20 May 2013
Last updated at 02:41
Territories like the Cayman Islands have a reputation for low taxes and light touch regulation
Prime Minister David Cameron has urged British overseas territories to “get their house in order” and sign up to international treaties on tax.
He wrote to 10 territories and crown dependencies, including the Cayman Islands and the Isle of Man, which operate low-tax regimes.
Critics claim such places are used by companies for tax avoidance or evasion.
The plea came ahead of a G8 summit in June, when the UK is expected to push for tighter tax measures.
“With one month to go, this is the crucial moment to get our own houses in order,” Mr Cameron wrote in the letter.
“I respect your right to be lower tax jurisdictions… but lower taxes are only sustainable if what is owed is actually paid.”
The 10 territories that received the letter are Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man.
Some have been described by the UK government as having “complex tax arrangements”.
Low taxes and light touch regulation have seen some of them become major centres for international business.
But the lack of transparency in their banking systems has left them open to accusations that they are being used to avoid paying taxes.
Mr Cameron urged them to sign international protocols designed to allow tax information to be shared more easily between countries, and also to take measures to improve their own transparency.
“Put simply, that means we need to know who really owns and controls each and every company,” he said.
Tax avoidance, where companies operate within the rules to avoid paying taxes, and tax evasion, which is outside the law, have risen high on the political agenda in recent months.
High-profile companies like Google, Amazon and Starbucks have faced criticism in the UK for the low levels of tax they appear to pay compared with the size of their businesses.
On Sunday, Google’s executive chairman Eric Schmidt defended the company’s tax affairs.
He said the search engine giant “has always aspired to do the right thing”, but added that “international tax law could almost certainly benefit from reform”.
Writing in the Observer, he said he wanted “to move the debate forward”.
20 May 2013
Last updated at 05:25
David Cameron has pledged to hold a referendum on Britain’s membership of the EU by the end of 2017
Those calling for the UK to leave the EU are “putting politics before economics”, business leaders have said.
In a letter to the Independent, figures from BT, Shell, Lloyds Banking Group and Deloitte, estimated membership was worth up to £92bn a year to Britain.
But the 19 signatories accepted reforms were needed and urged David Cameron to protect the City from EU ideas which they said put its standing at risk.
The move comes amid splits within the Conservative Party over Europe.
On Sunday, Tory grandee Lord Howe accused the prime minister of “running scared” of Eurosceptics and losing control of his party on Europe.
But Health Secretary Jeremy Hunt said the party was united and Mr Cameron was showing leadership on the issue.
The prime minister is also facing pressure over same-sex marriage and attitudes towards the party’s grassroots.
In the letter, the business leaders accuse Eurosceptic MPs of abandoning the national interest in their calls for the UK to leave the EU.
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We should promote the cause of EU membership as well as defend our position”
“The economic case to stay in the EU is overwhelming,” they wrote.
“To Britain, membership is estimated to be worth between £31bn and £92bn per year in income gains, or between £1,200 to £3,500 for every household.
“What we should now be doing is fighting hard to deliver a more competitive Europe, to combat the criticism of those that champion our departure.
“We should push to strengthen and deepen the single market to include digital, energy, transport and telecoms, which could boost Britain’s GDP by £110bn.”
The letter’s signatories included the current and next presidents of the Confederation of British Industry, the chairmen of BT, Deloitte, Lloyds and Centrica, and Virgin Group boss Sir Richard Branson.
The letter went on: “We should promote the cause of EU membership as well as defend our position.
“The benefits of membership overwhelmingly outweigh the costs, and to suggest otherwise is putting politics before economics.”
Former Conservative Foreign Secretary and Chancellor Lord Howe wrote in the Observer on Sunday that Mr Cameron had “opened a Pandora’s box” by promising to re-negotiate Britain’s membership of the EU.
Lord Howe said the Tory leadership was “running scared” of its backbenchers and had allowed Euroscepticism to “infect the very soul of the party”.
But Mr Hunt insisted on BBC One’s Andrew Marr Show that the party was “absolutely united” on the issue of Europe and Lord Howe’s views did not “represent the reality” of the situation.
Mr Cameron has pledged an in-out referendum on Britain’s membership of the EU by the end of 2017 if he wins the next general election.
