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Much as I think Mr Obsorne will make an excellent Chancellor, the ideas given above are rather ineffective, probably because taking radical action could, in the short to medium term, have a dire effect on our economy which is currently propped up by massive personal borrowing which in many cases is underwritten by rising property values......and the expectation by our younger generation of a generous inheritance.

Some ideas for a radical approach would be a statutory limit on the level of mortgage borrowing, credit card borrowing, bank overdrafts and hire purchase agreements, making the process of personal bankrptcy far far more onerous and the use of a mortgage limited to the purchase of a main residence only.

I except that such draconian measures would reduce borrowing, but at the same time would greatly deflate our economy in the short to maybe medium term, but at least when it recovered it would be one built on a more sound footing.

Oh dear, more government intervention, much of it likely to be poorly thought through and liable to cause as many or more problems that it solves:

1. "Compulsory financial literacy education for all 11 to 18 year-olds". So who does the education? How are the educators going to be trained? By whom? How long will this take and cost? Will even those who are sensible and not prone to rack up such debts be forced to sit in on what I imagine will be pretty boring lessons?

2. What business is it of the government how much I borrow and what I spend it on?

3. "A seven day cooling off period between a person opening a store card account and being able to use it." So those 20% discount offers available to those opening a store card will vanish, meaning we have to pay more for those goods? I remeber taking advantage of some of those. Thanks, George.

4. "Lord Griffiths...believes that banks have not lent optimally and some form of statutory intervention may soon be necessary."

Well he should set up his own bank, then, and lend "optimally", rather than impose his views on everyone else.

Goodness me, the belief of politicians of all people that they can run (and have the right to run) other people's lives better than they can is astonishing. Butt out.

At least 90% of the debt has been caused by high house prices, not by careless use of credit cards. Out of the £1258 bn total debt, £1046 bn is secured lending on homes, which has increased by 11.2% or £105 bn in the last 12 months.

Only the remainder, £212 bn, is consumer credit lending to individuals, which has increased by 6.3% or about £13 bn in the last 12 months.

Hence: "Total lending in September 2006 grew by £9.9bn. Secured lending grew by £8.9bn in the month. Consumer credit lending grew by £0.9bn." Even then, it's not clear whether the £4508 unsecured debt per adult is a snapshot including credit card balances which will be paid off on the due date.

So while I agree that there's a growing problem with low personal savings and increasing personal unsecured debt, there's a much greater problem with the size of mortgages which people have to take out to buy a home - and that itself is one reason why they then start borrowing in other ways. According to this:


house prices are now at their most overvalued since 1948, exceeding the peaks of 1973 and 1988 during the intermediate period (see the graph in the article).

I need hardly say that net immigration creates additional demand, and if that is not met by increased supply then it's inevitable that prices will go up.

The problem now is that house prices have been pushed up by mass immigration (and the investors' response, "buy-to-let") and if immigration is curtailed there'll be a crash in property prices.

But the longer this carries on, the bigger and more damaging the crash will be.

Time Worstall asked a salient question make about borrowing and debt here.

Is it all bad news?

According to this mornings Observer, Mr Osborne has an axe to grind on this one: Mum's business has just gone 'tits up'

A link or some more info please, David 10:31

2. What business is it of the government how much I borrow and what I spend it on? JT 10:20

To some extent you are right, however the Government's concern should be what would happen to the economy if you and a large number of other borrowers failed to pay it back, would they, the Government using taxpayers money, be expected to bail out the lenders? And developing that scenario, is it fair on taxpayers who do not borrow or who borrow responsibly to see their taxes being used to bail out the "feckless"?

Maybe of course this belief by lenders of the "Government bail out option" encourages their imprudent borrowing.

On a lighter note, there is irony in the title of this topic for our party who have been out of office for nearly ten years:

"Osborne wants to put the waiting back into wanting" ;)

Observer Business and Media section, (front page) by Jill Insley
His Interest in debt( Osborne) took on a personal note when his mother was forced to close her Kensington delicatessen last summer after incurring huge losses. According to official records, £372,000 of Osborne family money was invested in the venture, but only £8,000 was left by the time it closed, with a £57,000 loan still outstanding last year.
paul 10:54

I don't think it's helpful to link George Osborne's commitment to tackle the serious problems of personal indebtedness with the reported difficulties of his mother. GO's proposals should be evaluated on their own merits. I personally favour throwing some grit into the free market credit system. The above stats from Credit Action point to a real problem and encouraging people to pause before they borrow on extortinate store cards seems a good idea to me. I hope that we're conservatives - not fundamentalist free marketeers.

