The Chancellor of the Exchequer (Jeremy Hunt) Mr Speaker, last week
the Bank of England increased interest rates to 5% as the UK, like
other countries, grapples with high inflation. We are steadfast in
our support for the independent Monetary Policy Committee as it
takes whatever action is necessary to return inflation to the 2%
target in the medium term. None the less, I know that higher
inflation and interest rates cause anxiety and concern for many
families. That is why...Request free
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The Chancellor of the Exchequer ()
Mr Speaker, last week the Bank of England increased interest
rates to 5% as the UK, like other countries, grapples with high
inflation. We are steadfast in our support for the independent
Monetary Policy Committee as it takes whatever action is
necessary to return inflation to the 2% target in the medium
term.
None the less, I know that higher inflation and interest rates
cause anxiety and concern for many families. That is why the
Government are already supporting families with one of the
largest support packages in Europe, worth £94 billion, or £3,300
per household on average. As interest rates rise, I will not take
action that undermines the Bank of England’s monetary objectives,
but where we can take non-inflationary measures to relieve the
anxiety faced by families, we will do so. That is why on Friday,
I met the UK’s principal mortgage lenders, alongside senior
representatives from the Financial Conduct Authority and UK
Finance, to agree new support for people struggling with their
mortgage payments. At that meeting, I secured agreement from
lenders to a new mortgage charter that sets out what support
customers will receive, which we are publishing today. The
charter has been signed by lenders covering 85% of the UK market,
and provides support for two groups of people in particular.
The first group is those who are worried about their mortgage
repayments. If they want to switch to an interest-only mortgage
or extend their mortgage term to reduce their monthly payments,
they will be able to do so, with the option of switching back to
their original mortgage deal within six months without any
affordability check or credit score impact. For most people, the
right course of action will be to continue to make payments on
their current mortgage. That will always be the best option, and
will always mean that they pay less interest overall. However,
this new measure means that people will be able to opt for a
lower-cost approach for six months with full reversibility,
giving them the peace of mind of knowing they can try out a new
approach and still change their mind later.
The measure will take effect in the next few weeks. It means that
a homeowner with a £200,000 property with £100,000 outstanding on
their mortgage over 15 years can change their payments—with no
immediate impact on their credit rating—by extending the mortgage
term by 10 years, which could save over £200 a month, or moving
to interest-only payments, which could save over £350 a
month.
A further measure for this group of customers means that if they
are approaching the end of a fixed-rate deal, they will be
offered the chance to lock in a new deal with the same lender up
to six months ahead. However, they will still be able to apply
for a better like-for-like deal with the same lender, with no
penalty if they find one, until their current deal ends. That
will provide people with more flexibility and optionality to find
the best deal for their circumstances.
The second group of people we are supporting is those who are at
real risk of losing their home because they fall behind in their
mortgage payments. Mortgage arrears and defaults remain at
historically low levels, with under 1% of residential mortgages
in arrears in 2023, and are at a level lower than just before the
pandemic. None the less, for the families involved it is
extraordinarily distressing to lose their house, so we will do
all we can to support people who find themselves in such a
challenging financial position.
As part of our strong regulatory framework for mortgage holders,
banks and lenders already provide tailored support for anyone who
is struggling and deploy highly trained staff to help such
customers. Support offered includes temporary payment deferrals
and part-interest part-repayment, as well as extending mortgage
terms or switching to interest-only payments. To supplement that,
we have agreed as part of the mortgage charter that in the
extreme situation in which a lender is seeking to repossess a
home, there will be a minimum 12-month period from the first
missed payment before there is a repossession without consent.
Anyone at all who is worried that they could be in this situation
should know they can call their lender for advice without any
impact whatsoever on their credit score. Lenders will also
provide support to customers who are up to date with payments to
switch to a new mortgage deal at the end of their existing fixed
rate deal without another affordability test, and provide
well-timed information when their current rate is coming to an
end.
Taken together, these measures should offer comfort to those who
are anxious about the impact of higher interest rates on their
mortgages, and provide support to those who do get into any
extreme financial difficulties. The mortgage market itself
remains robust, and the average homeowner remortgaging over the
last year had close to 50% loan to value, indicating that most
people have considerable equity in their homes.
Tackling inflation is the Prime Minister’s and my No 1 priority.
