Vince Cable Raises Help-To-Buy Doubts

Vince Cable has called for the Government's flagship help-to-buy property scheme to be reconsidered in comments likely to anger George Osborne.

The Business Secretary told Sky News there was a risk of a "new housing bubble" because of recent changes in the market.

Mr Osborne's plans were a key plank of his Budget last year but prompted fears of a price surge because they do not address property availability.

Under the first stage, an equity loan scheme allows buyers with only a 5% deposit to buy a new-build property worth up to £600,000.

In January, the scheme will be extended to include a mortgage guarantee for buyers of any home up to the same value with deposits of 5-20%.

It is due to last for three years.

Asked if it should be rethought, Mr Cable said: "We should certainly think about how it should come into effect, indeed whether it should come into effect in the light of changing market conditions.

"We don't want a new housing bubble."

He cited warnings from experts including from the Royal Institute of Chartered Surveyors this week about the "real risk" involved.

George Osborne recently hailed the change in economic fortunes

"I think in many parts of the country it clearly isn't a problem. If you are in Northern Ireland or Wales or indeed the East Midlands you would wonder what all this is about," he said.

"But certainly in London and the South East, in the north east of Scotland, in other areas, there are serious housing inflationary pressures."

Despite the warning, Treasury sources confirmed the Government's commitment to the policy and its launch next year.

Government sources added there were no plans for a rethink but that Mr Cable wants the Bank of England to keep a close eye on the scheme's effects.

His comments came as he was due to warn about "complacency" over Britain's economic recovery, insisting ministers cannot "rest on our laurels".

The Business Secretary will say later that a "few quarters of good economic data" does not mean the country is out of the woods.

The comments, in a speech to business leaders, follow Mr Osborne's declaration on Monday that the economy was finally "turning a corner".

The senior Lib Dem's intervention is likely to revive old tensions with the Chancellor after several clashes in the past.

It will also be seen as a piece of political positioning ahead of the party conference season, with the Lib Dems keen to put some distance between themselves and their Tory coalition partners.

In his address at Warwick University, Mr Cable will admit there are "encouraging" signs on the economy, but declare there is still further to go.

"We can't rest on our laurels. The kind of growth we want won't simply emerge of its own volition. In fact, I see a number of dangers. One is complacency, generated by a few quarters of good economic data," he will say.

"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.

"But 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 - and this is still 13% down on its 2008 peak and, as a share of GDP, is currently the lowest in the G7."

Mr Cable will stress that the improving economic news does not mean that the need for long-term restructuring and rebalancing could be forgotten.

"If we are to turn the British economy around on a sustainable basis there will have to be relatively rapid growth of exports and import substitutes," he will say

In a further sideswipe at Tory critics, he will also emphasise the need for the Government to have an industrial strategy, following a series of "classic market failures".

He will point out that Britain's growth rate for creating advanced skills put the UK just 20th out of the 27 Organisation for Economic Co-operation and Development countries.

But he will also argue that his work on industrial strategy will last beyond the election because it is supported across the business world and political parties.

Shadow business secretary Chuka Umunna said Mr Cable had delivered an "embarrassing slap-down" to Mr Osborne.

However, he insisted the Lib Dems could not distance themselves from the Chancellor's economic strategy.

"It also reminds everyone that you can't trust a word the Lib Dems say. Vince Cable has supported the Chancellor's policies which choked off the recovery in 2010," he said.

"Three wasted years of flatlining that has left families worse off and done long term damage to our economy is his record and he should take responsibility for it."

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