Ministers are complacent about dangers of rising debt, say Lib Dems

Households face financial ruin unless borrowing can be curbed and measures put in place to protect people from any economic downturn, the Liberal Democrats said.

Households face financial ruin unless borrowing can be curbed and measures put in place to protect people from any economic downturn, the Liberal Democrats said.

The party's Treasury spoke- sman, Vincent Cable, accused the Government of being complacent about the risks of allowing personal debt to spiral beyond £1,000bn.

Rising debt was "the most important single danger" to sustained economic growth, he said, warning of a "serious crash" if people began to believe that unlimited borrowing held no dangers.

He said that it would only take a slight dip in Britain's economy - a small rise in interest rates or unemployment - to bring disaster for thousands of people.

Outlining the party's plans to widen the safety net, he called for financial watchdogs to carry out an investigation of mortgage protection insurance. Many people had no cover, he said, and even those that did often found it did not protect them when they needed it most.

And he suggested that all loans should come with an official "health warning" of the consequences of non-payment. He accused some banks of using "aggressive" marketing.

Mr Cable said that he was not predicting doom and gloom for the country's finances but said it was vital that preparations were made for if the current economic stability ended.

Other policies unveiled yesterday were: the creation of a network of independent debt advice centres; improved sharing of personal credit histories among lenders- including an end to the ban on disclosing student debts; a clampdown on hidden credit charges and teaching young people about personal finance at school.