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Housing Protection Act 2008

That the Bill be passed  

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Housing Protections Act

Mr. Speaker, 

I believe it is fair to say that, as we assemble here today, a dark cloud looms over these chambers and indeed across the whole of our island nation. With each passing day, it becomes more clear that our worst fears are coming true. What started as a few market irregularities, and a few days of confusion, has now grown into a full blown global economic crisis. Like a tumor, the emerging economic recession has already begun to metastasize and spread to every facet of the British economy. People are beginning to lose their jobs, homeowners are being served repossession notices, and businesses are shutting their doors. It appears we are heading towards the worst economic crisis our nation has faced in a generation. 

Today, I rise before the House for the first time as the Leader of the Opposition, in the shadow of these clouds. I do so at a time when millions of hardworking people are understandably fearful. Fearful about how they're going to afford food, keep the lights on, and find a new source of income. Those of us on this side of the House hear these concerns loud and clear, and we are determined to do everything in our power to support the millions of working people and families who, at no fault of their own, may risk losing everything because of this crisis. They, Mr. Speaker, are who the Labour Party fight for. And it's why we will fight for policies that prioritize working families, not the banks and the billionaires. 

It is my duty, on behalf of the Opposition, to begin that fight by introducing the Housing Protection Act of 2008. Last week, I urged the Tories to introduce comprehensive legislation to protect homeowners from predatory banks. We were patient, we gave them time, and today the Chancellor announced the culmination of their efforts: that the major lenders have agreed to sign onto the Government's Code of Conduct. That, Mr. Speaker, simply isn't good enough. Families across Britain who are in fear of losing their homes to repossession deserve ironclad protections written in stone, not a verbal agreement between the Tories and their biggest donors - the banks themselves. I am proud to say that the Housing Protection Act represents the real, comprehensive protections vulnerable home owners need and deserve. 

The legislation we have introduced has three distinct components, Mr. Speaker. First, our legislation will impose a 12 month period of frozen or reduced mortgage repayments for British homeowners who have lost their jobs or 50% of their income. As the recession deepens, Britain is on the verge of a housing crisis, with thousands of families at risk of being unable to pay their mortgage. Rather than accept an epidemic of home repossessions as a new normal, the Labour Party believes that banks must show empathy and understanding for the homeowners who have been devastated by this crisis.  Families who have struggled for years to purchase their own home should not have it ripped away from them due to circumstances out of their control. Our repayment freeze and reduction scheme will allow homeowners to reach an agreement with their lender that will keep them in their home, reduce the damage they face from this crisis, and provide needed stability at a time when virtually everything seems to be changing for the average British family. The Tories have been quick to bend over backwards to stimulate banks with the additional capital they have asked for, and those of us on this side of the House believe its appropriate that we spread that economic support to those who need it the most - working people. This legislation makes meaningful steps towards leveling the playing field of state support. 

Second, Mr. Speaker, our bill implements a proper code of conduct, enforced through statute, for lenders looking to initiate repossession proceedings. A force repossession should have always been considered an action of last resort, Mr. Speaker, and it shouldn't have taken a global recession for the Tories to come to that realization. The code of conduct that they have proposed is vague, not sufficiently comprehensive, and not rooted in actual law - meaning that banks have increased leeway and flexibility in circumventing its provisions. To those on the other side of the House who argue that the Chancellor's voluntary code of conduct is sufficient to keep banks in line, I simply say this: why are you willing to trust the word of the same bankers whose actions created the code for this code of conduct in the first place? I don't want to leave matters up to chance, and I don't want to leave any homeowner unprotected, a concern the Prime Minister dismissed just this morning as, "unnecessary." We are lawmakers, entrusted by the British people to craft laws on their behalf and by their will. Let us do our jobs, Mr. Speaker, and implement binding legislation that protects British families from predatory lenders. 

Finally, Mr. Speaker, our legislation enshrines a Right to Rent into law, ensuring that homeowners that choose to allow a bank to sell their home to a local council have the right to continue to rent the property they used to own. Since last year, a trend has emerged where more and more homeowners with a mortgage are selling off their property to a company or bank, and then renting the property they used to own. Individuals who want to pursue this alternative should be able to do so, and should be permitted to participate in the Government's council home buying scheme to act on their intentions. That is why we have ensured that homeowners who want to dispense with their mortgage have a means to do so, and that when a council purchases their former home, they have the opportunity to rent the property they used to own. This guarantees that families can remain in their homes even if they choose to sell them, keeping working families together and children in the places they've grown up in. 

