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Mr. Evans: No, I am about to conclude.

Housing has never been cheaper. The opportunities to buy houses have never been better and the relationship between average earnings and average house prices is highly favourable. It is typical that the Labour party has somehow forgotten, or somehow does not seem to understand, the phenomenon of the trade cycle, which has been analysed by commentators for the past 250 years. The point is that recovery will come.

I turn quickly, because I have spoken for longer than I intended, to the second part of the argument: housing benefit. I shall deal with the first question asked by the hon. Member for Withington about the introduction of the new arrangements in January. We have had discussions with local authority representatives and associations. We were persuaded by listening to their careful and reasoned arguments about the difficulties of developing the various--and they are various--computer software systems that they needed longer than we had originally intended to provide. We believe that it was right to accede to their request and we have been assured by them that they will be able to meet smoothly the January 1996 start date.

Mr. Bradley: On that point, can the Minister assure the House that all the information on the subsidy arrangements and changes for new claimants is now available to the software companies so that they can introduce the systems for the local authorities?

Mr. Evans: I am slightly puzzled by that question in the sense that we are debating the very regulations which provide the legal framework for the computer software. I do not understand to what possible additional matter the hon. Gentleman may be referring. As I understand it, we are debating the very regulations which define the scheme in law and from which the software may be written. Both the regulations--I shall invite my hon. Friends to reject the prayers to annul them--represent a fair balance between defending people's homes and encouraging private responsibility, and the needs of the taxpayer.

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8.51 pm

Mr. Michael J. Martin (Glasgow, Springburn): I was interested in what the Minister had to say about Scotland. He appears to have second-hand information from the solicitors of Scotland.

Mr. Dewar: The Edinburgh solicitors.

Mr. Martin: The Edinburgh solicitors, as my hon. Friend says. They are not exactly experts in the suffering endured by some people in Scotland or, indeed, in the rest of the United Kingdom. Houses which used to be sold in a matter of weeks now take nine or 10 months to sell. The Minister and other Ministers have spoken about the mobility of labour and how young people should be able to move around the country to follow jobs. How can they follow jobs to other parts of the country if they cannot sell their homes?

It is easy for the Minister to talk about insurance and mortgage protection, but he must know that many young couples are finding it more and more difficult to get a mortgage, let alone insurance to go with it. Building societies and banks had their fingers burnt over evictions. This Government's policies meant that people found themselves unemployed and could not pay their mortgages, so building societies got into serious difficulties.

When young couples apply for a mortgage they are now asked more and more probing questions, especially about their employment prospects. Both parties in a marriage are asked whether their jobs are secure. As a result, sometimes young couples have to settle for brokers who charge higher interest charges rather than getting help from bigger building societies. They have to shop around to try to find a firm prepared to take them on.

Where I come from, it is not so easy for a young engineer to be able to say that he has a job for life--far from it. Many engineers in the west of Scotland work for employers who may be reasonable, but make it clear to those engineers and to other workers that their jobs are not permanent. That means that it is harder for such people to get a mortgage and very hard for them to get insurance. No insurance company will take on someone who is, for example, on a fixed-term contract for three or four years, and the Minister must know that. The Minister also states that benefit will cover those who have been deserted by their spouses. But he should be improving the situation and trying to give more assistance to those who have been deserted, particularly deserted wives. If in good faith a wife takes out a joint mortgage with her husband and he leaves her, she has the children to worry about, the emotional stress of her marriage breaking up and she will soon have to try to cope with mortgage payments as well. The Minister must know that that is very difficult.

Surely the Minister should be more interested in weeding out from the housing benefit market unscrupulous landlords who charge tenants well over the odds for property. The tenant does not always have a choice of landlord. The Minister knows that sometimes when a person from Scotland loses his job, say down here in England, he moves back up to Scotland because even without a job, at least he is back in the family circle receiving support from relatives. Sometimes that means the person has to rent a place from a private landlord. Some landlords leave a great deal to be desired. They charge terrible rates for accommodation.

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A recent report showed that young students were living in dangerous conditions in my native city of Glasgow. In fact one young student lived in a fire trap, and when fire broke out, he had to jump from a two-storey building. He has been disfigured for life because of an unscrupulous landlord. The Minister should be going after those landlords, not people who are easily exploited.

I know that other hon. Members want to speak, so I shall not speak for too long. Scottish Homes, which is responsible for the housing association movement in Scotland, has brought in a system known as assured tenancies. When a new tenant moves into a housing association property and becomes an assured tenant, he is not able to go to the rent officer. The Minister will also know that those housing associations are getting involved in what is known as joint ventures, where private sector money is being invested in new build. Part of that deal is that the private sector is always able to get its money back.

