Lunchtime news Tuesday 11 December 2023

Gordon Brown’s house-building plan could lead to house price collapse, a leading economist has warned. Professor Bernhofen at the University of Nottingham said that a big increase in the housing stock could have serious consequences for homeowners and the economy: ‘The government should be careful that it is not getting confused between need and demand’. With property values already in decline, the promise of a further three million homes by 2020 could result in an oversupply that would lead to the sort of slump affecting the US.

Meanwhile, Save the Children has said that up to 2.3 million people have had t0 take out loans with interest rates of almost 200 per cent from ‘doorstop lenders’. A further 165,000 people have been forced to borrow from illegal lenders or loan sharks – with repayments almost three times what was initially loaned. The effect that excessive credit repayments has on low-income or families in poverty means that nearly one in three families with credit problems have difficulty in buying adequate shoes or clothing, and nearly one in four have difficulties providing food.

And despite the Bank of England lowering interest rates last week, experts are preparing for millions to be hit with more woes as banks increase their lending rates. Financial analysts have described the past few weeks as the worst on record in the credit market , and this anxiety will be passed on to consumers in the form of steep interest rises. It is expected that a record £11.7 billion will be spent using credit cards in the run up to Christmas, with enormous repurcussions for the £65 billion in credit debt already amassed.

However, research has shown that 41 per cent of the British public believe there is ‘very little’ child poverty in the country, contradicting official figures showing that the number of children in poverty is actually more than three million. The findings also revealed a widely held belief that the poor only have themselves to blame. Yesterday children’s secretary Ed Balls, recommitted the government to meeting its target of halving child poverty by 2010 compared to the 1990 figures.