Just how ignorant is Ritchie?

There are very good reasons why most people in the UK need credit on occasion. The fact is that our UK wealth distribution is so skewed that the majority of households in the UK have little or no safety net if the unforeseen happens, as it, inevitably does. We used to have a ‘social fund’ to deal with the situation. it was, in effect, a state backed loan scheme for those in particular, and pressing current need at a time of crisis, which could in many households be represented by something like the need for a replacement cooker.

That social fund was abolished some time ago and now there is no way in which most people can access necessary essential credit at the time when they need it without recourse to payday lenders.

Rather than being abolished the social fund was devolved down to local authorities: with, yes, a block grant to pay for it.

22 comments on “Just how ignorant is Ritchie?

  1. also he seems to miss that the people “most in need” of Wonga-type lending are those most likely to default – combined with high admin costs (just as expensive to organise a £50 loan as a £5,000 one) this means that risk-adjusted profit and return on capital really aren’t that good despite the sky-high short-term interest rates

    What no-one has ever done that I’ve seen is to take the total cost of borrowing, say, £150 from Wonga for a couple of weeks with the total cost of a £150 unapproved overdraft for the same period. Although the bank’s interest charge would be lower, the £30 fee for writing the customer a letter means it would be much higher

  2. “We used to have a ‘social fund’ to deal with the situation.”
    Of course society also used to have a voluntary system known as ‘saving for a rainy day’ where people put aside money during the good times so they wouldn’t be dependant on others if something bad happened.
    But then the state introduced benefits that are means-tested on savings, and (more recently) 6 years of negative real interest rates, so nobody is daft enough to do that any more.

  3. As can be seen from his response on the Maugham thread, he thinks he’s entitled to his own facts.

    Correction is just ad-hom trolling and not adressing the facts he has brought. Apparently.

  4. Haven’t I read that most of those using food banks are doing so because their welfare payments have been delayed or screwed up? The state apparatus doesn’t have a great track record of quickly delivering emergency funding to those in urgent need.

    Wonga and the like can make a payment into an account within minutes of a loan being approved.

  5. You could add the rider ‘of what’ to the question: ‘Just how ignorant is Ritchie?’

    Thus far (in no particular order) I could put out economics, finance, tax, politics, international relations, science, history, philosophy, logistics, construction (and these are fields where I have a reasonable casual interest)

    What cracks me up is he makes no mention of what lies beneath Wonga in the chain, and that’s the loan shark, whose rates often dwarf Wonga and whose repayment rate is usually nearer to 100% than any private or state institution. If he think Loan sharks didn’t exist before both the creation and reform of the social fund under Thatcher, he is seriously ignorant of history, but then what is new?

  6. @Van Patten,

    Add intellectual property to the list of things about which he has strong prejudices and little knowledge.

    The apple trademark thread was just a train wreck.

  7. On the loan shark thing;
    From what I’ve heard on the grapevine, the advent of Wonga etc has put a considerable crimp in the loan-sharking business. Mainly at the gateway.
    It’s that initial need for a small amount of money in a hurry puts the punter into the loan-shark’s clutches. And that’s, of course, where your loan-shark’s at his most amenable & helpful.
    Coz that’s how the business works. The “helpful friend” in time of need. It’s later when the punter’s fully in their clutches the real terms & interest rates start to bite. And where victims go looking for other mugs to introduce to their “friend” to earn brownie points to ameliorate their own debts.

  8. no way in which most people can access necessary essential credit at the time when they need it ”

    “Most” people?

    So “most people” don’t have bank accounts or credit cards?

    Hmm…

  9. @abacab

    Ha! I had forgotten that – I wonder how many muppets tried to buy a pre-positioned table from the Apple website on the back of it – thanks for the reminder. Although there’s stiff competition that thread is right up there with the man’s greatest hits certainly – cannot recall if it presaged a chaange in the ‘comments policy’…..

  10. B(n)is

    Absolutely – I have heard the same rumor, although apparently much of that business is now run by organized crime of non-UK origin to cater for the burgeoning community introduced under Labour to ‘rub the right’s nose in diversity’ and the fact that many of them don’t have access to conventional banking systems, especially if they’re in the UK illegally and working in the ‘black economy’. And you are absolutely correct as to how the loan sharking arrangements work – oddly rereading the piece he does mention it in passing, only to compare legitimate companies like Wonga with actual Loan Sharks.

    He also seems wholly ignorant on how countries which had this kind of monopoly worked (and indeed work) in practice – rampant criminality and ingenuity in flouting the law.

    Hard to argue with the characterisation of him by Obnoxio, really…..

  11. Why do people assume he is ignorant?

    Propagandists for socialism are often quite knowledgeable about how the system works but they LIE because they know the average voter is not. They know they can lie with every word they speak and it will almost never be challenged, and if it is, it’s on an obscure website rather than the BBC evening news. So no one that matters (dumb voters) is going to ever see it.

    I find it much easier to believe he is a willing and able liar who is perfectly aware of his many contradictory positions, than he is an idiot who can’t keep two ideas in his head.

  12. The Social Fund was devolved to local authorities paid for by a grant, but as of April that grant will cease. So the Fund has basically been abolished.

    Mind, I don’t see why I’m being taxed just to pay for fridges and suits for bloody ‘transients’.

  13. You haven’t had the pleasure of keeping your new suit in your new fridge?

    People go on about payday lenders as its cash that matters. The goods lenders have been around for decades, these days some are on the high street with credit for sofas, TVs, playstations etc for those on low income at high rate of interest and weekly payments.
    But not seen the same way as its not giving cash.
    Same debt trap but in a ‘respectable’ format.

  14. HOW IGNORANT IS RITCHIE ?

    With apologies to EBB

    How ignorant is Ritchie, let me count the ways.
    Ignorant to the depth and breadth and height
    his soul can reach. When feeling out of sight
    for the ends of ignorance, no grace;
    ignorant to the level of his every day’s
    most urgent need, by sun and candle-light;
    ignorant freely, as men strive for Right,
    ignorance pure, as they turn from Praise.
    Ignorance with a passion, put to use
    in his old griefs, and with his childhood’s faith.
    Ignorance with a love he seemed to lose
    with his lost saints, — ignorance with the breadth,
    depth, tears, of all his life! — and, if God choose,
    he shall be ignorant still, e’en better after death.

    Alan Douglas

  15. Oxonymous,

    So we still have a social fund? It wasn’t “abolished some time ago”, it is there until Apr 15?

    And could still be there post Apr 15, if the councils divert some of their discretionary budget from “5 a day coordinators” and “Travelling Community Liaison Officers” to the actual community?

  16. Whenever the subject of payday lending comes up, we ought to vociferously point out that it’s yet another problem which would be solved by a Universal Basic Income. Borrow a small sum, sign over future UBI payments to cover it, and instead of being unsecured and hard to pursue in case of non-payment, it’s basically government-quality debt.

  17. Forget universal basic income, lets just tax less people. Raise tax & NI allowances to £15k a year. Can even save on civil servants and bank payment fees.

  18. @ Dave
    But then you have no poor people, which is why it is intolerable to the Labour Party and all those to the left of it.
    Sadly the idea is deemed toxic by the Conservative Party spinmeisters because it was proposed by Tony Barber, on the advice of a former head of the Inland Revenue who actually knew what he was talking about, and Heath lost the 1974 election.

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