Cable warns of 'very deep' housing crisis

Liberal Democrat deputy leader Vince Cable has warned of a "very deep crisis" in the housing market.

Speaking at prime minister's questions, where he stood in for leader Nick Clegg, Cable said the crisis was "probably the worst in our lifetime".

Leading housebuilders were sacking 40 per cent of their workers and "dragging down the banks" because of an excess of unsold private homes, he said.

And he appealed to Commons leader Harriet Harman, standing in for the prime minister while he attends the G8 summit in Japan, to expand the government's "pathetically small" scheme allowing councils and housing associations to buy unsold properties.

Harman acknowledged that the situation gave "grave cause for concern", and said the government was building more social homes and helping first-time buyers by reducing stamp duty.

It was also giving £200m to housing corporations to buy the excess homes, she told MPs.

Cable replied that the scheme was "a drop in the ocean".

"Instead of the prime minister lecturing us on what we should eat for dinner and competing with the leader of the Conservative Party to be the country's weight-watcher in chief, could he acknowledge that we've got a very deep crisis in the British housing market?" he asked.

Harman said the situation was not the same as the recession in the 1990s, and warned opposition politicians against "talking the economy down". "Confidence is important," she said.