Ed Miliband attacks Britain’s ‘hidden Wonga economy’ as payday lending bosses grilled by MPs

Labour leader criticises lenders for 'bullying, harassment and threats' towards families struggling with debt

Ed Miliband has launched an attack on Britain's “Wonga economy”, saying the rise of payday lenders symbolised the squeeze on living standards facing millions of ordinary families.

The Labour leader accused the firms of preying on the vulnerable, creating a “quiet crisis” for thousands of households left with debts they were unable to pay off.

His intervention came as representatives of the three of the biggest payday lenders - including Wonga - were facing a grilling by MPs on the Commons Business, Innovation and Skills Committee.

In a speech delivered at London's Battersea power station, Mr Miliband took issue with claims by the boss of Wonga that he was speaking for a “silent majority” who were happy with the service they were offered.

He said the reality for many was “bullying, harassment and threats” from lenders after they racked up huge interest charges they could not afford to pay back.

“The truth is, he wants us to stay silent about a company where in one year alone their bad debts reached £120 million. An industry in which seven out of 10 customers said they regretted taking out a loan. With half saying they couldn't pay it back,” he said.

“Payday lenders don't speak for the silent majority. They are responsible for a quiet crisis of thousands of families trapped in unpayable debt.

“The Wonga economy is one of the worst symbols of this cost of living crisis.”

Mr Miliband stepped up his attack on David Cameron over living standards, and what he said was the coalition's failure to curb soaring energy bills.

He challenged Tory and Liberal Democrat MPs to back Labour's plans for a temporary freeze on electricity and gas charges in a Commons vote tomorrow.

He said that while former prime minister John Major - who called for a windfall tax on the profits of the energy firms - understood the need for action, Mr Cameron did not.

“His response to Labour's energy price freeze shows how out of mainstream is. He took issue with the whole idea of government intervention in a broken market,” he said.

“Ever since, on energy he seems to have had a different policy every day of the week. But what we know is that we can never expect him to stand up to the energy companies, because they are a large and powerful interest.

“It is not who David Cameron is. It is not what he does.”

Mr Miliband highlighted Labour's pledge to end the “scandal of poverty pay”, strengthening the statutory minimum wage and offering firms incentives through the tax system to pay the living wage.

“Make work pay contracts will raise wages, keep the benefit bill down and tackle the cost-of-living crisis. It is a good deal for workers, business and the taxpayer too,” he said.

“And by tackling low pay, we won't just strengthen our economy, we will strengthen our society as well.”

He said the next general election would present a “big choice”, with Labour offering a different future to the “Tory vision” of a Britain where payday lenders “prey on the vulnerable”, living standards stagnate, and the energy companies carry on “ripping off” consumers.

“We can run Britain in a different way,” he said. “Different from the past, building a different future for our country, where ordinary people feel the country is run for them in their interests and for their future.”

Conservative Treasury minister Sajid Javid said: “We want to secure a sustainable, long-term economic recovery for hard-working people. That means we must stick to our economic plan - growing the economy, helping business create jobs and cutting the deficit.

”And by controlling spending to cut the deficit, we can keep mortgage rates low and taxes low. Already we have cut income tax for 25 million people, frozen council tax and frozen fuel duty.

“But Labour's same old policy of more spending, more borrowing and more debt - exactly what got us into a mess in the first place - would mean higher taxes and higher mortgage rates. Even Ed Balls says Ed Miliband's latest policy would have a 'substantial extra cost'.

“Hardworking people would be worse off with Ed Miliband's short-termist, opportunistic politics.”

Wonga rejected Mr Miliband's accusations about the firm and offered to meet the Labour leader to discuss the issues he raised.

“We don't accept the picture of Wonga and our customers painted by Ed Miliband today, which rehashes many of the myths about our business,” a spokesman said.

“Our bad debt (the amount of money loaned that we don't get back) is around 7.5%, comparable to credit cards. As a responsible lender, we reject 80% of first-loan applications, while the successful 20% borrow an average of £178.

“While we recognise that there have been unacceptable practices in the sector, Wonga has been instrumental in raising standards and arguing for better regulation to protect consumers.”

Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
Sport
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Travel
travel
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Robyn Lawley
people
News
people
News
people
News
i100  ... he was into holy war way before it was on trend
Life and Style
lifeDon't get caught up on climaxing
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Arts and Entertainment
Harry Potter (Daniel Radcliffe), Hermione Granger (Emma Watson) and Ron Weasley (Rupert Grint)
newsBloomsbury unveils new covers for JK Rowling's wizarding series
News
scienceScientists try to explain the moon's funny shape
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Arts and Entertainment
As Loki in The Avengers (2012)
filmRead Tom Hiddleston's email to Joss Whedon on prospect of playing Loki
Voices
voices In defence of the charcoal-furred feline, by Felicity Morse
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Shine Night Walk 2014 - 'On the night' volunteer roles

Unpaid Voluntary Work : Cancer Research UK: We need motivational volunteers to...

Accounts Assistant (Accounts Payable & Accounts Receivable)

£23000 - £25000 per annum: Ashdown Group: Accounts Assistant (Accounts Payable...

Senior IT Trainer - Buckinghamshire - £250 - £350 p/d

£200 - £300 per day: Ashdown Group: IT Trainer - Marlow, Buckinghamshire - £25...

Education Recruitment Consultant- Learning Support

£18000 - £30000 per annum + Generous commission scheme: AER Teachers: Thames T...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star