The Government have agreed a range of commitments with the banks supported by the recapitalisation scheme. They include arrangements to make available affordable mortgage products over the next three years and to help individuals who are struggling with their mortgage payments to stay in their homes.
I spoke to Wakefield citizens advice bureau representatives yesterday and they told me that there is a three-week waiting list for people in our district who wish to be referred for help, particularly in respect of mortgages given out by Northern Rock and HBOS. Will my right hon. Friend make sure that she ignores a recent paper from the Conservative party that saw no need to regulate the provision of mortgage finance, as that would be truly catastrophic for this country’s economy?
My hon. Friend is right. I am aware of the concerns about people wanting more debt support and advice in our district, too, and that is the case right across the country. That is why we have substantially increased the investment in providing debt advice in the past 10 years. We are looking into what more we can do, because people need more support. My hon. Friend is also right to say that, at the heart of this, it would have been utterly irresponsible to cut the regulation of mortgage provision, as some in the Opposition seem to advocate.
Do the Chief Secretary and her right hon. Friend the Chancellor agree that with the recapitalisation of our banks it was urgently needed that, as in America, there should be substantial cuts in interest rates, yet the current position is that our interest rates are 3½ per cent. higher than those in America? The present state of apparent paralysis of the Monetary Policy Committee—which I may say that I predicted in 1997 would be the case whenever there was a crisis—is adding to the problems facing mortgage holders.
I know that Opposition Members opposed and voted against the independence of the Bank of England at the beginning, but after time they said that they supported it. Clearly, they have now changed their position again.
I never changed.
I have to say to the hon. Gentleman that I think it is right to have an independent Bank of England. That is why interest rates are 4.5 per cent. instead of the 15 per cent. that they reached at the end of the ’80s and in the early ’90s. It is right that the Bank should take these decisions, not only to ensure that it has the inflation target in mind but to support the economy in the way that its remit allows it to do.
Lloyds TSB was bailed out with £5.5 billion of Government money. Since then, it has refused to pass on the recent interest rate cut and has increased the rate for its tracker mortgages. In the past couple of days, it has stopped existing customers moving from repayment mortgages to interest-only mortgages, which is a first step in easing people’s mortgage payments. As we are one of the biggest shareholders in this bank, does the Minister agree that at the next meeting we should ask our managers to review those destructive lending policies?
My hon. Friend is right to raise questions about what is being done by the lenders who have help from the recapitalisation scheme. They have agreed to make available lending at 2007 levels, and we will put in place procedures to monitor how they are maintaining availability of mortgage lending. As hon. Members have said, it is right, given that the Government are taking action to support the banks, that the banks should take action to support mortgage holders and home owners across the country.
Why is the publicly owned Northern Rock now the most ruthless and unforgiving of any institution in pursuit of defaulters of any kind?
As the hon. Gentleman will know, Northern Rock operates at arm’s length and on a commercial basis, and it is right that it should do so. I am aware of concerns that have been raised by charities about Northern Rock’s lending, and as a result it will meet some of those charities. They have particular concerns about its Together mortgages, which were, in effect, mortgages of over 100 per cent. It is right that all lenders, not only Northern Rock and those that have support from the recapitalisation scheme, should do everything they can to make repossessions, properly, a last resort, not a first resort. That is why we have introduced new court rules to strengthen the procedures to ensure that borrowers who get into difficulties can be offered alternatives and other support.
Will my right hon. Friend reassure the House that she would never have welcomed the report by the right hon. Member for Wokingham (Mr. Redwood) calling for the complete deregulation of the mortgage market, because to do so would show a total lack of judgment that could be taught only at the Bullingdon school of being on another planet?
My hon. Friend is right. To propose reducing the regulation of mortgage lending at such a time, a matter of weeks before the credit crunch hit, was not only irresponsible but did indeed demonstrate a lack of judgment.