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Unemployment is due to the economic climate. The policy will deal a further blow to the housing market and mortgage lenders are crying out about it. I gather that there was a fairly acrimonious meeting recently between the Secretary of State and the mortgage lenders, who stated that they thought that there would be thousands more repossessions and that that would cause a slump. I know that the lenders have a vested interest, but we must heed that warning. The Secretary of State says that that cannot happen, that he will modify the Administration of Justice Act 1970 so that people will have longer to pay-- perhaps even within the lifetime of the mortgage. That is fine so far as it goes, but mortgage lenders do not have to lend money and will pick and choose. The Government have always said that a thriving housing market is an indicator of economic recovery and they still keep saying so, but perhaps the Secretary of State does not agree. He will say that people should take out insurance, but that is not always available as illness or marriage break-up and unemployment is not always covered. We must face the fact that only 40 per cent. of those claiming benefit are unemployed.

Let us examine some existing insurance policies. Citizens advice bureaux have reported that people have been duped into buying policies with loopholes and that claims are not being met. One bureau reported the case of a man who had been made redundant. He did not want to sit around, so he got employment which lasted for some time but in different jobs. Eventually he became unemployed again, but he was not covered by his insurance because he was not in continuous employment for six months. That has not been addressed. Such happenings are not uncommon. How will such people survive? They will not if they do not have benefit and many will face repossession and homelessness. As I have said, that will be a further blow to the housing market.

One in three people buy insurance protection, but the policies are riddled with exclusions, as I have illustrated by my reference to the man who was made redundant. People are also ruled out by pre-existing medical conditions, illness in the previous 12 months or lack of continuous employment. It would bar people on fixed-term contracts, unless they run for a number of years. It would bar a number of building workers on contracts. It would bar a number of actors and people working in the media. Above all, the self-employed would suffer.

Those with mortgages will have to find an estimated £7,000 in insurance payments over 25 years. From October, the cost of a mortgage in real terms will be 10.5 per cent. higher than it is now, taking into account mortgage tax relief and other factors. That does not include the mortgage interest rate rise of 0.3 per cent. announced last Friday. At the same time, the Government are cutting housing benefit. Where will people go? Housing association grants are due to fall in 1996-97 to 1989-90 levels. Housing investment will fall because of the end of the capital receipts holiday. The Government's subsidy to council housing will continue to dwindle. Council and housing association rents continue to rise. If the rug is pulled from underneath home owners, they will find that there is no low-cost rented accommodation available for them. All of that will contribute to the lack of the feel-good factor about which the Government seem to be so worried.

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If the Government are thinking about reforms, they should introduce real reforms and put people with mortgages on the same basis as tenants. They should introduce a benefit for mortgage holders-- [Interruption.] I accept that it would have to be paid with the phasing out of MIRAS-- [Interruption.] That is in our policy document and it has been for some time. We are suggesting that in the long term there should be a new benefit for householders and tenants alike, which would mean that everybody would be better off in work. I agree with the view that currently people on income support who have help with their mortgages are not motivated to take low-paid work. With a merger of the two benefits in the long term, they would always be better off in work. There would be a taper in the same way as there is a taper on housing benefit. The cost of income support would be reduced because there would be an incentive for people to get back into employment.

All that the Government's policies will do is to impose a cost on people in the long term. There will be more repossessions and more homelessness. There will be a further destabilisation of the housing market. The Secretary of State's policy will cause misery and will not contribute to the feel-good factor about which the Government are always talking.

6.2 pm

Mr. Hartley Booth (Finchley): I have listened to the debate with interest and care. I was interested to note the inconsistency with which Labour Members attacked the Government and what they are trying to do. I have been in the Chamber for debates on subjects such as housing and inner- city matters when, time and again, Labour Members have criticised the Government for increasing the dependency culture. The number of people dependent on mortgage interest relief in 1979 totalled 100,000; in 1988 the figure was almost 400,000; and last year it was just short of half a million. It is obvious that there is an increasing dependency sector and the Government, as part of their proposals, are suggesting how that could be reduced. I should have thought that the Opposition, who have so strongly criticised the extension of the dependency culture, would applaud that--but they have said not a word.

