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?
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.
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.
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?
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. 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—
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?
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 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.
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 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?
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 outré 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 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.
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.
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.
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 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.
Does the hon. Gentleman agree that, with the cut in income support for mortgage interest payment, many disabled people and people with long-term illnesses will suffer because many insurance companies will not cover them, and those that do will force them to pay increased premiums?
I certainly agree that, on precedents, that is true. The Secretary of State no doubt will say that that will all change and some chemistry will set to work, but the evidence so far is all against him.
At the end of the day, General Accident Direct's offer is motivated by the phrase "If you don't score, it will cost you more." That, understandably, is the principle on which private insurance works.
Let us not forget the Department of the Environment. It commissioned research from the university of Loughborough, putting public money into necessary public research. The one startling fact that emerged—and one that I properly highlight—is that, of the claims that were made under private insurance policies, two thirds were unsuccessful. It is not just a matter of getting cover: once one has it, with all the exceptions and difficulties, very little may result from it.
To be fair to Secretary of State, he recognised that fact in his article in The Times on 10 January, in which he wrote:
Some insurance policies prove unsatisfactory. Either they do not cover some risks or the companies take refuge in the small print.
I agree. He has got to go a long way to establish that those difficulties can be overcome. There is justified scepticism about believing that this is not a case of trying to persuade the private insurance sector to move into a sort of cover with which, for good reasons, it has not been traditionally involved. It is not a suitable case for treatment from their point of view.
I accept that I am open to the charge that I would say that, wouldn't I? I am on the Opposition Benches, and I do not like the scheme. However, there is almost unanimity on the matter, which is quite impressive.
Some may be prejudiced about the Secretary of State's views. He tells us that Council of Mortgage Lenders is a vested interest to be discounted. I should have thought that it had a lot of experience and expertise to offer. Its chief executive commented on the Loughborough report, and the results were quite extraordinary. We all heard the interview. I do not have a transcript of it, but I have some of the correspondence that followed.
We were told that Mr. Adrian Coles had made ill-judged remarks to discredit the Government's proposals,
but, as so often when people resort to distortions he has simply succeeded in discrediting himself, and blackening the previously high reputation of the building society movement.
After that indictment, the reply of the chairman of the Council of Mortgage Lenders must have been a great disappointment to the Secretary of State. It said:
The Chartered Institute of Housing is unable to support the planned changes in Income Support for Mortgage Interest … We believe that the changes will target marginal home owners and will inevitably feed through to increasing costs for local authorities. We also believe that a government committed to the expansion of home ownership should not be countenancing a package of measures which will severely dent confidence in what is already a stagnated housing market.
It went on to say that the proposals
will dampen down the demand from new borrowers taking out mortgages for the first time.
The TSB Group is a group of which not even the hon. Member for Dover (Mr. Shaw) could find a trace in donations to the Labour party, although I have no doubt that, if I suggested it, he might well make the allegation. I am summarising quite a complex letter, but Claire Weaver, the group's senior manager for Government affairs, said:
The upshot of all this"—
is that there is likely to be an increase in the level of repossessions, the housing market will become even further depressed, negative equity will increase, and the 'feel good' factor—so elusive for so long—will take even longer to come through.
Mike Blackburn, the chief executive of the Halifax building society, might be thought to be a witness of some credibility in this sphere. The Times of 22 March reports:
Mike Blackburn … yesterday warned the Government that unless it was prepared to rethink its proposed cuts in mortgage income support, repossessions would rise and the most vulnerable would be left without a safety net.
It seems that there is an almost overwhelming, irrefutable weight of evidence that—to put it even in the most tentative way—the Government are running risks that they should not run, risks that are based on prejudice and not on a real assessment of the situation.
I repeat briefly the point that I made a long time ago, on 26 January. I do not understand why a Government who talk a great deal about home ownership should be withdrawing this safety net from the most vulnerable. There is nothing to stop people taking out additional cover, something of which the Secretary of State would no doubt approve—indeed, I, too, might approve of it—but why should we force people to take on additional burdens and withdraw help from those on income support who own their own homes, help which is not challenged for those who rent their homes?
There is discrimination against home ownership. At the end of the day, income support mortgage interest payments are the equivalent of rent. They do not reduce the capital; they are merely a rent paid to service the capital. If one withdraws that help on the grounds that it is wrong that the state should give it, the logic, presumably, is that one should do the same for people who live in rented accommodation.
The only distinction would be an odd one—that only wealthy people own their own homes. That is self-evidently untrue. No one would argue that we should withdraw housing benefit from those who are most hard pressed; why should we withdraw it from home owners? In particular, why should we put up with such a suggestion from this Government?
The Secretary of State will remember that, on 26 January, he said:
The Labour party has only one objective locally and nationally: to become the nation's landlord. We are the party of home ownership, and we will remain so."—[Official Report, 26 January 1995; Vol. 253, c. 501.]
That makes two fine statements of old Tory prejudices, the one as inaccurate as the other, and becoming demonstrably more inaccurate as the record unfolds.
We have seen the Government's salami tactics in parallel spheres, so perhaps we could ask the Secretary of State whether he is going to draw a line under the nine-month period, or whether, if he gets the scheme limping into action, we shall be told it will be 12 or 18 months, or perhaps abolition? Can we draw a line under the nine-month period, or will the Secretary of State come back for more?
In all seriousness, Conservative Members are probably not yet under a great deal of pressure, because we are only moving towards the new system, but I believe that it will become an important issue. Certainly in my part of the world, a large number of people are struggling to maintain their position in the home market in the face of rising costs. The problem will grow, and we shall hear much more about it at a constituency level.
The Secretary of State should listen to the case that I am trying to make. It is strange for me to say so, but I think that he should listen to Lady Thatcher, because she is someone who recognises a betrayal when she sees one. I should have thought that she is someone whose instincts he would respect, as she was once, and spiritually still is, his political standard bearer. He should listen to the Skipton building society which, after all, was of some assistance to the Government, but let us remember what it is essentially saying. Let us remember what John Goodfellow said, the one stick to which the Secretary of State has been able to cling in stormy waters. He disagrees with Government policy; he is moving to
limit the damage in a frail housing market
and to try to protect his customers against what he thinks will happen to many other customers who are left to fend for themselves. The Secretary of State should listen to the construction industry, and to home owners in every part of the country who are in duress and see no prospect of relief.
The Daily Mail, another unlikely witness for the Labour party and one which is usually loyal to the last, was driven to ask in a pained headline on 3 May: "What do the Tories have against the hard pressed home buyer?" That question will echo with increasing resonance across the country. I am trying to save the Secretary of State from his own folly and error, not in the interests of his party, but in the interests of the country. I believe that he should think again.
I beg to move, To leave out from "House" to the end of the Question and to add instead thereof:
reaffirms its commitment to enabling people to buy their own homes, which four out of five people aspire to do; welcomes the fact that the cost of home ownership relative to incomes is at an historically low level; recognises that the existing system of Income Support Mortgage Interest leaves seven out of ten households without cover for their housing costs when unable to work; welcomes the Government's proposed reforms which will help ensure that new home buyers protect their homes against the risk of unemployment; welcomes the innovation taking place in the lending and insurance markets to provide good quality and affordable cover; rejects proposals to spend even more taxpayers' money by introducing a mortgage benefit scheme that will effectively underwrite private borrowing; and is confident that proper management of this major household expense by comprehensive insurance schemes, backed by lenders and insurers, will contribute significantly to a return of market stability.".
I have some sympathy with Opposition Front Benchers on their misfortune in their choice of subject for Supply days. On the previous Supply day, they chose to have a debate on inequality, hoping that they could have a rerun of the issues raised by the Rowntree report. On the very
day planned for the debate, the Institute for Fiscal Studies released its evaluation of the statistics, which blew a hole in the Labour party's thesis that the poor were getting poorer. Today, the Labour party wanted to have a debate on income support for mortgage interest, but, between that decision being taken and today, the Skipton building society has blown a hole in its thesis.
Before I deal with the general topic, I shall answer the specific questions asked by the hon. Member for Glasgow, Garscadden (Mr. Dewar) about the two changes that we are introducing in housing benefit. First, he asked whether it would be necessary for people to draw on their income support or other forms of income in order to meet their contribution to rents if they are living in above-average properties. I should make it clear that the change applies to new claimants, and the system will therefore build gradually.
New claimants will usually have a choice about the sort of property that they occupy and only if they choose to occupy a property of above the reference level rent would they face that prospect at all. Then, of course, they would have the opportunity to negotiate the rent down. The evidence from those in analogous circumstances where the rent officer has limited the amount of rent eligible for housing benefit suggests that they are often successful.
The hon. Gentleman also asked about women's refuges and other hostels. I do not want to pre-empt my consideration of the Social Security Advisory Committee's report and advice on the matter, but I can say that I shall approach with distinct sympathy the case for exempting such hostels once I have considered its evidence. I hope that that fact will act as guidance so that people do not get too unnecessarily worked up about it.
Is the Secretary of State aware that in Southampton the current cost of housing benefit in cases where the city council exercises its discretion is more than £800,000 a year? The signs at the moment are that the sum to which it will be limited next year is £140,000. How can the Secretary of State expect such a cut in expenditure to be made without its greatly increasing the insecurity of those in greatest need?
The new system will build slowly and relate only to the new cases coming on stream, not to existing cases. Therefore, over a period, we would expect a larger sum to be involved.
The right hon. Gentleman has explained that the system will apply only to new claimants. I can follow his argument—although it is difficult to—as it applies to someone who moves into a property for the first time. A new claimant, however, may also be someone who already lives in a property and then becomes unemployed or suffers a fall in his income. Does he envisage someone in that position being able to negotiate a reduction in his rent, so that he can afford it in the new circumstances?
That can already happen now. The current arrangements are that there is a period of exemption from restrictions. That will be carried over into the new system—a period during which people will be entitled to live in the property with full housing benefit. If a rent officer declares that the premises have a rent above the allowable amount for housing benefit, the same can happen now. As I say, the same sort of arrangements will apply under the new system.
The main subject of today's debate has been income support for mortgage interest, and the last half hour has made three things clear about the Labour party's position. First, Labour does not have an agreed policy to help the 70 per cent. of home owners for whom income support is not available if they lose their jobs. The second is that the Opposition still hanker, as always, after much higher public spending, but they dare not commit themselves publicly to it. The third is that, to hide their confusion, they resort to scaremongering and talking down the housing market. That is the best the Opposition have to offer the House today.
The hon. Member for Garscadden rested his case against the Government's plans in part on his criticisms of the mortgage protection policies sold by mortgage lenders. He claimed that those policies were unclear about what protection they did or did not offer; yet he himself refuses to make clear what protection Labour's policies will or will not offer to home owners, let alone how much they will cost. The hon. Gentleman criticises the small print of the insurance policies, but will not give us even the headlines of Labour party policies. He has given us no policies at all. So before complaining about the mote in the eye of the insurers he should perhaps remove the beam from his own.
This morning on the "Today" programme, the chairman of the House-Builders Federation made the point that in most respects the outlook for prospective home owners should be very attractive. I agree with him. Incomes are rising and are set to rise further. Unemployment is falling steadily. The price of housing is low, relative to incomes—the lowest for about 10 years. Interest rates are at the lower end of their historic range. The overall cost of buying a home, after the tax changes that we have announced, is still £130 a month less than it was five years ago.
The only thing holding the housing market back is the sense of job insecurity among potential first-time buyers in today's competitive world. Increasingly, people realise that the state safety net for mortgage interest lets 70 per cent. of those who lose their jobs fall through it, so they hesitate to start on the road to home ownership. Listening to the Opposition, one would think that the present system of income support for mortgage interest was satisfactory, was available to everyone out of work, and prevented repossessions. That is nonsense.
The current system is highly unsatisfactory. It leaves 70 per cent. of people with mortgages without any help if they lose their jobs. People with working spouses, redundancy money, savings, part-time work or early retirement income do not qualify. As a result, about 150,000 people on unemployment benefit get not a penny of income support for their mortgages, and 50,000 people a year have their homes repossessed. Yet the cost of income support for mortgage interest has risen from £30 million to over £1 billion in 15 years, and its very availability has discouraged the growth of comprehensive private mortgage insurance.
What my right hon. Friend is saying about the apparent ineffectiveness of the present system is extremely telling. The self-employed are a very important group in many of our constituencies—a group who have suffered greatly during the recession of the past four or five years. Is it not true that they would not usually qualify for this protection, especially if they have a spouse in work or some capital? Is it not therefore necessary to look again at the system and to try, as I hope the new system will, to help people in an even-handed way?
My hon. Friend makes a good point. The Opposition have made much of the difficulties that self-employed people may have when claiming under some private insurance policies, but they make nothing of the difficulties that they may face when claiming under the state system. The same problems of determining whether someone's business is just going through a difficult period or has had to cease altogether, so the person is genuinely out of work, apply in the state system as in the private system.
I shall be talking about insurance for quite a long while. Perhaps the hon. Gentleman will listen to what I have to say before commenting.
There are only three possible options in response to the situation that I have outlined. The first is to do nothing; to leave the 70 per cent. of home owners unprotected; to let repossessions continue; and to leave the housing market depressed by the resulting insecurity, particularly for first-time buyers. That option means letting the taxpayer continue to pick up the tab, not just for past bad lending but for any unwise future lending. That is the Dewar option.
The second option is to expand the state system into a mortgage benefit scheme for anyone with no or low income. That does address the issue. Almost all the lobby groups which the hon. Gentleman so approvingly quoted advocate this option—but it would have a huge cost. Even the National Association of Citizens Advice Bureaux accepts that it would cost upwards of £600 million. Coupled with reversing our proposals, the cost could easily be nearer £1 billion a year or more.
The Borrie Commission on Social Justice, advocated this sort of mortgage interest benefit and was prepared to finance it by ending mortgage interest tax relief. The Labour Front-Bench housing spokesman adopted this policy in his interview with the Shelter magazine Roof. He said:
I do think a mortgage benefit scheme has substantial advantages … if part of its costs were met by the further phasing out of MIRAS, so be it.
When I challenged the hon. Gentleman last time, he accepted that that was his policy and berated me for having
the gall to criticise the Labour party for having no positive proposals".—[Official Report, 26 January 1995; Vol. 253, c. 508.]
He claimed that Labour in fact had one.
Today, we understand that the policy is temporarily in limbo. A close study of Hansard will reveal that the hon. Member for Garscadden merely said that it would be wrong at present to cut and eliminate mortgage interest tax relief, but that the Labour party would be prepared to do that if it ever got back to power. Will the hon. Gentleman rule that out now?
I made it clear that it was not on the agenda—a perfectly straightforward statement. As the Government have cut mortgage interest relief twice—arguably three times—in the past couple of years, may I ask the right hon. Gentleman whether he wants that reversed, as some of the papers are suggesting, or whether he rules out the possibility?
I shall deal with both points. We are going to be in the business of reducing taxes as the economy grows and as we curb the growth of public expenditure. I have forgotten the hon. Gentleman's other point—
As the right hon. Gentleman seems so keen, I would not want to deprive him of the chance to answer both questions. My question was whether he would categorically rule out further reductions, given the Government's record. Secondly, I wanted to know whether the right hon. Gentleman would comment on the report in The Daily Telegraph today, which states that, in order to head off a leadership challenge in October—not a very honourable determining factor—the Government are going to effect a U-turn.
I shall read it, and I shall certainly apologise if I have got it wrong. The question sounded different the first time around. The hon. Gentleman will have to ask The Daily Telegraph about its sources; and matters of taxation are for the Chancellor. We know that my right hon. and learned Friend and this party are in the business of getting taxes down in the future. The Opposition are not in the business of ruling out tax cuts for the future.
The hon. Gentleman has said that the abolition of this tax relief is not on his agenda: he has not got an agenda to put it on.
When my right hon. Friend referred to the article in Roof, the hon. Member for Greenwich (Mr. Raynsford) shook his head. Yet the minutes of one of the meetings of the all-party group on homelessness have the hon. Gentleman saying:
The phasing out of the
mortgage tax relief
subsidy would be a much safer policy, especially when combined with the introduction of the Mortgage Benefit Scheme".
Does not that make it clear where he stands?
Absolutely. I think that the hon. Member for Greenwich, the housing spokesman for the Labour party, is much more forthcoming about his policies than the rest of the fringe would like him to be.
Shelter certainly got a different impression in the course of its interview. It said that, under scrutiny, the hon. Member for Greenwich, relied heavily on "Yes, Minister" responses, such as, "I cannot quantify that," "I am not saying that I am committed to that figure," and the ubiquitous, "We will certainly want to look at that." But when it came to mortgage benefit, a genuine policy initiative that is clearly music to the ears of the budget-battered lenders, Shelter was given the impression that it was a clear commitment, even though most of what the hon. Gentleman said manifestly was not.
The third option is to encourage the spread of private insurance, and ensure that everyone taking out a new mortgage has proper protection, by insurance or otherwise, against the threat of a spell of unemployment. For periods longer than nine months, of course, income support for mortgage interest will be available on the same conditions as at present. That is the Government option. We are determined to encourage cheaper, better, more comprehensive insurance. The Opposition may not like it, but it is clear that we are going to succeed.
Let me take cost, quality and coverage in turn. When I first debated this issue in the House, I predicted that the cost of insurance would fall. In the past, mortgage insurance was expensive. Only a few people took it out. A disproportionate number of them were poor risks—people who had some reason to suspect that they might lose their jobs. Consequently, insurers faced high costs and charged high premiums. And the lenders added high commissions on top—often about 30 per cent. of the premium. Following my announcement, the first thing to happen was the entry of direct insurance schemes cutting out that commission. That is why General Accident Direct was able to cut the typical premium from £7 per £100 to £4.50. That is not a huge sum compared with the cost of insuring household contents or the buildings fabric.
Then the House-Builders Federation showed the effect of pooling risks. It told me that builders will offer cover, to anyone buying an average-priced new house, for the first three years for just £150. That is £1 a week. I understand that, already, a third of people buying new houses have that cover.
Then the building societies began to respond to our new proposals. The Leader of the Opposition was rather flummoxed, not to say disappointed, when last week my right hon. Friend the Prime Minister revealed that the Skipton building society plans to offer insurance for all its policy holders free of charge.
The cover is for unemployment. We are considering the treatment of those with pre-existing medical conditions and those with long-term conditions, and I shall respond on that point when I have considered the recommendations from the Social Security Advisory Committee on that. We want, essentially, to mesh in our system with what can be made available realistically by the private sector.
I was most interested last week when the matter of the Skipton building society was raised. I am not sure that the Skipton building society was not as surprised as I was. I ask a specific question of my right hon. Friend. If a building society is to offer insurance for free, where will the money come from to do that? Does it not mean that savers will get less? Is there not a risk that fewer people will put money into building societies?
I shall come to that point, but the brief answer is that it will come out of its margins.
I rather suspect that the hon. Member for Garscadden got a ticking off from the Leader of the Opposition for allowing him to blunder into good news by mistake, and the hon. Gentleman was immediately dispatched to discredit Skipton's plans. First he wrote, as he admitted today, to my right hon. Friend the Prime Minister, casting doubts on the existence of those plans. The hon. Gentleman wrote:
I was very concerned by your reference to the Skipton Building Society in Prime Ministers' Questions today, in which you said that the Society is introducing an insurance scheme which will provide 'cover for all of its borrowers without increasing premiums'. The implication was that those of us who follow these matters had missed an announcement about the Society's plans.
My right hon. Friend the Prime Minister wrote back and said:
I fear you did miss news of the Skipton Building Society's plans. You might like to refer to the article in the Daily Telegraph on Saturday 20 May about their scheme.
