The House of Commons Public Accounts Committee (PAC) warned that the scheme – under which Government equity loans finance up to 20 per cent of the purchase price of homes worth up to £600,000 – has created a “medium and long-term risk” to the taxpayer in the shape of a £10bn portfolio of loans which will impose a “heavy administrative burden” for decades to come.
In a new report, the spending watchdog said the scheme was introduced smoothly and quickly last year and helped 13,000 home-buyers within nine months.
But it noted that Eric Pickles’s Department for Communities and Local Government violated Treasury guidelines by failing to carry out any assessment of alternative options before going ahead with the scheme.
Committee chair Margaret Hodge said: “This means it has committed to spending up to £10bn on supporting Help to Buy without establishing whether it represents the most effective way of using taxpayers’ money to achieve its objectives.
“The department will not carry out a comprehensive evaluation of the scheme until 2015, by which time billions of pounds will already have been spent.
“That evaluation needs to ask three things: whether more people purchased properties than would have done without the scheme; whether builders built more houses than they would have built otherwise; and what effect the scheme could be having on house prices.”
The PAC report cited Government estimates that 25 per cent to 50 per cent of purchases through Help to Buy had led to the construction of a home that would otherwise not have been built. But it said that the scheme’s impact had varied in different regions, proving more popular in the North and Midlands than in the South East.