Government hides risks of controversial Help to Buy scheme

A secret paper on the house-buying scheme reveals officials’ concerns

Ministers are refusing to publish the Government’s own risk assessment into its flagship housing policy, it emerged last night – triggering suspicions that they are trying to cover up official warnings that the scheme will endanger the British economy.

A string of independent housing experts have publicly warned that Help to Buy, launched by George Osborne in this year’s Budget to give people a lift on to the property ladder, will overheat the housing market and “detonate a bomb” under the British economy.

Ministers have refused for months to say if any official risk assessment has taken place, insisting only that the independent Office for Budget Responsibility (OBR) was responsible for housing forecasts. Yet in a Freedom of Information (FOI) response to the Shadow Local Government Secretary, Hilary Benn, officials have revealed that the Government does indeed hold details of a risk assessment into Help to Buy, but that publication has been blocked by ministerial veto. The risk assessment was carried out before the policy was announced in March, meaning that the Chancellor ignored any warnings in it.

In a letter to Mr Benn’s office, an official at the Department for Communities and Local Government (DCLG), where Eric Pickles is in charge of housing policy, acknowledged that publication would “lead to greater transparency, making government more accountable to the electorate and increase trust in steps the Government is taking on housing policy”. But he added: “Disclosure of information related to the formulation and development of policy would impede the effective conduct of government and good policy-making, as ministers and officials need to be able to conduct rigorous and candid assessments of their policies and programmes, including considerations of the risks, pros and cons without there being premature disclosure, which might close off better options. The release of the information would also inhibit officials from ... thinking the unthinkable and considering a wide range of scenarios and their potential impact.”

Despite being in classic Whitehall language, the comments suggest the risk assessment contains information that would undermine confidence in the Help to Buy policy.

Mr Benn said last night: “Ed Balls and I have warned the Government that, while we support Help to Buy, in the absence of increased house-building the scheme threatens to increase the number of people bidding for an insufficient number of houses, thus driving prices up and making it more difficult for young people and families to get a foot on the housing ladder.

“The Government is presiding over the lowest level of house-building in peacetime since the 1920s.

“Eric Pickles and George Osborne need to come clean urgently and publish their risk assessment in full so that the public can understand how their money is being spent and see what the impact will be.”

Help to Buy offers first-time buyers and people moving into newly built homes government-backed loans on properties worth up to £600,000. The Government will offer equity loans of 20 per cent.

Since its announcement in March, however, there have been warnings that the scheme will fuel property prices and create a new housing bubble. In its latest forecasts for the Autumn Statement, the OBR described the housing market as “notably strong”, particularly in London and the South-east, and forecast annual house price rises of 7 per cent by 2015.

It emerged last week that Alex Morton, David Cameron’s new No 10 housing adviser, wrote in the summer while at the centre-right Policy Exchange think tank, that Help to Buy risks “detonating a bomb both under the British economy and [Osborne’s] political career” and could lead to a repeat of “boom and bust”.

Spencer Dale, chief economist at the Bank of England, warned that the housing market could turn “from lukewarm to scalding hot in a few economic seconds” because it had a “microwave-like quality”.

Yet Mr Osborne defended Help to Buy before the Treasury Select Committee last week, and dismissed talk of a fresh property bubble. He said: “Of course we have to be vigilant, and we have a system for that, but there is not that issue today.”

Ed Miliband and Mr Benn will tomorrow launch a commission into Britain’s housing supply, led by the economist Sir Michael Lyons.

In its FOI response to Mr Benn, the DCLG official said that because Help to Buy would involve only 2 per cent of the 3.4 million transactions in the housing market over the next three years, “we do not expect the scheme to have a measurable impact on house prices”.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Sport
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own