Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 24th June 2014 Commons Chamber

[Mr Osborne]

I find it extraordinary that the Labour party is against Help to Buy, which is assisting those who are on low and middle incomes to get into the housing market. The great majority of those homes are outside London and the south-east. Almost none of them has been bought at £500,000 or £600,000, as the hon. Gentleman says, and what we are actually seeing is that the homes that are being built and bought are below the national average. So instead of carping about Help to Buy, Labour should get behind it.

[Mark Garnier (Wyre Forest) (Con)]

A key component of the financial crisis was a debt-fuelled housing bubble. The Governor of the Bank of England confirmed to the Treasury Committee this morning that a failure of regulation and macro-prudential policy was instrumental in that crisis. Is my right hon. Friend confident that the measures that he has introduced, including the new regulatory framework as well as the Financial Policy Committee, will succeed in heading off any future housing bubble-inspired crisis?

[Mr Osborne]

The Bank of England now has very powerful tools to deal with the kind of risks that we saw develop in 2006 and 2007, with such catastrophic consequences for our banking system and for our economy. The new powers that it will receive—subject, of course, to parliamentary approval—on being able to limit loan-to-income ratios and loan-to-value ratios for every mortgage or, indeed, as a percentage of mortgage portfolios, are very powerful tools. It is up to the Bank of England to make independent judgments about when to deploy them, because, as we have learnt with such monetary and macro-prudential policies, it is better that the politicians stay out of it.