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What assessment he has made of the average levels of household indebtedness in the UK in comparison to other European countries.
Levels of household debt have risen over the past decade, as in other European countries. As a proportion of total debt, unsecured household debt is at its lowest point since 1997, but levels of secured household debt have risen by 153 per cent. as a result of the 1.8 million rise in the number of home owners in Britain.
But can the Minister confirm that the average UK consumer owes more than twice the average of the average western European consumer? Related to that, has he read a recent speech by the Governor of the Bank of England, in which he spoke of the rise in indebtedness and bankruptcies, and described it as a
"social problem that is materialising"?
Does the hon. Gentleman agree, and what does he intend to do about it?
The right hon. Gentleman is right. We have a higher level of household debt than other European countries, because we have a higher number of people with mortgages who are buying their homes. Since 1997 we have also had a 65 per cent. rise in the wealth of households, and the average net wealth of households in the UK is higher than in France or Germany. The right hon. Gentleman is right that where consumers get into distress, we need to do more to help them. I shall be in Leeds tomorrow, launching a Leeds pilot on tackling loan sharks who exploit people who get into trouble with unsecured debt. However, the fact that there are more people with mortgages who are buying their homes is a good thing, which has been delivered since 1997.
Will my hon. Friend accept my commendation of the initiatives that have taken place to improve the availability of products to poorer families, which take them away from the loan shark market? That may be a partial explanation of the fall in unsecured loans to which he draws attention.
My hon. Friend is right. We need to crack down on illegal loan sharks through policing and trading standards, but at the same time ensure that there are decent, affordable alternatives. That is why we have a £36 million growth fund which we have increased by £6 million so as to provide, through credit unions and other mutuals, more affordable credit for low-income consumers. We are determined not only to crack down on illegal lending but to ensure that decent alternatives are available for those families.
The House will be aware that households struggling with problem debt are likely to face a further increase in interest rates this afternoon. Is the Minister concerned that after 10 years the Chancellor's economic legacy will be personal debt at £1.3 trillion, falling living standards, rising interest rates, and inflation at a 16-year high? Does he agree with Kate Barker's analysis that the Chancellor's fiscal policy has been partly responsible for the increasing interest rates that are hitting so many families so hard?
I do not agree with the hon. Lady at all. The fact is that we have more people with mortgages buying their own homes and they are paying lower levels of interest rates than they were 15 or 20 years ago. Under the Conservative Government, we had 15 per cent. interest rates, negative equity above 75,000 and record repossessions. Since 1997, this Government have put that instability behind us and delivered stability. That is why people can afford their mortgages and their debt and can live with prosperity.
If we might revert to the question, I hope that the Conservatives are not suggesting that the Government should dictate to people what they can and cannot borrow to buy a house, a car or whatever. Where the Government do have control over debt—that is to say, national debt—is it not a fact that British Government debt is about two thirds of the EU average, half that of Belgium, half that of Greece, far lower than France—where every penny of income tax is used to pay off French national debt—and 10 percentage points lower than when the Conservatives were last in power, when so much of our income tax was used to pay off debt because of their economic incompetence?
My right hon. Friend is right. We have low levels of national debt because of tough decisions that we took on fiscal policy and on tax, including on pension credit in the early period of this Government. A few weeks ago, the shadow pensions Minister told "The Daily Politics" that the decision we took on pension credit should be looked at and that the Conservatives would like to find a way of putting that kind of money back into pensions. The question that I would like to ask is whether the shadow pensions Minister was acting with the permission of the shadow Chancellor.
It is right that in a dynamic economy we create businesses, and also businesses go out of business. In fact, we have a much lower level of insolvency than in the United States, which is a more dynamic economy. It is important to have more risk-taking businesses. We have many more small businesses now than 10 years ago, which is a sign of success in our economy.