Martin Lewis on pre-budget announcements to tackle payday lending

On the No-interest Loan Scheme study to be proposed by the Chancellor in Monday’s budget, Martin Lewis, founder of MoneySavingExpert.com and member of the government’s Financial Inclusion Policy Forum said:

"We’ve been held at the mercy of payday lenders and exorbitant interest rates for far too long. As we celebrated Wonga's recent demise, it again shone a light on the fact that ever since the decimation of the government social fund loans, there's only been flaccid provision for cheap short-term emergency loans for many who are struggling.

"So it's good news the UK is going to look at its own version of the Australian Good Shepherd scheme. This has been discussed to much acclaim in the Financial Inclusion Forum as a way to provide a responsible interest-free lender.

"The likely structure is that it'd have seed funding from the Unclaimed Assets Register, with a social investment vehicle giving tax breaks for additional contributions. The only slight disappointment is the lengthy timetable – that needs accelerating rapidly so a pilot is up and running by 2019."

On the extension of the ‘breathing space’ scheme from six weeks to 60 days, Martin Lewis, founder of MoneySavingExpert.com and the Money and Mental Health Policy Institute said:

"The news that people are likely to get 60 days’ breathing space rather than the previously-declared six weeks is a relief. Most of us who were campaigning for this wanted it to be three months, but 60 days is far better than what had been the prior suggestion.

"Breathing space is a win, win, win. It’s a win for the individual, who gets pressure removed and a chance to stop their finances spiralling out of control. It’s a win for the creditor, because if you give people time to sort out their finances they are likely to be able to repay more in the long run. And it’s a win for the economy, because crisis debt creates many mental health issues, causing work absences and adding cost to the NHS."