Government insists guarantee scheme is working

In July the Communities and Local Government select committee warned the Treasury’s £50 billion guarantee scheme for asset-backed securities was not working, in a follow up report to an earlier enquiry into housing and the credit crunch.

The Communities and Local Government department has now published its response to the report. It states: ‘The Bank of England’s latest credit conditions survey suggests a net balance of lenders reported an increase in the availability of secured credit to households in the three months to mid-June 2009, the first positive net balance since September 2007.

‘This resulted primarily from an improvement in the cost and availability of funds to lenders. A net balance of lenders was expecting a further increase in the availability of secured credit to households over the next three months.’

The select committee had also argued the government was too focused on promoting home ownership at the expense of the private and social rented sectors.

The response says: ‘We note the committee’s support for a review of the balance of tenure. However it remains the aspiration of the majority of people in this country to own their own home and the government continues to support home ownership where it is affordable and sustainable.

‘Nevertheless we recognise that homeownership is not suitable for everyone and it is important for a range of tenure to be available.’

The report points to the Rugg Review of the private rented sector, and the publication of new guidance on allocations for social housing as evidence the government is not neglecting other tenures.

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