If the tenants are assured tenants and have no recourse to the rent officer, they face a double problem. They cannot go to the rent officer, so if their rent increases, those who are unfortunate enough to be on social security will not receive any assistance from the Minister's Department. It is time that the Minister tried to help people who are in difficulties rather than trying to hinder them. 8.58 pm

Ms Liz Lynne (Rochdale): The announcement by the Secretary of State for Social Security last month that he was to backtrack on some of the proposals for income support mortgage interest payments and housing benefit was welcome, even though the concessions were only very small. He should not have thought about penalising carers, the sick, remand prisoners, people suffering from AIDS or deserted partners with children in the first place. It is scandalous that he proposed to remove income support and tighten up the housing rules for those people. The housing association charities and the voluntary organisations that provide care and support will, fortunately, be able to function. But, again, the Secretary of State should not have thought of penalising them in the first place.

Vulnerable groups will still face tremendous problems, especially in relation to income support mortgage interest payments. The Secretary of State has accepted only certain of the Social Security Advisory Committee's proposals. I welcome the fact that he has accepted them, but he has not accepted the proposals for seasonal workers and part-time workers. He has not thought about deferring the changes until April 1996, as the Social Security Advisory Committee proposed. He has not introduced help for existing borrowers who switch to a new lender.

The main problem concerns seasonal workers and part-time workers. If people take a job for 12 weeks in the summer and are then out of work, they will lose their benefit. If they do not take that job they will lose their benefit anyway, so they cannot win. Their unemployment benefit will be cut. The Association of British Insurers said that it would not cover seasonal workers and part-time workers, remand prisoners or deserted partners. The Government have made an exception in two of those cases; why not in the third? Why have they not made an exception for seasonal workers and part- time workers? What will happen to that group of people? They will not

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be able to obtain benefit and they cannot obtain insurance. They will face repossession and homelessness. It will cost the taxpayer more in the long run.

As for the time scale, the Under-Secretary of State seems to have a blind faith in the fact that everything will be in place by October. Is he seriously telling the House that someone who becomes unemployed in October will be able to receive cover? I should appreciate it if he would clarify that when he answers tonight. The number of people claiming income support for mortgage interest has fallen since 1993, so one would have thought that the Government might have considered the position to be under control. It is a cost-effective way of keeping families housed.

Another stupid policy that the Government have introduced is to penalise those who switch lenders to receive a lower interest rate. All that will happen is that those borrowers will stay with their existing lender and will not switch. In the long term that will cost the Treasury more.

On the subject of housing benefit, I welcome the Government's decision to exempt non-profit-making accommodation offering care, supervision and support, but the Government lack courage. They are not facing up to what has happened and the reasons why the bill for housing benefit has soared. The cost of housing benefit has soared because the Government have forced up council rents and housing association rents and there has also been an increase in rents in the private sector. I know that the Minister will try to deal with that problem, but the growth in housing benefit is a deliberate Government policy. If it were not, why would the Government have introduced policies that have contributed to it? The subsidy for bricks and mortar was removed and given to the individual for housing benefits. The Government's approach is that of a motorist who blames the temperature gauge when the car overheats.

I am concerned about private tenants because they do not have any negotiating strength. What do they do if the landlord will not bring down the rent? They have to move or make up the shortfall from their meagre benefits or low income. The Minister is placing them in an impossible position. There will be a growth in rent arrears and homelessness. According to Shelter's research, in 1993, 19 per cent. of its clients came to see it about rent arrears and housing benefit problems. One fifth of homeless families come from the private rented sector. The reduction in housing benefit for landlords will mean that they will stop performing essential maintenance work. They will say, "We're not getting enough money, so we will not do the repairs." A lot of private rented accommodation is already in an appalling condition. People who cannot afford it may be forced out of rented accommodation and there is often no other low-rent accommodation in their areas.

The Government could assist by releasing the council housing receipts so that local authorities could build more low-rent housing. The Secretary of State for Social Security groans about that but, in trying to shift more people out of local authority housing and into the private rented sector, he has introduced measures that will penalise people in the private rented sector. The Secretary of State is taking entirely the wrong approach.

