§ Order for Second Reading read.
11.30 pm§ The Minister for Social Security and Disabled People (Mr. Nicholas Scott)I beg to move, That the Bill be now read a Second time.
I believe that there will be a consensus across the House on the Bill. As its provisions will be beneficial to many people, I hope that we shall deal with it expeditiously.
The House will recall that in the latter part of last year both my right hon. Friend the Chancellor of the Exchequer and my right hon. Friend the Secretary of State outlined measures to be taken by both the Government and mortgage lenders with the excellent aim of reducing the level of repossessions that were occurring at that time. Whatever party we belong to, all were agreed that that was a desirable aim.
Mortgage rescue schemes are an important part of that initiative. I am sure that we are all glad that many of the lenders—building societies, banks and others—have come forward with schemes to ensure, or at least to advance the proposition, that the number of repossessions should be reduced to the absolute minimum. The Bill will be a further significant contribution towards the vital aim of bringing reassurance to people who might otherwise be at risk of losing their homes. I am especially glad that lenders have given assurances that they will not repossess homes where direct payments are being made to cover the mortgage interest.
The Bill provides for the direct payment to qualifying lenders of the mortgage interest component of income support. It builds on existing, more limited arrangements that we have already introduced, which rely on suitable cases being referred to an adjudication officer who considers whether it is in the interests of the claimant for direct payments to be made. Those arrangements have already proved to be a useful interim measure—but they are only that, pending the introduction of the Bill, which provides for a much more comprehensive scheme. It will provide the basis for detailed regulations, which will come before the House in due course, to come into effect from April.
The Bill will cover those income support claimants who have an amount for mortgage interest included in their income support assessment. I think that by anybody's judgment, they should be making appropriate payments to qualifying lenders. The Bill will cover all such claimants, but the regulations specify the point at which the direct payments will start.
Many unemployed claimants stay on benefit for less than 16 weeks, during which only 50 per cent. of the mortgage interest is payable. After 16 weeks, the income support calculation for claimants under 60 years of age includes 100 per cent. of the eligible mortgage interest. Accordingly, we intend to provide in regulations for direct payments to start once that 100 per cent. of the eligible interest becomes payable in income support.
Perhaps I ought to make it clear that, when we talk of qualified lenders, we have in mind building societies, banks, insurance companies and other institutional lenders. Local authorities and certain other public bodies 412 with home loan facilities will also be included. It has been possible, relatively simply, to prescribe most qualifying lenders on the face of the Bill, but 1 hope that the Opposition and others will understand that provision for others, including some institutional and centralised lenders, can be made in the regulations that we shall introduce in due course.
The arrangements will, of course, impose a significant increase in administrative costs on the Benefits Agency. We therefore felt it appropriate, in our discussions with the lenders, to negotiate a contribution from lenders, so that the increased costs would be met at least in part by them and not entirely by the Government. I am glad to say that the Council of Mortgage Lenders has agreed to such an arrangement.
As I said at the outset, the scheme that the Bill introduces forms part of a positive and collaborative response from the Government and the lending institutions. The lenders have given assurances that they will not repossess the homes of people on income support whose mortgage interest is paid direct. In addition, lenders are drawing up mortgage rescue schemes, and are also examining ways of easing the terms of repayment to help people to stay in their homes.
I believe that, in introducing the Bill, the Government are playing their part, in collaboration with the lending institutions, in providing a powerful and constructive means of increasing the security of many people who might otherwise risk losing their homes. I hope that the House will agree that the Bill deserves a Second Reading and, indeed, passage into law.
§ Mr. Keith Bradley (Manchester. Withington)Although we shall support the Bill because we believe that any measure that alleviates the terrible problem of repossessions is to be welcomed, the way in which the Minister presented it suggests that there is no problem. We should view the Bill in the light of the package of panic measures that were announced in December. as the rapidly rising tide of repossessions threatened finally to engulf the remnants of this lame-duck Government.
The Council of Mortgage Lenders estimated that there would be up to 100,000 repossessions in 1991—a staggering 120 per cent. increase on the previous year. The cause of the problem is absolutely clear, and is twofold. First, there is the utter incompetence of the Government's management of the economy: secondly. there are its housing policies. described in The Independent as
a disaster waiting to happen".The management of the economy has caused massive interest rates, crippling mortgage rates and escalating unemployment. The Minister for Housing, who I am pleased to see is present, recognised in a previous debate that unemployment was a crucial part of the problem of repossessions. [Interruption.] If the hon. Member for Harrow, West (Mr. Hughes) would like to intervene, I should be pleased to give way, but if he listens he may learn something.
