Personal debt at record levels - credit must be crunched.

10.49.39am GMT Mon 17th Nov 2008

Vince Cable MP, deputy leader of the Liberal Democrats.

New analysis from the Liberal Democrats shows that total personal debt has risen by £1 trillion since Labour came to power in 1997. Commenting, local Liberal Democrat parliamentary candidate, Sarah Carr said:

"Britain's economic growth over the past ten years has been built on a mountain of unsustainable personal debt. This credit card culture means that the UK is now especially vulnerable to the global economic downturn.

"Vince Cable, the Liberal Democrat Shadow Chancellor, has made repeated warnings over many years about the terrible consequences of fueling economic growth on unsustainable personal debt. In this economic downturn, millions of hard-pressed families are now struggling to keep their heads above water and our worried for their future. Labour and Conservatives politicians have ignored his warnings at their peril and our suffering."

Whilst the UK has comparatively lower levels of public debt than other developed countries, Britain's level of personal debt is unrivalled anywhere in the world outside of the United States of America. Sarah has commented further: "I am very concerned that so many young people now think that debt is the norm and an overdraft is free money - which it is not. It is clear the addiction to debt in the UK must be broken before our children get sucked in to the downward spiral."

The Liberal Democrats are supporting a plan for the BBC to immediately launch a campaign of public education through all its media channels, directing people to the appropriate advice and information to manage their finances. As part of this "financial literacy" plan, the Liberal Democrats are advocating a comprehensive network of free financial advice centres, funded 50-50 between the banks and the Government, to ensure everyone has access to impartial information and advice regarding extreme debt cases; issues around benefit and tax credits; and pension advice and repossessions. Also, in order to put money back in the pockets of lower and middle income families, the Liberal Democrats are proposing a 4p cut in the basic rate of income tax, paid for by closing tax loopholes benefiting the wealthy.