With the new spending rectitude of the Labour party, broadcast daily throughout the media, one would have thought that there would be considerable concern about how expenditure has risen from £31 million in 1979 to more than £1 billion last year on this item alone. One would hope that the Opposition would be consistent in their arguments and say, "Hold on, the Government are sensibly trying to be responsible with public expenditure, so let us welcome the tough decision that the Government have taken." But no, throughout the debate Labour Members have insisted that this is just one more attack on a particular group of vulnerable people.

The Conservative party stands for home ownership. It stands for the ability of people to buy, own and live in homes happily and comfortably. Indeed, the record referred to by my hon. Friend the Member for Macclesfield (Mr. Winterton) stands for itself. Home ownership has risen from almost 55 per cent. to almost 67 per cent. I have argued many times that the experts might be wrong, but they say--and they are all agreed on this--that there is a ceiling on any predictable level of home ownership of about 70 per cent. On that basis, we

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are only some 3 per cent. short of what the experts say we could conceivably achieve in home ownership, so we have done well in that area.

We must ensure that home owners are assisted, encouraged and live in the real world; that is what the proposal is about. I looked, I listened and I was prepared to criticise the Government if they had not included a transitional period, but they have. It is only with insurance taken out after 1 October this year that the rule will apply. It is vital that a fair, good and thoughtful Government provide a transitional period. We could not do that with milk quotas because the European Union would not allow it. As a result, many farmers were tied to their equivalent of mortgage or business loans. That will not happen with the Government's proposal; there is to be a proper, phased introduction. The results are sensible, as I understand them, and it is why I support the Government. If any of our conclusions do not hold, we will have to think again, but in the round the results are such that I would argue strongly that we should back the Government's proposal.

Of course there will be savings--small to begin with, but larger by stages. There was an extraordinary paradox in the remarks of the hon. Member for Glasgow, Garscadden (Mr. Dewar). I do not know whether my hon. Friends noticed it, but he began by saying that this was an horrific and damaging proposal for many people--yet only a paragraph later he said, "Well, the Government are going to save only a small amount of money." If that is true, why the horror? The point is that the proposal exercises something that we were elected to do--to spend responsibly.

We are becoming more sophisticated on the subject of debt. It is a most important subject that we need to deal with in this country. Young people in Germany do not borrow money to buy houses at the age of 25 or 30. The average age for doing so--and they do not buy that often--is nearer 35 or 40. It is certainly right to encourage the purchase of homes, but it is also about time we thought about responsibility in the acquisition of debt. Over the years, the Government have been consistent in their dislike of debt. That was why, in the face of opposition from Labour Members, we reduced the national debt at several stages during the 1980s. We do not like debt and we do not like young people getting into debt irresponsibly. The proposals will assist the culture of thinking about debt and of getting into it only when one is ready for it.

I am descended from a group of people with a Puritan past, which many hon. Members have. Those people did not like to borrow at all. People will have to consider the acquisition of a mortgage with the extra hurdle. They will have to think about the acceptance of the nine-month period that is included in Government's proposal. That is a sensible addition to the growing culture.

With regard to the opposition of my hon. Friend the Member for Macclesfield and of Labour Members, there may be a temporary effect on the macro-housing market. The proposal may lead to a points depression in that market, but as we are close to the 70 per cent. maximum purchase level, that effect would probably have occurred anyway. In the end, however, more people will take up mortgages, with more thought to the debt that they take on, and with more planning. I conclude, therefore, that

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fewer people will claim, even though they could claim. As I said earlier, the proposal will strike a blow against the dependency culture.

The Conservative party is the party of home ownership and of spending responsibility. It is a party of debt responsibility. For all those reasons, I support the Government's proposals and oppose what has been said by the Labour party.