This is all good fun and really rather unimportant, but as the Secretary of State has made the charges, I must say to him, yes, I did miss the newspaper article, which was on page B9 of the "Money-go-round" section. It was the middle paragraph of a diary. When I telephoned and spoke to Mr. Alan Scotter, the director of sales and marketing for the building society, that afternoon, he told me that he had made no announcement whatever, that he could not confirm or deny the truth of what the Prime Minister had said, and he gave me, very clearly, the impression that it had been very surprised indeed that this had been said. We now know how the Prime Minister knew. It was not from any public announcement but from the fact that the hon. Member for Skipton and Ripon (Mr. Curry), who is sitting beside the Secretary of State, had had a conversation—I presume it was social—with the chief executive, who had confided in him. He had not made any announcement to the general public.
I can assure the hon. Gentleman that the way in which I got to know about this originally was through reading The Daily Telegraph. My hon. Friend, who happens to be strategically placed, also has his sources of information. But as the hon. Gentleman said, it was a singularly unimportant point on which to detain the House at such length.
Having failed to disprove the existence of the policy, the hon. Gentleman went on to suggest that Skipton could offer free insurance only by putting up its interest rates. The society has denied that and is quoted in The Sunday Times as saying:
Any society could afford to provide free policies—just look at their profits.
Indeed, building society margins at present are at an all-time record.
This morning, the hon. Gentleman was reduced to arguing that Skipton was just a tiny maverick which no one else would follow. "It has only 1 per cent. of the market," he said. Alas, there is now detailed evidence that his pessimism—perhaps it is optimism from the Opposition's
point of view—is unfounded. The Mortgage Finance Gazette, together with Special Risk Services, has carried out a comprehensive survey of lenders. It says that
virtually all large building societies
completed its questionnaire—so the survey covers 75 per cent. of the new lending in this country. It reported:
Two-thirds of the sample planned to buy block protection for their borrowers. Of that two-thirds, over 60 per cent. plan to give it away free.
The results of this survey should provide … comfort to the government … it is likely that block protection for borrowers will become the norm.
I am not in the business of discrediting in that sense. I have fairly reflected what has been said by the industry itself in my contribution. I have had the good sense to consult the industry again over the past 24 hours, and we have had rather a different picture. The best thing that I can say to the Secretary of State is that we shall all have to wait and see what emerges. I have taken good advice and see no reason to retract what I have suggested.
I think that I have given the hon. Gentleman a very good reason to retract—an objective, anonymous survey, covering 75 per cent. of lenders—[Interruption.] The hon. Member for Bootle (Mr. Benton) intervenes from a sedentary position, as is his wont, because he is very reluctant ever to expose himself to criticism.
The second issue was the quality of insurance policies. Opposition attacks have rested heavily on criticisms of existing mortgage protection policies, voiced by Loughborough university, the National Association of Citizens Advice Bureaux and the Council of Mortgage Lenders. The Loughborough study was not primarily designed to examine mortgage protection policies, and its observations on that subject, particularly on the success of claims, were based on interviews with just 12 people. NACAB has wider experience of the difficulties that have arisen with policies, precisely because people with difficulties go to their local citizens advice bureau. I am happy to say, however, that NACAB now serves on the monitoring committee for the code of practice governing the sale of creditor insurance. The Government recently approved a strengthened version of that code requiring lenders to spell out limitations of policies and ensure that they are appropriate to borrowers' needs. The National Association of Citizens Advice Bureaux recently said that the new industry guidelines being drafted to cover the types of policy for sale did address their main concern.
Finally, there is the Council of Mortgage Lenders. Banks and building societies are the principal beneficiaries of the present income support for mortgage interest scheme; indeed, we pay roughly £1 billion of taxpayers' money a year directly into their coffers. It is natural that they should want to retain the system in full and, if possible, expand it into a mortgage benefit scheme. The director general of the Council of Mortgage Lenders recently said:
we would especially like to work with Labour on working up a mortgage benefit scheme.
The council seems to believe that that is the Labour party's policy. The remark was made in the same issue of Shelter's magazine.
The director general seems to take Labour's housing spokesman rather more seriously than does the hon. Member for Garscadden. Unfortunately, the director general's understandable enthusiasm for state-subsidised mortgage insurance tempted him to rubbish private mortgage protection policies as
not really worth a great deal".
He seemed to forget for a moment that most of those policies are sold for a hefty commission by his own members.
Unlike Mr. Adrian Coles, I do not believe that banks and building societies have been cynically selling worthless policies to their borrowers. After all, it is in the lender's interest to ensure that insurance policies pay out when the borrower loses his job. The Mortgage Finance Gazette survey that I mentioned earlier found that the overwhelming majority of lenders were happy with the way in which claims were dealt with by the insurers. In fact, one of the largest insurers revealed that it paid out on 80 per cent. of claims, and that the level of complaints that it received was almost negligible.
When lenders negotiate block insurance for their borrowers, they will have an even stronger incentive and leverage to ensure that the policies are of high quality, do not contain hidden escape clauses and pay out readily on genuine claims: otherwise the lender's loans will not be serviced when the borrower is in difficulties.
It is, of course, probable that private insurance rather than income support will discourage some kinds of irresponsible lending. In particular, it will discourage lending for equity withdrawal—second, third and even fourth mortgages. One fact to emerge from the Loughborough university study is that 50 per cent. of borrowers in arrears had extended or increased their mortgages, or taken on extra mortgages. The new arrangements for income support will discourage a resurgence of such lending in future.
Earlier, the Secretary of State kept talking about mortgage providers providing free insurance. An impeccably right-wing Conservative such as the right hon. Gentleman must know that it cannot really be free; someone must be paying for it, directly or indirectly. This so-called free mortgage insurance reminds me of the promises of Ministers when we debated eye testing some years ago that of course opticians would conduct the tests for free because of the pressures of the market. That free eye testing never transpired, and this free mortgage insurance will not transpire either.
Surely it is clear that the process of competition drives down costs and forces people to take the cost of providing cover out of their otherwise higher-than-normal margins. It is to their competitive advantage to do so.
The third area of concern during our last debate, and since, was the coverage of insurance for different categories of people. In January, the hon. Member for Garscadden said that because of our policy
there will be great difficulties for the self-employed".
In fact—as I mentioned to my hon. Friend the Member for Taunton (Mr. Nicholson)—an increasing number of insurance companies, including those providing direct mortgage and block insurance, cover self-employment.
The hon. Member for Greenwich (Mr. Raynsford) said that many contract workers
will find that they are uninsurable".—[Official Report, 26 January 1995; Vol. 523, c. 496–529.]
Again, policies of the type negotiated by the Skipton building society do cover contract workers.
The Association of British Insurers has reiterated that
virtually anyone who is able to obtain a mortgage should be able to purchase insurance to go with it—even special categories of mortgage holders such as the self-employed, single parent and part-time workers.
In short, I am confident that we are well set to see the rapid expansion of low-cost, high-quality comprehensive insurance.
Members of the Labour party—like their unfortunate, flummoxed leader—are left equally bewildered. Their problem is that they still do not understand the creative, innovative, cost-cutting power of free enterprise when it is released from the distortions of state subsidy and intervention. There could be no clearer evidence that the party is still the old Labour party: hostile to private enterprise, ignorant of how it works and instinctively preferring to rely on subsidised state provision.
I was encouraged by my right hon. Friend's response to the hon. Member for Rochdale (Ms Lynne). Does he intend under the legislation to outlaw discrimination against disabled people, to make it illegal for mortgage lenders to refuse to provide mortgage insurance for disabled people under block schemes? Would they, at the very least, be required to look at each individual case and not discriminate against categories of people? Will my right hon. Friend undertake, on behalf of the Government, to monitor the position? In the event that the private system fails to provide adequate mortgage cover for disabled people, will he ensure that his Department affords other protection?
I can certainly give my hon. Friend an assurance that, when considering the advice of the Social Security Advisory Committee and the representations made to it, we shall look closely at the interaction of the proposals and our measures to improve the position of disabled people, to ensure that we do not take away with one hand what we give with the other. I do not wish to spell out the details, but that will be the underlying approach, which I think will be shared by my hon. Friend and, indeed, the whole House.
Less than a month ago, having given his interview to Shelter, the hon. Member for Greenwich—Labour's housing spokesman—went to a conference organised by Shelter. There he promised that a Labour Government would repeal our reforms to income support for mortgage interest. In due course, that would cost hundreds of millions of pounds and leave 70 per cent. of mortgage payers unprotected. Will the hon. Member for Garscadden reaffirm his colleague's pledge? Is Labour's policy to withdraw the changes that we have made in income support if it ever becomes the Government?
Will the Secretary of State accept that I did not do what he claims I did? At that conference—the hon. Member for Skipton and Ripon (Mr. Curry) was present—I gave a clear undertaking that we would fight the introduction of the proposals tooth and nail. We believe that they will be very damaging to the market, and will cause hardship to individuals. We said that we would do everything to stop them coming into effect.
According to the report that I received—not from my hon. Friend the Member for Skipton and Ripon or any other political source, but from a non-political source—the hon. Member for Greenwich clearly did what I said that he had done, but if he says that he did not I entirely accept his word. I believe that in the House we should accept an hon. Member's word. [Interruption.] My hon. Friend the Member for Skipton and Ripon was not the source.
The upshot is that we do not know whether the Opposition would repeal the measures. The Opposition have made no policy statement about whether they would repeal them. That is another item that is not on their non-agenda.
The hon. Member for Garscadden had the cheek to raise the question of taxation. As I said then, our policy is to reduce taxes when it is prudent to do so, but the only way to afford tax reductions is to curb public spending growth. That must inevitably involve curbing the growth of social security spending because it accounts for more than 40 per cent. of what central Government spend.
In the past two years, I have set out, introduced legislation on and begun to implement a programme of reform to ensure that the social security budget does not outstrip the nation's ability to pay, yet the Labour party has opposed nearly every reform—not just this measure, but the measures on pensions, unemployment benefits and incapacity benefit. In effect, it has rejected the bulk of the £4 billion of savings a year by the end of the century which I have put in train. Even if it is not persuaded by the housing spokesman to commit itself to £600 million of extra spending on a new mortgage benefit, Labour must tell the country how it would finance up to £4 billion of savings that it wishes to forgo.
The Opposition paint an unremittingly gloomy picture of the housing outlook. They then fail to agree on any remedies or policies. The hon. Member for Garscadden offers nothing to help people who have no mortgage protection. Labour's record confirms that it is the enemy of a free housing market. It destroyed private renting, it opposed council house sales and it wants to abolish mortgage interest tax relief entirely.
The hon. Gentleman offers nothing to help first-time buyers and he does his best to undermine their confidence by blatant scaremongering. As I have demonstrated, however, the outlook for housing is a lot brighter than he suggests and our reforms of income support for mortgage interest will help make prospects brighter still. Our policies should lead to the development of high-quality insurance, giving wide coverage at modest cost. That will ensure that most prospective first-time buyers will be offered low-cost mortgage insurance against jobs lost. That will boost their confidence and so strengthen the housing market.
The debate has been begun by two of our most coherent debaters. I like the style of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), which is frank and at times quite tart. He is an honest debater. The Secretary of State for Social Security can be a persuasive debater, if at times over-sanguine. In today's debate, he ducked and weaved with some mischief and managed to sit down without acknowledging too many of the great errors that his Government have committed. What should be emphasised throughout the debate is that, for 16 years, Her Majesty's Government have had control over and given the lead in housing. It is not good enough for Ministers to refer over and again to what they perceive to be defects in the policies of Her Majesty's Opposition when it is the Government who carry responsibility and must face up to some worrying situations.
The context of our debate, as it affects people, is wretched. One miserable statistic is that, in the past five years, 295,000 of our fellow citizens have suffered repossession. Another worrying statistic is that more than 1.2 million of them suffer negative equity. I define the first as a misery, and the second as a continuing and deep worry for those who are affected.
I make a plea to the Government: do not end the income support safety net for home buyers who have suffered a loss of employment. That is a real plea and I hope that it does not fall on deaf ears in the months ahead. The second plea is more positive. I hope that the Government will sanction greater release of council house receipts so that, over a period, we can get some of that money into the housing market.
I should like to raise matters that concern north Wales. In 1992, Alyn and Deeside council was able to complete only 22 houses. In the same year, only 42 houses could be completed by Clwyd county council. The local authorities in Clwyd—Delyn, Glyndwr, Wrexham and Colwyn—were not able to complete one home in 1992. In that year, throughout Wales, there were only 133 completions by local authorities—a wretched figure. The great city of Cardiff was able to complete only six houses. That offers a pretty miserable scene when one considers the fact that Cardiff city council represents the capital of Wales and that city has a pressing housing problem.
There are two fundamental requirements for fellow citizens: they should have a home and, secondly, they should have a job. I take the view that some form of housing is the priority, even before a job. One cannot have a civilised existence without a home. Anyone without it is in serious trouble. To say that a house should come before a job is a bold statement to make in any debate, but that is the view that I have formed after only 25 years in the House and after holding at least 50 surgeries or advice bureaux every year.
My proposal to the Secretary of State is that he should lead the Government in a greater and more urgent attack on the tens of thousands of aging houses for which councils have taken responsibility. There should be a much bigger programme of council house building. More tenancies should be made available for people who live on their own.
Senior citizens will always tell us that the sheltered housing in which they live is excellent. My own council makes a wonderful effort in that direction, but I find that there are not enough sheltered housing schemes for senior citizens. That means that throughout the country we cannot evacuate single elderly people from three-bedroom council houses. If we could do that, we would be able to give younger people with a family and children a better start in life.
If we wanted to contribute, as a House of Commons and as a Government, to the sum of human happiness, building more homes would be a great priority. If we could do that, we could employ jobless construction workers in Wales, who number tens of thousands. If we could put the unemployed construction worker back to work to make those houses, we could give a better start in life to younger people who have no home of their own.
I am sure that I am not the only Member of Parliament who finds that most of his time in his surgeries is taken up by people with housing problems. The particular problem that I should like to highlight involves young couples who come to see a Member of Parliament, who are living apart but who are married or have a stable partnership, who have young children and who find that they must make appointments to see each other because they have no settled home of their own. I find it difficult to interview couples such as those. That problem should add urgency to the Government's approach to their housing policy.
It is also clear to me that we have many houses that were built soon after the end of world war two; we have dilapidation. I cannot be the only Member of Parliament who receives petitions from worried local authority tenants in certain estates and streets, who say that it is time that their homes were modernised. All that those citizens are asking for is new windows and doors and central heating.
If we were able to meet that urgent necessity for tens of thousands of our fellow citizens, we could do better for them and enable them to have better lives and to realise their full potential. The Government have neglected the opportunity to take the lead and to give the industry a boost. Since 1979, the Government have had access to about £125 billion of North sea oil revenues. Too little of it has gone into the housing industry.
Although the Government can point to advances and improvements and to a housing programme, it is not a programme that will tackle our deep-seated problems. If the Government want to be seen to be in favour of the enhancement of the lives of those who are suffering from very real difficulties, they should give top priority to housing.
I must inform the Secretary of State that we have a serious housing problem in Wales and his right hon. Friend the Secretary of State for Wales would be able to tackle it to more effect, I presume, if he had more assistance from the Treasury. The Secretary of State for Social Security should tell his right hon. Friend that, if the Government are serious about tackling unemployment as well as housing, they must release more receipts from the sale of council houses. That is a top priority in Wales, as it is throughout the country, and I very much hope that the Secretary of State will bear in mind the matters that I have raised.
I agree with what the hon. Member for Alyn and Deeside (Mr. Jones) said about the importance of housing, although not with all his remarks.
First, I must declare an interest, as I am the chairman of the National House Building Council. We do not build houses but give structural warranties on new houses and so are, in effect, a consumer protection body.
Furthermore—and nearer to the subject of this debate—I was Secretary of State for Social Services in another Government between 1981 and 1987 and, with that experience, I find it extremely difficult to take entirely seriously the Opposition's claim to be the natural protector of the home owner, even less the champion of the new, would-be home buyer. As my right hon. Friend the Secretary of State said, we all remember well Labour's opposition to council house sales. If Labour policy had prevailed, local authorities would still be the landlords for hundreds of thousands of tenants and 1.5 million council tenants would have been deprived of the opportunity of ownership.
Labour's policy announcement of 10 years ago is perhaps less well remembered, but has some similarities to my right hon. Friend's arguments. In 1985, I was about to publish the Government's proposals on social security reform, but was pre-empted by the Opposition, who had a radical new plan for housing. That plan amounted to the abolition of mortgage tax relief and the creation of a new housing allowance. Between 2 million and 3 million people would have lost out directly as a result.
The tradition that the Opposition spokesman for housing outlined—he is spokesman for housing now, but having listened to this debate I would not bet on his remaining spokesman long—
Perhaps the right hon. Gentleman will check the records and accept that what he is alleging is incorrect. That set of policy proposals came from the Association of Metropolitan Authorities and was never endorsed as Labour party policy. In fact, the proposals were rejected by the Labour party. The right hon. Gentleman's attempt to present them as Labour party policy is incorrect and misleading and I hope that he will withdraw that assertion.
I am interested in that statement. If the hon. Gentleman is referring to the 1985 proposals, as I was, I will not withdraw it. The hon. Gentleman had better check his facts, as I have done. I looked it up in Hansard. We debated those proposals on the Floor of the House at the time. They were not the AMA's proposals but those of the hon. Member for Oldham, West (Mr. Meacher), if the hon. Gentleman wants to know. I have the Hansard here and I can show it to him if he wants to check.
The shadow Secretary of State, the hon. Member for Glasgow, Garscadden (Mr. Dewar), said that the reduction in mortgage tax relief is
not on the Labour party's agenda
in present circumstances, and he also mentioned the small print of the insurance companies. I would want to examine the small print of his assurance very carefully.
At the very least, the Labour party's credentials on mortgage tax relief are suspect. As my right hon. Friend the Secretary of State said, it is clear that there are those in the Labour party, including some Labour Front-Bench figures, who would do away with mortgage tax relief altogether. That is another reason why I am not inclined to take lectures on housing from the Labour party.
As for the Opposition's attack on social security changes, the principle of those changes is difficult to dispute. I understand the concern that the Opposition Front-Bench spokesman quite fairly expressed and the quotations from the housing industry. Anyone with any experience in that area would know that there is concern.
The principles of the changes that the Government propose are difficult to dispute, however. Social security remains a vast budget. It is accepted now much more so than in the mid-1980s that we should target help to the people who need it. That principle is accepted now, but it was not then; it is certainly accepted by the Labour party's social commission. In addition, we must also be selective about what the social security system can do. In other words, if provision can be made in the private sector, through normal insurance, it is sensible for the Government to follow that avenue, which is precisely what they are doing in this case.
I understand the complaint about timing, but provided that provision can be made, and the evidence of the insurers is that it can—I hate to mention Skipton building society again—there is nothing to detain us in that regard. Indeed, judging by everything that has come from the Labour Front Bench today, if there ever were a Labour Government, as far as I understand the Opposition's policy—I am willing to give way again—such a measure would not be repealed.
My concern about the housing market does not relate to social security, but to mortgage tax relief—a subject that is not mentioned in the Opposition motion. My concern is about the Conservative manifesto pledge to
bring home ownership within the reach of more families",
which is of fundamental importance. I am conscious that my old boss, my noble Friend Baroness Thatcher, has been setting out her views on that very subject and on several others at the same time. On the radio this morning I heard my right hon. Friend the Secretary of State for Social Security nobly coming up with the charitable interpretation that Lady Thatcher had been laying about the Labour party. We must all hope that, if that indeed was her purpose, it never enters her mind to lay about the Government.
I see that Lady Thatcher's comments in her interview with David Frost about those hon. Members who had the Whip withdrawn are in The Times under the headline "Thatcher says Major treated rebels like a bossy headmaster". She is quoted as saying:
Really, I don't like it when [the Government] act like an overpowering headmaster. It's no good. It won't do … each of these [rebels] has been elected by their constituents".
