Rescue Scheme 'building a crisis'

Mortgage Rescue Scheme are “building up a crisis”

Government schemes to help homeowners avoid repossession are "building up a crisis" which will take hold in the next two years, Liberal Democrat Treasury spokesman Vince Cable has warned.

Mr Cable told MPs the temporary nature of assistance packages was acting like a dam that would see a "flood of repossessions" once underlying problems worked through the system.

His comments came as it emerged that just six families have so far been saved from losing their homes by the flagship £285 million Mortgage Rescue Scheme (MRS) since it was launched in January.

Junior communities minister Ian Austin said four more families had accepted offers under the scheme in May, in addition to the two that had already been helped, "which shows that the impact of the scheme is accelerating".

Mr Cable had earlier described the MRS, which keeps people in their own homes as tenants, as the "least successful" element in the Government's suite of assistance measures.

Its "extreme complexity", with assessments taking up to five months, and tough eligibility rules meant many families were unable to get help through it - despite Government promises that 6,000 homeowners would benefit.

He called on ministers to make MRS more flexible, but Mr Austin said judging it only by the numbers who accepted offers "undersells" it.

Mr Austin said 200 households had benefited from advice to freeze charges and stop the immediate threat of repossession, with a further 295 in the assessment stage.

Mr Cable acknowledged that many Government measures had helped families avoid losing their homes, pointing out that the Council of Mortgage Lenders had revised downwards its predicted repossession figures.

But in a Commons debate he also highlighted other research predicting 100,000 repossessions a year by 2011, saying: "The Government has brought forward some useful initiatives. They have undoubtedly alleviated the threat of repossession for probably thousands of people, but in many cases the problems are being postponed.