Debt crisis gets personal

Debt has become an ever growing problem over recent years, with payday loans in particular driving people deeper into trouble.
Debt has become a reality of modern life. It seems almost from the moment a person leaves school or university they become saddled with debts. Student fees, credit cards and then mortgages - all add up to a lifetime of debt.
The total level of personal debt in Britain is £1.43 trillion, an average of £54,000 per household - up from £29,000 a decade ago. Some £1.27tn of the debt is now owed in mortgages and £158 billion in consumer credit.
People are being driven increasingly in these cash-strapped times to look for loans to tide them over. After the credit cards are maxed out the next place to look is the bank overdraft or loan companies.
Of course, if people were paid more there would be less need to go to the loan companies.
Data from the Office for National Statistics shows that between 1977 and 2008 the wage share fell from 59 per cent of national income to 53 per cent, while the share of profits rose from 25 per cent to 29 per cent.
Payday loans are theoretically supposed to tide the person over until pay or benefits day. The problem comes with the practice.
The Daily Record reported recently on a woman who took out four payday loans of £300 each to pay for her father's funeral.
She thought she would get the money and pay the loans off but they just kept building up. She would take out one loan to repay the other and also got bank charges.
Then when she got paid the companies took the money. "I would be paid at midnight and the money would be gone in an hour or two. It meant I didn't have a penny. I ended up with rent arrears and was threatened with eviction. I couldn't eat and had to beg and borrow to get my two kids anything. We were surviving on 25p noodles," she told the paper.
She then got harassed by debt collectors, being bombarded with constant phone calls, texts and emails. She has now got on top of her debts with the help of the Govern Law Centre.
The payday loan can be OK if it is paid off in the time agreed. If you were to borrow £90 from a typical lender for three days it would cost £8.37, which is likely to be less than the bank charges for an unauthorised overdraft.
So if a £200 loan was taken out over 14 days, it would cost £234.27. If the lender is unable to retrieve that money from the borrower's account on the repayment date, a £20 late payment charge is applied. If the loan is rolled over for another 14 days then £274.17 will be owed. If then it is rolled over for another month, the debt will be £368.77.
If the lender cannot be repaid on the final agreed day, interest is added for up to 60 days at 1 per cent a day, then frozen. In this example, that would add more than £200 to the cost before fees were frozen. After four months the debt would have grown to almost £600.
The rates of 5,853 per cent APR quoted by the lender Wonga and 2,400.8 per cent APR by Money Shop are over a year (APR means annual percentage rate). The lenders point out that these are intended to be short-term loans, so APR is not a good indicator.
Critics claim that the companies do not check out the creditworthiness of the borrowers. The Citizens Advice Bureau has reported that among 2,000 loans taken out with 113 lenders, in nine out of 10 cases the borrower was not asked to provide documents to show they could afford the loan.
Of those who had repayment problems, seven in 10 said they had been put under pressure to extend the loan, while 84 per cent said they had not been offered a freeze on interest rates and charges when they said they were struggling to repay.
The use of Continuous Payment Authorities, whereby the lenders can access borrowers' bank accounts, have also caused problems.
"It is unacceptable that in a modern society, growing numbers of low-income households have little choice but to resort to unscrupulous lenders and to be subject to the abuse of power and increased deprivation to which this can lead," says Church Action on Poverty director Niall Cooper.
"Better regulation of the credit industry is urgently needed to bring down the cost of socially harmful credit and to ensure that lenders behave more responsibly."
A recent survey commissioned by consumer organisation Which? revealed that 400,000 people are using payday loans to pay food and fuel bills and 240,000 people are using the loans to pay off existing debts.
Government it seems is finally acting on payday loans, capping the amount that the companies can charge.
Though as Financial Conduct Authority (FCA) chief Martin Wheatley has warned limiting rates, loan terms or advertising would not necessarily curb lenders' behaviour - and could force consumers to use even less reputable providers.
The FCA has already proposed other changes to payday loans, including limiting roll-overs to a maximum of two and introducing more controls on how continuous payment authorities can be used.
One alternative source of credit is provided by credit unions. Credit unions are mutual loan and savings organisations made up of members drawn from a particular area, such as trade unions, the police or a religious group. So there is a need to be qualified by virtue of being a part of one of these groups.
There are now 400 credit unions in Britain and Northern Ireland, with over one million members. In other countries they are much more popular, with 45 per cent of US citizens and three-quarters of people in Ireland being members of a credit union.
The British government is keen to extend credit unions, looking to double the number of members.
Credit unions are prepared to offer loans of between £50 and £3,000. They offer loans at more reasonable rates - typically 6 per cent rising to 26 per cent APR.
Sometimes loans can be under 6 per cent a year, but the interest is usually around 12.7 per cent APR going up to a maximum 26.8 per cent APR. So if £100 is borrowed over a year, the most that needs to be repaid is around £127.
In order to borrow from a credit union, an individual has to be a member and to have paid in for a period.
There are also savings accounts available. Credit unions do not have shareholders, so all funds go into the running of the organisation and better terms for savers and borrowers.
They are also beginning to expand into other products like current accounts and morgages.
Credit unions certainly represent a better option for those looking to borrow. But maybe if wages went up, with measures like the living wage implemented across the board, there might be less need to borrow in the first place.

