Interview with Radio 4 'Today' programme on credit, debt & inequality

Friday 25th April 2008

Click link on the right to listen to the interview [7Mb]

A transcript follows:

John Humphrys: The Archbishop of Canterbury, Dr. Rowan Williams is not exactly a stranger to controversy. People who do that job seldom are, indeed you could argue that Archbishops are meant to stir things up occasionally - there may be a bit of that when Rowan Williams speaks in the House of Lords today on a debate that he is leading dealing with debt and poverty and inequality; and he is with me. Good morning Archbishop.

Archbishop of Canterbury: Good morning.

JH: Your concern is about young people in particular getting into debt that they can't afford; hasn't that always been the case?

ABC: I think we have seen in the last ten years or so the development of a culture where debt is so normal for young people and student loans have rather intensified that, that there is a more urgent need than ever for some teaching about financial literacy in schools and FE institutions and I think that is getting more urgent by the day as the credit crunch impacts on the people.

JH: You don't think they know?

ABC: I think they may know theoretically though some of them don't even know that, and of course some of them don't think forward five or ten years about what the roll on effects of the student debt might be and the accumulation that can come.

JH: If you teach them you are dealing, I suppose, with the demands side; but what about the supply side? What about those who push the debt?

ABC: I think one of the things that I really want to see as a matter of urgency reviewed here is both the interest rates charged by some door step lending companies...

JH: These are the sharks, the loan sharks?

ABC: Yes, and the advertising standards. Now there was a commission a few years ago chaired by Lord Griffith of Fforestfach which made quite a thing about checking auditing the practices, especially the advertising practices, of loan companies. Getting some credit counselling, respectable credit counselling groups, in to do independent audits of these methods, I think that is something we can now push for very hard.

JH: And what sort of methods do you have in mind particularly?

ABC: I think the information that is available to a lot of people with door step lending companies is very minimal, people don't understand often what the rates of interest might be. They can find themselves being charged over a thousand percent in a couple of year's time with roll-over debts. There's the payday lending phenomenon where people will post date a cheque to their next payday, be given a cash payment which involves effectively a charge of twenty-five, thirty percent and that will again build up and roll over. That is the kind of thing which people a) need to know about and b) needs to be capped in its full effects.

JH: A lot people say that sort of thing should simply be made illegal but isn't that slightly ducking the issue  because although they inflict a lot of suffering on a lot of people, they're at the very bottom of the ladder and it's a relatively small factor in this whole picture. Are you concerned about the much bigger picture? The availability of debt? What is going on in the banks at the moment?

ABC: I am certainly concerned about the fact that the high street banks, the historic high street banks, because of the pressure they are under, are ceasing to be high street banks. You know, they are withdrawing from some areas. They can't find reliable creditors and that leaves a gap into which, of course, not so creditable companies will move. Now I would like to see two things there. One is to see the strengthening of credit unions, that is local, low level, dependable credit, and there is pressure from the credit union movement to have the legislation loosened so they can deal with small businesses, not just with individuals and families, and so they can deal with small, local regeneration companies and that sort of thing. That would be a major step forward. But more broadly I think we need to look - and I'm not quite sure where this examination would lead us - we need to look at what it means for the whole economy to be built up on a spiralling, more or less uncontrolled, credit. We've seen signs and there was a report last weekend that even the utility companies depend very, very heavily on this in a risky way; so that basic utilities might be at risk.

JH: And the fact is that a lot of institutions and individuals make a fortune, literally a fortune, out of this.

ABC: Yes, people who run their own companies are saying they've never had it so good.

JH: Well people running the banks, until relatively recently, were doing immensely well out of it. Is that something that bothers you?

ABC: It does bother me and now I think we are seeing the results of that in the credit crunch.

JH: But what can you do about it? If you are bothered; are you bothered for instance by a man making here, and this is slightly broad English, but a man making billions literally - £3 point odd billion out of hedge funds, which is a form of gambling, sophisticated, highly sophisticated gambling – does that bother you?

ABC: It does bother me, yes. I haven't got any quick answers to it though. My immediate concern today is looking at the bottom of the ladder and the way in which the credit crunch impacts so disproportionately on the most disadvantaged. Start there because at least you can do something building up the credit union, the financial education.

JH: But if you start there, do you have to look at the gap between the poorest and the richest?

ABC: You have to I think and it is a gap that everyone knows is broadening and I think a growing number of people in society are unhappy with that.

JH: The government doesn't seem to be. The government thinks it is a positively good thing. Let me be clear about [that]; not that the gap is necessarily a positively good thing but that there are so many very rich people now is a positively good thing.

ABC: It will be a positively good thing I think if it impacted across the board on the health of the economy. The way in which it does it is not obvious I think to a lot of folk. Now the government has had a review in the last few of years of consumer credit and it has come up with a few suggestions which have slightly improved the picture. I think now we need, as I have suggested, we need some more specific targeted suggestions for the least advantaged.

JH: So when somebody like John Hutton, government minister, says the overarching goal that no one should get left behind must not become translated into a sense that no one should be allowed to get too far ahead. Do you sympathise with that?

ABC: I've got some questions about that I think because I think the more you have a disproportion between what people are actually earning and what they appear to be worth, the more you have astronomical sums with very little rational behind them the less credibility the whole thing has.

JH: Your critics would say that is a pretty old fashioned kind of Marxism.

ABC: My critics might say that but I think I'd be quite happy to say that seems to be how we run a society that's confident with itself and has belief in itself.

JH: What is the effect of this being, going on, continuing unchecked?

ABC: Well certainly among the poorest the effect is the erosion of family life, the erosion of self confidence. There is still a stigma about debt even though it is taken for granted in so many quarters but the stigma means people don't want to talk about it, they don't necessarily want to go and get the best advice about it and for young people particularly it does become crippling, especially for children.

JH: And do you think that, putting aside that aspect of it, do you think when we see people becoming in the words of another former government minister, 'filthy rich', our attitude is, 'I want a bit of that myself' and therefore a good thing for society which is what America has until very recently appeared to believe, or do you think the opposite effect?

ABC: I think it is a bit of both isn't it. I think there's a degree of envy and cynicism that's bred by disproportion and that leads people to feel even more alienated from the rest of society – that the gulf is even greater between themselves, between people who can't manage there own affairs - can't take control of their own affairs/ circumstances - and these others. So there may be an element of I'd like some of that but here is also an element of what kind of society is this? Why should I trust this system when it rewards some people so disproportionately in a way that doesn't connect at all where I am?

JH: So you are simply saying that the government and the politicians are more relaxed about that than you are and that you are taking...?

ABC: They seem to be. I wouldn't mind if they were a little more worried.

JH: And in what sense? Exemplified how?

ABC: I don't want to go into the details of how regulation of high salaries might be achieved because my primary concern today is simply with the poorest end of the spectrum where I think more can be done, more rapidly and in a more focused way.

JH: But you are not saying, or are you, that it is easier for a camel to go through the eye of a needle than a rich man to enter the Kingdom of God?

ABC: I've heard that somewhere before and I think it's said on quite good authority!

JH: Archbishop, many thanks.

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