OK – I’m being cynical. And, I actually think that yesterday’s budget was pretty firm-but-fair: But, we are all familiar with the law of unintended consequences – and I think there may be one here. I believe that the VAT rise has a very good chance of creating, in 18 to 24 months time, a big increase in the number of people who can’t pay their debts.

Why? Because people have just been told that they are, again, going to be feeling the pinch. And they have been told that things are going to be two and a half per cent more expensive, come January. Can’t you see the adverts now? Beat the VAT increase, buy your conservatory/new car/double glazing/next year’s wardrobe NOW!

And they will. In droves. Big things not really needed will be bought on credit between now and midnight on January 3, 2011 (George Osborne has even ensured the retailers get bumper January sales – c’mon everybody – max out the plastic).

And, sometime in the course of 2011 some of these people will realise they bit off more than they can chew. And they will sit on their hands waiting for things to get better. And things won’t get better, not quickly: And the Osborne strategy might well be right, but it isn’t going to help these people. Sometime in late 2011 or early 2012 many of those who bought things they couldn’t really afford, to avoid 2.5% VAT (probably less – I can see a lot of producers/retailers cutting a little bit of margin to share the burden with the consumer – and preserve their market share) will finally realise they have swelled the ranks of the 11% of Britons with debt problems.

And, they’ll still sit on their hands – because that is what people in debt do – right up to the point when the spouse walks out or the CCJ lands on the doormat, or the bailiff calls. Then, they’ll come to us for a Debt Management Plan or an IVA. And we’ll do a good job for them. Thanks George.

There is time to avoid this. And, with more than one in ten of us suffering from debt problems it is time for Vince Cable and his minister, Edward Davey, to get a grip. Force us, the industry, to get our house in order so we do what we do well and the rip-off merchants have no place to hide. Acknowledge that the free sector can’t ever meet the demand for debt help that is out there. Persuade (force?) creditors to treat debt recovery as a co-operative exercise rather than a competitive game. Consumer debt is still the biggest issue everyone is ignoring. And I think the budget means it’s going to get bigger. And that means a stuttering recovery – at best.

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