The Dawning of Debt

Posted on: 28/02/2021

You have to understand history to understand the position the UK public find themselves in today in relation to debt. The recent history of cash is closing connected with the changes in Personal Debt.

Here's a very simple timeline

1954 - the end of WW2 rationing. The UK government has a choice. Increase wages to allow the public to fund post-rationing aspirations - or allow the public to get into debt to meet those aspirational "needs". Meantime, the public were happily only using the cash they were paid directly by their employers each week.

1955 - Hire Purchase is energised by the UK government, the starting point of  Personal/Household Debt. Also, the launch of Commerrcial Television, advertising all those goods that could be acquired through Hire Purchase, with a deposit of only £1.

1960 - The Payment of Wages Bill, enabling employers to stop paying workers wages in cash.

1960’s - Banks use wages deposited to fund loans to the public, fueling Personal/Household Debt.

1966 - First Credit Card launched in UK, fueling Personal/Household Debt.

1967 - First ATM launched to help bank branches process requests for cash created by wages not being paid in cash. In 2020 ATMs dispensed 91% of all cash used by the the public.

1980 - Household Debt reaches 30% of Disposable Income.

1980 - Privatisation of Nationalised Industries starts, with workers/the public starting to think about becoming “shareholders” for the first time.

1987 - First Debit Card launched in UK, giving banks a mass market means of replacing cash as a payment method.

1989 - Bank/Building Society branch numbers peak at around 20,000, as Abbey National became first Building Society to demutualise. Numbers of branches have been falling since that event, as all demutualised Societies have merged with banks. Also year when first telephone only bank service launched (First Direct).

1997 - Online Banking starts in UK, the beginning of the end for Bank Branches.

2000 - Independent ATM operators join LINK, meaning banks have to pay those operators interchange for providing cash free-of-charge to bank customers for the first time.

2001 - Office of Fair Trading (OFT) approves methodology for calculating ATM interchange.

2003 - “Touch&Go” ( contactless?) Oyster Card launched by Transport for London.

2007 - First “contactless” Debit Card launched in UK.

2012 - Visa attempt - and fail - to impose “cashless” on London Olympics.

2017 - LINK stop using the OFT-approved methodology for setting ATM interchange, as ATM numbers peak at over 70,000.

2020 - UK Household Debt now 120%+ of Disposable Income, “contactless” accounts for the majority of Debit Card Transactions, ATM numbers down by 25% from their peak and the public are told that the UK might be sleepwalking towards becoming a "cashless society". Also, Klarna launch Buy Now Pay Later, digitalising Hire Purchase.

2021 - The UK National Debt has increased by around £300 Billion in one year - around £10,000 per worker. The average worker pays around £3000 a year in Income Tax. How much more Personal/ Household Debt will be required to make good the National Debt increase?

So in 1954 the UK public were happily using only cash, had almost no Personal Debt and were hoping for a better future.

One thing hasn't changed.

They are still hoping for a better future...


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