THE next Labour government will cap the total amount that can be paid in overdraft fees or interest payments in a bid to free three million people from the “low-paid debt trap,” shadow chancellor John McDonnell will pledge today.

The policy announcement comes as real wages are lower than when the Tories first took power in 2010. Labour argues that this decline in workers’ spending power has created a “vicious circle” of debt for some of the poorest and most financially vulnerable households in Britain.

Campaigners have warned of the danger of “persistent overdrafts,” where high fees and low wages keep families trapped in debt.