Member News
8th June 2012"If you charge extortionate rates, you are a loan shark. Just because you don't break people's legs, you are still breaking their lives."
Gracia McGrath does not mince her words when it comes to so-called 'payday loan' companies.
They operate by offering short-term loans to "tide people over" until their next wage or benefit payment, but also charge rates of interest that can be in excess of 4,000%.
Chance UK's chief executive, who was awarded an OBE in 2009 for her work with vulnerable young people, says she is "incredibly disappointed " that Labour MP Stella Creasy's efforts earlier this year to cap 'payday loan' charges was not supported by the coalition.
"You have got a government who says they want to work with the 120,000 most troubled families- they are the people that Stella Creasy is trying to help," Ms McGrath explains.
"They are the people who have ended up borrowing from these companies, who are in the most financial difficulty.
"Those families do not become less troubled when they are up to their eyes in debt, when everything they have struggled to get has been repossessed. You either want to help them or you don't and if you do a loan cap is a really important thing to support.
"For us, we are going to be working in Stella's constituency with families who are suffering from this.
"I back her campaign 1,000% and hopefully the government will realise they can't still say businesses should be allowed to make as much money as they can get away with."
Ms McGrath says it is "shameful" that these companies continue to operate in Britain.
The issue is close to Chance UK's mission to improve the lives of primary school children with behavioural difficulties who are at risk of developing anti-social or criminal behaviour in the future. It provides volunteer mentors for primary-aged children across the UK.
The charity works with young people whose families have lost their homes as a result of taking out 'payday' loans.
"We now all know what happens when you borrow beyond your means, because our country and the whole of Europe have done it," Ms McGrath says.
"When a family does that, they get into real difficulty and when they do they can no longer borrow from a bank or someone who will give them a reasonable interest rate.
"So they start borrowing from loan sharks - these companies are no better than loan sharks who charge extortionate interest rates.
"We have families at the moment whose lives have spiralled out of control because they borrowed money to pay off other debts. Every time they borrow money they pay higher interest on the loan they have had to take out to pay back the original loan."
Ms McGrath says other businesses that offer poorer families the opportunity to buy household goods with weekly payments are also preying on the most vulnerable.
"They don't even tell you how much they cost; they tell you how much they cost per week. In a society where we are seeing poor people getting poorer, I can buy something cheaper than someone who is on benefits.
"This is wrong. People are ending up paying five times as much as they should for essential equipment for their home, such as a washing machine. It is absolutely shameful and some businesses should not be allowed to exist."
The recent u-turn on the so-called 'charity tax' is one government decision Ms McGrath does welcome.
"It really did feel like the wrong time to punish people who are going to give to charity, especially at a time when charities are relying on philanthropists a lot more than they have done in the past," she explains.
However, Ms McGrath warns Chance UK is already starting to feel the effects of deep cuts to public spending.
"Although we are expanding into new areas, our biggest threat financially is to core funding from local authorities, and from trusts that have got less to invest because they are not getting the returns on their investments. That kind of money is what shores up organisations."
She added: "We have already started to see that other organisations that we would often refer children with specialist needs to have gone.
"Those organisations that are still standing have to deal with more children and that will have an impact. That will increase over the next two years."
One Chance UK project that has secured long-term funding is a programme that is about to launch in the London boroughs of Enfield and Waltham Forest.
The five-year project is being backed by the Big Lottery Funds Realising Ambition project. It will work with 200 five to 11 year olds using an innovative early intervention programme to prevent young children getting involved in crime.
"Enfield was particularly hard hit by the riots," explains Ms McGrath.
"Our work is actually about looking at young people who would have been influenced by what happened last year and would think that rioting is OK.
"If you are in primary school you look at how older siblings are behaving, how your neighbours are behaving, and that is where you get your definition of right and wrong. If in your area rioting was seen as acceptable, if it happens again you are much more likely to join in."
Ms McGrath says that while the focus is on boys, girls do tend to get left out of intervention programmes.
"If you look at the statistics for youth crime, it is 87% boys. We have a specialist programme in Hackney and Islington that works just with girls.
"We can't allow ourselves to forget that girls are suffering too."
To find out more about becoming a Chance UK mentor, visit their website.