Mortgage Option Scheme

HC Deb 18 June 1968 vol 766 cc884-6

1. Mr. Rossi

asked the Minister of Housing and Local Government what response there has now been to the introduction of the 100 per cent. mortgage guarantee scheme.

The Minister of Housing and Local Government (Mr. Anthony Greenwood)

According to a sample survey of building society mortgages, about 10 per cent. of mortgages completed during April were option mortgages and of these over 35 per cent. came under the guarantee scheme.

Mr. Rossi

Has the right hon. Gentleman any plans to extend the scheme to those with no money to put down as a deposit but who nevertheless will not obtain any advantage from the option mortgage scheme?

Mr. Greenwood

I have no power to do that at present.

3. Mr. Clegg

asked the Minister of Housing and Local Government what representations he has received to permit those who have exercised a mortgage option to change their decision.

Mr. Greenwood

Certain representations to this effect have been received, but there is no provision in the Housing Subsidies Act, 1967, for a properly given option notice to be revoked.

Mr. Clegg

Is the Minister aware that certain people who have taken on the option mortgage are now, because of the family allowances, paying more than they would have paid had they not taken it on? If the right hon. Gentleman cannot take action, will he have a word with his right hon. and noble Friend the Lord Chancellor to see whether he can do something on his side?

Mr. Greenwood

I have no power to do it at the moment, and I think that we have to take into consideration the interests of the various lending agencies who administer this scheme and who felt at the time that to introduce a choice of this kind would add greatly to the complications of the scheme.

Mr. Barnett

Would not my right hon. Friend agree that genuine mistakes can be made and cause quite considerable difficulties, and that circumstances might change, too? In those circumstances, will he consider bringing in legislation to change the present situation?

Mr. Greenwood

As my hon. Friend knows, anybody can opt into the scheme but cannot later opt out. I think that we must have regard to the interests of the lending agencies who are responsible for the administration of the scheme.

Mr. Rippon

But does not the right hon. Gentleman understand that the questions put to him this afternoon show that there are grave deficiencies in the Act as it is now operating? Far too few people are exercising the option because its operation is too limited. Also, as hon. Members on both sides have said, the Finance Bill has perpetrated a fraud on some of the people who have got in.

Mr. Greenwood

Ten per cent. of existing borrowers have taken advantage and 5 per cent. of new ones, which is about what we originally estimated. I have not ignored the point which the right hon. and learned Gentleman makes, but at the moment I have not these powers and I see little chance of legislation in the immediate future.

Mr. Wellbeloved

Would my right hon. Friend bear in mind that this is a first-class piece of legislation, of which his Department is entitled to be proud, but that difficulties are being experienced? Would he undertake to review this within 12 months to see whether further legislation is required?

Mr. Greenwood

I am obliged to my hon. Friend. About 160,000 families among existing borrowers have already benefited and, on present figures, about 50,000 families per year among new borrowers will do so. We shall naturally keep the operation of the Act under review, and if we decide that any amendment is necessary we shall take that into account, but I cannot promise it at this stage.

10. Mr. Silvester

asked the Minister of Housing and Local Government what modifications of the mortgage option scheme he is considering.

Mr. Greenwood

None, Sir.

Mr. Silvester

While the right hon. Gentleman has explained that he has no power at the moment to change the option mortgage scheme, is he aware that his booklet on the scheme explains that people paying tax of £80 a year are likely to benefit if they take the option and that that statement is no longer true? Has he any plans to change the booklet if he cannot change the law?

Mr. Greenwood

I share the concern of the hon. Gentleman. If, in fact, the booklet is now misleading, I will, of course, look at the point he raises and see whether any corrective action is required.

Mr. Brooks

While congratulating my right hon. Friend on planning to take this belated action, may I ask him to agree that where the Government takes financial measures which tip the balance of advantage against those who have taken up the mortgage option scheme there should be scope for some compensatory action so as not to cause great disillusion?

Mr. Greenwood

I am afraid not. [Interruption.] Taxation is a normal risk. This matter was thoroughly discussed in Committee when the Measure was going through the House, at which point hon. Members decided to approve the Measure in its present form. It is too early to start contemplating an amendment along the lines suggested by my hon. Friend.