Prescott housing plan branded 'a failure'

John Prescott was accused of failing thousands of public- sector workers yesterday after figures revealed that a high- profile scheme to help them buy homes had led to only one in four of them succeeding.

So far, 2,678 nurses, police, teachers and other key workers have bought homes under the £250m Starter Home Initiative, two years after Mr Prescott set a target of helping 10,000 to secure a roof over their heads.

Yesterday the Office of the Deputy Prime Minister defended the scheme, which ends in April next year, insisting that more house purchases were being processed. But the Liberal Democrats accused ministers of inflating house prices while doing nothing to encourage affordable housing for public servants.

The locally managed scheme is intended to help public-sector workers in London and the South-east by sharing ownership, and offering interest-free loans to help people to buy their first home. Its launch was hailed by Mr Prescott in 2001 as a "direct response to the problem which key workers can face in buying their own homes in high- demand, high-price areas."

But Edward Davey, who shadows Mr Prescott for the Liberal Democrats, said £12.3m was spent running the programme, and accused Mr Prescott of tinkering in the housing market.

"Mr Prescott's flagship scheme has so far only helped one in four of the target key workers buy homes, and he is fast running out of time to help the remainder. Giving a small number of key workers loans for homes will do nothing to provide more generally affordable housing. In fact it will contribute to the inflated housing market, leaving the unlucky workers who are not part of the scheme paying more for their homes. Many more key workers could have been helped by using the cash to kick-start building projects for reasonably priced housing."

A spokeswoman for the Office of the Deputy Prime Minister said many house purchases were being processed, but acknowledged that the scheme's success varied from place to place. She said: "It has been successful in some areas, but has not got off the ground so quickly in other areas."

It is funded by the Government but is managed and distributed through local housing associations. She said the scheme would end next year when it would be absorbed into the national affordable housing programme, run by the Housing Corporation.