19 May 2013
Last updated at 17:39
Mr Alexander said the coalition would survive until the next general election
Claims that Deputy PM Nick Clegg could face a Lib Dem leadership challenge from Vince Cable are “ridiculous”, Lib Dem minister Danny Alexander has said.
The chief secretary to the Treasury told the BBC that such reports were “a distraction from [the Tories'] own political problems”.
He “absolutely” expected the coalition to survive until the 2015 election.
Conservative Michael Gove has suggested Mr Clegg was opposing childcare reforms to shore up his own leadership.
The education secretary had claimed there were efforts to “destabilise” Mr Clegg to make way for the business secretary, Mr Cable.
Mr Alexander was responding to suggestions on BBC One’s Sunday Politics from Andrew Neil that Downing Street privately expected the Lib Dems to do badly in next year’s European elections and anticipated a leadership challenge from Mr Cable.
Asked about the rumours, Mr Alexander said: “Of course not, it’s completely ridiculous. It won’t happen. It’s a distraction from their own political problems.”
He added: “We came together in 2010 as two parties to sort out the major economic mess that was left by the previous Labour government.
“Some people at the time, in 2010, said it would be difficult to keep a coalition party going because one party may not be able to keep going and be disciplined.
“Let me reassure you and your viewers that Liberal Democrats will make sure that this government continues to be strong and stable enough to continue to take the difficult decisions in the many years to come.”
In an interview with Total Politics magazine, Prime Minister David Cameron said the coalition had its “frustrations” and disagreements and sometimes he could not take action in the areas he wanted to.
But he said it was “remarkable is how radical we have been in making really important changes in our country”.
He said there was still “important work to do” and the best way to “get things done” was to continue with the coalition.
“But if that wasn’t the case then we’d have to face the new circumstances in whatever way we should,” he added.
A Downing Street spokesman said later: “The coalition will continue until 2015.”
19 May 2013
Last updated at 12:04
Mr Schmidt said that profit had “become something of a dirty word”
Google’s executive chairman Eric Schmidt has defended the company’s tax affairs after it came in for heavy criticism this week.
Mr Schmidt said Google “has always aspired to do the right thing”, but added that “international tax law could almost certainly benefit from reform”.
Writing in the Observer, he said he wanted “to move the debate forward”.
On Thursday, Google executive Matt Brittin faced tough questioning from MPs on the Public Accounts Committee.
Mr Schmidt wrote: “At a time when families are having to tighten their belts and funding for vital public services is under pressure, corporation tax is rightly a hot topic.”
But he emphasised that the tax treatment of multinational companies with a global presence was very complicated.
International tax law might need reforming, and he looked forward to seeing a forthcoming report by the Organisation for Economic Co-operation and Development on how to make the rules simpler and more transparent.
But he said: “Change won’t be easy because it will require the renegotiation of international tax treaties, not just action by individual nation states.”
However, also on Sunday, Labour leader Ed Miliband said he will write new rules to tackle tax avoidance if he wins the next election, even without international agreement.
Mr Miliband said it was up to politicians to change the laws on taxes, but they also had a responsibility “to talk about the kind of society we want to create and what the responsibilities of a company like Google are”.
Prime Minister David Cameron will try to secure an international deal on new tax structures at the G8 summit next month.
Google, Starbucks and Amazon are among several large companies to face criticism over the amount of corporation tax they pay.
Google’s sales in the UK are worth £3.2bn, but most are routed through Dublin. In 2011 it paid £6m in UK corporation tax.
Mr Schmidt wrote in his Observer article: “While profit has become something of a dirty word, it’s important to remember that many corporations reinvest their profits in research and product development, which in turn tends to lead to job creation, further economic growth and, ultimately, more tax.
“For example, Google has just announced plans to invest more than £1bn in new offices in London’s King’s Cross. It’s been estimated that this investment will generate some £80m a year in new employment taxes and £50m in stamp duty.
“This is in addition to the significant amounts we already pay in UK tax through corporate, local and employment taxes.”
20 May 2013
Last updated at 13:40
Nick Clegg has warned against attempts to “hijack” proposals to legalise same-sex marriage in England and Wales ahead of key votes in the House of Commons.
Tory critics have tabled an amendment saying heterosexual couples should be allowed to have civil partnerships, if gay couples are allowed to get married.
