Mortgage Guarantee Scheme: Contingent Liability
(3 days, 11 hours ago)
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The Economic Secretary to the Treasury (Emma Reynolds)
Supporting first-time buyers is at the heart of this Government’s housing strategy as we aim to build 1.5 million new homes this Parliament. The Government recognise the difficulties that many aspiring homeowners face in getting on the housing ladder—in particular, the challenge of raising a sufficient deposit for a home. To tackle this problem head on, we committed to introduce a permanent mortgage guarantee scheme in our election manifesto to ensure buyers with smaller deposits can get a mortgage and fulfil their home ownership ambitions.
Today, I can confirm that the Government will be launching a new mortgage guarantee scheme in July 2025, delivering on our manifesto commitment to support homebuyers with smaller deposits across the UK. This Government are committed to home ownership, and we will continue to explore ways to help more prospective first-time buyers own their own homes. The scheme will be permanently available, helping to incentivise and sustain availability of 91% to 95% loan-to-value mortgages through the economic cycle by providing lenders with a Government-backed guarantee—this will insure lenders against a portion of their potential losses on those mortgages. Mortgages offered through the scheme will enable eligible first-time buyers and home movers to buy a home with a deposit as small as 5%.
Guarantees issued under the new, permanent scheme will be valid for up to seven years after the mortgage is originated. Participating lenders will pay HM Treasury a fee for each mortgage entered into the scheme. This will be set and regularly reviewed so that expected claims against the guarantee should be covered by revenue from the fee. To limit the Government’s exposure from the scheme, there will be a cap on the size of the Government’s contingent liability of £3.2 billion. HM Treasury judges the risk of incurring losses through the scheme to be low, which would only materialise if the sum of fees was not sufficient to cover calls on the guarantee.
Authority for any expenditure required under this liability will be sought through the normal procedure. HM Treasury has approved this proposal in principle. A departmental minute has been laid in Parliament today. If, during the period of 14 parliamentary sitting days, a member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.
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Modernising Public Finance Systems
(3 days, 11 hours ago)
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The Chief Secretary to the Treasury (Darren Jones)
The Government have set out their ambition to fundamentally rewire the British state so that it works for working people and delivers the plan for change. To support this agenda, I am taking forward wide-ranging reforms to modernise and reform the architecture of public spending, alongside improving levels of delegation and reducing the burden of compliance reporting HM Treasury currently requests from Departments. This will be a key contribution to our ambition of an agile and productive state.
Under these reforms, HM Treasury is developing a technology solution that enables live sharing of financial, outcome and performance data at both a departmental and programme level. This will modernise the way that the Government undertake spending control—meaning that HM Treasury and Departments will have a shared understanding in real time of how Departments are performing against their budgets and objectives.
The Cabinet Secretary has written to all Secretaries of State and permanent secretaries, setting out his expectation that they should be accountable for ensuring their departmental financial and performance systems are fully integrated with HM Treasury systems at the conclusion of this project.
Following the publication of the spending review, all Departments will be participating in feasibility work for this initiative which will include an audit of their current systems and data approaches, to deliver on this vision and take Government and public spending towards a new technology-enabled operation.
HM Treasury are working with Cabinet Office to ensure this aligns with the shared services strategy for Government and wider functional system reform and will deliver this change in line with our agreed principles for civil service reform. Departments are being encouraged to support HM Treasury and the Cabinet Office to understand what improvements to delegations, conditions and reporting requirements could be made to improve Government delivery.
[HCWS693]