Oops! We've borrowed £1.43 trillion

Borrowing by UK households has reached a new record, as consumer credit bounces back in the recovery and mortgage lending continues to grow.

Total borrowing by individuals stands at £1.43 trillion, according to the Bank of England, very slightly higher than the previous peak reached in September 2008, just before the effects of the financial crisis and the recession began to bite.

The precise figure for UK household debt is £1,429,624,000,000.

Most of the debt is in mortgages, which have been rising steadily.

Other lending, including personal loans and credit cards, dropped sharply in the recession and has started to recover.

The rise reflects the willingness of British consumers to borrow again as a more solid recovery comes into sight.

However, the figures may also show the extent to which credit is fuelling the upturn - and how, in some cases, families are having to borrow to deal with the higher cost of living and make ends meet.

The Bank of England points out that incomes have been rising as well, so the ratio of debt to income has actually been on a downward trend.

Renters hit by council tax arrears

Families forced to rent rather than buy are falling behind on their council tax.

The debt advice charity, the Consumer Credit Counselling Service (CCCS), says it recorded a 27 per cent jump in England last year in people asking for help with council tax arrears.

It says much of rise has been fuelled by the worsening financial position of families renting their homes. For the first time more renters then homeowners contacted the charity with council tax problems.

The numbers calling CCCS for help increased from13,353 in 2010 to 16,958 in 2011 - despite the fact that many English councils have frozen council tax.

The average amount owed in council tax arrears has also increased, from £675 to £717.

Council tax is a priority debt to deal with because there's a danger or bankruptcy or bailiffs being called in, so here's some official advice.

Plus pointers from...

Payplan and Citizens Advice

Perils of catalogue debt

Pressure on household finances is causing thousands more people to fall into unaffordable debt with mail order catalogues, according to the debt charity, the Money Advice Trust.

National Debtline, which is run by the charity, received a record 25,000 calls about catalogue debt last year, up 10 per cent on the year and nearly double the number received in 2007 before the credit crunch.

It's had a further 7,000 calls so far this year.

Families on tight budgets have been turning to catalogues to take advantage of keen prices and offers to buy now and pay later with no interest.

Then they find they can't settle the bill.

Catalogue debt is prompting more calls for help than payday loans, mortgages or rent.

The Trust says many people don't realise they are signing a consumer credit agreement, which means the debt is enforceable in the courts.

Nor do they understand that missing a payment on a catalogue debt will usually invalidate any special zero per cent interest deal.

How people have been paying off debt

Given David Cameron's non-words about people paying off credit cards etc, here are some stats which show how consumer credit has shrunk.

The headline figure is the Bank of England's number for outstanding consumer credit, up to end of August.

It's the one which includes credit cards, personal loans and overdrafts, not mortgages.

The total was £209bn, a figure which has fallen steadily since it reached a high of £236bn in September, 2008, just before the recession struck.

Within that, outstanding credit card lending stood at £57bn, down from £62bn in January, 2010.

Other credit, including personal loans and overdrafts was at £152bn. It's been flattish this year, after peaking at £180bn in July, 2008.

From Bank of England

Rogue debt firms lose licences

The Office of Fair Trading has revealed that 62 debt management firms have lost their licences in the last year, after a crackdown on rogue operators.

Some fee-charging firms have been criticised for misleading customers about their charges and for giving incompetent advice.

Others have been told to stop cold calling customers or pretending that they are charities or from the public sector.

They have to be licensed under the Consumer Credit Act in order to offer their services to people who have serious debt problems.

The 62 have had their licences taken away, been refused licences or surrendered them to the OFT.

The action comes after the watchdog issued warnings to 129 firms last September.

Help if the energy bill is a problem

Scottish & Southern is bringing in its prices rises from today. Eon's price hikes came in yesterday and npower's arrive on 1st October. Scottish Power and British Gas tariffs have already gone up.

The CCCS (Consumer Credit Counselling Service) says that a third of people with debt problems are also in fuel poverty - they're struggling to pay their bills.

If you're having trouble paying for gas and electricity, here are some places to go to for help:

Home Heat Helpline 0800 336699

CCCS Debt Remedy

My Money Steps

British Gas, Scottish Gas Trust

Other British Gas help
And check with your supplier for help, if it's another one.

Winter Fuel Payment

Cold Weather Payment

Clampdown on debt firms

Fair Trading clampdown on debt management companies

Much-criticised private debt management companies have been warned to raise their standards or face sanctions.

The companies advertise widely and often cold-call heavily indebted people, promising to help manage their borrowings and deal with lenders.

The Office of Fair Trading has unveiled new guidelines designed to eliminate suspect practices, including the tactic of retaining clients' money rather than passing it on to creditors.

Debt management firms will have to have ring-fenced accounts to safeguard clients' money and draw up clear contracts on how it will be passed on.

There are measures to prevent firms taking fees from client funds without warning.

And the rules prohibiting cold-calling have been reshaped. Unsolicited calls, texts and emails are banned unless people have given prior consent.

Since last autumn 43 debt management firms have surrendered their licences and the OFT has taken action to stop another 11 from operating.