We must also blame the blinkered ideological dogma of a Government who have put owner-occupation at the top of every list, at the expense of decent affordable housing. Although we support the right-to-buy legislation, we wish that the capital receipts could be used by local authorities to provide affordable housing so that people would not be 413 forced into owner-occupation that they cannot afford. The consequence of these two strands of Government mismanagement of the economy has led to the appalling problem of homelessness, evictions, marriage breakdown and the human misery associated with the scandalous mismanagement of housing policy by the Government.
The building societies are not without blame, due to their lending policies during the 1980s which led to individual circumstances not being properly taken into account. The provision of 100 per cent. mortgages, as well as deferred interest schemes and low-start mortgages, led to the Government having to introduce these panic measures. The Labour party warned the Government of the time bomb that was being being created by their policies months before they took any action to try to stem the flow of repossessions. We should pay tribute to my hon. Friend the Member for Hammersmith (Mr. Soley), who produced a proper, comprehensive mortgage rescue package long before the Government considered taking any of their panic measures.
What has happened since December, leading to the Bill that we are debating, shows clearly that the Government were more interested in grabbing the headlines about repossessions than in taking any action to stem the flow of repossessions.
§ Mr. Scott1 apologise for intervening during the hon. Gentleman's speech, but may we be absolutely clear about where the Opposition stand on these matters? The hon. Member for Hammersmith (Mr. Soley) made certain remarks, which I gather have been repudiated by the shadow Chancellor of the Exchequer, about housing expenditure and the way in which resources from the sale of houses will be made available.
§ Mr. BradleyWhat is more important is that the Government should recognise that repossessions cause real problems. We want to know whether the Government are tackling them. I should be happy to give way to the Minister if he could tell us how many schemes have been agreed with the building societies to tackle the problem, how many properties will he involved in those schemes and how many people have been helped by building society rescue packages. Can the Minister give us the absolute numbers involved?
§ Mr. ScottA number of schemes have been announced. If the hon. Gentleman reads the national press, he will know how they are coming forward. I still want him to tell the House where he stands in the dispute between the shadow Housing Minister and the shadow Chancellor of the Exchequer. There are clear differences between them. The House is therefore entitled to know where the hon. Gentleman stands in that dispute.
§ Mr. BradleyThe Minister is clearly unable to tell us about even one scheme that is in place that is helping people over repossessions.
There is no clear statistical evidence of the effects that the Bill will have on repossessions. What we know from the reply given by the Under-Secretary of State to my hon. Friend the Member for Leeds, West (Mr. Battle) is that in May 1990 the annual equivalent of £553 million was paid to 310,000 claimants. There are no official statistics showing the number of income support claimants with mortgage arrears, so we have no evidence of the number of people who will be helped by the Bill. 414 Even if that information were available, it is not clear what proportion of the arrears could be averted by the direct payment of income support. The Council of Mortgage Lenders estimates that it will save 40.000 repossessions in 1992 but a recent report by UBS Phillips and Drew, entitled "Housing Market: An Economic Time Bomb", estimates that only 10,000 repossessions will be saved by the direct payment of income support. It still expects 80,000 mortgage repossessions in 1992. As I said, that is no better than last year.
§ Dr. Ashok Kumar (Langbaurgh)May I draw my hon. Friend's attention to repossessions in the north-east and draw a comparison? Between January and August 1990, there were 5,460 repossessions, but between January and August 1991, repossessions nearly doubled to 8,830. Since the Chancellor made his announcement in December, no progress has been made, and people regularly come to tell me that their houses have been repossessed.
§ Mr. BradleyMy hon. Friend is absolutely right. 1 repeat my question to the Minister —how many schemes are currently in place to help people in the rescue package? There is still a staggering silence on that issue.
It should also be noted first that many essential housing costs of owner-occupation are not covered by income support and have to be met out of claimants' remaining basic benefit. I shall return to this issue later, but for the first 16 weeks only 50 per cent. of the interest is covered. Secondly, premiums for insurance policies linked to endowment mortgages are not covered. Thirdly, any costs for the maintenance of buildings are not covered. Therefore, it is possible that the Government and the lenders have overestimated the positive impact of the proposal on lenders' receipts and underestimated the problems which direct payments will cause to claimants.
I shall consider the second point in more detail because, contrary to some opinions, claimants usually put a high value on the retention of their home. Diversions of income support mortgage interest payments for other purposes in many cases reveal not mismanagement of benefits but the struggle claimants have in managing on the very low level of benefit of income support.
There is increasing concern about the multiple deductions from basic benefit faced by many claimants. An article in The Guardian on 24 January assured us that
more than one in ten relying on income support now face pre-payment deductions to meet debts for poll tax, fuel and other bills.Another direct deduction from benefits will put greater pressure on the already meagre benefits to which many people are entitled through income support.
§ Mr. ScottThe hon. Gentleman must understand that these deductions are not from the generality of income support but from payments specifically included in the applicable amount for mortgage payments. Surely it is right that the payments which are included in income support are paid to the mortgage lenders.