6.11 pm

Mr. Bill Etherington (Sunderland, North): I must take exception to some of the remarks made by the Secretary of State for Social Security. It is almost beyond belief that he has the effrontery to stand up in the House and to say that he is seeking to improve the position for people unfortunate enough to become unemployed who have to pay a mortgage. It borders on the mendacious.

The Secretary of State talks about the two thirds of people who cannot benefit because they are not in receipt of income support. Obviously, those people do not need the relief. If they have redundancy payments and more than £3,000 in the bank, they may be able to manage for a few weeks. In case the Secretary of State is not aware, the income support level is below what is regarded by the European Union as a decent level. When those people go on income support, they will have difficulties, which shows how barren the thinking is behind the legislation.

Since 1979, a string of Bills have been introduced to worsen the plight of people who are unfortunate enough to be unemployed. First, it must be said that unemployment is brought about by the Government's policies and not by people who happen to be unfortunate enough to become unemployed. That is an important factor, which the Secretary of State seems to overlook.

Two unedifying strands in the Government's philosophy seem to have come together in the Bill. The first is their lack of respect, concern or compassion for the unemployed, which borders on disdain. The second is their love of providing work for their friends in the City. That was shown when the Government sought to abrogate their responsibility in relation to the payment of state earnings-related pensions. Because it was costing the taxpayer too much money, the Government decided that private insurance should take over. What a disaster that has been, and what a cost to the taxpayer it has proved to be. Not many strands in the Government's thinking are philosophically satisfactory, but those two strands are the worst. The Government are forever stating that they believe in a property-owning democracy. Some Labour Members also believe in that. Since 1967, I have been in the privileged position of having my own house. When I started to buy, however, the circumstances were much more propitious than they would be for anyone buying now. I issue a challenge to those on the Treasury Bench: I am willing to give way if the Minister will stand up and guarantee that every person who seeks and obtains a

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£45,000 mortgage will be able to obtain for £12 per month satisfactory insurance which covers them against sickness and unemployment?

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans) rose --

Mr. Etherington: I am delighted.

Mr. Evans: There is a fatal fallacy in the hon. Gentleman's premise. If the hypothetical person in the example that he mentioned is granted a mortgage because his credit is sound and because he is in a reasonable position to expect reasonably to repay that mortgage, there is no reason to suppose, if a sensible lending judgment is made, that he cannot be insured as well.

Mr. Etherington: Those were weasel words. I asked for a guarantee, not a platitude, but that was what the Minister offered. No guarantee was given. The Government are in favour of people owning or paying for their own houses, and getting into debt. They support that so that those people can be controlled by their employers, so that the threat of the dole queue becomes ever worse, so that they can be forced into taking poor employment, and so that they are not in a position to fight back when an employer tries to worsen their conditions.

That is what this is all about. It is not about financial constraints. My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) has already pointed out that a small amount of money will be saved by the Treasury by the measure. It is not, however, a small amount of money to the victims who find, after a few weeks of unemployment, that they are likely to become homeless. That is how much the Government care about people's security. The Government do not give a damn for the citizens of this country unless they are making money for someone else--preferably the Government's friends in the City.

My hon. Friend the Member for Southampton, Itchen (Mr. Denham) mentioned that insurance companies can sometimes be a little fickle in the way in which they deal with policy holders. He understated the position. He said that if a miner became unemployed, the insurance company would try to find ways of abrogating its responsibilities. It is not quite so bad as that because the insurance company would not have condescended to give a policy to a miner in the first place. I do not speaking from anecdotal evidence, but from personal experience as in 1967 I sought to obtain just such a policy.

I have no doubt that some Conservative Members, who have made many interventions, who are hired hands of various insurance companies, and who are on their payrolls but do not bother to declare it on occasions in the House--

Mr. Deputy Speaker (Mr. Michael Morris): Order. The hon. Gentleman has just made a very serious allegation. I hope that he will either withdraw it or substantiate it.

