Hunt won’t back mortgage interest tax relief for struggling borrowers; Mortgage ticking time bomb is ‘now exploding’ – business live

Gwyn Topham

In the transport sector, National Express Group, the parent company of Britain’s venerable intercity coach service, has today changed its name to the more, er, international-sounding Mobico.

The London listed plc, which now runs services in North Africa and the Middle East as well as Europe and the US, will still keep the original brand for UK coaches, as well as other well-known brand names in its operations abroad.

However, the change reflects its growth worldwide – and perhaps its detachment from at least one sector in the UK, having abandoned its once-significant rail interests in Britain just before franchising blew up.

Announcing the plan last month, Ignacio Garat, chief executive of what is now Mobico, said the new name “better represents our multi-modal operations, global reach and future ambitions”.

Not to be confused with: Mobilo, Moby.co, or Bonio….

Shadow chancellor Rachel Reeves tells MPs that mortgage rates are rising due to 13 years of economic mismanagement and the mini-budget last year, leaving to higher inflation in the UK.

Q: Average mortgage payments are going up by a crippling £2,900 this year – where does the chancellor think families are going to get the money to pay the Tory mortgage penalty?

Jeremy Hunt says the government announced £94bn support in the autumn budget.

He says Labour’s plans mean an extra £28bn of borrowing per year, at a time when experts say higher borrowing mean higher inflation, higher interest rates and higher mortgage rates.

Reeves tells the chancellor to stop passing the buck, and focus on the mortgage crisis.

She say 10,000 households in Uxbridge and South Ruislip will be paying £5,200 more on average this year (which may concentrate minds at the upcoming by-election).

Q: Will the chancellor apologise for the harm that his government have caused?

He will not. Hunt declares, to some chortles from opposition MPs, that:

I am proud of our economic record, which has seen our economy grow faster than France or Japan since 2010, and the same rate as Germany.

Mortgage holders will pay even more if a Labour government borrowed an extra £100bn in the next parliament, Hunt adds.

Chancellor Jeremy Hunt has told MPs he will meet major lenders later this week to ask them to show forbearance towards households who struggle to pay rising mortgage bills.

During Treasury questions, Hunt says the government “won’t hesitate in our resolve” to support the Bank of England in its fight against inflation.

The best policy is to stick to our plan to halve it.

Hunt adds:

“Later this week, I’ll be meeting the principal mortgage lenders to ask what help they can give to people struggling to pay more expensive mortgages, and what flexibilities might be possible for families in arrears.”

Stewart Hosie, Scottish National Party MP for Dundee East, reminds MPs that the cost of a two-year fixed mortgage has risen from 2.57% in March 2021 to over 6% today.

Q: As the government have no plans to change the Bank of England’s inflation target, which means interest rates will keep rising, what will you do to actually tackle the mortgage pain people are suffering from?

Hunt says interest rates have risen in other countries, and at a faster rate in the US and Canada than in the UK.

The chancellor says:

We will look at doing everything we can to help people under pressure, but we won’t do things that will prolong the inflationary agony that people are going through.

We have to be very careful, because a lot of the schemes that are being proposed would actually make inflation worse and not better.

Hosie points out that in March, the Office for Budget Responsibility thought inflation would peak at 2.9%. By May, the Bank of England was predicting 5% – nearly double.

Q: Will the chancellor guarantee today that inflation will be halved to 5%, as promised by the prime minister?

Hunt says the IMF, the OBR and the Bank of England all predict the UK government will hit its target of halving inflation.

I give him this guarantee – we will stick to the plan to do so.

Chancellor Jeremy Hunt has ruled out providing large-scale assistance to mortgage payers, through tax relief on their mortgage payments.

Sir Jake Berry, Conservative MP for Rossendale and Darwen, tells MPs at Treasury Questions that people are very concerned about what is being called a “mortgage bomb that is about to go off”.

Q: Is it time to consider reintroducing a bold Conservative idea of mortgage interest relief at source. If we don’t help families now, all the other money we have spent to help them will be wasted if they lose their home.

Hunt replies that such schemes, involving injecting large amount of cash into the economy, would be inflationary.

He adds:

Much as we sympathise with the difficulties and will do everything we can to help people who are seeing their mortgages costs going up, we won’t do anything that would mean we prolong inflation.

Mortgage interest tax relief – effectively a tax break for home buyers – was introduced in 1983 to boost homeownership but scrapped in 2000.

Patricia Gibson, SNP MP for North Ayrshire and Arran, turns Treasury questions to the cost of living squeeze.

She reminds MPs that former Bank of England Mark Carney had spoken about how before the Brexit referendum, the BoE had warned that Brexit would probably mean a weaker pound, higher inflation and weaker growth:

Q: Is it fair that the UK government’s decision to ignore those stark warnings are being paid for by households who can least afford it?

Chancellor Jeremy Hunt says he doesn’t “buy this Brexit narrative”.

Food price inflation has been around 20% in Germany, Sweden, Portugal and Poland in recent times, Hunt says [in the UK it’s running at around 19%].

He insists:

This is not a UK-specific issue.

We are all dealing with the consequences of Putin’s invasion of Ukrraine and the aftermath of the pandemic, and we are all tackling it with one central focus, to bring down inflation as our overriding priority.

Over in parliament, Treasury ministers are taking questions from MPs – at a time when the cost of living crisis has soared up the political agenda.

Ian Byrne, Labour MP for Liverpool, West Derby, asks what fiscal steps the chancellor plans to take to help reduce the impact of recent increases in the cost of living on households.

Chancellor Jeremy Hunt says the government knows the pain that households up and down the country are going through.

It has introduced “one of the largest support packages in Europe”, Hunt adds, worth £3,300 per household this year and last year.

Byrne points out that Which? has shown that own-brand supermarket food brand prices have risen by 26.6%. We now have security locks on baby formula milk, at a time when corporations are making vast profits, he says.

Byrne reminds the Commons that the government have signed up to UN goals of eradicating poverty. So..

Q: Will he cap essential food prices and tackle the grotescue profiteering in the food industry that is driving many of my constituents in Liverpool, West Derby into poverty?

Hunt says he totally respects Byrne for raising these concerns, but doesn’t support such price caps.

The chancellor says:

I don’t believe capping prices is the right long-term solution.

Hunt insists that “we are doing a lot”, citing payments of £900 per household for people on means-tested benefits, £150 for households with a disabled member, and £300 for thosewith pensioners.

This, Hunt adds, is:

Precisely because we want to help the people he is talking about.

Hunt adds that he will meet with regulators next week to discuss what else can be done with respect to supermarkets…