Tories to target UK 'debt addiction'

Shadow chancellor George Osborne has said that a Conservative government would clamp down on Britain's "addiction to debt", specifically targeting store cards.

According to the Tories, Britons owe about £2.2bn on the cards, and Osborne pledged to give the Office of Fair Trading (OFT) powers to limit "excessively high" store card interest rates".

Currently, some store cards charge annual percentage rates of 29.9 per cent or more, but the Conservatives would look to give the OFT powers to penalise firms who charge interest rates if 25 per cent and above.

A so-called cooling period of seven days would be implemented between the time an individual applies for a store card and when they can use their card for the first time.

Speaking to GMTV, Osborne said: "We've got a big problem in Britain, we're addicted to debt, and we are seeing the consequences of that as the credit crunch hits, and everyone is finding it more and more difficult with the rising cost of living.

"I think the role of the next Conservative government is to stop Britain's addiction to debt, and make sure when we next have a financial crisis or economic problem, that we are much better prepared that we are at the moment."

Dismissing claims that the proposals were representative of 'nanny statism', the shadow chancellor explained that his party was "just setting out the boundaries to ensure fair play".

A Conservative spokesman said: "While many people borrow responsibly, there are a growing minority who struggle to pay their loan bills. With the cost of living rising, that is likely to get worse.

"We need to take steps now to deal with the current problem and make sure that in future we don't repeat the mistake and let Britain become hooked on debt."

Within the first year of a Conservative government taking office, the party would also set up a free national financial advice service which would cost £50m a year, funded by a 'social responsibility levy' placed on the financial services industry.