Mr Percy became an MP last year An MP has admitted running up tens of thousands of pounds of debt while he was a student – during a debate about high cost credit lending.
Conservative Andrew Percy said he is still paying off the debts at a rate of about £600 a month.
“I understand what debt is like and I know how the whole thing, once you’re on the conveyor belt, it’s very difficult to get off.”
MPs rejected Labour’s call for a review of high-cost credit lending on Monday.
They discussed the issue during a debate on the Finance Bill, which aims to enact tax and spending measures announced in the Budget, but rejected an amendment urging a review by 273 votes to 228.
During the debate Mr Percy, a former teacher who became MP for Brigg and Goole at last year’s general election, told the Commons: “I’ve never personally had to borrow from a high cost credit company but I have most certainly understood the issue of debt, to the tunes of tens of thousands of pounds.”
The backbencher said he was not alone in facing problems with credit card debt: “It’s something that started with me at university and I did go down the line of paying one credit card off by transferring it to another on 0% for a year, or however many months, and then conveniently forgetting about that and maxing out the other one that I’d just cleared.
“These companies are deliberately targeting people who are at home during the day, who they know are on low incomes”
Jenny Chapman Labour MP
“To the tune that I now pay about £600 a month to clear off all of my credit cards which I’ve had to roll into a loan since my election.”
He added: “And that’s just with credit card debt. So for individuals who are in the high cost credit side of things, that conveyor belt just moves faster. That’s the only difference I guess.”
MPs on all sides criticised the activities of companies which lend to people with interest rates of as much as 4,000% and complained that marketing was often directed at the poorest.
Labour’s Stella Creasy said: “A quarter of customers in high-cost credit companies cannot access any other form of credit. Indeed, Consumer Focus’ research suggests that many users of payday loans are unable to access mainstream credit such as overdrafts because they have already maxed them out.”
Her Labour colleague, Jenny Chapman, admitted watching Jeremy Kyle’s TV show “in the interests of research” and being “disgusted” by advertisements she saw: “These companies are deliberately targeting people who are at home during the day, who they know are on low incomes.”
And Conservative Neil Parish added: “I’m not a huge man for regulation but I can’t think that we can just stand idly by and let people be exploited because these are some of the most vulnerable people in the country.”
But Treasury Financial Secretary Mark Hoban said the high-cost credit market provided a service “for those who can’t get credit from any other source”.
“We should be very careful about describing high-cost credit providers as ‘legal loan sharks’. We all recognise from our own communities that real loan sharks are far worse, resorting to violence and intimidation to recover their debts.
“High cost lenders are licensed and operate within a regulatory framework which provides some recourse when things go wrong.”
He said a government review of the consumer credit industry was already underway and there had already been suggestions that interest rates should be capped, which ministers would “consider properly and carefully”.
Mr Percy said on his Twitter page later he did not vote for Labour’s amendment, because there was already a review going on.
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