Challenge for the Pope is whether his teachings result in real social justice inside and outside the Church

The papacy of Pope Francis has brought a breath of fresh air to the Catholic Church.

His message has been one of social justice, not only about embracing the poor but asking why in a world of such abundance so many live in poverty.

It is these fundamentals of his message that many, particularly in the media world, choose to ignore.

Instead of embracing the message of social justice and its ramifications, many have chosen instead to idolise the man himself.

Maybe in the inane modern world of celebrity this was inevitable but it is also to misunderstand the message that the Pope is trying to convey. It is not all about charity but justice.

Christmas is a time when charity comes to the fore. People reach out and give to the homeless, foodbanks and other charities. However, charity as an end in itself has little merit.

Giving to a homeless charity at Christmas, whilst ignoring the homeless for the rest of the year could almost amount to self-indulgence.

It was Pope John XXIII who said that charity can never be a substitute for justice – this appears to be a mantra that Pope Francis also embraces.

Simply adopting a charitable response to social problems that can easily be resolved if the political will exists is simply putting a band aid on the problem. At best a salver of conscience, at worst willful collusion in the causes of the injustice in the first place.

So a campaigner for justice cannot accept a situation of growing homelessness, much of it caused by deliberate government policies being implemented to cut benefits.

Similarly, nor can they accept in a country of 88 billionaires that 500,000 people have to go to food banks.

In the coming year, it must also be hoped that more is heard from Pope Francis on the need to attain equality as well as address poverty.

The Pope has made a bold start in tackling Vatican corruption, consulting the laity and in setting up the commission on child abuse. However, the basic structures of the Church need to change.

A Church based on social justice cannot go on discriminating against women in the way that it presently does.

If it is serious about child abuse then the structures that allowed that abuse to occur in the first place need to change.

The position of priest needs to be reviewed and reformed, from qualifications to practice. Structural change will be the mettle test of whether the Catholic Church really is changing.

The Pope has made a great start at a rhetorical and reforming level; the challenge though will be how far these changes can be made reality.

How far pursuit of the social teachings means demanding justice, not just charity and also whether that demand for justice will extend to the structures of the Church itself.

Why media see Mandela as a saint but Chavez as a sinner

There has been limited social and economic change in South Africa since the fall of apartheid. Nelson Mandela helped defeat apartheid but he did not bring economic transformation for the mass of people living in poverty.
In terms of the media and political lexicon it is interesting to compare the attitude to the death of Mandela with that of Hugo Chavez, who did bring economic transformation to Venezuela. Whilst Mandela is viewed as a saint, Chavez remains a sinner - these different attitudes say much about the capitalist values that underpin many of the recent Mandela tributes

Healthy living can help cut dementia but society has to change to make it happen

The news that a study by Cardiff University has found that a healthy lifestyle can reduce the likelihood of dementia by 60 per cent is a cause for hope amid a growing epidemic.

The research, which has involved following 2,235 people since 1979, found that regular exercise, eating fruit and veg, staying slim, light drinking and no smoking reduced the likelihood of getting dementia.

The researchers also found that if 50 per cent of men had taken up the five options there would have been 13 per cent less dementia generally.

I was fascinated by the research, given that my father and grandmother (Dad’s Mum) got dementia. Given the genetic trends, dementia developments are always of more than a passing interest to my brother and myself as well as our cousins and offspring. That said: Dad really did follow the five criteria set out for a healthy lifestyle. He exercised every day, always going for regular walks and before that swimming. He ate a balanced diet. He went on a stringent diet about 30 years before he died, reducing his weight by a couple of stone, then made sure he never really put on much weight. He drank moderately and gave up smoking at about the same time as he lost the weight. Prior to that he was really only a moderate pipe smoker.

So the latest research doesn’t really throw a lot of light on dementia amongst the Donovans. We are still very much in the genetic analysis, namely that it is handed from generation to generation somehow. The upside for us is that Mum had an almost photographic memory.

The latest research though useful, underlines the need for more research. There are 800,000 plus dementia sufferers in the UK, with the number set to increase over coming years. Critics have attacked the low level of funding for research into dementia compared to cancer. Cancer research receives four times the level of research funding that dementia does.