Mr. Etherington: I shall substantiate it. A Conservative Member stood up on, I think, five occasions this afternoon during a debate on an important matter in

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which the insurance industry is involved, and from which it benefits, but he has not declared an interest. I invite him to comment.

Mr. Deputy Speaker: Order. The hon. Gentleman knows the rules of the House. Any hon. Member who makes a speech in the House is required to declare an interest. Hon. Members are not required to make such a declaration in an intervention. The hon. Gentleman should know the rules of the House and he should challenge only hon. Members who disobey those rules.

Mr. Etherington: I accept your reprimand, Mr. Deputy Speaker. If I am required to withdraw my remark, I shall do so. I hope that if the hon. Member concerned makes a speech he will clarify the matter for the benefit of the House.

On the notional figure of £45,000 of borrowing for a mortgage, it has been stated that the payment required will be about £12 a month, but people in the financial services business say that it will be £21 a month.

I pay tribute to the hon. Member for Macclesfield (Mr. Winterton) who alone of all Conservative Members spoke with compassion and some understanding for those who find themselves in the vulnerable position of having a large mortgage, on the payment of which the retention of their home depends. It is to the hon. Gentleman's credit that he recognises their plight, but I am sorry that his understanding was not reflected in the speeches of other Conservative Members, least of all that of the Secretary of State.

The Government's proposals should be taken in conjunction with various pieces of legislation that have been introduced since 1979 and which discriminate against the unemployed. Together, they create a society to which fear is the key. If people do not have very good jobs but are paying a mortgage and have the threat of things being made so much worse if they become employed, the more fearful they will be of challenging their employers. That is what the proposals are all about.

I trust that people outside will see the proposals for what they are: they have nothing to do with improving the lot of those who are unfortunate enough to be unemployed and have a large mortgage to service, but they have everything to do with further intimidation of those who are fortunate enough to be employed.

6.20 pm

Mr. Bernard Jenkin (Colchester, North): I am happy to declare an interest as an adviser to Legal and General Group plc, which is an insurer and an arranger of mortgages. I am a little distressed that the hon. Member for Sunderland, North (Mr. Etherington), with whom I have had many debates in European Standing Committee B where I have often declared my interest, should not expect me to make that declaration. This time, I shall put his attitude down to the heat of the debate and leave it at that. I shall respond later to several comments that he made, especially that about the unattractive motive that he feels lies behind the Government's policy.

I deal first with a recurrent theme that was mentioned by opponents of the measure and others, such as my hon. Friend the Member for Finchley (Mr. Booth), who represents the constituency which, perhaps more than any other, resonates with the principle of home ownership. The hon. Member for Rochdale (Ms Lynne) and my hon.

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Friend the Member for Macclesfield (Mr. Winterton) also mentioned the effect that the measure is likely to have on the housing market. I do not participate lightly in the debate. My constituency has probably suffered some of the biggest falls in property prices. Negative equity on a large scale is one of the major problems facing my constituents. My constituency was an area of considerable new build in the 1980s when houses were purchased at what we now regard as inflated prices, with the result that negative equity is a serious problem in huge parts of my constituency. Therefore, I would not dream of supporting a measure that would have a seriously deleterious effect on the housing market. It would not be in my interest to do so and as, I think, the hon. Member for Rochdale--but certainly the hon. Member for Glasgow, Garscadden (Mr. Dewar)--suggested, it would be extraordinary for a Conservative Government to propose such a measure.

The measure will have an extraordinarily slight effect in its first year. Indeed, the hon. Member for Garscadden derided the Government for the fact that the measure will remove a mere £18 million from the housing market in that time and will build only over a period of time--perhaps 10 years--to savings of perhaps £200 million. I should explain how that will happen.

In the first year, a small proportion of householders will be eligible under the scheme and only a small proportion of them might trigger the effects of the scheme. In the second year, perhaps twice as many households will fall on hard times and be eligible for the scheme. That is how the scheme will build and how savings will accumulate year by year. In that sense, the scheme will have a minimal impact in its first year of operation. It cannot be described as a knockout blow to the housing market when it is being introduced so gradually.

