Great news for Wonga shareholders!

At the back of my mind, I had been thinking about this whole Wonga thing about lending money to high-risk borrowers, i.e. welfare claimants.

If you lend money to a welfare claimant, who doesn't have two brass farthings to rub together, you would struggle to get your money back, which is why Wonga have colossal write-offs equal to nearly half their headline interest income (company accounts 2012).

But there is one body who can easily gets its money back, and that is the government which is paying those benefits in the first place - it can recoup such short term loans by knocking them off future payments (the 'right of set-off').

So I was thinking, the government could make a massive dent in Wonga if they made it easier and simpler for welfare claimants to get small advances, e.g. to buy a second hand washing machine for £100, which would save them from having to spend £5 or £10 a week at the launderette. How you filter out people who will take the money and spend it down the bookies, I do not know, that's their problem. If they spend it on booze and fags, then the government wins out anyway, because three-quarters of what they spend comes straight back as VAT and duty.

(They could do exactly the same thing with payday loans, if people are too embarrassed to ask their employer to give them an advance or pay them weekly instead of monthly, or indeed daily instead of weekly, the government can get its money back via PAYE codes).

It turns out, that the government/local councils do exactly this via the Discretionary Social Fund (e.g. Brighton)…

… which is now going to be axed.