Debt: France and Ireland are worried. Why isn't Britain?

Christmas is over and the work of 2006 is under way, but very few people know - until the bills come in - how much they have borrowed to fund the annual December megaspend. That's the way the credit card works: we live now and we pay later.

It's all very empowering and convenient but it is the credit card - with its ambivalence of purpose (are we just spending or are we borrowing?) - which has ushered in the modern era of guilt-free debt. The other contributor to the normalisation of debt is the student loan, which former students see as proof positive that the Government adds its own endorsement to the culture of borrowing.

Last month, the French government sounded a warning note about personal debt; the Irish FSA announced new measures to restrict lending.

By contrast in Britain, new legislation meanders through and, although the departments of Trade and Industry and Constitutional Affairs appear to puff and warn worthily, the Bank of England is unconcerned - as is the Federal Reserve in the US - about personal debt at macro level. Who is right or wrong?

The surprise figure is the number of people in the UK finding solutions to personal debt problems last year. In 2005, an estimated 110,000 people reached the haven of bankruptcy, sequestration, a CCCS debt management plan or insolvency. That compares with 71,000 in 2004 and 54,000 in 2003 - a doubling in three years.

However, that may not be cause for alarm: there were many signs in 2005 of the savvier consumer coming to terms with the climate of debt. A disappointing 2004 Christmas for retailers was followed by a surge in demand for advice, provoked only in part by the heavy advertising of quoted insolvency companies.

In many months, credit card repayments exceeded new borrowing. So the upsurge in solutions may reflect better informed consumers and a readier service; it may well not be the tip of an iceberg.

Nonetheless, the number of people - hundreds of thousands - who get into financial difficulty through debt is still unacceptably high. What can be done to put in place measures to curb the excesses without harming the economy or hurting the vast majority of consumers who are unvexed?

It is something of a mantra at the moment that more sharing of data among lenders will solve many problems.

Certainly, sharing of information about customers on minimum repayments should be shared since it can be a clear sign of distress, but I am unconvinced that the experience of the United States fully underpins the claims for full data-sharing. The interests of the consumer in protecting data may not be fully recognised.

Most of all it is important that people needing help should get it quickly. Partly, this is a psychological hurdle - people put off getting help in the hope that something will turn up; partly it is a knowledge hurdle - many people do not know where to go for free help.

The writer is chairman of the Consumer Credit Counselling Service

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