The hon. Member for Birkenhead (Mr. Field) complained that we have are not piloting the scheme, but, in effect, the first year of operation will be the pilot because such a tiny proportion of the housing market will be affected. It is important to keep this important, revenue-saving measure, which has other benefits that I shall discuss later, in perspective.

Before I give way to my hon. Friend the Member for Macclesfield, I must say that his somewhat hysterical comments about the state of the housing market, made in this place in what may be a delicate period of transition from decline to recovery, probably do more damage to confidence in the housing market than the scheme ever would.

Mr. Nicholas Winterton: I am not considering the measure on its own; I am considering it with the reduction in MIRAS, which is extremely unpopular and is having an impact, and with increases in mortgage interest rates, although they are as yet only nudging higher. Job security must also be taken into account. Although we do not often do so under a Conservative Government, dare I say that there has been an increase in taxation, which means that people have less to spend and are therefore less likely to buy a new house?

Mr. Jenkin: Interest rates have fallen substantially over the past three, four or five years. We may have to expect small increases in future to continue our successful anti-inflation policy, but we do not want to return to the 1980s when so much economic activity was diverted into speculative property investment. My hon. Friend praised

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the Government for the export-led recovery, and we must ensure that investment in assets for export remains more attractive than investment in property for speculative gain. We should encourage people to invest in property in which they want to live rather than to invest in property for speculative purposes. We are succeeding in that, and this slight measure is probably not even relevant to the argument about incentives to invest in property.

Two main issues have arisen in our debate. The first involves equity of treatment for those in the rented sector and those with mortgages in owner- occupied properties. The hon. Member for Garscadden in particular implied that the benefit and tax system should treat similarly owner-occupiers and those in the rented sector. In fact, there is a certain balance. We give home owners generous support--some billions of pounds--through MIRAS, and it is entirely logical that those who benefit in one respect should accept a little more responsibility in another.

Secondly, what has been lacking in the debate is an appreciation of how the insurance and lending markets operate. [Interruption.] The hon. Member for Holborn and St. Pancras (Mr. Dobson) chuckles, but, if we had accepted Opposition Front Benchers' advice over the past 15 years whenever we placed our faith in the way in which the markets operate and can take over functions previously carried out by the state, we should not have privatised anything, contracted out anything or achieved anything. Economically, we would be in a substantially worse position today. Well may the hon. Member for Holborn and St. Pancras laugh--at his own folly for all the mistakes made and bad advice given by his party to the country over the past 15 years.

The important thing is that the system will make more demands on lenders and borrowers. Just as during the recession lenders were required to make finer judgments about who they lent to and about who was a safe risk, the insurance markets will be required to do the same. It is hardly surprising that there is not a flourishing insurance market for mortgage insurance at the moment, when so much of the market has been displaced by state activity. That is what one would expect. When the state has been undertaking an activity, one would not expect the private sector to come in and take part. The theme--I return to the comments by the hon. Member for Sunderland, North--behind the proposals is to try to make borrowers and lenders make more responsible decisions on loans taken out and houses bought. We do not want a market--indeed, we cannot afford a market--which is insulated from all the consequences of its decisions by the state underwriting every risk taken by the consumer. That creates the problems which overheated the property market in the 1980s.

Finally, I shall deal briefly with the issue of mortgage benefit, which arose earlier. That is perhaps the maddest idea that the House has heard for some time. I have great sympathy for what the Labour party says about the number of people who find themselves on income-related, means-tested benefits. I agree that there are too many people on means-tested benefits. If we moved more towards a system of tax allowances and away from means- tested benefits, we would avoid the indignity of means-testing for quite a number of people.

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The proposal of mortgage benefit would increase the number of people--most of them probably already paying tax--on means-tested benefits and paying tax, thereby increasing the poverty trap and increasing all the problems which currently beset our benefits system. It would be a major step backwards. I urge the House to reject that idea and to support instead sensible measures such as the Government's proposals instead.

