Mortgage Interest — [Mr Philip Hollobone in the Chair]

Part of Backbench Business – in Westminster Hall at 4:00 pm on 19 June 2018.

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Photo of Kit Malthouse Kit Malthouse The Parliamentary Under-Secretary of State for Work and Pensions 4:00, 19 June 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am pleased that Angela Crawley has raised the question of support for mortgage interest and I congratulate her on securing the debate. However, she seems to have developed a number of misapprehensions about the scheme, how it operates, and, in particular, how the system works.

It is worth restating the principles behind the change in the policy. Back in 1948 when the policy was introduced, the housing market was a different place and mortgage products were a different thing. In those days, it was unheard of for people to take mortgages into retirement, there was no such thing as an interest-only mortgage and the average house price was about £1,700. In the intervening decades, the housing market has changed significantly, yet this part of the benefits system remained unreformed and unchanged to reflect the reality we now face.

Back in 2015, when the reform was announced in the Budget, it was deemed to be appropriate and fair to reform the system to reflect the fact that there had been significant changes in the housing market and, as the hon. Lady outlined, to transfer this payment from a welfare payment in the benefits system to a loan. It was also decided that from a cosmetic point of view, as far as possible, there should be no change in how people see the scheme operate. It was recognised that the original scheme was designed to maintain people in their own homes and, exactly as the hon. Lady says, to ensure that they did not go into the private rental sector or lose their homes because of temporary unemployment. Back in 1948, this was meant to be something temporary for a few months or perhaps a couple of years, not the 20 years for which some people have been on it.

It was decided—we have carried this out in the execution of the scheme—that there should be as little disruption as possible to the recipients of these payments in the reformed new system. On a day-to-day basis, recipients of support for mortgage interest should see no difference between the old and new scheme.

The only difference is that when the property is sold or transferred at the end, perhaps even after the owners of the house have died, the amount of accumulated loan is recovered from that property. That is the only difference. On a day-to-day basis, the payments will still be made at exactly the same rate, with the same frequency, in the same way and with the same purpose of maintaining people in their own homes.

Let me cover some of the issues that the hon. Lady raises. On numbers, there is a significant acceleration in the number of people deciding either way. The bulk of people have now made a decision in principle. Large numbers of people are now in payment of the new support for their houses and quite a lot of people are in the process of getting through the system. The numbers are looking better and better. We expect to be on timetable for the transition to be complete later this year. We will publish statistics on SMI on a regular basis to keep the House updated.

Secondly, the hon. Lady raised Serco’s involvement. Let us be clear: Serco is not administering the loan. It was contracted only to provide information to individuals.

Sitting suspended for a Division in the House.

On resuming—