Week 32 2013

Tendring Topics….on line

‘Neither a borrower nor a lender be’

          This was the advice that, in Shakespeare’s play Hamlet, the old and worldly-wise Polonius gave his son Laertes when he was departing the shores of Denmark for England; a distant foreign land where debt was only one of the many perils facing an inexperienced young Dane travelling abroad for the first time.  Today England is part of a United Kingdom with a national debt that its government tries with only limited success to reduce, and in which a great many of its inhabitants get deeper and deeper into personal debt.  Perhaps things were different in Shakespeare’s day because nowadays the ‘lenders’ usually do quite well out of it.

 Payday loan companies, whose advertisements help daytime commercial television to survive, claim to give a badly needed service to folk with a temporary financial problem.  Their potential clients are the many thousands of people in Britain today in steady jobs with just-adequate salaries paid monthly. 

Suddenly, perhaps a fortnight before payday, the family car, or the tv, or the freezer breaks down, or perhaps there is an unexpected visitor.  It may need no more than £200 or £300 at the most, to solve the problem, but the ever rising cost of living coupled with pay freezes has meant that there are virtually no savings.  A Payday Loan will solve the problem.  Give the firm a ring and within minutes, the sum required will be in the borrower’s bank account.  Pay it back on payday, with what seems a very small interest charge and all will be well. How simple and straightforward it sounds.

But, of course, it isn’t.  If the borrower’s salary is only just sufficient for a normal month’s expenditure, once the loan and interest have been repaid the borrower won’t have enough left for the next month’s living expenses.   I had seen it happen often enough with Council House tenants’ rent arrears.  Those who are unable to pay the rent on one rent day are unlikely to be able make a double payment a week later.  The council didn’t charge interest on money owed in this way. It was usually possible to make an arrangement for the defaulting tenant to free himself from debt by paying just a small sum extra each week until it was cleared.  Payday loan companies do charge interest.  They’ll extend the loan period and the interest will begin to add up – sometimes to as much as 4,000 percent of the original loan!

I am glad that Archbishop Welby, who spent his earlier years in the realms of high finance, does see the problem – and hopes to use the resources of the Church of England to solve it.  He is planning to encourage the Church to support and extend the country’s credit unions. They could prove to be an alternative source of emergency lending that would eventually put the payday loan companies out of business.

Credit Unions could be described as local community banks. Members pay their savings – whatever they can afford - into their Union account and then, when a domestic crisis arises, they can borrow the sum required at a much lower rate of interest than that offered by any commercial organisation.  They can then repay it in instalments over twelve months though, if they are able to do so, it is to their advantage to pay it back by larger instalments over a shorter period of time.

There are currently about 400 credit unions in Great Britain with over a million members.  At the end of last year they held about £807 million in savings and there were about £627 million on loan to members.  The Church of England isn’t proposing to run credit unions but will offer its premises for their use and offer any other support that they need to ensure their success.

 Colchester and the Tendring District are served by the Colchester Credit Union set up in 2002.  It currently has 550 adult and 400 young members. Chris Burrows, the union’s secretary is quoted in the daily Gazette as saying that there has been a strong public interest since the Archbishop made his statement with 17 new membership applications the day after the statement made the headlines in the national press and nine people offering their support as volunteers.

The union lends sums of up to £3,000  to a total of about £20,000 a year, a figure that has risen since the government’s austerity programme began to take effect.  Colchester Credit Union tries to keep its interest rate for borrowers at one percent per month.  If you live in our north-east Essex area you can contact the Colchester Credit Union on info@colchestercreditunion.co.uk   or phone 01206 798823.

I wish the Archbishop of Canterbury every success in his campaign though I think he is a little optimistic in his hope that it will put the Payday Loan Companies out of business.  The present government’s policies with student loans and its offer of  help in meeting deposit requirements for house purchase mortgages encourages borrowing, but does nothing to encourage the small-scale regular saving on which Credit Unions depend. I fear that Wonga’s and other payday loan companies’ adverts will continue to keep day-time commercial tv going for a while yet.    

A Republican Britain?   Not for me.

