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Housing and the Credit Crunch

Nevertheless, it has been a fascinating debate, in which a number of Members who are acknowledged experts on these issues have taken part. I congratulate my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey), the Chair of the Select Committee, on producing the reports and securing the debate. I apologise to the hon. Member for Brent, East (Sarah Teather) for having popped out of the room—I am very sorry for having done so. I welcome the opportunity to have this debate. In June, my predecessor gave evidence to the Committee on the issue, but a lot has happened since then and I am grateful for the opportunity to report on the progress that has been made. As a number of Labour Members have made clear, housing has always been one of the Government's top domestic priorities and, whatever the Opposition spokesman wants to claim, I think it is fair to say that we have made significant progress over the past decade. A million more households now own their homes, and there are more than 400,000 new affordable homes and 1 million more decent homes. All of that has made a real difference to people's lives up and down the country. Following that period of real success, as the Committee's report shows, housing along with many other sectors of the economy is undoubtedly now facing difficult times. The global economic turmoil has made conditions much tougher for developers, home owners and prospective buyers alike. The Government have had four key priorities in responding to these challenges: first, to help home owners concerned about repossession; secondly, to support first time buyers; thirdly, to restart the flow of lending; and fourthly, to increase the number of homes being built and boost skills in the construction industry. I shall set out the progress that we have made on each of those. Supporting home owners who are threatened with repossession, so that we can make sure no household needlessly loses its home is one of our top housing priorities. That is why we have put in a place a framework of support through the whole arrears cycle—from debt advice to court desks—which has helped hundreds of thousands of families already. As part of that programme, we have boosted the support offered by the benefit system and have implemented new schemes offering targeted financial assistance to those in the greatest need: the homeowner mortgage support scheme and the mortgage rescue scheme. Every repossession is a tragedy for the family affected and all the figures and statistics will be of no consolation to people who have lost their home, but the measures we have introduced will help thousands of households avoid repossession. As my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) said, it is worth pointing out that the figures provided by the Council of Mortgage Lenders show that the number of repossessions in 2008 represent about 0.34 per cent. of all loans, which means that despite the fact that more than a million more households now own their home, the numbers affected are proportionately smaller than in the 1990s. Again, as my right hon. Friend pointed out, the Council of Mortgage Lenders has already said that its forecast of 75,000 repossessions this year was looking pessimistic in light of the Government's intervention. The Council of Mortgage Lenders has now reduced that figure and that revision is a direct result of the action that we have taken, in combination with lower interest rates and other actions to support the economy. I am glad that the hon. Member for Welwyn Hatfield (Grant Shapps) raised that point and went into it in some detail. I want to deal with the matter with the same amount of detail. To be honest, it is a bit ridiculous to judge the success of a scheme or the impact of the Government's measures by the number of people whose homes have been sold to housing associations at the very final stage of one particular scheme and ignore the hundreds of thousands of people who have been helped much earlier in the process. The macro-economic framework we have put in place means that millions of home owners have benefited from record low interest rates, which is in stark contrast to what has happened in previous recessions when interest rates soared to 10 per cent. for four years and 15 per cent. for a year. That caused even bigger problems for millions of families. Ensuring that lenders are offering their own forms of support to borrowers and that they are providing extra advice and protections through the courts has helped hundreds of thousands more people.