House of Commons Hansard Debates for 13 Jun 1995

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It is a great shame that the Select Committee on Home Affairs did not produce the answers that the House wanted. First, it sought not to have the investigation and then to delay and weaken it by denying witnesses to the House, including witnesses from the Conservative party. It did Parliament no service whatever by producing an anodyne report that did not deal with a serious problem. It is a great tribute to my hon. Friend the Member for Sunderland, South (Mr. Mullin), that he produced, in an amendment, a splendid report that gives us some practical reforms for the future.

The case of Mr. Asil Nadir is even more worrying because it reveals that the sums he gave the Conservative party had been channelled through firms abroad and that the Conservative party was not clear what its sources were. In a statement, the former Treasurer, Lord McAlpine, claimed that Asil Nadir had met him in 1991 and tried to persuade him to ensure that criminal charges against him would be dropped. It was suggested that that would be in return for the donations he had made to the Conservative party.

I have other examples of how money is used subversively. There is a correlation between the sums of money given by companies and the honours that members of those companies have received in the system. The figures have been given to the House on many occasions. The rate for peerages seems to be about £500,000 and that for knighthoods seems to be about £250,000. It is disgraceful that our democracy should be so besmirched by such practices.

It should be the duty of all right hon. and hon. Members to ensure that we put democracy back on an even keel. We must stop what is now going on. It is possible for democracy to be subverted by the wealthy, the powerful, the criminal and those--such as tobacco companies--who want to use their contributions for purposes that are contrary to the interests of the people and to buy their own or their party's way to power. I commend the Bill to the House.

4.24 pm

Mr. David Shaw (Dover): I oppose the Bill because it is one-sided. Labour and the trade unions were hardly mentioned by the hon. Member for Newport, West (Mr. Flynn), and the structure that would result from the proposals in the Bill would be open to abuse. The Bill would bring political parties under the control of the state and the Government of the day, and we would have no democracy. The proposals would lead to state funding of political parties, which is what Labour's 1992 manifesto called for. I believe that the Bill is based on a fundamental misconception about the financing of the Conservative party.

The hon. Member for Newport, West failed to open up the mysteries of trade union and Labour party funding, but we can find many secret arrangements the Labour party puts together to get funds from as many different sources as possible. What we find is that the trade unions own and control the Labour party and its finances. We find in the accounts of the Labour party that 70 per cent. of funding comes from the trade unions directly.

We cannot find the major donors from the Labour party's accounts, but, by going to the trade union accounts, we can discover that four or five major unions give

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£1 million pounds apiece to the Labour party. I wish that the Conservative party could rely on four or five people to donate £1 million apiece, election after election. It is easy for the leader of the Labour party to raise money. He just has to make four or five telephone calls, and£1 million turns up as a result of each. The Labour party has a problem, and that is what lies behind the Bill. Membership of the Labour party has not been going up, as the publicity machine would have us believe. If one reads the accounts carefully, we see that the party is not taking off the list people who are not paying their subscriptions. The Labour party's most recent accounts showed that contributions from the membership had gone down.

Writers who sell their books offshore--gosh knows where their money is, but it is not easily detectable onshore--and the pop stars who support the Labour party, we wonder how much of their money is onshore, may announce their support for the Labour party, but the accounts show that they are not donating very much and certainly not to the extent about which they sing and write.

The secrecy behind the Labour party's accounts is considerable. Although there is £4.7 million of direct financing, a large amount of indirect financing goes into what I call the off-balance sheet and off-profit and loss accounts. Some £2.2 million does not go to the main accounts, but directly to the general election funds. The Walworth road property arrangements--whereby the trade unions own that property--have been varied so that the rental agreement now covers the decorating and maintenance of the property by the tenant, the Labour party. The trade unions pick up the bill for that.

There is a business plan, in which £2 million a year is donated to the Labour party. People may ask whether that affects the control of the Labour party, and it is clear from the accounts that it does. The accounts suggest that the business plan is managed by a group of guarantor unions--the GMB, the Union of Communications Workers, the Graphical, Paper and Media Union, the National Union of Rail, Maritime and Transport Workers and the Transport and General Workers Union--which is defined as the control group. Therefore, I believe that they control the Labour party.

