Ranters of Mow Cop

Ranters of Mow Cop

Friday, 28 February 2014

Would you credit it?

Debt is one of the greatest curses of modern society. Our global capitalist economy is built on it and in 2008 crashed because the bankers mismanaged it. Easy credit, doorstep lenders, pay day loans and the Wonga wonderland blight the lives of many Britons, especially in the poorest communities.
Of course this is nothing new. The Scriptures of the three Abrahamic faiths condemn usury, making it clear in numerous places that money lending at interest is against God's will. The OT law codes set up a principle for the forgiveness of debts in the Sabbath year and Jubilee year. Jesus highlighted the need to forgive debts in the prayer he taught us, proclaimed the jubilee and told stories involving loan sharks. We might be better as a society if we followed the Bible literally in economics, though I guess the economists would come up with all the arguments that would predict disaster if we did so.
Older generations of Christians were very reluctant to get into debt, perhaps because the consequences of doing so – destitution, shame and prison – were so harsh. In our family we still pursue that policy and apart from a mortgage on the house we never borrow at interest. We also learned long ago never to lend money to our friends who were always skint. It's much more honest to help them out with a gift, often repeated gifts, with no expectation of repayment or shame if they can't. That anyway is the way we read the sermon on the mount (Mt. 5;42) When we surveyed evangelical Christians in 2012 about money we found much of this ethos persists, especially among older people. 58% said they had no debts at all and only about 10% said they were at ease with borrowing money when they wanted to purchase something other than a house. Perhaps these figures reflected the relative affluence of this group of Christians.
It's relatively easy to preach against debt when we don't have any ourselves, But that has the tendency to heap blame and shame on the desperate and destitute, those who see little prospect of surviving without borrowing. The Christian call for justice must surely be directed against the lenders, especially the ones who profiteer by imposing astronomical rates of interest on the poor. Groups like Church Action on Poverty have campaigned for many years on these issues and deserve our support. Meanwhile many churches have teamed up with Christians Against Poverty to help get people out of the financial mess they have been seduced into by the power of marketing.
The Archbishop of Canterbury made a famous intervention in 2013 in what I like to call his Justin's Wonga Twilight speech By setting up a chain of credit unions to outcompete the payday lenders. It was rather embarrassing when it was discovered the church commissioner had some investments in Wonga. More significantly he has presented a bit of a conundrum for the church on the ground in deprived communities – How best can a parish with limited resources and capacity find the energy and resources to develop or support credit unions?
The Church Urban Fund has done some research and produced a briefing paper on what churches can do. Two of the five suggestions are around learning and education about credit unions and are not difficult or controversial. The third is about encouraging people to join and save with a credit union. This is no doubt a good and noble thing to do when you have some money, as it is an ethical investment, with a decent rate of return. It doesn't directly help the financially excluded or those who are already in serious debt. But it does provide some help to those who might otherwise get eaten by sharks.
The idea of volunteering to serve as a trustee of a credit union is also useful, but it can only apply for a few people who have the necessary business skills and time available, and you won't find many of them in the average church on a council estate in the North of England. The last suggestion is to make church halls available for credit unions to use. However, it's not clear to me that this is what today's credit unions actually want – in the 1980s credit unions operated in small amounts of cash with weekly collecting sessions, and with management boards from a local neighbourhood who all knew each other. Maybe it's a pity that sense of trust in the personal common bond has gone – but to be a viable credit union today you need economies of scale.
This week I heard a presentation from the Blackpool and Fylde Credit Union. They are working with Preston Council with a view to extending their field of operation into our city. They've only been going a few years, have over 3000 members and a turnover of several millions. They are more or less self sustaining now, with enough income to support seven staff and offer a 3% dividend on top of interest to their members. They have achieved this by scaling up and by operating without ever handling cash. Money can be paid in at post offices and Paypoint corner shops, or by standing order, direct debit or online, and taken out at cash machines. Lots of other workplace and community credit unions now work on these lines. And I can't wait till it gets up and running in Preston.
Now here's the rant. Sadly no credit union is going to make much difference to people who are financially excluded. Even a credit union has to take up credit references before it can lend to a customer, though it may be more generous than most. It's just not economic to offer short term loans of small amounts as the costs of arranging them can cost more than the loan itself. The best it can offer to people in serious debt is a payday killer product that will settle the debts with Wonga or the like, and pay off the capital at a much lower rate of interest. So the people in deepest trouble can't really expect much.
Destitution is growing as evidenced by the foodbank boom and is mainly driven by welfare reform especially benefit sanctions. What can Christians or other concerned people usefully do. Sometimes the best thing is just to be generous giving in money and kind and friendship and support to people who are in a financial mess. There is of course a challenge there to get to know such people personally – which is hard to do if you insist on living in the affluent white highlands. But there is also a cry to campaign for justice – we need laws that will put some cap on interest rates, and will tax until the pips squeak the ill gotten gains of the legal loan sharks. Finally we need planning laws that will enable local councils and communities to drive the payday loan shops (and the betting shops) out of the High Street. And if you are a preacher.. and you like a rant and believe the Bible… here maybe is your text for next Sunday. But woe to you who are rich, for you have already received your comfort. And of course supporting credit unions is an essential element of the gospel, for as Christians have proclaimed for nearly 2000 years, "JESUS SAVES".


  1. some interesting ideas here http://www.publicspirit.org.uk/challenging-unjust-lending-through-social-enterprise/

  2. and more on the theology of finance and banking from Luke Bretherton http://www.publicspirit.org.uk/the-realism-of-faith-and-the-fantasies-of-finance/


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