Tag Archives: lender

Tories are forcing ‘mortgage prisoners’ to pay up to three times a competitive interest rate

Houses: are their mortgages competitive or will buyers become ‘mortgage prisoners’ because of decisions made, not by them, but by the Tory government?

Is this part of that “bonfire of red tape” that David Cameron and his cronies were trumpeting a few years ago?

I wonder how many of the quarter-of-a-million so-called “mortgage prisoners” merrily voted Tory in the belief that this meant they would find it easier to switch lenders.

And I wonder how they feel, now they know that the opposite is the case.

The salt in their wound, of course, is the fact that it is the Tory government itself that sold their mortgages to unregulated lenders – and is now blocking a change in the law that would help them.

Tougher affordability checks have made it hard to change lenders if a home owner’s mortgage is large compared to the price of their house, if they are close to retirement or have bad credit.

While many lenders are able to switch to different deals with the same lenders, that have lower interest rates, around 250,000 are blocked from doing this because the lenders to whom the Treasury sold their mortgages don’t offer such deals.

The upshot is that they are stuck forking out two or three times what they would pay in a competitive mortgage.

The House of Lords has passed an amendment to the Financial Services Act to cap rates for borrowers in that position, but government whips are instructing Conservative MPs to vote against the amendment on Monday.

Chancellor Rishi Sunak reckons capping the interest rate would be “unfair” on other borrowers.

I don’t see why. How is it unfair to let these people have the same deal as everybody else?

Or does Sunak mean it would be unfair on the lenders to deprive them of one- or two-thirds of their profits?

Should we perhaps be asking questions about how the Treasury chose these particular firms to receive these particular mortgages?

Is this another aspect of the lobbying scandal that we have yet to grasp?

Source: Treasury snubbing ‘mortgage prisoners’, say MPs – BBC News

Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.

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Thatcher disdained sanctions. Why do her heirs love them so much?

austeritydolequeue

Vox‘s article on Nelson Mandela stirred up a huge amount of comment. As you might expect, much was complimentary; some was not.

One of the critics sought to alter the stated opinion of David Cameron and his Conservatives by pointing to a letter from Margaret Thatcher to then-South African President PW Botha in 1985, seeking Mr Mandela’s release from prison. This part of the letter didn’t sway yr (dis-)obdt srvt, as the suggestion seemed to be made as part of advice on how Mr Botha could gain political advantage from the situation, rather than from any genuine moral standpoint.

The letter did feature comments that are of considerable interest and relevance at this time – relating to sanctions. Mrs Thatcher wrote: “The Commonwealth meeting opened with forty-five countries seeking extensive trade and economic sanctions against South Africa… My rebuttal of the case… rested on two main premises: that sanctions do not work, indeed are likely to be counter-productive and damaging to those they are intended to help: and that it was inappropriate to take punitive action against South Africa at the very moment when you are taking steps to get rid of apartheid and to make necessary changes in the system of government in South Africa.”

Let’s take these comments back home and apply them to people who are unemployed in the UK today.

The Department for Work and Pensions, under Iain Duncan Smith, imposed a tough new regime of sanctions against Jobseekers’ Allowance claimants in November last year.

Now, sanctions can be imposed for a month if a claimant is judged to be not actively seeking a job or being available for work. Subsequent misbehaviour along these lines would mean a 13-week period without benefit. The claimant must then reapply for benefit in both instances.

Benefit may also be lost for 13 weeks if a jobseeker fails to attend an interview with a Job Centre advisor, although it restarts automatically at the end of this period.

The highest sanction withdraws JSA for 13 weeks if a person leaves their job voluntarily, rising to six months for a second “failure” and three YEARS for a third.

In the eight months between the application of the new rules and June this year, nearly 600,000 JSA claimants were sanctioned. Employment Minister Esther McVey claimed that this affected only a small proportion of jobseekers – “The vast, vast majority of people don’t get sanctions” – but when you compare the actual number of sanctions (553,000) with the number of people on JSA (1,480,000) it becomes clear that this is not true.

In September 2012, 1,570,000 people were on JSA. The government has been claiming that the figure has dropped because people are getting jobs but from these figures it seems far more likely that they have had their money stopped instead.

Ms McVey also said: “The people who get sanctions are wilfully rejecting support for no good reason.” Let’s have a look at that with the help of this website. All the sanctions it describes were really imposed on real jobseekers by Job Centre Plus employees, and these are just some of them:

“You apply for three jobs one week and three jobs the following Sunday and Monday. Because the job centre week starts on a Tuesday it treats this as applying for six jobs in one week and none the following week. You are sanctioned for 13 weeks for failing to apply for three jobs each week.”

“You have a job interview which overruns so you arrive at your job centre appointment 9 minutes late. You get sanctioned for a month.”

“Your job centre advisor suggests a job. When you go online to apply it says the job has “expired” so you don’t apply. You are sanctioned for 13 weeks.”