One area of the Labour party's financing is open and available for people to discover. It has taken a pensions holiday and not paid into its pension funds for the past two years. Some might think that the Labour party has "done a Maxwell" on its own pensioners.

The Labour party also sets up secret companies.A company called Common Campaign Ltd. was set up in August 1994 to finance newspaper advertising by the Labour party during the general election. That is outside Labour party rules, which require donations of £5,000 and more to be disclosed. The company was set up by Labour party supporters in an attempt to avoid such disclosure.

I have not much time to go into as much detail as I should like, but some further points need to be made. Not only do the trade unions, representing 8 million or fewer people, control the Labour party, they constitute a powerful group of organisations behind that party. Almost £1 billion in assets are shown in the trade union accounts. There is a £200 million annual cash flow, £300 million in directly owned assets and £400 million in pension fund

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assets. All those resources are used to help one political party when a general election comes, so there are almost £1 billion worth of assets behind the Labour party. The Conservative party's financing pales into insignificance in comparison.

The Walworth road development trust, which has recently been set up, receives a contribution of £244,000 in support from the GMB, and that does not even come from the GMB's political funds, but from its direct funds, so Conservative members of the union support that loan to the Labour party. The Labour party's business plan has been set, and the GMB has put a £75,000 general guarantee from its general funds behind that Labour party development plan.

Another form in which the Labour party gets help from the unions is grants to parliamentary candidates. The GMB donates £30,000 for those, and other unions make similar donations. Those are not only the national affiliation; the local affiliations of the GMB account for about £294,000. Other unions do likewise. The GMB's central Labour party affiliation accounts for more than £1 million.

Then there is the Labour party's by-election insurance fund, towards which the GMB also contributes, as it does to the Labour party conference. There is a sinister operation based in Walworth road called the trade unions for a Labour victory levy, with mysterious staff operating out of Labour party headquarters. The GMB alone contributes £94,000 to it.

Trade unions are contributing to the Labour party in all sorts of different ways. I have not had time to mention the 1992 general election, in which trade union advertising cost as much as the Conservative party spent, whereas the Labour party itself spent still more on advertising. NALGO spent £1 million on advertising alone, and the trade unions were happy because, in a confidential memorandum, it was said:

"The evidence for both the 1987 and 1992 elections is that where there was well co-ordinated union involvement, involving many unions, with a co- ordinator in place early and with time to properly co-ordinate activities, then the election result was significantly better than average. An example of excellent union involvement was York . . . Croydon, North-West . . . Norwich, North".

In all those constituencies, the trade unions put in resources out of all proportion to the legal election funds and to anything that was allowed under the law. They put those resources together and provided extra money to get Labour candidates returned.

There are many reasons for opposing the Bill. The Labour party has lots of secret funds. Through its leader and its leadership, it gains money from the trade unions through all sorts of different accounts and in all sorts of different ways. The Conservative party must do everything to resist that, for the sake of democracy, because we are outgunned financially by a narrow band of people who are not widely representative.

When it is alleged that one gets a return from donating to the Conservative party, we should remember the words of Mr. Fayed, who said that he had given £250,000 but got nothing in return. That is evidence that, if one donates to the Conservative party, there is no guarantee of anything in return. One donor made that clear. If one donates to the Labour party, however, one has total control, according to the Labour party's own accounts. The Bill seeks to promote the Labour's party sources of

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finance and funding and to make sure that the Conservative party has even more difficulty raising money. Labour goes in for secret financing--

Madam Deputy Speaker (Dame Janet Fookes): Order.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business): --

The House proceeded to a Division.

Mr. D. N. Campbell-Savours (Workington) ( seated and covered ): On a point of order, Madam Deputy Speaker. Is it in order for a Whip to bully a Conservative Back Bencher and stop him calling a Division of the House?

Madam Deputy Speaker: If there was an incident,I did not see it. Question agreed to.

Bill ordered to be brought in by Mr. Paul Flynn, Mr. Nick Ainger, Mr. Jon Owen Jones, Mr. Paddy Tipping, Mrs. Gwyneth Dunwoody, Mr. Dennis Turner and Mr. David Winnick.

