Labour predicts £889 mortgage increase

Party targets Tory grassroots with campaign highlighting extra insuranc e costs imposed by social security changes
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The Independent Online
The average cost of a mortgage for a typical homebuyer will have risen by £889 a year in the 18 months to October, according to figures to be unveiled by Labour next week as part of its campaign to halt new social security changes.

The estimate is based on the impact of new insurance costs needed after the ending of social security payments to cover mortgage costs of householders who lose their jobs, on top of interest rate rises and cuts in mortgage tax relief.

The figures - which assume a £281-a-year increase in costs as people are forced to take out mortgage insurance - will form the centrepiece of a national campaign planned by Gordon Brown, the Shadow Chancellor, which will use techniques used successfully by Labour's Treasury team in its onslaught on the second-stage increase to 17.5 per cent of VAT on fuel.

Labour aims to overturn in the House of Commons the order which Peter Lilley, the Secretary of State for Social Security, will introduce to implement the changes, which means that from October new homeowners will no longer receive income support for the first nine months after becoming redundant.

Labour will run a national campaign based on the theme that those already insecure about losing their jobs now have to fear losing their homes as well. It will also submit resolutions to council meetings in the hope of building up grassroots Tory supportand launch letter-writing campaigns to put pressure on Tory backbenchers.

Nicholas Winterton, Tory MP for Macclesfield, has been reported as indicating that he will oppose the measure, and that up to another dozen MPs could join him in opposing the order.

The campaign will run alongside those against rail privatisation and executive top salaries. On the latter, Labour aims to submit amendments to gas, pensions and finance bills to secure legislation giving shareholders new rights and responsibilities to sanction pay rises.

Mr Brown said this week that homeowners faced additional bills of £50 or more "and possibly £70 per month" as a result of government policies, including the social security changes. He said: "homeowners have become the government's new target in 1995."

The new figures, based on those produced by the Council of Mortgage Lenders, show the cost of an 80 per cent mortgage on an average house will have risen from £3,407 a year from 31 March 1994 to £4,296 a year after the changes come into effect on 1 October 1995.

Mr Lilley, writing in the Times yesterday, said his proposals would "encourage comprehensive cover for new mortgages" and "build on an existing and rapidly growing practice". Mr Lilley said he would discuss with lenders and insurers "what additional steps they will take to ensure that high quality, comprehensive cover is available".

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