RSGOLD-RUNESCAPEGOLD

A report published by Shelter yesterday says that three-quarters of those in serious arrears have no realistic chance of repaying their debt. Lenders argue that much of what is saved in social security will be spent again in housing benefit and support for housing associations in order to help those who lose their homes.But Peter Lilley, Social Security Secretary, is unmoved by all this. He has told the lenders that he won't back down, and it is up to them and the insurance industry to find ways to manage any problems. He points out that only about a third of those in arrears are eligible for Income Support, so the difficulties should be manageable.Why is Mr Lilley so adamant about his proposals, when the measure seems likely to increase the insecurity of so many of the middle-class homeowners to whom the Tories promised undying support in the Eighties?The reasons are as much symbolic as practical. More and more middle-class people, moreover, find themselves in a condition of such insecurity.Meanwhile, poverty trap problems at the bottom end of the market exacerbate these difficulties. Many self-employed people or short- term contract workers often have great difficulty in claiming under such policies and premiums are generally high.

Over a quarter of a million households are six months or more in arrears, and repossession rates are still very high. Most unemployment insurance for mortgage interest payments presently excludes those with medical problems or over a certain age. They are worried that many people won't be eligible for insurance, or won't be able to afford the premiums, and they'll run up even more arrears, so that lenders will be forced to repossess even more properties They have a case. On the other side, it looks as though the Government may be able to count on the insurers, whose high command is called the Association of British Insurers.Building societies are alarmed by the Government proposals. Like all wars, it's a story of temporary alliances and betrayals, bluff and counter-bluff There are four armies. Right now, the lenders - the building societies and the banks - whose joint chiefs of staff are the Council of Mortgage Lenders, are allied with the home owners represented mainly by the housing charity Shelter.

Regulations will probably be put before the House of Commons in July. Social security ministers have claimed the measure will save about pounds 200m a year. Then, after the Budget, the war started. Instead, those who want to cover themselves for such eventualities will have to take out private insurance. The Government proposed in the last Budget that anyone who takes out a new home loan after October this year, and subsequently becomes unemployed, will not receive Income Support for their mortgage interest payments for the first nine months. For you are the subject of one of the most important battles of the decade concerning the role of the welfare state. If you're self-employed, on a short-term contract, or have medical problems, you should be glued to the box.