Page last updated at 14:53 GMT, Sunday, 19 October 2008 15:53 UK

Ministers plan repossession help

Yvette Cooper tells Sky News she wants stronger rules across the board

Home repossessions should be a "last resort" and banks should do more to help homeowners, says the government.

Chief Secretary to the Treasury Yvette Cooper told Sky News she wanted "stronger rules across the board" to make sure homeowners were supported.

Meanwhile the chancellor has signalled he will use public spending to boost job-creating areas of the economy.

The Tories say that could take years to begin and the government should focus on stopping jobs being lost now.

The Council of Mortgage Lenders predicts that 45,000 properties will be repossessed this year - up from 26,200 last year.

'Repayment holiday'

Ms Cooper said she wanted a "more responsible" approach to repossessions and the banks should adopt a more lenient approach.

She told Sky News there were other things a bank could do.

"For example working with lenders to re-profile the payments, or maybe give people a repayment holiday so they are just paying interest, or other kinds of mortgage rescue schemes where maybe a share of the home is bought back by the bank or a housing association too.

Those costs of doing too little will be greater than if we take the action to maintain spending and investment in the real economy
Peter Mandelson

"So there are a lot of things we can do to keep people in their homes when they are under pressure.

"Some banks are doing that... but also I'm worried about some of the anecdotal reports we have had where this is not happening.

"That's why what we want to do is look at stronger rules across the board, that all the banks will follow, to make sure we are doing everything we can to support people through a difficult time."

BBC political correspondent Norman Smith said there was a question mark over what the government could do to stop banks repossessing homes, beyond urging them to adopt a more lenient approach.

Of the 19,000 homes repossessed in the first half of this year, about 4,000 were by Northern Rock - the only bank to be fully nationalised.

Asked about the bank earlier, Ms Cooper said it had to operate "on a commercial basis, at arm's length from the government" but added: "What we also want to see is a responsible approach by all banks across the board."

Building projects

Meanwhile, Chancellor Alistair Darling has said he will use public spending to boost the economy.

In an interview with the Sunday Telegraph, he said: "You will see us switching our spending priorities to areas that make a difference - housing and energy are classic cases where people are feeling squeezed."

BBC political correspondent Norman Smith said there were suggestions that large-scale building projects, such as schools, hospitals and housing projects, would be brought forward to get boost jobs and try to avert a possible recession.

Government should be doing what it can to help so jobs aren't lost
George Osborne

The chancellor also signalled that proposals for two new aircraft carriers and a replacement for the Trident nuclear weapons system would go ahead - while the 16bn Crossrail project and 2012 Olympic Games would help create jobs.

The government says it can afford extra borrowing because it has reduced debt over the past 10 years.

Business Secretary Lord Mandelson said it was not a "spend, spend, spend" approach, saying Britain was in a better position to borrow than other European countries.

He told BBC One's Andrew Marr Show: "Those costs of doing too little will be greater than if we take the action to maintain spending and investment in the real economy - in public services and in infrastructure too."

But Shadow Chancellor George Osborne said: "While the chancellor speculates about the timing of big capital projects that could take years to get off the ground, that's not going to help small businesses struggling this winter. Government should be doing what it can to help so jobs aren't lost. "

Poll lead 'narrows'

He pointed to Conservative plans to allow "small companies in trouble to delay their VAT payments to the Revenue" for six months: "That will give them a breathing space and help keep people in work."

In an article in the Observer, Conservative leader David Cameron said his party's plans to help homeowners and entrepreneurs would be laid out in the coming months.

An opinion poll in the Independent on Sunday suggests Gordon Brown's handling of the economic crisis has narrowed the Conservative lead.

The ComRes telephone survey of 1,007 adults puts the Conservatives nine points ahead of Labour - the party's narrowest lead since March.

And an ICM poll of 1,041 adults for the News of the World suggested 43% trusted Gordon Brown and Alistair Darling to handle the economy against 35% for David Cameron and George Osborne.

But asked whether the crisis had made them more or less likely to vote Labour, only 13% said more likely, while 22% said less likely and 59% said it would make no difference.

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