6.32 pm

Mr. Nick Raynsford (Greenwich): I begin by declaring an interest as a consultant to HACAS housing consultancy company, although, to the best of my knowledge, it does no work relevant to the debate. I have certainly undertaken no related work.

This has been an important and revealing, albeit short, debate. My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) spelt out with his characteristic incisiveness the main problems associated with the Government's proposals for home owners and the impact on the housing market. His concerns have been echoed by my hon. Friends the Members for Southampton, Itchen (Mr. Denham) and for Sunderland, North (Mr. Etherington) and by the hon. Members for Macclesfield (Mr. Winterton) and for Rochdale (Ms Lynne), all of whom raised valid and extremely powerful points about the adverse impact of the Government's proposals. By contrast, the Secretary of State secured support only from the hon. Members for Finchley (Mr. Booth) and for Colchester, North (Mr. Jenkin).

The Secretary of State's speech was extraordinary in three ways. First, he had to reveal that even now, two months after the proposed changes were first announced in the Budget, he is far from clear about the precise details of how the scheme will work in practice and what will be its various impacts. Secondly, even more extraordinary, coming as it does from an apologist--

Mr. Lilley: Is the hon. Gentleman complaining that we are consulting about the details? That is extraordinary given that Labour Members often make the allegation--false, of course--that we come out with things, which were thought out in great detail, without consultation.

Mr. Raynsford: The Secretary of State made great play in his speech of the adverse effect on the market of scares. He has introduced proposals which have scared the market substantially. He only has to talk to the House-Builders Federation, the Council of Mortgage Lenders and all the experts, to reinforce that point. It would have been wise on his part to have thought a little more carefully about the precise details of what he proposed before coming forward with them. That is the point that I am making. He does not appear to have worked out precisely what he is proposing to do. Secondly, and even more extraordinary, coming as it does from an apologist for the market, the Secretary of State showed little understanding of the consequences of his proposals on the housing market. Thirdly, and perhaps most extraordinary of all, he chose to present himself rather like a latter-day Mr. Bumble; as a benefactor of the poor. In that famous section in "Oliver Twist", one recalls Mr. Bumble expressing the great principle of outdoor relief, as it was then, and social security as we would call it now, which is "to give the paupers exactly what they don't want; and then they get tired of coming."

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The Secretary of State appears to believe, and certainly tried to make the House believe, that his cuts in income support discussed today were really an act of kindness to struggling home owners in difficulty. That is nothing to do with reality. The proposals are not necessary. They are ill thought out, they are confused, they are unlikely to achieve the savings that they are supposed to generate, they will be difficult to implement and they are likely to cause severe administrative problems, widespread anomalies and immeasurable anguish to thousands of families.

The proposals are not necessary because the rising trend in income support expenditure is already beginning to reverse. From a peak of £1.22 billion in 1993, expenditure has fallen to £1.08 billion in 1994--by far more than the savings that the Secretary of State expects to achieve this year. If measures were now being taken to help recovery in the housing market, as well as to tackle the continuing scourge of unemployment, we could expect further substantial reductions over the next few years, achieving savings far in excess of the £200 million that the Secretary of State is claiming that he will save. That figure has already turned out to be a rather elusive target.

The proposals are ill thought out and confused. Under the Secretary of State's proposal, most existing home owners will receive no benefit for the first two months and then only 50 per cent. for the next four months. Thereafter, even though they will qualify in full for income support, it will be calculated on a standard rate which could be significantly below their outgoings, especially if people have opted for fixed-rate mortgages.

Pensioner claimants, we now understand, will not lose entitlement in the first two months, but they will, apparently, have their benefit assessed on the standard rate. That makes a mockery of the claim in the Government's amendment that pensioners on income support will not be adversely affected because those who have mortgages at higher rates than the standard rate will be adversely affected. New borrowers after October will have no entitlement at all for the first nine months. We have not yet heard whether that restriction will apply to new borrowers who subsequently reach retirement age. Perhaps the Secretary of State would like to tell us whether future pensioners will be subject to that restriction. We do not know.

