We salute you, Vince

Sometimes, you suspect, it must be a bit frustrating to be Vince Cable, the Lib Dems Shadow Chancellor of the Exchequer.

For three years now, he has been highlighting the impact of Gordon Brown’s economic policies on consumer debt. Here (just one example) is what he said in March to the Lib Dems’ spring conference in Harrogate:

… the most alarming deterioration in Britain’s national finances arises from the accumulation of private, household debt. There is now £1.2 trillion – that is thousand billion or million million – of personal debt, 85% in the form of mortgages. Some banks are advancing four, five, six times peoples’ income, way beyond recognised prudent limits and shackling the borrowers to a lifetime of onerous debt service. The Government and the banks insist that there is no problem since the assets in household balance sheets are buoyed up by inflationary property prices. This assumes, of course, that the property bubble doesn’t burst. But financial bubbles have burst throughout history from speculation in tulip bulbs in 17th century Holland to the dotcom boom. Despite Gordon Brown’s claim to have abolished cycles of boom and bust, I suspect he will prove to be as effective as King Canute was in abolishing the ebb and flow of the tides.

Meantime the burden of servicing debt is rising. The average cost of interest, debt repayment and credit card payments, in relation to income, is close to the level at the peak of the last, disastrous Tory credit boom. Growing numbers simply cannot pay as we can see from the massive explosion of personal insolvencies – up almost 60% last year to over a million – and of home repossessions: last year up 65%. …

It is time Gordon Brown started sticking up for consumers. He can start by acknowledging that the growth in debt financed consumer spending he has presided over has left millions with their future mortgaged. … The combined legacy of Blair and Brown has been to preside over the mortgaging of Britain’s economic future – both into public and private sector. Our task is to show how financial discipline can be restored, and in a way which also restores people’s faith in fairness and equality of opportunity.

And then David Cameron wakes up, thanks to the collapse of Northern Rock, and makes the same point, grabbing himself some front-page headlines. (Not that such problems are likely to impact much on the Tory leader, whose personal fortune is estimated at £30m.)

Never mind, Vince, we salute your clear-sighted perspicacity.

Update: I see Vince is now getting some deserved credit over at BBC.co.uk.

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One Comment

  • I note Alistair Darling claims the credit crisis originated in the US. Nothing to do with the money-grubbing practices of financial institutions and a lax regulatory environment, then.

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