MPs Warn Of 'Taxpayer Risks' From Help To Buy
The Government has dismissed a study by MPs which found the first part of its Help to Buy scheme poses a long-term risk to the taxpayer.
The Public Accounts Committee (PAC) said the policy - under which Government equity loans finance as much as 20% of the purchase price of homes worth up to £600,000 - risks creating a £10bn portfolio that will impose a "heavy administrative burden" for decades.
While the spending watchdog said the scheme was introduced smoothly and had helped 13,000 home buyers within nine months of its creation, it accused the Department for Communities and Local Government (DCLG) of violating Treasury guidelines by failing to carry out any assessment of alternative options.
Committee chair, Labour's Margaret Hodge said: "This means it has committed to spending up to £10bn on supporting Help to Buy without establishing whether it represents the most effective way of using taxpayers' money to achieve its objectives.
"The department will not carry out a comprehensive evaluation of the scheme until 2015, by which time billions of pounds will already have been spent.
"That evaluation needs to ask three things: whether more people purchased properties than would have done without the scheme; whether builders built more houses than they would have built otherwise; and what effect the scheme could be having on house prices."
The PAC urged DCLG to assess the scheme's effectiveness in regional and local markets - finding that while it had proved popular in northern England and parts of the Midlands it had little impact in the South East and London where demand for property was at its highest.
Responding to the findings, housing minister Kris Hopkins insisted it was supporting the economy.
He said: "The Government completely rejects this report which sacrifices thorough analysis of Help to Buy in favour of a grandstanding headline.
"The Help to Buy equity loan scheme is building more homes and supporting the economy - in fact we estimate the wider economic benefits could be as much as £1.8bn.
"It is also offering excellent value for money for taxpayers' and to suggest otherwise and try and use the scheme to score cheap political points is absurd.
"Since the scheme's launch, house building is up a third and now at its highest level since 2007. And over 27,000 people across the country have used Help to Buy to get on the property ladder with a fraction of the deposit they would normally require, with cities including Leeds, Durham and Manchester seeing some of the biggest numbers of sales."
Labour housing spokeswoman Emma Reynolds said: "The report from the Public Accounts Committee raises concerns that the Government has not fully assessed value for money or how many new homes will be built as a result of this scheme.
"For such a significant investment, it is shocking that so little assessment has been made of the impact.
"With the number of homes being built at the lowest level in peacetime since the 1920s, it's clear that this Government isn't up to the job of tackling the housing shortage."