Politics matters

Jamie Carswell (Lab)

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Hackney's deputy mayor Jamie Carswell on the government's recently announced home-buy packages.

One billion pounds was allocated to enable housing associations to use existing programmes to help those under threat of repossession, and to help first-time buyers onto the housing ladder.

I believe that some of the criticisms of the package as 'a drop in the ocean' have been churlish — this is about mitigating the worst excesses of the credit crunch, not replacing the private mortgage market. But the package has missed a trick in not grasping the energy and innovation that local authorities can bring to the table; and the role they can play in promoting and protecting home ownership, preventing homelessness and in shaping local housing markets as part of our leadership of place.

We should not underestimate the problem. Recently the Council of Mortgage Lenders estimated repossessions will hit 45,000 in 2008, up 40% from 2007. One hundred thousand people will be affected. There's an iceberg coming this way, and local government, as usual, will be in the front line.

It will be our communities needing housing advice; our local children facing the disruption of moving school mid-term; and our general funds picking up the bill for homelessness. Think of the 100,000 as a metaphorical iceberg (population wise) the size of Cheltenham or Eastbourne or St Helens.

There are a number of clear problems. There is still a substantial sub-prime market in London, with existing regulation lacking bite against lenders who are most likely to take court action. With 1.4 million borrowers coming off low fixed-rate interest rates in six months, there is potential for even more repossessions.

The housing market remains inaccessible particularly to first-time buyers despite recent reductions in house prices. New house building could yet reduce further, with land banking still a problem in London and developers shedding staff while waiting for an upturn in the housing market.

And there is a growing risk to the viability of many major regeneration schemes built on assumed levels of house sales.

Last month, London Councils held a cross-party mortgage summit to look at how to minimise repossessions and homelessness and open up access to the housing market. A menu with four key strands emerged.

Firstly, there is a critical need for early advice and support for those facing mortgage distress. Providing it will ultimately prove cost effective.

We could shut off the supply tap by ensuring better market regulation, to curb the excessive practices of those lenders who lend to households in way they are unable to service.

There is a role for local authorities to engage in mortgage rescue and buy stakes in residents' homes as a cost-effective way of avoiding a move into temporary accommodation.

Lastly, we can support the market. Those hit by a lack of affordable re-mortgages are facing the requirement for larger deposits. If local government can support these, a private mortgage can be unlocked and the market keeps moving.

Some councils may not feel they should act in these circumstances. But this menu should provide at least one option for a council of any political persuasion that feels it should not step back when hard working families are caught in a global credit crisis not of their own making.

Jamie Carswell (Lab) Deputy mayor, Hackney LBC, and spokesman, London Councils