The chancellor George Osborne broke the Treasury’s own rules on assessing public interest when he launched the government’s Help-to-Buy (H2B) scheme, an influential body of MPs has claimed.
More than 13,000 homes have been purchased under the H2B since its launch last year, which part-guarantees mortgage lending for homebuyers with limited capital to put on deposit.
Osborne failed to carry out the normal cost-benefit analysis required before approving a major new initiative however, said the Committee of Public Accounts.
[The Department for Communities and Local Government] did not carry out any assessment of alternative, potentially more effective options before going ahead with the scheme – a violation of Treasury guidelines,’ said chair of the committee Margaret Hodge.
‘This means it has committed to spending up to £10 billion on supporting Help to Buy without establishing whether it represents the most effective way of using taxpayers’ money to achieve its objectives.
‘The department will not carry out a comprehensive evaluation of the scheme until 2015, by which time billions of pounds will already have been spent.’
Since its launch in 2013, an outbreak of house price inflation led by London and the south east has led to fears that the government is stoking a sentiment-led bubble.
Figures released by the Office for National Statistics reported that house prices rose 10% over the year to April 2014, the highest rise in four years, rising 2% over a single month.
Backers of the scheme say there is little or no correlation between regions with a high take-up of H2B and rapid house price gains, however. The ONS showed that prices in London, which has seen little take-up, rose 19% over the year.