I want to talk about three things: mortgages and how we support them, how local authorities can help and what can be done on commercial lending.
We should strip out all the fancy schemes. I talked to some of the people I used to work with at Simply Finance, and apparently there are about 100 viable 90% loan-to-value schemes. The situation is not quite as bad as it was in the past, but the credit-scoring system for those mortgages tends to be so severe that only about 10% of applicants ever get a mortgage. My only concern about our new scheme is that we should make absolutely sure that it results in people being able to borrow money, rather than having their application turned down. The Opposition believe that the scheme will provide second homes for millionaires. I agree with the Secretary of State that that can be sorted out easily.
If mortgage schemes work, they increase demand, but if demand goes up without an increase in supply, prices will increase. I am sure that is not the intention. We need to develop and build houses. To ensure appropriate development while protecting our country’s green spaces, we must innovate. At Eastleigh borough council we work with developers to purchase properties that would not otherwise be bought. We then rent them out. It would be a real help if the Government could lift the borrowing cap on councils building new homes to rent, which would supply an economic boost and provide affordable homes. In places such as Eastleigh, 30% of every new development is reserved for affordable housing. We have 5,830 people on the housing list, so it is vital that we do something about it.
To achieve a significant increase in house building, we need to reverse the banks’ failure to fund it properly, especially for small and medium-sized builders. Before 2007, the inability of banks to assess the true risks resulted in massive losses. Now the situation is reversed. It is the same old story; the banks go from one extreme to another.
We need to co-ordinate our housing policies, our commercial and mortgage lending policies and our planning policies. There is no point in keeping them separate. Banks, local government and builders are all part of the same whole. I am confident that this Liberal Democrat-Conservative coalition can act accordingly, but we need to find a way for us all to work together.