§ Mr. BradleyThe Minister is right, and that is why we are supporting the Bill. I am trying to point out that the argument that mortgage payments are being frittered away because some people have enough money in benefits to pay other bills is not true. The only way to help people is to increase benefits to a level that would cover the essential payments. 415 As I said, direct deductions cause great hardship and fly in the face of the Government's response to the social security advisory committee in 1986. The Government said:
direct payments arc both complex and costly administratively; and they diminish the claimant's responsibility to manage their own affairs.We must consider the benefit level in the light of that statement.The fundamental issue that is not covered in the Bill is that claimants are entitled to only 50 per cent. mortgage interest payments for the first 16 weeks of an income support claim. It is worth remembering that it was the Prime Minister, then wearing the hat of the Minister of State for Social Security, who introduced the cut in benefit in December 1986. Even he recognised at the time that the change was "contentious". He also said that it would have no effect on repossessions.
The Opposition believe that allowing only 50 per cent. for the first 16 weeks causes hardship to claimants, and can cause or exacerbate arrears which are then difficult to recover. Many claimants have problems in covering the cost in those weeks. In spite of the Minister's contention about people going off benefit within that period, the case is not proved. The arrears may not subsequently be pulled back.
Claimants who move into low-paid work get no help with their mortgage interest once they leave income support. Many pressure groups—representatives of the Child Poverty Action Group have been at the forefront of them—support the view that the Government should now withdraw the 50 per cent. rule and provide 100 per cent. help with mortgage interest repayments as soon as a claimant comes on to income support. That is our policy, and that is what we shall do.
§ The Parliamentary Under-Secretary of State for Social Security (Mr. Michael Jack)Is that a pledge?
§ Mr. BradleyIt is an absolute pledge that that is what the Labour party will do.
I shall say something about the plight of home owners on low incomes—people who are not on income support. As we all know, the only help that they receive is through mortgage interest relief at source—MIRAS. An increasing number of claimants are worried about their ability to afford mortgage repayments if they go into low-paid work and are no longer eligible for income support.
A study by Steve Webb and Steve Wilcox for the Joseph Rowntree Foundation, entitled, "Time for Mortgage Benefits", and published in November 1991, showed that a couple with two children on mortgage payments of £70 a week would have to earn more than £200 a week before they would be better off than on income support.
In contrast, as the Minister knows, reasonable rent payments are eligible for housing benefit whether someone is on income support or not. The anomaly is especially ironic for a Government committed to extending home ownership. Indeed, we believe that it determined the shape of the mortgage rescue package, in that owner-occupiers have to be converted into tenants to take advantage of the scheme.
I believe that one of the reasons why the scheme has not really got off the ground is that, even when people are converted into tenants, when the housing associations take 416 over properties they realise that the rents that would have to be charged are so high that people in difficulty with their mortgages would still have to make very high payments even if such properties were converted to rented accommodation.
If the rescue packages are in place between the building societies and the housing associations, will the Minister tell us whether the rents will be affordable, and whether they will be covered by housing benefit?
The anomaly will become even more evident when the change in qualifying hours of work for income support is made in April. For new claimants the qualifying period will be reduced from 16 hours or more, and the income support problem will become more serious.
The Government should now consider extending help with mortgage costs to people who are not on income support—[Interruption.] I am asking the Government now in place to consider the idea that I have suggested, in the light of the problems that have been experienced. [Interruption.] If Conservative Members wish to intervene, I shall be happy to take their questions.
Even the Prime Minister recognised the problem when, as a Social Security Minister, he introduced the 50 per cent. rule. On 16 December, 1986, he said:
social security help applies only to those without jobs. There is an imbalance there"—[Official Report, 16 December 1986; Vol. 107, c. 1129.]We support the Bill, because any help to alleviate the horrors of losing a home is welcome, but we believe that it is too little and too late. If the Government had listened to us, many thousands of people who were home owners would not have lost their homes, or suffered the appalling misery associated with homelessness.
We firmly believe that a much more comprehensive package of measures should be put into place. As I said, we support the package proposed by our Front Bench before the Government introduced their panic measures.
We support the present Bill, but, as a Labour Government, we shall very soon welcome the opportunity to introduce comprehensive measures on housing and economic policy that will ensure that people keep their homes rather than suffer the misery inflicted on them by the Government.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)My speech will be short and to the point, because the hon. Member for Manchester, Withington (Mr. Bradley) has already referred to many of the points made by the pressure groups.
The Government must examine the trends that have been developing since the early 1980s. I accept that they are not all entirely within the remit of the Department of Social Security. The Minister for Housing and Planning, who is in his place, has some responsibility to examine some of the difficulties that have been caused. It is quite clear why those difficulties have arisen. In the early 1980s, the Government—properly, in my view —were encouraging people to enter into home ownership. With the benefit of hindsight, I think that some people on relatively low incomes were perhaps given rather too much encouragement to go into home ownership. Then, in the mid-1980s, came a series of hikes in the interest rates that those people had to pay.