At the same time that the research was published, Prime Minister David Cameron was set to chair a G8 international conference on dementia or as it was more dramatically stated “the 21^st century plague.”

This prioritisation of this disease internationally must be welcomed but it also raises questions.

If the Cardiff University research is accepted, namely that factors about the environment in which we live can be conducive or otherwise to getting conditions like dementia, then that raises many questions. Not least the whole manner of human evolution in the 21^st century.

The lifestyle of the mass of people is becoming more and more sedentary. Economic progress is being driven increasingly by internet based technology.

Young and old alike spend growing amounts of time locked into laptops or mobiles, seemingly cut off from the natural world. It always amazes me when travelling through some fantastic rolling countryside on the train to observe people plugged into these various electronic devices, totally missing the panorama going on outside the window.

The sedentary existence is further promoted by the loss of playing fields and the like across the country. Computer games abound. Obesity is increasing to epidemic proportions, particularly among the young as a result of this major change in our way of living and working.

There is also the growing ignorance regarding food. The explosion of fast foods on the back of a culture that no longer creates the space for proper meals being eaten and shared.

The fast food epidemic has helped fuel the obesity epidemic. Many people today will not know that a healthy lifestyle requires fruit and vegetables as part of the diet. The public health message about the need for the five a day of fruit and veg has hit home with some but many remain ignorant.

Then there is the basic lifestyle of people today. The insecurity of work, leads to stress and less possibility of a work /life balance. What hope is there for someone working long hours for low pay in say a call centre environment? This lifestyle is not conducive to following the five elements set out for healthy living, if anything the opposite. A sedentary existence that does not allow time to exercise and due to stress pushes the individual toward drinking and smoking. When the person also has children to care for, the problems multiply even further.

As someone who endured the pain of watching my Dad descend into the depths of dementia, whereby he did not recognise any of the family, I welcome any advance in averting or treating the disease. However, if we are to take the medical research seriously, then there is a need to look to the sort of society being created.

Low wages, insecure work, sedentary type existences do not promote healthy living. Everyone needs to take responsibility for the way they live but there also needs to be wider look taken at how conducive life patterns are to that goal.

The ultimate conclusion could be that the type of society being created today makes conditions like dementia more not less likely to develop. If we are to all follow the five elements that ensure more healthy living then just maybe the whole way in which society is organised today needs revaluation. For it will only be by taking a truly holistic approach to how our society is organised that conditions like dementia can really be overcome.

Mandela committed to the struggle and freedom

The enduring theme of Nelson Mandela’s life was the struggle for freedom.

He was part of a group of ANC individuals with the same goal in their lives. They included Oliver Tambo, Mac Maharaj and Thabo Mbeki.

Reading Mandela’s biography the “Long Walk to Freedom” the theme that resonates is that of the liberation struggle. His life has been an inspiration to all those involved in similar struggles around the world. Many of these struggles start off as the few before gathering pace to become the many.

It is in the context of struggle that Mandela’s life needs to be set. Some of the eulogising since his death was announced on Thursday has come from strange quarters. Viewing some of the coverage here it was as though the whole of the UK was united in opposition to apartheid, with those pop concerts being the thing that really helped free Mandela.

These views are absurd. Many of those who now proclaim in favour of Mandela and the anti-apartheid struggle were firmly on the other side at the time. Let’s remember, Margaret Thatcher was the Prime Minister of this country for 10 years, she stood out defiantly almost alone at times in opposition to the imposition of sanctions on South Africa.

The same British establishment that now seems to want to be allied with all that was good about Nelson Mandela continues to sweep its own atrocities such as those committed in Northern Ireland under the carpet.

Maybe if the British state wants to pay tribute to Nelson Mandela it should take a tip out of his book and create a peace and reconciliation process in Northern Ireland. This one act in South Africa dealt with much of the hurt and suffering of the past, it also marked an openness that has long been alien to the old imperial country Britain.

Mandela was a hero of South Africa, he led the fight to end apartheid, however in the rush to eulogise, we need to remember that the great man did not bring a better material state to the mass of people in that country. People still live in poverty. One of the great tragedies of South Africa has been that despite Mandela’s dream of equality, the same powerful corporations which dominated under the apartheid regime, seamlessly retained their power and position under Mandela led and subsequent South African governments.

Maybe this was a key to a peaceful transition but it also calls into question how much has changed. Capitalism still rules and mass inequality exists.

Mandela would have recognised this situation. It would also be fair to say he did his bit in ridding the country of its racist rulers, it is for the next generation to sort out poverty and inequality. The struggle continues. Mandela was a great and inspiring man, from which we all can learn...but let’s remember he was also human.