To build on debt is to build on sand

While many families are struggling to survive in these times of austerity, the Tudor Whelans are unusual in that they used to enjoy a life of luxury.

Home was an £800,000 six-bedroom house with views across the Lancashire countryside. They drove a top-of-the-range Audi and Range Rover and their daughters went to private schools where fees cost up to £12,000 a year.

The family owned five horses ...

The reason why they are now impoverished appears to be that their vast business empire, when it existed, was built on debt.

Many people buy houses by taking out a mortgage, and many people get into financial difficulties as a result.  In many cases I am inclined to be sympathetic, but of course most people in Britain would not be able to buy a house without taking on debt.  Likewise, many people who start up businesses do so with borrowed money, but that is very different from trying to enlarge an already successful business by taking on yet more debt.

The Tudor Whelans did not need to build up anywhere like as much debt as they did.  Why on earth would any sane couple with debts buy a six-bedroom home for themselves and their two daughters? Why would anyone in their right mind buy expensive cars on credit?  Of course I do not know that the cars were bought on credit, but they were certainly bought at a time when the Tudor Whelans owed a lot of money.

The poet and politician Hilaire Belloc argued that rich people are morally obliged to give employment to the working classes.  I firmly believe that rich people are morally obliged to live their lives free from debt.  In fact I believe that we are all morally obliged to live our lives free from debt if we can.

The Tudor Whelans should have bought a three-bedroom house, and driven modest cars.  Their daughters should have gone to state schools from the outset, and a gerbil or a hamster would have been far less expensive than five horses.  At some point they should have stopped borrowing money to fund their business ventures, and set about the serious business of reducing their debt burden.

If they had gone down that route, then they might still have the three-bedroom house, and the modest cars, and the gerbil.  People who borrow money beyond what is reasonably necessary are a disgrace to their country.