16 October 2006
Lenders should blame themselves for a rise in bad debt, a government minister has argued.
Trade and industry minister Jim Fitzpatrick told the Financial Times that the recent rise in bad debt may be due to lenders being overly keen to extend personal loans.
However, he insisted that Britain's debt problems are under control, claiming that 'bankrupt Britain' is a tabloid invention and the government does not need to intervene.
Mr Fitzpatrick told the newspaper: "If we've got a rise in indebtedness, if we've got a rise in people having difficulty servicing that debt, then maybe the banks are lending too much money, or maybe they're not being as careful as they used to be in scrutinising the applications."
He added: "If they'd not lent it [the money] in the first place then they wouldn't be in the difficulty of trying to recover it."
Mr Fitzpatrick also rejected calls from the banks to regulate companies offering individual voluntary arrangements (IVA).
This summer, all the major banks reported a rise in bad debt.
Correspondingly, in the second quarter of 2006 there was a two-thirds rise in bankruptcies and IVAs compared to the same period last year.
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