We said we would halve inflation not because it was an easy thing
to do, but because it is the right thing to do, and we will not
flinch in our resolve, because we know getting rid of high
inflation from our economy is the only way that we can ultimately
relieve pressure on family finances and on businesses. That is
why we will seek to remove inflationary pressures in our economy,
not stoke them. That is what the measures I have set out today
will help to do, and I commend this statement to the House.
Mr Speaker
I call the shadow Chancellor of the Exchequer.
15:41:00
(Leeds West) (Lab)
Thank you, Mr Speaker. I would like to thank the Chancellor for
advance sight of his statement this afternoon.
Families are worried sick to their stomach about what is
happening at the moment, but the Prime Minister says, “Don’t
worry—it will all be okay”. However, it is not going to be okay
for the millions of homeowners who face an average increase in
mortgage costs of £2,900 this year—all of this during a wider
cost of living crisis. The Prime Minister told the country
yesterday to hold its nerve, but where are people meant to find
the money in the meantime to pay for the Tory mortgage bombshell?
The Chancellor and the Prime Minister have not yet said.
For many, the Tory mortgage bombshell will mean holidays
cancelled, family savings draining away and missing out on days
spent with family and friends, but for others it could be much
worse—not moving up the housing ladder, but heading down it
through no fault of their own. The Chancellor does not need to
take my word about how many people will be facing the Tory
mortgage bombshell. He could speak to any of the 11,600 families
in his own constituency who will be paying £450 more every month
in mortgage costs alone as a result of this Conservative
Government.
The Resolution Foundation estimates that millions of households
will have to pay a combined total of £15.8 billion more in
mortgage payments a year by 2026. That is just devastating. The
Tories gambled last autumn with people’s livelihoods, and since
then things have got worse, not better, yet Ministers take no
responsibility for the damage that they have caused, and blame
anything and everyone else. Again today, the Government claim
that this is all due to global factors, yet the latest data show
that a typical household in Britain are now paying over £2,000
more per year for their mortgage than in France, over £1,000 more
per year than in Ireland or Belgium, and over £800 per year more
than in Germany. The Chancellor is going to need a better
scapegoat.
Labour set out our plans last week. Our measures were a
requirement—yes, a requirement—because all lenders need to play
their part when people are struggling. Our plan would have
provided real help, but the Government have provided just a bad
cover version. While many banks and building societies are doing
the right thing by their customers, a voluntary set of measures
is just not good enough. The Chancellor said today that the
voluntary measures would cover 85% of the mortgage market, but
what is his answer for the more than 1 million families who are
missing out because their lender has not signed up to this
scheme—tough luck? Just how bad does it have to get before the
Chancellor recognises that mandatory action is needed to provide
meaningful assistance?
I would like to ask the Chancellor the following questions. Can
he confirm what consequences there are for firms who have not
signed up to this scheme? Where is the plan for renters? The
Chancellor did not even mention them in his statement, but many
of them are paying higher rents because the mortgage costs of
their landlords have gone up? Why does the Chancellor think that
savers are not enjoying the full benefits from rising interest
rates in the same way that mortgage holders are feeling the full
pain? Why does the Chancellor think that the UK has the highest
inflation in the G7, and does he still think the Government are
on track with their target of halving inflation by the end of the
year? How does the Chancellor think getting rid of house building
targets will help increase home ownership? Finally, six days ago
the Chancellor said that he was “proud” of this Government’s
economic record. With energy bills twice as high as last year,
food inflation close to 20% and millions hit by the Tory mortgage
bombshell, is he seriously saying he is proud of that record?
People work hard to get on to the housing ladder, yet there is
now a risk that dreams will become nightmares due to the
decisions of this Conservative Government. The Chancellor today
has come to the House with a watered-down package that does not
meet the task of dealing with the Tory mortgage bombshell.
I will deal with the right hon. Lady’s specific points first. She
says these measures should be mandatory, so why did Labour oppose
the intervention power in the Financial Services and Markets Bill
that would have made that possible? She said she wants action for
savers, and I have indeed been talking to banks about action for
savers and will keep the House updated. What she carefully did
not mention is that we secured on Friday more than Labour
committed to, because our measures provide protection for people
who miss payments not for six months, but for 12 months.