“You are on a workfare placement and your job centre appointment comes round. The job centre tells you to sign on then go to your placement – which you do. The placement reports you for being late and you get sanctioned for 3 months.”

The victims of these sanctions were clearly people who were trying to take steps to rid themselves of their unemployed status and get a job – but they were sanctioned by our Conservative-led government under a policy created by former Conservative leader Iain Duncan Smith. Draw a parallel with what Mrs Thatcher was saying about South Africa and it is clear that she would call that “inappropriate”.

But do they work? No.

According to Liam Purcell, writing in the Church Action on Poverty blog: “Where there are few jobs available, as in the North West of England, taking money away from people is hardly going to help them find jobs.

“Many of the unemployed despair of getting help and meaningful training. For most people who are sanctioned, it does nothing to help them acquire skills that would help them compete in the labour market.

“Having to apply online for dozens of inconvenient, unsuitable jobs for which they are poorly qualified, and which they may be physically or mentally incapable of holding down, is hardly a profitable use of time… Yet failure to comply can mean an end to even the minimum income produced by benefits.”

And the result? “Destitution, which follows, merely helps the poorest to learn how to survive by ducking and diving, by applying to charity, by falling into the clutches of payday lenders and loan sharks, by begging and sometimes stealing. Increasingly we come across people who find the whole process of claiming out-of-work benefits so demeaning and stressful that they just can’t be bothered to apply, and conveniently disappear from the official register of the unemployed.”

And conveniently disappear from the official register of the unemployed.

For those the system was originally “intended to help”, as Mrs Thatcher put it, her letter of 1985 was absolutely right: “Sanctions do not work [and] are likely to be counter-productive and damaging.”

But for a government that is desperately trying to claim that its policy on jobs is succeeding, sanctions that “conveniently disappear” people work very nicely indeed.

 

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‘Barefoot banking’ to support people on the edge

usury

This is a piece I wrote for the local credit union in my part of Powys, following on from the Archbishop of Canterbury’s vow that the Church of England would fight payday lenders. Quite right – usury is an evil that religious organisations traditionally oppose. I’m publishing it here because the main information is relevant nationwide (and also because today appears to be quite slow for political news).

Credit unions must rise to the challenge created by the Archbishop of Canterbury’s stand against payday lenders, according to a leading figure in a Mid Wales organisation.

Richard Bramhall of Red Kite Credit Union said the main issue facing credit unions was how to bring affordable credit to “people on the edge”.

Last month, the Most Reverend Justin Welby announced that he planned to help community-based credit unions by allowing them to use Church of England premises as bases, to put firms like Wonga.com, which charge huge amounts of interest for their loans, out of business.

“His idea is very constructive,” said Mr Bramhall.

“Instant credit is a difficult sector to service because of high rates of defaulting. Payday lenders, door-step lenders and loan sharks – and to a lesser extent banks and credit card companies – answer the threat of bad debt by charging monstrous interest rates.

The Credit Union approach is responsible lending, careful interviews, getting guarantors where possible and working with the member to develop financial competence.

“The ethos always was to save; build a relationship with the credit union through saving – becoming a shareholder – and borrowing using the shareholding as security. They pay low interest and benefit by keeping and growing their shares.

“We do not want to lend at high rates,” he said. “Our standard rate is 12.68 per cent, or one per cent per month. If you borrowed £100 over a year and paid it back without interruptions, it would cost you £6.60 in interest, with no extra charges and no penalty for early repayment.”

But he warned: “The population density here is so low and the conceivable number of members so small that, even if everyone joined, our income from loan interest would not be enough to pay for bank-type premises or employees.”

The Credit Union’s solution is what Mr Bramhall calls ‘barefoot banking’. He said “The Herb Garden Café, in Llandrindod Wells, is an example. You can access credit union services six days a week, 12 hours a day – not just when we’re open but any time we’re in the building. People can pick up leaflets, ask about the credit union, leave messages, make payments and collect cheques. It costs the café nothing.

“If people want to help, they could develop the sort of access point we have here. Our greatest need is for self-motivating volunteers and casual drop-in service points in shops, churches, cafes and even private homes all over Radnorshire and north Brecknock.”

He added that credit unions also needed to establish themselves in schools, teaching responsible money management to youngsters.

Local election campaigns begin – but where are the NEW contenders?

Get your votes out: But who will you support, if your local council is holding elections this year? The mid-term vote is always carefully watched, so your vote could sway predictions for the 2015 general election!

Get your votes out: But who will you support, if your local council is holding elections this year? The mid-term poll is always carefully watched, so your vote could sway predictions for the 2015 general election!

Hard though it may be to believe, in the midst of all the ‘Mrs T’ drivel, but life goes on and there are elections on the way.

The Liberal Democrats have launched their bid for seats on 34 councils in England and one in Wales, predictably, with a smear campaign.

