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medicine is not pleasant. I face people on the doorstep and at surgeries, as do other hon. Members. It would help ease the pain if the Government were to explain frankly that the medicine is for the long-term health of the economy and that we should continue to take it.

The aim cannot, and must not, be higher house prices. We want stable and sensible house prices and the encouragement of a private rented sector. We should remember that the international financial community watches debates such as this. The question for it is whether the Government are serious in their anti-inflation policies or whether they are going to play games with their people and, therefore, with inflation. If we start fooling around with tax relief, in whatever way, on the pretext that it is temporary, who will believe it? Once mortgage tax relief is raised, who would dare bring it down again, given the trembling middle classes out there? I cannot remember whether it was inside or outside the House, but I have said that the fundamental problem with Britain is that it is overhoused and undereducated. Let me explain what I mean by overhoused. I took the trouble to check the housing position in France and Germany. Obviously, my figures are general, but they are interesting.

Roughly speaking, we are by far the best-housed people in Europe in terms of rooms per household. Certainly we are better housed than people in France or Germany. We can see that from anecdotal evidence from going around the country. We may think that some of those rows of houses are rather tedious and some are getting on in age, but they are quite luxurious in their way. They are two-down, three-up and have a garden and so on. The figure for Britain is roughly five rooms per household. I am not talking about the condition of housing. There are problems with that, but let us not exaggerate. A lot of those houses are in perfectly good condition and are good living units, to give them a clinical name.

In Germany, a much richer country, there are four rooms on average per household. In France, again a richer country than us, there are three. We know, again anecdotally, that people in France or Germany are not tremendously generously housed. A lot of people live in flats or rented accommodation.

I make that point simply to stress that Britain does not consist solely of people living in cardboard boxes or people with housing problems. I acknowledge those problems, but this country consists mainly of people who are overhoused and overmortgaged. There are masses and masses of people who are overmortgaged in comparison with their earnings. Their lives, again considering international statistics, are distorted by the amount that they are forced or feel obliged--or sometimes are encouraged by Conservative Governments--to spend on their houses. They have high mortgages and they sit at home sweating and eating baked beans.

In other countries, the tendency is for people to spend less on housing and more on amusing themselves, on restaurants, entertainment and so on. Given the choice, I know which way I would like to swing our culture, not least, of course, for economic reasons. It is important for us to recognise in this debate that the entire British financial housing structure is askew, for some of the reasons that I mentioned earlier.

We are told constantly that there is a housing crisis, and the hon. Member for Garscadden gave us the usual list--the Halifax building society and so on. Lists of such

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bodies crop up in the press every day. Every single one of those bodies is profoundly self-interested in a rise in house prices, and the sooner the better, because they are all in business. They make money out of it. There is nothing that they would like better than to have the Government pour in more money so that their profits can rise. That is what we are talking about.

Believe it or not, I have a little residual realism about the matter. If some independent body could prove to me that such were the catastrophic effects of past policies that the British housing market stands on the edge of a precipice and that it was serious because of the overweening importance of that market and the way that it is linked to all sorts of other financial activities, such as insurance, I would have to take a serious view of a grave situation. I would have to take that view if the independent assessment were that bad, but I have yet to see such evidence. I discount most of the other evidence as self-interested.

I am more impressed by the position of my right hon. Friend the Secretary of State. Discounting his political necessities, the fundamentals of what he said are right. We have interest rates down and so on. All that is true. I do not want the housing market to take off or go up; I want it to stay where it is rather than go sharply down.

For all those reasons, although I am very much aware of the people who are suffering out there and of the short-term political advantages of throwing them a few more dud fivers to follow the others that we have thrown at them over the years, my inclination would be to do nothing, in an informed way. Naturally, being a realist, I would keep an eye out for any signs of the market really going over the cliff. In that case, we could not stand back and do nothing.

The debate is fundamentally about whether we should bolster popular illusions about the worth of people's assets or tell them the truth. In recent days, we have heard siren calls from someone not completely exempt from responsibility for the hole that we are in. The advice that we got from my right hon. and noble Friend Baroness Thatcher was that we should throw money into the hole. Of course, some hon. Members will remember that that was not the sort of advice that she gave in office. When she was confronted with problems, the last thing she said we should do was to throw money at them.

