Ed Balls announces funding for projects tackling loan sharks

The Economic Secretary to the Treasury, Ed Balls, and Trade and Industry Minister, Ian McCartney, today announced funding of £1.2 million to provide specialist enforcement teams to tackle the problem of illegal money lending.

The funding announced today allows for expansion of operations into new areas including Sheffield, West Yorkshire and Liverpool, building on the considerable success of pilot projects based in Birmingham and Glasgow. These initiatives are an important complement to the Government's strategy of increasing the availability of affordable and appropriate sources of credit for those suffering from financial exclusion.

Over the last two years, two pilot specialist teams in the West Midlands and Scotland have been working to tackle criminals who illegally give out quick cash loans, often using intimidation and threats of violence to extort large sums of money in return. These teams work by overcoming the barriers to successful law enforcement that often arise from the fear and intimidation of victims, and by providing support to victims in finding legal alternatives. The teams have been responsible for a number of high profile prosecutions of loan-sharks in Birmingham and Glasgow.

In a visit to the Birmingham base of the illegal lending project, Ed Balls, said: "This important project has helped give victims in the West Midlands the confidence to come forward, an awareness of better ways to borrow and helped us to build evidence against loan sharks to bring them to justice. The money we are announcing today means that not only will the existing projects in Birmingham and Glasgow continue to serve their communities, but that this important initiative will be expanded to other parts of the country also suffering from this blight."

New research, published by the Department of Trade and Industry (DTI), today finds that the specialist teams have had considerable success in tackling illegal lending. The research also shows that the UK, with its efficient and diverse financial services market, has a low incidence of illegal lending compared to other European countries. Nevertheless, approximately 165,000 households in the UK use illegal money lenders. As many as half of these are in the poorest parts of the country, often concentrated in the most deprived urban housing estates, where legal alternatives are hardest to access.

Ian McCartney said: "The loan shark projects in Birmingham and Glasgow have worked tirelessly in the last year to pursue loan sharks and take them off the streets. Loan sharks prey on the poorest people in our communities and use threats and violence to intimidate the people they are ripping off. These people are the lowest of the low and the pilot projects have done a fantastic job in getting loan sharks behind bars where they belong."