"Welsh Lib Dems Call For Action On Personal Debt" - Öpik

9.00.00am GMT Tue 21st Mar 2006

Lembit Öpik, MP for Montgomeryshire and Leader of the Welsh Liberal Democrats, today said Gordon Brown should focus on creating honest measures of inflation and face up to the skyrocketing debt time bomb threatening the British economy.

Lembit said: "If Gordon Brown wants to protect his legacy of success in the Treasury, he must face up to the two areas which most threaten that security - the hidden level of inflation which is caused by monumental rises in house prices, and the economic precipice of personal debt.

"In the last 7 years, inflation figures in the UK have seemed reasonable and under control. But this is because the way they're calculated takes no account of the greatest element in the cost of living most people will ever face - the price of their house.

"In the last five years, average house prices in Wales have increased by 118%. In Montgomeryshire, house prices soared by 157% between 2000 and 2005! That means a house which cost £40,000 in 2000 will cost over £100,000 now. The increase in Wales over the year to April 2005 was greater than in any other UK region or country.

"It's no wonder there's such a housing crisis for first time buyers across much of Wales. By including the cost of housing properly in the inflation figures, we'll see the true pressures on households. This higher inflation rate will help fix the interest rates at sensible levels and that will stabilize the market.

"As for personal debt, the British public now owe over a trillion pounds in personal debt! The interest on that debt alone is over £1 million every ten minutes of ever hour of every day all year round! No economy is safe when it's so dependent on unearned expenditure. It's an economic accident waiting to happen.

"While the solution to the overall debt level is long term, short term we can protect the economy against by increasing awareness of the dangers of debt through the National Curriculum. Small measures like protecting consumers from hidden debt charges on credit and store cards and establishing a code for mortgage payment protection insurance will help a little. But, at heart, we'll only get consumer debt sorted out if we get the inflation rate sorted. Since much of this debt is secured on houses, it's a link the chancellor simply must not ignore.

"Welsh Liberal Democrats have the courage to tackle this ticking debt bomb. The budget statement will show is if this Government has the courage to do the same."

ENDS

Notes:

House Prices

Average Price 2005 5 Year % Change

Wales £140,662 118%

Montgomeryshire £165,571 157%