Ministers say the move, which Labour may back, would delay the whole bill.
Mr Clegg said he backed extending civil partnerships in principle but would not allow the bill to be “derailed”.
And Downing Street played down any suggestions the bill would be dropped, saying the government “has a legislative programme and it is getting on with it”.
The Marriage Bill was approved by a 225-vote majority when it was last debated by MPs in February, but nearly half of all Tories voted against it and many party activists remain deeply opposed to it in principle.
The legislation returns to the Commons on Monday amid other divisions within the Conservative Party on Europe and attitudes towards the party’s grassroots.
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Far from being a wrecking measure, some of the strongest support for my amendment to extend civil partnerships comes from the biggest supporters of same-sex marriage in the Labour and Lib Dem parties”
David Cameron has said equal marriage would help build a stronger and fairer society, and the bill also has the backing of the Deputy Prime Minister Nick Clegg and Labour Leader Ed Miliband.
But according to ministers, reconsidering the status of civil partnerships would delay the introduction of same-sex marriage by two years, as it would prompt a fresh consultation period and possibly have a knock-on effect of adding as much as £4bn to pension liabilities.
MPs get a free vote on the Marriage (Same Sex Couples) Bill because it is considered an issue of conscience.
Tim Loughton is among a group of Tory MPs who will try to amend the bill, with a plan to extend civil partnerships to heterosexual couples.
BBC political correspondent Gary O’Donoghue said some in Westminster – including some Tory MPs – were saying the amendment was an attempt to “wreck the bill” because it could delay its passage beyond the 2015 general election.
Mr Loughton said the amendment would make the bill “less unpalatable”, since extending civil partnerships to co-habiting heterosexuals would address a “glaring inequality” in the current proposals as well as encouraging family stability.
“I don’t want to delay this bill, we all want to be shot of this bill one way or another,” he told the BBC.
He criticised forecasts of the cost of such a move as “back-of-a-fag packet” calculations.
“This is all about equality. If the government is serious about equality they should be backing my amendment and not scaremongering about it.”
Ministers say the status of civil partnerships should be reconsidered at a later date and doing so now would throw up a whole new set of “complex” issues, such as pension entitlements for heterosexual civil partners.
“I want to see marriages being undertaken under this bill as early as next summer,” Maria Miller, who is equalities minister as well as culture secretary, told BBC Radio 4′s Today.
“To put in at this stage such a fundamental change, I believe, risks that and risks significant delay. I think those supporting that need to be aware of that.”
Lib Dem leader Nick Clegg said it was his party’s position to extend civil partnerships to everybody, irrespective of their sexuality and he had “no problem” with the principle.
But he said he wanted the legislation to “do what it says on the tin”.
“I don’t want anything to interfere with the central purpose of this legislation,” he said. “The bottom line is that I will do whatever I judge is best to safeguard the bill and to make sure that it does not become hijacked by those whose ulterior motive is actually to discredit or to derail the legislation.”
‘Crisis of conservatism’
Several Cabinet ministers remain opposed to the plans. Last week, Defence Secretary Philip Hammond said too much time had been spent on a policy which had angered many.
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The issue of same-sex marriage is proving to be a headache for David Cameron as it returns to the Commons.
Like Europe – and whether there should be a referendum – it has become a divisive issue for the Conservatives, with large numbers of Tory MPs and activists angered by the idea but the prime minister championing it.
Mr Cameron argues that extending marriage to same-sex couples is a thoroughly Conservative thing to do – and believes it will strengthen the institution.
But the former Tory Education Minister Tim Loughton’s amendment to the bill, which would allow heterosexual couples to enter into civil partnerships, is being seen by many as a wrecking tactic.
It’s a free vote. so this is not about a rebellion.
But if large numbers of his MPs decide to back Mr Loughton’s amendment, it will be another blow to David Cameron and raise further questions over his leadership.
On Sunday, 34 current and former local party chairmen delivered a letter to Downing Street opposing the gay marriage policy as “flawed, un-Conservative, divisive and costing us dearly in votes and membership”.
They complained of a “crisis of conservatism” and said Europe, same-sex marriage and the “contempt” for party membership from the leadership were currently “destroying the party”.
