Liverpool

The payday loan shop in Breck Road erupts from its grey surroundings. Everything is painted yellow, black and red — colours that in the natural world mean ‘do not touch’ but that serve here as a lure. ‘Need cash now?’ ask the posters in the windows, in scarlet block capitals on a sunburst background. ‘We can help.’

The shop is well placed. Breck Road is where Everton meets Anfield — the centre of Liverpool’s football rivalry, but also of its destitution. Industrial decline has put the streets around here into a decades-long slump. One in three adults is out of work. There are plenty of people here who need cash now, and will take it from wherever it comes.

Once, this might have meant dealing with a predatory doorstep lender. Payday loan shops offer a reputable alternative. Like supermarkets, they have outlets across the country, and they offer a bit of everything. Want to sell a gold necklace? You can do it here. Want to buy a gold necklace? Likewise. The Breck Road shop even has an arrangement of glittering fairy statues by its entrance: £10 each, or a £2 deposit and six monthly instalments.

Payday loans, however, are the mainstay. The process is simple. All you need to do is fill in a few forms and, circumstances permitting, up to £1,000 will be in your account later that day, to be repaid when your next wage arrives. It is as easy and as swift as credit can be. But you will be charged interest at a typical annual rate of 1,737 per cent.

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Asked why she uses payday loan shops, Sally Fletcher replies, ‘Why shouldn’t I borrow some money to tide me over for a few days?’ She lives in Anfield and, like almost everyone else, has one of those salaries that is enough to keep her comfortable but not enough that she doesn’t need help from time to time. ‘If I pay it back when I’m meant to, there’s no trouble at all.’ And what does she use the money for? ‘Oh, usually late credit card bills, council tax, that sort of thing.’

That is more or less how the debt merchants put it, too. They are, they say, stepping in now that the banks have become squeamish. And borrowing money for a few days to pay a bill on time — even at 1,700 per cent per year — may well work out cheaper than paying a late fee. According to recent research, the number of people using these loans has risen fourfold in five years.

Yet although this may be a recent phenomenon, the overall story is wearily familiar. When Dominic Lawson visited Liverpool for The Spectator in the late Eighties, he saw the first squalls of the credit crunch: whole communities borrowing to the limits of what they could afford to buy houses, electrical goods, clothing and cars. That borrowing has carried on, through new means.

When Lehman Brothers shattered in 2008, it was said that we couldn’t go on injecting cheap credit into our economy. But British households still owe more than those of any other major nation. Official figures estimate that household debt will rise by £500 billion by 2015, to a total of £2.1 trillion. No one likes to admit it, least of all the politicians, but this is the bubble that never burst.

The centre of Liverpool is two miles downhill from Breck Road, but it feels like another country. These streets are becoming glassier and more prosperous by the year. A £500 million shopping complex sits alongside the renovated Mersey waterfront.

They call it urban regeneration in action. And so it is, in a way. The bustle of shoppers, the tide of money, the jobs and opportunities — all are part of a process that might hasten this city’s flight from recession. But debt sloshes around here, too, and not only in the payday loan shops a little way from the main drag. Many of the biggest outlets urge ‘store cards’ on their customers, with promises of savings and special offers and, in the small print, of credit charged at 30 per cent APR.

‘That’s how I got the family’s Christmas presents, right there,’ smiles Daniel as he fans open his wallet, revealing a dozen credit and store cards. He is trying to generate some cash to go alongside them by selling scarves and pin badges outside Anfield stadium on match day. His friend leans across: ‘I’m a teacher in the week. On £23,000 a year, so I’m better off than 90 per cent of the people around here. But I’m still living off my overdraft.’ He pauses. ‘Do you know Blood Brothers? Living on the never-never? It’s just like that.’

Behind him, a row of terraced houses recedes into the gloom, lights and the flicker of televisions glowing from most of the windows. Yet two houses stand lifeless, shuttered up. The occupants, a neighbour tells me, lost their jobs and tumbled down a spiral into the maws of the debt collectors, bailiffs and, eventually, the repo men. ‘It could happen to any of us,’ she shudders outside her door, and then steps back inside.

This article first appeared in the print edition of The Spectator magazine, dated