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Mortgage Assistance Schemes

Volume 493: debated on Tuesday 2 June 2009

7. How many households have received assistance under the mortgage rescue scheme and homeowner mortgage support scheme. (277605)

Our objective is to ensure that repossession is always the last resort. The mortgage rescue scheme and homeowner mortgage support scheme are just part of a comprehensive package of measures that we have put in place to assist families at risk of losing their homes. The MRS has been operational across the country since 1 January 2009. Since its launch, local authorities have reported that more than 1,000 households each month have come forward and received guidance on what support may be best for their circumstances. Seventy-seven households are in the final stages of receiving assistance and have had repossession action against them frozen by their lenders. Two households have so far completed the Government mortgage-to-rent process, whereby a registered social landlord has agreed to purchase their property and enabled them to remain in their own home as tenants. We expect many more households to be helped in this way in the coming months.

The homeowner mortgage support scheme opened with the first group of lenders on 21 April. Official figures on the number of households entering the scheme will be published later this year, and we are working closely with lenders and money advisers to monitor progress and ensure that the scheme is working effectively.

Well, there we have it. Since the Chancellor announced this scheme, a house has been repossessed every seven minutes, yet the scheme has helped only two families since it was launched. Is this not another example of the Government seeking publicity—in a blaze of glory—to pretend they are helping people when in reality they are failing to deliver any tangible help to people suffering hardship through no fault of their own?

As I have just pointed out, thousands of households have approached the relevant authorities to seek advice. [Hon. Members: “Two.”] Only two have completed the full process. I also pointed out that more than 70 households—77 to be precise—are now well on the way to receiving a formal offer, and I can also tell the House that a further 10, making 87 in all—[Interruption.] I am glad that Opposition Members find this so amusing; 87 households in all are now in the final stages of having a formal offer of assistance. That is 87 more households than received any help whatever under the Conservatives when they were last in government and when repossessions were taking place. They did not lift a finger. I am glad that they think it is funny that people are at risk of losing their homes, but I do not.

Does the Minister agree that if Opposition Members were to consult the transcript of the proceedings of yesterday’s Select Committee on Communities and Local Government and read the remarks of the Council of Mortgage Lenders on this scheme, they would, perhaps, moderate their mirth? The CML is broadly supportive of these two schemes, and it pointed out that the MRS had been extremely helpful in making sure that many more people at risk of repossession were now approaching their lenders at the outset and getting decent advice, instead of burying their head in the sand and waiting for things to hit them. That might be one of the reasons why relatively few of them are going through this entire system and requiring the MRS; instead, they are coming to an agreement with their lenders early on. If the demand is in fact lower than envisaged, will the Minister consider sending the money through for the building of more homes, instead of leaving it in a scheme that might not be required to the level that was originally thought?

My hon. Friend is entirely right, and I agree that it would be wise for the Opposition to look carefully at the evidence that has been given to the Select Committee that she chairs. Opposition Members are so busy trying to be clever about this issue that they completely overlook the fact that, for everybody who is being considered for schemes of this kind, there is forbearance of action that could otherwise be taken against them that could lead to their homes being repossessed. One of the reasons we took the step of making the announcements that we did earlier in the year, which has been much criticised since by the Conservative party, was precisely to encourage people to go to their lenders and get advice at the earliest possible stage, instead of burying their heads in the sand. It is very clear from all the professional evidence that people believe that that has had a substantial effect.

The second effect that we hoped to achieve, which, again, seems perhaps to have come to fruition, was to get lenders to think more carefully about whether taking such as approach is worth their while—the suggestion is that repossessing a home costs a lender, on average, about £37,000. One of our chief aims was to convince lenders to consider the fact that for a lesser expenditure they might save all that misery and disruption to so many families. I am frankly appalled by the frivolous attitude of the Conservative party—I mean that quite sincerely, Mr. Speaker. It is a shattering blow to people when they lose their home—it is much harder than losing one’s job and much harder to recover from.

On the mortgage rescue scheme, it appears that what is happening is that those who are coming through to the end of the scheme—I appreciate that the numbers are comparatively small on the official statistics—are agreeing to forgo their home ownership in order to stay on as tenants. That, in itself, is a major decision, so we should not be surprised that people are taking time to arrive at it.