The trends must have been clear even to the Department. In 1979, it was paying about £31 million in 417 income support for mortgage interest costs. That figure has now increased to about £600 million in 1992—a 900 per cent. increase. That is a lot of money. The Department cannot ignore that increase; nor can it ignore the extent of the difficulties that flow from the fact that many of those people—the figure is now one in 100—face repossession.
Although I support the Bill, I think that it is an inadequate response to that deepening problem—if it is the only response that the Government are prepared to make. I hope that the Under-Secretary of State for Social Security, who is to reply to the debate, will say what thought is now being given to the on-going trends.
In his statement of 19 December, the Chancellor of the Exchequer adverted to the fact that we do not really know as much as we would like about how many people on income support are in difficulty and not passing on their payments to the lender. One of the Government's intentions was to make efforts to find out more about that between now and April. It would inform the debate if the Under-Secretary could say what progress is being made in that direction. That is an important official statistic to know.
Is there any cause to revise the initial predictions that the Government were making about the number of repossessions that the Bill might prevent in the coming year? That, too, is an important figure. I was disturbed to discover that, in its report "Housing Market: the Economic Time Bomb", UBS Phillips and Drew was still predicting about 80,000 repossessions in 1992, notwithstanding the improvements that will be made by the Bill. It would help if the Minister would say something about what has happened since December, when the action proposed in the Bill was announced. What changes, if any, have been made?
I strongly support the points made by the hon. Member for Withington about the potential exacerbation of the situation by the change in the remunerative work rule. As I have said before, I well understand the reasons for that, and I am sympathetic to what the Government are doing in terms of the influence on family credit, but it is not acceptable for the Government to say that they cannot assess the full impact of the change on repossessions.
I have read and understood the report of the Standing Committee in which the Minister set out the transitional protection—that is fine and good—but have the Government considered finding a way of totally idemnifying those who will come on to income support in the future and who might be caught by the change in the 24 hour rule to 16 to try to give those people some access to the protection that is available to them until the change is made in April? There must be some people who will lose.
I do not believe that, with good will, it is impossible to address that problem, and I shall be interested to hear the Government's view. I know that they have tried to limit that damage, but I believe that the problem will be exacerbated if yet more is not done to address it. If the Department puts its mind to it, I am sure that there must be some way of retaining the existing entitlement.
I am also concerned about multiple deductions. The report of the Social Security Advisory Committee was compelling. I understand the Minister's point when he intervened in the speech of the hon. Member for Withington—that we are talking about a deduction not from basic benefit, but from an addition. However, in addition to the provisions affecting mortgage interest, a 418 whole series of deductions is now biting on people's basic benefit. The Government must address the way in which that is increasing, and consider it carefully in conjunction with the SSAC and some of the other pressure groups, because it is beginning to affect people's freedom to choose.
An important part of the Government's policy previously was that people should have the ability to deploy their benefits. In their evidence to the SSAC, the Government argued vociferously that they did not want to incur the high costs of administering the benefits. We should not lose sight of the fact that there appears to have been a considerable change.
A mortgage benefit scheme of the kind for which Webb and Wilcox argued in the Rowntree Foundation report bears some examination. As I understand that we now spend about £5 billion per year on housing benefit, with a tax expenditure of £7 billion on mortgage interest tax relief, to move towards a scheme that would add on another £400 million and take the total cost of mortgage benefits in a full year to about £1 billion is not out of kilter with the trends of the past two or three years.
There must be some way of redeploying some of the MITR tax expenditure. I know that that will be difficult but, over a period, it should be possible to construct some way of redeploying some of the benefit, even if we are not talking about big total increases in benefits expenditure. I hope that the Department is doing some work on that, at least to the extent of studying the Webb and Wilcox scheme.
The Government should also examine the £35 million that it would cost to reintroduce the 50 per cent. payment in the first 16 weeks. Perhaps the Minister will tell us how many repossessions such expenditure might save. Does the Department have any idea of the level of repossessions that might be avoided if that £35 million was expended? It must have some estimate of that. If not, it is high time it did.
Finally, more resources should be made available to enable the mortgage-to-rent schemes to work effectively. According to the Government's own philosophy, they are an efficient solution to the problem. Although I have not seen any costings of the amount that would be required to make a mortgage-to-rent scheme a viable proposition, having looked at the trends, my assessment is that the position will get worse before it gets better.
I do not know how easy it will be to find big sums of money, but I am persuaded that redeployment within the existing system in terms of tax expenditure through MITR and the rest should now be re-examined by the Treasury and the Department of the Environment, as well as by the Department of Social Security, if we are to try to make some real changes and improvements in the coming 12 months.
