I have blogged elsewhere (e..g. http://conservativehome.blogs.com/centreright/2008/02/the-luck-of-the.html) about Northern Rock’s desperate search for savers in the last year, and its offer of inflated interest rates to depositors in Denmark and Ireland. This has been a story running all this week in newspapers in Denmark and the UK, who question why a state-owned bank is offering above-market rates to savers in other countries.
The reason Northern Rock was foraging abroad is that the UK has both the worst savings rate in the EU, and the highest level of personal debt. There simply weren’t enough savers in the UK to provide the funds for our fellow-citizens’ voracious appetite for taking on more debt. In fact, the average UK household has £50,000 of personal debt, as well as supporting £70,000 Government debt on top.
Fortunately, there is a growing realisation that something needs to be done. Citizens Advise Bureaus are swamped with people with personal debt problems. I am a patron of a new charity called “Debt Doctors”, based in Hammersmith (http://www.ddukonline.org/), which tours our local primary schools giving lessons in financial education. It also offers an online facility for those seeking advice and counselling. DDUK has only just started, but I expect they will grow quite quickly.
Our local churches are also playing a role. St Paul’s Hammersmith (http://www.sph.org/ ), which has been influential in IDS’s Centre for Social Justice, runs a debt counselling surgery every Monday evening. SPH sees it as a key part of their community outreach role, and its services have a terrific reputation.
One of the key challenges that will face David Cameron after the next election will be reducing the debt burden. Debt is closely linked to family breakdown and to addiction, and we need to be supporting voluntary sector efforts like those outlined above if we are going to tackle it.