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Archbishop attacks 'debt culture'
The Archbishop of Canterbury on the 'poverty trap' facing some families
Archbishop of Canterbury Dr Rowan Williams has criticised the British economy's reliance on high levels of consumer debt.
Dr Williams warned the House of Lords that the poorest people were trapped in a cycle of borrowing.
During a Lords debate tabled by Dr Williams, he also called for tighter controls on credit firms.
He said the children of low-income families were caught in a "particularly toxic version of the poverty trap".
The archbishop said that children would be the biggest losers in an economic downturn.
Poverty damaged their education and aspiration, leading to social problems that the state would eventually have to confront, he said.
Teenage pregnancy, underachievement in school, a lack of drive at work and even suicide were all consequences of high levels of debt, he added.
Loan sharks
Dr Williams blamed irresponsible unsecured lending and punitive interest rates, as well as what he called "doorstep lenders", for chronic indebtedness.
Speaking ahead of the debate, he said some doorstep lenders were charging borrowers rates of more than 1,000% over two years as their interest piled up.
We need to look at what it means for the whole economy to be built on spiralling, almost uncontrolled debt 
Dr Rowan Williams
Other companies, he said, were charging up to 30% to take cheques post-dated to an individual's pay-day.
"That's the kind of thing which people need to know about and needs to be kept in check," he said.
He also spoke of his concern that mainstream High Street banks had withdrawn from some of Britain's most impoverished areas, leaving loan sharks the only source of borrowing for many poor people.
"We need to look at what it means for the whole economy to be built on spiralling, almost uncontrolled debt," he told BBC Radio 4's Today programme.
"Among the poorest, the consequence is the erosion of family life. There is a need for the teaching of financial literacy."
He called for better education for children in managing money and government help for credit unions - financial co-operatives owned by members - to break the cycle of debt.
He said in the past 10 years a culture had developed where debt was normal for young people - in particular as a result of student loans.
"For young people it does become crippling, especially for young children," he added.
Liberal Democrat Lord Newby said that there was a "systemic irresponsibility in the financial services sector about the way they sell their products".
He added: "The pressures of society now are towards taking out debt. The message is that debt is not just acceptable but, to a certain extent, it is also creditable."
Baroness Noakes, speaking for the Conservatives, said: "My party certainly supports more financial education.
"We believe that lenders have social responsibilities to ensure that they do not make problem borrowing worse than it is. And we certainly support the work of credit unions, who are responsible lenders."
The Archbishop of Canterbury on the 'poverty trap' facing some families
Archbishop of Canterbury Dr Rowan Williams has criticised the British economy's reliance on high levels of consumer debt.
Dr Williams warned the House of Lords that the poorest people were trapped in a cycle of borrowing.
During a Lords debate tabled by Dr Williams, he also called for tighter controls on credit firms.
He said the children of low-income families were caught in a "particularly toxic version of the poverty trap".
The archbishop said that children would be the biggest losers in an economic downturn.
Poverty damaged their education and aspiration, leading to social problems that the state would eventually have to confront, he said.
Teenage pregnancy, underachievement in school, a lack of drive at work and even suicide were all consequences of high levels of debt, he added.
Loan sharks
Dr Williams blamed irresponsible unsecured lending and punitive interest rates, as well as what he called "doorstep lenders", for chronic indebtedness.
Speaking ahead of the debate, he said some doorstep lenders were charging borrowers rates of more than 1,000% over two years as their interest piled up.
We need to look at what it means for the whole economy to be built on spiralling, almost uncontrolled debt Dr Rowan Williams
Other companies, he said, were charging up to 30% to take cheques post-dated to an individual's pay-day.
"That's the kind of thing which people need to know about and needs to be kept in check," he said.
He also spoke of his concern that mainstream High Street banks had withdrawn from some of Britain's most impoverished areas, leaving loan sharks the only source of borrowing for many poor people.
"We need to look at what it means for the whole economy to be built on spiralling, almost uncontrolled debt," he told BBC Radio 4's Today programme.
The economy is funded on debt from mortgage equity release type schemes to credit cards
Mark, London "Among the poorest, the consequence is the erosion of family life. There is a need for the teaching of financial literacy."
He called for better education for children in managing money and government help for credit unions - financial co-operatives owned by members - to break the cycle of debt.
He said in the past 10 years a culture had developed where debt was normal for young people - in particular as a result of student loans.
"For young people it does become crippling, especially for young children," he added.
Liberal Democrat Lord Newby said that there was a "systemic irresponsibility in the financial services sector about the way they sell their products".
He added: "The pressures of society now are towards taking out debt. The message is that debt is not just acceptable but, to a certain extent, it is also creditable."
Baroness Noakes, speaking for the Conservatives, said: "My party certainly supports more financial education.
"We believe that lenders have social responsibilities to ensure that they do not make problem borrowing worse than it is. And we certainly support the work of credit unions, who are responsible lenders."
