NHS employees, council officials, and gig economy workers are among the most regular applicants for payday loans, which claim interest rates of up to 1.325% per annum, industry data has shown.
In Birmingham, Leeds and Manchester, city councils were among the top applicants for ultra-high-interest debt last month, according to figures from a credit comparison website.
In Leicester, employees of the courier company DPD applied for the most loans after the people in the NHS. The most common reason for applying for credit was “paying bills”. DPD recently announced that it is reforming its working model following the death of a courier who was billed £ 150 for attending a hospital appointment.
Figures released on Wednesday by the Cash Lady comparison website showed that NHS workers applied for more payday loans than any other worker in London, Cardiff and Bristol, and applied for more loans nationwide than workers in other organizations. The website collects loans from companies like Quick Quid, The Money Shop, Sunny, and 118 118 Money. According to Cash Lady, lenders charge interest rates between 68.7% and 1.325%.
The data sheds new light on how even people with regular incomes are being forced to turn to super-high-yielding companies for emergency loans. Frank Field, the chair of the Special Committee on Work and Pensions, described it as shocking and said it was in line with reports of nurses using food banks last year.
Around 300,000 people take out the expensive short-term loan every month. At the end of 2016, 1.6 million people were in debt on a payday loan, with the average loan being just over £ 300. About one in eight of the debtors was in arrears, according to the Financial Conduct Authority.
According to NHS staff, supermarket employees from Tesco, Asda and Sainsbury’s applied for the most loans in March, followed by employees from McDonalds, Morrisons and Royal Mail. Next came the British Army – which has already banned ads for military base payday loans and publications – Amazon and workers for outsourcing giant Capita.
NHS workers’ representatives said it was “in dire straits”.
“Nobody should be so desperate for money that they have no choice but to shake hands with unscrupulous lenders,” said Unison health chief Sara Gorton. “It shows how much damage the government’s years of wage restraint have done.”
NHS England did not respond to the request for comment.
Sarah-Jayne Clifton, director of the Jubilee Debt Campaign, said the numbers showed how “austerity, low wages and insecure work are driving people to take on expensive debts from rip-off lenders just to put food on the table.” She said: “We need urgent government action not only to curb rip-off lenders, but also to tackle the cost of living crisis and social protection cuts that are driving people to the loan sharks in the first place. ”
The Money Advice Trust said a parliamentary inquiry in payday loans last year that “when young people are between 16 and 24 years old and are thinking about taking out credit, they are more likely to choose expensive loans than the mainstream alternatives” just because the marketing has been so “slick” and the online Experience so easy.
Commenting on the numbers, a Defense Department spokesman said, “We provide guidance, training, and support to service personnel to ensure they can make informed financial decisions.”
A Birmingham City Council spokesman said: “We are one of the largest local employers and we pay the Birmingham Living Wage which is higher than the national living wage”. Leeds City Council said the staff support measures included low-cost credit unions.
Amazon said it paid all of its employees, including contract workers, at least £ 8 an hour.