The main point is that the right hon. Lady wants people to think
she is fiscally responsible and will not take risks with
inflation, so why on earth is she committed to borrowing £28
billion more a year when, as a former Bank of England economist,
she should know that that will be inflationary and push up the
cost of mortgages? Members need not listen to me; they should
listen to people such as Paul Johnson of the Institute for Fiscal
Studies, who said about Labour’s plans that
“additional borrowing both pumps more money into the economy,
potentially”—[Interruption.]
The right hon. Lady might not want to hear this but this is what
Paul Johnson says about Labour’s plans:
“additional borrowing both pumps more money into the economy,
potentially increasing inflation, and also drives up interest
rates.”
It is Labour’s mortgage bombshell, hidden in plain sight.
The right hon. Lady does not want people to notice the real
comparison here, which is that her party faced an economic crisis
in 2008, just as this Government did last year, but we are taking
the difficult decisions to restore sound money and the public
finances while they ducked each and every one of those decisions,
ran out of money and left it to others to clear up the mess.
(Wokingham) (Con)
Given that we do not want too much pressure on mortgage holders,
who will be struggling, will the Government launch a series of
supply-side measures to increase the supply of things that are
short, to promote more home-grown food and home-produced energy,
and above all to work with public sector employees and managers
to have a productivity revolution in the public services where
there has been a collapse in output?
As so often, my right hon. Friend is absolutely right and it is
in supply-side measures that we see the long-term solution to the
inflation problem that we and many other countries face. That is
why the Budget was focused on labour supply measures such as a
massive reduction in the cost of childcare—a reduction of up to
60% for families with young children—and it is why my right hon.
Friend the Chief Secretary to the Treasury is launching the very
productivity review my right hon. Friend the Member for Wokingham
() has called for many times, to
make sure we are getting better value for public money spent.
Mr Speaker
I call Scottish National party spokesperson.
(Dundee East) (SNP)
With a debt to GDP ratio of 100%, the Chancellor was rather brave
to talk about sound money. However, I welcome the statement and
early sight of it. Notwithstanding the fact that it was described
by Reuters as a package of limited relief measures, it is none
the less necessary and welcome, with support from lenders, no
repossession within 12 months of a missed payment, the chance to
lock in a deal six months early, a temporary move to
interest-only, and no impact on customer credit scores. The
Chancellor’s words about anxiety and concern struck the right
tone, unlike his Prime Minister yesterday.
However, that that does not begin to answer some of the
fundamental questions. Given that the base rate drives the
mortgage rate, and the base rate, as the Chancellor knows, is the
primary tool that the Bank has to tackle rising inflation, is
this now not the time to review the Bank of England’s targets and
tools? Secondly, are the Government genuinely convinced that
using a rising base rate to tackle input inflation caused by
external shocks is the best approach we have, other than to tip
the economy into recession, as some people are suggesting? I hope
the Chancellor would agree that that would be an idiotic and
catastrophic thing to do. Thirdly and finally, should we now not
revert to forward guidance on base rates from the Bank of
England, as we had under Mark Carney during the financial crisis?
It may not affect the trajectory of interest rates and mortgage
rates initially, although it might, but it would certainly
provide certainty to business, retail and mortgage borrowers.
I often do not agree with what the right hon. Gentleman says, but
I thank him for the constructive tone of his comments this
afternoon, because he is absolutely right to talk about external
shocks. He will know, as we do, that interest rates have gone up
by similar amounts in the United States, Canada, Australia and
New Zealand and that core inflation is higher in 14 EU countries.
We need to look at all the tools at our disposal. Whether the
Bank of England Governor issues forward guidance is a matter for
the Governor, but I am sure he will have heard the right hon.
Gentleman’s comments. It is important, because we respect and
support the independence of the Bank of England, that I allow the
Governor to make those judgments. I disagree with the right hon.
Gentleman’s suggestion of reviewing the target for inflation.
That target is the right target, and it is important that we give
everyone confidence of our total commitment to hitting that
target, which we will.
(New Forest West) (Con)
Given the significant tightening in the measures of monetary
growth, is the Chancellor absolutely sure that the Bank of
England has got it right?
The Bank of England Governor himself has been very open about the
fact that the Bank’s inflation forecasting has not been accurate,
and it is conducting an independent review to see how it can do
that better. It is clear that there have been some issues with
how that process has worked, but what I would say to my right
hon. Friend—
Mr Speaker
Order. The Chancellor should be making his remarks to the
Chair.
Mr Speaker, you are absolutely right to correct me on that point.