However, houses--bricks and mortar--it seems, are special. They are a form of spiritual entity for some people, and if they are in trouble, we have to shovel money in their direction. One might suspect, listening to some of these siren calls, that their motive was cheap populism--were it not for the fact that populism never comes cheap. I am sorry to have taken so long, but, to sum up, it seems to me that the fortunes of the Conservative party have reached the stage where it has nothing to lose by acting responsibly. We might even get some credit for it.

7.28 pm

Mr. Brian H. Donohoe (Cunninghame, South): I wish to draw the House's attention to another aspect of housing. The housing market in my area is in crisis. I represent an Ayrshire constituency which has been subjected to a three-pronged attack by the Government through the early wind-up of the development corporation, the stock transfer of Scottish Homes

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properties and the continuing attacks on local government housing. The Government's involvement in all three aspects will force massive changes in the tenancy rights of tenants the length and breadth of Ayrshire. Nothing less than an attack on the principle of public sector housing is the charge.

As a Member of Parliament representing a Scottish new town constituency, I am very concerned about the plans to dispose of the development corporation's housing stock before the end of next year. Just two weeks ago, the development corporation authorised the sale of 160 general purpose properties to an association known as the Irvine Housing Association in advance of wind-up at a total cost of some £1.6 million--that works out at an average of some £9,000 per property--despite assurances given by the Scottish Office that all tenants of the new town would be balloted before the wind-up and would have the option to transfer to the local authority landlord. The sale seems to fly in the face of those assurances.

Irvine development corporation is only one of Scotland's five corporations to be transferring major parts of its general needs housing stock to other landlords in advance of wind-up and apparently without there being any bidding to protect the interests of the taxpayer. By next year, nearly one quarter of all the development corporation's tenancies could be under the control of Irvine Housing Association without the tenants having any choice about who their landlord will be.

I understand that the Scottish Office has a policy of diversification. Surely part of that diversification should be that tenants are given choice, but what choice have development corporation tenants in getting any rationale into housing policy if the new tenancy is forced on them? Perhaps the Scottish Office is obsessed with taking housing out of local authority control and putting it in the hands of housing associations. Polls taken in Scotland in development corporation areas suggest that more than 95 per cent. of tenants would, given the option, transfer from Scottish Homes to the local authority. The sale, at about £9,000 a property, is becoming known as the sale of the century.

Despite the apparent modification of the guarantees to development corporation tenants, at least some of those tenants have the choice of the local authority as their landlord. However, that choice is being denied to the tenants of Scottish Homes properties in my constituency and across Scotland. Scottish Homes is disposing of its stock just as Irvine development corporation did, but its tenants are being denied the opportunity to transfer to the local authority landlord.

One has to ask why there is such an anomaly. Scottish Homes tenants cannot understand why they are being denied choice. The only reason why the Scottish Office and Scottish Homes can come up with is that it affords Scottish Homes the opportunity to gain a capital receipt which can then be used to build more homes and pay for investment in housing.

Some two months ago, I obtained figures from James Mellon, the chairman of Scottish Homes, which showed how much Scottish Homes had raised through stock transfer. Until the end of March this year, Scottish Homes sold off nearly 10,500 properties at a combined price of about £65 million. That works out at an average of just over £6, 000 for each property. I do not think that that

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represents a very good deal for the taxpayer. Indeed, it proves that Government dogma is ensuring that public sector housing is sold at knock-down prices, and another sell-off is becoming known as the sale of the century.

Tenants of Scottish Homes have a right to be angered by the way in which their homes are being sold. Scottish Homes has spent more than £3 million establishing and bankrolling housing associations, while only £25,000 has been allocated by Scottish Homes to tell tenants what their rights will be under the new stock transfer.

Tory attacks on the development corporation and Scottish Homes tenants have been the more obvious methods adopted by the Scottish Office to undermine public sector housing, but the systematic underfunding of local authority housing has done the most damage. In 1979, nearly 5,000 homes were built by Scottish councils. By 1982, the number had dropped to just over 2,000 and, last year, fewer than 500 new council houses were built for rent. Those figures speak volumes about the Government's view of Scottish housing. More people than ever before are being made homeless because of mortgage arrears and family breakdown, but the number of council houses being built for rent has been literally decimated in the 16 years of this Government's rule.

The Government's housing policies are wholly out of step with the needs of modern society, especially in Scotland. I see that the Under-Secretary of State, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), is now in his seat. Perhaps he can suggest to his colleagues that the Government's housing policies ignore the massive housing crisis and causes cardboard cities and people living rough to move out of the cities and into towns like those in my constituency. They ignore the contradiction in denying Scottish Homes tenants the choice of a local authority landlord while people living in the property next door have that choice because they have a different public sector landlord.

