It says the Government’s response today is “trying to bribe” people into buying houses in a falling market. They have also accused the Government of creating plans which will lead to more people in negative equity.
Liberal Democrat Leader Nick Clegg says: “The Liberal Democrats have consistently called for more help for those threatened with repossession, cutting energy bills and stopping irresponsible behaviour by banks.
“It is a pity that Gordon Brown only wakes up to the problem when his own job is under threat – he has produced a plan to save his job, not help people struggling with the credit crunch.”
Included in the Lib Dem plan is a cut on basic income tax by a fifth, paid for by equalising pensions relief for all workers and taxing capital gains as income.
The party also says it will ensure any borrower facing repossession has free independent financial advice at an early stage of falling into arrears. They also propose forcing lenders to sell repossessed properties to social landlords.
Other proposals include liquidity assurances for mortgage lenders. But it stresses that banks should have to provide assurances that additional liquidity will be used to maintain credit and not used to increase reserves or pay dividends.
The Lib Dems would also increase the funding lines for mutuals. It says building societies, which are limited in their funding, should be rewarded for their historically conservative lending practices.
It will also introduce full peer-funded depositor protection so account holders don’t lose their money, and there are no further situations like that of Northern Rock.