Lies, Damned Lies and Worrying Debt Statistics

ANDY FLEMING examines the current dire financial state of Britain's households, especially the unsustainable level of personal debt now standing at a gargantuan average of £15,531!

To anyone brought up like me in the proud tradition of 'neither a borrower nor a lender be', the current state of household finances in the UK is an anathema.  My wife also belongs to the same frugal and obviously out-moded way of thinking.  We do not borrow money or possess credit cards, and live by the cliche of what you can't afford, you don't buy.  Hence, we drive a fourteen year old small car, have a second hand laptop, a £50 flat screen television from the British Heart Foundation and don't by the latest gizmos.  We're now up to date with rent, utilities and council tax.

Now I know the false Gordon Brown, Tony Blair and New Labour 'boom' was infact fuelled solely by foreign credit and a ridiculous boom in property prices.  And I know that contemporary capitalism only seems to work with gargantuan levels of personal and soevereign debt, but if more people had made an effort to live within their means, had resisted the Brown and Darling greed-fest and lies about 'no more boom and bust' and had been more sceptical then the UK finances (you could subsitute just about any other Western country here) would not be in its present parlous state.  And I would not have to report to you the following latest depressing personal debt statistics provided by Credit Action.

Total UK personal debt at the end of May 2011 stood at £1,452 billion. The twelve-month growth rate remained unchanged at 0.8%. Individuals currently owe nearly as much as the entire country has produced over the last four quarters (Q2 2010 to Q1 2011).


Total lending in May 2011 rose by £1.3 billion; secured lending increased by £1.1 billion in the month; consumer credit lending increased by £0.2 billion (total lending in January 2008 grew by £8.4 billion).

Total secured lending on dwellings at the end of May 2011 stood at £1,242 billion. The twelve-month growth rate remained unchanged at 0.7%.

Total consumer credit lending to individuals at the end of May 2011 was £210 billion. The annual growth rate of consumer credit decreased 0.1 percentage points to 1.4%.

UK banks and building societies wrote off £9.5 billion of loans to individuals in the four quarters to the end of Q1 2011. In Q1 2011 they wrote off £1.89 billion (£866 million of that was credit card debt). This amounts to a write-off of £20.71 million a day.

Average household debt in the UK is £8,076 (excluding mortgages). This figure increases to £15,531 if the average is based on the number of households who actually have some form of unsecured loan.

Average household debt in the UK is £55,862 (including mortgages).

If you add to this the March 2010 budget report figure for public sector net debt (PSND) expected in 2015-16 (excluding financial interventions) then this figure rises to £106,477 per household.
 

Today in the UK

331 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 60 seconds during a working day.

• 1,577 Consumer County Court Judgements (CCJs) were issued every day during Q1 2011 and the average judgement amount was £3,118.
• Citizen Advice Bureaux dealt with 9,072 new debt problems every working day in England and Wales during the year ending March 2011.
• The average cost of raising a child from birth to the age of 21 is £27.50 a day
• 100 properties were repossessed every day during Q1 2011
• 126 new people became unemployed for more than 12 months every day during the 12 months to end April 2011
• 1,271 people reported they had become redundant every day during 3 months to end April 2011
• £334,000,000 is the amount that the Government Public Sector Net Debt (PSDN), including financial interventions, will grow today (equivalent to £3,865 per second).
• £149,590,000 is the interest the Government has to pay each day on the UKs net debt of £2299.8bn (which includes financial interventions). This is estimated to rise to £182m a day in 2015-16.
• 220 mortgage possession claims will be issued and 160 mortgage possession orders will be made today
• 382 landlord possession claims will be issued and 265 landlord possession orders will be made today.
• The UK population is projected to grow by 1,205 people a day over the next decade
• 24.1m plastic card purchase transactions will be made today with a total value of £1.156bn.
• 7.7m cash withdrawals will be made today with a total value of £528m
• The average car will cost £16.08 to run today
• It costs £68.05 on average to fill a car with a 50 litre tank with unleaded petrol.

Many thanks once again to Credit Action for those figures that as an amateur astronomer I can confirm are truly astronomical.  Infact it's getting to the stage where it would be more appropriate to use scientific notation, especially the £2.2998 x 10^12 total national debt (yep, that's a staggering £2.3 trillion!).

My analysis of these figures, and one that some people may regard as cynical is that:

• There was no real boom, just a credit-fuelled greed-fest provided on the back of the ridiculous escalation in house prices.
• The banks lent money, often unsecured, for consumer goods, cars and services that many individuals had no intentions of repaying.
• When the 'chickens came home to roost' and the house of cards collapsed many individuals stopped repaying.
• A run on the banks was then threatened because of the inrcreasing number of loan defaults.
• The tax-payer had to step in and subsidise the banks through guaranteed loans to prevent a run on the banks.
• Thus the frugal tax-payer who didn't go out and spend like there was no tomorrow is directly subsiding irresponsible borrowers and lenders.

Little wonder so many of us are hacked off... and not by the News International!