Postcard from London

About five years ago, Archbishop Justin Welby aimed a blowtorch at payday lender Wonga. He went so far as vowing to “put Wonga out of business.” Wonga’s business model was short-term lending, advancing cash to people needing funds to tide them over to their next payday.

As of April 2016, a loan of £100 for 17 days (Wonga’s average loan term) required £113.60 to repay. That seemed straightforward enough. If you were a person who earned a regular salary, that might be a viable way to get by.

The trouble was that not all borrowers managed to repay their Wonga loan on time. For those failing to pay within the term, debt quickly mounted up: interest charged by the lender at one stage equated to an annual percentage rate of 1,509 percent. People already under financial pressure were quickly faced with a growing and uncontrollable debt. The poorest in the community suffer most.

Welby encouraged churches to press credit unions to offer cheaper, fairer loans. And his vow has come to fulfillment. Last month Wonga collapsed into administration, having incurred the ire of financial regulators, and this caused its revenue to dry up.

But the story of Welby and his campaigning for fiscal good conduct rumbles on. On September 12 the archbishop addressed the Trades Union Congress, a federation of most trade unions in England and Wales.

He sharply criticized multinational companies that manage to avoid or pay very little U.K. tax. He singled out the multinational company Amazon, which he said pays “almost nothing in tax” and has “leached off the taxpayer.” He mocked Wonga and said he wanted to see the end of the need for foodbanks and night shelters for homeless people.

Welby criticized zero-hours contracts, which are associated with precarious employment, as they do not provide sick or holiday pay or maternity cover, which he says are “the reincarnation of an ancient evil.”

There were the usual grumbles from politicians that the archbishop should focus on spiritual issues, including addressing the church’s numerical decline.

A question quickly arose, however: Had Welby done his homework? Or was he in dispute with the Church Commissioners who manage the church’s investments? After media reports of Welby’s speech, Church of England officials found themselves having to admit that Amazon was one of the biggest items in Church of England’s £8.3 billion ($10.9 billion) investment fund. It emerged moreover that a cathedral bookshop had recently advertised jobs on zero-hours contracts.

A statement release soon after said: “As a responsible employer, the Church of England is now reviewing its working practices.” That is no easy task. There is no central control system in the church to regulate its many constituent parts.

The statement added that the church’s investments made it possible to condemn aggressive tax avoidance: “We take the view that it is most effective to be in the room with these companies seeking change as a shareholder. We continue to work with other shareholders to tackle this issue via engagement with companies and their managers.” An Amazon statement said the company pays “all taxes required in the U.K. and every country” where it operates.

The Wonga story has yet to go away. Its demise does not release Wonga’s defaulting borrowers from their obligations. This prompted Frank Field, a Labour Member of Parliament, to call on the church to take the pressure off by purchasing Wonga’s debt portfolio.

Archbishop Welby hosted a meeting at Lambeth Palace to discuss the issue of Wonga debtors, but unsurprisingly the Church Commissioners said unequivocally that they were unable to accede to Field’s suggestion. An action like that would put them in violation of their responsibilities as set out in their charter.

There is a moral to the story: when a high-profile Christian leader enters the world of finance and corporate governance, the leader’s words used will undergo close scrutiny. It’s therefore very important that whatever is said is cloaked in humility.

John Martin

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