Max Flint (presenter)

Tonight on the Money Programme; if you think we’re all in for a tough time as the economic slump deepens then think again because for some things have never been better.

Michael O’Leary (Chief executive, Ryanair)

I love recessions. Recessions are much more fun; good times are a pain in the bum. Good times any idiot can make money.

Max (commentary)

Despite the credit crunch, increasing inflation and stagnant house prices some businesses are reporting record profits.

Jim Tannahill

That retails at £78,000.

Max (commentary)

And as the high street reports a slump we visit the bargain basement shop that’s taking advantage of these cost conscious times.

Joe Morris

There’s a lot of companies going bust so that will be a good opportunity for us, we see that as a great opportunity.

Max (commentary)

If we stay in and save money that’s great, according to one man.

Chris Moore

We actually like a recessionary climate because people will tend to spend more money at home, umm, and that’s where our point of sale is.

Max (commentary)

Tonight we meet the people and the businesses whose very prosperity relies on our financial difficulty as we uncover the profits of gloom.

As banks become increasingly reluctant to offer loans so business has grown for the 540 pawn brokers, like Sutton’s in London’s Victoria. As long as you have something valuable to act as security they’ll lend you money for six months.

Max

When you get first-time customers in, how do you explain the system?

Jim Tannahill

Simply by going through the transaction. The transaction’s fairly simple in itself but we, we will lend money against that, that asset and the contract’s for six months and you’re paying interest against the money that you borrow. It is a fairly simple transaction.

Terry Lee

I’ve just brought a watch in; I wondered how much you’d give me on it.

Max (commentary)

Terry Lee is a builder and a frequent customer at the pawnbrokers. He needs to raise some money and has brought in a gold watch.

Terry Lee

I’ve just popped down to pledge this watch to see if they, umm, want it. It’s a Jaeger 18-carat gold watch.

Pawnbroker

How much were you hoping to raise?

Terry Lee

Around £300.

Pawnbroker

Umm, we can help you with that.

Max (commentary)

Sutton’s charge an industry average of six per cent a month for loans under £1,000. So, Terry’s loan of £300 for six months will set him back £108. A bank loan is cheaper but they don’t usually lend such small amounts.

Terry Lee

Thanks.

Pawnbroker

Please check that before you leave.

Terry Lee

I recommend people coming to the pawnbrokers; it’s a good way of getting extra money and cash you need. I’m not too sure what I’m going to spend the money on.

Max (commentary)

This year Sutton’s pre-tax profits were £1.5 million, up 50 per cent on last year.

Jim Tannahill

Heavy!

Max

Two-person job is it?

Max

So, can you show me some stuff that people have borrowed against then?

Jim Tannahill

Yeah, of course, of course.

Max

Another fantastic safe.

Max (commentary)

It’s only if you don’t repay the loan within six months that you risk losing your secured item.

Max

Wow! Look at this.

Jim Tannahill

Right, we’ve got some, some jewellery items, err…

Max

What is that? You are joking.

Jim Tannahill

That is a fully diamond set, five time zone watch. Retails at £78,000.

Max

£78,000?

Jim Tannahill

It is called oversized but I think you can see why.

Max

Overkill, I think. That’s, that’s the ultimate in vulgarity. Can I try that on?

Jim Tannahill

Of course you can. Of course you can. I don’t know if you notice there, even, even the buckle’s fully set with diamonds.

Max

Look at the size of that! Slightly over the top. In your job then, is this where you make the profit, selling stuff like this.

Jim Tannahill

No. No, that’s the last thing we want to do. Anything that we sell and goes off to auction, if there’s anything over and above our loan that goes back to the client anyway.

Max

Oh, I see, so if you sell something and you get more than the loan then you have to give that to the client. And do you notice when the economy takes a down turn, do you notice more people coming through the door?

Jim Tannahill

Oh, we’re busier, without a doubt, I mean assuming as people can’t borrow in the way they would traditionally do it, they look for other avenues and we’re one of those avenues.

Max (commentary)

The vast majority of pawn customers are unlikely to be granted credit from a bank and their numbers are growing.

So, pawnbrokers are there to help individuals who run out of cash. But, if small businesses run into trouble then it’s the turn of another industry to start making money.

With over 3,000 businesses going to the wall in the first quarter of 2008, the debt collector, or bailiff as they prefer to be known, is busier than ever.

Max

So where are we going today, Chris? What’s, what are we going to pick up?

Chris Lucas-Jones (JBW Bailiffs)

We’re going to Surrey today to clear up some companies which haven’t paid their business rates and we’ll go there and make a levy on the items. As long as we meet them today.

Max

So this is non-payment of business rates?

Chris Lucas-Jones

Yeah.

Max (commentary)

Andy Sababady and Chris Lucas-Jones work for JBW Bailiffs who collect Sutton Council’s debts. Last year the company had a turnover of £4.2 million. This year it’s £5.1 million.

Max

So what’s the debt here?

Chris Lucas-Jones

Yeah, it’s £535 she owes in business rates but then with the charge of obviously the letters been sent from us, the van turned up, two bailiffs and obviously we’re going to have to levy, it’s come up to £761.74.

Max

So that’s over £200 for your visit?

Chris Lucas-Jones

Yeah.

Max (commentary)

Bailiffs charge set fees regardless of whether or not they collect the goods or payment. JBW Bailiffs’ business has gone up by 21 per cent in the last year.

Max

Despite rustling sounds no-one came to the door. So what do you do at this point?(commentary)

Chris Lucas-Jones

We’ll have to leave a letter.

Max

Just a letter?

Chris Lucas-Jones

Yeah, we’ll leave them a letter, give them a chance obviously to make the payment and contact us before the fine goes up any further.

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Content last updated: 17/06/2008

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