I look back with fondness on those much gentler times when my right hon. and noble Friend Lady Thatcher was in power. The Cabinet was rather like a gathering of old pals—all at one in policy. There were no disagreements and no leaks. As Secretary of State, one had only to ask for something and one would be given it. "Of course,
Norman," Lady Thatcher would always say, "if you want more money for the health service, you must have it." No pressure was ever brought on the parliamentary party in any respect whatever. The rumour that the Single European Act was pushed through on a guillotine is, of course, a total misreading of history. Those who differed from Lady Thatcher on policy were allowed—no, they were not allowed, they were encouraged—to set out their reservations. It was, of course, the role of the Chief Whip to facilitate such constructive discussion.
The House may take it from what I have said that I am not an uncritical adherent of all of Lady Thatcher's historical account, interesting as it is, but on housing, she has got it absolutely right. It is a great pity that the then Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), started the process of reducing mortgage tax relief in the 1991 and 1993 Budgets and that that process was continued in November 1993.
We all know that the Treasury wanted to reduce and, preferably, end mortgage tax relief. That is no secret. It would like to reduce and end other things too. But mortgage tax relief has led to much of the increase in home ownership over past years. More than 4 million more householders own their homes today than in 1979. That is a record of which this Government should be very proud and which should be extended. I repeat that that is what our manifesto promised.
Yet today—we have to take note of the position because we cannot run away from it—sales of second-hand houses are down, starts of new houses are down, and a respected body such as the House-Builders Federation predicts that prices could fall as the year progresses. We should not deplore the past; we should ask what—practically—can be done. I do not believe that we should have a negative equity relief scheme such as I have heard advocated. I do not think that the Government can take on the obligation to guarantee a particular price for individual houses. The Government can, however, encourage the market generally, especially first-time buyers.
There are two reasons why help for the first-time buyer would be going with the grain. First, there is no question that to be a home owner remains the public's aspiration. All surveys show that. That is not a reason to neglect other areas of housing policy such as housing associations and the rented sector. The main hope of recovery comes from giving help to those who want to buy. Secondly, given inflation, the price of houses and interest rates, it is an exceptionally good time to buy a house, but some confidence and encouragement are needed. The Government can give that encouragement.
There should be a mortgage tax scheme—I am not trying to turn the clock back to where we were at the beginning of the 1990s—aimed specifically at helping first-time buyers. That scheme would have a number of elements. There would be an increase in the rate of mortgage relief to, say, 25 per cent. There would be an increase in the MIRAS threshold to, say, £40,000 or £50,000. That special relief would taper over a 10-year period to a point where normal tax relief would take its place. Clearly, I accept that there are other ways of achieving the goal, but targeting first-time, new home buyers would not only help thousands of couples to realise their ambition to be home owners—I repeat that that ambition still exists—but have a knock-on effect in the housing market and get sales moving again. There would be a dual effect.
The Labour motion fails partly because it makes no mention of any kind of scheme for first-time buyers. Indeed, I do not think that Labour Members can really say that, in Government, they would preserve tax relief. My right hon. Friend the Secretary of State showed that quite clearly. They are not prepared to say that that would be their position were they in Government. The motion also fails on the ground of Labour party history. I do not think that any objective analysis of the Labour party's position over the past 10 or 15 years shows that its heart is in extending home ownership. Indeed, it has fought against many of the most important developments.
Nevertheless, having said that about the Labour motion, I hope that Ministers will take from this debate a message that action in housing is needed urgently.
I am very grateful to my right hon. Friend. I very warmly support his proposition that we need to give an incentive to first-time buyers, not least because I made precisely that proposal in the House three weeks ago in an Adjournment debate on a Wednesday morning which I initiated. My right hon. Friend carries considerable weight with the Government because of his experience in many high offices of state. Will he assure me that, with me, he will weigh very heavily on the Government to bring about the proposal whereby MIRAS is increased to a standard rate of 25 per cent. up to a threshold of £50,000 for first-time buyers? If he agrees to do that, the campaign will be very successful. May I have his support?
With respect to my hon. Friend, I thought that that is exactly what I was doing. I have been weighing in over the weekend. I have even appeared on the "Today" programme to put forward my proposition. No man can make a greater sacrifice and get up that early. In all seriousness, I agree very much with my hon. Friend. I say in the most friendly way conceivable that I would not wish Ministers to go away from this debate rejecting the Labour motion—which I reject—with its policies and its history, and with the feeling that nothing is required to be done.
It is difficult to over-estimate the importance of housing, not only to the national economy but to individuals and families. A house is the single biggest item which the majority of families will buy in their lives. People in the United Kingdom spend between them more than £30 billion a year on housing. Some 30 per cent. of our total net wealth is in housing.
Although this debate is specifically on the housing market, we must be careful not to lose sight of the most important principle of housing policy: to ensure that everyone has some sort of roof over his or her head, regardless of who owns it, and that the accommodation is warm, healthy and not overcrowded. Hundreds of thousands of families in Britain today long for a home that fits those criteria. Security and stability are important, too. People want not just a good quality home; they want to know with a degree of certainty that they will still have it next week and next year. With the shortage of council house developments and the decline of the private rented sector in recent years, people have looked to owner-occupation as a way to get a secure home, despite the fact that many people—particularly the elderly, the young and the mobile—find it more convenient to rent.
In the 1980s, a mood of euphoria surrounded the housing market. It has now gone, perhaps never to return. The idea, fostered by the Government, that housing was a dead cert bet, not just for profitable investment but for a secure future, has now been blown out of the water. As another hon. Member said, we must ask why we are in this position and why we are having this debate. Who have been in power for the past 16 years? Who refused to allow local authorities to invest money from council house sales in building new homes to replace them, despite the fact that one million households are on waiting lists? Who stoked up the economy in 1987–88 with what many people believe were cynical tax cuts for short-term political gain? The result was an excessive boom and the housing market has paid the price in excessive interest rates. The economy then had to be damped down.
The hon. Lady has just observed that the tax cuts of 1987 and 1988 were intended for short-term political gain. As she would be the first to challenge the Government if they introduced a tax cut in the immediate run-up to an election, when does she think would be an appropriate time to have one?
As the right hon. Gentleman will know, my view is that people are not asking for tax cuts at the moment. Last Sunday's papers show that people are only too happy to pay for what they believe the nation needs, such as a better health service. When the economy is booming and doing well, and when people have good jobs and homes, perhaps one could think about tax cuts, but we are certainly not in that position now.
Whose reliance on mortgage interest tax relief conspicuously failed to provide proper support for those on low incomes? The Minister's speech today was evidence of that. Now mortgage interest relief at source is being phased out with no thought about how that fits in with an overall housing strategy. The Government's economic short-termism has created mayhem with interest rates—some describe it as a rollercoaster—which has thrown the housing market into turmoil. Since the Government have been in office, inflation has been as high as 22 per cent. and almost as low almost 1 per cent. Interest rates have gone from 10 per cent. to 20 per cent. to 7 per cent. to 15 per cent. to 5.25 per cent., and they are probably on their way up again.
Who now propose cuts in housing benefit which will deter private landlords from letting houses? Who propose cuts to income support for mortgage holders, which everyone in housing, whatever the sector, agrees will lead to more repossessions and homelessness? And who now propose less help for those with mortgages when they lose their jobs? It is the current Government—the same people who are nervously milling around the button marked "emergency reverse". We heard proposals in that respect this afternoon.
We are in the present position because of the way in which the Government have played around with the economy and the housing market for what we and many other people believe was short-term electoral gain. Where the Government should have ensured stability, they have played fast and loose with interest rates and tax cuts. Where they should have encouraged sensible, sustainable home ownership, they have led families into mortgage misery with arrears piling up, unable to move because they owe more than their homes are worth. Where the Government should have brought security, they have brought a flood of repossessions—more than 300,000 in the past five years—and with them, family breakdowns, stress and other serious problems.
For millions more people, the Government's policies have brought an ever-present fear of homelessness, which haunts them day and night. If the Englishman's home is his castle, the Government have let down the drawbridge, drained the moat and sent the guards away, leaving the occupants vulnerable to attacks from the dark knights of sickness, unemployment and recession. For many, the fear is that they will lose not just their homes but their livelihoods. A considerable proportion of small businesses are set up with bank loans using family homes as collateral. According to a survey carried out last year, more than 60 per cent. of overdrafts to small businesses in 1994 depended at least partly on personal collateral, which is nearly always the family home. In that way, home and job are tied up together so that if the one is lost, so is the other. Such a double blow—a double whammy—can be shattering.
The Government are guilty of an astonishing misdirection of priorities. They have concentrated all their fire on grants, loans and other incentives to tempt people into home ownership but then largely abdicated their responsibility for helping people when they are threatened with losing their homes. The Government have regularly espoused the virtues of the free market but they have tilted that market to encourage entry into home ownership at unsustainable levels. They allowed mortgage interest tax relief to fuel spiralling house prices in boom times, but when people need it most they decide to take it away without a word of warning.
Unlike the Government, the Liberal Democrats have been consistent in their policy. We have always believed that MIRAS and income support for mortgage holders should be replaced by a much more coherent, effective and means-tested benefit that will help home owners on low incomes, and we have been roundly condemned by Conservative Members for daring to suggest that we would do that. Yet that it is precisely what the Government have been doing in recent years. But the Government have not just phased out MIRAS for new mortgage holders: they have taken it away from the very people whom they tempted into owner-occupation in the first place.
I do not remember the Government saying, "Buy a house but be careful how much you spend because we are thinking of cutting mortgage interest tax relief." Their message has always been, "Buy a house. Get a mortgage. We are on your side and we shall support you. You can rely on us." It is another broken promise and people are so angry about it that today we have heard Conservative Members proposing to reverse it.
The Government could have not have picked a worse time to begin to reduce MIRAS. They are kicking the market when it is down. The time to cut MIRAS gradually is when the market is healthy, and we should not hit those people with existing mortgages who have made their financial plans on that basis. We as Liberal Democrats have always said that we would phase MIRAS out slowly over two Parliaments. We would not hit the market with 10 per cent. cuts in 12 months, as the Government have done, and we certainly would not do anything with the market as it is at the moment.
The Labour party's record is not much better. For years it has prevaricated about what to do about mortgage interest tax relief. Despite the fact that the Rowntree foundation, Shelter, the Institute for Fiscal Studies, the National Housing Forum and even its own Commission on Social Justice have recommended replacing MIRAS with a mortgage benefit, the Labour party has prevaricated. Once again, on a major policy issue we are less than sure where Labour stands. I think that the message I got from Labour today was that, like ourselves, it does not want to do anything at the moment. But where the Labour party stands on mortgage interest tax relief in the long run remains unclear.
The Government have pursued a chain of policies across the housing spectrum which have encompassed a blind faith in owner-occupation and a determination to run down the public sector, regardless of the consequences. The Government's negative attitude to social housing has led to cut after cut in new building, until we have reached the stage where fewer affordable homes to rent will be built in this financial year than in any year since the war. Yet there are now 2 million households in unsuitable accommodation. Some are in hostels or board and lodgings, while others are squatting, sleeping on friends' floors and are often forced to share with a host household.
In the Budget, total housing spending for the next three years was cut by more than £1.5 billion. While housing need has never been higher, investment has not been lower for a long time. Perhaps the most frustrating thing for many of us is that we can see where the money is going: it is paying the unemployment benefit, income support, housing benefit and family credit of the construction workers who have lost their jobs.
The case of a gentleman in my constituency illustrates clearly where 16 years of Tory housing policies have led us. He worked in the construction industry earning a good salary in the boom 1980s and took out a mortgage on a house at a high price at that time. As things got worse, however, he lost his job. Although the Government help him with his interest payments, he is trapped in that house. When he goes to the employment office, he is told that he must take a job at wages which he knows full well will not cover the payments on his house. Being a responsible man, he goes to the people who lent him the money for his mortgage, who say that they will repossess his home as soon as he defaults when he gets a job. His next stop is the housing association, where he is told that if that occurs he will knowingly be homeless and therefore the housing association will not have any responsibility towards him. That encapsulates clearly what has happened as a result of the Government's policies in the past 16 years.
The Government should be investing in building affordable new housing to rent in the public sector, and they could start with a phased release of the capital receipts which are held in local authority bank accounts. We know that the Government will say "What about the public sector borrowing requirement?" But respectable people in finance know that if there is the will to change the way we work, we could do it. We could get more money invested in housing, and that would mean more jobs.
We need a comprehensive mortgage benefit. The Government should be using the money saved by the cuts that they have made in MIRAS to create a coherent and reinforced safety net for mortgage holders. That is what my party has proposed for a number of years. Another subject which needs tackling is housing benefit, which traps people in poverty because they cannot afford to work.
We certainly need to see an end to boom and bust economics. We need an accountable central bank which looks after interest rates—which the bank itself would set, subject to targets set by Parliament—to take politics out of interest rates and avoid interest rate variability. We have consistently put forward those proposals in recent years, and we have warned the Government about the consequences of their short-term economics for housing and the economy. They have not listened, and we are paying the price. That is one of the reasons for the debate today.
It is vital to our economic future that we have a flexible and stable housing market. People who are tied up by negative equity or who are held by housing shortages are not just being trapped in cramped or sub-standard accommodation. They are often being locked out of work and into poverty. They are being held back from reaching their full potential, and our economy is suffering as a result.
The national debate on housing has reached a crucial point, and the choice is fairly stark. Either housing will continue to descend to the level of a party political football—with the Government using blind and illogical measures to push home ownership to unsustainable levels while increasingly abandoning mortgage holders to the effects of the economy—or we can take the alternative route that my party has proposed. We need a strong safety net for home owners and tenants alike so that families can feel secure in their homes even when they are under threat in their jobs. We do not need the Government's proposals to hit income support for mortgage holders. It would be wrong to do that at any time, but people in all sectors of housing believe that now is definitely not the time for the Government's proposals. It is time that the Government started to listen to people. More importantly, it is time that they took responsibility for their actions over the past 16 years.
First, I declare an interest in that I am the chairman of a group of companies involved in the private rented sector. On a non-pecuniary basis, I am chairman of the all-party homelessness group, a trustee of the Big Issue charitable trust and a friend of the National Association of Citizens Advice Bureaux, whose report in many ways stimulated this debate.
It has to be one of life's more unpleasant experiences to wake up to the dulcet tones of the hon. Member for Holborn and St. Pancras (Mr. Dobson) on "Today" saying that we are to have a debate on housing this week. That is what we heard last week.
We always expect the hon. Gentleman to tell the truth, but that does not make it any more pleasant.
We discovered today that soundbites and media presentation are rather more important than the Opposition's policies. I have listened intently to the speeches made so far in the debate, and we are no nearer knowing where Labour currently stands on this issue. One might have thought that a policy would come out of an Opposition Supply day.
We do not know yet what Labour's policy is towards a mortgage benefit. My hon. Friend the Member for City of Chester (Mr. Brandreth) intervened on the hon. Member for Glasgow, Garscadden (Mr. Dewar) to ask about that, and was told that the hon. Gentleman would come back to the subject. He did not do so, and has now left the Chamber. He may have left it to the hon. Member for Greenwich (Mr. Raynsford) to deal with in his winding-up speech. I hope that he will do so.
We do not know whether the Labour party wants to extend the current scheme. We know that 70 per cent. of people are not covered by it at present. We know that it is not adequate, but we do not know whether the Labour party would extend it to cover more people. Labour Members are simply saying what they believe to be politically popular to catch another few minutes' slot on the news tonight or tomorrow morning.
It is cynical in the extreme for the Labour party to choose this subject for a Supply day debate. In many ways, the empty Opposition Benches bear that view out. Labour Members know that they cannot speak with a straight face on the housing market and home ownership, and they have decided to remain absent from the debate.
That shows the depth of the Labour party's thinking and its commitment.
We can tell from the Labour party's record how committed it is. When we introduced the right to buy—the most important measure for extending home ownership ever—the Labour party opposed it. Even when the national party had decided grudgingly to accept it, Labour-controlled local authorities throughout the country were doing their best to thwart it.
We know that home owners would be hit by a Labour Government because of Labour's spending policies. The Labour party may not commit to them now, but if it were in office it could not bear to keep the lid on them. That would inevitably lead to higher taxes and to high interest rates—one of the most damaging factors for home owners.
Day by day, home owners see the cost of Labour. If people aspire to improve their house and push it up a council tax band, or aspire to buy a better house, everywhere we look, band by band, Labour councils cost them more—from £99 in band A to nearly £300 for more expensive properties. That shows Labour's commitment to home ownership.
If the Labour party wants to try to be the friend of home owners, perhaps it should start by recognising some of the facts. Since 1971, the number of houses has increased by 3.25 million, and 2 million of them have been built since the Government came to power 16 years ago.
The hon. Member for Alyn and Deeside (Mr. Jones) said that the number of houses being built by the council in his constituency had dropped, but he did not tell us how many more homes were being built by housing associations. How sad it is that he chose to show us only a small and distorted element of the picture.
Is not the hon. Gentleman in danger of misleading the House, albeit inadvertently? The truth is that, last year, only 500 council houses were built and the number of housing association properties built fell. Fewer properties for rent were built last year than in any year since the war. Housing association new build has not replaced council new build. The total for both combined has fallen to the lowest level ever.
Certainly the total number of houses built has fallen, but a key factor is the number of new lettings taking place. The figure for last year shows a key movement in the rented sector. The number of new lettings has been rising consistently in recent years, and last year it was at its highest level—
For the hon. Gentleman's information, it was the highest level ever. Perhaps he would like to use that soundbite when he is next on the "Today" programme.
The number of mortgages has increased dramatically. In 1980, only 6.2 million people had mortgages; now, 10.4 million have them, and that figure has not dropped during the recent difficult years in the housing market. Year on year, the number of people taking out mortgages has grown.
On the other side of the spectrum, in 11 successive quarters, the number of families accepted as homeless has dropped. It is a shame that political parties and the pressure groups outside, which are so ready to see two months of bad figures as a trend, will sometimes not see 11 quarters of good figures as something to be welcomed. The home ownership ratio—the ratio between peoples' incomes and the cost of buying a house—is at its most favourable for 10 years. There is a tremendous improvement in many of the housing indicators, and the House should welcome them.
We should also welcome the fact that housing standards have never been higher. The housing improvement survey, taking into account the way in which standards were measured and changes were brought in, shows that housing standards are better than they have ever been. That has happened in the context of a Government spending commitment of more than £20 billion on housing this year, last year and the year before.
The debate shows us the Labour party scurrying about the political spectrum, not because of an issue of principle but because it has spotted some potential votes of which it may be able to catch hold. That will not wash in the longer run.
We hope that the hon. Member for Greenwich will tell us where he now stands on MIRAS, because we know that he has called for it to be phased out over a period of five to 10 years. He is minuted as having said that, so I hope that if that is not his view now he will distance himself clearly from it. We know one answer that we shall not hear—that Labour will commit itself absolutely to holding down public spending to avoid rising interest rates, which are the biggest curse that affect people who own their own homes.
Fundamentally, the debate is about repossessions. Their number has fallen. The level now is 35 per cent.—one third—below its peak. There are also encouraging figures on the level of arrears. The number of people who are more than 12 months in arrears has fallen by a quarter. There has also been a fall in the total amount of arrears.
Much has been made of levels of negative equity. I understand the concern, but let us recognise the facts there, too. There are now 1.2 million homes with a total negative equity of £7.2 billion. That compares with 1.8 million homes two years ago, when the total negative equity was just below £12 billion. The total level of negative equity per property has dropped from £6,500 to £5,800. All those indicators show a move in the right direction, and many families who were experiencing negative equity a year ago have now moved out of it altogether.
We cannot rewrite history, but we can be absolutely certain about one thing—that almost all the repossessions could have been avoided if there had been comprehensive mortgage protection. We shall not find anybody who has lost his home in recent years who does not now wish that he had taken out a mortgage insurance policy.
What the Government are proposing is right, not only for the taxpayer but for home owners, because it would give them the security that the hon. Member for Christchurch (Mrs. Maddock) said was so important. We insure our furniture, our treasured possessions and our lives; we even insure our holidays in case they are cancelled or we cannot take them. Surely it makes sense to insure the most important purchase that we shall ever make in our lives—our home, which is the roof above our family's heads.
