Asked by: Chris Evans (Labour (Co-op) - Caerphilly)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps she is taking to reduce the administrative cost of the tax system.
Answered by James Murray - Chief Secretary to the Treasury
At Autumn Budget 2024 the government committed to simplifying the tax system as part of its three strategic priorities for HMRC: closing the tax gap, modernisation and reform, and improving customer service.
A key aim for the Government is to reduce the administrative burdens for businesses when dealing with the tax system. To this end the Government announced, for example, on 28 January that it has listened to businesses and stakeholders and decided that employers will no longer have to provide more detailed employee hours data to HMRC from April 2026.
The Government is meeting with stakeholders, including the Administrative Burdens Advisory Board, to understand their priorities for administration and simplification, ensuring that this work is driven by the views of taxpayers.
Asked by: Chris Evans (Labour (Co-op) - Caerphilly)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the implications for her policies of the recommendations of the report entitled Releasing Mortgage Prisoners: proposed solutions and illustrative costings, published by the LSE in February 2023; and whether she plans to implement those recommendations.
Answered by Tulip Siddiq
This Government understands the challenges that mortgage prisoners face and will work with regulators and the industry to ensure that this issue is properly considered, including looking at the recommendations of the 2023 LSE report.
There are significant measures in place to protect vulnerable mortgage borrowers across the mortgage market, including mortgage prisoners. Financial Conduct Authority (FCA) rules require lenders to engage individually with their customers who are struggling or who are worried about their payments in order to provide tailored support. Closed book lenders must also comply with the FCA’s Consumer Duty, which ensures firms prioritise fair treatment and good outcomes for their customers.
Additionally, the Government has a number of measures in place to help people to avoid repossession, including Support for Mortgage Interest (SMI) loans for those in receipt of an income-related benefit; the Housing Loss Prevention Advice Service (HLPAS); and protection in the courts through the Pre-Action Protocol, which makes it clear that repossession must always be the last resort for lenders.
Asked by: Chris Evans (Labour (Co-op) - Caerphilly)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will announce a timeline for a decision on whether additional measures will be introduced to further support mortgage prisoners.
Answered by Bim Afolami
The Government understands that being unable to switch your mortgage can be extremely stressful. Alongside the Financial Conduct Authority and industry, we have shown we are willing to act through the introduction of a ‘modified affordability assessment’, which removes the regulatory barriers that prevented some customers, who otherwise may have been able to switch, from accessing new products. We are also regularly in contact with key stakeholders, including recently with the UK Mortgage Prisoners campaign group.
The Government remains committed to this issue and will continue to work with industry and wider stakeholders to determine if there are proposals that will meaningly benefit affected borrowers and be fair to other borrowers in the wider market.
Asked by: Chris Evans (Labour (Co-op) - Caerphilly)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the Financial Conduct Authority's Mortgage Prisoner Review published on 29 November 2021, what assessment he has made of the implications for his policies of the findings of that report.
Answered by John Glen
In November 2021, I laid before Parliament a review on the issue of mortgage prisoners conducted by the Financial Conduct Authority (FCA). This review found that there are 47,000 mortgage prisoners who might benefit from switching to a new mortgage deal but are considered too high risk to do so, despite being up to date with payments.
The review makes clear that the reasons mortgage prisoners are unable to switch are complex and varied, including a high proportion of interest-only mortgage borrowers with no clear repayment plan and pre-financial crisis legacy issues such as borrowers self-certifying their income on their loan applications. A comprehensive understanding of the circumstances of mortgage prisoners is therefore crucial in progressing work and the FCA’s review provides the key insight necessary to facilitate this. Following this and previous interventions to help borrowers switch, the Government is working with industry to determine if any further solutions that can be found to help mortgage prisoners.
This further work must consider the practicality of solutions and their effects on the wider mortgage market, including the resilience of firms and fairness to other borrowers. A cap on the Standard Variable Rates (SVRs) charged by inactive firms would be an unprecedented market intervention and would undermine the principle of risk-based pricing which underlies the mortgage market. It would entail risks to the financial stability of firms which would be unable to vary their rates in line with their costs of funding and would be deeply unfair to borrowers in the wider mortgage market who pay similar rates to mortgage prisoners. It is worth noting that the SVRs charged by inactive firms are in line with those paid by borrowers in the active market.
The Government continues to examine what further practical and proportionate solutions existing to help mortgage prisoners which do not pose unacceptable financial stability risks or are unfair to other borrowers in the mortgage market.
Asked by: Chris Evans (Labour (Co-op) - Caerphilly)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he plans to cap standard variable mortgage rates for inactive lenders to protect people who cannot move their mortgages.
Answered by John Glen
In November 2021, I laid before Parliament a review on the issue of mortgage prisoners conducted by the Financial Conduct Authority (FCA). This review found that there are 47,000 mortgage prisoners who might benefit from switching to a new mortgage deal but are considered too high risk to do so, despite being up to date with payments.
The review makes clear that the reasons mortgage prisoners are unable to switch are complex and varied, including a high proportion of interest-only mortgage borrowers with no clear repayment plan and pre-financial crisis legacy issues such as borrowers self-certifying their income on their loan applications. A comprehensive understanding of the circumstances of mortgage prisoners is therefore crucial in progressing work and the FCA’s review provides the key insight necessary to facilitate this. Following this and previous interventions to help borrowers switch, the Government is working with industry to determine if any further solutions that can be found to help mortgage prisoners.
This further work must consider the practicality of solutions and their effects on the wider mortgage market, including the resilience of firms and fairness to other borrowers. A cap on the Standard Variable Rates (SVRs) charged by inactive firms would be an unprecedented market intervention and would undermine the principle of risk-based pricing which underlies the mortgage market. It would entail risks to the financial stability of firms which would be unable to vary their rates in line with their costs of funding and would be deeply unfair to borrowers in the wider mortgage market who pay similar rates to mortgage prisoners. It is worth noting that the SVRs charged by inactive firms are in line with those paid by borrowers in the active market.
The Government continues to examine what further practical and proportionate solutions existing to help mortgage prisoners which do not pose unacceptable financial stability risks or are unfair to other borrowers in the mortgage market.