Brown and Purnell described as being loan sharks
The Prime Minister, Gordon Brown, and the Work and Pensions Secretary, James Purnell, have been accused of acting like a couple of loan sharks after proposing the introduction of crippling interest rates on vital loans that are designed to help the poor to cope with unforeseen emergencies.
The government’s social fund is designed to provide interest free loans to low income households who find themselves unable to fund an emergency such as a broken boiler, and last year more than one million loans were dishes out amounting to over £600 million in total.
The accusations have come after Mr Purnell suggested that interest should start being charged on the loans, and suggested an interest rate of 26.8 percent. This is an interest rate that is way above the rate that most credit cards charge, and is more akin to those found on High Street store cards. The suggestion has caused outrage amongst Conservative Party officials as well as amongst rebel Labour Party MPs, who have backed the opinions of the opposition on this matter.
Most of those that take loans from the social fund are on state benefits, and the crippling rate of interest could add a small fortune to the amount that they have to pay back as well as leaving them lumbered with the debt for a longer period of time.
Senior Labour MP Terry Rooney, chairman of the Commons Work and Pensions Select Committee, stated: ‘Whoever dreamed this up, particularly at this time of year, must have lost their moral compass. It cannot be right to start charging almost 27% interest on loans to the poorest people, who currently pay zero interest.’
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