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Gordon Brown today announced plans to help borrowers who are struggling to keep up with their mortgage repayments stay in their homes.
The move, announced this afternoon by the prime minister in a debate on the Queen's speech, is designed to slow the rising tide of repossessions as job losses and increasing household costs push more and more households into mortgage arrears.
Under the scheme households that have temporarily lost some or part of their income will be able to defer mortgage interest payments for up to two years.
"Hard-working households that experience a redundancy or severe loss of income as a result of the downturn will be able to defer a proportion of their interest payments for up to two years as they get their family finances back on track," Brown told MPs.
"The result will be more affordable monthly payments for homeowners who are needing a bridge through difficult times."
The prime minister said eight lenders had signed up to the scheme: HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays and HSBC.
A spokesman for the Treasury said that by guaranteeing the payments in this way the government was encouraging banks to consider requests for payment breaks.
However, he added that lenders would need to take a commercial decision on each case, subject to guidelines on treating customers fairly outlined in the banking code. He refused to confirm reports that the scheme would be available to borrowers with mortgages of up to £400,000.
The scheme is similar to one aimed at households who claim benefits which was announced in last week's pre-budget report.
Brown was speaking in a debate overshadowed by the Speaker's statement on the arrest of Tory frontbencher Damian Green, which dominated the first exchanges of the new parliamentary year and threatened to sink the Queen's speech.
In a concise statement in the morning Her Majesty outlined 14 government bills designed to show the government was "committed to helping families and businesses through difficult times".
"My government's overriding priority is to ensure the stability of the British economy during the global economic downturn," the Queen said.
The government's legislative plan was scaled back from the 18 bills listed in May's draft Queen's speech to make way for new measures to deal with the financial downturn.
The first piece of legislation to be announced was the banking reform bill to protect people's savings and reduce the likelihood of banks getting into difficulties.
However, the speech also contained a range of new measures on equality, crime and welfare, marking a break by the prime minister from his focus on the economic crisis. The move suggests he believes he needs to widen his government's programme if he is to claw back lost votes.
The speech paved the way for a crackdown on benefit cheats with claimants compelled to take lie detector tests. Those found guilty of fiddling the system will lose benefits for a month, in a "one strike and you're out" initiative.
The government is also proposing to give the public clearer information, mainly via the internet, on how criminals are sentenced in local courts. Communities are to be given a bigger role in deciding what form of community punishment local criminals should be forced to undertake.
New legislation will be drawn up to improve policing, and reduce crime and disorder.
Lap dancing clubs will be reclassified as sex establishments, allowing councils greater scope to close them.
Airport security will be enhanced and border controls strengthened by bringing together customs and immigration powers. Newcomers to the UK will have to earn the right to stay.
The government also intends to introduce an equality bill to promote fairness, fight discrimination and introduce transparency in the workplace to address the pay gap between men and women.
The introduction of a lie detector test for benefit claimants is the most striking shift to a more populist programme, similar to Tony Blair's so-called "respect agenda".
The government currently withdraws 13 weeks of benefit from anyone found making a fraudulent claim twice in five years, but said yesterday it intends to tighten this process by withdrawing four weeks' benefit for first-time fraudsters.
The benefit withdrawal will be taken against both those that suffer an administrative penalty as well as those found guilty in a criminal court. Currently the Department for Work and Pensions seeks court penalties only where the alleged fraud is worth more than £2,000.
A bill enshrining in law the government's commitment to end child poverty by 2020 was the only bill not contained in the draft Queen's speech introduced in May.
Three bills – the heritage protection bill, the communications data bill and the Geneva conventions and UK personnel bill – were dropped to make way for beefed-up legislation to help tackle the financial crisis, while two other bills, on transport security and constitutional renewal, were consumed into other pieces of legislation.
- Queen's speech
- Welfare
- Criminal justice
- Public services policy
- Social exclusion
- Prisons and probation
- Mortgages
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