Personal Debt Balloons To Over £5,000 Each

12.20.57pm GMT Wed 5th Nov 2003

With a decision on interest rates due on today, Vince Cable MP, Liberal Democrat Shadow Chancellor, released new figures from the Office of National Statistics obtained by the Liberal Democrats showing that unsecured personal debt has grown by over 50% since 1997 and now stands at £5,330 per person. Incomes have risen by only 23%.

• Personal debt has grown twice as fast as incomes since 1997 and has increased by £1,790 each.

• Unsecured debt is as large as over 1/3rd of the average person's

annual income.

Unsecured debts are not backed by collateral (an asset which guarantees the repayment of the loan) i.e. like credit card debts. These figures do not include secured debts such as mortgages.

The Liberal Democrats revealed in July that average annual household debt, including mortgages, outstrips average annual income by 30%. In 1997, it was only 5% higher.

Vince Cable MP, Liberal Democrat Shadow Chancellor, said: "With interest rates set to start rising imminently, the ticking debt time bomb is now set to explode."

"Many people who have borrowed to the limit, are going regret pushing their debts up so high."

"With more and more of people's income being soaked up by personal debt and mortgage repayments, the boom time for lenders may well be over. People who are mortgaged to the hilt, or have borrowed to the limit, are the ones who will suffer."

ENDS (See Notes To Editors)

Average Annual Personal Debt

Source: Letter from Karen Dunnell (Director of Survey's and Administrative Sources Department at the Office of National Statistics) to Dr. Vincent Cable, dated 30 September 2003:

Average annual income and unsecured debt per person, UK, 1997-2002.

Annual Income per person (£) Unsecured Debt per person (£) Unsecured

Debt as a Percentage of Income

1997 12,400 3,540 28.5

1998 12,680 3,790 29.8

1999 13,330 4,090 30.6

2000 13,980 4,470 31.9

2001 14,980 4,900 32.7

2002 15,310 5,330 34.8

% increase 1997 - 2002 23.47% 50.56% 22.1%

The ONS definition of how they have come to the figures is:

The National Statistician has been asked to reply to your recent question on unsecured debt per person and annual income per person. I am replying in his absence. (129931) The information requested is shown in the table below. The data for unsecured debt (households' total financial liabilities other than secured debt) and income (households1 gross disposable income) used in the calculations are national accounts series for the combined household and non-profit institutions serving households (NPISH) sectors. The accounts for the household and NPISH sectors are currently combined; separate estimates are not available.

The average annual disposable income and unsecured debt person can be obtained by dividing the appropriate national accounts totals by the UK population aged 16 and over. These are shown for the years requested in the table.

Average Annual Household Debt

Source: Letter from Len Cook (National Statistician at the Office of National Statistics) to Dr. Cable dated 16 July 2003

Year Average Annual Household Debt £ Average Annual Household Income £

% Debt Higher Than Income

1997 24,500 23,400 4.7

2002 37,500 28,800 30.2

Growth % 53 23