The Labour Party is united by a very simple belief: working people and families should be protected and supported to the same degree that the big banks in London have. So far, that has simply not been the case. This recession, made possible by the radical and irresponsible deregulation agendas of successive Tory Prime Ministers, is impacting working people the hardest. They need Parliament's support, and they need their elected officials to step in and help them as the storm clouds of this crisis grow ever darker. The Housing Protection Act provides these meaningful protections, and I urge my colleagues on both sides of the House to join me in passing this critical legislation. 

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Mr Speaker,

 The Government will be opposing this legislation, because it is not only of no practical effect; it is also actively harmful in a number of circumstances. The Leader of the Opposition is all performance politics here – spin rather than substance; jumping to legislate on an issue that Government action has swiftly and effectively resolved.

If the Right Honourable member really wanted to make a difference he wouldn’t be grandstanding from the despatch box about invented or solved crises, he would be proposing practical solutions to real problems. This isn’t a new phenomenon from this Labour Party. They have no answer, no clue, no plan. All they have is spin and scaremongering.

I will start with part two of this Bill Mr Speaker. This section seeks to put the code of conduct on a legislative footing. That is purely unnecessary, because the code of conduct already has a legal basis. Repossession, as we have tried to explain to the member many times, is a legal proceeding. If a bank tried to go to court and repossess a home without following it, they would be laughed out because it would be they in breach of contract rather than the mortgage holder. Legislating it makes no difference at best. At worst, it is less effective.

Take the legislation tabled by the Leader of the Opposition as an example of the latter, Mr Speaker. Let’s put aside errors in wording that I am sure that we could fix, but just go to show the speed at which he chases headlines. A mortgage over 400,000 or anyone with savings of more than 20,000 would be excluded. Many of those people, particularly in London, or later in life with retirement savings, still deserve protection. Protection they get under the code we have put in place. Protection the Leader of the Opposition’s flawed legislation would remit.

As a second example, the role of the FSA he has put in place to enforce the code. The FSA has no role in home repossessions. They are not a consumer arbiter, and they do not grt involved in individual disputes between personal borrower and lender. Do you know who does specialise in disputes like this Mr Speaker? The courts. The very courts that are already enforcing the code of conduct. Not only does their legislation cover fewer people, the cover it will give them is worse than they are getting now.

Another element of this section simply makes no sense. Section 2[c] says that one option is the deferral of interest repayments. All well and good, Mr Speaker. It then says that the Treasury will pick up the liability for those deferrals. What is it, Mr Speaker? A deferral, or the Treasury paying banks interest on someone’s mortgage?

That’s just part 2, Mr Speaker.

But part 1, on the other hand, is a largely meaningless one. It says that for the next 12 months banks must freeze or reduce mortgage repayments to customers in financial distress.

Mr Speaker, they already do have to. That is what “last resort” means. There is no suggestion that the agreement banks are forced to reach would have any regard for what a person can pay and whether it is realistic for them to continue with a mortgage. It simply says there must be an agreement. The lender could reduce the repayment by 1 pound a month and be within the laws of this section. And if they can’t agree, it goes to the FSA – which again, Mr Speaker, is not a consumer regulator.

If only, Mr Speaker, there were a mechanism through which – if a bank started proceedings to repossess a home without that being a last resort because they had not offered payment plans, deferrals, or payment holidays – a neutral arbiter could settle the dispute?

Except there is. It is called a court, enforcing the rightful discharge of the bank’s responsibilities under the code of conduct. Section one is at worst pointless, because it achieves nothing in addition to existing elements of the act or the code of conduct. At worst it is harmful, because the FSA – which I must stress again is not a dispute resolution service, or a court – may end up imposing an “agreement” that is worse for homeowners than a bank would have otherwise offered because they knew it would not stand up in court.

In summary Mr Speaker, this is at best, an entirely pointless piece of performance politics from the Leader of the Opposition. At worst, his attempt to spin his party out of its rut with a legislative dead cat will cause real hardship. Hardship for people saving for their retirement. Hardship for people who took out a big mortgage in London thanks to his party’s runaway house price inflation over the last decade. 

We, on the other hand, Mr Speaker, moved quickly to fix a discrete and distressing issue. We made banks’ obligations clear to them. We imposed a new code of conduct that is being enforced in courts right now and preventing repossessions. A success that this legislation would unwind for the sake of a bit of posturing from the despatch box.

It is, in short, the very culmination of everything that the party opposite has practiced over the last year; the very shallow behaviour that saw them turfed out of office. Spin before substance. The leader of the Labour Party may have changed Mr Speaker. But it’s very clear that very little else has


Katherine West

Conservative MP for Watford (2007 - )

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