LEADING ARTICLE: Pity the poor home-owner

The Government is right to reduce social security support for home-owners. It is surely unfair that the middle classes are entitled to have large mortgages funded by the taxpayer as generously as is now the case. If people wish to buy their own ho mes they should take out insurance to cover the risks of unemployment, just as they insure themselves against premature death and the risk of fire and flood.

This is the message that Peter Lilley, Secretary of State for Social Security, gave the building societies yesterday. Mortgage lenders are naturally worried by the changes, which mean that from October new borrowers can expect help with paying their mortgages only after being on income support for nine months.

Taking out private insurance to cover this period will inevitably raise the cost of buying. Some would-be borrowers will find either that they cannot now afford to buy a home or that they must scale down the size of their purchase. A number will be judged uninsurable and will find it virtually impossible to take out a mortgage. An already fragile housing market will be further buffeted.

Many people may regard the move as a betrayal by a Government that once heralded rising home ownership as the best index of its success. But we should not grieve. It would be no disaster if more people chose to rent; home ownership was never open to all in any case. Likewise, stable prices in the housing market can only be a good thing for an economy that already faces inflationary pressures.

But Mr Lilley still has some explaining to do. Existing borrowers took out their mortgages on the understanding that the welfare state would help them should they become redundant. The Government's changes will alter their financial situation considerably. Even current mortgage holders will now have to make alternative provision for themselves.

In most cases that will involve some belt-tightening as borrowers take out private insurance. But some of those unable to secure coverage will suddenly be at risk of losing their homes if they lose their jobs. It is unacceptable that they should be put in this position, under pressure either to sell their homes or live with the anxiety that redundancy could render them homeless.

It makes sense to cut back the middle-class welfare state, in the interest of containing and targeting public expenditure more effectively. But change should, whenever possible, be gradual, and those hurt must be offered alternative ways to protect themselves. Mr Lilley should address these concerns.