LONDON (10/21/13)--A member of the British Parliament has unveiled plans to tax payday lenders and use the money to fund low-cost alternatives such as credit unions.
British Labor Leader Ed Miliband said his party aims to raise enough cash to double the US$20.8 million the government now provides each year to the fund to expand credit unions (Standard Oct. 17).
Credit unions are being touted as alternatives to the high-cost payday lenders by the Archbishop of Canterbury, who has waged war on payday lenders by forming a credit union during the summer for clergy and urging others to support credit unions.
Payday lenders in Great Britain have been widely criticized for exorbitant interest rates that can reach 5,000% a year. The party has already proposed a cap on credit.
Speaking at a credit union in South London on International Credit Union Day Thursday, Miliband said the prices families pay keep rising faster than wages they are paid. As a result, the payday loan market has doubled in the past four years. Nearly one-third of the loans are to cover gasoline and electricity bills, he said.