Electoral Reform

Mr. Paul Flynn accordingly presented a Bill to control parliamentary election expenses within limits set nationally and in each constituency; to establish a national registration system for political parties; to require companies who donate to parties to establish accountable political funds; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 14 July, and to be printed. [Bill 132.]

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Opposition Day

[13th Allotted Day]

Housing Market

Madam Deputy Speaker (Dame Janet Fookes): I have to announce to the House that Madam Speaker has selected the amendment in the name of the Prime Minister.

4.38 pm

Mr. Donald Dewar (Glasgow, Garscadden): I beg to move,

That this House, concerned by the continuing depressed state of the housing market, the reduction in the building of houses for rent, and the impact this has on the construction industry, and recognising the plight of owner- occupiers trapped by negative equity and hard hit by rising housing costs, calls on the Government to abandon policies such as the proposals to limit the help available from income support with mortgage interest payments which can only reinforce insecurity and delay recovery.

There may be a little common ground between the two sides of the House, at least on the fact that the housing market has had a bad time and is struggling. Ministers put on brave smiles and there was talk of the recovery that the Prime Minister promised would start on the Friday after the last general election. The smiles have become a little forced over the months, as recovery limped into sight and then gave up. There has been no sustained growth and no bounce, and anyone looking at the scene at the moment must be worried.

The Halifax building society's house price index is down 1.5 per cent. in the year to April 1995. There has been a cumulative decline of 10 to 15 per cent. since 1990, which continues. There are almost 1,000 repossessions a week--about 50,000 a year. Depending on which figures one reads, between 700,000 and 1.2 million people may be trapped in negative equity.

Housing costs are increasing, partly as a result of interest rate increases, partly as a result of reductions in mortgage interest relief at source and partly as a result of income support mortgage interest withdrawal. The insurance tax adds minor insult to major injury in that respect.

The amount of rented accommodation built this year is the smallest in 50 years. Council rents have increased by three times the rate of inflation as a matter of Government policy. The homelessness figures continue to tell a tale of misery and despair.

There are times--I suppose that it is the law of averages--when I agree with the Prime Minister about something. He said, as recently as a week or two ago, that the crazy situation existing towards the end of the 1980s was one of the explanations for present discontent. I do not disagree with that, but I parted company from him when he added--I interpret loosely-- "Not me, Guv," when it came to whose fault it was.

The Prime Minister may be interested to know that efforts have been made to try to find out what the public think about the matter. I am told that tomorrow, an ICM poll will be published in The Guardian , and that one of the questions that it asked was:

"In your view, who is most to blame for the fact that over 1 million people bought houses in the late 1980s which are now worth less than they paid for them?"

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I concede right away that 12 per cent. of respondents said that they did not know, so I suppose one must allow something for public ignorance, but very many people replied, and most people had a clear opinion. Estate agents and the councils that sold the houses were held to be at fault by 6 per cent. of the sample. The people who bought them--that is the Prime Minister's favourite horse--were to blame according to 11 per cent. The banks and building societies who lent them their money were blamed by 13 per cent. The Government were blamed by a resounding 62 per cent.--home and dry by a straight. So "Not me, Guv" begins to appear, at least in the public's opinion, a very odd defence. It may be worth reminding the House that, in the time when things went out of control, the man who became the Prime Minister was involved in those things regarding which the Prime Minister now points the finger of blame. It is also worth recalling that the Economic Secretary to the Treasury between June 1987 and July 1989 and the Financial Secretary to the Treasury between July 1989 and July 1990, the guilty period, was presumably one of the guilty men--the present Secretary of State for Social Security. The one consolation--I am always anxious to bring good news--is that there was an opinion poll of the public asking who specifically, in terms of political names, was to blame, and the Secretary of State will be glad to know that he scored "nul points" in that poll. It is another triumph for the charisma that is his trademark.

Most people blame Lady Thatcher, which is hardly surprising. I watched Lady Thatcher on television last night, and I thought that she is starting to appear more and more like someone rehearsing for the part of Lady Bracknell in "The Importance of Being Earnest". I think the producer's opinion was, "It was a wonderful character vignette, my dear, but just a way over the top."

