John Harris

Journalist & Author

Archive for May, 2012

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How South Wales learnt to bite back at loan sharks | John Harris

Friday, May 4th, 2012

The way credit unions operate goes against the orthodoxies of finance. And that’s exactly what we need

On the high street of the south welsh town of Tonyrefail, there sit two very different examples of financial services. No 3 is a branch of Barclays, whose logo sparks thoughts of shareholder revolt, and a chief executive who last year claimed it was time to increase what City types call its “risk profile”. Next door, at number 1, there are the rather less flash local offices of an organisation called Dragon Savers, whose publicity blurb associates it with a handful of rather contrasting ideas – among them, training and education in “the wise use of money” and “the promotion of thrift”.

Dragon Savers is the local credit union, run by a mix of paid staff and volunteers. It has about 4,500 active members, and endless points of contrast with the way that finance usually works. Unlike the banks, it can only lend money that it actually holds: its deposits total about £1.5m, and there’s £1m on its loan book. As against plenty of payday and doorstep lenders, it sets great store by carefully examining any application for credit, and offering annual rates that peak at 26.8% – though, as general manager Christina Stoneman points out, that rate applies only to the reducing balance, meaning that debt can be paid off quickly and cheaply. Its books are full of the kind of small loans in which banks and building societies don’t tend to be interested, leaving people at the mercy of the more exploitative set-ups from which credit unions often have to rescue people.

All this may seem old-fashioned. Certainly, in the context of the Rhondda Valley, it suggests an often romanticised model of community self-help that can be traced to the heyday of the local pits (and back further, to the birth of building societies). But on closer examination Dragon Savers doesn’t represent the revival of something from the past, as much as a very modern bulwark against 21st century insanities. Certainly, its emphasis on discipline and responsibility – the opposite of everything embodied by the dread notion of “sub-prime” – contrasts with the recklessness of any number of financial organisations, from big banks to online lenders. But the mindset it encourages among its members also highlights something that the modern mania for blaming all the ills of the world on big finance rather ignores: that though irresponsible business undoubtedly manipulates millions into debt, plenty of people’s attitude to money still defies belief.

One Dragon Savers customer I meet – who is in work, and by no means on the breadline – marvels that dealing with them has taught him that “I can only spend what I’ve actually got”. That he expresses this in terms of a revelation surely points up a collective failure in which most of us are to some extent complicit (the ancient wisdom of Paul Weller springs to mind: the world’s insane, and we’re all to blame in a way). Just about every conversation I have here points up this dichotomy: between the transgressions of companies and corporations on one hand, and individual frailties and failures on the other – with simple want as a recurrent backdrop.

Among Dragon Savers’ volunteers is 44-year-old Helen Bishop. Some 25 years ago she and her first daughter arrived in Tonyrefail having escaped somewhat difficult circumstances. In her native south London she had had grim experience of loan sharks, some of whom had chased their debts by kicking down her front door. In south Wales she fell into traps laid by more respectable doorstep-lending firms – she mentions two well-known firms, whose “agents” offered her loans to pay for both small pleasures and some of life’s essentials.

She had been borrowing for six years when she found herself drowning. Her loans totalled £3,500 and she owed £2,500 in interest. School trips and new clothes were out: her budget for family food barely scraped £5 a day. She’d been brought up in care and had virtually no idea of what officialspeak calls financial literacy. Now, having put as many of her dealings as possible in the hands of Dragon Savers, she tours local schools on their behalf making the case for thrift and warning of the nightmares of debt.

Two days in the Rhondda is enough to almost turn me into a credit union evangelist, although their recent history is not without controversy. There are sporadic examples of mismanagement. Earlier this year, for instance, the Financial Services Authority censured two Glaswegian credit unions: one of whom had loaned 88% of its holdings to a single community trust; another that had given loans to its management on better terms than anything offered to its membership. There are currently about 450 British credit unions, although around six go bust every year (members are covered for up to £85,000 by the FSA’s financial services compensation scheme). All told, they’re a work in progress, with an admirably solid foundation: in the wake of the loosening of restrictions on membership and new rules whereby they can compete with banks in terms of interest rates, fresh FSA regulations are due to come into force next year, aiming to reduce the number of failures.

What’s most important is that credit unions are growing, and not just in hard-pressed places like this. When we asked for information from Comment is free users – one of whom suggested we pay a visit to Dragon Savers – the examples that came back spanned the country, not just such bywords for difficult living as inner-city Glasgow and Manchester, but Croydon, Kensington and Chelsea – even Henley-on-Thames.

Such is an aspect of this story that suggests one of modern Britain’s most shop-soiled phrases. If credit unions are going to be a convincing beacon not just for responsible lending but for lives newly attuned to the prudence and self-restraint at which modern finance often seems to laugh, one thing is self-evident: they’re nothing without deposits, so we’d better be all in this together.

John Harris

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Money with morals in the Rhondda Valley – video

Friday, May 4th, 2012

John Harris visits south Wales and meets savers and staff at Dragon Savers, one of the credit unions offering an alternative to the big banks, doorstep lenders and online loan companies

John Harris
Laurence Topham
Christian Bennett

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Credit union offering money with morals in the Rhondda Valley – video

Thursday, May 3rd, 2012

John Harris visits south Wales and meets savers and staff at Dragon Savers, an alternative to the big banks, doorstep lenders and online loan companies

John Harris
Laurence Topham
Christian Bennett

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London 2012’s stupendous insanity leaves sport as an also-ran | John Harris

Tuesday, May 1st, 2012

Rooftop rockets, uncontrolled consumerism and out-of-touch elites are at the rotten heart of this hugely wasteful Olympics

And so it is that the socio-economic model of the 21st century attains its iconic apotheosis: a gated community with added surface-to-air missiles.