What I would say to you about the point raised is simply that in
my dealings with the Bank of England, I have never once had any
reason to question its resolve to hit the target, but we need to
ensure that the forecasting is better.
Dame (Wallasey) (Lab)
Some 8,600 families in Wallasey are facing increases in their
mortgage bills of up to £1,800 in a year. That is a huge extra
chunk of worry. I welcome the Chancellor’s statement, but does he
not worry that the banks are being very slow to pass on interest
rate rises to those who are saving, while almost immediately
passing interest rate rises on to those who borrow? That makes
the interest rate mechanism much less effective in dealing with
the inflation situation. Did he notice, as I did, that the banks
this autumn made more than £4 billion extra on the differential
between those interest rates? Should he not have been much
tougher on the banks? What will he to do to stop this
profiteering?
The right hon. Lady is absolutely right. It is taking too long
for the increases in interest rates to be passed on to savers,
particularly with instant access accounts. The rates are more
frequently being passed on to those with fixed-term and notice
accounts. She is right that there is an issue there, which I
raised in no uncertain terms with the banks when I met them. I am
working on a solution, because it is an issue that needs
resolving.
Sir (North Herefordshire) (Con)
My right hon. Friend will know that increasing liquidity in the
housing market will give homeowners more options and choices.
Will he look at reducing the burden of stamp duty to help both
current and future homeowners?
I thank my hon. Friend for his comment. The level of stamp duty
is, as with all taxation measures, kept under review. We make
decisions at the time of fiscal events, whether autumn statements
or spring Budgets, and we will continue to do that.
(Richmond Park) (LD)
The root cause of soaring interest rates—other than the shambles
of the mini-Budget—is the Government’s failure to control
inflation. The Prime Minister took personal responsibility for
halving inflation this year. Will the Chancellor explain why the
Government are refusing to take obvious steps to tackle inflation
such as reinstating energy support for farmers and businesses,
cutting import costs for small businesses and bringing down the
NHS waiting list to alleviate the squeeze on our workforce?
I find it strange that the hon. Member should be criticising the
Government’s failure to tackle inflation when her party is
suggesting a multi-billion-pound package of mortgage support that
would increase inflation. I must say that the Liberal Democrats
are positioning themselves brilliantly as the pro-inflation
party.
(The Wrekin) (Con)
I welcome the new mortgage charter, but may I say, along with all
Members across the House, that constituents are suffering and
that they are very concerned? Many are having to choose between
food, clothes and shoes and paying the mortgage or the rent, and
decisions that we make here, either as the governing party or
cross-party, are having a direct impact on individuals’ lives
every single day. I join cross-party with the hon. Member for
Wallasey (Dame ), who is absolutely right
that, so often, when the base rate rises, lenders are quick to
raise those interest rates on our constituents. Will my right
hon. Friend ensure that when interest rates fall, as they surely
will—hopefully they will soon; possibly in the autumn, but we
will see—those reductions are passed on to our constituents as
quickly as possible?
My right hon. Friend is right to draw attention to the human
consequences of any economic shock. I am extremely proud that,
under the Government since 2010, 1.7 million people have been
lifted out of absolute poverty, including 400,000 children. That
is why in the autumn statement we prioritised those facing the
biggest challenges with a £94 billion package of support to help
people through the cost of living crisis. But one thing that can
definitely happen better than it is now is passing on increases
in the base rate to savers.
(Cardiff South and Penarth)
(Lab/Co-op)
One reason nearly 10,000 of my constituents will be hit by the
Tory mortgage bombshell is that many deals ending in this
12-month period were taken out when interest rates were below 2%;
they are now at 5%. Will the Chancellor set out clearly his
private analysis of the likely rises in arrears and repossessions
over the next few months?
I do not have any private forecasts that I have not shared with
the House. What I can say is that about 0.9% of families with
mortgages are currently in arrears, and that is nearly four times
fewer than in 2009.
(Southend West) (Con)
I thank the Chancellor for his statement. A third of my
constituents have mortgages and will welcome this range of
measures. Now that the majority of the mortgage market is fixed,
not floating, does he agree that rising short-term interest rates
will not necessarily result in falling inflation and that we need
to look at other measures such as making sure that interest rate
increases are passed on to savers so that they keep their money
in the bank?
