Payday loan firms council leases ‘must be banned’

Kezia Dugdale campaigns against 'legal loan sharks'. Picture: Malcolm McCurrach
Kezia Dugdale campaigns against 'legal loan sharks'. Picture: Malcolm McCurrach
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CITY leaders were today urged to ban payday loan companies from leasing council-owned property.

Lothians Labour MSP Kezia Dugdale said the city council should refuse to rent premises to controversial lenders that charge massive interest rates to vulnerable people struggling to make ends meet.

The call follows the revelation in yesterday’s Evening News the council has bankrolled loan firm the Cheque Centre Ltd – which charges customers over 3800 per cent interest – with £700,000 of council taxpayers’ money, despite the authority’s strong public stance against the firms.

The company is paying half-rent for the first five years of a ten-year lease on council-owned premises at Ratho Station and also received more than £160,000 of council cash to help pay for fitting out the offices.

The 19,000sq ft premises at Phase 3 of the Ratho Park development are Cheque Centre’s European headquarters and employ around 180 people.

Ms Dugdale, who has spearheaded the Debtbusters campaign for a crackdown on “legal loan sharks”, said she was shocked to find the city council had signed up to such a deal.

And she urged Edinburgh to follow Glasgow’s example in banning any future lease of council-owned property to the firms.

She said: “Glasgow City Council has a policy against letting buildings to payday loan firms. Not only is Edinburgh doing the opposite, it has offered them at a discount rate.”

Last year, the council announced a package of measures aimed at curbing the “excesses” of the payday loan firms, including blocking access to their websites and ads on council computers. The move followed a petition by the Debtbusters campaign.

Ms Dugdale said the council’s cut-price rental deal with Cheque Centre was “incredibly short-sighted”.

She said: “It’s these companies who are causing financial misery throughout the city.

“When people don’t have enough money, it’s very often their rent and council tax bills that go unpaid.

“So the council is shooting itself in the foot – the more people take out payday loans, the harder it is for the council to cut the level of arrears which are building up.”

She said Glasgow had the most progressive anti-payday loan policies in the UK and said Edinburgh should also follow its example in cutting business rates for credit unions, which offer an alternative to the payday loan firms.

She said: “The campaign we have been running was never about taking a pious position that people should not borrow from payday loan companies. We recognise that people need credit.

“Credit unions offer a credible alternative but they need to be easy for people to access so they need to be on the high street. Edinburgh could encourage that by cutting their business rates so they can afford to open there.”

Finance convener Alasdair Rankin said extra support for credit unions could be examined, but he did not believe a blanket ban on leasing property to payday loan firms was appropriate. He said: “What these companies are doing is not illegal and some people find it quite useful if they are on a night out and they can ring up and get some cash instantly.

“There are circumstances where people are taking the money to get by, day-to-day, and that is different. We have been developing a relationship with the Capital Credit Union to raise awareness that there are alternatives.”