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A £240m scheme designed to prevent borrowers from being evicted from their homes helped fewer than half those intended for assistance, according to a report.
The National Audit Office (NAO) found the government's Mortgage Rescue Scheme aided 2,600 households and cost £35m more than expected.
Launched by the Labour government in January 2009, the scheme had been budgeted to support 6,000 households at a cost of £205m, but actually cost more than £240m.
Under the scheme, families were able to either receive an equity loan to reduce their mortgage, or to sell their property and remain as tenants.
The report found the average cost of each completed rescue was almost triple than anticipated - £93,000, compared with £34,000.
It criticised the department for communities and local government for making the "wrong call" about the level of demand and not adequately testing the assumptions behind the business case.
If the initial errors had been identified, the department could have acted earlier to improve value for money.
The report said the department did not give enough information on why so few households had taken out the equity loan path, but it did now have a plan in place to reduce the cost of the programme.
The NAO said the department accepted the risk that the actions may reduce the local availability of the scheme if fewer housing associations find offering it financially viable.
Margaret Hodge, public accounts committee chair said: "The scheme has helped fewer than half the number of households expected and each rescue has cost more than three times as much as expected, with overall costs sitting at £240m.
"Spending £35m more than planned yet not reaching all those in need does not represent value for money for taxpayers' investment in this scheme."
Amyas Morse, head of the NAO said: "The department made assumptions about the level of demand for the Mortgage Rescue Scheme and made the wrong call. There was more need than expected for more expensive support and less for the relatively low cost rescue option.
"Spending more than expected and delivering less means that the department has not provided value for money."
Article Comments
I find this extraordinary! If tax-payers money has already SAVED these banks to the tune of billions of pounds (and the weakness of Politicians SAVED the Fraudulant Bankers), surely those households who were caught-up in this banking Fraud mess have 'legally' redeemed their mortgage as a result of this. It is appalling that homeowners have to lose their homes because of the FRAUD by BANKERS!! It's a DISGRACE!! And, surely, ILLEGAL for them to be evicted under the circumstances of this Banking Fraud? Where are the LAWYERS??
IAS
9th Jun 2011 at 5:49 pm
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