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§ Mr. Patrick Nicholls (Teignbridge)Much could be said in this debate, but I shall make just three short points which may help. The background to the debate is the repossessions that have taken place. All of us have constituency experience of the individual tragedy that that can be for those whose property is being repossessed. It is worth looking at the numbers involved.
The numbers produced by the Council of Mortgage Lenders show that for the first half of 1991 repossessions 419 amounted to exactly 0.4 of I per cent. of all mortgages. In other words, 99.6 per cent. of all mortgages were not repossessed. Even bearing in mind that those figures will presumably increase somewhat in the second half of the year, to look at those figures is an exercise in flaccid hyperbole which does not take the argument forward.
Secondly, anyone who has ever done debt counselling —I have done it in the context of matrimonial breakdown when I have acted as a solicitor—will know that, when trying to rearrange a person's debts, it is often those who ask most for the money who must be paid off first. They want to see what money a person has available. To say that the money is available but earmarked for mortgage does not impress those who press most strongly for the repayment of a particular debt. It would give a measure of security to people to be able to say that they do not receive the money and it cannot be treated as part of their income. No one who has not been in this position or who has not acted for people in this position can know the terrible pressure to pay the worst, the most pressing, debt immediately. This is a real advantage, and will help debt counsellors.
Finally, it has been hinted at in this debate and certainly in the country that in some way the Government may be passing on their responsibilities by asking mortgage lenders to play a part in helping those who face repossession. I would not want to generalise, but there are some specifics that the House can know about.
I know of a case in my constituency where a major building society advanced a mortgage to a man earning £8,000 a year in fairly insecure circumstances. It took into account his wife's £4,000 a year when it was obvious from their family circumstances that she was likely to become pregnant again. On an income of £12,000 a year, it advanced a mortgage of £40,000. To add insult to injury, the building society then sold them an endowment policy. That may not be a typical case but, equally, it is not an isolated case.
When that can happen in the marketplace it in no way absolves people from the responsibility to look after themselves and to bear in mind that they must borrow responsibly. At the same time, the disparity in the bargaining position means that if on occasions building societies are capable of behaving in that way, when a proper mortgage rescue plan is put to them, they have a responsibility to join in. That is why it is entirely proper for the Government to say that, although they will take the lead, they expect others also to play a part.
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§ Mr. Quentin Davies (Stamford and Spalding)I will not detain the House long. I fear that there is an anomaly in the present regime for paying mortgage interest payments through the Benefits Agency which I hope will be addressed in the Bill or the regulations that will be made under it.
The anomaly was brought to my attention rather forcefully during the past 24 hours by a constituency case in Stamford. I understand that at present—the position has been the same for some time and will continue under the proposed regime—where a claimant for income support receives mortgage interest payments from the Benefits Agency, the claimant may sell his or her existing 420 house and move into a new one. The mortgage interest payments continue to be met so long as the claimant remains eligible. Clearly, that provision is sensible, particularly where the claimant is trading down, having offered a decline in his or her financial position. I have no quarrel with that. Indeed, I am very much in favour of it.
The problem arises because, whereas normally a mortgage lender would look to the creditworthiness of the individual borrower, in particular to his or her salary level, in this case the only cash flow available to the claimant is income support and mortgage interest payments that are being met by the Benefits Agency. It follows that the building society, bank or lender must look to those payments as security and needs some assurance that that cash flow will be available to meet the interest payments on the renewed mortgage. When the claimant has moved house, the mortgage is formally considered as a new one.
The problem is that the Benefits Agency is not allowed, under the rules imposed on it by the Department of Social Security, to give any formal commitment to the lender that the mortgage interest payments will be met—even a commitment that is hedged with certain conditions. It is impossible for the Benefits Agency even to state formally to the lender or potential lender that the claimant is, at the relevant time, entitled to receive mortgage interest payments from the agency.
Clearly there is a mismatch in such circumstances and it is impossible for the lender to decide to lend until he has some assurance that the mortgage interest payments will be met. Equally, it is no doubt impossible for the Benefits Agency to give any assurance to the claimant until the mortgage lender has made a commitment to lend. That can be a heart-rending problem for someone who has to move house while being dependent upon payments from the Benefits Agency.
That problem is being experienced by one of my constituents in Stamford and no doubt he is losing a lot of sleep tonight. I hope that my right hon. Friend the Secretary of State and his colleagues will consider this matter. It would be ideal if I were told that I had misunderstood, that there was no problem and that my constituent has nothing to worry about. If the problem appears to be slightly less easy to resolve than the theory suggests, I hope that I might trespass on their time by supplying them with the details of my constituent's case.
