Co-operative Councillors in Manchester have led the charge to pass a motion condemning ‘legal loan sharks’ and promoting credit unions.

Councillor Sue Murphy (Deputy Leader and Labour & Co-operative councillor for Brooklands) and Councillor Kevin Peel (Labour & Co-operative councillor for Manchester City Centre) proposed and seconded a motion to yesterday’s meeting of Manchester City Council. The motion, posted in full below, draws attention to the End Legal Loan Sharking campaign led by Co-op MP Stella Creasy and seeks to promote affordable credit and financial literacy, in particular through credit unions.

In his speech, Councillor Peel stated:

“High-cost lending is the outcome of a deeply flawed credit system, which does nothing to help people out of poverty. A cap on credit costs is the first step in rebalancing that system.

“I welcome the pledges in this motion to promote financial literacy, affordable lending and credit unions and I would urge all Members to join a credit union and support these organisations which provide affordable credit to those who need it.

“The previous Labour Government understood the problems associated with personal debt. They introduced the Consumer Credit Act, took action on loan sharks and supported the development of credit unions as an alternative source of loans and financial services.

“But this government are failing to tackle the urgent and fast growing problem of high-cost credit.

“I hope that by the passing of this motion we can put pressure on the government to change their view and also send a strong message to these legal loan sharks that this city will no longer tolerate them preying on our communities.”

Manchester is indeed home to several successful and dedicated credit unions but legal loan sharks are flourishing nonetheless. This demonstrates the need for both proper regulation and decent mutual alternatives working hand in hand.

Motion – Loan Sharks

Council:

Notes and welcomes the UK-wide campaign to end ‘legal loan sharking’.

Believes that the lack of access to affordable credit is socially and economically damaging. Unaffordable credit is causing a myriad of unwanted effects such as poorer diets, colder homes, rent, council tax and utility arrears, depression (which impacts on job seeking behaviour) and poor health.

Further notes that unaffordable credit is extracting wealth from the most deprived communities.

Believes it is the responsibility of all levels of government to try to ensure affordable credit for all, and therefore pledges to use best practice to promote financial literacy and affordable lending. This will help to ensure that wealth stays in the local economy. We also pledge to promote credit unions in Manchester, community based organisations offering access to affordable credit and promoting saving.

Calls on the government to introduce caps on the total lending rates that can be charged for providing credit.

Calls on the government to give local authorities the power to veto licences for high street credit agencies where they could have negative economic or social impacts on communities.

Signed: Councillors Sue Murphy (proposer), Kevin Peel (seconder), Jim Battle, Nigel Murphy, Jeff Smith, John Longsden