Something is wrong with Government policy--it is fundamentally flawed and requires to be examined. In Ayrshire, public sector housing is under a three-pronged attack which has been

masterminded--if that is the right word--by the Secretary of State for Scotland and his Ministers bunkered in new St. Andrew's house. They are out of touch with what the public want from public housing and out of touch with the reality with what it means to spend 12 years on a council waiting list for a house that there is virtually no chance of getting.

The Government's housing policies have failed. The more constituents I have met in the past three years, the more I have become convinced that that is true. The Government's crazy policies have failed my constituents in particular, but they have also failed Scotland and the whole of Britain. It is time that the electorate were given a chance to implement a repossession order on every Government Ministry occupied by the current Administration. That would be the best policy for housing in this country and one that I would commend to the House.

7.37 pm

Mr. David Martin (Portsmouth, South): It has been worth waiting to hear the high standard of contributions made to the debate. I am thinking especially of that of my hon. Friend the Member for Buckingham (Mr. Walden) with whose speech I wholly agreed. He made a thoughtful

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and worthy contribution to a debate on a serious subject which has interested me for many years, especially as it has in my lifetime--certainly my political lifetime--been grounded in mythology. My right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) said that Labour's hostility to home ownership goes back some 15 years. I think that it goes back further and has also affected my party over the years. The bomb damage caused by the second world war meant massive devastation, mainly to rented accommodation, especially in London. The Rent Acts, which had been introduced after 1917 to deal with the problems of the first world war, were kept in place. Things were made worse after the second world war by all the controls that remained on house building and on the occupation of houses--imposed understandably in some cases, but ideologically by the Labour party in others. There was hostility to ownership and a belief that the Rent Acts should remain, controlling rented housing. Under Harold Macmillan, as Housing Minister, 300,000 houses a year were promised and 300,000 were built in the course of the 1950s. There was no relief from the Rent Acts until 1957, when common sense returned and there was an attempt to revive the rented sector. But then, Rachman and others ruined the political field, and we unfortunately returned to the ideological battle lines drawn up between rented accommodation and the private sector.

The only options were to own a property or to be in public sector houses-- in a council house. Housing associations were not much in evidence then; there were similar bodies, but the movement had not yet taken off.

In 1965 came another Rent Act, which made matters even worse for the rented sector and made it even more imperative that people buy their own homes rather than look to the private rented sector. Throughout the 13 years of Conservative rule--the Churchill, Eden, Macmillan and Douglas-Home Governments--the public sector had been expanded, and it reached its peak in the 1970s, with all that sky-rise housing. The idea was to get people as fast as possible into "units of accommodation"--to use the clinical expression of my hon. Friend the Member for Buckingham--even if surrounding neighbourhoods were ruined and demolished. They were badly built, often jerry built. Since then, many of them have had bombs put under them and we have started again.

Throughout, the choice lay between home ownership or public sector housing: the parties divided along those lines. The Labour party's hostility to home ownership was taken on by the Conservatives' property-owning democracy slogans that were so well dealt with by my hon. Friend the Member for Buckingham.

Little wonder then, as my hon. Friend said, that people became acclimatised to the idea that they must own a home. Failing that, they would hope for a council tenancy near their parents, or at least aspire to getting on the waiting list for one. There was never enough money; there were never enough houses. Instead, waiting lists got longer and longer. Sub-committees were formed in councils, with all the attendant temptations to corruption, in the form of special housing lists: "You come to me and I'll get you a house." That sort of culture entered local government, because the need for housing could never be met.

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How to get some sort of sense into the market? In 1975, more legislation was passed which made rented accommodation in the private sector even more difficult. So we come to the mix of the late 1970s and early 1980s, when housing associations came in to try to hold the ring between the death of the private rented sector and the alternative of owning a home. This move was not so much ideologically based. Over the years I have visited many of the initiatives implemented by Portsmouth Housing Trust. Only last Friday I visited some. The trust has certainly plugged gaps in housing need over the years.

Apart from the Rent Acts, we cannot look at the problem without taking into account another extremely distorting factor in the market--mortgage interest relief. It is important to look at its origins. To do that, we need to go back even further than my hon. Friend the Member for Buckingham took us. Before 1974 people could get interest relief on any borrowing, not just borrowing for a mortgage. Today is not the first time house prices have spiralled upwards beyond people's ability to pay to stay in them-- bankrupting some of them in the process. Others have had their houses repossessed.

