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Housing and the Credit Crunch

I will deal with that and answer the important point that the hon. Gentleman has made, but I want to take him through the whole process. To support households in financial difficulty, we have provided extra funding for debt advice, including £6 million for the National Debtline and £10 million for the citizens advice bureau. CAB figures show that 95,000 households received advice on a mortgage or secured loan last year. When a possession case has reached court, repossession is not inevitable and the right advice and support can help households remain in their home even at that stage. That is why we have put in place universal access to advice desks in courts, and have doubled DCLG funding for that vital scheme to £1.5 million for the current year. The scheme provides free legal advice and representation to people facing repossession or eviction hearings. Legal protection for home owners in difficulty has also been strengthened. In 2004, the Government introduced statutory regulation of mortgages and the Financial Services Authority's regime affords consumers important protections and requires lenders only to repossess as a last resort. More recently, we introduced the mortgage pre-action protocol, which sets out clear guidance to the judiciary on what steps the courts expect lenders to take before bringing a claim to court. That helps ensure that lenders can only repossess as a last resort—and the measure has paid off. More lenders are working with their customers to help them stay in their homes and although, as I said earlier, every repossession is a tragedy, Ministry of Justice figures show a 42 per cent. drop in mortgage possession claims issued in quarter one of 2009 compared with quarter one of 2008. That is important as it is crucial for effective forbearance that lenders treat borrowers fairly and that borrowers talk to their lender if they enter financial difficulty. On other measures, we are helping 200,000 through the support for mortgage interest scheme, which helps with payments towards the interest component of a mortgage. We have also introduced the homeowners mortgage support scheme, which helps people on reduced incomes to reduce their mortgage payments, and we estimate that that could help tens of thousands more households. In addition, the mortgage rescue scheme helps people stay in their homes—some by selling a stake to the housing association—and has helped up to 6,000 families, 200 of which have had repossession action in the first five months of the scheme. I want that scheme to help people as quickly as possible, but there are practical problems because households are selling their home when they enter the scheme. It is not an overnight process. We need to ensure that checks on the property are carried out and that the home owner gets proper advice before making the decision to go ahead. However, we want to speed up the process where possible, which is why, on 30 June, the Minister for Housing, my right hon. Friend the Member for Wentworth (John Healey), announced our plans for the new mortgage rescue fast-track team, which will be up and running by the end of this month. The team will be based in Birmingham and will help manage MRS applications. Its work will include handling negotiations with lenders and registered social landlords, which should really speed up the process for some households. The truth about the package as a whole is that millions have benefited from low interest rates—that did not happen in previous recessions—and hundreds of thousands have been able to stay in their homes because of direct help from the Government. As I said, every repossession is a tragedy and none of the statistics will be of any consolation. However, as a result of these measures, even though a million more households own their home, the numbers being repossessed are proportionately smaller than in the 1990s. I understand the Opposition's position on this and why they want to claim that such schemes—the home ownership and the shared ownership schemes and so on, to which the hon. Member for Welwyn Hatfield referred earlier—are not having an impact. To be fair to the hon. Gentleman, I do not think he is making such claims to score political points—[Interruption.] Although, perhaps I am being too generous. I think there is a fundamentally difference in our values and the Opposition's view of how things should be organised. The Opposition want to say that the extra investment and the real help that we have provided is not working because they are ideologically opposed to Government intervention. When they talk about wanting a smaller state and rolling back the frontiers of the state, what they actually mean is that the Government should do less, and spend less. The Opposition would like to introduce spending cuts, so that they can do whatever they want to do on inheritance tax regarding some of the richest estates in the country. They were opposed to the action that we took to save the banks. They think our approach should have been to do much less or nothing during the recession and that we should cut public spending. We think that we should increase investment to keep people in their homes, save jobs and get the economy moving. Those are two very different sets of beliefs, are they not? The next election will be an opportunity for the country to choose which approach it wants. But let us not reduce this to some kind of point-scoring around this or that number. Let us have an honest debate about the competing values that our different parties hold. In addition to supporting those at risk of repossession, we have also taken action to help make home ownership more affordable. To help first time buyers get on the property ladder, we will provide increased funding for our low-cost home ownership schemes. These include the Rent to HomeBuy scheme, which enables potential purchasers to rent a property at below market rent for up to five years, giving them an opportunity to save the deposit needed to buy a share in their home. The HomeBuy Direct scheme enables purchasers to buy a newly built home with the assistance of an equity loan of up to 30 per cent. Households with incomes of up to £60,000 that could not afford to purchase a suitable property on the open market are eligible to buy through HomeBuy. Together with the recent housing pledge, we expect to help more than 46,000 people into home ownership this year and next. The Committee and my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) discussed finance for mortgages. In January, the Government announced measures to reinforce stability of the financial system, increase confidence and capacity to lend, and support the recovery of the economy. Those measures build on the £500 billion package announced in October last year to help restore confidence and trust in the markets. In addition, and as a condition of accessing the asset protection scheme, lending commitments on commercial terms have been agreed with the Royal Bank of Scotland and Lloyds for the 12 months from March 2009. Other banks have also signalled their intention to increase lending. That should help families looking to buy a property and households that want to remortgage. As I said earlier, the Bank of England has taken decisive action to reduce interest rates. Mortgages are cheaper for some prospective buyers and many in home ownership as a result of the average mortgage interest rate having fallen from 5.8 per cent. in April 2008 to 3.59 per cent. in May 2009. Let me turn now to housing supply, which was raised by my hon. Friend the Member for Islington, South and Finsbury (Emily Thornberry). She spoke with great passion about the problems facing her constituents. I would be happy to go to her constituency and meet some of those people and see for myself the conditions that she described. In addition, I would be happy to speak to her in more detail about the problems that she referred to with the housing market in London more generally. The Government's help, combined with the commitment of the registered social landlord sector, meant that more than 47,000 affordable homes were funded through the HCA in 2008-09. That is a real achievement, and we have to do more. It is fair to say that, for decades, housing supply has failed to keep up with our growing and aspiring population, and that demand for housing, both affordable and in the private sector, will continue to increase. It will be crucial that our house building industry responds flexibly to meet that challenge. That is why our recent pledge to invest £1.5 billion to build 20,000 new affordable homes for rent and low-cost sale is so important. The pledge builds on existing programmes: the national affordable housing programme, the local authority new build programme, the kickstart housing delivery programme and the surplus public sector land programme. The pledge will increase total investment in affordable housing over the next two years to £7.5 billion, and it will mean that more than 110,000 new affordable homes will be built during that period. The Chairman of the Committee, my hon. Friend the Member for Milton Keynes, South-West, discussed the latest projections, which indicate that the number of households will grow at a faster rate, and that we might need to build even more homes. That underlines the urgent need to maintain our ambition to provide more homes, not just for now but for future generations as well.