This is a continuation of work by the Office of Deputy Prime Minister to address spiralling property values which are making it difficult for first-time buyers to get a foot on the property ladder. However, a shortage of homes in key regions means that Labour’s stable economy has not helped FTBs. In previous decades, property prices have fluctuated but this has not happened in recent years. The net result has been inflation of around 13.85 per cent a year since 1999 compared with 8.85 per cent between 1995-98. However, the Institute for Public Policy Research makes the point that, in real terms, house prices are only negligibly rising above income inflation, if at all. We welcome economic stability. Low interest rates have been a big driver of economic prosperity and this stability offers the industry and the Government the opportunity to understand the long-term needs of FTBs and develop suitable solutions. Lenders have a significant part to play by working with the Government to help FTBs. If the Government increases housing supply, then lenders will need to continue to supply products to help this market. Various schemes have been introduced over the past few years such as enhanced multipliers for friends buying together, parents’ income being considered as part of a mortgage application without them necessarily being on the title to the property and, of course, 100 per cent schemes. If supply does not increase to keep up with demand, then this will continue to apply inflationary pressures and FTBs will struggle. The Government has started to tackle the problems faced by FTBs and shortage of housing stock. The Barker review of housing supply, completed in March 2004, delivers a comprehensive assessment of the condition of housing supply. One major policy innovation has been the increased role given to local authorities in the five-year strategy for housing recently released by the ODPM. This will provide greater autonomy for planning and flexibility to respond to housing demand. One of Labour’s main successes in housing has been the rollout of key worker housing through the starter-home init- iative of subsidised equity loans. Much of the Government’s third term will be judged on whether it can spread these ben- efits to the wider community. The ODPM is consulting on the specifics of its three shared-equity schemes which should allow non-key-workers access to affordable housing. Construction companies have already responded to John Prescott’s 60,000 house challenge. We welcome the talks that the ODPM has been having with the CML to introduce private lender funds into the shared-equity schemes and appreciate their understanding of the necessity both for consumers and lenders not to be overly exposed to downside risk. This is not the Government’s first attempt at shared equity, as it has initiated the homebuy scheme where take-up was not on the scale needed to make significant inroads into the first-time buyer issue. The onus is on industry as well as the Government to innovate and find solutions for the long term. John Prescott and the new minister for housing and planning, Yvette Cooper, should focus their efforts and resources on working with lenders and other stakeholders to devise a solution which works. Before this year’s Budget, the Chancellor faced pressure from industry and opposition parties to raise stamp duty thresholds. He responded by doubling the nil-rate band to 120,000 but this is 37,000 below what it would be if the previous 60,000 limit had been raised in line with house price inflation since being set in 1993. It also means a continuation of the threshold system that has a tendency to distort house prices at the margins. We would encourage the Government and other parties to rethink stamp duty and to devise a tax which is truly progressive. We realise that the Treasury will not forfeit revenue any time soon but we face a situation where many of our custo- mers and first-time buyers, especially in the South-east, are subject to stamp duty. A flat percentage does not seem a lot but increasing purchase prices mean that this increases the burden ever more. Tony Blair has committed himself to the goal of an extra one million homeowners by the end of his third term. There can be little doubt that this is a significant challenge, even with innovations such as greater local autonomy with planning authorities and shared-equity schemes. The disincentives posed by regressive levies such as stamp duty will certainly not help but there is significant scope for the industry to work with the Government to implement a solution which will deliver a breadth of homeownership in the places it is needed.