In 1972-73 I wanted to enter the housing market. I had practised at the Bar for two or three years, I was living in London and I wanted to buy a house jointly with my brother, having begun save some money. I was living in a controlled tenancy, paying £12 a week with my brother for half a house in Kensington. What a rent to be paying for a property of that kind! No wonder the private rented sector died. The house that we had been looking at was in Peel street, just north of Kensington High street. Just as we became interested in it, the price doubled, and the mortgage became too expensive for us. In the end, I did not own a house until 1980, when house prices, having fallen considerably in the late 1970s, returned to the sort of level that would enable me to enter the market.

Having seen the stoking up of the market that interest relief on borrowing had brought about, the Labour Government in 1974 introduced mortgage interest relief, allowable on no more than £25,000 paid for a property. That was intended to cap spiralling prices, which had been stoked up by borrowing in 1972-73.

In subsequent years the market levelled out. From the later 1970s until the early 1980s it was a good, buoyant market that people could afford to enter. Much of it was subsidised by mortgage interest relief, but that was not then as noticeable as it later became. In the 1980s the cost of money-- for buying houses, antiques or cars--was highly affordable: money was cheap. It became very cheap in the middle and late 1980s. That factor fed through into the housing market.

My right hon. Friend the Member for Sutton Coldfield and my hon. Friend the Member for Buckingham have taken us down memory lane, to the time when Baroness Thatcher headed the Government. She was good at spending money while saying that she was not doing so and that Ministers should not do so. My right hon. Friend, like my right hon. Friend the Member for Braintree (Mr. Newton), was a successful Secretary of State when health and social security were still combined in one Department, but I clearly remember that expenditure in the Department did not fall during the stewardship of my right hon. Friend the Member for Sutton Coldfield. The rhetoric in Cabinet may have suggested otherwise, but it certainly did not fall.

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One of the features of Baroness Thatcher's Government was much rhetoric about cuts in expenditure, while in practice expenditure rose and rose, in every area. I nearly choked last night when I heard her saying on television that the Government's policy on mortgage interest relief represented the destruction of all that she believed in. Her Government cut it. I was therefore relieved to hear my hon. Friend the Member for High Peak (Mr. Hendry) remind the House that, in 1988, Baroness Thatcher's Chancellor removed double mortgage interest relief, which had meant that two people in a property could together get relief on the sum of £60,000. Baroness Thatcher therefore presided over a Government who cut mortgage interest relief.

The results were tremendous, showing just how important a part of purchasing houses mortgage interest relief can be. In the delay before the relief was disallowed, many of the people who are still suffering from negative equity today quickly entered the market. My right hon. Friend the Member for Sutton Coldfield said that, in those days, there were no leaks, but that is not my memory of that Government. I think that there was a certain irony in his saying it, as there was a sort of leak that went around--namely, that Baroness Thatcher was rather keen, in those days, on mortgage interest relief and did not want her Chancellor to cut it. She wanted it to be increased. So it was increased from £25,000 to £30,000. It was a pathetic amount. When it was introduced in 1974, £25,000 bought a substantial part of a house, but £25,000 in the Thatcher years, and then £30,000, was a little blip as far as the market was concerned. It was not a significant increase. It withered on the vine, quite frankly. It was kept at £30,000 for year after year and became more and more insignificant, particularly as house prices went up, if I remember correctly.

Mr. Walden: I am sorry to interrupt, but it is significant to point out that, although £30,000 may not have seemed much to us, who, perhaps, have to buy houses in London, the national average for a house was still only about £60,000, and therefore that £30, 000--because houses are cheaper in the north--still represented about 50 per cent. of the cost of the average house nationally.

Mr. Martin: I am pleased that my hon. Friend has corrected the apparent drift of what I was saying. I really meant that, by the time of the boom at the end of the 1980s, £25,000 was an insignificant part, and when it was increased to £30,000, it had a more significant effect on the market, and had the deleterious effect that my hon. Friend pointed out in his excellent speech. By the closing year of Baroness Thatcher's Government, it was a far more insignificant part of the total house purchase than it had been when it was increased to £30,000, and it was certainly more insignificant than £25,000 had been in 1974.

