In a speech to an audience of business leaders in the South East of England John Cridland, director-general of the CBI, argued the government should be willing to take on more risk under the initiative.
He says: “The government swiftly recognised the value of a mortgage indemnity guarantee, through its NewBuy scheme to give people a better chance to own their own home and support the construction and real estate sectors.
“But to ensure it has maximum impact, it should be prepared to take a greater risk and make the initiative more appealing to first-time buyers. The construction industry would also benefit.”
In a wide ranging speech he also called for more quantitative easing going beyond the Bank of England buying government assets.
Cridland went on to criticise UK banking regulation for going further than other countries under the Independent Commission on Banking proposals.
He says: “The UK’s gold-plating of internationally agreed reforms is not helpful, and is a major constraint on banks’ ability to lend. Easing liquidity requirements – as hinted at by the governor of the Bank of England last week – should be done immediately.”
He welcomed last week’s funding for lending scheme offering banks cheap Bank of England loans to pass on to small firms and home buyers.
Cridland believes the UK needs such an “action-this-day” approach and good intentions must not be lost to poor implementation.