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Vince Cable urges caution over help-to-buy mortgage scheme Vince Cable urges caution over help-to-buy mortgage scheme
(7 days later)
The business secretary, Vince Cable, has said the government should not introduce the help-to-buy mortgage scheme in January, adding that it needed to be looked at in the light of market conditions.The business secretary, Vince Cable, has said the government should not introduce the help-to-buy mortgage scheme in January, adding that it needed to be looked at in the light of market conditions.
He said: "We certainly do not want a housing bubble."He said: "We certainly do not want a housing bubble."
Cable also expressed "some sympathy" with his Liberal Democrat colleague Sarah Teather for resigning over the coalition's immigration policies.Cable also expressed "some sympathy" with his Liberal Democrat colleague Sarah Teather for resigning over the coalition's immigration policies.
The business secretary said he shared some of her concerns and called for a "much more sensible" approach to proposed immigration controls.The business secretary said he shared some of her concerns and called for a "much more sensible" approach to proposed immigration controls.
While he believes Teather "overreacted", Cable strongly criticised "negative" plans to force immigrants from some countries to put up £3,000 visa bonds.While he believes Teather "overreacted", Cable strongly criticised "negative" plans to force immigrants from some countries to put up £3,000 visa bonds.
He said the scheme had caused "outrage" in India and promised his party would push for changes to the flagship policy promoted by Theresa May, the home secretary.He said the scheme had caused "outrage" in India and promised his party would push for changes to the flagship policy promoted by Theresa May, the home secretary.
Speaking on BBC Radio Four's Today programme, he denied that the Liberal Democrats had lost their "moral purpose" but signalled that Teather's resignation could prompt some soul-searching at the party's conference in Glasgow next week.Speaking on BBC Radio Four's Today programme, he denied that the Liberal Democrats had lost their "moral purpose" but signalled that Teather's resignation could prompt some soul-searching at the party's conference in Glasgow next week.
"I think we're giving a lot of thought to it and you'll hear quite a lot of that next week," he said. "She's a very impressive colleague and we're certainly listening to her. But I think the point I would make to her is there is a very positive story to tell alongside the things she worries about and I think we just have to stay the course and argue the case within government.""I think we're giving a lot of thought to it and you'll hear quite a lot of that next week," he said. "She's a very impressive colleague and we're certainly listening to her. But I think the point I would make to her is there is a very positive story to tell alongside the things she worries about and I think we just have to stay the course and argue the case within government."
Cable's comments on immigration are his second swipe at a fellow cabinet minister in less than 24 hours, highlighting divisions over policies in the runup to conferences over the next few weeks.Cable's comments on immigration are his second swipe at a fellow cabinet minister in less than 24 hours, highlighting divisions over policies in the runup to conferences over the next few weeks.
On Tuesday night, Cable released extracts of a speech that will implicitly criticise George Osborne for showing complacency over Britain's economy. It comes just days after the chancellor heralded the start of a recovery.On Tuesday night, Cable released extracts of a speech that will implicitly criticise George Osborne for showing complacency over Britain's economy. It comes just days after the chancellor heralded the start of a recovery.
Labour said Cable's speech, to be made at a joint government/CBI industrial strategy conference, was "an embarrassing slapdown to George Osborne's deeply complacent and out-of-touch speech".Labour said Cable's speech, to be made at a joint government/CBI industrial strategy conference, was "an embarrassing slapdown to George Osborne's deeply complacent and out-of-touch speech".
On Wednesday morning, Cable insisted Osborne had got his tone "exactly right", but went on to warn that Britain's economy was still in a "long, dark tunnel".On Wednesday morning, Cable insisted Osborne had got his tone "exactly right", but went on to warn that Britain's economy was still in a "long, dark tunnel".
"The point I'm trying to make is that this is a long-term haul," he said. "We've got a marathon, not a sprint here. It took us years of mistakes by the previous government to get us into this crisis, it's taken five years to start to crawl out of it and it's going to take a long time to get the British economy on the right track and export growth, business investment, the jargon 'rebalancing the economy'. These are very important things.""The point I'm trying to make is that this is a long-term haul," he said. "We've got a marathon, not a sprint here. It took us years of mistakes by the previous government to get us into this crisis, it's taken five years to start to crawl out of it and it's going to take a long time to get the British economy on the right track and export growth, business investment, the jargon 'rebalancing the economy'. These are very important things."