Local authorities can restrict housing benefit if people are in over-large accommodation or if the accommodation is too expensive. They have the power to do that at

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present. The Government reforms fall between two stools: they hit the vulnerable and they do not save the taxpayer any money. I oppose the regulations because I believe that they will cause real hardship and increase homelessness. The Government have yet again failed to see the knock-on effect of their actions. Until that lesson is learned, the taxpayer and the most vulnerable in society will continue to suffer.

9.6 pm

Dr. Lynne Jones (Birmingham, Selly Oak): Earlier today the Minister accused my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) of being gloomy and doom-laden. However, I listened to the Minister's speech and I detected a rather strong rose-coloured tint to his glasses. He seems completely oblivious to the insecurity and misery that his Government have created among people on average and below-average incomes. The measures that the Government have introduced tonight will do nothing to relieve that sense of insecurity.

The Minister talked about the economic recovery, but the improvements in the market and in the economy that occurred after black Wednesday are now slowing down. There is no wonderful recovery--unless the Government seek to stimulate it artificially with tax cuts, which is presumably what the measures are about. As I attempted to suggest in an earlier exchange, any tax cuts that the Government may hand out before the next election will not compensate for the tax increases that they have imposed already. Nor will they take into account the extra charges that people will have to meet as a result of tonight's measures.

Like his right hon. and hon. Friends, including the Prime Minister, the Minister mentioned the Skipton building society. It has received a lot of free advertising courtesy of Conservative Members in recent weeks. He did not respond to the suggestion that, contrary to what the Minister and his colleagues try to promote, all may not be well in the building society sector. I have been in touch with the 17 building societies that are as large as or have a larger asset base than the Skipton building society, and there is little evidence that they are rushing to follow its lead. The Bradford and Bingley building society said:

"The Society is concerned that the Government is seeking to transfer obligations from the public to the private sector especially when those involved are potentially the most vulnerable in society". The Nationwide building society said:

"We have no plans to offer `free' insurance on an ongoing basis as this is not sustainable; the cost involved would have to be covered by borrowers in one way or another".

The Portman building society said that it already offers mortgage protection insurance, and added:

"We currently charge for these services and have no plans to change that policy."

A person with an average mortgage who is worried about insecurity or losing his job is faced with charges of about £5 a week--far more than the Government will give to people on average or below-average incomes in any tax giveaway. The Government seem more concerned about doing away with inheritance tax than helping those on low incomes. I support everything that has been said by Opposition Members in opposition to these mean-minded regulations.

On housing benefit, the Government again will create more misery and will put people at risk. The measure is contradictory to the Government's espoused policy of

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promoting the private rented sector. In the recent White Paper, the Government recognised that small landlords were worried about ensuring that rent is paid regularly. People on low incomes find it easier to find accommodation if landlords can be confident that rents will be paid. What will the measures do to improve that confidence? The Government are also promoting rent guarantee schemes, and I am involved in such a scheme in Birmingham. These schemes will be put at risk, as landlords will not be willing to take on people on low incomes if they know that the housing benefit will not cover the rent. Benefits at the moment are not sufficient to enable people to meet any shortfall that may exist.

It is common on the continent for the benefit system not to cover the full cost of rental, but basic benefit on the continent is much more generous than it is here. That may be a practice that we could follow. If we looked at the base amounts of benefit and gave people more money in their pockets, it really would give those people choice. The Government talk about choice, but what choice do people on low incomes and seeking rented accommodation have in Tory Britain? Very little.

Finally, housing associations are extremely concerned about whether the housing associations as managing agents initiative--a ministerial initiative from 1991--can continue. The initiative is a good idea, and was designed to help bring empty private properties back into use. The housing associations say that the scheme will be put in jeopardy unless it is given an exemption from the measure, and they call for the introduction of a mechanism to appeal against rent officer determinations. I have been pretty unkind to the Minister, but perhaps I could finish by asking him--in the nicest possible way--if he will consider exempting such schemes from the regulations, if nothing else.

9.12 pm

Mr. Bradley: I shall be brief in summary. We have had an interesting, if short, debate. I say to the Minister that we are as keen as the Leader of the Opposition to reduce the housing benefit budget. We believe that the problem has been caused by the Government deregulating rents in the Housing Act 1988, and by the way in which they have allowed housing subsidies--through a transfer to the individual from bricks and mortar--to take the strain of their policies. That could be quickly rectified by allowing houses to be built at rents that people can afford. The housing benefit budget would then reduce.

