Mortgage and Rental Costs

Catherine West Excerpts

Tuesday 27th June 2023 Commons Chamber

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of the people of Bradford East, a constituency that I know well and that I know will be badly affected, not just by the Tory mortgage bombshell but by the cost of living increases as well.

[Catherine West (Hornsey and Wood Green) (Lab)]

My constituent’s mortgage has gone up from £1,950 to £3,000. She spent an agonisingly stressful time waiting for that deal to come through, but if she had made the deal today, it would have been £3,500. Does my hon. Friend agree that that is too much stress for one family to take?

[Rachel Reeves]

My hon. Friend is absolutely right. People who live in Hornsey and Wood Green, where house prices are high, will see a big increase in their payments. When rates go up from below 2%, which is what many people were paying, to above 6%, there will be huge increases. It is through no fault of my hon. Friend’s constituents, or any of our constituents, that they are in that position, which is what is so frustrating.

I remember a time—you may as well, Madam Deputy Speaker—when the Tory party used to preach personal responsibility, yet this Government are taking no responsibility for the devastation that they have caused. Where is the apology for the Tory mini-Budget? Where is the apology to those paying hundreds of pounds more a month in mortgage payments, or to those at risk of losing their homes? There is nothing.

Let us just imagine for a moment that a group of people working in an office, a supermarket or a factory burn the place down. Everyone else who works there is told that they have to pay to clean up the mess and that that payment will carry on for years. The next day, the arsonists turn up to work again, expecting to be paid as normal and, not only that, they are furious if someone even brings up the incident of the fire with them. That would be preposterous and outrageous, and yet it is precisely what the Government are doing. “Inflation? Oh, that was nothing to do with us. It was all global events. It was those public sector workers asking for a pay rise. It was the Bank of England. It definitely was not anything to do with us.” That is what we hear from this Government. Well, we know what the Tories did last autumn was totally outrageous. The country will not forgive or forget the scale of the harm that the Tories have caused to the economy and to families up and down our country.

The Government say that this is happening everywhere, so let us look at what is happening in Europe. The latest data comparing interest rates among our European neighbours show that a household in Britain, with a £200,000 mortgage, is now paying over £2,000 per year more for its mortgage than in France, over £1,000 a year more than in Ireland or Belgium, and £800 more than in Germany. That impact on families in Britain reflects the choices made by this Tory Government.

To make matters worse, after 13 years of the Tory Government being in power, average real wages are still lower than they were in 2010. Many families have faced one financial pressure after another. Energy bills are twice as high as a year ago. The weekly food shop is astronomical. On top of all that, higher mortgages and higher rents are the last thing they needed. No one is reassured by the suggestion from the Prime Minister that he is “100% on it”. After 13 years in power, it is clearer by the day that the Tories are the problem, not the solution.

The truth of the matter is that we have the highest inflation in the G7, with core inflation rising and interest rates rising too. We are in a weaker position than many as a consequence of Tory choices that have left our economy lacking resilience and security in the face of shocks, including global ones. Banning onshore wind, closing our gas storage facilities and scrapping the home insulation programme have all contributed to higher bills, higher costs and less security.

A patchwork Brexit deal full of holes is making goods such as food more expensive, with the prospect that that could get worse at the end of this year, with new import checks and costs. What is the Government’s latest idea? One of the Chancellor’s economic advisers called last week for the Bank of England to “create a recession”, adding:

“They have to create uncertainty and frailty."

Will the Minister tell us whether the Chancellor agrees with that advice from his advisers? If not, why is taking advice from them?

A Labour Government would be built on the firm foundations of economic responsibility, with strong fiscal rules. We would negotiate a bespoke British food and farming agreement with our trading partners, while staying out of the single market and customs union. We would lift the ban on onshore wind and reform antiquated planning rules, working in partnership with businesses and trade unions to invest in the jobs and industries of the future, protect our energy security and reduce our energy bills. That is what is needed to get our economy on sustainable and stable path, so that families are not grappling with a cost of living crisis created by this Tory Government.

If ever there were proof that the Government do not have the answers that our country needs, it is what is happening on housing. The Conservatives once claimed to be the party of home ownership: not any more. Home ownership is falling. It is not because of just their failure to require lenders to provide mandatory support for mortgage holders, although that would certainly help today. Incredibly, the Prime Minister has scrapped house building targets in the face of pressure from some of his councillors and Back Benchers. The consequence of the Tory Government’s policy is now to push the prospect of home ownership for young people and families starting out in life even further away.

--- Later in debate ---

[John Glen]

I do not accept that, but I do accept that there are challenging situations for our constituents up and down the country. That is why this Government have intervened and are working in this way with lenders to find a constructive package of interventions to meet the situation those constituents are in.