If anyone had wished to preserve the policy on mortgage interest relief-- which, apparently, on television last night, I heard Baroness Thatcher say by implication that she wished to do--Baroness Thatcher's Government would certainly have put up mortgage interest, not only to £30,000 but probably to something like £60,000 to keep pace. That is really the context in which I meant my

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remarks. When mortgage interest relief was increased to £30,000, that was a significant sum of money to certain people in certain parts of the country.

Now, interest rates are the most significant factor to consider when purchasing a house. It would be wholly wrong, as my hon. Friend the Member for Buckingham said, to provide subsidy to the very people who are getting the best bargains, certainly since the 1950s, on cheap houses, many of which are repossessions, I confess. I do not rule out from blame the way in which, in the late 1980s, the Government fuelled and increased the expectations of people to own their own homes. They did encourage 22-year- old deputy or assistant managers of building societies to lend not one and a half times one's income but up to four times one's income. They also based mortgages on the joint incomes. That fuelled the whole crazy spiral. It had to stop, and it has stopped. First-time buyers are now able to get into the market, and certainly do not require more subsidy to do so. What I would have said in addition to that was far better said by my hon. Friend the Member for Buckingham. The illusions to which he referred really gave us a cold shower.

I have another matter to raise--I hope that I do not run so horribly over time that I shall never be called again in this Session, because if I did I would have to sit through even more speeches without catching anybody's eye and would have to make my speech to the Lobby rather than the Chamber--and it concerns elderly people who live in houses that they own outright; the mortgage has been paid off; the husband died some years ago; and there is a small occupational pension.

In my constituency, there are quite a few elderly women with service occupational pensions from their late husband's service years and working life. Those people find that the savings that they had when the husband died are becoming less each year. They own their freehold property, that is true, but the problem is that the roof needs replacing; the chimney causes problems; the house needs repainting. Various parts of the house are beginning to rot. We all know, from owning houses ourselves, that one never sees the end of property maintenance. The bills are high, and now one must pay VAT on those bills, so they are even higher.

An elderly woman cannot keep pace with the cost of the house. Perhaps she has been taught all her life--she came from a family that does this, and her husband made sure of it--not to live off the state, that she must work and save, and that that will see her out for her days. Unfortunately, in her mind, that is not the case as she sees her savings going down and down. Perhaps her husband left £35,000 when he died. Then it is £25,000. Then it is £15,000. She is getting nearer and nearer to £8,000 and then, of course, down to the £3,000. Of course we say to her, "There will be help when you get there. If you need to go into a rest home or nursing home, your house will be taken into consideration. You will not need to rely on the state until the proceeds of the sale of the house have been used." That does not impress the relatives, who intended to inherit the house, but that is the position. What can we do about it? That is a very real concern to people who are not used to being in that position. The capital limit at the moment is £8,000. We have to increase it. We have to take into account the income from the capital rather than the capital itself. I confess that it is expensive. I have

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tabled a written question, which, unfortunately, had not been answered by today, to find out exactly how expensive it will be. To take into account the income for benefit purposes rather than the capital amount is not as expensive. It is very expensive, no doubt, just to disregard £10,000, £20,000, £30,000, £40,000, or £50, 000 of income, but it is cheaper to take the income into account, and it is more reasonable. It would stop the tremendous acceleration in the loss of savings and the feeling of insecurity that comes into the minds of widows, particularly elderly widows, because women live so much longer than men.

I shall leave that as a thought. It is obviously another debate for another time and I need to develop it, but that is an aspect of housing policy that needs to be looked at, particularly because of what happens when people in those circumstances become incapable of looking after themselves, and then we get into the rest home or nursing home angle and what happens to the inheritance of their house.

7.57 pm

Mr. John Denham (Southampton, Itchen): It was very interesting to listen to the hon. Member for Portsmouth, South (Mr. Martin), and particularly to his history of the development of the housing market. If I could summarise his speech, I would say that we have seen the problem of rapid over-inflation before in the housing market, created by the mistakes of Government policy. The hon. Gentleman said, quite rightly, that it happened under the previous Conservative Government in the early 1970s, and was good enough to point out that it took a Labour Government to sort out the problems.

Here we are again with problems created by a Conservative Government. The hon. Gentleman failed to draw the logical conclusion, but others will: it will take a Labour Government once again to restore some sanity, security and stability to the housing market. I agree with the hon. Gentleman and with the hon. Member for Buckingham (Mr. Walden) that we do not and should not aim to see another bout of rapid inflation in house prices. Representing, as I do, a southern constituency, and being particularly interested in the politics of the south and of the southern voter, I recognise the temptation to devise policies that would temporarily stuff the pockets of voters with fivers or create the illusion of capital growth through rapid house price inflation, but, for reasons that have been well stated by Conservative Members, that is not a desirable housing or economic objective.