§ Mr. Graham Allen (Nottingham, North)Some weeks ago the Financial Times put an interesting perspective on the debate when it explained that the mortgage interest payments from income support were to be paid direct to the lenders, because that meant that tenants avoided the temptation of wasting that income support on food.
Such thinking belongs to the same bracket of unbelievable cheek as that displayed by Lord Hanson and Lord White. They took some time off from their destruction of British manufacturing industry to visit the House of Lords in their Rolls-Royces. They did so to vote in favour of the proposal that the poorest people—those on income support—should still pay 20 per cent. of the poll tax in its last year. That behaviour and the thinking revealed in the Financial Times typifies the attitude that many Conservative Members adopt towards poverty and 421 the problem of repossessions. That is how they deal with people who are suffering because of 13 years of Government economic mismanagement.
What we are witnessing tonight is the parliamentary clean-up operation for the publicity stunt of November and December. when the Government wanted to create the headlines to give the impression that something was being done about the repossession crisis that they had created. The Chancellor of the Exechequer and the Secretary of State for Social Security came to the House to make their respective announcements. The Prime Minister got his publicity with the usual fawning headlines. The editorials gave the Government what they sought2014;the suggestion that somehow they had produced the solution to the problem. But they created that problem.
Tonight we are the bit players in the tidying-up operation necessary to get the legislation through. That is a measure of how seriously the Government view this problem.
Since that day, not one family has benefited from the scheme that the Prime Minister, the Chancellor and the Secretary of State for Social Security put forward. Not one family has benefited from all that publicity. The only beneficiary has been the Conservative party, serving its own electoral purposes.
I am glad to see the Minister for Housing and Planning here tonight. He may even say a few words about the scheme's success so far. After all the alleged effort on his behalf, as far as we know—the Under-Secretary of State for Social Security may enlighten us when she winds up the debate—only one building society is pursuing a scheme in respect of mortgage assistance. All that sound and fury just for one scheme that is not even operative at present. If a family that is suffering or threatened with repossession goes along to the Nationwide, it will not yet be assisted. Was the scheme worth all that effort and publicity?
Many good, imaginative and creative schemes are available, many of which were proposed by my hon. Friend the Member for Hammersmith (Mr. Soley). There are ways out of the problem, and the trend of repossessions can be reduced. In those circumstances, what is needed is the will to do it, rather than trying to kid people in the newspapers. The Government must put the money where it is necessary so that people can buy new homes or, better still, stay in their homes.
Last year, 75,000 people suffered repossessions and, according to UBS Phillips and Drew, even more people will probably suffer repossessions in the coming year. I hope that those figures will decline and that the Government will find the will to make real progress in the matter, but in the several months that have elapsed since the big hoo-hah for electoral purposes, little political will has been invested in getting those schemes off the ground.
The basis on which the Government are bringing forward the Bill is that the lenders—building societies and others—are not receiving the element of income support that they should receive. I have no doubt that, in some cases, that is true, but it is staggering that a Government who have been in power for 13 years and seen the number of repossessions rise steadily have undertaken no serious research into the facts.
How many people are not using their income support as we would wish? If we ask the Chancellor of the Exchequer, he says, "Dunno." if we ask the Secretary of State, he answers, "Couldn't tell you, really." If we ask the Minister, he answers, "Disproportionate costs—can't tell you." 422 Despite the fact that they do not know the basis on which the scheme has been proposed, they are prepared to divert what may amount to £350 million to building societies.
That is not a bad little earner and will provide some nice cash flow for building societies. The only basis on which that figure can be put forward is a Council of Mortgage Lenders' survey conducted by telephone. Hon. Members know how carefully we should treat results discovered by telephone surveys, yet the Government consider that £350 million will do the job, and they have gone ahead.
The figures are so high because the amount spent on the mortgage element of income support is 10 times higher than it was in 1979. I hope that the Government are thoroughly ashamed of the fact that, in their tenure of office, that figure has risen tenfold. The party of home owners has turned into the party of wreckers and repossessers. They now seek, at the bitter dog-end of a Parliament, 13 years too late, to make amends.
Who is responsible for the foul-up? Who would have been stupid enough to block direct payments when they were on offer four or five years ago? Who would have been silly enough to prevent the income support going directly to the lenders? We know where the trail leads it is heavily signposted and it leads back to 1986, when the then hapless Social Security Minister, talking about direct payments to lenders, said that that would be "a tighter requirement" than the Government wanted. Since the present Prime Minister, the leader of the property-owning democracy, said those words, 100,000 additional families have had their homes repossessed. We always bandy statistics around in the Chamber, but it is worth rolling that one round again—100,000.
Before 1986, mortgage interest payments were available from the beginning of the claim. We are talking about whether we should put back the other half of the payments that are now missing from the first 16 weeks. In 1986, the cost in the first 16 weeks and thereafter was met. The change was deliberately introduced by the Prime Minister, who was then a Social Security Minister. He introduced the rule that cut the permissible pay-out in half for the first four months of the claim, so that thousands more people were plunged into mortgage debt.
