Clegg Quizzes Brown on interest rates and repossessions

11.40.24am GMT Thu 27th Mar 2008

[Mar 26] Nicholas Clegg: Home repossession orders now stand at 100,000-the same as in 1990-and house prices are falling faster than they were even then . .

. . Does the Prime Minister still deny that the crisis facing British home owners today looks at least as bad as the Tory recession of the early 1990s?

Gordon Brown (Prime Minister): I do not know when the Liberal party will ever learn. Interest rates were 18 per cent. at one point in the early 1990s; they are 5.25 per cent. today. The number of repossessions in the last year was 27,000; in the first two years of the 1990s, it was 200,000. We are dealing with a quite different situation and the reason is that we did not take the advice of the Liberal party, but pursued policies for economic stability.

Nicholas Clegg: Is complacency the only thing that the right hon. Gentleman has to offer the thousands of British families who are frightened of losing their homes? Will he now instruct the Bank of England to take house prices into account when setting interest rates, to stop the boom and bust in the housing market? Will he also stop banks from repossessing homes at will and force them to explore all other options to keep British families in their homes?

Gordon Brown (Prime Minister): But the way to deal with the economic problems is to keep inflation low and to keep interest rates low, and that is exactly what we have done. Inflation is lower than in the rest of Europe and lower than in America. That is why interest rates have managed to come down twice in the past few months, whereas that has not been possible in the euro area. I tell the right hon. Gentleman this: we take seriously our responsibility to home owners in this country. That is why there are 1.5 million more home owners now than there were in 1997, why interest rates are on average half what they were in the Conservative years and why mortgage rates are lower than they were on average in those 18 years. We will continue to ensure that inflation and interest rates are low, to the benefit of home owners. One way we will do that is by not taking the advice of the Liberal party.