The Minister redefined negative equity for us tonight. It was a useful new concept. He said that mortgage holders must take account of the proceeds of their endowment mortgage which they may get in 25 years' time if they manage to make all the payments during that period and if they have not moved in the meantime to a house whose price was lower than the mortgage they wanted. That was some new evidence on negative equity, for which the public outside will be grateful. They now know that they are not in negative equity, even if the figures that they have for their mortgage and for their current house price would tend to confirm that they are. I am grateful to the Minister for his new analysis of that matter.

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I must press the Minister on two issues. First, will he confirm that most private insurance policies do not pay out for the first 60 or, more usually, 90 days? How are people to take out private insurance to cover the first eight-week gap that the Government are creating by their change in policy?

Secondly, and most important, the Minister did not comment on private rented supported housing schemes. I asked him a number of questions, but why did he not answer them? Why have such schemes not been included in the concessions? Many bodies such as local authorities use organisations like Barnardo's which then use high- quality, carefully monitored, private sector housing schemes, especially adult placement schemes. Why will these now be subject to benefit cuts under the new regulations? I must press the Minister for answers.

As I said, we shall be voting against the regulations because they are a testament to the Government's inadequate response to people's real needs, whether they be in the private rented sector or own their own homes.

9.15 pm

Mr. Roger Evans: The hon. Member for Manchester, Withington (Mr. Bradley) should treat Mr. Kaletsky with a little more care. Significantly, Mr. Kaletsky's point was that statisticians have assumed for the purpose of negative equity that repayment mortgages are 100 per cent. of the market whereas we know that they were less than 20 per cent. at the material time. Statistically that is rather important. People's endowment policies after, say, five years--most of the mortgages that went wrong were taken out five years ago at the height of the boom--have a substantial value. It is nonsense to compare like with dislike. [Interruption.] The hon. Gentleman appears wholly unaware of the fact that quite apart from cashing them in, or surrendering them with a penalty, one can assign such things. They do have a value and are perfectly acceptable security. He is simply showing ignorance of the commercial world.

The hon. Gentleman also asked me about private insurance and why there was a 60 or 90-day waiting period. Lending institutions have already accepted that such a pause at the beginning is not going to be a ground for repossession. The hon. Gentleman should understand that when one takes out insurance, the longer the waiting period for which one opts--it may be a matter of choice if one has savings or equity--the cheaper the insurance. That is sensibly a matter for individual judgment and negotiation.

The hon. Member for Rochdale (Ms Lynne) mentioned the cost of insurance. Building societies' margins are at a historic two-decade high of 2 per cent., which is why the Skipton building society is able to offer this insurance free. It is also why, despite a private Labour party survey from which we heard only two examples and a private enterprise survey of which we heard from another Labour Member, we are assured by the Association of British Insurers that insurance will be in place for the October start date. The Association of British Insurers would be very unhappy about any deferment.

The hon. Member for Glasgow, Springburn (Mr. Martin) expressed concern about landlords. However, the Government are concerned that under the existing arrangements some landlords in some circumstances have

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been dealing neither sensibly nor fairly with tenants or taxpayers. The purpose of the local reference rent system is to introduce an element of control.

Question put:--

The House divided: Ayes 234, Noes 256.

Division No. 206] [9.18 pm

AYES

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Column 1405

Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Anderson, Donald (Swansea E)

Anderson, Ms Janet (Ros'dale)

Ashton, Joe

Austin-Walker, John

Banks, Tony (Newham NW)

Barnes, Harry

Barron, Kevin

Battle, John

Bayley, Hugh

Beckett, Rt Hon Margaret

Beith, Rt Hon A J

Bell, Stuart

Benn, Rt Hon Tony

Bennett, Andrew F

Bermingham, Gerald

Berry, Roger

Betts, Clive

Blunkett, David

Boateng, Paul

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, N (N'c'tle upon Tyne E)

Burden, Richard

Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Mrs Anne (C'bridge)

Campbell, Menzies (Fife NE)

Campbell, Ronnie (Blyth V)

Campbell-Savours, D N

Cann, Jamie

Chidgey, David

Chisholm, Malcolm

Church, Judith

Clapham, Michael

Clark, Dr David (South Shields)

Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Coffey, Ann

Cohen, Harry

Connarty, Michael

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Corston, Jean

Cousins, Jim

Cox, Tom

Cummings, John

Cunliffe, Lawrence

Cunningham, Jim (Covy SE)

Darling, Alistair

Davies, Bryan (Oldham C'tral)

Davis, Terry (B'ham, H'dge H'l)

Denham, John

Dewar, Donald

Dixon, Don

Dobson, Frank

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