A new Shelter survey has shown that almost one million people have taken out a payday loan to help pay their rent or mortgage over the past year. The survey also shows that almost seven million people in total are relying on some form of high-cost credit to meet their housing costs.

The UK now has one of the highest levels of personal debt in the world - in April of last year the British people owed over £1,460bn in private debt, a figure which the Office of Budget Responsibility estimates will rise to £2 trillion by 2015.

Payday lenders charge rates of 2,000% or more over short periods to desperate borrowers. Charges, which customers often do not fully understand when they sign up, can escalate rapidly leading to a downward spiral of debt.

Shelter is warning that turning to payday loans to help handle housing costs can lead to inescapable cycles of debt and poverty. Campbell Robb, Shelter's Chief Executive said: ‘These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.

‘Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable.  It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness.'

The Shelter survey shows the urgent need for an affordable alternative credit scheme accessible all across Britain to all segments of our society. Whilst the Government has committed to regulating excessive interest rates on credit and store cards, it must do more to promote Credit Unions and initiatives such as the Community Development Finance Institutions and Fair Finance which lend to people on low incomes at a fair price.

The survey also highlights the importance of money advice and debt management counselling services in the increasingly uncertain economic environment. Greater financial literacy education and financial inclusion awareness could prevent many of the problems forcing people into the arms of payday lenders and other high-cost creditors.

The Co-operative Party is campaigning under the banner the Feeling's Mutual for fairer financial services that put people before profit. We believe that co-operative forms of community finance, as well as large financial mutuals such as building societies, offer a more sustainable alternative to shareholder owned banks.

You can join our campaign here.