Home / Business / Pre-crash debt problems 'rearing their heads', Reeves warns

Pre-crash debt problems 'rearing their heads', Reeves warns

Debt problems seen in the run up to the financial crisis are “rearing their heads” again, the new head of the business select committee has warned.

Labour MP Rachel Reeves, who worked at HBOS during the crisis, said regulators needed to be “forever vigilant”.

She echoed the Bank of England which warned earlier this week of a sharp rise in household debt and car loans.

Ms Reeves also pledged to question company bosses over their record on reducing the gender pay gap.

The recently elected chairman of the House of Commons Business, Energy and Industrial Strategy Committee told the BBC’s Today Programme she was concerned that UK households were overextending themselves with personal debt.

Working conditions

“I do worry about the growth of some of those issues we saw in the mortgage market in 2008 now rearing their heads in unsecured lending and in car purchases,” said Ms Reeves.

“We’ve got to be forever vigilant. We’re not going to have the same crisis as in 2008, but there are risks building up in the financial services sector as well as in household debt.”

Ms Reeves’s words chime with a warning from the Bank of England’s Alex Brazier this week that personal loans had increased by 10% over the past year and were now at “dangerous” levels.

Ms Reeves, an economist, worked in the retail banking arm of HBOS between 2006 and 2009. She became MP for Leeds West in 2010 and served in Ed Miliband’s shadow cabinet.

Under her predecessor as committee chairman, Iain Wright MP, the select committee prompted headlines over the appearances of some prominent business leaders.

Most notable were its cross-examination of Sir Philip Green, interviewed about his role in the collapse of BHS, and the appearance of Sports Direct boss, Mike Ashley, after allegations surfaced over poor working conditions and under-payment at the company’s Derbyshire warehouse.

Ms Reeves said she thought those events were “really powerful and actually changed behaviour in some cases”.

She said she was keen to pursue a similar strategy and also planned to look at employment practices in the gig economy.

Pay ratio

Ms Reeves signalled her intention to get tough with companies over the difference between what they pay male and female employees.

From next April firms must publish information on the ratio of pay between the genders.

“I’d like the select committee to scrutinise that, to look at what sectors and businesses are doing well and which have some way to go,” she said.

“And I am keen to call in some of those businesses to understand why some – I hope – are getting close to parity on pay, while others are still out of step.”

Following her election earlier this month she also indicated the committee would hold companies to account over their disability and ethnicity pay gaps.

Source: business

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