Labour have promised to put “vulture” payday lenders out of business by offering interest-free loans to struggling families .
People in debt would be able to access up to £1000, rather than throw themselves at the mercy of firms that charge crippling rates of interest.
Party leader Richard Leonard said: “Our new interest-free loans would tackle the ‘poverty premium’ and give people struggling to make ends meet the means to get by without creating a cycle of debt.”
StepChange, a financial advice charity, has estimated there are nearly 700,000 people north of the Border in debt, or at risk.
Nearly 290,000 children are in households without access to £500 to cover an unexpected problem such as a boiler or fridge break down.
The charity says the average level of payday loan debt among the people they help is £1257, in addition to £6646 for credit cards and £1867 for catalogue debt.
Labour’s plan, which will be a manifesto commitment, is to “loosen the grip” that high interest lenders have on families without access to savings.
Under the proposal, the Government would provide the financial backing for emergency help by working alongside councils and credit unions.
The loans would only be available for essential household items, or to help access employment by paying for a season ticket for travel, tools or clothes for a job interview.
Leonard said: “Payday lenders and illegal loan sharks have preyed on vulnerable people across Scotland’s hardest hit communities for too long.”
