HC Deb 02 February 1995 vol 253 cc1201-2
2. Mr. Hoyle

To ask the Chancellor of the Exchequer what assessment he has made of the impact that the restriction of benefit entitlement on home owners who become unemployed will have on the housing market.

The Financial Secretary to the Treasury (Sir George Young)

The growth of private insurance should reduce repossessions and improve the stability of home ownership. At present, two thirds of home owners would not qualify for help if they lost their jobs and many of the remaining third would be disqualified by receiving redundancy pay or an early retirement package. Our proposals aim to encourage home owners to insure against those risks.

Mr. Hoyle

Does the Minister not realise that the folly of his Department in cutting support for home owners will lead to mortgage lenders seeking more repossessions and to more homeless people? Whatever happened to the Tory promise of creating a property-owning democracy?

Sir George Young

I do not accept the hon. Gentleman's premise. As he knows, repossessions have already fallen by some 36 per cent, and we hope that that trend will continue. It makes sense to try to remove an obligation of about £1 billion on the social security budget and reposition it through the insurance market on those who benefit—home owners. That will lead to a more stable system, which will cover more people than the current system.

Mrs. Peacock

Will my right hon. Friend confirm that about 40 per cent, of borrowers take out insurance and that, traditionally, it was always accepted that any borrower should? Will he please encourage the other 60 per cent, of borrowers to do the same?

Sir George Young

My hon. Friend makes a valid point. The 40 per cent, of new borrowers are paying not only for themselves, but, through the taxation system, for the other 60 per cent. It would be fairer if we moved from a taxpayers' subsidy to an insurance-based system.

Ms Primarolo

Why should someone who loses their job face losing their home too because of the Government's planned changes to the benefits system? Will not the £18 million saved by the Government in the first year increase the mortgage payments of every new home owner by £20 per month? Since mortgages are already rising, why do not the Government withdraw that proposal and help home owners, not undermine them?

Sir George Young

The figure of £20 per month, to which the hon. Lady referred, or the figure of £12 to which my right hon. Friend the Secretary of State for Social Security referred in last week's debate, must be put in the context of a reduction of £140 per month in the cost of an average mortgage since 1990. Against that background, the figure mentioned is not a high imposition.

Mr. David Martin

Does it not stick in my right hon. Friend's craw, as it does in mine, that Labour Members have been posing as the champions of home owners, when all their policies, in and out of government, have been not only discouraging but positively hostile to the interests of home owners?

Sir George Young

My hon. Friend is absolutely right. If Labour Members felt so strongly about these measures, they would have given an obligation to repeal them, but of course they have not done so.