Anyone who is worried that they could be in those difficult situations should know that 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, those measures should offer some comfort to those who are anxious about the impact of high interest rates on their mortgage and provide support to those who get into extreme financial difficulties.

[Catherine West]

May I return briefly to the point made by my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley)? Last time I asked the Economic Secretary to the Treasury about the number of renters estimated to be impacted by this situation, he did not have an answer. Do Ministers on the Treasury Front Bench have an answer today on how many renters will be affected by this crisis?

[John Glen]

The interventions we have made provide significant scope for assistance. To find an accurate number would be very difficult, but we will continue to work with industry and with lenders to find maximum flexibility and interventions to support them at this difficult time. While we roll out those measures, tackling inflation remains the No. 1 priority of the Prime Minister and the Government. Inflation makes every person in this country poorer and it has to be tackled head-on.

Notwithstanding that, I am fully alive to the fact that some people remain in real distress. I assure hon. Members and their constituents that we will always stand ready to help where we can. That is why at the Budget we announced that the energy price guarantee would be extended for a further three months. That extension was funded in part by the energy profits levy that this Government introduced last year, recognising that profit levels in the sector had increased significantly due to those very high oil and gas prices, caused by global circumstances—including, of course, Russia’s invasion of Ukraine.

Alongside holding down energy bills, freezing fuel duty, increasing universal credit and raising the national living wage and pensions, we are giving up to £900 in cost of living payments to households on means-tested benefits. Taking those measures together, the Government are already supporting families with one of the largest support packages in Europe, worth £3,300 per household on average.

The Government’s approach makes targeted interventions to protect the most vulnerable, while maintaining a laser-like focus on tackling inflation. I believe that that stands in sharp contrast to some of the policies offered by opposition parties. The Liberal Democrats are calling for a £3 billion mortgage protection fund, which would simply pour fuel on the fire of inflation, making it harder to bring prices down. That would be such a damaging move that it is apparently even too extreme for those on the Labour Front Bench to contemplate.

However, I would say that the Labour party is not without its own flaws when it comes to offering unfunded inflationary policies. The media reports that the right hon. Member for Doncaster North (Edward Miliband) has had his wings clipped by the Leader of the Opposition for his excessive spending proposals, but in reality the shadow Chancellor is only slightly delaying Labour’s £28 billion spending spree to the second half of the next Parliament—an amended timetable, but the same reckless policy.

We said that we would halve inflation, not because it was an easy thing to do, but because it was the right thing to do. History and the best economic insights that we have today tell us that the best way to beat inflation is to stick to our plan, backing the Bank of England’s monetary policy decisions. We will stick to the plan, because it is the only way we can give relief to families and reprieve to businesses. As we have done before, we will face down these economic challenges while supporting the most vulnerable and setting us up for economic growth.

Since a Conservative Government came into power in 2010, the UK economy has grown more than those of major countries such as France, Italy, or Japan, and about the same as Europe’s largest economy, Germany, which is now in recession. We have halved unemployment, cut inequality and reduced the number of workless households by 1 million. We have protected pensioners, those on low incomes and those with disabilities. We will now overcome this inflationary period, and offer a helping hand to those who need it as we do so.

--- Later in debate ---

[Andrew Griffith]

I will happily respond to the hon. Member. Not only did Opposition Members oppose the very powers in the Financial Services and Markets Bill that we passed last night that would give the Treasury the ability to direct the regulators—an ability they now somehow seem to want to reinvent—but the exercise of those powers would inevitably take time. What we are hearing from the Opposition is not just a package that in many respects is deficient compared with what the Chancellor and this Government have brought forward, but a path to implementing that package that—rather than taking days, hours and weeks as our mortgage charter will—would take a much more significant period of time. They offer more delay, less help for people and fewer paths to deliver.

[Catherine West]

The topic of the debate is mortgage and rental costs, but the Minister has not covered the rental side. The last time he came to the Chamber he was asked how many renters are going to be in distress due to this situation. He was unable to answer, because he had not done the assessment. Will he promise to go back to the office and do an assessment on how many renters are affected?

[Andrew Griffith]

All households are impacted by the higher cost of money that we face. That is why we are focused on supporting all households, supporting those who are the most vulnerable and bringing forward at pace our measures to support the mortgage market. That is also why, since taking power, this Government have restored the overall health of our financial system. It is important that the House understands that mortgage arrears and defaults are today at historically low levels. Less than 1% of residential mortgages are in arrears, a level below that which we saw during the pandemic and significantly lower than under the last Labour Government.