LABOUR HAS denied its Ministers are at odds with each other over the Government’s approach to forgiving the mortgage debts of thousands of hard-pressed homeowners.
Tánaiste Eamon Gilmore yesterday ruled out any debt forgiveness, an approach that appeared to run counter to the views of Minister for Social Protection Joan Burton and Minister of State Willie Penrose. Both have said they are open to considering the writing off of some mortgage debt.
However, a party spokeswoman said last night that the Tánaiste was expressing opposition to any blanket forgiveness of debt, while his colleagues were referring to individual cases of hardship.
Mr Gilmore told The Irish Timesthere were "very big problems" with debt forgiveness schemes.
“The issue is that ultimately debt forgiveness has to be paid for by the taxpayer, and that’s not one of the proposals the Government is looking at.”
New Beginning, a group which works with heavily indebted homeowners, last night criticised the “incoherence” of the Government approach on the issue.
“It’s truly frightening that different Ministers have such divergent views on such an important issue,” said spokesman David Hall. “They don’t seem to have a clue what to do.”
More than 50,000 mortgages are in arrears for more than three months, and New Beginning claims 20,000 of these are unsustainable.
Independent TD Stephen Donnelly yesterday added his voice to the growing clamour for debt forgiveness, saying it made good economics as well as being morally correct. “We can either destroy people’s lives by squeezing them for 15 years and then letting them off their debts, or we can take a bold step now and get them back into the economy.”
However, Mr Gilmore said the Government had already put in place a number of measures to deal with those in difficulty paying their mortgages. These included a longer moratorium for people facing repossession, changes in mortgage interest relief and reform of personal bankruptcy laws.
In addition, he said, the Government’s economic management council had tasked a small group of civil servants to look at proposals in the programme for government and the expert group on mortgage arrears and report by the end of next month.
Ms Burton said yesterday that Ireland needed a debt resolution mechanism that would sort out differences between mortgage-holders and their banks without the need for recourse to the courts. She cited approvingly a scheme introduced in Iceland which capped mortgage payments at 120 per cent of the current value of a person’s house, with a further settlement made when the property was sold on.
Mr Penrose said at the weekend that a proposal by economist Morgan Kelly for debt forgiveness was worth consideration. It would be “foolhardy” not to examine the proposal, which Mr Kelly estimated would cost €5-6 billion.
However, Fine Gael Minister of State Brian Hayes described the proposal as unrealistic.
The Money Advice and Budgeting Service said legislation was needed to define the exact circumstances in which mortgage debts could be settled, to include the forgiveness of debt where borrowers were genuinely unable to meet repayments.
Spokesman Michael Culloty said the Government needed to recognise the “psycho-social” effects of extreme indebtedness.
Ms Burton also refused to rule out cuts in social welfare payments in the next budget.
Although the Government parties have committed themselves to leaving payments untouched, the Minister said the world economy had changed since then and 47,000 more people were unemployed than the Government had planned for.