Time for a health check

Facing up to financial problems is a big deal for many people.

Some put it off for 18 months or 2 years, even though they are falling behind on interest and other payments. By which time the problem is much worse.

So the new money Health Check from the government's impartial Money Advice Service is a useful tool.

And here's is my Fiddler on the Roof take on it. Remember "If I was a rich man, didle deedle didle...etc"

The check doesn't provide the sort of detailed advice that you would get from a debt expert and an investment specialist, but it will point you in the right direction.

In fact, if you own up to serious debt problems, it offers a quick route out of the questionnaire to an action page which offers instant help, including contact numbers for debt charities who will assist.

The Money Advice Service wants millions to try it out, with a target of 500,000 in the first year.

Let's hope the people who most need the help will end up taking the Health Check.

They'll need to be on a computer, on the internet and know about the service.

Unlicensed finance websites closed

OFT shuts unlicensed websites to protect borrowers

The Office of Fair Trading has shut down 19 websites which solicited personal information from vulnerable borrowers in order to sell it on.

The lead-generation firms targeted people with disabilities, those connected to the military, and people with generally limited access to credit. An OFT investigation found they were unlicensed and therefore in breach of the Consumer Credit Act.

If the information is sold on, the victims could find themselves being targeted by other companies offering credit.

The OFT is already investigating cold calls and texting by credit brokers and debt management firms.

£67 for a loan which never arrived

Citizens Advice is demanding a ban on cold calling by credit brokers and up front fees for loans, saying that people are being pressurised into parting with cash for loans which never materialise.

Here's the story of one target of the scam, Yvonne Weekes, who lives in Cornwall...

I was filling in a survey on the computer and one of the things that came up was: "Would you be thinking of getting a loan any time in the near future?". I thought: funny it should come up just when I'm thinking of getting some money and I clicked on it.

The following morning I had a phone call from a loan company, offering me £1,000.

I said I only needed £200. I said that I do pyrography. I burn pictures on wood and I needed a new machine

She said the least they could lend was £500. I said I didn't need that.

She said maybe you're thinking of a holiday. You could do with a weekend away somewhere.

Then I thought I'm going away with my daughter and granddaughter. It would be useful. She was very, very persuasive.

She asked for all my details. Then she said the only thing we need to do is to get your bank details because we charge a fee of £67. We don't take that out of your bank, we take that out of the payment of the £500.

I thought I'm not keen on giving my details and I said I don't really want to give away my bank details.

She said said have you ever bought anything on ebay? It's the same thing, she said, except we deal with thousands of people every day and we never have any problems. It won't cause you any problems at all. So I gave them my bank details.

Five days went by and I rang them up and it was an answering machine. I left a message: when do I get this money?

I went into the bank and checked where I stood. £67 had been taken out of my bank account. Of course I didn't get any loan: it never came through at all. I phoned them 20 times.

They sold on my details and the first thing I knew was I got another phone call: "We understand you're looking for a loan, Yvonne".

It just went on and on. I got 60 phone calls.

It's very, very stressful because not only have you not got the money you applied for,but you're getting harassed by people.

It gets to the point where you're not just upset. I was really, really upset: I couldn't believe I had been so naïve as to be taken in by them.

Then I started to get angry. They're doing that to me. What if they do that to someone who's ten years older than me and they're desperate for the money?

Do not under any circumstances give out your bank details. If somebody rings you and they want information just tell them to go away and you're not interested.

What is a U-turn?

The Treasury is adamant that it has not executed a U-turn in deciding to extend support for 500 specialist debt advisers.

This comes after the decision to axe the Financial Inclusion Fund which paid for the advisers across England and Wales, followed by an announcement this morning that £27m had, after all, been found to keep the service going for another year.

The Treasury told me last night: "The reason we haven't made an announcement until now about the funding we were always going to provide is because it was important to get it right". (See my report.)

What happened was that the Financial Secretary, Mark Hoban, said on 19th January this year in a written answer in parliament:

"The Financial Inclusion Fund will close at the end of March this year. The Government will work closely with industry and other stakeholders to ensure that tackling financial inclusion remains a high priority".

Ministers allowed a situation to arise in which the debt advisers were sent their redundancy letters, then stopped taking on new cases, as I reported at the beginning of this month.

There was a spate of campaigning by charities and MPs, pointing out that cutting debt advice when debt problems were expected to increase was a questionable policy. And there was a Westminster Hall debate.

So the advisers were preparing for life on the dole, the service was disrupted and winding down, and frantic lobbying was taking place.

During these weeks there were plenty of opportunities for ministers to give the reassurance that they were "always going to provide" the funding. But it wasn't given privately, as far as I know, and certainly not publicly.

In fact, the people managing the advice service were on a roller coaster ride, thinking first that there would be zero support, then perhaps 50%, before they got wind of today's announcement.

Of course, the Financial Inclusion Fund is still being closed. The £27m has been found from a contingency fund and an underspend (whatever that means amidst the current cuts) at the Department for Business and is for one year only. So it is true to say that the original funding has not been renewed.

But some will take the view that this reprieve for debt advisers comes after ministers listened to the warnings they were being given and changed their minds.