Repossession Orders in Wales

Speech by Peter Black delivered to Plenary on Wed 11th Jun 2008

Peter Black: I propose that

the National Assembly for Wales:

1 notes with concern:

a) that the number of repossession orders in Wales has increased by 26 per cent since 2007; and

b) that higher mortgage rates, the credit crunch and spiralling consumer debt may lead to further increases in the number of repossessions in Wales;

2. calls on the Welsh Assembly Government to help reduce the number of potential repossessions by supporting:

a) debt advice and mortgage rescue schemes; and

b) the development of a protocol that would require a court to be satisfied that lenders and borrowers had taken the relevant steps before possession was awarded. (NDM3955)

This debate is taking place in the context of our personal debt in Britain being at its highest level ever, exceeding the value of the entire economy. Consumer debt has exceeded £1.3 trillion. Advice surgeries are not being well promoted to people with financial difficulties, and we need to look at how we provide advice and support to people who are in debt. Wales has the highest levels of mortgage repayment problems that it has had for some time. We also have higher than average increases in the number of repossession orders awarded, which stood at 26 per cent last year.

Not only are more people in greater debt than ever before, but experts say that more people are in day-to-day financial difficulties than ever before. In a recent survey, 2.5 million people claimed to be 'very concerned' about their personal finances. It has been estimated that, by 2011, more than 8.6 million people in Britain will be credit-blacklisted.

House prices in Wales have been growing faster than in other parts of the UK. However, wages have not been growing at the same rate-or anything like it. That has clearly been putting additional strains on people's ability either to get on the property ladder in the first place or to service the ongoing mortgage costs if they are on that ladder.

The fact that banks and building societies have been lending irresponsible amounts of money to borrowers-sometimes up to five times their income-has made the situation much worse, together with credit card debt. As a result, the number of repossession orders made has increased in Wales and the number of houses being repossessed has increased by a staggering 75 per cent.

The Welsh Liberal Democrats welcomed the announcement made by Jocelyn Davies, Deputy Minister for Housing, earlier this week that the Government would be investing an additional £5 million in the mortgage rescue package. It seems that the Government is taking some of those concerns on board. We also recognise that that is one of a whole raft of measures available to local councils and advice agencies to help people who are in debt or are facing repossession.

The issue for us is largely one of UK regulation of how we deal with debt levels, but also of people's awareness of advice services and their ability to access them. I have spoken to a number of people with mortgage problems who did not realise that they could go to their local council, citizens' advice bureau or other places for advice and help. When they did go to such places, they did not expect them to do anything other than talk to them; they did not realise that financial packages were in place to assist people like them, including the mortgage rescue package that Jocelyn announced. Such packages can help by purchasing all or part of their home, or helping with the renegotiation of mortgages. There is clearly an issue there.

I understand that the package that Jocelyn announced this week will help up to 100 families compared with the 15 families that were helped last year with the £850,000 that was in place. I understand from listening to Jocelyn on Radio Wales that more money might be available if needed. I hope that she can confirm that today, because if that money turns out to be insufficient, we do not want people being unable to get help until the next financial year.

It is useful to bear in mind that, in Wales last year, 6,559 repossession actions were instigated by lenders. Obviously, not all of those actions turned into court warrants, but 940 people had their houses repossessed. That huge figure indicates how many people are in severe financial difficulty, and there are others whose homes are not threatened but whose financial situation is just as bad, and they have ended up in court because of their debt.

We should not allow repossession orders to be granted left, right and centre. We need to be confident that both lender and borrower have taken all appropriate steps to establish a sensible and workable repayment plan before a repossession order is made. The courts should also make sure that the borrower has had the opportunity to get independent advice on the debt before a repossession order is granted. If the person in question has not taken advice, our opinion is that the borrower and lender should not be deemed to have taken appropriate steps to resolve the matter, and so more time should be allowed for them to reach an agreement before the case continues.

We also support the recommendation of Citizens Advice Cymru, which featured in the briefing paper that was circulated to Ass Members this week. It suggested that every county court should be staffed by mortgage repossession experts during repossession sessions, so that borrowers can access independent advice rather than depend on advice from representatives of lenders, who are not in the best position to offer the impartial advice that they need.

We accept that much of this is the responsibility of the UK Government, but we also think that the Assembly Government can do a fair amount more to get its own advice services in order, by encouraging local authorities to give support and financial assistance to advice-givers such as Citizens Advice, the Legal Services Commission, and a number of other bodies, including Shelter Cymru, which gets substantial support from the Assembly Government. All those bodies are valuable and helpful, but sometimes, people who are looking for advice do not know where to go. I hope that we can set up some sort of one-stop shop, so that people who want advice can go to a single point and be directed to the most appropriate adviser for their particular issue.

I hope that Members will feel able to support this motion today, and will recognise that we are trying to be constructive and helpful. In particular, we believe that sorting out the court protocols is urgent and needs to be dealt with as soon as possible.