Poverty pay and debt

Three years ago the Low Pay Unit was predicting that tax credits would become a subsidy for low-paying employers (Our subsidy to low pay, October 29). While they have provided valuable support for the low-paid, tax credits could never be a sustainable solution to poverty pay.

The achievement of the minimum wage is tainted by flaws in the mechanism for setting the level. The Low Pay Commission, in its reports, takes as gospel the CBI "evidence" that its members cannot afford more than token rises without dire consequences. There appears to be little consideration of the macroeconomic impact of low pay.

Without serious political resolve to address widening income distribution, which is leaving so many people behind, we risk drifting to a welfare-supported near- feudal society. We need a statement of long-term policy, similar to that for child poverty, which puts employers on notice that they must prepare to pay the true costs of the labour they seek to profit from. In the meantime, a tax recovery from companies which profit from taxpayer-subsidised low pay would send useful messages.
Dr RichardTowers
Sheffield

In 1795, Berkshire magistrates fixed the parish subsidy for poverty-stricken agricultural workers' daily wage at "below that of the slaves in the plantations" (a quote from the time), while enabling the farmers to avoid paying a living wage. The Speenhamland system in some form endured into the 20th century and even now forms the basis of attempts to raise the income of the low paid above the "rock-bottom wages" which are so profitable, as Polly Toynbee says, for many multinationals. A living wage of at least £7 an hour should be the going rate.
Leslie Turner
Maidstone, Kent

Speenhamland is alive today: a Tesco worker (single parent or with non-working partner and two children) earning £6.06 an hour for a 35-hour week would be able to claim aabout £50 a week in state benefits. No wonder Tesco's profits are so high.
Richard Knights
Liverpool


We are pleased to see the courts recognising that predatory lending practices lead people into unmanageable debt (Leaders, October 30). The case of Mr and Mrs Meadows should have far-reaching implications and help to erode this multimillion pound industry. But until the government curbs the legitimacy and powers of private companies to mis-sell these kinds of products to our most vulnerable consumers little will change.

We also need much more investment in alternative providers and money advice services that operate for people rather than for profit. We are working with our members, many of whom have clients like Mr and Meadows, to provide responsible finance to those whose only choice is going to predatory lenders. Our sector, community development finance, is young, determined and passionate. It is becoming a recognised force for change in financial practice.
Bernie Morgan
Community Development Finance Association

Some legal lenders who specialise in loans to the poor charge rates of 185%. The government refuses to cap rates because caps in other countries push lenders out of the market and drive the poor to loan sharks. But this happens when rates are set too low. A rate of, say, 36% would still leave lenders with a handsome profit. The real answer is for government to more fully back credit unions and to persuade banks to accept the poor as customers.
Bob Holman
Glasgow