Archbishop Speaks Out About Rising Loan and Mortgage Costs for Young People

Phil asked:

The Archbishop of Canterbury has called for action to help young people in Britain who are struggling with excessive debts, whilst also raising concerns about the growing wealth gap between the rich and the poor in the UK.

Rowan Williams, the leader of the country’s Anglicans said he believed ministers should be ‘a little more worried’ about the huge salaries being earned by the City high-fliers.

The Archbishop is keen for the introduction of improved financial education to be available and the regulation of loan sharks to help young people stay of debt worries.

Speaking on Radio 4’s Today programme, he said, “I think e have seen in the last 10 years or so the development of a culture where debt is so normal for young people, and student loans have rather intensified that, that there is a more urgent need than ever for some teaching about financial literacy in schools and further education institutions. I think that is getting more urgent by the day as the credit crunch impacts on people.”

With some doorstep lenders charging rates that leave the borrower facing interest costs of more than 1000 per cent over two years, other companies are charging as much as 25 to 30 per cent to take post dated cheques as an advance on an individuals wage.

“One of the things that I really want to see as a matter of urgency reviewed here is both the interest rates imposed by some of the doorstep lending companies and the advertising standards.

“That’s the kind of thing which people need to know about and needs to be kept in check” Dr Williams said.

He believes that debt problems are leading to ‘the erosion of family life and the erosion of self confidence’ amongst the poorest of people, with many of them not seeking advice or help because of the reputation and stigma this carries.

The Archbishop said he was concerned about the removal of mainstream banks from the high streets from some of Britain’s most impoverished areas, resulting in people being left with loan sharks as their only alternative for borrowing money.

“We have to look at what it means for the whole economy to be built on spiralling, more or less uncontrolled, credit. We have seen signs that even the utility companies depend very, very heavily on this in a risky way, so basic utilities might be at risk. People who are running the loan companies are saying they have never had it so good.”

Dr Williams has said it ‘bothers him’ that some individuals have become enormously rich on the back of people struggling to pay off crippling loans.

“My immediate concern is looking at the bottom of the ladder and the way in which the credit crunch impacts so disproportionately on the most disadvantaged. If we start there, at least we can do something”, he said.

The Government’s apparent willingness to accept that the economic system will allow a minority of rich people to become even wealthier does sit well with the Archbishop.

“I wouldn’t mind if they were a little more worried. I think the more you have a disproportion between what people are earning and what they appear to be worth, the more we have astronomical sums with no clear rationale behind them, the credibility the whole thing has.”

Create a video blog