My hon. Friend is absolutely right. Notwithstanding the fact that
85% of mortgages are now fixed to some degree, an extra 1.2
million families will feel the increase in interest rates over
the months between now and the end of the year. That will be felt
by many families, but we should do everything in our power to
tackle inflation, because in the end that is the only way to end
the misery for so many people.
(Leeds East) (Lab)
Many of the banks that the Chancellor has been talking about are
raking in bumper profits by refusing to pass on higher interest
rates to their savers. Surely, a windfall tax on those additional
profits would allow the Government to provide mortgage holders
with the kind of support they really need at this time. Before
the Chancellor dismisses that idea, may I gently remind him that
even Margaret Thatcher imposed such a windfall tax on banks’
excess profits?
I hear what the hon. Gentleman says, but he will be pleased to
know that banks already pay a 3% surcharge on their corporation
tax—they pay 3% more than everyone else—as well as a levy on
their balance sheets.
(Kettering) (Con)
I welcome the action that the Chancellor has taken on this issue.
Increasing the flexibility of mortgage terms and conditions will
provide welcome relief to homeowners who are struggling with
anxiety at the present time. The mortgage charter sounds great.
What obligations has he insisted on with the mortgage companies
to get that information out to mortgage holders to inform them of
the extra flexibility available?
My hon. Friend makes a good point. All lenders had some of those
measures to a lesser or greater extent. What is significant about
Friday is that they aligned their offer so that it is much easier
to communicate to all families with mortgages. The charter has
been agreed by 85% of the market, so a very large majority of
mortgage lenders are agreeing to a simple set of terms that they
will all follow so that it is easy for people to understand their
rights.
(Walthamstow) (Lab/Co-op)
The people watching this who have too much month at the end of
their money need better and straight answers from the Chancellor.
He has ducked the question about whether he thinks the Government
will reach their own target to halve inflation, and he needs to
be honest about what he thinks the consequences will be of only
reaching an inflation target of 5%.
I join colleagues across the House who have raised concerns about
the fact that the vast majority of mortgages are fixed. People
facing the possibility of eviction even in a year’s time will be
sick with worry. What assessment has he made of the impact if
inflation only gets down to 5%? When will he learn the lessons
from the energy companies, and not wait to hold the banks
responsible for their role in all this?
I have a lot of respect for the hon. Lady, but she is being a
little churlish about what the Government have done. I have not
waited; I called in the banks and the lenders on Friday, and I
got them to commit to a set of terms that will make life easier
for 85% of families with mortgages if their mortgage comes up for
renewal. On the Government’s target to halve inflation, both the
Bank of England and the International Monetary Fund have said
that we are on track.
(Ruislip, Northwood and
Pinner) (Con)
I have never forgotten the anxiety caused to my parents in the
late 1980s, after they bought their current home and interest
rates soared. Does my right hon. Friend agree that the package of
measures that he has announced will help enormously to alleviate
the anxiety that many households are feeling, without allowing
rampant inflation to put my constituents’ dreams of home
ownership even further out of reach?
I thank my hon. Friend for a thoughtful question. The measures
agreed by the banks and principal lenders on Friday will make a
big difference, particularly for people who are genuinely in
arrears, who now know that their house will not be forcibly
repossessed for 12 months. That is an important reassurance, and
gives people longer to get their finances in order. It also
encourages people who are worried about the impact on their
credit score that the simple fact of having a conversation if
they are in distress will not have any impact on it. For people
in a similar situation to his parents, this is an important set
of measures.
Brendan O’Hara (Argyll and Bute) (SNP)
In his statement, the Chancellor said that there will be a
minimum 12-month period from the first missed payment before a
repossession without consent. Does that come into effect from
today, or will it apply retrospectively? What will that mean for
hard-pressed families who, because of soaring costs, missed
August but managed to pay September, October, November and
December, and missed January? At what point does the clock start
ticking on their repossession?
The agreement will take effect in the next few weeks, but the
context of the agreement with the banks and lenders is one where
they are agreeing to do everything they possibly can to give
people longer to get their affairs in order so that repossessions
are reduced or eliminated altogether. I think it will be a
positive step forward.
