Gilmore stance on debt forgiveness gets backbench backing

LABOUR BACKBENCHERS have backed their leader’s rejection of proposals for a blanket forgiveness of the mortgage debts of thousands of homeowners.

Tánaiste Eamon Gilmore has rejected any across-the-board forgiveness of mortgage debts, as suggested by economist Morgan Kelly, because of the cost that would have to be borne by the taxpayer. However, other Labour Ministers have suggested that some unsustainable debts could be written off.

The latest figures on mortgages arrears, to be published shortly, are expected to show that about 60,000 mortgages are more than three months in arrears.

Galway East TD Colm Keaveney yesterday welcomed the Tánaiste’s comments, and said a “one size fits all” approach to the problem of mortgage debt would exacerbate inequality in society.

“There are people doing well who don’t deserve debt forgiveness and there are people struggling who do require help. We need a more targeted approach in terms of how we deal with the very real problem of mortgage debt.”

A targeted mortgage debt assistance scheme would be good for the domestic economy and increase public confidence, he added.

Dublin Mid West backbencher Joanna Tuffy said a large-scale scheme of debt forgiveness would destroy social solidarity by giving rise to perceptions of unfairness among those who were continuing to pay their debts. Other measures, such as shared ownership schemes, were needed to tackle the problem.

Kevin Humphreys, Labour TD for Dublin South East, said the Labour leader’s approach was the right one for now. While this was not the time for blanket debt forgiveness, at some stage the Government would have to grasp the nettle of people who were unable to pay their mortgages, he said. Before this happened, however, there would have to be a full understanding of the costs involved for the taxpayer.

Fine Gael TD Peter Mathews said the cost of a debt forgiveness scheme would be far higher than the €5-6 billion cited by Mr Kelly. The banks’ loans would have to be categorised rigorously according to their performance and sustainability before any decisions were made on write-offs.

Any plan would have to be presented to our creditors in Europe before implementation, he said.

Debt forgiveness is not a new idea. In 2002, the banks implemented a pilot scheme under which the heavily indebted were required to make full disclosure of their financial means. Those who were genuinely unable to pay their debts but met the conditions of the programme could make a “fresh start” by having their residual debt wiped out after a set period.