In the speech, Cable is due to say: "One [of the dangers] is complacency, generated by a few quarters of good economic data. It isn't difficult to see evidence of confidence returning, and there are positive trends in production. Taken together with success stories like the car industry and export growth in emerging markets, we have the beginnings of a recovery story."In the speech, Cable is due to say: "One [of the dangers] is complacency, generated by a few quarters of good economic data. It isn't difficult to see evidence of confidence returning, and there are positive trends in production. Taken together with success stories like the car industry and export growth in emerging markets, we have the beginnings of a recovery story."
The business secretary, who previously called for "more prudential borrowing by councils for house building" in a New Statesman article, will also raise doubts about Osborne's views on the housing market.The business secretary, who previously called for "more prudential borrowing by councils for house building" in a New Statesman article, will also raise doubts about Osborne's views on the housing market.
On Monday, Osborne defended his help-to-buy scheme, designed to help the property market by underwriting low-deposit mortgages to ensure that borrowers can secure a mortgage with a deposit as low as 5% of the value of the property. He said he had not unleashed "exotic weapons of financial mass destruction".On Monday, Osborne defended his help-to-buy scheme, designed to help the property market by underwriting low-deposit mortgages to ensure that borrowers can secure a mortgage with a deposit as low as 5% of the value of the property. He said he had not unleashed "exotic weapons of financial mass destruction".
Cable will say: "There are risks, not least the housing market getting out of control. Recovery will not be meaningful until we see strong and sustained business investment."Cable will say: "There are risks, not least the housing market getting out of control. Recovery will not be meaningful until we see strong and sustained business investment."
The government has been facing growing calls from economists and some in the housing industry to drop its controversial mortgage scheme to prevent another housing bubble, as lending to first-time buyers rose to a post-2007 high.The government has been facing growing calls from economists and some in the housing industry to drop its controversial mortgage scheme to prevent another housing bubble, as lending to first-time buyers rose to a post-2007 high.
The number of mortgages advanced to would-be homeowners reached 68,200 in the second quarter of this year – the largest quarterly total for five and a half years, according to data published by the Council of Mortgage Lenders on Monday.The number of mortgages advanced to would-be homeowners reached 68,200 in the second quarter of this year – the largest quarterly total for five and a half years, according to data published by the Council of Mortgage Lenders on Monday.
The figures highlight the significant boost the government's Funding for Lending scheme and the first part of its help-to-buy housing package has given the property market. More than 25,000 loans were advanced to first timers in June, a 30% rise compared with a year ago.The figures highlight the significant boost the government's Funding for Lending scheme and the first part of its help-to-buy housing package has given the property market. More than 25,000 loans were advanced to first timers in June, a 30% rise compared with a year ago.
Cable called for the government to suspend plans to introduce the second part of the scheme. The £12bn mortgage scheme will give buyers of all properties the ability to borrow with only a 5% deposit, backed by a government guarantee.Cable called for the government to suspend plans to introduce the second part of the scheme. The £12bn mortgage scheme will give buyers of all properties the ability to borrow with only a 5% deposit, backed by a government guarantee.
The prime minister's spokesman said the help-to-buy scheme was an important part of housing policy and denied that it would lead to a housing bubble.The prime minister's spokesman said the help-to-buy scheme was an important part of housing policy and denied that it would lead to a housing bubble.
The spokesman added that the scheme when announced was time-limited and could only be extended with Bank of England approval. He added that the present problem of mortgage approvals was real, and that with mortgages set at a cap of 75% of income, there were significant obstacles to home ownership. Mortgage approvals were 50% below those of the last decade, he added.The spokesman added that the scheme when announced was time-limited and could only be extended with Bank of England approval. He added that the present problem of mortgage approvals was real, and that with mortgages set at a cap of 75% of income, there were significant obstacles to home ownership. Mortgage approvals were 50% below those of the last decade, he added.
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