Seventy per cent. of people would not be covered by income support if they lost their job. The cruelty of the Opposition's approach is that it gives a false sense of security and makes more people believe that they would be covered by income support than has ever been the case. Indeed, in the past, too many people have erroneously believed that they were covered and, tragically, have found out to their cost that they were not.
The building societies are responding constructively. We have heard what the Skipton building society is doing. If it is the fact that my hon. Friend the Minister for Local Government, Housing and Urban Regeneration represents the constituency of Skipton and Ripon that has encouraged the Skipton to be so constructive, I wish that all building societies would set up their headquarters there. There may be discussions about how far such a scheme would go, but after the discussion this morning with the chief executive of one of the largest building societies in the country, I know that other societies are considering following the Skipton's lead.
The response of the Association of British Insurers to the Government's proposals has already been mentioned, but it may be worth picking up a couple of points from it. For example, it says:
Unlike income support, there is no savings test, and the circumstances of other members of the family are not taken into account.
It is reasonable to expect that as a result of the recently-announced changes in income support, more people will take out mortgage protection insurance. This factor, combined with falling unemployment, should reduce the cost of such insurance … There are likely to be very few people who will meet a mortgage lender's eligibility criteria but who will not be eligible for Mortgage Payment Protection insurance.
That is the voice of the organisation that represents the firms that would be responsible for providing the insurance. It believes that the firms can do it, and do it in a comprehensive way—[Interruption.] The hon. Member for Greenwich may laugh, but there will be a moral, if not legal, obligation on those organisations. Even before they have started to develop policies in intricate detail, they believe that they can meet the objective. I find it slightly sad that Labour's housing spokesman finds that something to giggle at.
We must recognise the limited extent of the Government's proposal. They do not propose the removal of income support for all time, but for a limited period—the first nine months of new mortgages. On an average mortgage of about £33,000 at an interest rate of 8 per cent. the total cost would be £2,000 over nine months. We should see the proposal in context. We have had discussions about how much the premiums should be and whether they should be £150 or £250, which would mean an extra £3 or £5 a week.
We should ask people whether they would rather spend £3 or £5 on a house that is £1,000 or £2,000 more expensive or have an absolutely cast-iron assurance that, if they lost their job or fell into difficult circumstances, they would not lose the roof over their head. The policy offers greater security than has ever been available before.
The hon. Member for Christchurch spoke about the double whammy of people losing their jobs and then losing their houses. If everyone took out mortgage insurance, we could remove that threat, and if a person lost their job, they could be assured that they would not also lose the roof over their head. There are also other exemptions, such as involve people who are over 60. The Government are consulting further as to whether those exemptions should be extended.
We must look at the subject in context. We must also ask the building societies to examine the way in which they operate. In the past, they have been too quick to lend people money without taking them aside and saying, "Interest rates may be low at the moment, but if they went up to 12 or 15 per cent. could you afford it?" There should be almost an obligation on building societies to encourage people to think, "Maybe I can afford that mortgage now, but if my circumstances changed, if one partner stopped working or lost their job, could we continue to afford the mortgage at a higher rate of interest?".
Not surprisingly, there have been some comments on MIRAS, following the comment of Baroness Thatcher last night. It should perhaps be remembered that the biggest change in mortgage interest tax relief happened in the 1988 Budget, when double mortgage relief was removed. It was not removed overnight; it was phased out. We should recall that that created a tremendous growth in the property market before it dropped overnight. Perhaps the right hon. and noble Lady might care to remember who was in charge of the Administration at that time. She spoke about the level at which interest relief was payable being increased to £30,000, but had it been increased in line with the rate of inflation under her Administration, it would have been £60,000 rather than £30,000.
If home ownership is the way in which people prefer to live, and independent surveys by Shelter and other organisations suggest that 80 per cent. of people want to own their own homes, it seems strange that Government subsidies support the non-preferred systems of housing, such as renting, but are being removed from the preferred system of housing.
There is a good, but not absolutely comprehensive, case for assisting first-time buyers as this is an uniquely favourable time for many of them to enter the market, but we should view any move to extend MIRAS for first-time buyers against the background of falling interest rates. People who buy a house now on an average mortgage will pay £130 a month less than they would have paid in October 1990.
We have heard repeated calls for more money to be ploughed into building 100,000 new houses, or whatever, a year. I am certain that if 100,000 new houses were being built, the Opposition would say that the figure should be 200,000. Whatever the figure, we can be certain that the Opposition will double it.
Does my hon. Friend agree that that observation leads on to another problem for us to ponder? We have not managed to free up the rental market enough and, even after the reforms, we have still to do a great deal more to reduce the pressure on the housing market.
I am grateful to my hon. Friend for raising that point. I hope that the Government will move in that direction because the private rented sector has a key part to play in the balance and it needs further development.
The solution should not always be to build more social housing. There are about 100,000 empty flats above shops. Not only are they a wasted resource, but bringing people back into city and town centres is a socially desirable objective. There are some 780,000 empty properties in Britain. Many of them are owned by local authorities—predominantly Labour-controlled authorities—but the overwhelming majority are in the private sector. As my hon. Friend the Member for Chingford (Mr. Duncan Smith) suggested, we should encourage those properties back into use.
The case for Suffolk Coastal is quite remarkable. That local authority has sold off the overwhelming majority of its social housing stock in a large-scale voluntary transfer. It has shown tremendous responsibility by keeping a small number of houses to meet the needs of homelessness in the borough. That is a way forward that many others should follow. A small percentage of residual stock is kept empty to enable the local authority to house homeless people with great speed. I should have thought that the hon. Gentleman would welcome that.
We should also encourage housing associations to feel the exciting and exhilarating wind of competition. I hope that the Government will soon announce that the housing association grants will also be made available to private developers and that money will be recycled to housing associations by extending the right to buy to those who live in housing association properties.
We must also take steps to make the housing waiting lists in local authorities operate better and more efficiently. The Government have already put forward proposals and I hope that it will not be long before they make a firm commitment to them.
As joint chairman of the all-party group on homelessness, there is nothing I want to see more than the scourge of homelessness removed. The Government's proposal, whereby everybody would have mortgage protection insurance, is a key element in that process. It would mean that we could begin to remove once and for all the fear of people who lose their jobs that they may also lose their homes.
It is sad that, once again, in today's debate Labour has shown that where there is a choice between easy popularity and responsible government, easy popularity always wins and responsible government is relegated.
I must comment straight away on the speech by the hon. Member for High Peak (Mr. Hendry) who, despite his clear knowledge of the subject that we are debating today and the range of interests that he rightly disclosed, would appear to be living in a different country. He talks about letting being at an all-time high, but overlooks the fact that a significant proportion of new rentals are simply transfers within the local government market, and if one removes them from the statistics, the figures are far from the level that he would lead us to believe.
The hon. Gentleman talks about the number of repossessions falling, but overlooks the fact that they are still running at more than 50,000 a year. There are 1,000 a week and the number is rising. If I were on the Conservative Benches, the last thing in the world that I would want to refer to is repossessions. If one walks down the streets in the well-to-do suburbs that many Conservative Members represent, one can see that the "For Sale" signs are going back up. Repossessions are again increasing in number.
The hon. Gentleman talks about negative equity as if the Government had achieved some marvellous success in reducing it. He tells us that there are only 1.25 million home owners whose houses are worth less than the mortgage taken out on them. What sort of achievement is that? He did not tell us that it is an enormous number, nor did he mention that it is increasing yet again.
It is increasing again; repossessions are increasing and negative equity is increasing, and we are confronted with a genuine crisis in the market. The hon. Member for High Peak, as chairman of the all-party homelessness and housing need group, which must be one of the most socially oriented and worthwhile organisations in the House, should be deeply worried about those issues instead of trying to place the best gloss on what is a terrible position for the Government.
However, there is one matter on which I would tend to agree with the hon. Member for High Peak, yet again I must fundamentally disagree with him. I am pleased to see the Secretary of State returning to the Chamber, because I wanted to intervene in his speech about that issue—insurance—earlier. I am grateful that he has returned.
I happen to agree with the Secretary of State and the hon. Member for High Peak that, if we could achieve a comprehensive insurance policy to cover mortgages for those who have taken them out, that would be very worth while. Throughout the House we would agree—it has been said already and it bears repeating—that there are two essential things in the lives of our citizens. One is a job—or jobs, in two-parent families, if they can get them—and the other is a house. If one places the other at risk, it is a dramatic situation.
I said earlier, and I say again now that the Secretary of State is back, that the fact that we have approximately 1.25 million people with negative equity, that there are 50,000 repossessions a year and the figure is increasing, and that we have so much homelessness, to which the hon. Member for High Peak—chairman of the all-party homelessness group—referred, shows that there is a major problem.
The uncertainty will persist because, whatever the Secretary of State says about Labour Front-Bench Members and our proposals, there are a few precious months before we shall have to declare them as the next Government. It will happen. We shall have to. There is no doubt about that.
However, we are now worried about what the Government will do about that position. The Secretary of State got off lightly earlier because he was able to focus on the narrow issue in the Opposition motion of insurance for mortgages. If he is really telling us that he is confident that, on the back of that remarkable initiative from the Skipton, we shall now have a nationwide—"cast-iron", I think, was the phrase used by the hon. Member for High Peak—insurance policy covering all mortgage holders, I would rejoice with him. It would be a tremendous achievement.
However, the Secretary of State knows as well as I do that subscribing for insurance for mortgage risks is an extremely difficult, if not impossible, proposition, with the best will in the world. I defy any of the big insurance companies to come up with a policy that will work. We know that two thirds of people who have taken out insurance have found, when they came to cash it in, that it did not work. Those are the figures that we have. If the Secretary of State wants to correct me, I would be delighted to hear him do so.
I have no doubt that, as the Secretary of State is so committed to that issue—it is important and I am with him on it—he will do better research to find out what the true figure is.
I shall come to another matter in a moment, because "sophistry" is an in word at the moment and the Secretary of State was indulging in a great deal of it in his speech. However, I challenge the right hon. Gentleman, in his heart of hearts, to give us the terms of the policies that will be underwritten, which will give a cast-iron guarantee to people who have mortgages that, in the event that they lose their job, they will be able to cash in the policies and prevent a repossession. I do not believe that it is possible, and it is a cruel hoax on the people to put it as a realistic proposition.
Then the Secretary of State said that the policy would pay for itself—that that would come from the margins because the Skipton building society was offering free insurance to gain a competitive advantage. Correct. He then said, "But of course all the others will follow suit". I say that there is no competitive advantage once the whole market is covered and all mortgage lenders are doing the same thing.
If the Secretary of State, who is the arch apostle of market forces—the one who believes in supply and demand, the profit motive and so on—believes that, once a pattern of behaviour is established for all providers in a given service, they will continue to do that out of their own margins, he lives in cloud cuckoo land. Obviously, mortgage lenders will pass on the costs. It would be worth doing if it could be done properly, but all it will do, in the meantime, is depress the market further by making the cost of borrowing more expensive.
That brings us to the nub of the Opposition's case—the timing of these perverse proposals. When the market is flat on its back, one does not go on kicking it. When one is in a hole, one does not go on digging. When a company or an industrial sector is in difficulties, one does not clobber it further. That is the golden rule for anyone who wants to handle pragmatically and constructively problems that inevitably arise in various sectors and at various times in the economy.
Instead of doing that, the Government, for a reason that I cannot understand, have chosen to tackle insurance, social service provision for mortgage interest and tax relief on mortgage interest. At the very time when we need measures to revive and sustain the market, the Government have chosen to indulge in those perverse measures to depress it further.
It is equally inane to pretend that no crisis exists. Some figures were mentioned earlier, but we know that sales of existing housing are down. We know that starts on new houses—I heard the figure today—are at an all-time low, lower than since the second world war.
We know that prices are down. The Halifax building society's figures say that they are 1 per cent. down on a year ago, and 10 to 15 per cent. down on a few years ago. There are 1 million people in negative equity and the number is increasing.
The construction industry is the next example that I give the House. I read today, sadly, in the "Companies & Markets" section of the Financial Times, that a major provincial house builder had issued a profit warning. The chief executive said that the company was being clobbered because it was the first house builder to announce a profits warning, and that the company felt it right that it should let its shareholders know the way things stood. However, he says—it is clearly quoted in the Financial Times—that the company is only the first in a series of similar companies in the house building industry that will announce severe profit warnings.
If that does not amount to a crisis, I do not know what does. Moreover, we all know it. I do not want to indulge in describing the problems that we have in Coventry, but it is simply incorrect that in Coventry, the private sector is replacing the houses that the public sector no longer builds—to take another argument from the speech of the hon. Member for High Peak. The private sector is not nearly replacing what we have lost from the public sector's building programme.
We are in crisis, and we need remedial action from the Government. It is no good trying, as the Secretary of State, perhaps smugly, has done today, to sneak out of the debate on the narrow issue of insurance and to say, "We shall now have a nationwide programme put in place to deal with that"—first, because he knows that, in all probability, it will not work and, secondly, because he knows that, in itself, it will not be remotely enough to solve the major problem in the housing market.
It is not for me necessarily to say what I think should be done, but the Government could do two things. Obviously, I do not speak for Labour Front-Bench Members, but I wish not to speak to them or for them. I want to speak to the Government and persuade the Government to do something; they are the people who can do it. They are the people who suffer most from the instability in the market. They are the people who suffer most from the pervading sense of insecurity that the job position is creating, which now also permeates the housing market.
The Government could do two things, one of which is Labour policy. They could allow a phased release of the housing capital receipts in the possession of local authorities, to be spent on affordable rented accommodation. If the Government were not ideologically blinkered against that, they would realise that it is the obvious thing to do. The resources are there. That is within the borrowing requirement already as they are capital receipts. I know that it can be argued within the Treasury and within Departments whether we need to increase the public sector borrowing requirement. In my opinion, it need not be treated in that way.
The second thing that the Government could do—which would, in all probability, involve a further increase in borrowing and in the PSBR—would be to help first-time buyers. That proposal has been made from the Government Back Benches and it merits Government consideration. The alternative is to sit the whole thing out and say, "It will get better; we do not have to worry. If we simply sit back, the thing will recover in the normal course of events." No doubt it will. Perhaps it will. But how many more people will have their homes unnecessarily repossessed as a result of that laid-back attitude?
I am sure that every Conservative Member would have a different attitude if it were their house, their mother's house or a family house that was going to be repossessed. Let us think about it for a second in that context. If it was so, Conservative Members would have a totally different attitude.
One might sit back and say, "Let's leave it to the market," but how many more people do we needlessly have to put through that hoop, and how much longer do many people who need housing have to wait, simply because the Government believe that the market will right itself in the fulness of time? I will be second to no one in subscribing to the usefulness of market forces. But the point of government is to reinforce market forces and to make them work effectively through Government action when it is required. I put it to the Secretary of State that it is one of those occasions in the market at this time. If he could get beyond his narrow ideological focus and come closer to the real human suffering involved, I believe that he would take action to deal with the problem.
Having listened to some of the contributions to the debate, I am reminded of how difficult it is becoming to discuss a whole series of absolutely fundamental subjects openly and frankly in this place. For example, hon. Members on both sides of the House know that the social security budget cannot continue at anything like its present level. Yet neither Front Bench can address openly the question of radical cuts—although I pay tribute to my right hon. Friend the Secretary of State for Social Security, who has made some suggestions in that regard.
Hon. Members on both sides of the House know that we cannot continue indefinitely spending more and more on the national health service, yet we must all pretend that we can. Hon. Members on both sides of the House have known for years that mortgage tax relief is indiscriminate, expensive, wasteful and inflationary, and that it militates against the private rented sector and distorts the entire economy. Yet no one can say that outright.
The speech by the hon. Member for Glasgow, Garscadden (Mr. Dewar) was notable for a certain shiftiness—uncharacteristic in a man who is so upright as to be elongated—on the question of mortgage tax relief. It is a sterile sort of debate when no one is able to tell the truth for fear that someone out there may be listening. The reason for that collective reticence is simple: we are all afraid of making the insecure middle classes feel even more insecure. I somehow doubt that it makes them feel better to know that their elected representatives are avoiding the issue.
The debate in the media and in the pubs is really about whether the Government should take action to inflate house prices artificially. If we cut through much of the debate on both sides of the House, we shall find that that is what we are discussing today. One does not have to be a genius to understand the politics of the matter: people quite like it when they are given money for nothing. The more owner-occupiers there are, the easier it is for us to ingratiate ourselves to 70 per cent. of the country at a stroke by giving them money for nothing. Who does not feel a secret gratification when told that his or her main capital asset is worth more than it really is?
The trouble is that we can fool the public only some of the time. We are having this debate today because the housing market became a farce in the late 1980s. The farce then became a circus and the circus became a pantomime, and many people who were assured at the time that they would enjoy the pantomime are now running to us in tears. For a few years the British public were led to believe that every Englishman's home was worth the price of a castle, or at least the price of a gatehouse from which one could hope one day to graduate to the castle. It was a cruel illusion.
It is convenient for us to pretend today that that situation resulted entirely from artificially low interest rates due to shadowing the deutschmark. It is very easy for us to shuffle all our problems, in one form or another, on to the exchange rate mechanism. The truth is far less comforting—particularly for my party, I am sorry to say. The truth is that the last Administration wilfully, wrongheadedly and irresponsibly encouraged people to believe the myth that home ownership of itself brings economic security and unearned financial gains.
Let us go to the root of the matter in so far as my party is concerned. The slogan "a home-owning democracy" is as appealing as motherhood, but unlike motherhood it is not a primary necessity for civilisation. The phrase is a logical nonsense; even worse, it is a dangerous nonsense in terms of modern Conservative philosophy. Of course, no one can oppose home ownership—it is a measure of where we have come to that it is necessary to spell that out. If we accept the idea that we can have a real democracy only when people own their own homes, we are back in the 19th century pre-reform days. If a real democracy can exist only when people own their own homes, the United States, with its high levels of rented accommodation, cannot be much of a democracy. So we are talking absurdities when we use the phrase "a home-owning democracy".
The modern Conservative party is supposed to be about choice and responsibility—that is how I understand it, but perhaps I am mistaken. People must decide themselves whether they want to own their own homes and how they should invest their savings or capital. It is for them to decide whether they should rent instead. A combination of Labour's bigotry against landlords and the tax privileges that we hand out to home owners has resulted in a scandalously overdeveloped private rented market. In that sense, we have deprived people of choice. Instead, we have fed them with illusion. That is a fundamental reason why they are so angry with the Government now.
At the heart of the whole dismal business lies a contradiction in our political thinking. It is summed up in two conflicting political slogans. The first is, "Get on your bike," which I think makes excellent sense in an international as well as a national context; and the second slogan is, "Get on the housing ladder," which is a cruel and a cynical nonsense. However one dresses it up, the Government of the day tipped the public the wink that buying a house was a sure-fire investment underwritten by Government subsidies and guarantees.
For that reason, it is absurd to say—I was sorry to hear my right hon. Friend the Secretary of State say it on the "Today" programme this morning—that 80 per cent. of people want to own their own homes. Of course they will say that if one asks them. If one asks them whether they want bigger houses than the ones they own at present, they will probably say yes to that as well. It has been dinned into them that home ownership is the only route to financial security. And behind it all is the secret hope that, who knows, one day we could all clamber back on the house-price carousel and set the whole unstable machine spinning again.
It is not merely a question of economic policy or the ups and downs of the housing market; it is a question of the relationship between Governments and the electorate. Do we want to treat the public as economic morons? Do we want to lead them into financial extravagance and irresponsibility by encouraging them to believe that their future can be based securely on inflated and publicly subsidised house prices?
So much for the inglorious past; we start from where we are, which is in a deep black hole. Climbing out of the hole is the easiest thing in the world: all one has to do is rig up some rescue package involving the rate or amount of mortgage tax relief or to devise some scheme designed to help first-time home buyers. I was sorry to hear my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) advance just such a proposal. Most of such schemes—I mean no offence to my right hon. Friend or to any other hon. Members on either side of the House who have advocated them—are of dubious economic honesty. I say that because, consciously or unconsciously, we all know perfectly well that the effect of those schemes will be to provide an artificial stimulus to the housing market, which will result in rising prices.