(Stroud) (Con)
I listened very carefully to the shadow Chancellor, because I
want to hear serious ideas. The public are not daft; they can see
there are incredible pressures across the world. But not only is
Labour not coming up with ideas, it is breaking its own economic
pledges. It made me think of the latest Labour councillor to step
down, who said recently that she watched Keir Starmer’s
leadership with increasing concern and frustration because of a
“lack of policy” to help those most affected by the cost of
living. Does my right hon. Friend agree with me? Will he say more
about how we can keep working with lenders—so it is not just a
one-off conversation—to create solutions to help with some of the
problems ahead of us?
I am happy to give my hon. Friend that reassurance. I will
continue to talk not only to the lenders but the regulators, who
I am meeting later this week, to see if there are any areas at
all where price reductions that should be passed on to consumers
are not being passed on. I hope to update the House further.
(Oldham East and
Saddleworth) (Lab)
I will put aside the fact that the Chancellor did not answer my
right hon. Friend the Member for Leeds West () on what happens to the 1
million people who are outside the 85% of mortgage providers, or
why we have higher borrowing costs than France, Germany and
Ireland. Some 9,200 families are affected by the increase in
interest rates and the mortgages they are paying. We know, for
example from the prompt payment codes, that voluntary codes have
a limited impact, so who will monitor the compliance of the code?
How many people will have to be disappointed by their lender
before the Chancellor puts it in statutory form?
It is generous of the hon. Lady to put aside so many things. I
will also put aside the fact that Labour opposed the powers that
would have meant the mandatory imposition of the charter on the
banks and lenders would have been possible. What I will say to
her is that the charter will be monitored by the Financial
Conduct Authority. It will take appropriate action if it thinks
that banks and lenders are in breach of their statutory
duties.
(Loughborough) (Con)
I recently met constituents in The Wolds villages who have shared
ownership arrangements for their properties with a housing
association. They have never missed a payment. Please will my
right hon. Friend confirm that the mortgage charter will assist
those across the country with shared ownership schemes?
I am absolutely delighted to give that confirmation.
(Dwyfor Meirionnydd)
(PC)
During the 2008 credit crunch, Plaid Cymru, as part of the One
Wales Government, developed a mortgage rescue scheme. Through the
co-operation agreement, we have now secured £40 million to
support Welsh mortgage holders in difficulty. People look to
Government to help them to keep their homes in a crisis. Will the
Chancellor follow where Plaid Cymru led and implement direct
protections for those hardest hit by interest rate increases?
We will do everything we possibly can to help people in
difficulties, except measures that are themselves
inflationary.
(Worcester) (Con)
I welcome the fact that my right hon. Friend, in tackling this
huge challenge, is determined not to increase inflation. Does he
recognise, however, that with so many people owning their
properties outright and not having a mortgage on them today,
increasing the payment for people who save is a very important
element in tackling inflation? I wish him every success in his
further conversations to encourage the banks to pass on interest
rates to savers.
My hon. Friend is absolutely right. If more people are encouraged
to save, that is technically counter-inflationary and something
to be encouraged.
(Slough) (Lab)
Due to the disastrous policies of Conservative Governments,
including eventually crashing the economy, hard-working Brits,
including people in my Slough constituency, are having to pay the
price via painful premiums on their mortgage or rent. Why does
the Chancellor think that the latest data shows that someone with
a £200,000 loan is paying over £800 more annually in the UK than
in Germany and over £2,000 more than somebody in France?
If the hon. Gentleman wants to look further at Europe, he will
see that 14 EU countries have higher core inflation than we do.
As for interest rate rises, they have been at similar levels in
Australia, New Zealand, Canada and the United States.
(Barrow and Furness) (Con)
I thank my right hon. Friend for his statement and for his hard
work in securing the new mortgage charter, which will give people
certainty and comfort in globally uncertain times. The
simplification of the terms and the coverage of 85% of the market
are welcome, but what are my right hon. Friend’s views on the 15%
who are not currently round the table, and what message does he
think he should be sending to their customers?
We will be making big efforts to sign up any remaining lenders
who have not subscribed to the charter. To reach a level of 85%
over a period of four days is a good start, but we would love to
get the other 15% on board. I should add that if they are not on
board, that will make their mortgage offer less competitive from
the viewpoint of the many thousands of families who will want to
arrange their new mortgage with a lender who makes an effort to
reduce the anxiety they may feel.
