§ 3. Mr. BlunkettTo ask the Chancellor of the Exchequer whether his Department will commission research into the relationship between increases in base rates and levels of mortgage default.
§ The Economic Secretary to the Treasury (Mr. Peter Lilley)No. A study by the Building Societies Association showed no correlation between interest rates and mortgage defaults and that the single most important cause of mortgage arrears is matrimonial breakdown.
§ Mr. BlunkettIn view of the fact that between 1979 and 1987, of those accepted as homeless for whatever reason, mortgage defaulters rose from 4 to 19 per cent. of the total, does the Minister still believe, as the Government declared 18 months ago, that
Some people are still deterred by the costs and complications of house purchase. That is why we must look for new ways to make house buying simpler and easier"?424 Does he believe that that statement, in the Conservative party election manifesto, has been helped, or hindered, by the Government's actions?
§ Mr. LilleyThe hon. Gentleman will welcome the fact that in the first six months of this year the number of people in arrears with their mortgage, or forced into having their property repossessed, though extremely small, was 19 per cent. down on the previous year. Another factor found by the Building Societies Association to be important in affecting the level of repossessions was unemployment. With the decline in unemployment, the number of repossessions has also fallen. We believe in making it easier for people to buy their own houses and we welcome those trends.
§ Mr. HoltWill my hon. Friend note that, despite the strictures of Opposition Members, the hon. Member for Stockton, North (Mr. Cook) has just taken full advantage of the Government's legislation to purchase his own council house at a maximum 54 per cent. discount?
§ Mr. LilleyIf that is the case, I congratulate the hon. Member for Stockton, North (Mr. Cook) on his good sense in taking advantage of the opportunities that we have created for all working people. I am proud that I million others have joined the hon. Gentleman in taking advantage of their right to buy.
§ Mr. Frank CookWill the Minister note that the purchase of council houses by sitting tenants is not against Labour party policy and never has been? It has been possible to do so in Stockton on Tees since the early 1920s. If the Minister's right hon. and hon. Friends undertook any research, they would realise that their information is grossly distorted—like their mentality.
§ Mr. LilleyIt would be interesting to know whether the hon. Gentleman joined so many of his right hon. and hon. Friends in voting against the right-to-buy legislation, which ensured that the majority of Labour authorities that did not grant the right to buy to their tenants were required to do so. His right hon. and hon. Friends would be embarrassed by this issue being raised.
§ Mr. DykesDoes my hon. Friend agree that home ownership on the current scale is one of the Government's outstanding successes and leaves the Labour party in a state of acute embarrassment on a constant basis? Does he also agree that the financial system is now strong enough to withstand any significant defaults next year, and that it is essential that those who are in difficulties with mortgage repayments should contact the relevant agencies before the problem develops into an unsolvable one?
§ Mr. LilleyYes, my hon. Friend is right. He has returned to the original question, which concerns the burden of debt. Another great Labour party hypocrisy is to pretend to be concerned about debt, when a Labour Government burdened every household in this country with a level of debt far greater than that recently highlighted by the Citizens Advice Bureaux report.
§ Mr. Chris SmithDoes the Economic Secretary recall that the Chancellor told the nation on London Weekend Television on 9 October, specifically in relation to the issue of mortgage default and repossessions, that he did not think that, with increasing interest rates, there would be more repossessions because families would have to spend 425 less on other things. Does the hon. Gentleman recall that the Chancellor said that, and does he not think that the remarks were deeply offensive to millions of homebuyers? What has he to say to those home buyers who budgeted sensibly in taking out their mortgages, who mortgaged themselves up to the hilt, cutting back on other expenditure, and who now have no fat in the family budget to cut out? What are they to cut out to meet the higher interest payments?
§ Mr. LilleyI agree with my right hon. Friend and disagree with the hon. Gentleman profoundly when he says that it is budgeting sensibly to mortgage oneself up to the hilt. To the extent that people have borrowed too much, and lenders have been unwise enough to lend too much, it is normal to accept—as most building societies do—that when there are difficulties in repayment because of changes in the interest rate, the mortgage can be prolonged, and that is why the level of repossessions is not related to the mortgage rate. I refer the hon. Gentleman to the report of the Building Societies Association, which says:
A careful examination of the statistics shows that there is no relationship between the level of mortgage rates and the level of possessions and arrears.
§ Mr. GowWould it not add to the spirit of comradeship on the Opposition Benches if my hon. Friend were to publish in the Official Report a list of those Opposition Members and Labour councillors who have taken advantage of our right-to-buy legislation?
§ Mr. LilleyMy hon. Friend is always doing his best to stir up unity in the Labour party. If it proves possible to carry out his request, I shall do so.