The chancellor Alistair Darling has reiterated the government’s determination to help potential home buyer’s access mortgages, saying that it would work up an elaborate scheme to boost lending by next spring in line with the principal recommendation of the Crosby report.
The scheme would involve government helping the mortgage market by providing, for a temporary period, guarantees for securities backed by new mortgages.
The chancellor said he is setting up a new body called the Lending Panel which will monitor lending to both business and households. It will bring together the government, lenders, trade bodies, consumer groups, regulators and the Bank of England to monitor lending levels and practices by banks.
To implement this recommendation, Mr Darling said, the government would be required to obtain State Aid approval from the European Commission
As part of a programme to accelerate capital spending the chancellor said he was bringing forward ?775 million this year and next year (2009) to invest in new social homes as well as regeneration projects. This money is in addition to the ?750million announced in September.
Industry bodies are urging the chancellor to do more than just lower VAT by 2.5%, and to take action that will stimulate the housing market and building sector.
The Home Builders Federation (HBF) is calling on the government to use its new found influence on banks to get mortgage lending going again while urging that cash from the Housing Corporation budget be used to buy empty new homes and bring forward sites for development by public private partnerships. HBF also requires incentives in place to encourage institutional investment in the private rented sector.
HBF executive chairman Stewart Baseley said,
“We have reached the stage where radical and decisive action is needed to assist the housing market. With the market so absolutely critical to the wider economy, the chancellor cannot miss the opportunity presented by the pre-budget report.”
The Modern Masonry Alliance (MMA) meanwhile has said that a 2.5% VAT cut across the board will do little to support the industry’s long-term recovery. Instead the MMA is calling for VAT on building materials to be cut to zero for two years to encourage new building and home extensions.
Mike Leonard, director at MMA said,
“We appeal to the chancellor to axe VAT on building products for 24 months to save UK jobs now,”
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