by Stephen Tall on July 1, 2009
There was a fair amount of mockery of the Government a couple of months ago when it was revealed that Labour’s flagship Mortgage Rescue Scheme, launched last autumn, had helped only one family up to the end of April.^
I said then that these things take time, Rome wasn’t built in a day etc. How prophetic, for today we discover that the figure of families helped by the Mortgage Rescue Scheme has rocketed … to six. Or 6 if you prefer. To be fair, that’s a 600% increase. On the debit side, the original intention was to help 6,000 families facing repossession.
Here’s what Our Vince had to say about it:
Helping just six families is absolutely pitiful and doesn’t even begin to address the scale of the problem. Vast reams of red tape stand in the way of families faced with repossession staying in their own homes. There are enormous time lags and the vast majority of people who think they are eligible find that they are not.
“Repossession is a ticking time bomb. Despite the predictions of a modest fall, the numbers of repossessions are likely to soar in the next two years because of rising unemployment. Temporary Government schemes are deferring the problem, not solving it. If interest rates start to rise next year, the problem will become even more severe.”
Vince was today leading a debate in Westminster Hall on this very issue of mortgage arrears and repossessions – you can read the Hansard transcript HERE. Here’s his conslusion:
Repossession is only really a problem because of the underlying lack of available housing, particularly social housing. If social housing was freely available, repossession would not be the tragedy and disaster it currently is. Are the Government, working with the charitable bodies, doing any research at the moment on what happens to people who become repossessed? I do not think that any of us know where those people actually go, although anecdotal evidence suggests that most of them go into the private rented sector, which of course presents problems of its own. Many people go into the private rented sector because they can then get housing benefit, which they found more difficult to get as owner-occupiers, but many of them are still in considerable difficulty.
There is still an issue about how to ensure greater availability of affordable housing in the long term. Yesterday, the Prime Minister, in his statement, gave an indication that more money will be brought forward, stitched together from various other departmental budgets, to increase the availability of social housing. That is welcome, as far as it goes. I understand that the Housing Minister is due to make a statement this week indicating that councils will have greater flexibility in their housing revenue accounts, to enable them to build more council houses of a traditional kind. Will the Minister confirm that that is correct? Will we have a statement about it and will the Government move on the issue?
Another development is taking place on which it would be useful to hear the Minister’s thoughts. I understand that the biggest leap forward in the housing supply is now likely to happen in the form of institutional private investors—pension funds and insurance funds—putting their money into private rented accommodation, some of which could then be managed by local authorities or other registered social landlords, with a share of property being available for social renting, much as we have had through owner-occupier developments in the past. Do the Government welcome that trend? Are they looking at the role that social landlords can play in collaborative arrangements with private developers producing private rented property? Have they thought through some of the legal implications? Is it part of Government long-term planning?
My concluding thought is that the Government have introduced some useful initiatives. They have undoubtedly alleviated the threat of repossession for probably thousands of people, but in many cases the problems are being postponed. We are building up a crisis that will probably reach maturity in a year or two. I want to use this debate primarily to persuade the Government to think ahead rather than looking back, and to consider how to deal with the problem when the crisis builds up in magnitude, as it surely will.
^ In fact, it seems the actual figure was two rather than one. I’m not sure that changes very much, though.