YOUNG PEOPLE'S DEBT SPIRALLING OUT OF CONTROL - CABLE

3.05.00pm BST (GMT +0100) Sun 23rd Jul 2006

Commenting on the revelation that people are significantly underestimating the levels of personal debt likely to be accrued at university, as well as new Liberal Democrat figures which show that the number of people aged 18-29 going bankrupt each year has risen from 1,681 in 2001-2 to 6,520 in 2004-5, Liberal Democrat Shadow Chancellor, Vincent Cable MP said:

"There is now a pressing need for better financial education for the young. This generation of young people face an unprecedented burden of debt which is going to affect their ability to buy homes, start families and save for old age.

"The Government has shown alarming complacency on this issue. Action must be taken to increase financial awareness and clamp down on irresponsible behaviour so that debt levels do not spiral out of control."

Commenting further, Liberal Democrat Youth spokesperson, Jenny Willott MP said:

"Today's twenty-somethings face serious financial problems because of student debt that their parents never encountered. The Government is not taking the long-term consequences of their top-up fees policy seriously.

"Ministers must not shut their eyes to the growing problem of debt and bankruptcy among the young. There is a distinct lack of preventative advice for people attending university.

"Although there is some financial education and help for people when they are in difficulty, the focus should be on tackling this problem before it occurs."

ENDS

Notes to Editors

Home buying

Only about 20% of homebuyers are in the 20-24 age group, compared to around 34% ten years ago. (Nationwide)

Start Families

Research undertaken by Skipton Building Society (Shrinking Families, 2006) shows that more than a third (39%) of 25 - 34 year olds say they have delayed or are delaying parenthood due to their financial situation - and 24% have waited more than five years.

Save for old age

The number of young people saving for retirement has fallen from one in three to one in four since 2000 (Minister for Pensions Reform, James Purnell at a speech to IPPR, 12th July 2006)

Debt levels

The average owed by under 25s seeking help from CCCS has risen by around a quarter in two years, from �11,833 in 2003 to �14,984 in 2005.

71 % of young people (aged 18 to 29) have an overdraft facility and up to one in five are permanently overdrawn (Credit Action).

Parliamentary Question:

Jenny Willott: To ask the Secretary of State for Trade and Industry how many and what proportion of people aged between 16 and 24 years declared themselves to be bankrupt in each year since 1997; and if he will make a statement. [82912]

Jim Fitzpatrick: Official bankruptcy statistics are not routinely analysed by age group and to provide the information requested would incur disproportionate cost.

However, the Insolvency Service published the report "Characteristics of a Bankrupt" in March 2006 which included an analysis of bankruptcies by broad age groups for the financial years 2001-02 to 2004-05 and is available from http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/policychange/cob.pdf

It should be noted that the nearest age band in this report to that requested is for those aged 18-29; the following table provides a summary based on this information.