§ 2.55 p.m.
§ Earl Russell asked Her Majesty's Government:
§ Whether and, if so, how the Prime Minister's plans to increase home ownership by 1.5 million are compatible with the Secretary of State for Social Security's plans to cut back income support for mortgages.
My Lords, 1.5 million additional households in home ownership over the next 10 years is considered to be a cautious estimate. It will be assisted by the growth of private mortgage protection insurance which will be generated by the income support for mortgage interest changes.
§ Earl Russell
My Lords, is the Minister aware that the Secretary of State for Social Security, in his reply to the Social Security Advisory Committee, said:the Government believes that those taking on major financial commitments should ensure that they can sustain those commitments in the short-term if they are, for any reason, unable to work"?Without wishing to argue with that, perhaps I may ask the Minister whether he accepts that that is a proposal to restrict home ownership to those for whom insurance is commercially profitable. Is that compatible with extending home ownership by 1.5 million?
My Lords, to answer the last question first, yes. We are quite certain that insurance will be available to anyone who qualifies for a mortgage.
§ Lord Molloy
My Lords, will it be possible for the Government to get involved with those local authorities which are not particularly anxious to see an increase in home ownership? In so far as this is a laudable scheme, does the noble Lord not agree that everybody who has some authority, particularly those local authorities which do not indulge, should be given more encouragement so to do?
§ Lord Stoddart of Swindon
My Lords, what have the Government against owner occupiers? Over the past two years they have reduced the mortgage tax relief from 25 per cent. to 15 per cent., thus putting up mortgage holders' costs considerably. Why is it that the Government are making a distinction between people who are buying their houses and those who are renting their houses? Why is it that those who are buying their houses have to take out insurance in case they become unemployed and those renting do not? It does not seem to me to be an encouragement to own one's own house if those who are renting their homes will have everything paid if they become unemployed without having had to insure themselves.
My Lords, the obvious difference is that people who have bought their houses have taken on a very large and long-term capital commitment which does not go away, whereas those who are renting their houses are in a much more flexible financial situation. I am delighted that the noble Lord now supports the housing policies which we have advocated all along and which met so much opposition in their time from the Benches opposite.
§ Lord Cockfield
My Lords, in order to cast further light on this problem, can my noble friend tell us how much the rate of interest charged on mortgages has been reduced over the period to which the noble Lord, Lord Stoddart of Swindon, referred?
My Lords, I do not have that figure. However, as the noble Lord, Lord Stoddart, doubtless knows, it is by a substantial amount and by a great deal more than any increases from any other direction.
§ Lord Dean of Beswick
My Lords, is the Minister aware that if the Government are to achieve by the millenium the objective stated by the Prime Minister, we cannot be referring to new houses? Over 150,000 new houses a year would be required to achieve that objective. Is it not true that to achieve 1.5 million new owner occupiers requires the further dispersal of council houses through sales at enormous discounts, as has occurred in the recent past, and through the very desirable housing association accommodation? Bearing in mind those factors, why is that group of people being treated so favourably when the Government at present seem to have a vendetta against struggling owner occupiers?
My Lords, I am delighted to find "old Labour" present on the Front Bench; it seems to have disappeared from the Back Benches. The noble Lord, Lord Stoddart, thinks that we are bearing down on home owners. The noble Lord, Lord Dean, from the Front Bench points in exactly the opposite direction.
We expect the trend in home ownership in this country to continue. There is every indication that that is what people want.
§ Lord Dean of Beswick
My Lords, will the Minister answer my question about new construction? That is the issue. There is no way that a third of the figure referred to can be achieved under the Government's present building programme.
My Lords, the proportion of people in this country who own their homes is increasing. We do not need to build new houses for them all.
§ Lord Barnett
My Lords, the noble Lord, Lord Cockfield, is correct in what he said about interest rates. Will the Minister, therefore, tell us why there is so much negative equity and the housing market is in a terrible state?
§ Earl Russell
My Lords, the Minister may or may not be correct in his confidence in the private insurance industry. However, will he consider accepting the recommendation of the Social Security Advisory Committee that new forms of insurance should be in place before there is any removal of mortgage income support? Alternatively, is it not possible that he may be mistaken?
My Lords, we are in very close contact with the insurance and lending industries. We are totally confident that the outcome which the noble Earl desires will he achieved.