Read the relevant reports about how Olympic security is going to affect the residents of Bow Quarter, E3, and the details only confirm the story’s absurdity – to quote from the Guardian, “the Star Streak missiles that are likely to be installed on top of a water tower … travel at more than three times the speed of sound, have a range of 5km and use a system of three dart-like projectiles to allow multiple hits on a target.” Just to truly warm our cockles, they’re made in the UK – Belfast, to be precise – though according to Wikipedia, they will not protect east London quite as soundly as other ordnance options. Star Streaks, it seems, lack “the armour penetration capabilities of a purpose-built anti-tank guided missile or a dual purpose missile such as Air Defence Anti-Tank System”. The latter is manufactured in Switzerland; the Thai army likes them, apparently.

At which point, it is surely worth reflecting on the stupendous insanity boiling around the Olympics, and the fact that sport has become only a detail. Small wonder, of course – the founding idea of the modern games was an expression of the rise of the nation state, and ever since, the resulting spectacle has always crystallised two things: first, the unrivalled power of governments to lay on such gigantic and ludicrously wasteful spectacles; and second, whatever madness is swirling around the host country. Running, jumping and swimming, by comparison, will always be an added extra.

In Moscow (1980), the Olympics displayed the vanities of what might be called late communism, just as the invasion of Afghanistan revealed fatal Soviet hubris. In Los Angeles (1984), the games embodied the decisive arrival of the consumer capitalism that has since eaten the planet (my favourite bits of the opening and closing ceremonies were Lionel Richie, and the 84 grand pianos). Beijing (2008) attested to the niceness of the Chinese state by forcibly moving 1.5 million people to clear the way for Olympic buildings and installations, and allowing no opening for any noises-off about such minor matters as Tibet. And Berlin in 1936 barely needs mentioning, though it’s worth bearing in mind the subsequent comments of Baron Pierre de Coubertin, the founder of the International Olympic Committee: “People are worried … by the fact that the 1936 games were illuminated by Hitlerite strength and discipline. How could it have been otherwise? On the contrary, it is eminently desirable for the games to be thus clothed, with the same success, in the garment woven for them over four years by each people.”

Or, rather, some people. In London, the games will be an expression of three of the most rotten aspects of our version of modernity: surveillance and the arms trade; out-of-control consumerism; and most spectacularly, the fact that the elites who make their money out of these things have been barely touched by the crisis that is ruining lives across the planet. The fact has been barely commented on, but needs repeating: no matter that this week sees thousands of disabled people having their income cut by £100 a week, or that endless areas of public provision are being hacked down at speed: the cost to the public of Sebastian Coe’s fantasies, and an orgy of corporate hospitality, is currently put at £11bn. £11bn! Meanwhile, the distance between 99.9% of people and the Olympic elite has been beautifully demonstrated by perhaps the event’s most unpleasant bit of symbolism: those “Games lanes“, along which dignitaries and sponsors will be sped to east London, while the rest of us sweat our way through likely gridlock.

And who are we talking about? The event’s “worldwide partners” include Coca-Cola, McDonald’s (looking forward to temporarily opening its biggest outlet, apparently), Procter & Gamble, and good old Atos, the people whose UK division is seeing to those already-infamous tests for incapacity benefit (there’s a point to be made here about the latter bigging up a festival of physical prowess, while so swiftly passing judgment on the supposed fitness of thousands of people on benefits, but someone may make it more gracefully on the thread below).

That’ll be them, racing through the capital, in the company of politicians and droves of hangers-on: if you want a suitably grim picture of London in mid-to-late summer, picture Jeremy Hunt (if, by some dark magic, he’s still around), relaxing in the back of a people carrier with a free Angus Deluxe and fries, with people getting rich on so-called welfare reform hot in pursuit. Meanwhile, those members of the general public who have managed to get tickets to events usually not of their choosing (I have a friend who is inexplicably excited about going to watch handball) will not be able to bring their own food and drink, and will enter the games complex via that well known embodiment of sporting glory, Westfield Stratford City. In the context of all that, who exactly wins the 200m men’s butterfly – or the handball – may seem kind of irrelevant.

By way of illustrating how worked up some people get about all this, I’ve just received a copy of a polemic by the French academic Marc Perelman, published by Verso, and titled Barbaric Sport: a Global Plague. It earnestly shreds not just the Olympics, but also pretty much the whole of modern sport (”Sport is a consequence of the level of development of the productive forces under capitalism”, it says here). And though its prose style is rather gluey and its points a little too earnest even for me, fair play to him: if you’ve got a thinking brain, it strikes me as pretty poor to be averting your eyes from the Olympics’ most basic aspects, and claiming that it will simply cheer us all up. To quote good old Guy Debord, those 16 days may well amount to “nothing more than an image of happy harmony surrounded by desolation and horror, at the calm centre of misery”: as the burgers are bought in their hundreds and the missile systems whirr away, 2012’s underlying awfulness brought to life, spectacularly.

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John Harris

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