(Ellesmere Port and Neston)
(Lab)
My constituents who are facing eye-watering increases in their
mortgage repayments are asking—as have other Members—how they can
square those increases with the increased profits that the banks
and building societies are making, and are also asking whether
this pain is for any gain. Inflation has not fallen in the way
that the Government hoped. Is the current mortgage market not
fundamentally different from that of the early 1990s, when we
last had spiralling interest rates, and is this tool not merely
hammering a group of people rather than tackling the core
problem? Does the Chancellor believe there is an element of truth
in that, and does he believe that there are other tools at his
disposal to get inflation down?
The hon. Gentleman is entirely right to say that the mortgage
market has changed, given that 85% of deals now involve a
fixed-rate element, but I still think that interest rates are the
most effective tool. Other countries that have used them are
seeing their inflation starting to fall, and I would expect it to
do so here.
(Glasgow Central)
(SNP)
The mortgage crisis is not the only crisis over which this
Government are presiding. According to StepChange Debt Charity,
45% of mortgage holders—some 7 million—are now struggling to keep
up with all their other bills following the rise in interest
rates. What conversations is the Chancellor having with companies
providing other forms of consumer credit, and with debt advice
charities which are giving support on the frontline to many
people who have never had to call on their services before?
We continue to have conversations with everyone who is involved
in relieving families who are in distress because of debt
arrears, whatever they may be, but I think the most important
help we can give people is cost of living support. The extension
of the energy price guarantee has reduced people’s electricity
bills, and means overall that we have paid about half people’s
electricity bills over the last year.
(Liverpool, Wavertree)
(Lab)
Last week the Bank of England confirmed that the rise in interest
rates has been worst here in the UK, with overnight swaps—the key
driver of mortgage rates—rising by twice as much in the UK as in
the United States. What assessment have the Chancellor and his
Department made of the reasons why the UK has been so much worse
hit than other countries, and will he finally admit that that is
the case? Will he also indulge me by explaining the difference
between poverty and his new catchphrase, “absolute poverty”?
The hon. Lady may want to belittle the fact that 400,000 more
children and 200,000 more pensioners have been taken out of
absolute poverty, but I think that that is an important
achievement, and I am proud of it. I also think the hon. Lady
should recognise that the primary causes of the inflation we are
seeing are international factors that are affecting many other
countries, which is why we are also seeing interest rates rise
across the world.
(Chesterfield) (Lab)
The 8,600 mortgage holders in Chesterfield whose mortgages have
increased by an average of £1,900 a year will be very conscious
that in the Chancellor’s responses he has been very happy to
blame global factors, but that when he is asked about specific
countries such as France and Germany—the major European nations
where outcomes are not as bad as in the UK—he quickly deflects
and says, “Let’s talk about Australia or Canada.” Will he answer
the question that my right hon. Friend the Member for Leeds West
() asked? Will he explain why
it is worse for my constituents in Chesterfield than it is in
France, in Germany and in other countries he has been asked
about?
The truth is that Members can pick countries in Europe where
things have not been as severe as they have here, but they can
also pick countries in Europe where things have been more severe,
such as the 14 EU countries that have higher core inflation.
(Sefton Central) (Lab)
The Chancellor is not going to get off with not answering that
question. We are going to keep asking him again and again until
he answers. Why is it that people are paying £800 less in
Germany, £1,000 less in Ireland and Belgium, and £2,000 less in
France than they are paying here? What is it that their
Governments and their economies are doing differently—or is it
just that they do not have the problem of 13 years of this Tory
Government? What is behind it?
Let me give the same answer that I gave to the hon. Member for
Chesterfield (Mr Perkins). Core inflation is higher in more than
half the EU countries, so it is not just about us.
(Cynon Valley) (Lab)
We have had 13 interest rate rises in a row, yet little help for
those in housing need, and 13 years of public sector pay cuts.
All the Tory Government have done is double down on more
real-terms pay cuts. When will this Government take action to
tackle the cost of living crisis by raising incomes? Having
bailed out the banks in 2008 and 2009 to the tune of hundreds of
billions of pounds, should the Government not now deal with the
causes of inflation by controlling bank profiteering and
redistributing the extreme wealth that exists to the millions of
people, including people in my constituency of Cynon Valley, who
are suffering and at serious risk? They are petrified of losing
their home through no fault of their own.
