Cable and Brooke quiz Darling and Eagle

8.21.20pm GMT Fri 7th Mar 2008

[Mar 06] Vincent Cable: What is an appropriate mortgage lending policy for a state-owned bank, . .

. . bearing in mind that house prices are falling at 10 % a year on the Nationwide index and 13 % in the forward market, so that even the 90 % mortgage would produce negative equity in a year, let alone the 95 % mortgage, which the Government's Post Office is promoting?

Alistair Darling (Chancellor of the Exchequer, HM Treasury): It is for the board to devise a strategy to enable the bank to get out of its current difficulties. The hon. Gentleman will simply have to wait until then. It is true that house prices are slowing down, but on the back of many years when house prices were growing at 10 per cent., or even more in some parts of the country. Although the housing market in this country will slow down, I believe that it is fundamentally strong, but all lenders will want to price their products at what they regard an appropriate level now and at any time in the future.

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Annette Brooke (Mid Dorset & North Poole, Liberal Democrat): What recent estimate he has made of levels of personal debt.

Angela Eagle (Parliamentary Secretary, HM Treasury): According to the latest Bank of England statistics, total personal debt was £1.4 trillion in January 2008. That is against a background of economic stability and rising prosperity, with rising employment and robust income growth.

Annette Brooke: I thank the Minister for her answer, but given that about one fifth of all income is necessary just to service debt, which in turn will affect the demand for final goods and services, how confident is she about her forecast for economic growth of 2 to 2.5 per cent., when the consensus is that economic growth will slow down to 1.75 per cent.?

Angela Eagle: The hon. Lady will have to wait until next week for the updated forecast in the Budget. When looking at net debt, we must look at the level of assets, too, which have also risen, to £7.5 trillion. Household net wealth has risen by % in real terms under the economic policies pursued by the Government since 1997. I think that that is a success.