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CBI chief calls for urgent action to stimulate house building

30/09/2011
CBI chief calls for urgent action to stimulate house building

The influential head of the CBI has called on Government to bring forward fresh measures to kick-start house building.

In a speech to business leaders, John Cridland, director-general argued that boosting activity in the housing market and construction sector could be a major "game-changer" for growth.

"I want to see the Chancellor use his autumn statement on 29 November to jump-start the housing market, he told business leaders last night (Thursday).

"A determined attack on the major blockers of finance and planning, could transform the outlook of a generation of young people and provide a huge fillip to consumer and business confidence," he said.

The CBI has cautiously supported the Government policy to reduce borrowing through spending cuts. But his speech last night reflected growing unease about the flagging economy and need to adopt a plan to stimulate growth.

Speaking in Gateshead at the CBI's north-east annual dinner, he said: "Bolstering infrastructure spending investment on transport, power stations and housing is one of the biggest and most effective levers the government has to pull.

"It will help unlock some of the £60bn of potential investment currently on company balance sheets and could create new jobs into the bargain."

"Now is the time to stop the stagnation and get the housing market flowing again."
The CBI wants to see a revitalised Mortgage Indemnity Guarantee, to reduce the risk of higher loan to value mortgages.

"One way this could be done would be through a deal between mortgage providers and house builders.

"There could also be a role for government to step in with some very focused support to bridge the gap, explained Cridland.

"Another way of helping first-time buyers to access finance to get on the property ladder could be to allow them to access locked savings in their personal pension pots through a loan-back scheme.

"Members of company schemes could borrow money from their own pension pot at a low cost, paying the loan back through their salary at any time during their working life."

He also suggested that greater shared ownership, successful during the Thatcher years, was worth further exploration.

"As we have seen, without a steady stream of eager first-time buyers the housing market stagnates and our whole economy suffers.

According to the Council of Mortgage Lenders just 36,200 first time buyers bought homes in the first three months of this year compared to 43,600 in the first 3 months of 2010.

This compares with 167,400 first time buyers at the peak of the market in 2001.