The level of outstanding consumer debt at 31 March this year was £511 billion. Because of changes in coverage, comparable figures are not available for 1979.
Does the Minister agree that there has been a massive increase, producing that £51 billion figure, in the last decade and that the Policy Studies Institute is correct to say that about 6 million people in Britain are having great difficulty meeting payments on mortgages or other loans? What steps do the Government propose to take to encourage more responsible borrowing and in particular the establishment of credit unions? Does he accept that our nation of savers has increasingly become a nation of debtors and that many families are now in grave difficulties?
There certainly were some substantial increases in consumer borrowing in the mid-1980s, but I am happy to say that in the past 12 months the rate of growth of consumer credit has been under 10 per cent. I think that the hon. Gentleman will take encouragement, as I do, from the fact that the savings ratio has almost doubled from levels of around 5·5 per cent. to nearly 11 per cent. in the last quarter of last year. The problem is largely correcting itself, but we have to leave borrowers and lenders free to make those decisions for themselves and not tell them that they cannot do what they want to do; they must take into account the risks of incurring certain levels of debt and whether they can afford to service them.
Can my hon. Friend say whether current levels of consumer debt reflect an increased and improved standard of living in this country since 1979? Can he say what would happen to consumer expenditure if a Govenrment were returned who promised to increase income tax and to spend an extra £35 billion per year in public expenditure?
It is certainly clear that as living standards have risen and disposable income has risen—as we heard earlier, it has risen by about £75 per week for a person on average earnings—in the past 10 years, people have felt free to take on more debt. That has undoubtedly enabled them to spread spending over a longer period rather than simply relying on their earnings. My hon. Friend is absolutely right. If they had to pay an extra £20 a week in taxation—to finance that £35 billion worth of extra spending—their living standards and borrowing ability would be severely restricted.