Personal Debt and the Iron Ladies
Today sees the release of a new collection of essays by the think-tank Demos called Iron Ladies, edited by Beatrice Karol Burks and Max Wind-Cowie.
I’ve skim-read through the collection, but one particularly interesting piece I found was the one by Tracey Crouch, the Conservative Member of Parliament for Chatham and Aylesford.
Crouch’s essay aims to show that the “Conservative party has changed so it is no longer simply focused on core policies and that it can be confident in securing public support to having an understanding of wider, modern day issues”.
Given the recent criticisms of the party, and of Cameron and Osborne in particular, that they are “arrogant posh boys” who have no idea what, among other things, the cost of a pint of milk is (which, if you’ve seen the film The Iron Lady – which as of last night I have – you will know Mrs Thatcher did, and she was not best pleased at how much it has increased. Her move on milk when she was PM was a bit hasty, but that’s for another time), it’s no wonder that up and coming figures feel they need to re-de-toxify the brand.
But on matters of personal debt, and how new conservative MPs climbing the ranks have a handle on it, there is hardly any better than Crouch to comment. I had the good fortune of interviewing her myself towards a book I’m writing, and she told me about her own financial mismanagement on leaving university. She has since called it “youthful stupidity” but her £15,000 credit card and store card debt was largely the outcome of living a lifestyle she couldn’t afford, which some of her peers could.
When I spoke to Crouch she told me that much of the problem today had to do with a kind of quick-fix “I want it all, I want it now” culture. In many ways this is correct, with products being available on the market only a short while before something else comes along, there is a race to purchase new gadgets before they are seen as out of date. But whether this is the cause of sky-high unsecured debt is another question.
As an article on soaring personal debt in the Telegraph put it “Average incomes have fallen by nearly 3.5pc in real terms over the past year, squeezing budgets even further as consumers have faced soaring bills.” We must not forget that not all debt is to do with financial imprudence, but a failure of our incomes catching up with rising cost of living today.
Elsewhere, Crouch does well to show the positive side of access to credit, but highlights the negative aspect which has seen a rise in what PWC has called the underbanked – those who still have bills to manage and cashflow problems to overcome, but are restricted in their access to mainstream credit products.
As Crouch rightly notes, this has seen “a rapid rise in [the market share of the payday lending sector] from £500 million in 2007 to £1.7 billion in 2010.”
To solve this, we need a radical rethink on how to properly regulate the credit market and curb the dominance payday lenders have over the lives of so many vulnerable people.
Although Crouch is thankful for BIS examining the idea of imposing a cap on the total cost of credit, this has been driven by yet another expensive research grant to the very worthy Personal Finance Research Centre in Bristol University – despite there already being a great wealth of supporting literature to back up the benefits of a cap.
I think Tracey Crouch is a good asset to politics, and her own experience has clearly impacted upon the way in which she views the dire personal debt outlook in the UK – a nuanced view that was perhaps missing when Cameron told us all to pay our debts back.
But I do think the coalition, which her party leads, has a lot to answer for. This is, after all, the coalition of child trust fund cuts and rollback of the social fund. I think Crouch would do better to be more critical of the government, it would certainly help her case.