The standard interest rate for support for mortgage interest has been frozen for six months at 6.08 per cent., rather than falling in line with Bank of England base rates as would normally be the case. We will review the position and consider what arrangements should apply beyond May 2009.
I thank the Minister and the Chancellor for the action taken on this issue in the pre-Budget report, but can she give me any assurances today that the help that the 62 per cent. of mortgage holders on fixed rate deals will get from the Government from May, if they lose their job, will reflect the amounts that they have to pay rather than be linked to the Bank of England base rate?
The hon. Gentleman has raised this important point before. The standard approach would be for the standard rate to fall with bank rates as bank rates are cut. However, we know that a lot of people are on fixed rates, and many have mortgages with banks that have not yet passed on the full rate cuts. Many have seen a reduction of about £100 per month in their mortgage payment as a result of base rate cuts, but others are not benefiting. We will certainly take those issues into account, but the hon. Gentleman will appreciate that it is hard to predict at this stage where base rates will be in May and where individual mortgage rates will be.
Labour has done a great deal for pensioners in recent years, but in these very difficult times, does the Minister have any plans to review the calculation that results in a 10 per cent. notional rate of interest being placed on pensioners’ savings before they can qualify for benefit? Pensioners find that difficult to understand, and I must say it is difficult for anyone to understand.
I know that my hon. Friend has raised this issue with the Department for Work and Pensions and he will also know that we are clear about the importance of supporting pensioners through difficult times. That is exactly why, as part of our fiscal stimulus, we are providing an extra £60 to every pensioner in the new year. That is the right thing to do. It is funded by additional borrowing to help support the economy, and sadly it is something that the Conservative party has opposed.
We are both freezing the rate and expanding eligibility, and we believe that that is the right approach to take, because by that means we are making relief available to those who have lost their job and been out of work for more than 13 weeks rather than for the full 39 weeks to which the relief used to apply. That is the right thing to do and the relief will apply to more people. We have set out costings as part of the approach to the pre-Budget report. It is certainly clear that this is about providing more support to people at a difficult time.