The then Social Security Minister said that repossessions would not happen. The Labour party and the building societies warned him of the results of that policy, but he pressed ahead with exactly the wrong measure at exactly the wrong time. It was the same sort of Mr. Magoo decision-making that has characterised his leading us ever deeper into recession. I know that he cannot help not being up to the job, but that is of little consolation to people who have lost their homes or jobs, or been made bankrupt by the Government's policies.
A number of effective, imaginative and creative schemes exist that could help people. We need a change of Government to ensure that those schemes are put to work.
§ The Under-Secretary of State for Social Security (Miss Ann Widdecombe)Listening to Opposition Members tonight, one would imagine that the position was entirely that of gloom and doom. I do not deny the miseries that we are seeking to alleviate through the measure, but as the Opposition appear to have a vested political interest in making everyone believe that matters cannot and are not getting better, and there is no ray of light for those who 423 own their own homes, I shall direct Opposition Members to an article in the "Money Mail" section of today's Daily Mail. The article quotes the very building societies about which the Opposition have been challenging us tonight. The Opposition wanted us to say what progress those societies had been making.
Opposition Members seem to associate progress against repossessions with a narrow package of mortgage rescue schemes, but what matters is that building societies and lenders take measures to reduce repossessions in whatever way they see fit as a result of our introducing the provisions. The societies and lenders do not have to use any one route.
One large building society has said that, already—this is not in the future—nine out of 10 of its arrears cases have come to some form of arrangement with it. Another has said that rather than making loans to housing associations at a soft rate, it would prefer to renegotiate packages with the borrowers themselves at levels that they can afford.
We also read in "Money Mail" today that the Woolwich repossessed 15 per cent. fewer properties in the second six months of 1991. The Abbey National says that short-term arrears are in decline and repossessions are either stable or falling off, not increasing. Cheltenham and Gloucester has fewer short-term arrears and repossessed fewer properties in the second half of 1991. The Halifax says that short-term arrears and repossessions are in decline.
§ Miss WiddecombeI will give way in a moment. Figures from the Council of Mortgage Lenders to be released at the end of next week will show that there were some 80,000 repossessions for 1991, which is much better than the 100,000 which were predicted.
I should like to address the points made by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who quoted a figure of 10,000 from Phillips and Drew. That figure referred simply to the package which is before the House. He did not take into account the package which we announced before Christmas. On the basis of that estimate, Phillips and Drew says that some 45,000 repossessions will be favourably affected.
The view of the hon. Member for Roxburgh and Berwickshire about the number of repossessions is not shared by the Council of Mortgage Lenders. He said that the package will have very little effect. Whereas the Council of Mortgage Lenders was predicting 80,000 repossessions before, it says that as a result of this package it may be able to prevent 40,000.
May I turn a question round to the Opposition?
§ Miss WiddecombeIn a minute; I have remembered the hon. Gentleman.
All evening, the Opposition have been saying that we cannot give figures for how many people will be affected. If the Council of Mortgage Lenders is telling us, as it has been, that there is a potential to save 40,000 repossessions, and we had done nothing about it and said that we could not measure the effect, would not the Opposition have been the first to say that we should have been listening to what was being said?
§ Mr. Kirkwoodrose—
§ Miss WiddecombeI will give way to the hon. Member for Langbaurgh (Dr. Kumar) first, because I promised to do so.
§ Dr. KumarIf the figures for the building societies are as stated, why do we not see the result in local authorities? The number of people becoming homeless is still increasing in Middlesbrough and Langbaurgh when it should be declining. If the case that the Minister argues so vociferously is right, it should be translated into that.
§ Miss WiddecombeThe hon. Gentleman is completely confusing repossession with the larger question of homelessness. The figures that I have given are those of the building societies.
As to the interesting and expensive speech of the hon. Member for Manchester, Withington (Mr. Bradley), I want to be quite clear about what he promised. It was that the Labour party, in the unlikely event of its ever being in a position to do so, would abolish the 50 per cent. rule for the first 16 weeks and would pay 100 per cent. right from the start. In other words, he would pay for some 40,000 applicants at an average of £34 a week. That was a pledge, we were told. Is it an immediate pledge? I will be happy to give way if he will tell us. Is this to be done on day one, year one, Parliament one? Do we know?
The hon. Gentleman urged us to extend our help with mortgage payments to those on low incomes, not on income support. He did not even restrict help to those on family credit, if I understood his speech correctly. Is the Labour party promising to do that? How much would it cost? We reckon that, if we extended it just to those on family credit, it would come to some half a billion pounds.
§ Mr. AllenWill the hon. Lady tell us how much it is costing for bed and breakfast for all the people who have had their homes taken from them?