In any event, Lady Thatcher is noticed and remembered. The present Prime Minister, although very much involved in all that, scored only 7 per cent. in the poll, and his trouble is that he is almost all unnoticed, unremarked and largely anonymous, as he was on that occasion.

The specific problem in the late 1980s has been noticed by some of the more civilised members of the Government. Perhaps I should be careful damning him in that way, but the Secretary of State for National Heritage, a year or two ago, made an interesting speech in which he worried about the yuppie revolution and decided that it was built on sand:

"The wheeler-dealer was the man of the moment. The best returns were to be found in trading financial assets. Demand for property seemed inexhaustible . . . But the system was giving the wrong signals. Far from being sure-fire winners, many were, in fact, sure-fire losers."

Very properly, the Secretary of State was, by implication, regretting the part of his Government in that bad time.

We should agree that we are paying a price, and it is ridiculous to shift blame on to the buyers of flats or semis, presumably on the rather twisted logic that they were rash enough to listen to the Government.

The past has its lessons. The problem is that the past is the past. More importantly, the current policy threatens to compound those past errors. Several factors appear to contribute to the present discontent, and the one common factor among them is that they are linked to Government policy.

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The first factor, in terms of the construction industry alone in terms of house-building activity, is that the Government fail to allow the use of capital receipts to support and stimulate the construction industry. Firms, as everyone in the House knows who reads the financial pages, are lining up to point at and complain about that low rate of activity. Many have their feeling of frustration compounded by a sense of betrayal. They feel that they have been treated with ingratitude. In sociological terms, we may have a new phenomenon. It is called "McAlpine's grievance", and refers to the feeling that there was no reward for--no doubt at times painful--financial service to the party.

In any event, there is undoubtedly in this society a painful--to use the word again--lack of rented accommodation. There is a dispute about how much is available. The Government claim about £2 billion, but certainly substantial sums are available which I believe should be used in the way that I have suggested.

Mr. Den Dover (Chorley): The hon. Gentleman has mentioned the capital receipts in local authorities' bank accounts. In the past, I have supported the use of that money to upgrade old housing stock, but will the hon. Gentleman say what he would like those capital receipts to be used for? Does he accept that, if they are used, council tax rates in the various local authorities will have to increase because of the loss of interest on them?

Mr. Dewar: I am the last person to appeal to for expertise about English local government finance. It is to a certain extent a matter of discretion, but I should have thought that those capital receipts should be spent on major rehabilitation to try to save the crumbling existing stock and efforts to meet the undoubted lack of decent rented accommodation. Most of the property that fell into the latter category has been shifted out by right-to-buy sales, and in those circumstances it would be socially useful, and would make economic sense, to replace it. I hope that we shall continue to have the hon. Gentleman's support in that respect.

I want to discuss two specific aspects which are of some relevance, and I do so because they are both directly the responsibility of the Secretary of State for Social Security. The first is housing benefit, and I shall discuss that comparatively briefly.

There has been a spectacular increase in housing benefit. I believe that the total has doubled, or approximately doubled, since 1988 in real terms-- it is increasing towards £8 billion--and the private sector has been especially problematical in that respect.

I do not think that anyone will disagree that that is a direct reflection of the Government's policy. It is linked to the switch of subsidy from bricks and mortar to the individual. It is also linked, to be fair, to recession and low wages, but the main cause has been Government policy. That has, to be fair, been very directly recognised by Ministers, for example, in "The Growth of Social Security", the publication for which the Secretary of State was responsible--I suppose it is now getting on for a year ago. I am worried that the complex changes that are now being introduced, of which we do not know the details, will not make much of an impact on the problem. Of course we accept that, if there is abuse--if landlords are conniving to force up rents with their tenants, knowing that the taxpayer will pick up the bill--that is a problem.

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As the House will know, rent officers have powers that allow them, when a case is referred to them--which in my part of the world is done in every private sector case--to judge whether there is exploitation of the type that I have described and ensure that housing benefit-applicable rents are limited.