However, a separate letter, signed by more than 100 Tory activists, praised Mr Cameron for his stance, saying it was an issue of particular importance to younger voters, and MPs risked appearing out of touch if they pandered to a vocal minority.
Labour’s equalities team, led by shadow home secretary Yvette Cooper, had been thought likely to support Mr Loughton’s amendment, but has now put forward its own amendment which would start an immediate consultation on whether to extend civil partnerships to opposite sex couples.
The party, whose support has guaranteed the bill’s progress so far, accused the Tories of exaggerating the impact of changes to civil partnerships and their potential cost.
Ms Cooper said there was a danger this “whole debate is getting sucked into a vortex of Tory in-fighting”.
Stonewall, which campaigns for equality for gay, lesbian and bisexual people, said it would be a “terrible pity” if the legislation got “bogged down” and urged MPs from all parties not to “play politics” with it.
The bill will be debated over two days, with its third reading – the final hurdle in the Commons – on Tuesday. If approved, it will go to the House of Lords on Wednesday, where it is expected to face further opposition.
Under the bill, the Church of England and the Church in Wales would be banned from offering same-sex marriages because of their strongly stated opposition, unless they changed canon law.
Other religious organisations would be able to “opt in” to holding ceremonies. There are currently no plans for similar legislation in Northern Ireland, but there are already plans for a bill to allow same-sex marriage in Scotland.
19 May 2013
Last updated at 03:38
Pupils’ well-being and education should not be sacrificed to meet new targets, a head teachers’ leader is to say.
The NAHT’s Russell Hobby will draw parallels with the “human tragedy” of Mid Staffordshire NHS Trust.
The effects of management by data will be more subtle in schools, but “equally devastating”, the general secretary will say at its annual conference.
The government said schools had more freedom than ever before to use their “expertise and creativity”.
A public inquiry into the Mid Staffordshire scandal found that hundreds of patients had died unnecessarily at the trust as it focused on cost-cutting and targets.
In a speech to his association’s conference in Birmingham, Mr Hobby will say a relentless focus on the “bottom line” damages results in education.
That refers to the so-called floor targets schools have to meet in order to provide an acceptable standard of education.
Some say it leads teachers to focus efforts on the lowest achieving pupils to get them over those targets.
He will add: “To warn of the dangers of management by data, we need only turn to the more human tragedy of the Mid Staffordshire NHS Trust, where patient care was sacrificed to meet the targets.
“The same forces are rising within education. The effects will be more subtle but equally devastating.”
‘Deliver the basics’
Instead the whole contribution that schools make should be valued, he will say.
He is also expected to encourage heads to ditch the new national curriculum, set to be introduced in schools from 2014 and which the government has been consulting on, and teach what they feel is best.
Ministers have faced criticisms that they have tried to introduce too much, too soon in primary school maths, and that they overly focused on spelling and grammar in English.
Head teachers gave the education secretary a frosty reception on Saturday
Mr Hobby will say he hopes that Education Secretary Michael Gove will have followed his advice and created more freedom when he publishes the final curriculum.
But he will add: “Take it, deliver the basics and then go on to teach what you know to be right and to build the experiences that will produce well-rounded young people when they leave your school.
“That will include times tables and phonics, grammar and coding. It will also include the rich local history of your community, volunteering, sport and adventure, field trips and theatre visits, time to get lost in a good book.”
A Department for Education spokesman said: “The new curriculum is based on careful analysis of the world’s most successful school systems and will mean every child can get a broad and balanced education.
“Schools and teachers have more freedom than ever before to use their expertise and creativity to shape the curriculum to meet the needs of their pupils. Indeed, academies and free schools are free to choose whether they want to follow this curriculum or develop their own, based on some of the best ideas from anywhere in the world.”
On Saturday, the conference passed a motion of no confidence in Mr Gove’s education policies and gave the education secretary a chilly reception.
Mr Gove claimed the heads he had faced did not give any constructive alternatives to his policies.
Mr Hobby will say: “We’ve given plenty of constructive criticism. I don’t think anyone can miss our dismay at some of what is said and done, but we have plenty more ideas for a better way.”
19 May 2013
Last updated at 13:43
The Conservative Party is united and David Cameron is showing leadership on Britain’s relationship with Europe, Health Secretary Jeremy Hunt has said.
He told the BBC Tories were at one on the key issue – the need for change to ensure the UK remained competitive.