The hon. Lady is absolutely right to be concerned, as we all are,
about families in her constituency who are worried about the
impact of rising interest rates on their mortgage repayments. She
is wrong to suggest that this Government have not been extremely
generous in our cost of living payments, which at £94 billion are
more, actually, than her party was calling for. If she wants to
talk about the last 13 years, maybe she should reflect on why a
Conservative-led Government were elected in 2010: it was to pick
up the pieces of the terrible economic mess that her party left
behind.
(Glasgow South West)
(SNP)
Citizens Advice Scotland has reported that requests for advice
from people who are homeless or at risk of homelessness reached
their highest ever level in May this year and were up 30% from
May 2022. What additional measures is the Chancellor planning to
protect the most vulnerable households from the impact of soaring
interest rates on their mortgage repayments?
Let me tell the hon. Gentleman what we have done for those
families. This year, families on means-tested payments will get a
payment of £900, pensioner families will get a payment of £300
and families with someone who is disabled will get an extra
payment of £150, alongside a lot of other measures.
(Stockton North) (Lab)
Two of my constituents face a near tripling of their mortgage
payments to over £2,600 a month. It is easy for me to talk about
the Tory mortgage bombshell and rightly blame the Government for
crashing the economy, but what does the Chancellor have to say to
my constituents? Why do they have to pick up the bill for
Government incompetence?
What I would say to the hon. Gentleman’s constituents is that we
are taking the difficult decisions to deal with inflation in this
country, as other countries are doing. We will do what it takes,
because dealing with inflation is the only way in the long run
that we can stop more families going through what is happening to
the constituents he mentions.
(North Shropshire) (LD)
I have constituents whose mortgages were with Northern Rock when
it collapsed back in 2008. They have been moved against their
will to inactive lenders that have not allowed them to remortgage
on fixed rates. They are now, and will continue to be, trapped
paying variable rates for a long time. Is there any help for
mortgage prisoners in the measures that the Chancellor has
announced today?
The hon. Lady raises a very fair point. I will write to her with
some details of what we are thinking in that area.
(York Central)
(Lab/Co-op)
Private rents go up when mortgages go up, yet local housing
allowance disparity is growing faster in places like York than
anywhere else in the country. What process has the Chancellor set
in train to review local housing allowance and the broader rental
market, which is out of kilter in places like York compared with
surrounding areas?
The hon. Lady is absolutely right to talk about the impact on
renters because of the high prevalence of buy-to-let landlords
and the pass-through effect. That is an area we are looking at in
great detail, and I will write to her with some of the things we
are looking at and planning to do.
(West
Dunbartonshire) (SNP)
The Chancellor said in his statement that
“this new measure means that people will be able to opt for a
lower-cost approach for six months with full reversibility,
giving them the peace of mind of knowing they can try out a new
approach and still change their mind later.”
Going back to mortgage prisoners, why does he not know about the
assistance he is able to give them as Chancellor of the
Exchequer? Why does he not have an answer to that question, given
the statement he has just given?
It is a very complicated issue. I have said I will write to the
hon. Member for North Shropshire (), and I am also happy to
write to the hon. Gentleman. If he is saying that we are doing
nothing to help people who are struggling or worrying about
mortgage repayments, I urge him to read the statement in
full.
(Carmarthen East and
Dinefwr) (Ind)
The so-called mortgage time bomb will hit younger generations in
particular, so what fiscal measures is the Chancellor considering
to help younger generations and to address the intergenerational
financial unfairness that exists in the UK?
The hon. Gentleman is right to draw attention to that issue, and
I simply say that the biggest measure in the spring Budget was
the childcare measure that will mean families with young children
can get up to £6,500 of help with their childcare costs to help
them go back to work. That will help those families and help to
tackle inflation.
(Strangford) (DUP)
I thank the Chancellor for his statement and for the clear help
he is trying to provide. I very much welcome the move to ensure
that, in the extreme situation of a repossession, there will be a
minimum of 12 months from the first missed payment. Can he
confirm whether it will be 12 months from any first missed
payment or 12 months from a specific time? Some people may have
missed a payment, say, five months ago and missed none since. If
they lose their job or become ill, will this extension and
compassion be shown if more than one payment is missed within a
year? How will the Chancellor ensure that his goal of giving
people time in exceptional circumstances is not circumvented by
the banks and others?
The hon. Gentleman is right to raise this issue. I reassure him
that banks are required by the FCA to offer a tailored solution
to people who get into arrears, specific to their circumstances,
to make sure that precisely the kind of thing he worries about
does not happen.
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