Mortgages: if the experts are struggling, why let councils do it?

August 21, 2008 11:14 AM

A letter in today's Times from several council leaders and senior figures in local government makes a request that could have disastrous consequences for taxpayers: they are asking the Government to let councils offer mortgages.


The question in response to that letter is this: if the thousands of experts in banks across the world are struggling to succeed in the current rocky mortgage and housing market, what reason is there to think that councils would do a better job?


A look at the performance record of the councils signed up to the letter suggests that they would do better - and our money would be far safer - trying to get their existing job right before wading into a market they don't understand:


Manchester City Council: £11 million budget overspend in 2006/07
Bristol City Council: £7.9 million overspend on five school projects in 2007/08
Portsmouth City Council: £4.8m overspend in 2006/07 - and forecasting £12.6m in 2008/09!
London Borough of Lambeth: Overspend of £14m over two years
London Borough of Hackney: Leisure centre goes £30m over budget


And these people think they should be put in charge of providing mortgages that will be underwritten by taxpayers?


It is an even more worrying prospect when you consider that those people they want to give mortgages to are those judged too risky by the banks - so councils would be handing our cash over to the riskiest tranche of borrowers.


It never ceases to amaze me that councils can look at their own books and bewail their dire financial straits year upon year yet the next minute they think it is a good idea to take on more varied, complex and costly responsibilities. They would do us all a favour if they stuck to the job they are struggling at already and tried to get that right.


If you like what you’ve read please join and become part of our grassroots campaign for lower taxes - for FREE - here.

A letter in today's Times from several council leaders and senior figures in local government makes a request that could have disastrous consequences for taxpayers: they are asking the Government to let councils offer mortgages.


The question in response to that letter is this: if the thousands of experts in banks across the world are struggling to succeed in the current rocky mortgage and housing market, what reason is there to think that councils would do a better job?


A look at the performance record of the councils signed up to the letter suggests that they would do better - and our money would be far safer - trying to get their existing job right before wading into a market they don't understand:


Manchester City Council: £11 million budget overspend in 2006/07
Bristol City Council: £7.9 million overspend on five school projects in 2007/08
Portsmouth City Council: £4.8m overspend in 2006/07 - and forecasting £12.6m in 2008/09!
London Borough of Lambeth: Overspend of £14m over two years
London Borough of Hackney: Leisure centre goes £30m over budget


And these people think they should be put in charge of providing mortgages that will be underwritten by taxpayers?


It is an even more worrying prospect when you consider that those people they want to give mortgages to are those judged too risky by the banks - so councils would be handing our cash over to the riskiest tranche of borrowers.


It never ceases to amaze me that councils can look at their own books and bewail their dire financial straits year upon year yet the next minute they think it is a good idea to take on more varied, complex and costly responsibilities. They would do us all a favour if they stuck to the job they are struggling at already and tried to get that right.


If you like what you’ve read please join and become part of our grassroots campaign for lower taxes - for FREE - here.

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