House Repossessions (Hansard, 2 June 1992)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde)
My Lords, since the Chancellor of the Exchequer's discussions with the Council of Mortgage Lenders last December, 10 lenders have committed £170 million to individual mortgage rescue schemes. Lenders have also made great efforts to improve debt counselling to prevent borrowers falling into serious arrears. Recent figures on court actions for repossession indicate that the number of repossessions may be past its peak. The Government remain keenly interested in developments and the Chancellor of the Exchequer, the Secretary of State for the Environment, the Secretary of State for Social Security and the Secretary of State for Wales are this afternoon meeting representatives of the major lenders to review progress.

§ Lord Thomson of Monifieth
My Lords, I welcome the discussions that are taking place this afternoon. However, is the Minister aware that the actual mortgage rescue scheme has turned out to be a flop and a fiasco? Indeed, a scheme that we hoped would help many thousands of people has so far helped less than a hundred. Is the Minister also aware that the figures I have for February of this year in respect of 817 actions for eviction are just below the same figure for February last year? What action will the Government take to make their policies more effective in the field?

§ Lord Strathclyde
My Lords, clearly the meeting which is to take place this afternoon will go some way to answering the noble Lord's concerns. Negotiations with housing associations and with borrowers, and the legal complexities involved, all add up to a lengthy process. That is why I believe that it has taken longer than we would have wished to get some of the schemes off the ground.

§ Lord Dean of Beswick
My Lords, is the Minister aware of the report in today's Evening Standard from quite a reliable source which is headed "Two million face mortgage disaster"? The report says: Up to two million home-owners, many in the South-East, are living on the brink of a mortgage disaster". That is because, in many cases, people are now paying mortgages far in excess of the present value of their homes. The noble Lord, Lord Thomson, is right to say that the measures taken so far in terms of people being dealt with—I believe that he said less than a hundred; indeed, I think that the figure is actually 80—have been a substantial flop. The building societies themselves are saying that one of the first moves to correct the situation would be to carry on with the moratorium on the non-payment of stamp duty and to lower interest rates immediately. In view of such reports, when will the Government do something about the matter?

§ Lord Strathclyde
My Lords, the lenders made certain commitments in December. They have pledged substantial amounts of money. My right honourable friends, the various Secretaries of State to whom I referred, will be meeting those lenders to discuss the progress this afternoon.

§ Lord Molloy
My Lords, does the Minister agree that the psychological effect on a man and his wife, and their young children, of having to move out of the house that they are trying to buy is pretty devastating? Therefore, should we not look at why such things happen and consider what we can do to prevent them, even if it means providing some sort of help during the initial stages? There are tens of thousands of families who have lost their homes and who have a bitter feeling against their own country. It is not about time that the Government looked at means to try to help such people so as to prevent such things happening in the future?

§ Lord Strathclyde
My Lords, the Government have as much sympathy for these people as the noble Lord. We have acted by increasing the threshold on stamp duty, by pledging to make income payments direct to lenders from April 1992 and by bringing in further measures to help reduce the number of repossessions and to help the housing market generally.

§ Lord Hailsham of Saint Marylebone
My Lords, does not the need for this Question underline a rather important point; namely, that there is a vital conflict of interest between those who wish to lend money on 818 security and those who need to borrow it? It highly behoves the latter class to take independent advice before they embark upon a course of debt.

§ Lord Strathclyde
My Lords, that is wise advice from by noble and learned friend for all borrowers to take.

§ Lord Peston
My Lords, I am somewhat taken aback by that answer. Surely anyone who believes in a free market could not see any conflict of interest between the two sides of the market. Indeed, quite the contrary: their interests are exactly the same. Perhaps the noble Lord may care to reflect on that at some time. However, I am not in the mood for giving one of my standard economic lectures this afternoon.
Can the Minister say whether the noble Lord, Lord Thomson of Monifieth, is right to say that the scheme has been a fiasco? Does he not agree that it could never have been anything but a fiasco? Is it not a standard example of a piece of elastoplast dealing with a major wound? Further, is it not the case that, if we are to deal with the problem, we must get the economy right on the one hand so that mortgagees have some income in order to pay the mortgage and, on the other, get interest rates down so that mortgages are not so large? Surely that is the solution to the problem.

§ Lord Strathclyde
My Lords, in my response to my noble and learned friend I was of course agreeing with his point that people should take independent advice before they enter into borrowing agreements. The noble Lord says that the scheme has been a fiasco. However, he has absolutely no evidence to prove it. He is, of course, right to say that the greatest help we can provide is to get the economy heading in the right direction. I believe that we are doing that.

Lord Bruce of Donington
My Lords, is not one of the policy options open to Her Majesty's Government that of securing this coming Thursday, or the following Thursday, a reduction in interest rates of at least 2 per cent.?

§ Lord Strathclyde
My Lords, that is a most interesting point. I am sure that the Chancellor of the Exchequer listens to the noble Lord's wise words.

§ Lord Thomson of Monifieth
My Lords, short of the fundamental reappraisal of housing policy recommended by the noble Lord, Lord Peston, will the Government at least consider creating a more level playing field in relation to their own repossession rescue scheme by making available the same kind of financial support for that as is available for housing association rented schemes?

§ Lord Strathclyde
My Lords, that is an interesting suggestion. However, the noble Lord knows that a new mortgage benefit scheme would be very costly; indeed, it could be as much as £1 billion a year. The Exchequer already provides substantial support for those who need it most through income support and generally through mortgage interest tax relief.