Labour's payday lender tax plan

Payday lenders would be subject to a new tax to help fund low-cost alternatives, such as credit unions, under a Labour government, Ed Miliband is expected to announce today.

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Miliband on 'worst of exploitation by payday lenders'

The market in payday lending has doubled in just four years. Almost a third of the payday loans taken out in Britain at the moment are to cover the cost of people's gas and electricity bills.

We would cap the cost of credit, halt the spread of payday lenders on our high streets and force them to fund the credit unions that can offer a real alternative for people in desperate need.

We must protect the most vulnerable people in our society from the worst of exploitation by payday lenders. And it is right that the companies that benefit from people's financial plight accept their responsibilities to help ensure affordable credit is available.

– Labour leader Ed Miliband

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Labour: Payday lender tax will fund credit unions

Payday lenders have been widely criticised for charging excessively high interest rates. Credit: Press Association

Labour are expected to unveil plans for a new tax on payday lenders to help fund low-cost alternatives, such as credit unions, later today.

Payday lenders, which offer short-term loans to customers who run out of money while waiting for their monthly pay cheque, have been widely criticised for charging vulnerable individuals high interest rates which can top 5,000% a year.

Companies will have to pay an existing levy when they start being regulated by the Financial Conduct Authority next year.

Under Labour's proposal, payday firms will face an additional charge on top of this to boost the credit union market, where loans are available at much lower rates to households unable to access the mainstream credit market.

Ed Miliband to unveil payday lender tax plan

Labour have said a new tax on payday lenders will help fund low-cost alternatives such as credit unions Credit: Press Association

Payday lenders would be subject to a new tax to help fund low-cost alternatives, such as credit unions, under a Labour government, Ed Miliband is expected to announce today.

Details of the rates at which the levy would be imposed on the profits of companies like Wonga have not yet been announced.

Labour said it aims to raise enough cash to double the £13 million currently provided by the Government each year to fund the expansion of credit union

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