Tory grandee Lord Howe has accused the PM of “running scared” of Eurosceptics and losing control of the party.
Activists say the party is in “crisis” amid rows over gay marriage, Europe and a “disconnect” with the grass roots.
The prime minister has pledged an in-out referendum on Britain’s relationship with the European Union by 2017 if he wins the next election outright.
But Mr Cameron says he wants first to try to renegotiate aspects of Britain’s relationship with the EU.
Mr Hunt’s intervention comes amid anger among party activists at reported comments by a member of Mr Cameron’s inner circle that Tory grassroots Eurosceptics were “mad, swivel-eyed loons”.
The health secretary told BBC One’s Andrew Marr Show that he did not believe anyone close to Mr Cameron made those comments and they did not reflect the views of the prime minister.
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The Conservative leadership is in effect running scared of its own backbenchers”
He added: “If you look at the substance of the issue, the Conservative Party is absolutely united.
“We look at the European Union and we worry about Britain’s ability to compete in the global race… the Conservative Party says if we are going to be successful in that global race we need to renegotiate our relationship with Europe and give the British people a say.”
Mr Cameron was “showing leadership” and not sweeping serious issues under the carpet: “He and I would like to have a relationship with Europe where we can stay in the European Union and be confident we can be successful in the global race,” Mr Hunt said.
The Eurosceptic UK Independence Party’s recent local election successes in England have increased pressure on Mr Cameron to do more now to commit to a referendum.
Lord Howe, who resigned from Margaret Thatcher’s government over her policy towards Europe, told the Observer newspaper Mr Cameron had “opened a Pandora’s box politically and seems to be losing control of his party in the process”, over his plan to renegotiate the UK’s relationship with the European Union.
The party leadership was “in effect running scared of its own backbenchers”, he said.
Labour peer and former EU commissioner Lord Mandelson told the BBC pulling out of the EU would be a “great setback economically” for the UK, because it would restrict access to, and influence over, the single market.
He said: “The ‘UK isolation party’ and their fellow travellers in the Conservative Party are operating a Sopranos-style protection racket inside the Conservative Party.
“They are saying: ‘Do what we want, give us what we are demanding or we are going to burn your home down’. In my view the prime minister has got to say enough is enough.”
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Your refusal to listen to reason and grassroots opinion is causing many previously loyal Conservatives to leave the party”
However, Conservative MP John Redwood told the BBC Eurosceptics were happy with Mr Cameron’s policy of “negotiate and decide” and they simply wanted him to “get on with that negotiation”.
Meanwhile, No 10 has said it is “categorically untrue” that anyone in Downing Street made the “swivel-eyed loons” comment about Conservative activists.
And party co-chairman Lord Feldman said he was taking legal advice over “untrue” web rumours he had made “derogatory comments”, saying in a statement: “I would like to make it quite clear that I did not, nor have ever described our associations in this way or in any similar manner.”
Separately, legislation to allow same-sex marriages – which has split Conservative MPs and angered many activists – returns to the Commons for debate on Monday.
A petition was handed in to Downing Street on Sunday, signed by 34 local Conservative chairmen and former chairmen.
They complained of a “crisis of conservatism” and three issues which were currently “destroying the party” – Europe, same-sex marriage and the “contempt” for party membership from the leadership – as demonstrated by the “loons” comment.
“Your refusal to listen to reason and grassroots opinion is causing many previously loyal Conservatives to leave the party,” they wrote.
“Some are lost forever and many will not contemplate re-joining unless the Bill is abandoned or the party leadership changed.”
19 May 2013
Last updated at 09:29
Amazon and Google are among the companies MPs have attacked on tax
Labour leader Ed Miliband says he will write new rules to tackle corporate tax avoidance if he wins the next election, even without international agreement.
Prime Minister David Cameron will be trying to secure a deal on the issue at the G8 summit next month.
Mr Miliband told the Observer the government had “got to act” on the “massive” issue.
He said if no deal was done, he would order multinational firms to be more transparent about the money they make.
His statement follows the condemnation of Google’s tax practices by MPs.
The Public Accounts Committee heard this week that Google paid £6m in corporation tax in 2011 despite sales of more than £3bn annually, as most sales are routed through Dublin.
