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How can the government charge 27% interest rates?

The government white paper on the crisis loan fund is dominated by the suggestion that interest will be charged on loans at a rate approaching 30%. Let us not forget these loans are for families around the UK who literally have nothing and need to borrow money off the government, which the currently pay back and 0% interest, to cover such bills as gas and electric. The government has attempted to justify the proposed interest charge by suggesting that investment advice will be given when the loans are taken out.

The perception that this advice is worth in the region of 30% on top of any loan has not gone down well with Labour backbenchers many of whom are literally fighting for their seats as we speak. The government's argument that investment advice about how and when to spend the crisis loan money will see families better prepared for the future seems to be at odds with the position which many families are in, often living on a day-to-day basis.

It is also worth remembering that there are already national advice associations available for those in financial trouble and the citizens advice bureau is often a first port of call for potential legal issues.

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