The Minister will be aware that 75,000 families are expected to face the misery of repossession that she spoke about. Even if we were to add in all the package of measures to which she referred, tens of thousands of families would still be left facing that misery. Why then has she been unwilling to reform mortgage law—Shelter has consistently argued for this—so that we can give the courts the power to intervene? That would give the Government’s pre-action protocol some decent teeth. Why is she unwilling to do that?

I simply say to the hon. Lady that we believe that the pre-action protocol has been really quite effective. I appreciate the point she makes, which is that, sadly, many people could still lose their homes, but she may be aware that even in the best of years over the past decade or so—it was in 2004, as I recall—some 8,000 families lost their homes. There are a variety of reasons why people may find themselves in those devastating circumstances. She referred to the forecast of some 75,000 expected repossessions this year. That forecast came from the Council of Mortgage Lenders, but it has recently said that it now believes that, as a result of the action that this Government have taken, it has been too pessimistic. We certainly all hope that that is the case.

I cannot honestly say that everybody was enthusiastic, but the most important thing is that they have been willing to join. As my hon. Friend may know, 50 per cent. of the lenders in the marketplace have joined the home owners mortgage support scheme and taken advantage—or they could take advantage—of the Government’s underlying guarantee. Although some major lenders did not feel that they needed to use that guarantee, 80 per cent. of mortgage lenders are, in fact, offering comparable schemes.

Does the right hon. Lady agree that although these two schemes are both welcome, the process can be slow and bureaucratic? Will she undertake a review to see whether it might be streamlined?

We are indeed keeping the schemes under review. The right hon. Gentleman may know that in the Budget we brought forward some extra funding, because early experience of the mortgage rescue scheme suggested that there was a greater problem with negative equity than had been anticipated. So, we have already made that change to the scheme and put forward the funding that will enable us to cover that. We are continuing to monitor how the schemes are developing because, obviously, as I said at the outset, our goal is to be as effective as possible in preventing repossessions, by whatever means.

Does the right hon. Lady understand that there is no amusement on this side of the House at the Government’s situation, but there is a great deal of anger at their unwillingness to recognise the failure of these programmes, however well intended they might be, to deliver in practice? She neglected to tell the House that, of the 1,000 a month who register and express an interest in the mortgage rescue scheme, more than half are told that they do not qualify on the Government’s own criteria. She neglected to say that on the current rate of progress the 6,000 who are supposed to be helped over the course of the scheme would, in fact, total about 12.

The Minister refers to the home owner mortgage support scheme. Would it not have been better if she had owned up to the fact that the 50 per cent. of mortgage lenders coming forward is fewer than the 70 per cent. that she said would come forward when the scheme was first trailed? Will she explain why major players such as Santander, Barclays, HSBC and Nationwide have all ruled out participation in the scheme? There is nothing amusing about this: indeed, the Government’s failure is tragic, if not scandalous.

The hon. Gentleman accuses me of misunderstanding the Opposition’s approach. I admit that I was guilty of thinking that people who were roaring with laughter were finding something amusing.

What the hon. Gentleman says is straightforward nonsense, as he should be aware. He talks about a failure to deliver in practice and about the criteria for the scheme. If he has been paying any real attention to the schemes, he will know that the mortgage rescue scheme was only ever intended for some 6,000 families, and was geared towards the most vulnerable households who would be legally entitled to be rehoused by their local authority. That was all announced at the time. It was precisely because that scheme was funded only to deal with a small number of households that the Government then introduced the home owners mortgage support scheme, which is designed to deal with a much larger number—potentially tens of thousands—of households. All the strictures that the hon. Gentleman has levelled against the mortgage rescue scheme are therefore misplaced.

The hon. Gentleman suggests that Barclays, Nationwide and Santander are not participating, but he is wrong. They are offering comparable schemes and therefore have said that they do not see the necessity for the underpinning Government guarantee, and that is why they have not entered the guarantee scheme. They are certainly offering similar schemes, alongside our scheme, which they would not be offering were it not for the fact that this Government have urged them to enter our scheme. They do not need the support and that is why they have not come into that aspect of the scheme.