Emma Reynolds MP, Labour’s Shadow Housing Minister, commenting on the Public Accounts Committee report on the Help To Buy Equity Loan Scheme, said:

“Any help for first-time buyers struggling to get on the property ladder is to be welcomed. But rising demand for housing must be matched with rising supply if this scheme is to bring buying a home within the reach of low-and-middle-income earners.

“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.

“The report also finds that the government has failed to assess the combined effectiveness of its interventions in the housing market. 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.

“Labour is clear that you can’t deal with the cost-of-living crisis without building more homes. That’s why we are committed to getting 200,000 homes a year built by 2020, along with a Help to Build scheme for small and medium-sized builders alongside a reformed Help to Buy mortgage guarantee scheme.

Ends

Editors Notes

Key Points from the PAC report:

Page 5: 3. Before introducing the Scheme, the Department did not consider alternative ways to deliver its objectives, which goes against HM Treasury guidance. HM Treasury states that it is good practice to assess a range of options to achieve the intended policy objectives when appraising any new policy initiative. The Department acknowledged that its business case for Help to Buy, which underpinned its decision to introduce the Scheme, did not contain any such assessment of alternative options. Yet the Department will now spend nearly £10bn supporting this scheme up to 2020. The Department cannot say whether its chosen Scheme is the best way to achieve its intended objectives of increasing access to mortgage finance, increasing housing supply and contributing to economic growth.

Page 6: 5. The Department should be mindful of the need to demonstrate that the Scheme is value for money to the taxpayer. We welcome the Department’s commitment to a full evaluation of the Help to Buy equity loan scheme in 2015, particularly as the Department has failed in the past to conduct proper evaluations of similar schemes’ impact on the demand for, and supply of, new housing. We expect this evaluation to address fundamental questions about the Scheme’s impact and its value for money, including whether more buyers purchase properties than would have without the Scheme, whether builders build more houses than they would have built otherwise, and what effect the Scheme could be having on house prices. The Department has made some early estimates of these factors.

Page 7: 7. The Department has not evaluated the combined effectiveness of its various interventions to address housing market failures. The Department acknowledged that there are a wide range of complex problems in the housing market, and it explained that Government only intervenes where it thinks there is a market failure. The market has failed consistently for many years to supply enough new homes to meet both need and demand. This Scheme supports only a relatively small proportion of the market, and other fundamental housing market problems are beyond its scope. The Department has a number of other initiatives that address other market failures, for example the New Homes Bonus, through which it makes non-ring-fenced payments to local authorities for every home added to the council tax register. The Department, however, does not yet know what the combined impact of its initiatives will be on increasing the supply of new homes.