Climbing the Credit Ladder: Short-term loans as a path to long-term credit

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A new ResPublica publication

ResPublica’s report ‘Climbing the Credit Ladder: Short-term loans as a path to long-term credit‘ was launched on Monday 3rd November in Parliament by Cathy Jamieson MP, Shadow Financial Secretary to the Treasury, and Mark Garnier MP, Treasury Committee.

In recent years, the payday lending industry has seen significant growth, followed by necessary regulatory reform. However, despite changes in both principles and lending practice, the market in its current form serves neither the interests of consumers nor of wider society.The challenge we now face is that of creating a sustainable short-term credit industry shorn of its negative aspects; one which can protect people from illegal lending at a time when tightened household budgets continue to fuel the demand for credit.

Climbing the Credit Ladder: Short-term loans as a path to long-term credit argues that a reformed short-term credit industry has the potential to be both socially and economically transformative for those in need. In this report, we propose reforms to allow payday customers to ‘climb the credit ladder’ and progress into longer-term finance and the stability and prosperity it can engender. At the same time, the reforms we suggest will support those who fall into severe financial difficulty, making sure they do not enter a vicious circle of debt upon debt and are instead pointed towards the advice and resolution they need.

This report calls for a change of approach in the short-term finance market. A well-functioning short-term lending sector should be part of a wider consumer credit market, one which enables people to progress to cheaper and more affordable credit, and provides a safety net to those in need. The report sets out the necessary reforms to the sector to create a market that truly serves those who use it, and which can help create financial stability and prosperity at all levels of our society.

  • Lorena Papamanci


    Lorena is a Senior Researcher, co-ordinating events and research projects across all three of ResPublica’s core workstreams. She currently focuses on labour market reform, including programmes and campaigns on education and skills. Lorena leads on our organisation’s work on social...

    Lorena Papamanci
  • John Gathergood

    Contributing Author

    Professor John Gathergood is an Associate Professor in Economics at the University of Nottingham. John joined the University of Nottingham as a Lecturer in Economics in 2010 and was promoted to Associate Professor in 2013. His research focuses on household...

    John Gathergood
  • Adam Wildman

    Principal Research Consultant

    Adam originally joined ResPublica as a Research Manager in  2013 and rejoined in 2016 as a Principal Research Consultant. He mostly co-ordinates ResPublica’s research output on business and the economy. His coming work will focus on EU reform, the future...

    Adam Wildman