Sir, The credit crunch could have a serious impact in local communities across the country. Evaporating mortgage availability may place hard-fought regeneration in jeopardy unless rapid action is taken. With inter-bank lending at a standstill, we believe that there is a pragmatic need for the local public sector to step in and offer much needed new mortgage capacity.

Preventing a precipitous collapse in the housing market and restoring stability is in everyone's best interests. In 1980, 600,000 mortgages with homeowners were held by local authorities. Since then, the banking industry has almost universally taken on this role. Today we need a more balanced approach, involving both private and public sectors offering mortgage finance.

The public purse should not just be used to mop up the problems caused by banking difficulties. The Government should recognise that councils are well placed to take a judicious share of mortgage business — an opportunity that could yield a surplus for the council tax payer.

We call on the Government to urgently consider three reforms. First, legislation should allow councils to offer targeted deals to the public and the provisions specifying a blanket “standard national interest rate” for council mortgages should be reformed. Secondly, the Government should ask the Public Works Loans Board actively to encourage councils to revive their public banking functions. Thirdly, the Chancellor should set aside public borrowing capacity for council mortgage provision and frame new guidelines in conjunction with local authorities.

Councils are already supporting much needed community facilities, including rescuing local post offices from closure and investing in the retail and transport infrastructure. Allowing local government to carefully intervene and support homeowners is a sensible step which we urge ministers to consider seriously.

Cllr Sir Richard Leese
Leader, Manchester City Council
Cllr Helen Holland
Leader, Bristol City Council
Cllr Gerald Vernon-Jackson
Leader, Portsmouth City Council
Cllr Steve Reed
Leader, London Borough of Lambeth
Jules Pipe
Mayor, London Borough of Hackney
Cllr Jamie Carswell
Lead Member for Housing, London Councils
Chris Leslie
Director, New Local Government Network

Sir, The National Consumer Council believes that home credit companies (doorstep lenders) have been ripping off society’s most vulnerable consumers for years. Peter Crook may consider our attempts to stop this as “patronising nonsense”, but then he would — his company, Provident Financial, is the biggest player in the sector (“Could Peter Crook, chief executive of Provident Financial, redeem doorstep lending?”, Aug 18).

The Competition Commission has calculated that Britain’s two million poorest are paying £75 million a year over the odds every year for small cash loans. So they have recently put measures in place to stop the few key players from exploiting the lack of competition in the market.

These changes should certainly help some of Britain’s poorest people to access more affordable credit, as would the growth of alternatives such as credit unions, or major reforms to the Social Fund Loan scheme.

Home credit has its place in the market, but consumers deserve to be charged a fair price. Companies such as Mr Crook’s must not be allowed to get away with charging exorbitant fees from those least able to afford them.

Jill Johnstone
Director of policy, NCC

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