Hon. Members: Answer!

Mr. Lilley: Yes, they will.

Mr. Raynsford: I am delighted to hear it. We have achieved, at least, a certain further clarification.

Mr. Lilley: Not at all. I said it during my speech and the hon. Member was not listening.

Mr. Raynsford: We are delighted to tease out some of the more obscure features of the Secretary of State's proposals.

We must ask why the Secretary of State is introducing this complex series of arrangements, riddled with anomalies, ostensibly to save £200 million. Once again, confusion reigns. The Secretary of State cannot tell us precisely how that saving will be achieved. He expresses hope that, in the long term--over three years, he says--the figure will be reached. But he has some difficulty with the arithmetic, because in the written answer of 15

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December in column 794 , he indicated a saving of £18 million in the first year for new borrowers, which must be the main category of saving.

We accept that the figure may be larger in the second year, but if, as the hon. Member for Colchester, North suggested, the figure doubled, it would reach only £36 million. Even if it were to double again in the third year, we would still be a very long way short of £200 million. So the Secretary of State has a certain amount of explaining to do about where the mythical £200 million will come from.

Not only can the Secretary of State not provide good answers on those figures, he cannot provide convincing answers either to questions on the likely additional costs which will flow from what he is proposing. There will be costs, and the Department will have to bear some of them. It is clear that the measures will lead to an increase in repossessions.

Mr. Lilley indicated dissent .

Mr. Raynsford: The Secretary of State may shake his head, but the Council of Mortgage Lenders, which is in a far better position than he is to make an estimate, states that the increase could be between 12,000 and 24,000. I would rather believe the Council of Mortgage Lenders than the Secretary of State on that particular issue. If the council's upper figure is correct, that would push repossessions back to the level reached in 1991 when they were at their peak. That in itself is bad enough, but when we think about the consequences, the full stupidity of the proposal becomes clear. Many of the home owners who will forfeit their homes as a result of the Secretary of State's plans could find themselves in a

bed-and-breakfast hotel or other temporary accommodation. While the average weekly cost of income support for home owners towards mortgage interest is £37.98, the average weekly cost of keeping a family in a bed-and- breakfast hotel is £231. In other words, it is £193 more or, in annual terms, an extra £10,036.

If just 1,800 home owners end up in bed-and-breakfast accommodation as a result of the Secretary of State's action, he will have wiped out entirely the supposed £18 million from withdrawing help for the first nine months for new home owners. That is an indication of the stupidity of the proposals because we need only think of the personal cost to the families concerned if they are condemned to bed-and-breakfast hotels and cannot stay in the family home. The Secretary of State would have us believe that that will not happen because a new and thriving insurance industry will come to the rescue. Once again, the problem is that the Secretary of State has not done his sums and has apparently only the flimsiest grasp of the realities in the market place. The National Association of Citizens Advice Bureaux, which was quoted by the hon. Member for Rochdale (Ms Lynne), has made it clear that, for many individuals, mortgage protection policies are unavailable or inadequate. According to NACAB,

"Many citizens advice bureaux report clients who have taken out mortgage protection policies in good faith only to find that when they come to make a claim, the policy fails to pay out."

Many others do not even get that far. I received a letter last week, which I suspect is typical, from a home owner in Cumbria, who said: "When I bought my home last year my mortgage company"--

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which happens to be a very large and reputable building society-- "required that I should take out redundancy insurance. I agreed. No policy however could be found which would provide me with cover. My job? I am a primary teacher with years of experience who had a short break to have children. On my return to work I was given a temporary fixed term contract. The Secretary of State does not seem to realise that a large number of teachers and other workers will not qualify for redundancy insurance simply because the natural termination of a fixed term contract is not considered to be redundancy. He offers no solution to those of us in a very unpleasant situation."