I don't see what the problem is with Osbournes proposals here. I very glad to see the lack of teaching 'real life' skills in schools is being addressed. The IVA change might relieve us of those dreadful adverts which make it sound all too easy, and the cooling off period is sensible and in line with other such loan agreements.

So Osborn wants even more legislation, you would think that after almost ten years of laws from here, there and everywhere he would have more sense. Oh...forgot, he's a member of the "not the Conservative party".

Can't we be a bit more pragmatic rather than launch into the arguments of more legislation. Many of these are merely extensions to existing rules. What is possibly wrong with teaching kids personal finance? It will be a lot more useful than the majority of things they learn in school.

I do not believe that the eldest son and heir of Sir Peter Osborne, 17th Baronet would make a good Chancellor (what are his qualifications for this, by the way?).

And I fail to see how having someone who has gone through life with a trust fund, is heir to a huge fortune, and lives, courtesy of his parents, mortgage-free in Notting Hill lecture others about indebtedness really helps our party's image at all.

Denis Cooper @ 10.25:

"At least 90% of the debt has been caused by high house prices, not by careless use of credit cards. Out of the £1258 bn total debt, £1046 bn is secured lending on homes, which has increased by 11.2% or £105 bn in the last 12 months".

This is surely the nub of the matter.
Whilst, we as conservatives, do not encourage intefering with the markets, there are times when some government intervention is necessary; I have long thought that this problem is one example because housing is a basic commodity like food. We all need a roof over our head.
Unfortunately property is also an investment and, if investments only went up in value, there would be less of a problem. But they don't and I believe that thoroughly irreponsible lending (i.e. not even checking the borrower's ability to repay) should be curtailed.
In any event, the cost of housing is only one part of the financial problem for many 20 to 30+ year olds, who might also have student loans to repay and pension plans to start.

Osborne's definitely hitting on a solid point here. Personal debt is at unprecedented levels. I can understand the critics on this one saying this is government intervention of the worst kind and I can see their thinking. However there comes an exemption clause which I think this instance fits into. The fact is that people dig themselves further into debt to attempt to pull themselves out of it. Ive heard of a number of Americans who have committed suicide because they have credit cards to pay off credit cards and they simply cant do it.

Competition between companies in order to get customers is generally very good. However banking and finance is one of those areas where the free market can harm the customers. Hate to say this (and it is very hard to do this) but Osbornes onto something here...Im not convinced of the solutions being proposed but the problem is certainly highlighted right.

One way to sort this out would be to impose a 100% reserve requirements on the banks thus preventing them from lending money they don't have. Not only would this prevent the economy from overheating, it would prevent banks inflating the money supply and reducing the value of our savings. I believe the late Milton Friedman proposed this idea. Might be a fitting tribute!

I think George Osborne is absolutely right.I work for a personal finance magazine and the level of ignorance on this subject in this country is staggering.
Other factors such as grossly irresponsible lending,changes to bankruptcy laws and the rise of the IVA have led to unprecedented numbers of people walking away often virtually unscathed from their debts. How the present chancellor allowed this to happen defies belief.

It sounds like debt and finances are not something that Mr. Cameron's friend has had to worry about at any point in his life.

Perhaps this also explains, at least in part, the ease with which he and David Cameron have dismissed lower income taxes.

I would take your risible comment more seriously if you had the courage to post under your own name 'everyday conservative'.

If you really think it "risible" you are hardly likely to take it more seriously.

I don't want to go back to the bad old days when our party was mismanaged by people from privileged backgrounds who had little comprehension of how the rest of us live.

That it seems is where we stand today.

'everyday conservative': You miss the point. Everyone would take your views more seriously if you didn't cowardly hide behind an assumed name.

