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The Economic Secretary to the Treasury (Andrew Griffith)
It is a pleasure to see you in the Chair, Mr Robertson. I congratulate the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) on securing the debate. I thank all Members for their contributions, including my hon. Friends the Members for North Norfolk (Duncan Baker) and for Kettering (Mr Hollobone) and the hon. Member for Feltham and Heston (Seema Malhotra), whose chairwomanship of the all-party parliamentary group on mortgage prisoners does so much to increase the standing of Parliament.
Our primary role, as we represent our constituents, is to use our voice to ensure that nobody feels that they are being forgotten. Today’s debate is proof of that. There are no easy answers, but this is Parliament at its finest, as it uses its powers to compel Ministers to come and account for themselves. I am grateful for the work of Rachel Neale and others in the Public Gallery who are continuing with this campaign.
I am humble about the potential failings of Government and regulators. It is not my role to sit here and mouth platitudes. I am not going to say that everyone always gets it right, and I cannot offer false hope. There is a lesson for us all in what we saw with the Horizon scandal, involving postmasters: every human process is fallible. As Minister, I will continue to keep an open and inquiring mind on such issues.
Martin Docherty-Hughes
I will make the same points that I made to the shadow Minister. In the interests of openness, will the Minister consider at some point a moratorium on evictions and a cap on the standard variable rate? Will he pledge to support the creation of a cross-party vehicle to enable closed books to pivot back into the mainstream market?
Andrew Griffith
I was just starting, but I will try to address the points that Members have made in the debate, including those made by the hon. Gentleman.
The Government and I recognise the anxiety that people in general have about mortgages, and we will use the tools at our disposal to limit the rise in rates. I will leave the general points and address the specifics about what we are debating today. We spent a lot of parliamentary time yesterday debating the new mortgage charter, but this is clearly a different debate—about those who have been in this situation for a long time, such as the hon. Gentleman’s constituent Chris and the constituents in Feltham and Heston and North Norfolk.
Seema Malhotra
Before the Minister moves on to the specifics, I want to make a general point. I thank him for his words about the work of the all-party parliamentary group and the UK Mortgage Prisoners group. We want to ensure that we get a solution—this is all about getting a solution to a challenge that has been intractable. Our strong belief is that more can be done, and it will take the Government to step forward and be bold about getting a solution, working with the regulator, which also needs to step up to the plate.
Andrew Griffith
I thank the hon. Lady for her intervention. I have met her and campaigners previously, and I am happy to undertake to continue to do so. The best way to find solutions is by working together. I would caution that everything I have seen so far tells me that there is no one-size-fits-all solution. There are a very large number of categories. There is a temptation to aggregate to the largest possible number, but the FCA’s analysis slices it down into more detail and recognises that there are varied circumstances in terms of why people have reached the position they have. I would love to hear more from the hon. Member for West Dunbartonshire about his constituent Chris’s circumstances. He told us that the mortgage was taken out in 2003, which was well before the change in Northern Rock post-2008. By 2007, it had already moved into an interest-only mortgage.
I am a data-led Minister, and as we unpick the data we often find co-mingled in these issues, understandably, the human stories of people who are vulnerable, have fallen on hard times and have been affected by the personal tragedies that all of us as Members hear in our constituency surgeries every week. But those are, to some degree, disconnected from their particular choice of mortgage and are circumstances that affect the wider taxpayer population.
Martin Docherty-Hughes
I need to come back on that point. The only tragedy here is that my constituent and his wife will lose their home in 2029 if this Government and any future Government do not get their finger out.
Andrew Griffith
I hear the hon. Gentleman. As I say, one of the ways to explore solutions is, I would counsel, to look at the individual circumstances and see what remedies, if any, there are, based on particular cohorts.
Seema Malhotra
I thank the Minister for giving way again. I want to make two points. First, it is important to recognise, as the APPG has, that there will need to be longer-term solutions, but there also need to be short-term measures to deal with the situation specifically for mortgage prisoners among other mortgage holders.
Secondly, it is important not to characterise mortgage prisoners as people who have fallen on hard times. These are nurses, teachers and people in all professions. It is the circumstances of the mortgages and how they have been sold on that has been the issue. They have done nothing wrong, and they have not fallen on hard times. This is about the lack of support and protection of the terms on which they bought those mortgages, which were then taken away when the mortgages were sold on.
Andrew Griffith
That is fully understood. This is not about any attribution of fault. It is about looking at what the FCA found and the LSE report, which I have read and studied, did not disagree with: that there are a number of different cohorts within this broader category. As we seek solutions, sometimes we might find more illustration by looking at individual fact patterns. The hon. Lady mentioned the modified affordability assessment, which was one attempt to move forward. She observed, rightly, that it helped a relatively limited number of people, and we should try to learn from that. There was an inertia among some, and many mortgage prisoners were contacted, but many fewer engaged in that process.