          A job that I thoroughly enjoyed during the seven years that I was Tendring Council’s first Public Relations Officer, was talking to – usually bright teenage – students from overseas about the British way of life and, in particular, about British local government. Most were either French or German and there seemed to be always two questions that I was asked at the end of my talk.  ‘Why do you British have such winding roads with so many corners to turn? and ‘Why do you British still have a monarchy while most other European countries are republics?’ 

I wasn’t really competent to answer the first question but I would disarm them by quoting G.K.Chesterton’s ‘Rolling English Road’.  It begins, ‘Before the Romans came to Rye or out of Severn strode, The rolling English drunkard made the rolling English road’, and even the French students were amused at a subsequent verse, ‘I knew no harm of Bonaparte and plenty of the Squire, and for to kill the Frenchmen I did not much aspire, But I did bash their bayonets because they came arrayed to straighten out the rolling roads an English drunkard made!’

To the question about the monarchy I was very pleased to give a reply that was not only the one the Council would expect from their PRO but one with which I personally agreed.  We have a constitutional monarchy because it works for us.  It means that we have a head of state who is outside (neither ‘above’ nor ‘below’) politics.  What’s more, he or she will have been brought up and educated for the role probably for many years before becoming our Sovereign, and have had years more experience of government than even the wisest and most knowledgeable politician. A hereditary sovereign can’t override the intentions of an elected government but is in an ideal position to act as confidante, to advise, and to warn of the possible consequences of any proposed action.  Elected political heads of state must have the uncomfortable knowledge that although just over half of the electorate wanted him or her as their leader – almost half most certainly didn’t.  A head of state appointed from among distinguished citizens merely as a figure-head would lack the knowledge and experience of a hereditary monarch to advise and, when necessary, warn political leaders.  The UK isn’t alone in having a constitutional monarchy - Belgium, the Netherlands, Denmark, Sweden and Norway also have a similar form of government.  They are all, I think, countries in which most Britons would feel ‘at home’.

Yes, I am an egalitarian and am opposed to privilege, but I believe that the privileges of inherited wealth are infinitely greater and more noxious than those of inherited rank.   Who do you think will be able to have the fuller, more fulfilled, more truly privileged life – the recently born Prince George of Cambridge or the son of an American media billionaire, an oil-rich Saudi prince, or a Russian oligarch endowed with millions of roubles courtesy of ‘freedom loving’ Boris Yeltsin?  Prince George won’t be able to choose his own friends, his own girl-friend and partner (without careful vetting) and his own occupations.  He will spend his youth and middle-age preparing for a post that very possibly won’t become vacant until he is an old man. His whole life will be spent under press scrutiny. Every word that he speaks in public will be recorded by reporters praying for an indiscretion that will make the next day’s headlines!  It’s certainly not everybody’s idea of the ideal career!

I wish him well.  His mum seems to be a pleasant and amiable young woman (though hardly ‘that nice girl next door we see go off to work every morning’) and his dad, involved in air-sea rescue, has, at the moment, a thoroughly useful job.  The news media, including the BBC, certainly went overboard at his birth – the Sun (which rarely, if ever, has a kind word to say about his grandad the Prince of Wales) even temporarily changed its name for the occasion!  But then, the new prince is a mega-celebrity and I suppose that in this celebrity-obsessed age, that’s what we must expect.   Like all his family, he will be very wealthy.  But if the kind of taxation system that I am constantly advocating in this blog – a universal annual income tax consisting of a fixed percentage of the gross income of every British citizen and permanent resident (rich and poor alike) - were to become the principal source of government revenue, his privileges, and those of the offspring of the American media millionaire, the Saudi prince and the Russian oligarch would all be cut down to size.   In my Britain, ‘royals’ would be expected to pay the same tax as everyone else but they would, of course, be entitled to claim expenses incurred as a result of the demands of the job.

Striving to replace a constitutional monarchy that has evolved over 1,000 years with a republic, while tolerating our current economic system, is  an irrelevant distraction, hindering rather than furthering progress towards the building of a New Jerusalem ‘in England’s green and pleasant land’.