THIS newspaper has carried a number of stories in recent years about the issue of pay day loans. Concern has been growing over the increasing proliferation of firms – many of which populate our high streets – and charge exorbitant rates of interest to those most in need.
however, action is being taken. The UK government has announced that charges and interest rates on payday loans will be capped by January 2015. The Scottish Government has asked for this change to come in sooner.
In a number of US states as well as France, Germany and Australia the interest charged by such firms has already been outlawed or capped, effectively driving them out of business.
At local authority level, Edinburgh City Council has spoken out against legal loan sharks and has taken a formal position by blocking access to payday loan ads from council computers.
So, it will come as a surprise to many Lothian residents that Edinburgh City Council has offered significant financial inducements to one such firm – the Cheque Centre – to take a lease at the council-owned Ratho Station offices.
The inducements came in the form of 30 months of free rent plus £160,000 to fit out the offices for a call centre.
All of our local authorities are cash-strapped, and have a duty to examine revenue-raising measures. But there are lines that must be drawn. And here the authority has stepped over that line.
The council will say that the lease was agreed before the council explicitly took a position of payday loan companies. But this is a weak excuse.
Concern over such practices has been growing for a number of years and residents have a right to expect the City Chambers to offer not only fiscal prudence but also moral leadership. The horror stories of families ending up deep in debt after taking out small loans should not be on the conscience of our elected members.