§ Miss WiddecombeIf Opposition Members distribute pledges, they must put a price on them. Is the hon. Gentleman claiming that he would effect savings on bed and breakfast by abolishing the provision?
§ Mr. AllenThe hon. Lady seems to be practising for life in opposition already. She should remember that for at least the next eight weeks she will still be a Minister. The costs of bed-and-breakfast accommodation should be available to her and the Government. Perhaps she will give us the figures. The figures for future expenditure will become available as and when the expenditure is incurred. This expenditure, caused by the Government's incompetence having forced people into repossession of their homes and hence into bed-and-breakfast accommodation, is taking place now. So what are the figures?
§ Miss WiddecombeBed-and-breakfast accommodation is not restricted to repossession cases. We are discussing repossessions. We are discussing what Labour proposes. Opposition Members have consistently said that we have caused a lot of misery by our income support rates. I want to know: by how much Labour would raise those rates; when they will raise them; and whether this is a pledge or a priority.
The 16-week restriction has given rise to one of the major criticisms levelled at our policy. The hon. Member for Nottingham, North (Mr. Allen) repeated the 425 fabrication that when the Prime Minister was Under-Secretary of State with responsibility for social security he caused or contributed to the problem of repossessions by introducing this rule. But we were told at the time, in writing, by the Council of Mortgage Lenders that that rule would not be a cause of repossession and that it saw no reason for anyone to leave home as a result of it. We have been told the same since.
So the answer to the question asked by the hon. Member for Roxburgh and Berwickshire is that introducing 100 per cent. from day one would make no difference—this is not a cause of repossessions.
We must strike a balance between the use of taxpayers' money to help people to acquire assets and the people's need to keep a roof over their heads. We have therefore struck that balance. There is no effect on repossessions that we can measure, or that the Council of Mortgage Lenders will admit to, so—
§ Mr. AllenOn 19 December 1991, my hon. Friend the Member for Oldham, West (Mr. Meacher) quoted a statement by the Building Societies Association in 1986, as follows:
Building societies regret that the government has decided to limit assistance which unemployed owner-occupiers receive through supplementary benefit".—[Official Report, 19 December 1991; Vol. 201, c. 463.]
§ Miss WiddecombeFor the second time running, the hon. Gentleman has quoted only the first part of that statement. Immediately following that quotation, the association continued:
Societies will do all they can to help people where benefit is restricted, and there is no reason to expect that people will lose their homes as a result of this measure.The hon. Gentleman should quote in full, or not at all. My right hon. Friend the Secretary of State has already put the hon. Gentleman right on this point, so either he is insulting the House by making the same point again when he knows the truth, or he is hoping that we have even shorter memories than he has.The hon. Member for Nottingham, North mentioned what he called the diversion of £350 million to building societies. That was no diversion: the money was always intended for the lenders in the first place. There is no question of their having made what the hon. Gentleman called a nice little earner. They were supposed to receive the money; indeed, that was the only reason why it was handed over at all.
The next question concerns multiple deductions. As was said earlier, the Bill does not affect multiple deductions because those are taken, as the hon. Member for Nottingham, North agreed, from basic income support. These deductions will be taken only from the amount of income support which was calculated for mortgages.
From the talk tonight, one would have imagined that there were not already ceilings and limits on direct deductions. There are. We should remember that the sums 426 made over in income support include an amount for community charge and an amount for ordinary living expenses, and that they should, therefore, be used for this purpose. When social fund loans deductions which are on top of the 15 per cent. ceiling are made, they are flexible and negotiable. Often—[Interruption.] The problem with Opposition Members is that they do not talk to enough local offices. Often people have large numbers of social fund loans simultaneously, but they are paying off only one at a time. I can tell the hon. Member for Nottingham, North that the problem is well addressed.
I sum up—
§ Mr. KirkwoodThe Minister is making heavy weather of the point. Has she any estimate for the House of the repossessions that will be saved as a direct result of the Bill?
§ Miss WiddecombeAll we have are the estimates of the Council of Mortgage Lenders. As I have said, we are responding to that body. If we had not responded to the estimate that we could save that number of repossessions, we should have been heavily criticised at the time. We have the latest forecast that the package, in addition to the package that we introduced before Christmas, together with the measures being taken by building societies, could save 40,000. With the measures only having been announced in November, it is too early to say precisely how many will be saved.
We have responded to the request of the lenders. We have done our best to ensure that money is going where it should go. We have got, in return, an agreement from lenders to limit repossessions, some of the results of which I gave earlier. The Bill is a humane and welcome measure. Opposition Members, although they do not oppose it, have not the courage to welcome it and to praise it as it deserves.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House. —[Mr. Nicholas Baker.]
§ Further proceedings postponed, pursuant to Order [3 February.]