Labour’s Shadow Chancellor Rachel Reeves told BBC Radio 4’s ‘Today‘ that the Government should force banks to help borrowers struggling with their mortgage payments.
Reeves outlined a five-point plan to help homeowners on lower incomes.
This included allowing borrowers to switch to interest-only payments for a temporary period, extend their mortgage term, and ensuring a six-month grace period for those in danger of repossession.
She added that this was an instruction similar to that made during Covid-19 to provide forbearance to customers.
Reeves said: “The responsibility is to do all we can to help those who are most impacted by these price rises.
“The average inflation rate of 8.7% masks something much bigger here, because people who spend a higher proportion of their incomes on the weekly food shop, on the energy bills, and on rents and mortgages, are seeing prices rise even faster.”
She said: “The plan I’m setting out today around helping people with mortgages is about helping people in real distress right now.”
Reeves added: “It’s about instructing banks, who were bailed out by taxpayers when they needed help, to now support customers in the most financial distress.
“Many of them are doing it anyway, but this is about making sure that people don’t fall through the cracks, and that people come forward when they need support, knowing their their lenders are going to provide it because the government instructed them to.”
However, she said that major financial support would not be a good idea, as it could add to price rises.
The Bank of England is expected to raise the base rate again at midday today (22nd June), by 0.25% to 4.75%, while further rate rises have been predicted throughout the remainder of the year.
When asked if it would be preferable to trigger a recession in order to tackle inflation, as some commentators have suggested, Reeves said: “I don’t like that kind of language because the impact that recessions have on families, on pensioners, on businesses is disastrous.
“What we need to do is provide support for those who are struggling the most.”
However, when pressed for information on how Labour would go about directly easing inflation itself, Reeves did not provide an answer, instead focusing on the party’s plans to help those struggling with rising prices now.
Chancellor Jeremy Hunt will meet with bank chiefs on Friday, to continue discussing what additional help might be provided.
However, Foreign Secretary James Cleverly told ‘Today‘: “Not all the levers of control are in the Government’s hands.”
