Britain: The most indebted nation on Earth
Lord Stevenson of Balmacara tells Julian Knight that the Consumer Credit Counselling Service expects to see lots more families in trouble
Sunday 19 June 2011
A trillion and a half is such a big a number that most people probably wouldn't even try getting their heads around it.
But that is the total level of personal debt owed by the 50 million or so British adults. Per head of population, it qualifies us for the dubious honour of the most indebted nation on earth. Most think it's a mess, two decades at least in the gestation that we haven't even come close to tackling yet. But who is meant to be clearing up this mess? Step forward Lord Stevenson of Balmacara, the new chairman of the country's biggest debt charity, the Consumer Credit Counselling Service (CCCS).
A quick glance at Lord Stevenson's CV meets the old Denis Healey test that all public figures should have a "hinterland". The 64-year-old Oxford-educated life peer was director of the British Film Institute in the 1990s, followed by nine years at the progressive think tank the Smith Institute. He is governor of his local school as well as Chiltern Way, a Buckinghamshire federation of secondary schools for boys with special educational needs. And from 2008 he was an adviser to the former prime minister, Gordon Brown.
In his new role at the CCCS, the lord certainly has his work cut out. "From the moment I walked into our call centre I could sense a real buzz of advisers helping people make big changes with their lives. On one call, I listened to someone with £46,000 of debt spread across 12 different lenders," he says. "Such multiple debt problems create real crisis points; the lenders don't know about each other and go shouting for their debt. People need someone to draw all these creditors together and act as a free, impartial intermediary with the creditors and that's our role."
And it's busy work: the CCCS gets a staggering 416,000 cries for help with debts each year. "Think of us like a GP service. You come to us with your debt problem and then we recommend a course of action to the creditors, whom we have dealt with for many years, like a hospital referral. It tends to be the case that you get better treatment if you have someone working on your behalf than if you take a case-by-case approach to the lenders."
Meanwhile, the fee-charging debt management industry is being radically overhauled by the Office of Fair Trading. "The OFT is doing a terrific job with its guidelines (issued last Tuesday) to these firms and for getting rid of some firms which were acting to the detriment of consumers."
But with interest rate rises likely later this year, if not next, the CCCS could be getting a lot busier and Lord Stevenson's prognosis is not a happy one. "I am relatively gloomy for the prospects two years down the line. This recession is proving a real grind and it's too early to say if we have entered a Japanese style 'lost decade'. There are real pinch points when rates rise. The first is families with small children, and then there are parts of the north that are struggling."
As for Ed Miliband's "squeezed middle", this is a reality. "Our research shows a lot of people coming to us who are in their late forties or fifties who would normally be in a decent position as they're homeowners. But for any number of reasons – ill health, relationship breakdown, job loss – this is the group struggling with debt often for the first time."
One area of increasing concern to the CCCS is the number of enquiries relating to energy prices, what with the announcement that Scottish Power was to raise its gas prices by a shocking 18 per cent. "You ain't seen anything yet in terms of gas and electricity rises. It's yet another pressure we are seeing reflected through our debt calls. The role it plays in debt is only going to increase." The other hot debt topic is student debt and Lord Stevenson feels that we haven't yet thought through the implications of loading such huge debts on to the shoulders of the young.
But all is not doom and gloom; there are signs that after the credit splurge of the past decade or so, Britons are taking a more sensible approach. "The average debt of a CCCS client was £28,000 a couple of years ago. Now it's £21,000, which shows that slowly but surely people are paying down what they owe. People do learn lessons. If you get into difficulty, you're not going to go out the instant you're free and pile the credit back on. Credit is actually a good thing. It allows us to live our lives to the full." However, credit at rates in the hundreds or even thousands of per cent is not such a good thing. "Government has to decide whether or not there should be a cap on interest rates, while also ensuring that the more unsavoury elements such as the illegal money lenders are put out of business. As for the payday loan firms (some of which charge over 4,000 per cent APR) there are better ways of financing yourself than them."
But what about that £1.5trn pile of debt? As a former Brown adviser, does Lord Stevenson feel that New Labour got it badly wrong? "No one saw this thing coming. It's all very good to be wise after the event. Firstly the seeds of the credit boom were sown long before the Brown or Blair premierships and this is not a British problem. This is something that happened worldwide." Whoever is to blame, the likes of the CCCS and Lord Stevenson are now left picking up the pieces.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens