Lib Dem conference: Pensions could boost home ownership, says Nick Clegg

Proposal will give parents and grandparents opportunity to help their children and grandchildren buy a property of their own

Young people struggling to buy their first home will be able to unlock their parents' retirement funds to help secure a mortgage, under controversial plans unveiled by Nick Clegg today.

The Deputy Prime Minister announced proposals for getting more people on the housing ladder as he sought to reassure anxious Liberal Democrat activists that the coalition was working for them.

In a thinly-veiled swipe at Chancellor George Osborne, he also insisted the junior coalition partner would block "wild" Tory calls for £10 billion more to be slashed from the welfare budget.

The developments came on the windswept second day of the Lib Dems' autumn conference in Brighton.

Mr Clegg said: "We have thousands of young people who are desperate to get their feet on the first rung of the property ladder but deposits have doubled and the number of young people asking help from family members has doubled.

"So I can announce today that the Government is going to do something that hasn't happened before: we are going to work out ways in which parents and grandparents who want to help their children and grandchildren buy a property of their own, we are going to allow those parents and grandparents to act as a guarantee, if you like, so their youngsters... can take out a deposit and buy a home."

Aides stressed that details of the scheme had yet to be finalised, but it will see the lump sum element of pensions used as collateral for raising home loans.

Hundreds of thousands of people could be eligible for the arrangements, which are expected to be in operation by 2015. They will lose their lump sum if the child defaults on mortgage repayments, but the rest of the retirement fund would be unaffected.

However, experts warned that the proposals risked leaving people short when they came to give up work.

Otto Thoresen, director general of the Association of British Insurers, said: "Pensions are designed to mature into a decent retirement income, not for other purposes.

"Any scheme which uses pensions as a guarantee must ensure that it does not inadvertently make the saver worse off when they retire."

National Association of Pension Funds chief executive Joanne Segars added: "At first glance this idea leaves us feeling slightly uneasy. A pension can only be spent once and this policy could end up leaving retirees out of pocket. The UK already has a serious problem with people saving too little for their old age."

In another measure designed to please Lib Dem activists, Treasury Chief Secretary Danny Alexander revealed that a crackdown on tax dodgers was being extended to people with houses and assets worth over a million pounds. Scores more staff are being recruited to HM Revenue & Customs' "affluent unit" to make sure the wealthy pay their dues.

"It is targeted very much at those people whose affairs are risky," Mr Alexander told the BBC's Sunday Politics. "If your net worth is more than £1 million you will be within the population that the affluent unit is able to look at. But of course HMRC have a lot of information, they can identify particular groups, particular individuals where there are particular tax risks, for example, those with properties overseas."

In a question and answer session with activists at the gathering, Mr Clegg drew battle lines with the Tories on fresh spending cuts needed to meet deficit reduction targets.

The Lib Dem leader dismissed the prospect of more curbs being introduced over the next couple of years, and signalled his determination for the wealthy to shoulder most of the extra burden in 2015-16.

"When we look for additional savings in the years ahead the Lib Dems will start at the top and work down. We will not, as some other people seem to be suggesting, start at the bottom and work up," he said.

In an apparent reference to Mr Osborne's suggestion earlier this year of hacking another £10 billion off the welfare bill, he went on: "I can't promise you, because it is wholly unrealistic, that there won't be any changes to the welfare budget - since it now constitutes a third of public spending.

"What I can assure you is that we will not allow some of these wild suggestions that have been made from the right of British politics, that all the savings can be made from welfare. 'Let's just scoop out a great £10 billion size hole for welfare'. No.

"Nor will I accept that some of the wilder suggestions that we should just wave a wand and say we'll put a freeze on all benefits for two years across the whole piece.

"Yes, we have frozen some benefits and tax credits already, but the idea that you just freeze it across the piece, that directly hits the most vulnerable in society.

"That is why what I am arguing for on your behalf is yes, a grown up recognition that whoever is in power in 2015 - Conservatives, Labour, Lib Dem, or a combination of those three - the reality unfortunately is more belt-tightening in the years ahead."

The Deputy Prime Minister conceded that he had not yet managed to persuade David Cameron that a "mansion tax" should be introduced on high value homes. However, it is understood that work is under way to come up with other levies to target the asset-rich.

Mr Clegg, who faced tetchy questions from party members over tuition fees and civil liberties issues, dismissed speculation over his position. And he also played down the significance text exchanges between senior Lib Dems and Labour figures, amid suggestions the ground is being prepared for a post-2015 coalition between the parties.

"Over the last few weeks I have had lengthy conversations with Ed Miliband, David Miliband, Tony Blair, Peter Mandelson, grown-up politicians," he said.

"Talking about other things, talking about Europe, political reform. Talking about things which politicians always will continue to talk about."

Shadow chief secretary to the Treasury Rachel Reeves said: "Nobody will be fooled by Nick Clegg's empty words on tax.

"This is the man who backed a £3 billion tax cut for millionaires in the Budget while asking millions of pensioners and families to pay more.

"There's nothing fair about a family with children paying an average £511 extra from changes the Government has brought in this year, while millionaires will get a £40,000 tax cut next year.

"Nick Clegg is the Deputy Prime Minister of this Government and he must take responsibility for its actions. After so many broken promises, people will judge the Liberal Democrats on what they do, not what they say."


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