Now we have a rather more complicated, but I am not sure--

Mr. Gyles Brandreth (City of Chester): Would this be an appropriate moment for me to ask the hon. Gentleman for his opinion on the proposal of his colleague the hon. Member for Greenwich (Mr. Raynsford) for mortgage benefit, which I think is supported by the Commission for Social Justice? I recall that, when we last had one of these exchanges, the hon. Gentleman rather dismissed the Commission for Social Justice. Does he also dismiss the proposal of his hon. Friend the Member for Greenwich for mortgage benefit?

Mr. Dewar: I rather enjoy the hon. Gentleman's Uriah Heep approach and the obsequious way in which he slips his question into the debate. He has probably been practising hard in his constituency, which is highly marginal, but I fear that it will do him no good. I will certainly come to an appropriate point in a minute or two and I hope that the hon. Gentleman will wait rooted to his seat until then.

The new system involves average reference rents, which are calculated and based upon the size of dwelling units and not according to the type of dwelling units. That is one inflexibility. Once it has been set, that is the applicable amount for housing benefit purposes, plus half the difference between that figure and the appropriate rent determined by the rent officer. I do not think that that will prove a great weapon for progress.

If the local authority uses its discretion to meet that excess, will the Minister confirm whether it will have to do so from a cash-limited fund which is 0.3 per cent of the local authority's private sector benefit expenditure? Is there not a very real and almost inevitable danger that, in that situation, many people will be asked to dig into their income support payments in order to meet the gap that will appear? That is a very worrying feature, upon which I invite the Minister to comment. I also invite him to say a word or two about the more pressing subject of special needs and housing association rents. The House recognises that they will be higher than average because of the security, staff on site and amenity services which are often included in rent structures. There is particular concern that, because the rents will be high, tenants will find that their rent is not covered by housing benefit.

Many hon. Members have received a good deal of correspondence from women's aid refuges about that matter. The provision of 24-hour cover on site must be paid for. If we do not have a special arrangement either to exempt or to take account of those factors, there may be very real difficulties.

We have not yet seen the report of the Social Security Advisory Committee. We know that the changes come into force in October and that time is short. In a letter to me of 23 May, the right hon. Gentleman said that no decisions had been taken, and that consultations were going on with local authorities and the Institute of Rent Officers. It would be useful if the right hon. Gentleman would say something today to reassure the many people who are worried about that issue, and perhaps also allow

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hon. Members to answer the many inquiries that they have received from their constituents in that regard. It is an important matter. I recognise that it is a matter for the usual channels but, as an addendum, I express the hope that we will debate those issues before the House rises. Those very important changes will almost certainly come into effect before the House returns after the summer recess. It would be extremely bad if the debate on those issues were squeezed out and we were running to catch up after the event if the arrangements proved unsatisfactory.

Finally, on housing benefit--I crave your slight indulgence, Madam Deputy Speaker, but it is not often that I wish to thank a Minister--I ask the right hon. Gentleman to pass on my thanks to the Secretary of State for Scotland, who has now decided to defer and reconsider market testing the rent officer system in Scotland. That arrangement was never contemplated in England, but it was to come into force in Scotland.

When I wrote to the Secretary of State for Scotland about the matter a year ago last April, I was given short shrift and told, in the politest possible manner, to mind my own business and that the proposal would go ahead. However, it has now been postponed for at least a year, when it will be considered afresh. I do not think that that defeat for the deregulation programme should go unnoticed, and I thank the Secretary of State for it.

I now turn to protection payments for mortgage interest on income support. I do not want to rehearse the facts of which we are all aware: that support will be withdrawn for the first nine months for any new borrower who makes an application after the system comes into effect, and that existing borrowers will receive no assistance for two months and assistance at 50 per cent. of the normal rate for four months. I shall simply reiterate my belief and explain why I hold it.

The withdrawal of support is likely further to depress the market, reinforce uncertainty and burden the majority of home owners with an unwanted additional cost. The measures must be viewed in context. Rising interest rates have had a considerable impact in my constituency and, I suspect, in every part of the country. They may have been necessary in view of the financial situation, but they have had an impact. There is a heavy presence of negative equity, and we have seen the reduction in mortgage interest relief which Baroness Thatcher has so criticised in the past few days.

