December 3, 2013 - Bill Esterson MP's Westminster Diary

Bill Esterson



The growth in the number of people turning to payday loan companies has been one shocking consequence of the cost of living crisis which has hit this country since the global financial crisis hit in 2007. 
And since the Tory-Lib Dem Government’s budget in June 2010, those in work have become on average £1,600 worse off a year. 

Prices have risen faster than wages for 40 out of the last 41 months. The only exception was in April this year when banking executives chose to have their bonuses paid in the new financial year to take advantage of the cut in the top tax rate for those earning £150,000 a year or more.

But for ordinary people, who don’t earn anything like £150,000 a year, there was no opportunity to benefit from a cut in the top rate of tax (from 50p to 45p). 

More and more people in Formby, Crosby and Maghull are finding it difficult to pay their mortgage or rent and the increase in energy bills since 2010 has really hit hard. 

The increase in household costs is the reason that so many people have taken out payday loans. 

Labour has been calling for a cap on the interest rates that payday loan companies can charge because many people taking out these loans are unable to repay and quickly end up owing thousands of pounds. Some lenders charge as much as 4,000%. No wonder people talk about legal loan sharks. 

Labour gave the government a number of chances to vote to cap the cost of credit charge by payday loan companies and until last week, the government had refused. Happily, Prime Minister David Cameron has now changed his position on payday lending and says he will support our calls to cap the high cost of credit.

And having changed his mind on payday loan companies, Mr Cameron now says he has changed his mind on introducing standardised cigarette packaging - even though he announced just this summer that he was ditching the policy, shortly after appointing the tobacco lobbyist Lynton Crosby as his election adviser. Another welcome change of heart from the government although they are to hold a review so we shall have to wait and see whether there will really be a change. 

Remember, the evidence suggests that children are far less likely to take up smoking if cigarettes are in plain packaging. And once children start smoking they very quickly become addicted.

It looked for a moment as if we were going to see a third u-turn. This time on energy prices. For a few hours on Friday, the government appeared to have called on the energy companies to freeze energy prices. 

Labour is already committed to a compulsory energy price freeze if we win the election in 2015 but the Tories and Lib Dems have opposed this policy. So the apparent announcement of government support for Labour’s policy would have been very good news.

Sadly, after several hours of confusion, it turned out that the story wasn’t true and that the Tories and Lib Dems were still standing up for the energy companies and ignoring the plight of consumers.

My constituents need support so that they can pay their bills now. An energy price freeze will happen if Labour wins in 2015 and Labour will support small businesses with a business rate cut as well. These are two measures that could be introduced today. 

I hope that the government does just that to start to reverse the cost of living crisis which affects so many people.