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Mortgage Interest Payments

Part of Orders of the Day — Finance Bill – in the House of Commons at 9:30 pm on 15th July 1997.

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Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions) 9:30 pm, 15th July 1997

Judging from that response, I suspect that the hon. Gentleman would be in good company with angels and pinheads.

The Opposition are not alone in having a contradictory position on this issue. I welcome the fact that the reduction in mortgage interest tax relief removes some cash from the personal rather than the corporate sector. The Budget did not do enough on that front, so, to that extent, I welcome the measure.

The Budget is supposed to be about welfare to work, but what are the prospects for people with mortgages who want to take a low-paid job? They will find that their mortgages are higher when they are in work. When in opposition, Labour Members opposed the cut in help with mortgage interest for those on income support. If we want people to move from welfare into work, we must give them security and ensure that, if they lose their jobs, they will receive help with their mortgages. At present, as soon as someone comes off income support, even if it is only for a few weeks, his mortgage will not be paid if he loses his job. For many people, the risk is not worth while. What will be done to help those people under the Government's proposals?

The question has been asked: what would Opposition Members do? We have heard that Conservative Members would do nothing, because they would not have had a Budget. My colleagues and I, however, would have gone one step further: we would have spent part of the money saved from the cut in mortgage interest tax relief on low-income benefit, to which the hon. Member for Dudley, North (Mr. Cranston) referred. That would at least cushion the blow and help people to move from welfare into work. If the Budget is to be seen as a welfare-to-work measure, why has the issue of the low-income home buyer not been addressed?

It is clear that mortgage tax relief is on its way out, either rapidly or slowly. However, unless the position of those who are trying to move from the bottom end of the labour market is not taken into account, we shall never make progress. What will be done to remove the insecurity that is felt by many at the bottom end of the labour market? They are told now to rely on private mortgage insurance, but what private mortgage insurer has any interest in someone on a short-term contract or in a low-paid job?

Will people who are currently in receipt of welfare be in a position to take work, and what will happen when they lose it? We know, of course, that people will be forced to take work. We know that there will be compulsion for young people, for example. What will they live on? What encouragement does the Budget give them to take chances? It seems that there is a paradox in the Government's approach. They talk about welfare to work, but they provide no support for those who are willing to take the chance. That is the fatal weakness of the clause.