If we were to do what some hon. Members on both sides of the House have suggested, the result would be higher prices—perhaps just at the margin, we must not exaggerate; but higher prices nevertheless. My right hon. Friend thought that knock-on effects of that kind would prove positive. But what would really happen? Higher house prices would feed through into higher mortgages in a country where mortgage debt is wholly disproportionate to individual earnings and to our national wealth. That, in turn, would increase pressure for higher wages and that, in turn, would impact on inflation and competition. Macro-economically, the effect would be to divert funds from investment in the productive economy into sterile bricks and mortar.
The policy of the present Administration to date seems to me to have been highly responsible. They have trimmed back the inflation-producing machine of mortgage tax relief and stressed that they have no wish for a housing boom. They have begun shifting the burden for insuring mortgages to where it belongs. I am entirely behind my right hon. Friend the Secretary of State on that and he deserves personal credit, all the more so because it is naturally unpopular to have to tell people that they must take responsibility for their own actions. There has been, I am glad to say, some easing up on the use of the infantile slogan of "a home-owning democracy", although it still crops up from time to time.
We are now told that the country cannot take the medicine and that because some people arc caught in negative equity, the solution must be to give the whole damn shooting match a boost. I understand that the 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 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.
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 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 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.
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 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.
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.
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.
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.
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 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 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.
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 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 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.
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 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
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.
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.
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 he 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 he 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 to pay the mortgage? Where will the responsibility lie if the insurance company refuses to pay up on the claim—with the borrower, the lender or the insurer?
I hope that I am wrong, but the Government will push ahead with this policy, and I think that the Secretary of State was over-confident this afternoon. The negotiation of block insurance by lenders with insurers and the extension of the market will not remove the exclusions and the vulnerability that are inherent in this market. At the moment, the housing market does not need the greater insecurity that the measures will produce, and they should be withdrawn.
I will keep my comments shorter than planned and press on as fast as possible as other hon. Members want to speak. This has been an interesting debate because it has done much to demonstrate some of the clear differences between the two sides of the House. I hope that when my hon. Friend the Minister replies to the debate he will demonstrate that, so far, we have heard no policies from the Opposition Front Bench tonight. It is their debate, but amazingly no policy seems to be coming out. Perhaps that is part of new Labour: the idea is to talk a lot, but not to give much away. That is fair criticism and I hope that my hon. Friend will point it out.
We have had a particularly good debate, especially on some of the comments made by my hon. Friend the Member for Buckingham (Mr. Walden), who touched on an important point. Even though the record of Conservative Governments during the 1980s was impressive, both in terms of the number of people who got themselves into the housing market and in the way in which lettings increased, we now find ourselves at a critical point. We must examine what we have achieved and whether we should now be doing something else.
My hon. Friend the Member for Buckingham went into the matter and said that, essentially, the policy of the 1980s was wrong. I disagree. He was being far too simplistic and failed to recognise that many people who prior to the 1980s would never have dreamed of being able to own their own homes have managed to achieve that. They have some essential capital for their old age or their family and they have got on to the ladder of the capital-owning democracy: I prefer to see it as such, rather than as the property-owning democracy. We must accept that, in future, assets must have greater convertibility so that people can deploy them. After all, a home is an asset. People should be able to deploy their assets against their old age and, for example, provision in care homes. Many people who would never have been in such a position are in that position now, which is a positive factor.
There is a problem, however. After the housing boom of the late 1980s and the recession, too many people are locked into a depressing state of negative equity, with their properties not worth what they paid for them. That problem has been compounded by the fact that we have other instabilities in the marketplace—not merely higher unemployment, which we have been getting down, but more particularly because there has been a cultural change in the way in which people work. White collar workers now face greater instability than ever before, mostly because the nature of their employment has changed dramatically.
When I first started work in a private company, after leaving the Army, there were people who had worked for the company since they had left school at 16 or 17 and who were close to retirement. They had worked for one company right the way through and there were a number of them. By the time I left, I remember thinking that it was difficult to find such people. Most people seemed to be shifting in and out of employment and moving to different companies with greater regularity. That has meant that people to whom such stability gave some confidence about purchases, not least house purchases, have found themselves lacking that sense of stability and unsure where they might be.
On top of that, with low inflation there are lower pay rises. Everyone will say that, logically, there is no difference between a pay rise of 3 per cent. with low inflation and a pay rise of 10 per cent. when inflation is running at 7 per cent., but people saw that extra in their pay packet and somehow felt better. They do not feel that now. That is a state of mind which exists with permanently lower levels of inflation and we have to work through that. It all means greater instability. People are less determined to spend their money.
My hon. Friend the Member for Buckingham is wrong in his assertion that the policy was wrong. He compared our position with that in other countries. Most interestingly, he seemed to allude to the fact that the United States has a much better rental market because it had not entered the house purchasing programme. Yet the percentage of home owners in the United States is roughly the same as here. The difference is that the Americans have easier access to a rental market which does not penalise the private sector owner who wants to rent out property. One can move 2,500 miles across America at the drop of a hat and rent not just a home but all the furniture in it at easy rates. The difference is that Americans will leave their houses behind and rent them out; they will move to rent somewhere else. There is greater freedom.
If I have one criticism of any Government who have been in power, it is that we have ignored for too long the impact of having a constricted private rented sector, as my hon. Friend the Member for Portsmouth, South (Mr. Martin) said. We have not done enough to sort that problem out and that is where the dilemma lies. The problem is not that too many people own their homes, as my hon. Friend the Member for Buckingham said, but that when they want to move it is difficult to find temporary accommodation elsewhere, which locks up their ability to take jobs.
My hon. Friend the Member for Buckingham went on to compare the situation here with France and Germany, which I found intriguing. Some of my family live in Italy and have had to buy homes. They have had experience of buying a home over a two-year period—that is the amount of time given to repay the loan. That is a huge, crushing burden on anyone not earning at the highest level. So such people do not get access to capital. We heard earlier that access to capital and cheaper money somehow created a problem. In fact, such access has released many people who would never have had the ability to purchase homes.
In answer to my hon. Friend the Member for Buckingham, yes, purchasing a home is special. It is no good pretending that it is just any other sort of investment. People do not live in stocks and shares. People do not bring up a family in a load of paper investments. Bricks and mortar are special. A house is connected with the family, a way of life, tangible things that one can touch which give us security. That is why there is so much emotion on the subject. That is why we find that, with such great instability, people are concerned and wondering what will happen next.
Some have said that Lady Thatcher was wholly wrong to raise the issue of the housing market. I disagree. It is a very important point to raise. I do not think that the route that she is trying to persuade us to take is necessarily absolutely correct, but she is raising the fact that there is major concern about an emotive issue. We need to make certain that we focus on that issue, address that concern and point out to people why our policies will bear much greater fruit than some of the nonsense talked by Labour Members.
Yes, mortgage interest relief at source is withering. It would continue to wither even if we did not change any of the levels because it would become a smaller and smaller part of the purchase. For a long time, I have believed that MIRAS must disappear, simply because it has tended to distort the market place. I accept, however, that since there is great instability, we need to think carefully about the impact of the reduction in MIRAS—not because it financially benefits people to the huge degree that some claim, but because it has a psychological effect: it sends a certain message. That message is compounded by other factors. There is some point in drawing breath, but I am not certain that we shall gain very much by reversing our position.
It is rather pointless to go through some of the other problems, but when I look at what the Government are proposing, I accept wholly that there is a need for reform. There is no question but that mortgage protection has got out of hand and the Government are being bold in addressing it. I do not say that simply because I am a Conservative. Whatever Government were in power would have to address that problem. What is so brilliant about the Opposition is that they will not even begin to address the issue publicly. They talk about controlling public expenditure, but when the first opportunity arises to declare their interest they walk away from it at a rate of knots.
Let us consider, for example, the report of the all-party Select Committee on Social Security, which was published on 8 June. I stress that it was an all-party report. Paragraph 89 of the conclusion says:
There is no simple or agreed answer to the question at what point does social security become unsupportable … The Committee does however agree that the uncontrolled and unplanned growth of social security spending is a cause for concern. Whilst a Government may wish to raise social security spending as a conscious act of policy, no Government should find itself driven inexorably to devoting a higher and higher proportion of GDP to fund the consequences taken by Ministers long departed, who perhaps misjudged demographic trends or the long term effects of their decisions.
That is the crux of the matter that my right hon. and hon. Friends are addressing with the mortgage protection scheme.
If Labour Members do not believe that and want to walk away from it, they should look at what came off the back of that report. Total benefit expenditure rose from £6.6 billion in 1974 to £85.2 billion in 1994–95. Benefit expenditure less costs of unemployment as a percentage of GDP has increased for the past couple of years by around 11 per cent. The Select Committee report makes devastating reading.
Where do Labour Members stand? They do not; they run away. They hold a debate which should not be called a housing debate but a crocodile tears debate. They have seen in the newspapers and heard through the media that there is a problem. The Opposition's job is to get up and pretend that they really care about what concerns people, say a lot of stuff about how they would sort things out in a general sense but for goodness sake avoid going near specifics.
Anybody who consciously thinks that the Labour party will offer them anything by way of extra protection for their homes should forget it. The Labour party has made no particular pledge tonight. Labour Members have talked about lower income owners. The hon. Member for Greenwich (Mr. Raynsford) has said that they will look at ways to find money for lower income owners, but the Leader of his party says no, they will have a responsible view towards borrowing and expenditure and they will not allow themselves to get mixed up. Another spending pledge has been made; yet they keep telling the public that they will not go down such a road.
My hon. Friend is developing a very interesting argument, but does he agree that a reduction in the welfare benefits available to cover mortgage interest for those with less than £8,000 in the bank who are made redundant—together with a reduction in MIRAS when the housing market is in the longest and perhaps deepest depression, certainly in my lifetime—is not very satisfactory? With 1.5 million people in negative equity, would it help to bring back the feel-good factor, which my hon. Friend and I know is so essential to this country, certainly if the Conservative party is to go into the next election with some confidence?
I accept what my hon. Friend says. I said earlier quite clearly that I think that the Government need to draw breath and think carefully about the total impact of what we have been doing over the past 12 or 15 months with regard to home owners. We may need to think carefully about M1RAS—not because in the long term we do not think that it has a destabilising effect, but because in the short term we should consider the pressures that people are under. With respect, that is not what the Labour party is saying. The Labour party is pretending that it will have some magic wand to wave to benefit home owners, but it will not. People should be aware that it is perpetrating a fraud.
It is no good pretending that there is a magic wand because there is not. The most important thing that home owners must recognise, as we all must, is that maintaining low interest rates and low inflation is ultimately the best guarantor of security in the housing market and the single most important factor that the Government can deliver. That goes hand in glove with expenditure and borrowing. Reducing expenditure and reducing the social security budget relate to the measure proposed. Reducing expenditure helps to lower inflation and with it interest rates. If we are not honest about that, we shall always be running way from reality. We have to be honest and to explain that that is the only way to achieve security for home owners.
The real question is not, as ever, what we should do, but what we should not be doing. Many things that we have been doing and some of the new taxes that we have introduced in the past 15 months have had a destabilising effect. So the message that I send to my right hon. and hon. Friends is that we should start reducing the burden of taxation. Ultimately, that is the best way to ensure that home owners benefit greatly, because they will have more of their own money to spend and they will feel better as a result. As they feel better, the market will stabilise. So let us get on with it and reduce taxes, as a Conservative party should, and stop playing at nonsense schemes with the Opposition.
In any housing debate, we should state the basic premise that every individual in our society has the right to a home of a decent and acceptable standard. The Opposition believe that premise; I am not sure whether every Conservative Member who has spoken believes it. Those who pretend to believe it always make excuses about why it cannot be achieved.
Most of the suggestions made by Conservative Members in this debate would not deal with the major problems that my constituents face. The major problem experienced by people who queue up to see me at my surgeries is that they cannot get a home at all. It is caused by Government restrictions on the ability of local authorities and housing associations to build homes. We have heard that in this financial year local authorities will build a total of 500 homes. That is less than half the total that Sheffield city council alone was building when the Conservative party came to power. The pretence that housing associations are being allowed to build to meet that gap is nonsense. They will build fewer than 20,000 homes in the current year.
When the Government started restricting the building of homes for rent, we were told that investment in the public sector had to be restrained because it displaced investment in the private sector. The building of new homes in the private sector has not increased during the term of this Government and the total product of the Government's policy is to reduce house building from an average of 300,000 in the 1970s to fewer than 200,000 now. That is why so many young and not-so-young couples who come to see me at my surgeries say that, whereas they would have had to wait a year or two years for a semi-detached home in 1979, the waiting time for those properties is now 10 years plus. The hardship of young couples who must live with their parents or parents-in-law in desperate housing circumstances with all the family tensions that those bring is an essential problem, which the Government are incapable not just of solving but of recognising.
It is a problem not just of housing numbers but of housing quality and repair standards, as 1.5 million homes are unfit. When a survey was done of council housing stock in the 1980s, the Government took one look at it and would not allow local authorities to repeat the exercise. Local authorities are willing to invest and maintain their homes but are prevented from doing so by Government restrictions on their ability to borrow and spend their own capital receipts.
I welcome some of the Government's schemes on estate action, in which they have targeted some of the worst housing and invested money in it. But we must remember that the estate action schemes have not merely targeted but top-sliced. In that sense, they have directed money to some of the worst estates but away from many essential maintenance repair programmes, such as the replacement of windows and wiring schemes in other properties, where tenants now suffer as a result.
We therefore have the problems of a lack of houses and a lack of quality of housing, which can both be put down directly to the Government's attitude to housing investment. That is the crux of the problem. During the 1980s, the Government were obsessed with housing tenure and willing to ignore the problems of housing investment. How can Conservative Members criticise Opposition Members for opposing owner-occupation when their policy of the 1980s was an obsession with owner-occupation and an absolute hatred of and opposition to people who wanted to rent their home, and opposition to rented housing as such? Their obsession with one form of tenure over another explains many of the problems of housing policy during the 1980s.
It is no surprise to find that this country spends 2.9 per cent. of its gross domestic product on housing investment, whereas Germany spends 6.1 per cent. Of all the countries of the Organisation for Economic Co-operation and Development, Britain comes 21st out of 22 in terms of the amount of GDP invested in housing. That is a direct result of Government policy.
During the 1980s, people on the margins of being able to afford to buy their own homes were encourage into home ownership. They then suffered when house prices went up because they could not afford them. They certainly could not afford to move on into a larger home. They suffered from the rise in mortgage repayments, which they could not afford either. They also suffered when they became unemployed.
I was interested in the comments of the hon. Member for Chingford (Mr. Duncan Smith) about the difference between investing in a home and investing in other forms of assets. The Government encouraged people to believe that home ownership was a way of making money. It was not simply about putting a roof over one's head; it was an investment to make money—a one-way bet. People were told that they were on to a good thing and that, if they continued to rent their homes, they would lose that opportunity.
The Government not only encouraged that approach but tipped the level playing field so that people could not invest in rented homes but could invest in owner-occupied housing. They gave incentives to buy. They kept MIRAS for a long time while they cut grants to local authorities on rented housing. They tipped the playing field so that people naturally chose to buy, even if they would have been better off renting. All the incentives were in that direction.
The hon. Gentleman's words would carry much more weight in the House if his record on housing management when he was with Sheffield city council were not so disastrous.
On obsession with tenure, why is it that, even given householders' experiences of the past five years, 80 per cent. of the population still aspire to own their own homes? If that is what people want, why does the hon. Gentleman seek to deny them?
I do not try to deny anyone expressing a choice. But tilting the playing field in one direction by withholding from people who rent the same Government financial benefits as are available to owner-occupiers is unfair and discriminatory against people who want to rent or have no alternative but to rent. It also encourages into owner-occupation some people who wish that the Government had not pushed them in that direction because of the problems that the Government have subsequently allowed and caused them to get into. The Government have created an atmosphere whereby people feel that they have become a social failure and have not achieved if they do not own their own home. That has been a disastrous policy for the Government to pursue and it was just articulated effectively by the hon. Member for Plymouth, Sutton (Mr. Streeter).
The Government's only policy has been to persuade people to become owner-occupiers. The rest of what has happened has been a series of accidents which have affected people's housing circumstances. Many people in the private sector now have negative equity. The grave problems that people are now experiencing were created by the Lawson boom and the bust that followed, and the housing sector has been hit worse than most as a result. The fact that the Government now want to withdraw income support for owner-occupiers has little to do with housing and more to do with their desire to cut the social security budget, probably to create room for tax cuts before the next general election. The product of rising unemployment forced the social security budget up in the first place.
If the Government's proposals on housing benefit restrictions are necessary, it is because the Government deliberately forced up rents in the housing association and local authority sector and caused housing benefit expenditure to increase. We shall no doubt shortly hear proposals on homelessness, which the Government regard as another cause of the problems rather than the fact that their policy caused homelessness in the first place.
A series of major problems in the housing market have been worsened by the effects of the Government's short-term action. I caution that we should not look for short-term solutions to deal with the problems immediately facing us. First, we should try to deal with the problem of lack of investment. The policy advocated by the Labour party of allowing local authorities to spend their capital receipts on a phased basis is absolutely right. Sheffield city council has £40 million and many other councils have similar proportionate sums which they could use to deal with the lack of housing and the need to build new homes and repair existing housing in both the public and private sectors.
Conservative Members always ask about the effect of that measure on the public sector borrowing requirement. They are ignoring the fact that the PSBR is a uniquely British concept which would not apply in terms of Government deficit definitions in other European Union countries. They are also ignoring the fact that when the right-to-buy scheme started, the then Secretary of State for the Environment gave a commitment that local authorities could use the total proceeds of council house sales towards investment. The same rules of definition applied when the Secretary of State—now the President of the Board of Trade—gave his commitment on that occasion. Those definition problems should have been addressed by the Government at the beginning of their right-to-buy policy and before they made the commitment that money should be spent.
I certainly do not believe that all that money should be used for council housing. We ought to use some of the money to deal with the great backlog of mandatory improvement grants. It is a scandal that people in the worst accommodation—including home owners and people in private rented accommodation—cannot get their homes improved because the resources do not exist to allow that work to be carried out.
Conservative Members lecture the Opposition on our attitudes towards owner-occupation. They should remember the scandal in 1983 when improvement grants were allowed to let rip and virtually anyone who got in the queue could get such a grant. That helped the Government win the 1983 general election. What has happened subsequently with regard to the improvement of properties in the private sector shows that the Government are not concerned about helping owner-occupiers, particularly those in the worst properties. The queue for mandatory grants which now exists cannot be met, and that is a deliberate product of the Government's policy.
The successful schemes that local authorities pioneered—which began in Birmingham—included an attempt to tackle the worst of the private sector problems on an area basis through a scheme called enveloping. The Government legislated against that in the Housing Act 1988, and prevented local authorities from tackling the problem constructively and productively. Every time local authorities have come up with schemes to deal with the worst housing, the Government have sought to legislate against them and reduce their effectiveness and availability.
I accept that the relaxation of capital receipts rule is not sufficient of itself, and we must look at the attitude towards housing investment generally in the public sector. The issues can be solved within a ring-fenced public sector housing Act. We ought to be looking at the issue of leasing. I was pleased that, in Sheffield, we put central heating in thousands of homes through leasing arrangements in council homes. That was a correct measure, but the 1988 Act again prevented local authorities from entering into those very schemes. We built 2,500 homes in Sheffield on a partnership basis, but the Government legislated to stop other local authorities from following suit. The Government have legislated to stop all the initiatives for local authority partnership schemes and other means of improving people's homes.
