Gaffe lays bare government’s property slump fears
Minister’s secret notes exposed to reveal ‘we can’t know how bad it will get’
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The Government’s fears over the dire state of Britain’s property market were laid bare by an embarrassing gaffe yesterday.
A secret Cabinet briefing paper showed ministers expect house prices to slump by 5%-10% this year “at best”. It also warned starkly: “We can’t know how bad it will get.”
The bleak assessment, which would knock more than £20,000 off the value of an average British house and leave thousands in negative equity, was unwittingly revealed by Housing Minister Caroline Flint as she arrived at Number 10 yesterday.
Her typed speaking notes were clearly visible to photographers through a plastic folder, and reinforced the sense of gloom amid a welter of poor economic figures.
The blunder is particularly awkward for Gordon Brown as he and other senior ministers have repeatedly dismissed the danger of a property crash in public, insisting falls would be “containable”.
The briefing pointed out that leading house-price indicators were predicting reductions for the first time in recent years.
“Given present trends, they will clearly show sizeable falls in prices later this year, at best down 5%-10% year on year.”
The document highlighted the rise in mortgage defaults, after figures last week showed threats of repossession had hit their highest level since the early 1990s.
“We can’t know how bad it will get,” it went on. “But we need to plan now to put in place effective measures against the risk that it does get worse and to prepare for the upturn.”
In a statement later, Ms Flint accepted she had been “caught out” but said the note only contained information that was already public.
There was grim news later with a survey from the Royal Institution of Chartered Surveyors revealing that 95.1% more surveyors saw house prices fall than rise in April, up from 79.4% in March.
And the Council of Mortgage Lenders said the number of loans for house purchases plunged to 142,000 between January and the end of March, the lowest since the first quarter of 1975.
Producers have approached Mr Brown to act as a judge on the mooted programme, enthusing that he could become “more popular than Alan Sugar”.
The discussions were unwittingly revealed by Communities Secretary Hazel Blears as she left Number 10 yesterday, and was photographed carrying a printout of an e-mail that described details of the “mainstream” show, provisionally titled “Junior PM”.
A spokesman for Ms Blears said: “It is a very worthy programme idea.
“The idea is to get more young people interested in politics. But it hasn’t been commissioned yet. It is very early days.”
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