I happen to agree with your viewpoint of Osborne's plans (the government should not be poking their noses into people's individual finances on principle. To do so is the mark of a socialist administration, not a Tory one), but I do have the guts to say so under my own name. You don't. Why not? What are you hiding?

Maybe if we win the next general election we should have a 7 day "cooling off" period before introducing any new legislation!

Although teaching personal finance at school would be incredibly useful.

So because George Osborne happens to come from a wealthy family he can play no part in determining the financial welfare of this country? What a truly risible argument.Perhaps if I had made it I wouldn't have the guts to use my real name either!

Malcolm, I am with you on this one. However, the problem is more deep-seated. Much of the debt bubble reflects the fact that for most people, real incomes are falling as a combination of high and rising taxes, rising utility, mortgage and transport costs plus the constant downward pressure on wages because of globalisation/outsourcing/large-scale immigration, especially in the private sector. Add in top of that things such as university tuition fees and the problem gets worse. However, the noises from Osborne and Cameron do not suggest that they are in a mood to address these underlying causes.

"because George Osborne happens to come from a wealthy family he can play no part in determining the financial welfare of this country"

Haven't we had enough of this sort of thing in the Conservative Party yet?

Modernising, surely, should mean a party of people who share the everyday experiences of the electorate. This person has no more experience of the issues surrounding debt than Macmillan or Alec Douglas-Home did of the issues surrounding their very many deficient decisions when they ran the party.

I tend to agree with Tim Hames, writing about the "Notting Hill set" in The Times last year: "There is a valuable place for toffs in national life, but it is in the pages of Tatler not Hansard."

Hmmm. Perhaps because Mr Keith and I spend more time than is strictly necessary (any finite time would fit that hurdle) watching dreadful television on C4 between 8 and 9pm most weeknights, I think these proposals are sensible (we're currently addicted to Your Money or Your Wife). Teaching children to understand the concept of compound interest as part of their maths education isn't "nannying", anymore than teaching them the differential calculus is (they probably don't get taught that anymore **maths snob snort**). And insisting on periods between handing out a credit card and allowing the holder to ramp up unsustainable debt isn't nannying either. It would be perverse to ignore the impact of too much credit on low income households or to imagine that in a world of liberty such people can be left to their own devices. Why do you think the levels of individual bankruptcy have been climbing so rapidly? And who do you think ultimately pays for these costs?

I think this topic is a useful example of "we're all in this together". Lots of legislation isn't the answer, and nor is a return to serf-like begging for a mortgage. What is required is that financial institutions take a more socially responsible view of the impact of what they are pushing on their customers. Customers are real people, not atoms, and it's just not good enough to ignore the clear evidence of the spending pressure the poorest of our communities are subject to, and the evidence about what debt does to family life. Noting this doesn't make one some sort of anticapitalist marxist. I would be happier in a society where banks etc actually thought about the impact of their actions, rather than writing off the outcome as some sort of price worth paying (by whom!) of untrammelled individualism. (As so often in politics of course there is an irony that would be delicious were it not seeped in personal pain -- the untrammelled individualism of unrestricted access to credit leads to higher bankruptcy rates which of course engenders, ultimately, a higher financial cost on those who are careful with their money).

Sign of the times?

My Personal Debt for Sale

In Debt and i need some donations for xmas

"Sign of the times?"

Yes, who needs tax cuts anyway?


Any form of legislation to control personal debt will just be a challenge to the inventive financial markets to get around it...

I think the idea of a 50 year mortgage for the under 30's is a great way to resolve the need to get onto the housing ladder.

To force young people out of owning their own homes because the State doesn't want to see them in too much debt would be a massively retrograde step.

Government needs to support home ownership, not prevent it.

Why not have a website to share with a wider audience the inspiring riches-to-even-greater riches story of Gideon Osborne?

Using mummy and daddy's vast fortune, which one will one day inherit, to buy a 2,000,000 pounds house mortgage-free in Notting Hill is an excellent way to avoid from the debt and poverty in which so many are mired. This approach also has the added advantage of making tax cuts unnecessary since one already has enough money to more than meet one's needs. It has also worked for fellow trust fund baby, the Leader of the Conservative Party.

How wonderfully 1950s retro that the trust fund set are running the party again.

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