New Figures On Debt Show Hidden Problem

4.17.00pm BST (GMT +0100) Wed 31st Mar 2004

New figures showing that 40% of lone parents and 30% of low-income couples with children fall behind with their bills highlights a growing household debt problem, according to Liberal Democrat Shadow Chancellor Dr Vincent Cable.

Dr Cable was commenting on a new study of debt by the Institute for Fiscal Studies (IFS) published today. Vincent Cable disagreed with the report's assertion that low incomes alone, rather than irresponsible lending by banks and other lenders, were the cause of unsustainable debt amongst those least able to repay loans.

He said: "I welcome this timely report. It highlights a hidden dimension to the household debt problem: low income families becoming seriously indebted to local councils, utilities and mail order companies."

"One policy implication is the need for Government to reform the Social Fund so that poor people faced with fluctuations in their income can get repayable emergency credit without becoming dependent on money lenders charging extortionate interest rates."

"This study should not be used to deny the existence of a wider problem. If interest rates rise, unemployment increases and house prices fall as is widely expected, many middle income families will find themselves in arrears from negative equity."