Google is one of several multinational companies that have been strongly criticised in recent months for organising their tax affairs in ways that minimise the amounts they pay in the UK.
Mr Cameron has said he will raise the issue at the G8 to try and prevent multinational companies exploiting tax loopholes.
‘Culture of irresponsibility’
Mr Miliband said he would pursue a new global system where multinationals must publish their revenues, profits and other key corporate information in each country in which they operate.
And if international agreement cannot be found on the issue, he would force multinationals to publish such information in the UK
He would also make it a legal requirement for multinationals operating in the UK to disclose details of any tax avoidance schemes they were using globally.
He would seek reforms to “transfer pricing” rules to stop companies from moving money to other parts of their firm based in tax havens.
Mr Miliband will speak at a Google event in Hertfordshire on Wednesday,
The Labour leader said it was up to politicians to change the laws on taxes, but they also had a responsibility “to talk about the kind of society we want to create and what the responsibilities of a company like Google are”.
“I don’t think they are living up to their responsibilities at the moment, and I will be very clear about that on Wednesday,” he said.
“It is part of a culture of irresponsibility. If everyone approaches their tax affairs as some of these companies have approached their tax affairs we wouldn’t have a health service, we wouldn’t have an education system.”
‘Reinvest their profits’
A Conservative Party spokesman said Labour had had 13 years to tackle international tax avoidance, but did nothing.
He said the prime minister was putting the issue “firmly at the centre of his agenda for Britain’s presidency of the G8 this year”.
Google’s executive chairman Eric Schmidt, who is also due to visit Downing Street on Monday, wrote in the Observer that his company “has always aspired to do the right thing”.
He called the amount that the company paid in corporate, local and employment taxes in the UK “significant”.
But he said “international tax law could almost certainly benefit from reform”.
He added: “It’s important to remember that many corporations reinvest their profits in research and product development, which in turn tends to lead to job creation, further economic growth and, ultimately, more tax.”
19 May 2013
Last updated at 12:18
The outgoing governor of the Bank of England Sir Mervyn King has warned that a government scheme to help the housing market should not become permanent.
Under the plan, due to run until 2017, the state will guarantee up to 15% of a mortgage on homes worth up to £600,000.
Sir Mervyn said the UK must avoid emulating the US, where state-backed mortgage schemes had to be bailed.
But Treasury Minister Danny Alexander told the BBC that the scheme was never intended to be permanent.
“We’ve been very explicit that this scheme is limited to three years,” he said. But if it was extended, “we want the Bank of England’s new financial policy committee to take a view on this scheme before it’s extended.”
BBC business correspondent Joe Lynam said Sir Mervyn was concerned that, should Chancellor George Osborne’s Help to Buy scheme become permanent, it could leave taxpayers exposed to billions of pounds in private mortgage debt for years to come.
The governor, who has just over a month of his decade-long tenure remaining, told Sky News’ Murnaghan programme the eurozone remained the “single biggest risk” to the UK’s economic recovery.
“It’s very difficult to see that growing quickly for a long while, and that downward drag on exports from the UK to Europe… and the fact that our banks still have some exposure to the euro area, is undoubtedly the biggest factor dragging down on our economy.”
‘Too close for comfort’
Help to Buy is due to begin in January 2014, but Sir Mervyn said: “I’m sure that there is no place in the long run for a scheme of this kind.
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It’s pretty rare for a sitting Bank of England Governor to publicly question government policy – however politicised that policy may appear.
But the fact that he’s stepping down from the post he’s held for a decade appears to have loosened Sir Mervyn’s tongue a little.
More relevant though is the fact that many economists share Sir Mervyn’s concerns about the Help to Buy scheme.
Some feel that the government has no business intervening in a private market – whatever the circumstances.
Others fear that such intervention could stoke up the kind of reckless borrowing that got the UK into such economic trouble only five years ago. Borrowing and spending is not conducive to the long-term goal of rebalancing the British economy.
Finally and ironically, there may soon be less of a need to artificially kick-start home buying by the state.
House prices are rising and the criteria for bank lending is also less strict than it was even a year ago – signalling a returning confidence.
An economy inching its way upwards – however glacially – may be one that doesn’t need direct government intervention in the market.