Further reduction in mortgage interest relief should not be on anyone's agenda at this stage. It is out of the question, in view of the current state of the housing market. There have been two cuts in relief--indeed, if one adopts Baroness Thatcher's perspective, we have had three cuts, because there was a reduction from 40 per cent. before the further reductions to 20 per cent. and then 15 per cent. Perhaps, in his reply, the Minister will give us a categorical assurance that further cuts are not on his agenda, given the way in which he has punished the housing market in the past year or two.

Mr. Charles Hendry (High Peak): Is the hon. Gentleman aware that, on more than one occasion, his hon. Friend the Member for Greenwich (Mr. Raynsford) has called for mortgage interest tax relief to be phased out

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over five to 10 years? Will the hon. Gentleman make it clear to the House whether he supports his hon. Friend in that view, or whether he now disagrees with him?

Mr. Dewar: I have made the position very clear. If the hon. Gentleman had listened to me, he would know that that is not on our agenda, and we do not believe that it should be on the Government's agenda either-- although there have been indications that it is very much on their agenda.

I made the serious point to the Minister earlier that it is a great mistake to canvass every possibility for the future and assume that they are policy commitments. If we applied that approach to the Conservative party, we would come up with the most outre and unlikely series of proposals which I would not have the brass neck to hang around anyone's neck in an election campaign. I do not regard myself as a man of much delicacy or sympathetic feeling, but I commend that attitude to the hon. Member for High Peak on this occasion. We must consider the practicalities and the cost when dealing with mortgage interest protection.

The Secretary of State for Social Security (Mr. Peter Lilley): The hon. Gentleman suggests that the further reduction of mortgage interest tax relief should not be on anyone's agenda. However, it was clearly on the agenda of the Labour party's housing spokesman, the hon. Member for Greenwich (Mr. Raynsford), when he conducted an interview with the Shelter magazine "Roof". The magazine made it absolutely clear that it believed that it was a serious proposal, and contrasted it with much of the hon. Gentleman's so-called "Yes, Minister" contributions. It was apparently still on the agenda of the hon. Member for Glasgow, Garscadden (Mr. Dewar) this morning when he was interviewed on the "Today" programme. He certainly had not ruled it out.

Mr. Frank Dobson (Holborn and St. Pancras): Speech.

Mr. Lilley: No, I am grateful for the opportunity to ask this question. The hon. Gentleman was asked--

Madam Deputy Speaker: Order. I am sorry, but interventions, by their nature, should be short. I call Mr. Dewar.

Mr. Dewar: I think that I have dealt with the matter fairly clearly, so I intend to move on. I have made it clear that reductions in MIRAS would be extraordinarily unwise in the present situation. Leaving aside that qualification, they are not on the Labour party's agenda. I cannot make that any clearer, and I am afraid that the right hon. Gentleman must be satisfied with my explanation.

Mr. Lilley: The transcript of this morning's interview states: "Mr. James Naughtie: Is it clear precisely what your policy is on mortgage tax relief if there were to be a Labour Government? Donald Dewar: No, we have not committed ourselves to cut it".

Mr. Dewar: The right hon. Gentleman sounds like someone who is trying to prove that Bacon wrote the sonnets of Shakespeare--it is a particularly unrewarding activity. I suggest that he should be happy with the clear and unambiguous statement that I have given him. That is the sensible thing to do.

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I turn to income support and mortgage interest, because that brings us to one of the little entertainments of recent days: the Skipton story. I hope that the hon. Member for Skipton and Ripon (Mr. Curry) is not offended, but I did not know a great deal about Skipton. I know that Skipton castle was razed to the ground in 1645 by the parliamentary forces. That seems a rather attractive idea, but it is not one that I commend.

I remember that Lytton Strachey, when dealing with Lord Hartington--that Whig grandee of Gladstone's period and head of the great house of Cavendish --was wont to growl in an undertone: "the proudest moment of my life was when my pig won first prize at Skipton fair".

However, I confess that I do not think that that takes us much further down the road.

I want to make another confession; I was taken by surprise by the Prime Minister's announcement. I telephoned the Skipton building society, and was told that it had not made an announcement. I was very puzzled--though, to be fair, all was explained when the Prime Minister kindly wrote to me saying that the plan had been confided to the hon. Member for Skipton and Ripon, the Minister for Local Government, Housing and Urban Regeneration, by the chief executive. The hon. Gentleman therefore, in a sense, had inside information. It was suggested that I should accuse the hon. Gentleman of trying to curry favour with the Government, but such an appalling pun would not pass my lips.

