George Osborne's U-turn on capping the cost of payday loans is a step in the right direction, but will come too late for many as his cost of living crisis grips the nation and people borrow an eye watering £660 a month to make ends meet.
The warning from Britain's largest union, Unite, follows the government's announcement today and recent findings from an independent survey which showed that the amount has more than trebled from £200 since March 2012.
Unite general secretary Len McCluskey said: "This belated U-turn is welcome but will be cold comfort for those struggling to make ends meet who have been forced into a spiral of debt and fallen prey to the sharp practices of payday lenders. Questions still remain about what level interest rates will be capped at and when.
"Our research shows that as the grip of Cameron and Osborne's cost of living crisis has tightened, the average amount being borrowed to get through to the end of the month has soared to £660. While wages have plummeted and energy and food prices have shot up the government has sat by and let the wild west of the credit industry rip with no thought of the human cost.
"Despite the government's warm words people will be facing the dilemma of going cold this winter or paying eye watering interest rates to the likes of Wonga to heat and eat.
"Unlike other nations Wonga has been allowed to charge interests rates of more than 5,000 per cent. This free ride must come to end with vastly more reasonable rates. Otherwise British consumers will be left to conclude that Wonga and the payday loan industry's cosiness to Number 10 really is allowing them to rip off Britain.
"Urgent action is needed to not just tackle pay day lenders but the cost of living crisis that had fuelled their rise."
The independent survey conducted by Mass1 of 4,087 Unite members in the week 25-30 August showed people are borrowing £660 – a – month compared to £328 in September 2012. The figure has more than trebled from the £200 being borrowed in March 2012.