Apparently, both their Coalition partners the Conservatives, and Labour, are inefficient and waste money on “vanity projects”.

This will be a hard criticism for the Tories to counter, considering they are about to waste up to £10 million of taxpayers’ – our – money on a ceremonial funeral for Baroness Thatcher that the majority of the people in the UK simply don’t want.

Apparently, MPs can claim £3,750 each, from the taxpayer, because Parliament has been recalled to pay tribute to her. If they all take advantage of it, that alone will cost us £2,437,500!

Praise is due to Labour’s John Mann, who the BBC placed among those calling the debate a waste of money. He said tributes could have been made next week, when Parliament is due to return.

But then, what is the Liberal Democrat plan to increase the Personal Allowance, that we are all allowed to earn before we start paying Income Tax, if it isn’t a vanity project?

Nick Clegg says the Liberal Democrats will spread “the burden of austerity fairly”, but if this policy really has made 24 million families in the UK £600 better-off than they were in 2010, that means the Treasury has received £14,400,000,000 less than it otherwise would have. Nearly 14-and-a-half BILLION pounds!

This is money that could have eased the severity of the benefit cuts on the poorest in society, or the government could have invested it in projects that would have created jobs, increasing the tax take and lessening the burden of debt repayments and benefits for the poor.

Noticeably absent from Mr Clegg’s speech, at the Eden Project in Cornwall, was any mention of what his party would do with any new council seats it picks up. Instead, he went back to the Liberal Democrat ‘message script’ that was thrust upon his party back between Christmas and the New Year. “Only the Liberal Democrats will build a stronger economy and a fairer society, enabling everyone to get on in life” he droned.

Here in Radnorshire, Wales, people hearing that will be thinking those words are familiar, and asking themselves when they were aired before. Oh yes – it was last week, when our MP Roger Williams and AM Kirsty Williams were talking up the increases in the Personal Allowance.

So there’s no offer from the Liberal Democrats.

At least Labour’s Ed Miliband launched his party’s campaign with a solid commitment – he wants councils to be allowed to prevent payday lenders from operating in their areas, and to stop bookmakers from opening as well.

In hard times, it makes sense for gambling to be curbed – although it is a shame that the last Labour government allowed it to become commonplace before the financial crash hit. And payday lenders must be brought to heel – the huge interest rates they charge mean borrowers – who need the money because they receive such a poor pay packet from their fatcat bosses, don’t forget – fall even further into debt.

But Labour’s recent behaviour in Parliament has created deep mistrust of the party among its core voters. Labour betrayed the poorest workers in the UK, and everybody who is looking for a job, by supporting Iain Duncan Smith’s retroactive law to legalise his illegal sanctions against jobseekers who would not take part in his slave-labour ‘mandatory work activity’ schemes to raise cash for ‘work programme provider’ companies and commercial enterprises that took part.

If Labour wants to win that trust back, it needs to field prospective councillors who genuinely want to represent the interests of the people in their wards, with good Labour values – ensuring they get the best value for their council tax money, rather than turning services over to private enterprises who then make councils pay through the nose for inferior work, for example.

And what about all the new contenders that have sprung up since the Coalition came to power and started reversing all the good work the previous Labour government did, justifying it by saying the new austerity made it necessary (it isn’t)?

The National Health Action Party can be ruled out, I think. That organisation is a single-issue party created solely to attack Coalition members of Parliament, and anyone else who voted in support of the Health and Social Care Act, that allows private, for-profit companies to run NHS services.

What about the ‘No’ Party? This group claims the UK needs a fresh start, and wants to contend the next general election “on a massive scale”. In that case, they should start at local level. Political organisations of any kind won’t be trusted with Parliamentary seats until their members have proved themselves in the local arena and the May elections are a perfect opportunity to get started. Where are the ‘No’ candidates?

What about the People of the British Political and Lawful Rebellion Party, which says it aims “to put the People back into politics”.

This organisation’s Facebook page says: “It is time this country came together and started the mass political and legal upheavel required for a legitimate, lawful, peaceful and successful rebellion. As a newly founded political party, we take one-step at at time while learning to utilise our skills as individuals and collectively.”

Okay, then why not start now – in local councils? Then the ordinary people will be able to find out what they’re all about.

It seems too early for any wide-based, mainstream ‘Party of the Left’, of the kind Ken Loach has been pushing, to come together in time for these elections – which is a shame.

In the light of Labour’s actions on the Jobseekers (Back to the Workhouse) Bill, it is possible that there does need to be another mainstream, national left-wing political organisation – if only to remind Labour of what it ought to be.

One of the most telling comments about the late Baroness Thatcher was that she changed not only the Conservatives, but other political parties, meaning that Labour followed a similar course to the Conservatives when it came to office in 1997.

It’s time Labour remembered that there are other, real and workable alternatives – and started working on them.