Big Issue boss John Bird reveals mum’s battles with loan sharks and vows to bring them down
Born into poverty, Big Issue founder John Bird knows all too well the devastation that comes from high-cost credit. That's why he's backing our Stop the Credit Rip-Off campaign
I WITNESSED the devastating grip that debt can have from an early age.
Coming from the very poorest in society, and being made homeless several times, I saw first-hand the damage done by having to pay through the nose for credit.
What people often forget is that it is very, very expensive being poor.
Today, there are millions of pounds to be made by making the poorest pay through the nose for their credit, food and utilities - costs known as the "poverty premium".
If you’re at the bottom of the scale, you all too often pay upfront for your gas, electricity and water. And you'll likely be stuck on the most expensive tariffs.
It means the average low-income household pays £490 more every year just for being poor.
John Bird's CV
LORD John Bird was born into poverty but after a spell in prison he turned things around and ever since has dedicated his life to helping the poorest in our society.
1946: Born in Notting Hill, London
1950: Became homeless for the first time
1960s: Excluded from school, worked as a butcher’s boy, resorted to stealing to make ends meet, learnt how to read and write and the basics of printing in prison during his teens and twenties before being made homeless again in 1967, aged 22, sleeping rough in Edinburgh.
Early 1970s: Set up a small-scale printing business
1991: Launched The Big Issue with the co-founder of The Body Shop Gordon Roddick
1995: Created The Big Issue Foundation and awarded an MBE
2005: Big Issue Invest launched
2005/6: Beacon Prize for Creative Giving
2014: Awarded UN Habitat Scroll of Honour, which recognises contributions to the development of housing
2015: Received a life peerage to the House of Lords as Baron Bird
2017: Launched the Creditworthiness Assessment Bill
And adding insult to injury, if you're poorer, you’ll be buying your goods from the likes of BrightHouse and other rent-to-own companies that charge you hundreds of per cent of interest.
They offer you money because - with a non-existent or low credit score - they can get away with lending at extortionate rates just for being prepared to lend to you at all.
No-one wants to get caught in Britain’s biggest credit con, where overpaying loans shows just how much can be taken from the poorest among us.
That's why I welcome The Sun’s Stop the Credit Rip-Off campaign with open arms, and it'll hopefully help people manage their hard times better, and help them out of need.
Why we want to Stop The Credit Rip-Off
WE never want you to pay more than double the amount you've borrowed - whether it's for a new sofa or a loan to help pay your bills.
That's why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to those lenders has more than halved, according to Citizens Advice.
People on the lowest incomes, living in the poorest places, are paying a poverty premium - up to 7 million people have resorted to high-cost credit, according to the Department for Work and Pensions.
People whose wages or benefits don't stretch far enough need to borrow from rent-to-own or doorstep lenders to help pay for things such as an unexpected bill or to furnish their homes.
These come with exorbitant rates of interest - more than 1,500 per cent in some cases of doorstep lending.
It is scandalous that one mum who borrowed cash to help keep a roof over her family's head and ended up paying back over THREE times the original amount.
It's time to stop the credit rip-off.
Here's what we demand:
Rent-to-own
- Cap on all repayable costs at double the item list prices (including fees, add-ons and interest)
- Ban on incentives for all sales staff
- Ban on discounts for existing customers to tempt them into more credit
- Companies to publish example interest rates and costs on all payment options
Doorstep lending
- Cap at double the original amount borrowed
- Stricter affordability checks
- Ban on discounts for existing customers to tempt them into more credit
It's time to Stop the Credit Rip-off.
At , we’ve seen first-hand how problem debt contributes to people being forced to - and trapped on - the streets.
Ordinary things like difficulties with a Christmas budget and the odd missed utility bill payment can spiral out of control, with some Big Issue vendors telling us how they were forced to take on increasingly more expensive debts to pay for essentials, and repay other loans as their credit scores worsened.
Day in, day out, we see how difficulties in managing money, alongside other factors such as losing a job, family breakdown and mental health problems, can rob a person of a roof over their heads.
We’ve also been helping people in social housing to up their credit ratings as part of puncturing the poverty premium.
Big Issue Invest created the Rental Exchange - a partnership with Experian - which has the potential to improve the credit files of 3.4 million social housing tenants and give 1 million tenants an all-important digital identity. This is vital in 21st Century Britain.
It incorporate a tenant’s payment history in their credit file, giving tenants an online proof of identity so they can build a positive credit history, which can help towards increasing access to mainstream affordable credit and services.
Why does this matter? Because over 11 million people (or more than 40 percent of households) live in rented accommodation, but - at the moment - lenders don’t have to bother to use their rent as an indicator of how good they may be at repaying a loan.
The problem is that if you have a mortgage, and if you pay it off regularly, you’ll have a higher credit rating, meaning credit is cheaper.
But if you pay rent and you're regular, you can’t put your rental record to use in getting a better credit rating and more suitable finance.
In short, the poorer you are, the more you pay for credit.
We hate to see such injustice and it's why I have a private member's bill going through Parliament to tackle it.
Currently heading to a committee in the House of Lords (and hopefully through the Commons), my Creditworthiness Assessment Bill will mean that if a tenant pays their rent regularly, credit providers will have to take their payment history into account.
More data will create a fairer, financially inclusive society with the power to help the poorest access more affordable credit.
What The Sun's Stop the Credit Rip-Off campaign is calling for - a cap on the total cost of lending and fairer lending practices - is dead right.
It rightly addresses the fact that getting out of poverty shouldn't have all of these stumbling blocks, making people needier, more dependent and more open to the exploitation of lenders who cash in on the tragedy of their disadvantage.
So the next time you sit on a sofa, load a washing machine, or turn on the telly, remember that the poorest among us having been paying through the nose for everyday things like this for years.
And that behind it all are lenders who know the value - but don't see the problem - of charging the poorest top rates, and reaping bigger profits.
Don’t take my word for it that bad credit means poor mental health. The Royal Society of Public Health has pointed out that high-cost credit rates undermines people’s ability to cope and prosper.
So let’s get behind every attempt to bring justice to those people whose credit costs hold them back, preventing them from getting out of poverty.
We pay for your stories! Do you have a story for The Sun Online Money team? Email us at money@the-sun.co.uk or call 0207 78 24516. Don't forget to join the for the latest bargains and money-saving advice.