Simon Danczuk MP

Fighting for Rochdale, Littleborough and Milnrow

MP alarmed at town's debt problem

Rochdale's MP has voiced concerns that levels of personal debt are causing real problems in the town.

Simon Danczuk was speaking after it was revealed that Manchester Credit Union are refusing more people for loans in Rochdale than anywhere else in Greater Manchester because of high levels of personal debt.

The credit union has been operating in Rochdale for less than six months but is already refusing nearly 50 per cent of loan applications, more than three times their normal refusal rate.

 “When Manchester Credit Union is refusing three times as many people in Rochdale for loans than anywhere else then that has to be a concern,” said Simon Danczuk MP. “I don’t think it’s a coincidence that a credit union is raising concerns about high levels of personal debt at a time when we’ve seen an explosion of shops selling sub-prime financial products in Rochdale town centre. When we see Payday Loan shops lending at a typical rate of 2,000%APR then this is only going to cause problems and accelerate the debt spiral.”

There are now 11 shops on Yorkshire Street offering loans to people who would be turned down from traditional lenders because of a poor credit rating. In the Council’s Financial Inclusion Strategy Action Plan 2011-2014 plans to amend planning policy to limit the growth of the sub-prime sector is listed as a priority.

“I think we have too many people lending at an extortionate interest on the high street and responsible lenders and other local agencies need to work together to make sure there is enough support for people at risk of being sucked into a debt crisis,” argued Mr Danczuk. “Manchester Credit Union is doing a great job here in Rochdale and it really is scandalous that a town of our size has been lacking a credit union for so long. It will take time to get the right infrastructure in place to stop people falling prey to lenders charging astronomical interest rates. But unless we get on top of this now we could be storing up huge problems for the future.”

That view was echoed by Mike Wolstencroft, Money Advice Officer at Rochdale Boroughwide Housing, who added that the growth of sub-prime lenders on the high street could do irreparable long term damage to the town. 

“Most of the shops are branches or franchises of global firms, backed by international investors,” he said. “When Rochdale citizens are ripped off, their wealth is extracted from them – but it is also extracted from the local economy, never to return. If Rochdale is to regenerate, it must do something about that.”