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Will a house building boost save the UK economy?

The Government has announced measures to boost the economy by encouraging house building. Photo:

Crest Nicholson, one of the country's biggest house builders, are pretty pleased with the government's package of help for builders and buyers. At one of their new developments in Hertfordshire, Chris Tinker from the firm told me the proposals should make a difference.

But crucially he said much of the success will depend on buyers getting mortgages more easily. And he called on more lenders to sign up to the government's existing scheme to provide mortgages of 95 percent. Relaxing planning laws too, he said. should help stimulate building, but we 'still have a long way to go' before economic conditions really change.

David Cameron and Nick Clegg talk to new home buyer Jenny Wood. Credit: Press Association

But what about the other end of the market where planning permission will be relaxed for householders to extend their homes? One local firm told us permission was not the problem. Not a single conservatory was being built by them because their customers can't afford it.

Business groups in general approve of the government's plans. But this is not a radical departure from what was already happening. If you pardon the pun, these ideas build on proposals the government had already produced.

And because the government is under writing projects, rather than signing the cheques themselves they can't guarantee that cash will start to flow. The key is, will these proposals make firms and families feel they can afford to spend? When the economy is stubbornly sluggish, especially with more cuts in the forecast for growth from the OECD today, some argue we need much more than more, more of the same.

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