I would like to address the issue of MIRAS and the proposals which have been suggested, given the state of the owner-occupied sector at present. It will probably not come as a surprise to Conservative Members that when I chaired AMA Housing in the 1980s, I supported the phasing out of MIRAS and the use of that money for a benefit scheme for owner-occupiers who became unemployed or were on low incomes. I supported that scheme along with the Royal Institution of Chartered Surveyors, and following a survey carried out by the National Federation of Housing Associations. The present President of the Board of Trade was also advocating such a scheme at the time. He was then a Government Back Bencher, and was desirous of new policy initiatives.
I find it strange that Conservative Members who talk about their opposition to the general provision of benefits and their support for the targeting of benefits do not address the same criteria to the use of tax reliefs. They favour reliefs that benefit everyone but not reliefs that are targeted.
The only effect of MIRAS in terms of targeting is that historically the biggest reliefs have gone to the people with the biggest mortgages, the biggest homes and the biggest incomes. I agree with the hon. Member for Buckingham (Mr. Walden), who said that MIRAS had over time increased house prices. It has not benefited anybody, but it has pushed prices up. There is a lot of evidence to suggest that.
I accept the phasing out of MIRAS over a period—that is my personal point of view. It is typical that when the Government started to address that issue, they got the timing totally wrong. If they had started to reduce MIRAS at the end of the 1980s by taking it down to 20 per cent. or 15 per cent., they could have done something to cushion the rise in house prices. They could also have started a scheme of benefit support for those people who lost their jobs as the Lawson boom became a bust. They could have acted in those two ways to help the housing market. What they did, of course, was to wait until the housing market was in crisis. They then acted at a time of falling housing prices by taking benefit away from owner-occupiers. That was a failure of timing on their part, and they should be ashamed of what they did.
The right hon. Member for Sutton Coldfield (Sir N. Fowler) suggested that we bring in short-term measures to help the housing market by giving additional benefits and tax relief to first-time buyers. I do not think that that is necessarily the right way to go. The hon. Member for Buckingham asked one or two clear questions which I would like answered before I would be prepared to accept any such scheme.
There is a worry that if we give help in that form to first-time buyers, there is the effect of pushing house prices up generally. Everyone will have to pay more, including those who are not getting the benefits. If a scheme is introduced, will it be time limited? Can it ever be taken off? If help is given to someone buying for the first time, will that help cease when that person goes to buy a second home? Will restrictions on flexibility and mobility in the housing market be placed that otherwise would not exist? Some people remortgage their property and get a cheaper deal. Will the help apply to that second deal? Those are all real problems which need to be addressed.
There are no quick fixes to the problem, which has been created by a set of economic disasters caused by Government policies. There is in this country a housing crisis, and it is a crisis of the Government's making. There has been a collapse in confidence in the owner-occupation sector which has been produced by the Lawson boom and the fear of unemployment. There is a long-term lack of investment in both public sector housing and older private sector housing. The Government's policies are of a short-term nature for reasons other than housing, such as cutting income support and MIRAS to provide the funds for tax cuts at the next general election. That seems to me to be a hopeless and disastrous set of policies.
There is a long-term crisis in this country, and I have not heard one single proposal from the Government Benches in this debate—the Conservatives are, after all, those in power—to address any of the real problems in owner-occupied housing, council housing or housing association houses. I hope that we will hear such a proposal when the Minister winds up, but I very much doubt it.
I begin by declaring an interest in that, over the past 23 years, I have been the director and owner of a house-building company, which has just started a new development programme. I am glad to say that I am much more optimistic about the prospects for housing than many of my hon. Friends appear to be, and certainly more optimistic than many Opposition Members are. In the time available to me, I shall elaborate on the reasons why.
I have some sympathy with my hon. Friend the Member for High Peak (Mr. Hendry), who said that it is a bit rich for the Labour party to table a motion defending owner-occupiers as if it were the friend of the private house owner, when its record shows precisely the opposite. Plainly, the Labour party has voted not only against every measure to make the private rented sector more flexible but against council house sales, which have given home ownership opportunities to 1.6 million people, including 3,000 or 4,000 of my constituents.
The most important fact is that the Labour party consists of inveterate spenders who like to put their hands in the pockets of the taxpayers, so it is no surprise that in response to a recent survey of managers who look after institutional instruments in the City, 78 per cent. said that if—God help us all—there were a Labour Government, there would indubitably be higher interest rates. High interest rates and the uncertainty that they cause kill the housing market, whether the private rented market or the owner-occupier market. Sadly, high interest rates are what we almost invariably get under a Labour Government.
I agree with my hon. Friend the Member for Buckingham (Mr. Walden), but, although his speech was interesting, it was rather over-academic in that he did not seem to realise the special place that a house has in somebody's compendium of assets. A house is not simply an asset like shares or a building society account; it happens to be where one lives and where one's children grow up. As a result, people's houses have an important emotional effect on them.
Therefore, Governments have an obligation in that direction, especially if they have—rightly, in my view—encouraged people to own their own houses, as the present Government have done. The Government have an obligation to ensure that people can do that in an environment that is stable in macro-economic terms and not likely to fluctuate wildly and affect the value of their most precious asset.
One could argue that, at the end of the 1980s, the housing market appeared to be a one-way bet. I never thought that that was sustainable, and in 1988 I always urged my colleagues in the building business to get out, because the boom could not last. I am glad to say that I was proved right, although sadly many others were to be proved wrong.
Nevertheless, the housing market is important, and I make no bones about the fact that it is worrying that some of the statistics are not yet as helpful as we would like them to be. The National House Building Council tells us that starts have dropped year on year and that, in the first five months of this year, they dropped by 15 per cent. Indeed, in the west midlands they dropped by 17 per cent.
The House-Builders Federation says that sales of secondhand houses have dropped by 17 per cent. but that, significantly, sales of new homes have dropped by only 3 per cent. I am told that the number of completed transactions in April was 85,000—considerably less than the comparable figure over the past three years. In fact, it is the lowest total ever recorded for the month of April. So it is not an easy market out there.
However, I must add the caution that we talk not about "the housing market" but about "housing markets". With property, location is everything, so there is a series of discrete markets that are difficult to evaluate. Nevertheless, they are important, and they have an important effect on related industries such as the construction industry, the white goods industry, the furniture industry and the carpet industry, which employs 4,500 people in my constituency. Although carpet export markets are going well, the home market is suffering as a result of our difficulties in the housing market.
What has caused the lack of confidence in the housing market? And—the $64 million question—is it susceptible to measures that a Government, however sympathetic, can take? I am always slightly cynical when people say that we can change sentiment in a particular consumer or commercial market.
We have been given plenty of reasons today. There have been two changes in the MIRAS arrangements, and they cannot have helped. There is also job uncertainty, although one might add that 50 per cent. of people who become unemployed get another job within three months, and that a flexible job market can have advantages as well as disadvantages.
Although we have spent a huge amount of time talking about the income support proposals today, I do not think that they have had much effect on the market so far. They are anticipated, but it is a relatively sophisticated purchaser who allows for them. Moreover, the Halifax building society says that about 40 per cent. of purchasers are already taking out their own mortgage insurance, so that puts the changes in context.
There may, of course, be a change in attitude towards home ownership. Although I suspect that 80 per cent. of people would say in principle, "Yes, I would like to own my own home," it is like saying, "I would like to be virtuous," and the answer, in St. Augustine's terms, is, "When are you going to be virtuous? Is that now?" I suspect that many first-time buyers are delaying making purchases as they would not have done in the 1980s, and that people will rent until they settle down or get married and then purchase, as they have in the past.
In short, we are witnessing a fundamental readjustment of the property market to a non-inflationary era and there are bound to be casualties. It is a huge change and they are evidence of it, although one should not underestimate the problems. Most artificial stimulants can be unpredictable, patchy and, by God, they can be bad for one in the long term. It would probably be a mistake for the Government to try artificially to stimulate the housing market, mainly because Governments do not second-guess markets very well and often provide a stimulus when the market is making an upturn anyway, so that it exacerbates rather than counters the normal cyclical effects.
There are reasons for being reasonably optimistic about the housing market, and we have heard some of them. The ratio of house costs to wages is very good—possibly the best for 20 years. Houses are very affordable. The NHBC said that its first-time buyers index was at its best ever level in the 20 years it has been calculated. There are opportunities for potentially new buyers to buy at a relatively good level.
Finance costs are very low. In the Estates Gazette this week, the Hinckley and Rugby building society is offering fixed rate mortgages for one year at the rate of 1.5 per cent. I am not saying that everybody is offering those mortgages, but it shows that the money is available. Since 1990, when interest rates began to fall, it has been easier to finance the average mortgage and costs have reduced by about £130 a month.
The number of households is still increasing; therefore, there is still a demand for houses and, most important of all, real incomes are generally rising. The best predictor of the level of transactions and housing market activity over a 20-year period is the level of real incomes throughout the country. I believe that real incomes, particularly with the prospect—without being definite—of tax reductions later in the year, will rise by about 3 per cent. a year over the next three years. That also bodes well for the housing sector.
Next year, we have a couple of unusual events. I understand that, on the basis of three-year payouts, Lloyd's will have a better year next year, because 1993 was a good one. In addition, building society flotations in the next two years should release an estimated £15 billion to savers, which indirectly is bound to have a good effect on the housing market.
Bearing all those optimistic prognostications in mind, the debate about income support and mortgage relief will be resolved by the market. It is significant that 60 per cent. of building societies surveyed said that they would offer that particular service absolutely free in a highly competitive environment. It is costing the taxpayer a great deal more than it was 10 years ago—about £1 billion against only £50 million then.
As my hon. Friend the Member for Chingford (Mr. Duncan Smith) rightly pointed out, nowadays social security costs take not only an absolute amount but a greater proportional amount of our gross national product than ever before—about 12 per cent. When Beveridge set up the system, it was only 6 per cent. and we were a much poorer country. Some 50 per cent. of families are now getting one of the three main benefits. That was not intended in the original scheme, which is why reform is so important.
I am certain that the private sector will take up the slack comprehensively. Obviously, the Government must maintain a look-out, possibly with the aid of a code of practice, to ensure that pay-outs for income support are as effective as people say that they will be.
We have had, as was said earlier, a series of suggestions from various self-interested groups, including the House-Builders Federation and the Council of Mortgage Lenders, of ways in which we should stimulate to move the market out of its current recession. I believe that most of them are grossly misguided, for the reasons that I have outlined.
The Institute for Fiscal Studies argued that, such was the effect of MIRAS in the 1970s, the scheme gave a tax advantage for a house purchase of about 800 per cent. for top rate taxpayers and 200 per cent. for basic rate taxpayers. That was not sustainable. It was not good for the economy as a whole. That is why it is important that resources are diverted away from the housing sector in the longer term into the more productive sectors, which is part of the reason why the MIRAS sector has been withering on the vine.
I agree with the hon. Member for Sheffield, Attercliffe (Mr. Betts) the idea of the House-Builders Federation that there should be a first-time buyers' scheme that would offer, on a tapering basis, 25 per cent. relief up to £50,000 is cloud cuckoo land, for three reasons. First, I do not believe that it is lack of finance that prevents first-time buyers from entering the market, for all the reasons that I have given. Secondly, I do not believe that it would have a knock-on effect on the market, because those first-time buyers would be stuck in their first homes, and would lose tax relief on leaving. Thirdly, the scheme would be subject to enormous abuse. I am sure that everyone's wife would be a first-time buyer; she would have the mortgage and we would miss the target with a vengeance. Such a scheme would be a great deal more expensive, and it would be poorly targeted. Too often schemes are counterproductive and short-lived. Trying to change sentiment is generally not a very effective thing for Government to do.
There may be a case, as my hon. Friend the hon. Member for Chingford said, for considering the way in which mortgage interest relief is calculated on an average basis and possibly moving it back a little bit nearer 20 per cent. I would not do that temporarily; I would do it on the basis that we were going to maintain that level. Uncertainty is one of the things that has most worried people in the housing market and, if people get the feeling that mortgage interest relief will be reduced even further than the present rate, that will have a debilitating effect on confidence, and therefore on the housing market, in a way that will be no good to anyone.
I shall mention one or two measures that might have a constructive effect on the housing market without throwing an enormous amount of taxpayers' money at it—supply-side measures, which would make the market work more effectively, and which would stimulate demand, which would then be supplied in the usual way.
I have always considered it anomalous that, although the housing market is not subject to VAT in the main, stamp duty is imposed on every transaction. We want to encourage mobility. Stamp duty raises relatively little in revenue terms—about £1 billion a year. If the Government seek a supply-side measure, reducing or abolishing stamp duty would not be a bad place to start.
There is a case for introducing more sophisticated savings-related home ownership schemes to encourage saving among young people and first-time buyers, provided such schemes were on a one-off basis rather than on a continuing basis, which would distort the market. The Treasury would give, on a like-for-like basis, an equal amount to the sum saved, up to a certain amount. The schemes would encourage thrift and get young people on the first step of the housing ladder. Possibly more important, they would also ensure that young people did not have to take out a mortgage for as much as 90 per cent. of the value of their property, because they would have more of a deposit to put into their property.
The president of the British Property Federation has suggested that authorised housing investment trusts should be established so that institutions can invest in private rented property more tax efficiently. I think that that would have a good effect on yields in the private sector and would prove helpful to the market. I would also like to see a review of part M of the Building Regulations. I think that we have gone over the top with regard to the importance that we attach to ensuring that every new house meets the needs of disabled people. That raises costs without necessarily benefiting disabled people in the manner intended.
Those suggestions are sensible supply-side measures. However, it is most important that we step back and try not to interfere unduly in the market. The market fundamentals are good. I believe that they will lead to some improvement and that real incomes will rise in the next six to nine months to a year on a sustained basis. Everyone involved in the housing industry wants to have sustainable growth rather than the boom-bust cycles that we have seen in the past. As my hon. Friend the Member for Chingford said, if we can add to that lower taxes on a permanent basis, I believe that we will have the foundation for a sustainable housing recovery.
In view of time considerations, I shall curtail my speech and confine my remarks to one subject that has not received proper attention in the debate today, although several hon. Members mentioned it—the rented sector in local authority areas.
I believe in home ownership. I also believe that rental accommodation should be provided for that percentage of the population who, for one reason or another, depend on the rented sector. The Government fail to recognise that fact. Although many issues have been discussed in the debate, the Government have not been forthcoming on that subject.
It is the responsibility of the Government, not of the Opposition, to answer questions raised in debate. Throughout today's debate, Conservative Members have asked constantly about the Labour party's alternative policies. The debate is not about alternatives; the Conservatives are in government and they must find a way of meeting the genuine housing need that I shall describe.
The housing waiting list in my local authority in Bootle in Sefton contains more than 7,000 names. Obviously, more than 7,000 people are affected as families are involved, and the number increases every year. My constituents in Bootle have to wait up to six years for a first offer on a three-bedroom house. In Southport, people have to wait eight years for a house and people in Crosby have to wait six or seven years for a house.
Those people want to know what the Government intend to do for them, recognising that they are not in a position to go anywhere near the private rented market, let alone contemplate benefiting from the Government's proposed new initiatives. Those people cannot go to the private rented market. Some of them have been waiting for a house ever since they were married. My constituents raise the problem of housing waiting lists at every surgery.
The Government have a duty and a moral responsibility to do something for those people. Tory councillors on Sefton council recognise that there is a problem, but they have no answers. They agree with my colleagues in the Labour party in Sefton. I hope that the Minister will confirm tonight what he proposes to do for those people who lack one of life's basic necessities—put a roof over their head. An illustration of the terrible problem about which I am talking is that, of the 7,000 people on Sefton's housing waiting list, between 1,200 and 1,800 are living in single rooms. That is not just a problem for Sefton council; I suspect that such figures are to be found right across the country.
In the brief time allowed me, I want to put it to the Government that they must give me answers tonight.
The contributions of Conservative Members have consisted of two sorts of ritual. There have been ritual denunciations of Baroness Thatcher. Those hon. Members should take a more philosophical approach and remember Henry V's words about veterans in his speech on St. Crispin's day:
But he'll remember, with advantages,
What feats he did that day".
She is clearly a veteran by that standard.
The other ritual has involved expressions of philosophical doubt about the MIRAS arrangements. I point out to hon. Members who have developed such philosophical doubts that they went into the general election with this clear promise:
We will maintain mortgage tax relief.
Everyone should have a decent home, feel secure in it and be able to afford it. That is a basic requirement of civilised living. Without it, people become unhealthy in body and mind; children's education suffers; parents find it hard to hold down a job, and families fall apart. The present housing crisis shows just how far our country falls short of that basic requirement.
Right across the board, the Government have failed, and their housing policies are making matters worse. Whether people are owner-occupiers, tenants or looking for somewhere decent to live, Government policies are hitting them hard, and the situation, far from improving, is going from bad to worse.
For the past 16 years, the Government have starved councils of the resources to build and renovate homes. The Government claimed that housing associations would take over from councils the job of building homes for rent. However, the housing associations never made up the difference and now their budgets have been slashed. As a result, the number of homes built for rent has fallen below 20,000 for the first time in all the 50 years since VE day. Only one home is being built for rent today for every seven built under the last Labour Government.
On top of that, the Government have been deliberately driving rents up at three or four times the rate of inflation. Not content with that, they have turned on owner- occupiers. Far from being encouraged to buy, more and more obstacles are being put in the path of people who are thinking of buying.
Recently, we were treated to the present Prime Minister musing on how the housing crisis has come about. He appears to suffer from memory loss when it comes to housing. First, he claimed to have stopped repossessions. Then he denied that he was involved in authorising the building of large blocks of flats in Lambeth. Now he says that the state of the housing market in the 1980s was the fault of the house buyers. He blames the victims for what he now calls "the rather crazy situation". He never said that at the time. Indeed, he encouraged it. He gloried in what he described as
creating a culture that encourages risk-taking.
Nobody could deny that he did that.
The present crisis of repossessions, mortgage arrears, negative equity and insecurity springs directly from the house price boom in the 80s. The Government encouraged that boom as part of their irresponsible strategy to win the 1987 election.
The deregulation of financial services led to cut-throat competition between the building societies and the new lenders who moved into the housing market. As a result, lenders new and old abandoned the old, rule-of-thumb limits on lending. People were encouraged, with the support of the Government and the financial establishment, to borrow higher proportions of the value of a house, and higher multiples of their income. The result was sky-high prices.
The last straw was the announcement in the 1988 Budget that the double MIRAS tax relief for couples would be ended, but not straight away. That provoked a frenzy of buying—it was exactly what the Prime Minister called a "crazy situation". However, that crazy situation was the direct result of the Budget produced when he was Chief Secretary to the Treasury, a post which hitherto had been synonymous with fiscal rectitude.
When the boom turned to bust, millions of home buyers were left over-extended. The Government kept on posing as the owner-occupier's friend. In 1992—the year of the tax promises—the Tories went into the election promising to keep mortgage interest tax relief. They have broken that promise; they have reduced MIRAS twice, and there is a threat of more reductions to come. They have also introduced a tax on house insurance, thus punishing the prudent.
As a result of the policies pursued by the Government, who continue to pose as the friend of the owner-occupier, the number of people with mortgages more than 12 months in arrears rose from 5,000 in 1982 to 117,000 last year. That means that there were 21 families in serious arrears last year for every one family in 1982. The number of repossessions rose from 2,900 in 1979 to 49,000 last year. In other words, 16 families had their homes repossessed last year for every one family in 1979.
Nearly 300,000 families have had their homes repossessed in the past five years, and 1,200,000 families have been left with negative equity, a concept for which there was not even a description until the late 1980s. All that is due to a Government who call themselves the owner-occupier's friend.
The Government's latest contribution to undermining the housing market is to deny the income support safety net to new borrowers who lose their jobs or encounter other financial difficulties and to reduce the cover provided to existing borrowers. People are to be forced to take out private insurance cover instead. There has never been a better example of how this Government of know-alls get things wrong.
No one supports the Government's proposal. Mortgage lenders are against it, house builders are against it, and even the Skipton building society is against it. Building materials suppliers are also against it. The Department of the Environment commissioned a report which revealed that mortgage protection policies do not offer adequate unemployment protection, and that two thirds of claims do not succeed. The Secretary of State for Social Security rubbished the Department of the Environment's report, but it is up to Ministers to sort out these things between them.
