PMQs: Cable warns of housing associations collapse

2.44.00pm GMT Wed 17th Dec 2008

Vince Cable urges the Government to act with repossessions policy reaching fewer than one in ten people in housing arrears

Vince Cable, standing in for Nick Clegg at Prime Minister's questions, criticised government policy for failing to impact on an impending housing crisis. The Government's funding formula for housing associations was "crippling" six leading bodies now in danger of collapse, said the Liberal Democrat Deputy Leader. He accused the Leader of the House, Harriet Harman, of being complacent by relying on a repossessions policy failing to reach the majority of those in housing arrears.

Read the full exchange below:

Dr. Vincent Cable (Twickenham) (LD): May I add my condolences to the family of the brave serviceman who died in Afghanistan?

When the Leader of the House last stood in at Prime Minister's questions, I asked her about the vicious spiral that was developing in the economy, with rising unemployment and a collapsing housing sector. Since then, it has been confirmed that housing starts this year are at the lowest level since Ramsay MacDonald led a Labour Administration in 1924.

Dr. Cable: Labour Members ought to remember, because they are in danger of repeating that history. The Leader of the House may not be aware either that, a few days ago, the regulator of the housing associations warned that six of the leading associations are in grave financial difficulty and in danger of collapse. What are the Government proposing to do about it?

Ms Harman: We are very concerned about the housing situation, and that is why we will bring forward capital investment, rather than cut it or postpone it. We will be backing up the Housing Corporation, and for those people who fear that a temporary fall in their incomes will cause them to risk losing their homes, we are making arrangements for them to be able to defer their mortgage interest payments, and those who lose their jobs will not have to wait 39 weeks to get their mortgage interest paid; they will be able to get it paid after 13 weeks. We are very concerned about housing, and we will do everything that we can to protect the housing market.

Dr. Cable: Basically, that was a complacent answer - does the Leader of the House not realise that the investment is not happening, because the housing associations are bust and the Treasury is imposing a crippling funding formula on them? The housing repossession policy is reaching fewer than one in 10 of people in housing arrears. Will she now give the same attention to the financial crisis in the housing associations as the Government are giving to the banks? Will she tell us which of them are in grave difficulty and what the Government are going to do to rescue them and to ensure that the public sector can play a role in kick-starting the moribund housing activity?

Ms Harman: We agree that the public sector has an important role to play in capital investment in the construction industry in the housing market. We took the action that we did on the banks so that they can be in a position to start lending again into the mortgage market and to stabilise the housing market for the future.