One of the proposals which the Labour Party has been putting forward in order to address the serious economic difficulties which the country and working families are facing is a guarantee for families that they will not lose their homes during the period of this recession. To be fair, it appears that the Government has taken up this proposal in some way and has discussed it with the financial institutions. It is reported today that the Bank of Ireland and Allied Irish Bank are prepared to delay issuing repossession orders on homes for 12 months. That is not good enough because all it does is put off the evil day for 12 months. It is not sufficient time because, as was noted this morning by Michael Culloty from MABS and echoed at lunchtime by John Monaghan from the Society of St. Vincent de Paul, a period of two to three years is required so that people can have some reassurance that their family homes will not be repossessed.

In any event, the idea of delaying the inevitable repossession for 12 months misses the point that people who are losing their jobs or are worried about doing so have the additional worry of losing their homes and they need reassurance. That reassurance needs to be provided by the Government securing an arrangement with the financial institutions.

I ask the Taoiseach two questions. First, what arrangements is the Government discussing with the financial institutions which have already been provided with a blanket State guarantee, and which are to be recapitalised in some instances, in respect of their policies on the repossession of homes? Second, can he give security and a sense of safety to families by reassuring them that their homes will not be repossessed, having regard to the arrangements he is discussing with the financial institutions, the considerable resources the State is now making available to recapitalise banks and underpin the financial institutions of the State and the existing arrangements for rent allowance and mortgage interest subsidy?

The basic point is that families need reassurance. That is distinct from simply being told the letter in the post is going to be delayed for six or 12 months. People need reassurance that they will not lose their homes during the period between their losing their jobs, getting another job and getting back on their feet and the return of the period of economic growth about which the Taoiseach has spoken.

Part of the purpose of the discussions on this matter is to provide reassurance to people who work honestly and reasonably, taking account of changed circumstances, with the bank or lender to reschedule mortgage arrangements that there will be no precipitative effort by financial institutions, including those outside the voluntary code who must now, in my opinion, sign-up to the statutory code, to repossess their homes. We are requiring that all lending institutions act in a humane and sensible manner on the basis that we wish to provide that reassurance to mortgage holders. In practice, assurance is given in the normal course of events that every effort will be made to avoid repossessions. This is evidenced by the low level of repossessions to date, the latest figure for which is 0.3% of the more than 1 million mortgages in the country.

It is important that the code be put on a statutory footing. This will provide protection and reassurance. Also, the code must be comprehensive. Obviously, the financial institutions must find the most humane way possible of dealing with the situation while distinguishing between those who can pay and those who will not pay. Those who cannot pay because of changed circumstances will be dealt with in a way that is reasonable and correct in the circumstances. That is the basis upon which the discussions are ongoing.

I am afraid just putting the code on a statutory footing does not deliver on this. This is about those who cannot pay. There are plenty of ways in which those who will not pay can be dealt with. In any event, the mortgage must be repaid at some stage. Let us be clear, this is about people who cannot pay and people who fear that they will not be able to pay.

Yes.

People are scared and worried. People have either lost their jobs, are afraid they will lose their jobs or their income is down and they are worrying about how they are going to make repayments on their homes and about the day somebody will come knocking on their door, mandatory code or not, to repossess their home.

The Taoiseach stated that there have not been many repossessions to date but some homes have been repossessed. There have many more repossessions of homes than of sites and half finished speculative developments, some of which are the subject of what are now known as bad debts and bad loans.

Hear, hear.

It appears two laws are being applied. We have one set of laws in respect of big borrowings for large developments, which are deemed part of the bad debt problem the State had to guarantee and in respect of which it must now recapitalise the banks. We appear to have a regime which is about to recapitalise big loans and repossess in respect of small loans. Saying there have not been many repossessions is not sufficient because there has been a very substantial number of voluntary surrenders. The hammer is put on people who cannot pay and they are effectively forced into surrendering the dwelling to the financial institution. This does not make sense.

Ultimately, when a family loses its home, the State must step in and provide rent allowance and so on. What is the financial institution to do with such dwelling? It cannot sell it in the current market. It makes sense for a whole pile of reasons that there is a regime in place that ensures homes are not repossessed. A formula must be agreed that allows the Taoiseach or any other Member of the House when speaking to worried families about the prospect of their home being repossessed to reassure them that for the next two or three years or during difficult times their homes will not be repossessed. People will still have to repay the mortgage but we should put in place a formula which helps them to get through such times. This, apart from reassuring people about not losing their homes, would provide the type of security and reassurance that might encourage people to spend again, which would have a knock-on effect on the economy. This is about more than just saying repossession orders will be delayed. This is about providing confidence and security to families who are worried about how they will pay mortgages, many of which are greater than the value of the dwellings on the market.

It is important to point out in response to Deputy Gilmore's question about identifying the bad debt provision that all bad debts are provided for in the accounts. Deputy Gilmore is asking me to predict what will be the performance of individual loans, be they residential or commercial mortgages. That cannot be predicted in the here and now. The suggestion is being made that provision is made for bad debts before they become such. We must be careful and point out, in the interests of maintaining confidence and providing an accurate picture of the current situation, that where debts become bad, provision is made for them.

No.

That is the case.

When do they become bad?

The point was made that there are different laws in respect of different people. That is not the case.

It is totally different.

No. What we are trying to do is, first, to ensure that assets that can perform do perform and, second, to provide reassurance to people who get into difficulties in respect of their principal private residence. What I am saying in respect of the latter is that reassurance will be provided. People who make contact, as they have been doing up to now — one must take into consideration the rate of possessions taking place despite current difficulties — will be able to put in place rescheduling or interest only arrangements and may agree to have arrears recapitalised onto the main mortgage amount. As stated, it is in the interests of the mortgage holder and the lender to find an arrangement which meets the current circumstances of the parties concerned.

As Deputy Gilmore stated, institutions are aware the housing market is not good. Their ability to take on assets for the purpose of disposal is not a good mark. It is better for them to work with the people and to assist them through the next number of months or years when they are in difficulty. That is in practice what the lending institutions, in their own interests quite apart from the wider public interest, have to and will do. It is a question of providing reassurance in terms of the statutory code and what practice arrangements will be in place. To make the argument that in some way that is not something we should be concerned with or that we are not trying to address is not correct. We are seeking to address that issue in a way that provides confidence that the performing loans are performing and those which are not, in particular in respect of private residences, will be dealt with in a humane and sensible fashion.