Lunchtime news March 18 2008

The Budget promise to reduce child poverty has been welcomed by commentators including Polly Toynbee in the Guardian, but a number of critics argue that the government’s poverty goal is unlikely to be met. The Institute for Fiscal Studies said that there would be a shortfall, even after Alistair Darling devoted what money he could spare to poor families with children. In the Budget, Mr Darling boosted child benefit for the first child to £20 a week from April 2009, increased the generosity of child tax credits and said that in future the calculation of housing and council tax benefits would ignore child benefit in their means-tests. This package will cost taxpayers £870 million in 2010-11. The IFS confirmed Mr Darling’s claim that it was likely to reduce by 250,000 the number of children living in families with incomes less than 60 per cent of the national median, the government’s poverty line. But the thinktank added that about £2 billion to £3 billion more would be needed for Mr Darling to have a 50:50 chance of halving child poverty by 2010-11, compared with the 1998-99 level – a target confirmed by James Purnell, work and pensions secretary, in the Commons yesterday.

The National Trust has warned that growing demand for land to build homes is putting pressure on precious natural resources. In a report, the Trust said the rising population is fuelling the need for more space to grow food, build homes and work places and was stretching vital environmental life-support services to the limit. The report says land and its natural resources were undervalued, underfunded and needed better care. It calls for more money to be pumped into protecting the major public benefits from the land including drinking water, flood protection, better health and help in tackling climate change.

The latest chapter in the continuing credit crisis has resulted in first-time home buyers being hit as lenders pull the plug on all but the lowest risk loans. Harsh new conditions set by banks and building societies may leave many borrowers unable to get a mortgage after the sudden demise of Bear Stearns fuelled concerns that the credit crunch will prove deeper and more enduring than was first thought. Lenders, desperate to reduce their exposure to risky debt, are turning away borrowers with small deposits or a credit-record glitch as small as a single missed payment. The number of home-loan deals available has plunged and the number of unexpectedly denied loans has soared. Hundreds of thousands of existing homeowners can expect to be hit with higher interest rates in the coming months. Experts are now warning that the fallout from the US will even affect ‘safe’ prime mortgage borrowers as banks become increasingly jittery and attempt to shield themselves from any housing market downturn.

The housing market may be in free fall, but in the least affordable parts of the country house prices are still booming. In St Ives, Cornwall, a two-up, two-down seaside semi is up for sale at a price tag of £1 million. ‘Waterside houses are big business,’ said one local estate agent. ‘There are houses which have been valued at £3 million to £5 million and they are being snapped up.’ Some of the prospective buyers are said to be Russians with millions to spend on British property.