The Skipton building society has about 0.5 per cent. of the mortgage market and about 1 per cent. of the building society market. Of course, the question that arises is, what happens to the other 99 per cent? I take the view--and I would think that this theme would be especially popular with the Secretary of State--that there is no such thing as a free lunch. The Skipton is going to pay about £2 million per annum for what will be a fairly expensive loss leader and marketing tool. It is entitled to do that, but we should not regard it as a precedent for the industry as a whole.

The Skipton is offering narrow unemployment cover for free, but if one wants to add sickness or accident insurance, one has to pay. One gets a 30 per cent. discount, but one still has to pay. Anne Ashworth, the personal finance editor of The Times, said that the scheme will not last for ever and added:

"The description`free' is not entirely accurate. . . as a building society is a mutual organisation, which belongs to its members the cost is being met by the customers."

I do not know whether anyone will follow the Skipton, or whether the chief executive is right about the doubts he expressed about that. In any event, it is wrong to assume that the Skipton is going to continue to finance that free lunch for ever.

What Mortgage magazine has a table of all the top building societies that measures the interest paid on an average mortgage at two, five and 10 years. At two years, the House will be glad to know, the Skipton was the 81st most expensive out of 83. At five years, it was doing somewhat better, at 71st out of 82. At 10 years, it was 61st out of 63. Perhaps that is why the Skipton can afford it. The Skipton also has a problem of long-term arrears, which was also interesting because, of investors with arrears over 12 months, average debt was spectacularly higher than with any other building society in the table. It

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has been suggested--I only repeat it--that that might explain some of the society's interest in that sort of insurance.

What is true is that the costs are set to increase as a result of the Government's initiative. As one of our papers in Scotland, The Scotsman, said, it is a double whammy. It reckons that, between April and October this year, the cost of an average mortgage in Scotland will go up by 11.8 per cent, and puts the income support mortgage insurance premium at almost £200 a year.

It may be that there are more friendly commentators. One of the few friends who seems to have given the time of day to the Secretary of State's argument is the Association of British Insurers. I take it as a witness. It said last week that the premium would be equivalent to 0.5 per cent. on current mortgage rates, which, on an average mortgage, is about £200 to £250. I am happy to take that as an expert and unbiased view.

The Government's scheme will add to the

"already intolerable burden of taxation"

that people have to face. That quotation is from the hon. Member for Monmouth (Mr. Evans), the Under-Secretary of State for Social Security. I am not clear why he should be sitting happily on the Front Bench when, after his Government have been in power for 15 years, he adduces that we face an "intolerable burden of taxation". Be that as it may, costs will go up and that will be unwelcome. To evaluate the Skipton offer, or any of the other private insurance policies, we must look at the small print. The Skipton, for example, allows an excess of 60 days in respect of mortgage payments, which is standard and I make no complaint about it. People cannot be in arrears, which knocks out a lot of vulnerable people. One must be in work and not aware of impending unemployment. That would rule out about half of the Conservative Members. Those are common exceptions. Voluntary redundancy rules people out, and carers are unlikely to get coverage on most policies; the self-employed may be able to establish entitlement only by filing for bankruptcy. Block cover is being offered by the Skipton, but it is block cover that has taken on a new meaning.

It is interesting to note that, originally, only 5 per cent. of people took out such coverage. I concede that that figure has gone up to 30 per cent. for recent mortgages, which is not surprising, given the publicity and fears. Even so, I am advised that 12 to 15 per cent. of those taking out such coverage fall out of the schemes within the first year.

It would be unfair to say that the Secretary of State has become an advertising billboard for one company or another, but, on 26 January, he sang the praises of General Accident Direct. It offered £4.50 per £100 for such insurance cover, but it was cherry-picking. That was the bottom rate of a system of differential rates depending on age, sex, post code and employment. If we follow that pattern, the danger is that those who most need cover will find it hardest to get and pay most for it.

General Accident Direct gave a good reply to our inquiries, in which it frankly set out the details.

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