Exclusive: Red faces at CLG over 'legal loan sharks' ads

The CLG was this week accused of a ‘major error of judgment' after being forced to remove from its website adverts for ‘legal loan sharks' offering council residents with bad credit records annual interest rates of 2,689%. Following a deluge of complaints from councils to LocalGov.co.uk sister title The MJ, CLG officials cut controversial adverts – promoting specialist credit companies and online casinos – linked directly to the spending details of councils struggling to cope with rising poverty rates and personal debts. One of the CLG advert sites which has attracted complaints from Ken Livingstone CLG secretary Eric Pickles has set a deadline of 31 January for councils to publish online all spending above £500. To help the public view the information, CLG established an interactive ‘timeline' listing each council which has published its spending details. But when residents clicked on their council, instead of spending breakdowns they saw adverts for loans firms, online casinos, dating websites and holiday companies. Allerdale BC in the Lake District has tried to reinvigorate its local economy by encouraging tourism following the recession. But residents seeking a breakdown of Allerdale's spending on the CLG site were greeted by an advert promoting holiday villas in Scotland. One senior council source said he was ‘greatly concerned' residents ‘would think our authority endorses firms offering high-interest loans as a solution to financial difficulties'. ‘Quite the opposite,' the source said. ‘We acknowledge these are legitimate firms offering legal services. But we feel it is inappropriate for the government department charged with helping councils tackle poverty to advertise high-interest loans and credit cards, and online gambling, that can exacerbate the spiral of debt facing local families.' Firms advertised on the CLG site included Wonga.com, the short-term loans company at the centre of a recent row between London's Conservative mayor, Boris Johnson, and his predecessor, Labour's Ken Livingstone. Mr Livingstone criticised Wonga.com's sponsorship of Transport for London's free travel initiative on New Year's Eve, after discovering the company offered loans with interest rates up to 2,689% APR. Mr Johnson described such interest rates as ‘extortionate', but backed the firm's sponsorship deal. Members of the London Assembly described such firms as ‘legal loan sharks'. Wonga.com was among a number of high-interest credit firms advertising on the section of the CLG website designed to improve councils' spending transparency. The site also promoted Vanquis Bank, a specialist finance company offering to help people with poor credit ratings borrow at 39.9% APR. An advert for TotallyMoney.com contained the tag-line ‘top cards for poor credit', and promoted credit cards at 34.9% APR. Speaking to The MJ, Mr Livingstone attacked ‘the willingness of the Conservative mayor and Conservative-led Government to sell prime-time advertising space to a loan company known for charging 2,689% APR'. ‘First it was Mr Johnson's decision that Wonga would be a key sponsor on London's buses and tube over New Year, and now we discover the Government is allowing Wonga to place prominent advertising on its websites. ‘While millions of Londoners are facing real pressure on finances and concerns over their jobs, our mayor and government are busy plastering the capital with adverts for loans companies which profit from increasing the debts of the poorest in society,' he said. Anti-poverty charities criticised the Government's inability to monitor its own websites effectively. Tim Nichols, a spokesman for the Child Poverty Action Group, said: ‘The Department for Work and Pensions has recognised debt as a major issue affecting low-income families and keeping them trapped in poverty. But this understanding has clearly not reached CLG, despite the crucial role given to local government in the Child Poverty Act. Allowing adverts for gambling and loan companies with the kind of interest rates that get families caught in a trap they can't escape is a major error of judgment.' Within hours of being contacted by The MJ this week, the CLG had removed the adverts from its site. A spokesman said: ‘We had not noticed they were appearing, and took them down immediately.' However, other council sources said they contacted CLG to complain about the adverts last week. An LGA spokeswoman said: ‘Now, more than ever, it's important for councils to be aware of how they are perceived. We want people to have trust in the "council" and "public service" brand.' The CLG denied it had been 'forced' to remove the adverts, and reiterated that they were removed as soon as officials became aware of the problem. Explaining how the adverts managed to appear under the CLG's URL address, a CLG spokesperson said: 'Last October, when CLG launched a 'transparency timeline' to help the public see online what their council spends, the free third party tool used had no pop-up advertising. 'The third party subsequently changed the form and extent of their advertising. When The MJ brought to our attention that visitors clicking on the timeline also saw pop-ups, our digital team immediately found a technical solution to stop the ads appearing.' 'Contrary to an unsubstantiated assertion from Ken Livingstone, CLG's online policy is that the department is not involved with selling or receiving revenue from advertising carried on external websites. We've also made it explicit on the timeline that neither the department nor any local authorities endorse or control any advertising on the external website. 'At the end of the month the timeline should finish, as we hope all Councils will have met their deadline of publishing all their spending online.'

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Exclusive: Red faces at CLG over 'legal loan sharks' ads

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