There are, however, modest objectives that we should set which have not been addressed by the Government. Although we should certainly avoid stimulating an inflationary house price spiral, it is quite reasonable to say that we should aim to remove the fear from the housing market, that we should aim to remove the insecurity that exists in the housing market, and that we should aim to remove the obstacles to the perfectly reasonable aspiration to be able to move house when that is required, whether it is because of a growing family, or for reasons of work, family circumstance or personal choice. That is a real fear and insecurity in the housing market, and a real block on the reasonable aspirations of home owners. Despite the recent fall in the number of court orders in repossession cases, the bad news in the south-east is that the number rose by 14 per cent. in the first quarter of this

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year compared with the first quarter of 1994. In my county of Hampshire, it was up by 9 per cent. That strongly suggests--as does the anecdotal evidence of advice agencies and housing

organisations--that the fall in the number of repossessions that appeared to be emerging about a year ago has now been reversed, and mortgage lenders are now pursuing property owners.

As has been said, 1,000 people a week are already losing their homes through repossession, and the figures seem to be rising. Those arrears problems will continue in the south-east. Reports from the Department of the Environment and a number of other sources suggest, significantly, that there is now almost a split in the pathway of those who have found themselves in arrears. Most reports suggest that about a third are working their way out of the problem; the downside is that the other two thirds are not reducing their arrears and, in general, show no real signs of being able to escape.

The Department of the Environment report suggested that 200,000 families in that position are now at high risk of losing their homes through repossession. Despite the Prime Minister's promise not so long ago that repossessions had been ended, they are still a very real feature of the housing market, and the fear is great for the families involved.

Many more people are suffering from negative equity. The Woolwich building society believes that, in the south-east, nearly one in five home owners with mortgages now have negative equity. That, however, does not give the complete picture of the problems faced by those with negative equity. The situation is not merely static; they do not simply owe more money than their homes are worth. Their position is a major obstacle to their ability to move.

Moving, of course, does not depend only on the vendor's having equity in the property that he is selling. Costs are associated with it--costs of about £5,000, it is said. The combined number of those with negative equity and those who may owe exactly what their properties are worth but do not have the extra £5,000 to cover the cost of a move amounts, in the south-east, to about 830,000 households, or one in three.

It is not surprising that many voters in the south of England feel deeply betrayed by the Government. Some have suffered repossession; many others have large arrears, and are making no progress in clearing them; many more- -one in three--could not move today if they wanted to, because they owe too much on their properties. People are trapped in their homes, and trapped in insecurity.

It is also not surprising that that has been reflected in the stagnation of the housing market. House prices overall in the south-east have moved little in the past year; that is hardly remarkable, if a third of the number of home owners with mortgages cannot even exercise the choice to move.

I want to speak mainly about the home-owning sector, but I intend to respond to the hon. Member for High Peak (Mr. Hendry), who is not present now. He talked more widely about the rented sector and the Government's record. I am well aware of the position in Southampton, because, until I became a Member of Parliament, I chaired the housing committee on Southampton city council.

Back in late 1989 and 1990, we made a fairly systematic estimate of the number of rented houses that needed to be produced in the city over the next five to 10

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years--socially rented houses, that is. We were not too bothered about whether they were let by the local authority or housing associations; that was a secondary issue. We decided that 500 new homes per year were required.

We set about the exercise very seriously. We compiled a big register of all the development land in the city--land owned by the council, land owned by other public bodies, and privately owned land that might involve some leverage because of planning gain, for instance. We put the land into a pool and used it with housing associations. That was what the Government had asked us to do. We also launched an empty property strategy, which has been praised by Ministers and empty homes agencies, and cited as a model. That too was mentioned by the hon. Member for High Peak.

Despite all that, however, the largest number of homes that it has been possible to produce in a year is 250--about half the number needed to make any significant impact on housing waiting lists in Southampton. Not enough resources are going into social housing to provide the homes that are needed for rent.

Ironically, a number of Conservative Members talked loosely of freeing the private rented sector. We know that what the Government have done in that sector over the past few years has stimulated a massive spiral in the housing benefits bill, so that three times as much as four or five years ago is now being spent on housing benefit. Money that could have helped to provide more new social homes to rent is being eaten up each year.

