Ten-point plan to rein in ‘1,000bn’ debt binge
While concerns continue to mount over the level of goverment borrowing in the U.S. in the U.K. it is the ever-growing level of consumer borrowing that is causing anxiety. The following article was written by Richard Miles in Today’s Times.
LIBERAL Democrats yesterday unveiled a ten-point plan to rein in consumer debt after claiming that the nation’s personal borrowings would hit 1,000 billion by the summer.
Vincent Cable, the Lib Dems Treasury spokesman, said that British households owed banks and other creditors more than the combined foreign currency debt of Africa, Asia and Latin America.
Dr Cable said the ‘biggest borrowing binge in history’ had kept the UK economy going but that this policy was unsustainable. ‘Any sensible person will know that you cannot simply keep on borrowing more than you can afford to pay back,’ he said.
Outlining his plans to tackle the debt mountain, Dr Cable called on financial authorities to monitor levels of household borrowing. Mortgage companies should be issued with guidance on ’safe’ lending limits, he said. And reserve deposits should be used to smoothe ‘boom and bust’ in the mortgage market.
Curbs on unsolicited credit promotion were needed, as well as a crackdown on loan sharks. Hefty early redemption penalties should be discouraged and Office of Fair Trading rules on credit more rigorously enforced. Excessive rates on store cards should be policed more closely.
Dr Cable also called on the Government to establish independent, low-cost advice centres, paid for by credit providers and the investment industry. Lastly, he wants a widening of the remit of the social fund to permit short-term loans to low-income families in financial crisis.
The Lib Dems estimate that unsecured lending has grown 50 per cent since Labour came to power in 1997. Bank of England figures published last week showed total lending to individuals at 934 billion.