The citizens advice bureaux said much the same thing. Even the Association of British Insurers acknowledged that universal protection against unemployment can be achieved only by pooling risk. Pooling risk is anathema to insurers. Cherry-picking the best risks is what insurers do, which is why they employ actuaries.
At various times, Ministers have said that satisfactory insurance cover might be better obtained from insurers than from lenders, but they appear to have changed their tune since the Prime Minister pulled the Skipton building society rabbit out of his conjurer's hat last Thursday. My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) dealt with that admirably in his speech, but the facts are worth repeating.
Perhaps the Prime Minister should be better briefed. When he picked on the splendours of the Skipton building society, he omitted to mention—possibly because he did not know—that in recent years that building society has charged its borrowers more than almost any other building society, that it has literally the highest level of mortgage arrears of any building society, and that, in the famous "crazy situation" of the late 1980s, it invested substantially in commercial property and lost a fortune, which is no doubt why it is charging its borrowers so much.
The fact is that potential borrowers do not know what is happening. Some, on the advice of the Secretary of State, are already taking out insurance cover. Others are postponing their decision to buy, and others may be looking to their potential lender to sort things out. Potential borrowers know that they will be expected to sign up for a 25-year mortgage, but will be able to get insurance only one year at a time. People who change their jobs will not know whether their cover is still valid. Everyone will be subject to cherry-picking by lenders and insurers alike, and the people most at risk of losing their jobs will find it hardest to get cover.
The situation will be patchy, unpredictable and uncertain. Borrowers face exactly what they do not want: further uncertainty, insecurity and risk. In short, it is a mess, and a mess of the Government's making—ill thought out, ill prepared, badly executed, flying in the face of the advice and experience of people who know what they are talking about. It is a typical product of the party that gave the country the poll tax and the Child Support Agency. It is likely to prove costly to borrowers, costing as much as an average £250 a year.
It is not just cost that is the problem, however. It is the added uncertainty that this proposal has introduced into an already shaky housing market. The party that promised to look after owner-occupiers has gone back on its word. Worse, people who took the Government's advice last time are being left in the lurch. People who are the victims of the Government's policies have been blamed for the Government's failures, and the situation continues to go from bad to worse.
The problem is that no one can believe a word the Government say. Governments who promise tax cuts during a general election and introduce tax increases immediately afterwards are capable of anything. Governments who introduce a tax on household insurance can increase the rate of that tax whenever it suits them. Governments who take away income support from new borrowers can just as easily come back and take it away from existing borrowers. Governments who take away the safety net for nine months can easily come back and take it away for 18 months or two years.
People will rightly be wary of any action that the Government take which they claim will improve the situation in the run-up to the next general election. The people of this country will not forget the lies and broken promises of the last election. But I tell Conservative Members: as the next election looms, the Government will find that the words of Scott come back to haunt them—not just Sir Richard Scott, of the report, but Sir Walter Scott:
O what a tangled web we weave,
When first we practise to deceive!
It is that deception at the last election that makes people unable to believe a word that the Government say.
The insecurity in the housing market, however, springs from causes much deeper than the people's distrust of Government promises. The growing insecurity in employment is the main source of insecurity in the housing market. Buying a house is the biggest transaction in which most people ever get involved. Most people are prudent; they do not like to borrow if they are fearful that they will not be able to pay off their debt. They do not like taking risks. In the past, people were confident that the value of their house would rise. Even more importantly, they felt confident that they would have a job. That no longer applies.
Some of this job insecurity is the fault of the Government. After all, their ranks include a Secretary of State for Employment who clearly believes that job insecurity, short-term contracts and part-time working are a good thing—he is in favour of them. But much of the increase in job insecurity is the product of technological and organisational changes which cannot be avoided in our rapidly changing world.
Half the working population of Britain have changed their jobs in the past five years. That change in the market inevitably means a change in the housing market. If owner-occupation is to continue to flourish, the lenders will have to come up with more flexible mortgage packages which allow for repayments that vary over time in line with families incomes. Some people may decide to opt for renting before they buy; others may want to change from mortgage to rent and then back again, as their circumstances change.
These ways of easing the situation for families who cannot afford a mortgage, however, will not work unless there are more houses for them to rent, whether in the public sector or the private sector. I suggest that a thoughtful Government would have started dealing with these problems long ago.
Ministers who constantly went around the country telling people that they could no longer expect a job for life should have been the first to recognise the housing consequences of what they were saying. A Government with concern and foresight would have called together all the organisations involved: builders, lenders, councils, housing associations, pressure groups, consumer groups, think tanks, employers, trade unions. A sensible Government would have thrashed out new policies designed to meet the new challenges brought about by technological and social change—
We are talking tonight about the policies of the Government, which are harming the housing market. In case the Secretary of State has not noticed, the only reason why he gets a chauffeur-driven car and an office in Whitehall is that he is in the Cabinet and he has to take responsibility for the decisions that he is taking. We are debating tonight the decisions that they are—
And the reason why the hon. Gentleman will never find his way into the Cabinet and get a ministerial car is that he has no policies to offer the British people.
I say again that we are not debating the Labour party's policies tonight. It is not Labour's policies that are harming the housing market. It is not Labour's policies that have thrown people into mortgage arrears. It is not Labour's policies that have left 1,200,000 people in negative equity. They are the results of the Government's policies, and we believe that the proposition that they are pushing through will make matters worse.
We believe that a sensible Government would have thrashed out new policies designed to meet the new challenges brought about by technological and social change—policies to give people a real choice of decent, affordable and secure homes. But the Government have done nothing of the sort. They persist in pretending that nothing has changed. As long as they keep up that pretence, they cannot come up with policies that meet the needs of our people as we approach the 21st century.
Instead of seeking to work together in partnership, with Government playing their proper part, the Government have sought to abandon their duties and leave everything to the vagaries of the market. It was the market in the 1980s that got us into this mess in the first place. At this time of insecurity, the Government have added to that insecurity. At a time when families are in difficulty, the Government are adding to those difficulties. They have behaved like Mark Twain's definition of a banker: as
a fellow who lends you an umbrella when the sun is shining and wants it back the minute it begins to rain.
In response to the changes in the pattern of employment, the Government should promote more choice and flexibility in housing. During the difficult and painful processes of change and adjustment, they should do all they can to protect families from insecurity, debt, repossessions and homelessness. The Government have proved themselves quite incapable of such action. That must await a Labour Government.
But in the meantime, the Government could start to make matters a little better, by abandoning their threat to take away the income support safety net. They could also start to release the takings from the sale of council houses. They should allow councils to invest that money in building and renovating homes for the homeless and for people living in poor conditions. Both those moves would make a start in dealing with the present housing crisis. They would help owner-occupiers, tenants and the homeless. They would provide jobs for building workers and for people in the building supplies industry.
In the long run, what we need are new housing policies, which serve all the people. That is what the Labour party will put to the people at the next general election, and those are the policies that we shall carry through.
It would be churlish of me not to thank colleagues for all the free publicity that they have given my constituency—and, in particular, the Skipton building society—over the past few days. It may be appropriate for me to declare that I have no interest other than my interest as a constituency Member of Parliament. Indeed, John Goodfellow, the building society's chief executive, has authorised me to say that all those providing the publicity are not doing so on a commission basis. Perhaps, in the age of Lord Nolan, that point is worth making.
I am glad that the hon. Member for Glasgow, Garscadden (Mr. Dewar) has been boning up on Skipton, and I shall be pleased to arrange for him to visit. A short while ago Prince Charles visited Skipton, and made some remarks about the headquarters of the building society. They were not complimentary. Following a certain correspondence in the Craven Herald and Pioneer, one of the great organs of the north of England, one correspondent wrote a letter that ran simply as follows: "Dear Sir, Thank God Prince Charles did not visit Bingley."
As I have said, I shall happily arrange a visit for the hon. Member for Garscadden—including a trip to Skipton castle, which, despite the depredations of the parliamentary forces, is still in one piece and is inhabited by the Fattorini family, who will doubtless be pleased to show the hon. Gentleman round. I shall also be happy to show him the birthplace of Iain Macleod, one of the town's most distinguished citizens. The hon. Gentleman would enjoy himself—although I suspect that puritanical gloom is so central to his character that he would anticipate enjoying himself with real apprehension.
It would, of course, be best for the hon. Gentleman to meet John Goodfellow, the chief executive of the Skipton building society, who is a Glaswegian. He will, no doubt, recognise instantly that a Scot running a Yorkshire company is unlikely to be overwhelmed by a sense of enthusiasm about giving money away. That is why it is important to look at what the society is planning.
The speech of the hon. Member for Garscadden—who said nothing noisily, and occasionally wittily—was interesting not for what he said, but for what he did not say. When my hon. Friend the Member for City of Chester (Mr. Brandreth) asked him whether Labour supported the idea of mortgage benefit, the hon. Gentleman did not say, "I am not going to mention that"; he said, "Hang on a minute—I shall come to that. It is a very important point." Indeed, he enjoined my hon. Friend to stay rooted to his seat.
My hon. Friend did so. The rooting was terrific. But the moment never came: the hon. Member for Garscadden said nothing. Like all Labour policies, this one never arrived. The same can be said of the entire Labour contribution to the debate. Here is a party that keeps telling the world that it is ready for government, yet it is not prepared to put a single policy before the British people.
There was another gem. The hon. Member for Greenwich (Mr. Raynsford)—the debate has, in a sense, been "Hamlet" without the prince, so constantly has the hon. Gentleman been mentioned—was alarmed at the accusation that he might inadvertently have revealed a Labour policy: the repeal of the changes in mortgage insurance that forms part of the Opposition motion. So alarmed was he at that suggestion that he might have unveiled a policy that he leapt to the Dispatch Box to say that he had not, in fact, pledged a repeal. He did not tell us whether the Labour party believed in our policy; what he said was, "We do not believe in it, but perhaps the time to act has not yet come."
What is interesting is that the hon. Gentleman had an opportunity to say clearly at the Dispatch Box that Labour, if it came to office, would reverse the change. He did not take that opportunity and say, quite simply, "I did not say that." We are still in the dark in regard to what Labour's policies might be.
The hon. Member for Christchurch (Mrs. Maddock) was not quite so reticent. She endorsed the principle of a mortgage benefit scheme—although she did not give the details. She said, "We will do nothing for the moment." That is a war cry to stir the blood. It is the old Gladstonian certainty of the Liberal party, still alive and kicking. That is Lloyd George's radicalism. On this crucial issue, the Liberal Democrats will go to the election saying, "For the moment, we will do nothing." Of course it is just as well that the hon. Lady does nothing because, if the Opposition parties were really tempted to bring into welfare benefit a whole new category of people when opinion in the House and elsewhere is disputing, contesting and concerned about the number of people dependent on means-tested benefits, that would be a deeply retrograde step. It would be a foolish and costly policy.
The hon. Member for Garscadden has returned to the Chamber. I have invited him to Skipton building society, which featured so commonly in his speech. He will read in Hansard of the generosity of my invitation and all the entertainments that I propose to arrange for him. I know that he will come. What the Skipton building society is offering, however, is what is important.
Let us consider the categories that would not be covered by the offer—I say this having spoken at some length to Mr. Goodfellow just a few days ago. The exclusions involve fewer than 2,000 of the 55,000 borrowers. That means that the overwhelming number of people who have their mortgage with the building society would be covered by the policies.
The exclusions would be the over-65s, those receiving state pensions, the unemployed, those receiving benefits, and those more than three months in arrears. It is natural that the society should not be able to cover those people, but it is important that the proposal opens the opportunity to sell insurance on accident, sickness and unemployment. At present, only a minority of people take such cover.
The Skipton building society proposal will cover far more than the state scheme, under which, as my right hon. Friend the Secretary of State said, only 30 per cent. of people are covered: the unemployed and those who have no working spouse and no capital, for example. Most people would be much better served by a developed insurance market. A developed insurance market comes into being by it being given the opportunity and challenged to meet that task. That is how the market works. I am confident that other building societies will follow the Skipton building society example.
My right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) spoke at some length about home ownership. I endorse a great deal of what he said. He said that it was important to reaffirm the commitment to home ownership and to recognise that home ownership, within the context of a vigorous and varied housing sector, had a particular role to play.
Houses are more affordable than they have been for years. The loan repayment:income ratio is probably the most favourable for about 30 years. As my right hon. Friend said, confidence is lacking, but let us not forget the facts: 230 households a day in Britain are still being helped into home ownership through the various schemes supported by the Government; 1.5 million council and housing association tenants have bought their own homes; 100,000 under-25s a year have moved into home ownership for the first time; and, last year, there were nearly 500,000 first-time buyers.
Of course, there are problems of repossession and mortgage arrears. No one pretends that that is not a serious problem and no one wishes to sweep those people's concerns under the mat, but they are still outnumbered by those coming into home ownership week on week and at a time when the recession has bitten severely.
As my hon. Friend the Member for Buckingham (Mr. Walden) said, speaking from his experience of the sector, the key to all this is sound economic management and low interest rates. However important mortgage interest relief at source might be, that benefit is small compared with the benefit of sustained low interest rates. That is what gets people into the business of sustained home ownership. We are concerned not to go back to the situation that obtained in the late 1980s. It is a matter of consensus that we do not want that volatile situation to return. We want home ownership that can be sustained in the context of a housing policy that seeks to cater for people's different needs and different circumstances. That is what the Government are committed to: sustainable home ownership.
In that context, I do not hesitate to say, along with my hon. Friends the Members for Buckingham and for Portsmouth, South (Mr. Martin), that the private rented sector plays a crucial role. It is a matter of record that the conditions that apply to home ownership are of influence in the incentives for, and willingness of, people to invest in the private rented sector.
My hon. Friend seems to be trying to have it both ways. He cannot make what I would regard as something of a fetish of home ownership and give home owners tax privileges to buy their houses—in the form of mortgage tax relief, which still exists, albeit at a lower level, and no capital gains tax—while appearing to show equal solicitude for the rented sector. The first disadvantages the second and I am sorry to say, therefore, that what my hon. Friend is saying is completely and utterly illogical.
If my hon. Friend looks to some of the continental countries that he cited in his remarks, he will find that they manage to combine incentives for home ownership, which are significantly greater than ours in the United Kingdom—in Holland, for example, the whole cost of a mortgage and of more than one mortgage can be written off against tax—with a much more vigorous private rented sector. I want to move towards the continental model. [HON. MEMBERS: "Ah."] Oh yes. In the present climate, I know that I must qualify that remark and I shall do so.
The United Kingdom is characterised by a high level of home ownership and of council, state-subsidised renting. We fall short in the vigour of our commercial market—the private rented sector. Diversification of tenure and a more equal distribution between what is accommodated by the market and what is let by the social sector can only benefit the housing sector. That is why the Government will be introducing proposals to help the private rented sector, which goes with the home ownership sector. The two are not in contradiction and that is what is important about this debate.
The private rented sector is good for labour mobility, choice, responsibility and, as several hon. Friends said, for young people starting their working lives and perhaps their married lives—if that term is still in vogue—who can move on to home ownership when they are ready to assume that responsibility and when they can sustain it. That is why the private rented sector is a complement and a support to the home ownership sector.
I remain totally committed to home ownership, as do the Government, but equally that does not mean that I cannot have a strong and urgent desire to ensure a strong private rented sector. The Labour party did its best to destroy that sector throughout its period in office, through regulation and yet more regulation—the hon. Member for Greenwich is still saying that it would need regulation. The Labour party cannot talk about the private rented sector without talking the most arrant hypocrisy. Labour simply has no record on that sector.
Whether rents are regulated in the sector depends on who lives in it, who is paying for it and who is subsidising it. Rents are regulated throughout the social market sector—in local authority homes and throughout housing association properties. It is part of our policy to continue with the social market sector at subsidised rents. It is no purpose of this Government to get rid of that sector because it is an essential part of a complete housing policy.
The Labour party, when it yells and bellows rather than telling us what its policy would be, is hostile to the private rented sector and is not interested in it. The Opposition talk about it, but all they want to do is kill it because they associate it with landlords. Nor are they interested in the home ownership sector. Look at Labour's deeds and its record in office—it has opposed every single measure. It is now supposed to be the friend of the home owner, yet it has spent all its period in opposition trying to deny the right to buy a home under the Government's schemes.
There are other elements in a sensible housing policy, but the hon. Member for Holborn and St. Pancras (Mr. Dobson) mentioned very few of them. It is important that we get a social housing sector with below-market rents and a diversification of tenure. One of the problems in this country has been the monolithic tenure on our estates. The hon. Member for Sheffield, Attercliffe (Mr. Betts) touched on that issue when he talked about estate action and some of the regeneration programmes. It is important that, on the estate and as part of the regeneration, there are people of different backgrounds, different forms of tenure and different activities.
It is equally important that in their allocation policy, local authorities look towards trying to help people who provide diversity on the estate as part of making them self-sustaining. Just as I wish that home ownership should become self-sustaining, I wish that social renting should become self-sustaining, so that communities that we create on the estates can also avoid the spirals into decline of the past and so that a virtuous cycle will be created in communities where there are jobs and a worthwhile future.
There are five minutes left of this debate. I am waiting to hear the Minister address the problems faced by thousands of his constituents and mine who are in negative equity. How will the Government alleviate the problems created by negative equity, which is also stifling enterprise because people cannot borrow?
I have been in the Chamber since 4.30 pm, in a debate on housing on an Opposition Supply day, hoping to hear one scintilla of information about what the Opposition might do if they were in government. There has not been a single hint about Labour party policy. Whenever Labour Members have had the opportunity, even by accident, to explain what their policy might be, they have hastened to deny it. That is what they stand for; a policy of Trappist silence on this matter. It is a con trick perpetrated against the electorate of the United Kingdom. I do not resile one little bit from what the Government have done.
The hon. Member for Holborn and St. Pancras thinks that capital receipts are a crock of gold on which the councils sit, as if it were some Tolkein novel. All that their release does is to replace external borrowing. If that borrowing were not there, council taxes would have to go up. Labour Members talk of phased receipts. We never know what the phases are, how big the amounts are, or how long it will last. It is one of those easy phrases. Nobody ever gets any detail. In fact, like the rest of Labour party policy, it is rhetoric without substance.
Labour has nothing to offer the housing market. The Conservative Government have set the agenda. [Interruption.] We have set the agenda on the right to buy.
I am glad that the hon. Gentleman can count—even backwards, as he will have to shortly. We have set the agenda on the right to buy and Labour has opposed every measure that the Government have brought forward. The hon. Member for Holborn and St. Pancras is still talking about lowering discount incentives from 70 per cent. because he thinks that that is excessive.
We have sought and brought about the revival of the private rented sector from the state in which Labour left it through its programme of over-regulation. When we ask about controls, we hear that, yes, the Labour party is back to controls. We stand for the diversification of social housing, whereas the Labour party wishes to go back to the old municipal monoliths of the state. Above all, we have delivered sensible and sane economic management, which is bringing low inflation, sustainable growth and belief in the policies. [Laughter.] It is all very well for Opposition Members to point to a period when there were mistakes. Was the Labour party telling us about those mistakes? Was the Labour party pointing anything out? Is there anything on the Labour record other than finding out what the Government's interest rates are and cutting them by 1 per cent.? That has been Labour's entire economic policy for year after year.
Labour does not believe in choice. On every occasion, it has voted against choice. Its policies are opportunistic, irresponsible and implausible. The electorate have the right to know what Labour stands for, and what alternative or remedy it would put in place, yet for an answer we hear a deafening silence. Even when Labour Members are given an opportunity to put that right, they remain silent.
The hon. Gentleman can clearly read and count, which is an advance on some members of his party.
The Labour party is hostile to choice and deregulation. Its vision is unimaginative. It is municipal and paternalistic and fails to respond to the nation's aspirations. For that reason, I urge the House to reject its motion.
