Cllr Paul Bettison, Local Government Association (LGA) spokesperson, has responded to reports of measures on the housing market and repossessions.

He said: "Anything that allows town halls to keep hard working families in their homes during tough times will be hugely beneficial. For decades councils have been offering mortgages and helping homeowners to stay in their homes when they hit hard financial times. A number of councils round the country are introducing mortgage packages in response to the economic downturn."

However, Cllr Bettison stressed that councils must be at the centre of deciding where and how the money gets spent.

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He continued: "The Government must also talk to councils about proposals made last week on helping those councils that want to resume mortgage lending. Rules tie town halls to an uncompetitive interest rate, making it practically impossible for them to help out many people. Councils need to be given freedom to set their own rates of interest.

"There would also be concerns that the amount of money made available may not be enough to make a significant difference in the current housing climate. Town halls must be given much greater financial flexibility to be able to raise the cash that would be needed to offer people money.

"Extra powers to help hard pressed home owners are necessary and needed, but this will do little for the four million people on the social housing list at the moment. Even when the economic good times were rolling, councils saw ever increased pressure on their social housing stock. Much more investment is needed in good quality social housing that acts as a safety net for so many when hard economic times hit."

(CD/JM)