DAVID Cameron ordered his ministers to look into the closure of a specialist team targeting loan sharks in the North-East, after the controversy was raised in the Commons.

Talks will take place with Tom Blenkinsop, the Middlesbrough South and East Cleveland MP, who warned the Prime Minister that the decision would give the green light to companies charging extortionate interest rates.

The Labour backbencher also alerted Mr Cameron to information on the website of the Department for Communities and Local Government (DCLG) – for companies charging interest of up to 2,689 per cent.

He said: “The North-East illegal moneylending team has a record of catching loan sharks and setting up credit unions in Easterside, Middlesbrough to encourage saving and safe lending. After all that hard work, will the Prime Minister please meet me to review his decision on the closure of that team?”

In reply, Mr Cameron said he would arrange a meeting with a DCLG minister, telling MPs: “I think there is unity across the House that we should try to encourage credit unions and try to get people out of the hands of loan sharks.”

In the dying days of 2010, it was announced that the North-East Illegal Money Lending Team (IMLT) – which employs eight staff in Middlesbrough – would be merged into a country-wide team, working from Birmingham.

Consumer Minister Edward Davey said the new structure, which will also see teams covering Scotland and Wales, would bring “efficiency savings and even better results”.

But IMLT said a nationallybased operation would target the “really big players” at the expense of smaller community lenders, which are more prevalent in the region.

The North-East operation has helped arrest 80 illegal money lenders since its launch three years ago and secured the write-off of nearly £2m in illegal debts, although the number of convictions is low.

Meanwhile, the Government plans to train up Jobcentre Plus centre staff to identify people who have fallen prey to money lenders.

Welcoming the raising of the issue during Prime Minister’s Questions, Kevin Rowan, Northern TUC Regional Secretary, said: “The government’s decision is a cruel cut at a time when people are most vulnerable.

“At a time when the region is facing 50,000 job losses in the public and private sector and pay freezes elsewhere, there is a far greater risk that people will turn to disreputable lenders and loan sharks.”

Meanwhile, Labour MPs are attempting to secure a debate in the Commons to force the Government to introduce a legal cap on interest rates.