I have nothing against the provision of private sector rented accommodation, but too much of what Conservative Members say assumes that that will be paid for by the taxpayer through housing benefits. That mistaken policy has led to a far less efficient use of resources than spending the money on social housing.

I have described the insecurity of home owners and the immobility in the housing market. Let me underline a point that has been made once or twice, but not in great detail. Insecurity in the housing market does not stand alone; it is not purely a matter of housing policy. It is a symptom, and at times a cause, of a wider insecurity. Home owners in the south face a barrage of problems, not least in the increasing unavailability of better- paid and more secure work. That can lead to initial problems with mortgage arrears and subsequently to repossessions.

Earlier this evening, I learned that the Secretary of State for Employment is going to Southampton tomorrow to launch the unemployment figures. I hope to point out then that, over the past year--despite a fall in the headline unemployment rate--the city has lost hundreds of well-paid, formerly secure jobs in such firms as British Rail Maintenance Ltd., Standard Telephones, the oil refinery at Esso, Pirelli and the privatised utilities; and, of course, many jobs in the construction industry, which is now stagnating. Our economy is losing well-paid, secure work, and replacing it with badly paid, insecure work. That feeds into housing insecurity, and creates circumstances in which home owners--even if they are paying their bills today--are unsure whether they will be able to pay them in future, can take on new commitments or can move house.

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It is against that background that we must assess the Government's present proposals. I do not believe that, at a time when the job market and the housing market are so insecure, further insecurity should be introduced. However one considers the current proposals, they cannot in any way improve the housing market or the position of someone who is in mortgage arrears or who is trapped in negative equity.

The problem of insuring mortgage payments was well covered in a report published by the Association of British Insurers entitled "Risk, Insurance and Welfare". It said some interesting things about the position of people who face unemployment and the difficulties of insuring them. I must make the fair point that that document is not an ABI policy statement but a series of papers that it has commissioned. It is, however, significant that it has published them.

It says:

"It would seem, therefore, that the new realities have done little to change the arithmetic of unemployment insurance. Risk remains highly differentiated, with those most at risk being least able to afford higher premiums. Indeed, in some respects the arithmetic has worsened, for the socially necessary expenditures of the unemployed have increased, while state support has lessened, the availability of permanent well-paid jobs has declined, and the duration of spells of unemployment has lengthened."

That is a fair description of the social context in which the Government are asking people to insure themselves against the inability to pay their mortgage.

That ABI report fairly details the type of exclusions that exist on mortgage insurance policies. They normally exclude the first 30 days of unemployment or financial insolvency, unemployment occurring during the first 90 days of the plan with a new mortgage, unemployment beyond 12 months, people without regular or continuous work for at least 12 months prior to claiming, voluntary unemployment or insolvency, unemployment that is a recurrent, regular or seasonal feature of the job, and unemployment at the end of a fixed-term contract. All those are standard exclusions from the type of insurance policies that we are discussing. I shall ask a few questions about the confident predictions that the Secretary of State for Social Security made in his speech.

The ABI report says:

"While the financial rationale for these exclusions is self-evident the net result is to exclude many of those whose circumstances result from the trends towards a more flexible labour market: the long term unemployed and those in precarious forms of employment."

The report makes an interesting comment which is important to the debate:

"Moreover, these are the very same people who are not well served by social insurance . . . There is a sense in which private and social insurance is currently competitive rather than complementary. Policies linked to mortgages tend to exclude the first 60 or 90 days of unemployment which coincides with the period when mortgage interest does not attract assistance from Income Support. Moreover, with the introduction of Job Seekers Allowance, which lasts for only six months, more people will find themselves excluded from Income Support on account of their private insurance. As a consequence of this trap some families will stand to gain little or no financial benefit from their private insurance premiums."

That point could be developed at much greater length, but it is interesting because it highlights a fact that the Secretary of State mentioned earlier. There are problems with the scope of cover in the state insurance--we can call it that--which is available to home owners. His

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proposals do nothing to resolve those problems. They simply exacerbate them and expose people to greater cost and greater insecurity.

