This month – in my role as Shadow Economic Secretary to the Treasury – I have responded to the news that exploitative pay day loan provider Wonga has stopped issuing loans as it teeters on the brink of administration.
I cannot mourn the demise of Wonga: their business model was immoral. Wonga had become a testament to so much that is wrong with our economy – too many people stuck in insecure employment reliant on short-term debt just to keep their heads above water. But in that sense Wonga was just a symptom of what is wrong: we need urgent action from Government to change this broken model and review the way lending is regulated.
That is why the next Labour government will lift living standards and tackle the persistent debt spiral that many working families have become trapped in by capping exploitative lending, increasing real wages, and ending austerity.
A Labour government would introduce a cap on credit card debt interest payments, extending the cap that is already in place for payday lenders. This will ensure that nobody will pay back more than twice the amount of their original credit card borrowings.