Local councils network eager to provide home loans

Members of the New Local Government Network (NLGN) are calling on the Government to provide local authorities with new powers that would allow them to make a competitive entry into the home loan market.

NLGN is an independent think tank that seeks to transform public services.

It comprises a number of senior local government figures who are now arguing that local councils should be encouraged to support the housing market and first-time buyers, by offering mortgages.

In a letter published in The Times this week, the body suggests that such a move could reduce the amount of public money needed to mop up the problems caused by banks’ difficulties, while at the same time giving local councils an opportunity to generate income that could offset rises in Council Tax.

The members of the network want the Government to ask the Public Works Loans Board to encourage councils to rediscover their public banking role.

They would also like the Treasury to come up with around £2 billion as a loan facility and have offered reassurance that councils would lend prudently.

According to the NLGN, local authorities were providing 600,000 mortgages in 1980, after which the banking industry began to dominate the home loans sector.

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