It is worth putting on the record some of the real costs that are involved in the Government's proposals. I am grateful to my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) for the calculation of these figures. He has considered the effect of the Budget announcements, which are really the subject of the debate, on people who do not have insurance against the inability to pay their mortgage. He points out that, without an insurance policy, if the average existing borrower is made redundant after October 1995, he stands to lose £590 as a direct result of the proposals. Without insurance, the average new borrower who is made redundant after October 1995 stands to lose £2,063 as a direct result of the 1994 Budget. It is worth putting those figures on the record, because they show just how much the Budget is taking from home owners. The Secretary of State believes that the insurance market will cope with that problem. He may come to regret the confidence with which he said that private insurers will cover the housing market in an adequate manner. He seemed sure about that this afternoon, but a number of questions need to be asked.

For a start, the right hon. Gentleman was entirely dismissive of the evidence produced by the Department of the Environment's report on the difficulties of claiming on mortgage protection. He was entirely dismissive of the experience of the National Association of Citizens Advice Bureaux, which has detailed many cases in which it is impossible to claim on mortgage protection policies. That is an important point.

This part of the debate is not about whether people can get someone to sell them an insurance policy; it is about whether the insurance policy is any good when one has paid one's premiums to it over a period of years. The Government have been and are now especially wrong to resist the pressure to regulate the sale of such policies in a statutory manner. They have learnt nothing from their experience with the promotion of personal pensions, which were not properly regulated and all sorts of errors arose as a result.

The income protection and mortgage protection market is not regulated in a statutory manner. There is clear evidence that mis-selling, misunderstandings in selling and unreasonable objections to claims are arising, yet the Government still resist pressure to introduce statutory regulation.

If the Government go ahead with these measures, they will pay a high price when people pay out on policies and find that they are unable to claim on them when they need them.

Mr. Nicholas Winterton: I am listening to the hon. Gentleman's argument, to which I am not unsympathetic, but how would the Government regulate the industry in the granting of mortgage protection insurance policies? Does he not agree that, if the insurance industry accepts that that is the way in which the Government will go, it will devise policies that are reliable? Clearly, the building societies will be interested, and they will want to be paid in the event of a mortgage holder becoming unemployed or long-term sick.

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Mr. Denham: That intervention reminds me that I should have declared an interest at the outset. I receive a contribution towards my office costs from the National Union of Insurance Workers. I have got to the relevant part of my speech. I ask the hon. Gentleman to bear with me, as I should like to cover some of the consequences in a moment. I think that he is suggesting that there will be pressure from mortgage lenders to ensure that policies can be claimed on. One would have expected that to be the case already to a degree, given that building societies lose out, sometimes on policies that they themselves have sold.

The Secretary of State has said that many of the policies that people cannot claim on have been sold by building societies, yet, until now, there does not seem to have been any effective pressure from building societies to make those policies worth while. Perhaps the building societies have been keener to pick up the commission on selling the policy than to ensure that policies work.

Generally, rather than relying, for example, on voluntary codes of conduct in the industry, it would be an advantage for codes of conduct to be given a statutory basis so that sanctions can be taken against companies that sell policies that do not work.

Earlier this afternoon, I thought that the Secretary of State was discovering things that had never previously been discovered about the insurance industry, especially that it is in the business of giving free lunches. I must be cautious about this, as, having made one or two speeches about the industry, I have found that it queues up to offer hon. Members free lunches. I suspect that the truth is that someone pays for those lunches, and that that will be the case in the free schemes that the right hon. Gentleman mentioned. I have a series of questions about the Secretary of State's proposals. First, if the block insurance policies are so good, why have mortgage lenders been so opposed to his proposals? Indeed, why have they not promoted them to the 70 per cent. of borrowers who he says are not covered by such insurance? One would have thought that, in their own interests, it would have been worth the lenders' while to promote such policies, but they have not done so.

Secondly, further to the intervention by the hon. Member for Macclesfield (Mr. Winterton), will lenders be pressurised to restrict the people who are able to borrow if block policies are introduced? There are plenty of types of block insurance around--company sickness or whatever--but they are not generally available to everyone. I suspect that insurers will put pressure on lenders to exclude various people from mortgages because they will not be covered by the block insurance policies. I want an assurance from the Secretary of State that that will not happen.

Thirdly, will people be any better able to claim on such policies than they are at present? Is the Secretary of State clear that there is no question of people being excluded because of existing health risks or business failure, or because it is alleged, after events, that they could have predicted redundancy?

What will happen? Will the building societies be in the front line of assessing people's risks to a greater depth than at present, or will there be rows after the event about whose fault it was that the person was unable to continue

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