Council Million Pound Mortgage Scheme Called In

07:35 Thursday 23rd June 2011
Peterborough Breakfast Show
BBC Radio Cambridgeshire

: Peterborough City Council’s decision to join the Local Authority Mortgage Scheme, investing a million pounds, has been called in for discussion by two of the city’s councillors. The scheme means they could help with up to 20% of the deposit, and help people get a 75% mortgage on top of that. All seemed very peachy. Labour councillor Mohammed Jamil though, not happy. Morning.
MOHAMMED JAMIL: Good morning.
PAUL STAINTON: What’s wrong?
MOHAMMED JAMIL: The problem is that it’s not been thought out fully by our local council. My problem with it is that there are pilots running in five other cities, and we don’t know what the results of those pilots are, as yet. What I would have liked to have seen, because when you run a pilot you then have an opportunity to improve the scheme, then you know what the pitfalls are, then you know what you’re up against. We’ve gone in head first, without considering what may or may not happen, and we’re using a million pounds of our taxpayers’ money to go into a scheme that we don’t know what will happen at the end. We don’t have a problem with the scheme itself, but we’d just like to know what we’re letting ourselves in for. And I don’t think we’ve done that. Because Cabinet at our Council decided that we’re going to do it. It’s not been scrutinised. And we feel that we need to know what we’re letting ourselves in for. Hence the reason why we’ve called it in.
PAUL STAINTON: We’ve talked about it quite a bit on this show. The five councils involved say they’re oversubscribed. It’s going really really well. There’s no real risk to us. We’re just guaranteeing some of these mortgages, and we heard from various people saying that the defaults don’t outweigh the profit that we could make out of this. And it seems a fairly simple scheme, Mohammed.
MOHAMMED JAMIL: It seems fairly simple, and as I say we just need to know. We’ve just gone through a process as a local authority where we’ve laid off so many people because we’re trying to cut some of the money that we do spend. And all of a sudden, here’s a million pounds. I just feel sorry for those people who lost their jobs, to be told that here we are, we’ve cut all this, and yet the local authority’s there with a million pounds. How would they feel? Secondly, the other criticism that I have of this scheme is it only helps a certain amount of people. If you’re poorer, you’re not going to get any help out of this. If you’re disabled, you’re not going to get any help out of this. And if you think about it, a million pounds, how many doctors does that buy? How many community centres, or how many schools, how many teachers? I just think I would like to have seen a debate on this, so people could put forward their views. And then if after that we all felt happy then we would have gone ahead with it. The other reason is, from what I have heard, the people who have been consulting in the Council are the same people who advised them to invest the money in the Icelandic banks.
MOHAMMED JAMIL: So I just want to make sure the checks and balances are in place, that we don’t lose a million pounds at a time when everyone is feeling the pinch.
PAUL STAINTON: However, there are some people out there who this money would really help, would help them get on the mortgage ladder, would help get the housing market going perhaps in Peterborough. And Councillor Cereste did say, if it’s a success, he’ll look to put ten million in.
MOHAMMED JAMIL: Yes, and we have no issue with that. We just want to make sure that it’s right for our Council. There are other people who criticise this scheme, and say that schemes like this are keeping in some places, may keep, prices artificially high, whereas if you let the market decide for itself, prices may actually drop, which may mean that more people get on to the ladder. So I just want to make sure that we’ve had a debate, and we know, as an authority, what we’re letting ourselves in for. Otherwise we may be in a situation where we’ve spent a million pounds, and like this authority, when we’ve closed schools, they’re telling us, well we know what we’re doing. The demographers have told us this. And then three, four years later, oh my God, we’ve run out of school places. I just want to make sureĀ  that we’re getting the best deal for the taxpayers of Peterborough City Council.
PAUL STAINTON: So what happens now, Mohammed?
MOHAMMED JAMIL: It’s going to be called in next week to the relevant scrutiny committee meeting. And from there it will then be debated, myself, and Councillor Murphy who’s also called it in, will have an opportunity to put our arguments to the committee, and then hopefully it will be debated there. Because otherwise there is no debate on this. It just goes through, and it could be an expensive mistake that we can not afford.
PAUL STAINTON: Mohammed, thank you for that. Councillor Mohammed Jamil, one of two councillors who’ve complained, and called in the decision to put a million pounds in this scheme.. We did ask for a member of Peterborough City Council to come on the show today. Instead we’ve been sent a statement, which reads, “The Councillors have called in the decision taken by Cabinet to give approval for the Council to join the national Local Authority Mortgage Scheme. The Sustainable Growth Scrutiny Committee will consider if the reasons given for calling in the decision are valid at its meeting on 29th June 2011.”