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—