How many other employees in an increasingly deregulated market, where fixed -term contracts are ever more common, will find that they are uninsurable or can obtain insurance only at a prohibitive premium? As the Secretary of State has been reminded frequently in the past two months, unemployment is only one of the factors leading to claims for income support from home owners.

Of the 548,000 claimants receiving such help last year, less than half were unemployed. Eighteen per cent. were over retirement age, 22 per cent. were lone parents and 19 per cent. were claiming for other reasons, mainly disability. The Secretary of State has yet to give us hard evidence in relation to where people will obtain insurance cover against the risk of a relationship breakdown or disability. All that he can offer is his optimistic hope--no hard evidence, just his hope--that new insurance products will emerge to cover many of those risks. However, I doubt whether many potential buyers would put their shirts, let alone their houses, on his hopes.

I challenge the Secretary of State to put this challenge to some of his colleagues. If he suggests to his colleagues, and particularly those in seats with majorities of less than 15,000, that they seek insurance cover at the moment, he might be interested to learn the terms that would be offered--if any of them qualified for cover at all.

What about the impact on the housing market? In its brief, the House- Builders Federation makes the point that it is evident to anyone with an understanding of what is happening at the present time in the market that it is, in the federation's words,

"Showing increasing weakness, reflecting lack of confidence, job insecurity and the possibility of a further reduction in MIRAS in April. The timing of these proposals"--

Mr. Jenkin: It would say that.

Mr. Raynsford: They are not my words, they are the words of the House-Builders Federation. The federation has a direct interest in a flourishing house building industry. It states:

"The timing of these proposals is particularly unfortunate and they are likely to cause more house purchases to be deferred." The federation continues:

"the measures will go on to discriminate against those households wishing or needing to move and will slow down housing transactions even further."

Against that background, what is needed is a positive package of policies to restore confidence in the housing market. The Secretary of State is offering the opposite. In addition to the threatened increase in interest rates, and

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the further cut in MIRAS in April, the income support changes constitute a lethal cocktail which will poison any prospect of recovery in the market this year.

Mr. Lilley: That is scaremongering.

Mr. Raynsford: According to the Secretary of State I am scaremongering by quoting the words of the House-Builders Federation. That is an indication of how extraordinarily badly informed the Secretary of State is about the market. The story in today's Daily Star about his reluctance to meet representatives of the House-Builders Federation is perhaps another indication of the problem. [Interruption.] The Secretary of State intervenes from a sedentary position, but I understand from the director of the House-Builders Federation that a meeting was arranged hastily this morning after the article appeared in the Daily Star .

Mr. Lilley: I had received no request from the federation to see me. On reading the article, I telephoned the federation to say that my door is always open to any organisation, such as the federation, which wanted to see me. I said that if the federation wished to come and see me, it was welcome to do so. I am pleased if the hon. Gentleman has discovered that the federation is willing to come, but those are the facts and I hope that he will now withdraw his remarks.

Mr. Raynsford: The Secretary of State said that he received no request for a meeting. Any sensible Secretary of State doing what he is doing would have asked for the federation's opinion before he acted.

The measures which the Secretary of State is proposing, and which we are debating tonight, are ill-conceived and incoherent and will, if carried through, have a devastating impact on thousands of families whose dream of home ownership will turn into the nightmare of repossession. That comes from a Government who have presided over the worst-ever crisis of mortgage debt and repossessions in the country's history. It comes from a Government whose Prime Minister claimed in January 1992 on "Desert Island Discs" of all extraordinary places:

"We've stopped, if you recall, the repossessions just before Christmas."

Since then, 176,000 former home owners, many now languishing in miserable and expensive temporary accommodation, can bear witness to the falsehood of that pre-election claim. It comes from a Government with no constructive thoughts on how to stimulate recovery in the housing market--recovery that is vital to liberate the millions of home owners who are trapped in negative equity.

The only good thing to be said for the package is that it will, if carried through, put paid to any prospect of a feel-good factor returning to the housing market and, by so doing, it will hasten the end of this discredited Tory Government.

6.47 pm

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