Question put, That the original words stand part of the Question:—
|Division No. 163]||[10.00 pm|
|Abbott, Ms Diane||Dixon, Don|
|Adams, Mrs Irene||Dobson, Frank|
|Ainsworth, Robert (Cov'try NE)||Donohoe, Brian H|
|Allen, Graham||Dowd, Jim|
|Anderson, Donald (Swansea E)||Dunnachie, Jimmy|
|Anderson, Ms Janet (Ros'dale)||Dunwoody, Mrs Gwyneth|
|Armstrong, Hilary||Eagle, Ms Angela|
|Ashdown, Rt Hon Paddy||Eastham, Ken|
|Ashton, Joe||Enright, Derek|
|Austin-Walker, John||Etherington, Bill|
|Banks, Tony (Newham NW)||Evans, John (St Helens N)|
|Barnes, Harry||Fatchett, Derek|
|Barron, Kevin||Faulds, Andrew|
|Battle, John||Field, Frank (Birkenhead)|
|Bayley, Hugh||Fisher, Mark|
|Beckett, Rt Hon Margaret||Flynn, Paul|
|Beith, Rt Hon A J||Forsythe, Clifford (S Antrim)|
|Bell, Stuart||Foster, Rt Hon Derek|
|Benn, Rt Hon Tony||Foulkes, George|
|Bennett, Andrew F||Fraser, John|
|Benton, Joe||Fyfe, Maria|
|Bermingham, Gerald||Galbraith, Sam|
|Berry, Roger||Galloway, George|
|Betts, Clive||Gapes, Mike|
|Blair, Rt Hon Tony||Garrett, John|
|Blunkett, David||George, Bruce|
|Boateng, Paul||Gerrard, Neil|
|Bradley, Keith||Gilbert, Rt Hon Dr John|
|Bray, Dr Jeremy||Godman, Dr Norman A|
|Brown, Gordon (Dunfermline E)||Godsiff, Roger|
|Brown, N (N'c'tle upon Tyne E)||Golding, Mrs Llin|
|Bruce, Malcolm (Gordon)||Gordon, Mildred|
|Burden, Richard||Graham, Thomas|
|Byers, Stephen||Grant, Bernie (Tottenham)|
|Caborn, Richard||Griffiths, Nigel (Edinburgh S)|
|Callaghan, Jim||Griffiths, Win (Bridgend)|
|Campbell, Mrs Anne (C'bridge)||Grocott, Bruce|
|Campbell, Menzies (Fife NE)||Gunnell, John|
|Campbell, Ronnie (Blyth V)||Hain, Peter|
|Campbell-Savours, D N||Hall, Mike|
|Cann, Jamie||Hanson, David|
|Carlile, Alexander (Montgomery)||Hardy, Peter|
|Chidgey, David||Harman, Ms Harriet|
|Chisholm, Malcolm||Hattersley, Rt Hon Roy|
|Church, Judith||Henderson, Doug|
|Clapham, Michael||Heppell, John|
|Clarke, Tom (Monklands W)||Hill, Keith (Streatham)|
|Clelland, David||Hinchliffe, David|
|Clwyd, Mrs Ann||Hodge, Margaret|
|Coffey, Ann||Hoey, Kate|
|Cohen, Harry||Hogg, Norman (Cumbernauld)|
|Connarty, Michael||Hoon, Geoffrey|
|Cook, Frank (Stockton N)||Howarth, George (Knowsley North)|
|Cook, Robin (Livingston)||Howells, Dr. Kim (Pontypridd)|
|Corbett, Robin||Hoyle, Doug|
|Corbyn, Jeremy||Hughes, Roy (Newport E)|
|Corston, Jean||Hughes, Simon (Southwark)|
|Cousins, Jim||Hutton, John|
|Cox, Tom||Illsley, Eric|
|Cunliffe, Lawrence||Ingram, Adam|
|Cunningham, Jim (Covy SE)||Jackson, Glenda (H'stead)|
|Cunningham, Rt Hon Dr John||Jackson, Helen (Shef'ld, H)|
|Cunningham, Roseanna||Jamieson, David|
|Dafis, Cynog||Janner, Greville|
|Dalyell, Tam||Jones, Barry (Alyn and D'side)|
|Darling, Alistair||Jones, Ieuan Wyn (Ynys Môn)|
|Davidson, Ian||Jones, Jon Owen (Cardiff C)|
|Davies, Bryan (Oldham C'tral)||Jones, Lynne (B'ham S O)|
|Davies, Rt Hon Denzil (Llanelli)||Jones, Martyn (Clwyd, SW)|
|Davies, Ron (Caerphilly)||Jones, Nigel (Cheltenham)|
|Davis, Terry (B'ham, H'dge H'l)||Jowell, Tessa|
|Denham, John||Kaufman, Rt Hon Gerald|
|Dewar, Donald||Keen, Alan|
|Kennedy, Charles (Ross,C&S)||Prentice, Gordon (Pendle)|
|Khabra, Piara S||Prescott, Rt Hon John|
|Kilfoyle, Peter||Primarolo, Dawn|
|Kirkwood, Archy||Purchase, Ken|
|Lestor, Joan (Eccles)||Quin, Ms Joyce|
|Lewis, Terry||Randall, Stuart|
|Liddell, Mrs Helen||Raynsford, Nick|
|Litherland, Robert||Reid, Dr John|
|Livingstone, Ken||Rendel, David|
|Lloyd, Tony (Stretford)||Robertson, George (Hamilton)|
|Loyden, Eddie||Robinson, Geoffrey (Co'try NW)|
|Lynne, Ms Liz||Roche, Mrs Barbara|
|McAllion, John||Rogers, Allan|
|McAvoy, Thomas||Rooker, Jeff|
|McCartney, Ian||Rooney, Terry|
|McCrea, The Reverend William||Ross, Ernie (Dundee W)|
|Macdonald, Calum||Ruddock, Joan|
|McFall, John||Salmond, Alex|
|Mackinlay, Andrew||Sedgemore, Brian|
|McLeish, Henry||Sheerman, Barry|
|Maclennan, Robert||Sheldon, Rt Hon Robert|
|McMaster, Gordon||Short, Clare|
|McNamara, Kevin||Simpson, Alan|
|MacShane, Denis||Skinner, Dennis|
|Madden, Max||Smith, Andrew (Oxford E)|
|Maddock, Diana||Smith, Chris (Isl'ton S & F'sbury)|
|Mahon, Alice||Smith, Llew (Blaenau Gwent)|
|Mandelson, Peter||Snape, Peter|
|Marek, Dr John||Soley, Clive|
|Marshall, David (Shettleston)||Spearing, Nigel|
|Marshall, Jim||Spellar, John|
|Martin, Michael J (Springburn)||Squire, Rachel (Dunfermline W)|
|Martlew, Eric||Steel, Rt Hon Sir David|
|Maxton, John||Steinberg, Gerry|
|Meacher, Michael||Stevenson, George|
|Meale, Alan||Stott, Roger|
|Michael, Alun||Strang, Dr. Gavin|
|Michie, Bill (Sheffield Heeley)||Straw, Jack|
|Michie, Mrs Ray (Argyll & Bute)||Sutcliffe, Gerry|
|Milburn, Alan||Taylor, Mrs Ann (Dewsbury)|
|Miller, Andrew||Taylor, Matthew (Truro)|
|Mitchell, Austin (Gt Grimsby)||Thompson, Jack (Wansbeck)|
|Moonie, Dr Lewis||Timms, Stephen|
|Morgan, Rhodri||Tipping, Paddy|
|Motley, Blot||Touhig, Don|
|Morris, Rt Hon Alfred (Wy'nshawe)||Turner, Dennis|
|Morris, Estelle (B'ham Yardley)||Tyler, Paul|
|Morris, Rt Hon John (Aberavon)||Vaz, Keith|
|Mowlam, Marjorie||Walker, Rt Hon Sir Harold|
|Mudie, George||Wallace, James|
|Mulin, Chris||Walley, Joan|
|Murphy, Paul||Wareing, Robert N|
|Oakes, Rt Hon Gordon||Watson, Mike|
|O'Brien, Mike (N W'kshire)||Wicks, Malcolm|
|O'Brien, Wiliam (Normanton)||Wigley, Dafydd|
|O'Hara, Edward||Williams, Rt Hon Alan (Sw'n W)|
|Olner, Bill||Williams, Alan W (Carmarthen)|
|O'Neill, Martin||Wilson, Brian|
|Orme, Rt Hon Stanley||Winnick, David|
|Parry, Robert||Wise, Audrey|
|Patchett, Terry||Worthington, Tony|
|Pearson, Ian||Wray, Jimmy|
|Pendry, Tom||Wright Dr Tony|
|Pickthall, Colin||Young, David (Bolton SE)|
|Pike, Peter L|
|Pope, Greg||Tellers for the Ayes:|
|Powel, Ray (Ogmore)||Mr. John Cummings and|
|Prentice, Bridget (Lew'm E)||Mr. Eric Clarke.|
|Ainsworth, Peter (East Surrey)||Ancram, Michael|
|Aitken, Rt Hon Jonathan||Arbuthnot, James|
|Alexander, Richard||Arnold, Jacques (Gravesham)|
|Alison, Rt Hon Michael (Selby)||Arnold, Sir Thomas (Hazel Grv)|
|Allason, Rupert (Torbay)||Ashby, David|
|Amess, David||Atkins, Robert|
|Atkinson, David (Bour'mouth E)||Fabricant, Michael|
|Atkinson, Peter (Hexham)||Fenner, Dame Peggy|
|Baker, Rt Hon Kenneth (Mole V)||Field, Barry (Isle of Wight)|
|Baker, Nicholas (North Dorset)||Fishburn, Dudley|
|Baldry, Tony||Forman, Nigel|
|Banks, Matthew (Southport)||Forsyth, Rt Hon Michael (Stirling)|
|Bates, Michael||Forth, Eric|
|Batiste, Spencer||Fowler, Rt Hon Sir Norman|
|Bellingham, Henry||Fox, Dr Liam (Woodspring)|
|Bendall, Vivian||Fox, Sir Marcus (Shipley)|
|Beresford, Sir Paul||Freeman, Rt Hon Roger|
|Biffen, Rt Hon John||French, Douglas|
|Body, Sir Richard||Fry, Sir Peter|
|Bonsor, Sir Nicholas||Gale, Roger|
|Booth, Hartley||Gardiner, Sir George|
|Boswell, Tim||Garel-Jones, Rt Hon Tristan|
|Bottomley, Peter (Eltham)||Garnier, Edward|
|Bottomley, Rt Hon Virginia||Gill, Christopher|
|Bowden, Sir Andrew||Gillan, Cheryl|
|Bowis, John||Goodlad, Rt Hon Alastair|
|Boyson, Rt Hon Sir Rhodes||Goodson-Wickes, Dr Charles|
|Brandreth, Gyles||Gorman, Mrs Teresa|
|Brazier, Julian||Gorst, Sir John|
|Bright, Sir Graham||Grant, Sir A(SW Cambs)|
|Brooke, Rt Hon Peter||Greenway, Harry (Ealing N)|
|Brown, M (Brigg & Cl'thorpes)||Greenway, John (Ryedale)|
|Browning, Mrs Angela||Griffiths, Peter (Portsmouth, N)|
|Bruce, Ian (Dorset)||Gummer, Rt Hon John Selwyn|
|Budgen, Nicholas||Hague, William|
|Burns, Simon||Hamilton, Rt Hon Sir Archibald|
|Burt, Alistair||Hamilton, Neil (Tatton)|
|Butcher, John||Hampson, Dr Keith|
|Butler, Peter||Hanley, Rt Hon Jeremy|
|Butterfill, John||Hannam, Sir John|
|Carlisle, John (Luton North)||Hargreaves, Andrew|
|Carlisle, Sir Kenneth (Lincoln)||Harris, David|
|Carrington, Matthew||Hawkins, Nick|
|Carttiss, Michael||Hayes, Jerry|
|Cash, William||Heald, Oliver|
|Channon, Rt Hon Paul||Heath, Rt Hon Sir Edward|
|Churchill, Mr||Heathcoat-Amory, David|
|Clappison, James||Hendry, Charles|
|Clark, Dr Michael (Rochford)||Heseltine, Rt Hon Michael|
|Clarke, Rt Hon Kenneth (Ru'clif)||Higgins, Rt Hon Sir Terence|
|Clifton-Brown, Geoffrey||Hill, James (Southampton Test)|
|Coe, Sebastian||Hogg, Rt Hon Douglas (G'tham)|
|Colvin, Michael||Horam, John|
|Congdon, David||Hordem, Rt Hon Sir Peter|
|Conway, Derek||Howard, Rt Hon Michael|
|Coombs, Anthony (Wyre For'st)||Howarth, Alan (Strat'rd-on-A)|
|Coombs, Simon (Swindon)||Howell, Sir Ralph (N Norfolk)|
|Cope, Rt Hon Sir John||Hughes, Robert G (Harrow W)|
|Couchman, James||Hunt, Rt Hon David (Wirral W)|
|Cran, James||Hunt, Sir John (Ravensbourne)|
|Currie, Mrs Edwina (S D'by'ire)||Hunter, Andrew|
|Curry, David (Skipton & Ripon)||Jack, Michael|
|Davies, Quentin (Stamford)||Jackson, Robert (Wantage)|
|Day, Stephen||Jenkin, Bernard|
|Deva, Nirj Joseph||Jessel, Toby|
|Dicks, Terry||Johnson Smith, Sir Geoffrey|
|Dorrell, Rt Hon Stephen||Jones, Gwirym (Cardiff N)|
|Douglas-Hamilton, Lord James||Jones, Robert B (W Hertfdshr)|
|Dover, Den||Jopling, Rt Hon Michael|
|Duncan, Alan||Kellett-Bowman, Dame Elaine|
|Duncan-Smith, Iain||King, Rt Hon Tom|
|Dunn, Bob||Kirkhope, Timothy|
|Durant, Sir Anthony||Knapman, Roger|
|Dykes, Hugh||Knight, Mrs Angela (Erewash)|
|Eggar, Rt Hon Tim||Knight, Greg (Derby N)|
|Elletson, Harold||Knight Dame Jill (Bir'm E'st'n)|
|Evans, David (Welwyn Hatfield)||Knox, Sir David|
|Evans, Jonathan (Brecon)||Kynoch, George (Kincardine)|
|Evans, Nigel (Ribble Valley)||Lait, Mrs Jacqui|
|Evans, Roger (Monmouth)||Lamont, Rt Hon Norman|
|Evennett, David||Lang, Rt Hon Ian|
|Faber, David||Lawrence, Sir Ivan|
|Legg, Barry||Sackville, Tom|
|Leigh, Edward||Sainsbury, Rt Hon Sir Timothy|
|Lennox-Boyd, Sir Mark||Scott, Rt Hon Sir Nicholas|
|Lidington, David||Shaw, David (Dover)|
|Lilley, Rt Hon Peter||Shaw, Sir Giles (Pudsey)|
|Lloyd, Ftt Hon Sir Peter (Fareham)||Shephard, Rt Hon Gillian|
|Lord, Michael||Shepherd, Colin (Hereford)|
|Luff, Peter||Shepherd, Richard (Aldridge)|
|Lyell, Rt Hon Sir Nicholas||Shersby, Michael|
|MacGregor, Rt Hon John||Sims, Roger|
|MacKay, Andrew||Smith, Sir Dudley (Warwick)|
|Maclean, David||Smith, Tim (Beaconsfield)|
|McLoughin, Patrick||Soames, Nicholas|
|McNair-Wilson, Sir Patrick||Speed, Sir Keith|
|Madel, Sir David||Spencer, Sir Derek|
|Maitland, Lady Olga||Spicer, Sir James (W Dorset)|
|Major, Rt Hon John||Spicer, Michael (S Worcs)|
|Malone, Gerald||Spink, Dr Robert|
|Mans, Keith||Spring, Richard|
|Marland, Paul||Sproat, Iain|
|Marshall, John (Hendon S)||Squire, Robin (Hornchurch)|
|Marshall, Sir Michael (Arundel)||Steen, Anthony|
|Martin, David (Portsmouth S)||Stephen, Michael|
|Mates, Michael||Stern, Michael|
|Mawhinney, Rt Hon Dr Brian||Streeter, Gary|
|Mayhew, Rt Hon Sir Patrick||Sumberg, David|
|Mellor, Rt Hon David||Sykes, John|
|Merchant, Piers||Tapsell, Sir Peter|
|Mills, Iain||Taylor, Ian (Esher)|
|Mitchell, Andrew (Gedling)||Taylor, John M|
|Mitchell, Sir David (NW Hants)||Taylor, Sir Teddy (Southend, E)|
|Moate, Sir Roger||Temple-Morris, Peter|
|Monro, Sir Hector||Thomason, Roy|
|Montgomery, Sir Fergus||Thompson, Sir Donald (C'er V)|
|Moss, Malcolm||Thompson, Patrick (Norwich N)|
|Needham, Rt Hon Richard||Thomton, Sir Malcolm|
|Nelson, Anthony||Thumham, Peter|
|Neubert, Sir Michael||Townend, John (Bridlington)|
|Newton, Rt Hon Tony||Townsend, Cyril D (Bexl'yh'th)|
|Nicholls, Patrick||Tracey, Richard|
|Nicholson, David (Taunton)||Tredinnick, David|
|Nicholson, Emma (Devon West)||Trend, Michael|
|Norris, Steve||Twinn, Dr Ian|
|Onslow, Rt Hon Sir Cranley||Vaughan, Sir Gerard|
|Oppenheim, Phillip||Waldegrave, Rt Hon William|
|Ottaway, Richard||Walden, George|
|Page, Richard||Walker, Bil(N Tayside)|
|Paice, James||Waller, Gary|
|Patnick, Sir Irvine||Ward, John|
|Patten, Rt Hon John||Wardle, Charles (Bexhill)|
|Pattie, Rt Hon Sir Geoffrey||Waterson, Nigel|
|Pawsey, James||Watts, John|
|Peacock, Mrs Elizabeth||Wells, Bowen|
|Pickles, Eric||Wheeler, Rt Hon Sir John|
|Porter, Barry (Wirral S)||Whitney, Ray|
|Porter, David (Waveney)||Whittingdale, John|
|Portillo, Rt Hon Michael||Widdecombe, Arm|
|Powel, William (Corby)||Wiggin, Sir Jerry|
|Rathbone, Tim||Wilkinson, John|
|Redwood, Rt Hon John||Willetts, David|
|Renton, Rt Hon Tim||Wilshire, David|
|Richards, Rod||Winterton, Mrs Ann (Congleton)|
|Riddick, Graham||Winterton, Nicholas (Macc'fld)|
|Rifkind, Rt Hon Malcolm||Wolfson, Mark|
|Robathan, Andrew||Wood, Timothy|
|Robertson, Raymond (Ab'd'n S)||Yeo, Tim|
|Robinson, Mark (Somerton)||Young, Rt Hon Sir George|
|Roe, Mrs Marion (Broxbourne)|
|Rowe, Andrew (Mid Kent)||Tellers for the Noes:|
|Rumbold, Rt Hon Dame Angela||Mr. David Lightbown and|
|Ryder, Rt Hon Richard||Mr. Sydney Chapman.|
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.
MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.Resolved,
That this House reaffirms its commitment to enabling people to buy their own homes, which four out of five people aspire to do; welcomes the fact that the cost of home ownership relative to incomes is at an historically low level; recognises that the existing system of Income Support Mortgage Interest leaves seven out of ten households without cover for their housing costs when unable to work; welcomes the Government's proposed reforms which will help ensure that new home buyers protect their homes against the risk of unemployment; welcomes the innovation taking place in the lending and insurance markets to provide good quality and affordable cover; rejects proposals to spend even more taxpayers' money by introducing a mortgage benefit scheme that will effectively underwrite private borrowing; and is confident that proper management of this major household expense by comprehensive insurance schemes, backed by lenders and insurers, will contribute significantly to a return of market stability.