There has been a rapid growth of Buy Now, Pay Later (BNPL) schemes across the UK in recent years, with millions of people using them to finance luxury goods and everyday purchases by spreading the payments over several weeks or months.
BNPL schemes can be a convenient alternative to credit cards and can make the purchase of expensive goods more accessible, which can drive consumer spending and contribute to economic growth. But since the introduction of many fast food franchises and local takeaways to the schemes, I have become deeply concerned about the long-term impacts this can have in exacerbating the cycles of poverty and poor health.
Alarming statistics from Citizens Advice speak to the problem, with one in five BNPL users having missed or made a late payment in the last twelve months, which has led to one in ten of those being visited by an enforcement agency or bailiff. Whilst almost a third of BNPL users who were due to make a payment in the last month borrowed money to repay their instalments, meaning their initial debt is only leading to more debt.
But the impact on young people is even more worrying – a quarter of those making BNPL repayments haven’t been able to pay for food, rent or bills as a result.
This is why I welcome and fully support the action by the Labour Government to introduce more regulations to the sector, which will include affordability checks, clearer information on late fees, and oversight by the Financial Conduct Authority.
However, I believe more needs to be done. The notion that borrowing can be used to purchase fast food and takeaways is simply wrong. It can encourage impulsive and unsustainable financial behaviour in communities already grappling with food insecurity, health inequalities, and economic hardship.
That’s why, at the Full Council meeting on 23rd July, I will be submitting a Motion on behalf of the local Conservative Group. We are calling on the Leader of the Council and the Chief Executive to write to the Chancellor of the Exchequer, the Secretary of State for Business and Trade, and Calderdale’s two MPs to urge the Government to go further by implementing restrictions on the use of BNPL schemes for fast food and takeaways.
However, another big part of the problem is financial literacy. Nearly 6 million people who used BNPL last year admitted that they didn’t fully understand what they were signing up for and didn’t even consider it to be “proper borrowing”.
Here in Calderdale, we are fortunate to have fantastic local services, including local charities and the Calderdale Credit Union, all of whom provide vital debt advice and financial help to those in need.
But we must do more to raise awareness about the risks associated with BNPL schemes. That’s why our Motion will also ask the Council to launch a local campaign and work with local organisations to highlight the risks.
BNPL may offer flexibility, but for many, it can lead to more debt and hardship. Therefore, we all have a responsibility to protect vulnerable residents and raise awareness of the risks.
