Rachel Stevenson: Are banks to blame for offering loans?

Rebuild the Marshalsea, the infamous debtors prison that was home to Charles Dickens's father in the early 1800s and scourge of Victorian society. Each new set of figures on levels of debt in the UK shows an increasing problem; we are still borrowing at record levels and, on top of our house-buying addiction, consumer credit now stands at £6,800 per household.

As long as wages are rising, these debts are manageable. But with income levels dropping, the ability to pay debts, which we have been encouraged to pile up while interest rates were at record lows, is being squeezed. We may need the workhouse.

The Liberal Democrats were this week furious with the Office of Fair Trading and its attempts to combat the swelling debt levels. They called its debt awareness campaign patronising. They want the OFT to do more to stop irresponsible lending.

The OFT undoubtedly had nothing but our best interests at heart and we do need to be warned about how much debt we are taking on.

Advice on how to stop piling the pounds on to credit cards as well as ourselves this Christmas is only part of the battle. What about the predatory tactics of the credit card companies and banks that push loan and credit offers through our letterboxes every day?

This week I had a letter from HSBC telling me to hurry to the bank because I had only a few days left to take out a loan equal to nearly a third of my salary at a very attractive rate. But why on earth do I need to get thousands of pounds in to debt? Do they know something I don't? Is my dog about to be kidnapped?

This was a point the bank did not care to address. I even have credit cards with the same bank; do they not know about the bills keeping me awake at night?

Banks and credit card companies are complacent about their involvement in the debt pile, saying they only supply a service customers want. They are, it is true, not the monitors of our spending activity; after all, it is their job to make money for shareholders, which our borrowing does. But they should not hint that borrowing is pratically free or without penalty. Nor should they obscure the costs of borrowing by making charges incomprehensible.

So three cheers for the OFT for rapping the knuckles of Barclays this week over its shameless "0 per cent forever" slogan for a credit cards. The 0 per cent rate applied only in complicated circumstances, involving transferring balances and spending at least £50 a month. Even its chief executive, Matt Barrett, admitted he did not know much about that offer, but he was smug enough to know it was still expensive. Should you tell your customers, that, Mr Barrett?

For some, a little over-indulgence at Christmas is the only debt issue they have to worry about. But many people live on credit. They cannot get by, week to week, without it. This is a far more worrying situation. Here, switching to a 0 per cent credit card for six months is only a drop in the ocean, and access to cheap credit can often be difficult for those most in need of it. But again, little is being done to stop unscrupulous loan sharks and debt collectors who refuse early repayment schedules.

Mervyn King, Governor of the Bank of England, this week said neither consumer spending nor house prices had slowed as expected from the recent rate hike. The message is clear: interest rates are likely to rise. How long it will be before the sentiment in the adjacent story on long-term, fixed-rate mortgages changes. Perhaps those happy enough to ride the short-term interest rate wave now will soon be clamouring for the security of a long-term rate at less than 5 per cent, as well as for another bowl of gruel.

Company pension schemes are becoming an increasing rarity, the National Association of Pension Funds tells us this week. One in every four final-salary schemes closed to new members this year. And the schemes replacing them not only pass the responsibility for retirement income on to staff, but also have much lower contributions from employers. Less going in to whatever type of scheme, will usually make for less coming out.

Many companies face problems funding their scheme. They need to inject more cash to meet the promises they have made, but they cannot afford to do so.

So staff are being asked to increase contribution rates or accept lower benefits. Something of a Hobson's choice, but as we are in the throes of a personal debt crisis, pensions provision looks set to slip even further down the priority list.

r.stevenson@independent.co.uk

William Kay is away