Archbishop warns over 'crippling debt'

Excessive debt is harming young people and there is an "urgent need" to improve financial education, according to the Archbishop of Canterbury.

Rowan Williams used a Lords debate on Friday to call attention to the impact on the family of economic inequality, credit and indebtedness.

Describing family debt as a "particularly toxic version of the poverty trap", he told peers: "We should resolve on specific, targeted measures that will protect those currently so ill-protected against the tyranny of doorstep credit."

He said that action is needed to regulate loan sharks and reduce the level of debt among young people.

Earlier, the leader of the Anglican church  told BBC Radio 4's Today programme that debt "does become crippling" for young people.

And he said that ministers should be "a little more worried" about disproportionate City salaries.

"I think we have seen in the last 10 years or so the development of a culture where debt is so normal for young people - and student loans have rather intensified that - that there is a more urgent need than ever for some teaching about financial literacy in schools and further education institutions," he said.

"I think that is getting more urgent by the day as the credit crunch impacts on people.

"One of the things that I really want to see as a matter of urgency reviewed here is both the interest rates imposed by some of the doorstep lending companies and the advertising standards."

He also warned that debt was leading to "the erosion of family life and the erosion of self-confidence" among poor people.

"For young people it does become crippling, especially for young children," he said.

The archbishop raised concerns about how "the credit crunch impacts so disproportionately on the most disadvantaged" and said he was "bothered" by individuals becoming rich as others became poorer.

Shadow business secretary Alan Duncan welcomed the debate, saying: "Too few politicians have appreciated the plight of poorer people trapped in debt.

"As the economy turns, many of us fear that the true scale of indebtedness and the pain that goes with it, is going to become more and more apparent.

"We need a good hard look at the credit card industry, where too many people are transferring debt to zero interest offers without cancelling their other cards."