Communities secretary Eric Pickles has defended the DCLG's role in the £3.7bn Help to Buy equity loan scheme, following a senior MP's withering attack on the department's integrity.
An exchange of letters released this week by the Commons Communities and Local Government Committee shows the panel of MPs have numerous concerns as to the reliability of evidence supplied by Eland House ministers and officials, in the wake of a recent National Audit Office (NAO) report.
In a letter dated 10 March, Clive Betts, chair of the Committee told Mr Pickles the NAO report on Help to Buy contradicted the communities secretary's assertion last September there was ‘no permanent cost to the taxpayer' from the mortgage guarantee scheme.
Mr Betts said the NAO reported the scheme's economic costs were "likely to be substantial" –with the DCLG's modelling indicating a best case scenario of £16m and a worst case scenario of £1.2bn.
‘This raises the question of how the Committee can have confidence in the evidence you supply to us,' Mr Betts wrote.
He complained the DCLG had 'again... embarked upon a costly and high profile policy without first undertaking credible financial modelling'.
‘If I can be blunt, you seem to have taken a "back of the envelope" approach to assessing the impact of the equity loan scheme,' Mr Betts stated.
In his response dated 24 March, Mr Pickles said the loan programme had caused the fastest surge in housebuilding for 10 years.
He said 74,000 households would benefit from the £3.7bn programme, which was estimated to return £4.8bn over its lifetime.
‘I said there was no permanent cost to the taxpayer because our economic appraisal indicated a positive net economic benefit,' Mr Pickles stated.
‘This is why, building on this success, the Chancellor has announced that we will extend the Help to Buy equity loan scheme to March 2020,' Mr Pickles added.
In recent weeks influential MPs, Andrew Tyrie, chair of the Treasury Select Committee and Margaret Hodge, chair of the Public Accounts Committee, have both warned of Help to Buy's potential to negatively distort the housing market.