The Government have consistently committed ourselves, and I am committed, to looking for practical and proportionate options where we can deliver genuine benefits for groups of borrowers, and we are committed to looking at where such interventions would be fair. It is the role of Government to try to ensure fairness and parity across different groups in society, although—while I hear what has been said about the circumstances people are in—we cannot simply solve the problem if somebody is, for example, on an interest-only mortgage but there is no plan in place to repay the principal. That is not confined simply to borrowers on inactive mortgage books, as, sadly, it happens across the market, but we want to ensure that there is the maximum number of options to switch and that all those who might want to switch are aware of the options. There is an awareness issue, as well as the specific problems that people face in the switching process.
Let me address the points raised by the hon. Member for West Dunbartonshire. We heard about the idea of a cap on the standard variable rate for mortgage prisoners. I do not want to repeat all the arguments at length, but that would be a one-size-fits-all solution. It is not, in the view of the Government, appropriate to do that, and I do not want to create a false expectation.
On a moratorium on evictions, there are already well developed pre-action protocols. The remit of the Financial Ombudsman Service does apply, with other remedies behind that. The fact that inactive lenders are not regulated in the same way as active lenders by the FCA does not in any way mean that the remedies available through the FOS are not available. I am happy to work with the FOS to ensure that that point is understood, and to learn from it the data that it has, such as the number of people who have petitioned and sought its support on the issue. Perhaps in some cases that might offer a potential remedy.
Even the LSE’s earlier report of November 2022 argued against the introduction of a standard variable cap, for some of the reasons that we have talked about. The Government have to be evidence-based. The LSE report of March 2023 did talk about free, comprehensive financial advice. Again, that reflects the bespoke nature of some of the problems, and potentially some of the routes forward for individuals. The Government provide significant independent financial advice that is free at the point of use through the Money and Pensions Service. The overall budget for that is £93 million.
I am interested in hearing, perhaps through the all-party parliamentary group, mortgage prisoners’ experience of accessing that financial advice. That was the No. 1 recommendation of the LSE, and that experience could shed more light and data on the subject. I am happy to explore that with hon. Members and, if necessary, convene a meeting with the Money and Pensions Service, or with individualised debt advice charities, to see how we could try to scale that solution.
Seema Malhotra
Very briefly. We would be happy to share that experience and to have the voice of the mortgage prisoners group heard. There is a slight concern that this is seen as the problem of the mortgage prisoners. They are very aware of their situation, and they had sought all sorts of advice. It would be helpful to share that experience and the work we have done with the FOS, which might be constructive with respect to how we move forward.
Andrew Griffith
I thank the hon. Lady for that constructive intervention. Again, I am committed to working with all comers as we try to find solutions that will help to move the situation forward. I understand the distress that people find themselves in. Whatever the situation was before, I understand that in an environment of rising rates people will feel the effects much more acutely, so I commit to work on that.
I want to fully address all the questions asked by the hon. Member for West Dunbartonshire. We have talked about the moratorium on evictions, and the existing legal framework applies in that space. A global cap on the standard variable rate is not the right or appropriate answer. In terms of working on a specific vehicle for those in closed books, again, I would rather work with the data and look at individual cohorts. As hon. Members have observed, a significant number of the so-called mortgage prisoners are now approaching the end, the maturity—the point at which the question is not necessarily about switching but about how to redeem or repay the capital or look at alternatives at the end of the process. That is one example of why a simple, single-point vehicle would not be the right answer.
We will continue to work with everybody who has expertise in this space, including those who have done work as part of the LSE report. We have to reconcile that duty with others who face similar circumstances, but perhaps are not in this particular category.
I have not responded to some of the more party political points, but I want to make sure that people feel the debate has been constructive and that they are being listened to. We will continue the dialogue and engagement to try to bring forward solutions where we can. We need to work with industry and the Financial Conduct Authority, which is the regulator. I have mentioned the potential role for the Money and Pensions Service. We will continue to try to find solutions that would defuse some of the deleterious impact on people and get more people the ability to switch. No one has ever been explicitly prohibited from switching, but I understand that one of the unintended consequences of regulation has been that in some cases people have been prevented from shopping around in the market, as other constituents can.
Finally, from a broader economy perspective, we will continue to do everything we can to bear down on inflation and interest rates, and we hope to get as quickly as possible back to an environment where rates are not rising. I thank the hon. Member for West Dunbartonshire for securing this debate today.