Shadow chancellor says Labour would legislate to put a cap on private debts
PEOPLE trapped in credit card debt would have interest payments and fees capped by a Labour government under a proposal, nicknamed the “McDonnell amendment,” which will be outlined today by the shadow chancellor.
The debt crisis has been embedded at every level since the Tories took power, with wages growing at the slowest rate since Napoleonic times over the last seven years, John McDonnell will tell Labour conference.
And plummeting spending power has meant that three million people are unable to clear their card debts — the average outstanding amount is £3,464 — because of escalating interest and fees, according to an estimate by the Financial Conduct Authority (FCA).
But no borrower will have to pay back more than twice the amount of their original credit card spending under Labour’s proposal to legally enforce a cap on interest and fees — a change recommended by the FCA.
The total outstanding sum owed privately is now around £14 billion, making credit card debt a “growing problem and a threat to our economy,” Mr McDonnell is expected to say.
“We have seen with payday loans, some companies were making massive profits from people’s financial difficulties.
“Under pressure, the government has been forced to cap interest payments on payday loans.
“But more than 3 million credit card holders are trapped by their debt. They’ve paid more in interest charges and fees than their original borrowing.
“The FCA has argued for action to be taken on credit card debt as on payday loans. I am calling upon the government to act now apply the same rules on payday loans to credit card debt.
“If the Tories refuse to act, I can announce today that the next Labour government will amend the law. Call it the McDonnell amendment.”
The Hayes and Harlington MP will also warn that Britain must meet the challenges posed by the “fourth industrial revolution” — which includes high-tech technological advances such as robotics, artificial intelligence, nanotechnology and biotechnology.
“While the Tories remain stuck in the language and values of the Victorian era we are determined that Britain embrace the possibilities of technological change — scary though they may be,” he will say.
Mr McDonnell will also announce that Labour will establish a strategic investment board to drive research funding and to make sure people do not get left behind by automation.
“The board will scrutinise and co-ordinate the delivery of essential funding — out of the hands of the speculators and into the technologies and industries of the future,” he will say.
“So to the technology sector, to the universities, to the researchers and the innovators, we say: ‘Help is on the way.’ The jobs that remain can — if we let them — be exploitative, dangerous, degrading and dead-end.
“Or the jobs we create can provide good, secure employment in work that is fulfilling and meaningful, in communities where pride and prosperity has been restored.”