A decade ago

It is hard to believe that the news of the death struggles of Northern Rock first surfaced a decade ago. I remember the time well. Gordon Brown had recently undergone his coronation as Labour Leader and PM. He was deliberately dropping hints of a snap general election and then backed off. His ratings nosedived and his twisting and turning led to Vince Cable's "Stalin to Mr Bean" quip. Northern Rock however began to steal the headlines and for the first time in the lives of all of us, we saw a run on a bank with queues of people waiting to take out their money.

Vince Cable had warned of problems in the financial sector and had been attacked by Labour as a party pooper. The debt-fuelled boom was set to burst and when it did, a decade ago, the consequences were horrendous and we have still not recovered from them now.

And do you remember the money lending adverts? If anything sums up the madness of stupidly easy access to "credit" (ie debt) it was the "Picture The Loan" advert with the Geordie woman who casually borrows £25,000. As someone who leans much more towards the importance of having savings rather than constant consumer spending, I detested that advert and I made my feelings clear every time it was on the tv. Like so many other financial companies, they encouraged people to take up large amounts of debt. Then they encouraged people to take out a single loan to "consolidate" all the other loans they had hanging around their necks, with "cheaper monthly repayments" (forgetting to mention the debt will run for more years). There was always the suggestion that when taking out a consolidated loan, people should borrow even more so they can have the expensive holiday in the sun (and spend the next decade paying for it).

The question is, has Britain as a nation learnt from the serious mistakes of that period? One look at tv advertising would suggest we haven't. Adverts for payday loans at 1300% interest and equity release (ie long term debt for the elderly to pay for round-the-world cruises) would suggest we have not. People's desire to have more and more consumer products and to buy them before they have earned the money to pay for them say to me that old habits are still alive and kicking. Will the banking reforms of the past decade be enough to save us from another financial crisis? The answer is likely to be "No" if personal debt levels continue to grow.