Housing Reform

Debate between Grant Shapps and Austin Mitchell

Monday 21st November 2011 Commons Chamber

[Grant Shapps]

Yes, I certainly can tell the House a little more about the mortgage indemnity scheme. It has principally been worked up by the Council of Mortgage Lenders and the Home Builders Federation. They had hoped to produce it on their own, without Government backing, but that was not possible.

First, the home buyer will put down a deposit of at least 5%. That is the first chunk. Secondly, the home builder will put money into an indemnity fund. It will stay there for seven years, and they will not be able to touch it. They will get it back after that period. Only after those two mechanisms have failed will the Government step in to back the mortgage. Lenders will pay a fee to be part of the scheme as well, so overall we believe it will be excellent value for money for the taxpayer.

[Austin Mitchell (Great Grimsby) (Lab)]

Is this not going to lead to two-class housing development? For those who can afford to buy, which is to say the first class, there will be subsidies and support. For those who cannot, who are a large proportion at current prices, the choice will be either council and social housing, which will be treated like a transit camp and will shrink as it is flogged off at knock-down prices, or a private rented sector that is unregulated and in which there is no security of tenure, rents will be rising and housing benefit will be cut. Is not the only answer to build more public housing for rent?

[Grant Shapps]

I am sorry, but I think the hon. Gentleman has misunderstood some of the principles behind the scheme. Unlike when the previous Administration were in office, we are not going to have declining social housing stock. We are going to build one-for-one replacements for every home that is sold through the right to buy. Of course, he is right that there are different types of housing for people who purchase and those who rent through intermediate rent, affordable rent and social housing. That is why we are proud to have put £4.5 billion to date, before this housing strategy, into building more affordable and social homes in this country.