice (whatever happened to the Bureaux?) has urged the Office of Fair Trading (OFT) to suspend the licences of four major lenders who, it says, 'are behaving as a law unto themselves' with their fees, charges and harassment of customers. No joking matter, of course. According to National Debtline they received double the number of calls - 20,000 of them - in 2012 as they did the year previous on matters relating to these loans. Like Citizens Advice the Money Advice Trust that runs the Debtline has called for the OFT to intervene where these companies are not sticking to 'responsible lending' practices. This month the government, under pressure to 'do something', has announced it will work with that other Quango the Advertising Standards Authority (ASA) and the OFT's 'tougher' successor Quango with regards Payday loans the Financial Conduct Authority (FCA), to clamp down on lenders that 'lure' customers into levels of indebtedness that are beyond their modest means.

And fair enough you might say. Even if you accept that gamblers only have themselves to blame for their debts, this is a miserable state of affairs for anybody just trying to make ends meet. But perhaps we should refer back to Redwood on this one too. However revolting his view might be about the propensity of the poor for gambling, he at least allows that they might have the potential to become rich (or at least less poor) if they didn't waste their time in this way. Those supposedly defending the poor are far more patronising and illiberal in their insistence that the machines and the betting shops be made less numerous and less accessible to them. The assumption being that they really are lazy and feckless and at the mercy of big all-powerful corporations; and that each of those jumped-up one arm bandits 'sucks money from the poorest communities' as Diane Abbott puts it. The same goes for Payday loans. A more sober view might first consider whether a frequenting of betting shops and a resorting to 'short term, high cost' loans might have something to do with the economic crisis we're in. National Debtline recorded an increase in calls about these loans of more than 4000% - coincidentally the rate at which some unscrupulous lenders are reportedly lending - since the recession began in 2007.

But even that isn't the nub of it. Beyond the desperation that might drive people to take on debts they can ill afford, or place bets they might not otherwise place, it is also worth asking who is really responsible for those decisions? The betting shop or the firm that owns the machine? The 'irresponsible' lender looking to maximise their return? No. To blame these no doubt socially-irresponsible and super-profit making outfits for the actions of their customers is to rob people of their dignity as autonomous individuals capable of running their own lives. Which is, in my view, a good deal worse than what they might lose as a result of their own foolishness having an extravagant flutter too many or even borrowing money at an extortionate rate. By seeking to deny people even the opportunity to make up their own minds or to be responsible for their own actions, and instead portraying them as victims of forces beyond their control, these commentators and policy-makers are degrading us all. Most of us would rather be faced with the world according to John Redwood, however contemptuously framed, than be told no less contemptuously that we need protecting from our own worst instincts. In fact, I'd put money on it.


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