“This scheme is a little too close for comfort to a general scheme to guarantee mortgages. We had a very healthy mortgage market with competing lenders attracting borrowers before the [financial] crisis, and we need to get back to that healthy mortgage market.
“We do not want what the United States have, which is a government-guaranteed mortgage market – and they are desperately trying to find a way out of that position.”
He added: “So, we mustn’t let this scheme turn into a permanent scheme… when is the right time to terminate it will depend on economic conditions at the time.”
The outgoing governor’s comments about Help to Buy echo those of the Treasury Select Committee, which warned in April that the government would come under “immense” pressure to extend the scheme in three years’ time.
But any such decision would be made by the bank’s incoming governor, Mark Carney – the Canadian who was hand-picked by the chancellor to succeed Sir Mervyn.
The Treasury stresses that it explicitly included this provision in the scheme.
A spokesman said: “The mortgage guarantee scheme will provide much-needed help for people who can’t afford a big deposit to get a mortgage.”
He added that the scheme represented “a good use of the government’s fiscal credibility”.
But Yvonne Goodwin, an independent financial adviser, told the BBC it could make buyers take risks.
“The worry is, are the government actually doing this for political reasons to make people feel confident again?” she said.
“People are sort of bonded to the idea that house prices always go up without coming down again, and they only need a bit more of a nudge to push them into buying something a little bit more expensive than maybe they can afford and this’ll give them the ability to do that.”
Help to Buy consists of two elements – an “equity loan” scheme and the mortgage guarantee.
Under the equity loan, new or existing homeowners will need to raise a deposit of 5% of the value of the property they want to buy, but can borrow up to a further 20% from the government on an interest-free basis. The biggest loan available will be £120,000.
In total the government will be guaranteeing £12bn worth of lending.
Labour MP John Mann, a member of the Treasury Select Committee, told the BBC that “government interfering in the housing market” in this way had been “a disaster in the United States”.
He also said the scheme was designed to help young people onto the property ladder, but would struggle to succeed because not enough small starter homes were being built.
Are you planning to use the Help to Buy scheme? Send us your comments using the form below.
19 May 2013
Last updated at 12:50
The bill is due to be debated for two days from Monday
David Cameron’s support for same-sex marriage has made winning the general election “virtually impossible”, Conservative activists have said.
In a letter to the PM, more than 30 past and present local party chairmen warned his backing for a change of law had led to voters switching to UKIP.
But Health Secretary Jeremy Hunt said it was an “issue of conscience that is not really about party”.
MPs will debate the Marriage Bill for England and Wales on Monday.
The letter to Mr Cameron was organised by the Conservative Grassroots umbrella group.
It said: “The marriage-based family is at the heart of Conservatism.
“This dilution and unravelling of marriage has de-motivated many ordinary, loyal Conservative Party members and has undermined their years of hard work for something they believed in.
“It makes winning the next election virtually impossible… For the sake of our children they [the government] should also strengthen conventional marriage.”
It added that many of those members who had abandoned the Conservatives for UKIP would not return unless the bill was abandoned “or the party leadership changed”.
Bob Woollard, chairman of Conservative Grassroots, told the BBC the policy had “upset countless people and caused many, many people – hundreds, maybe thousands, to leave the party over this issue”.
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What harm is being done by this bill? None. ”
He said if there was no change it would be a “slippery slope downwards” with “more party members leaving the party, getting utterly disenchanted and frustrated that nobody is listening to them”.
However, Mr Hunt told BBC One’s Andrew Marr programme the prime minister was right to raise the issue even though it was “difficult” for many people.
“I personally support it,” he said. “I support it because I believe in the institution of marriage and I think we should be encouraging people to make a lifelong commitment to each other. I think society is stronger if you do that.
“In my own case I got married in a church and not a register office because I happened to want to make my marriage vows in front of God.
“I think if gay people want to do that, and if the church is willing to conduct that ceremony, we shouldn’t stand in their way.”
And the Conservative former minister Nick Herbert told Sky News’ Murnaghan programme no church would be forced to conduct a same-sex marriage.
“So actually what harm is being done by this bill? None. For those that are concerned about their own belief, they are entitled to their own belief, but actually for the majority this is something that people are saying does reflect change in society.”
Shadow Home Secretary Yvette Cooper told Sky: “I think it’s a real problem if this gets lost in the vortex of the Tory infighting that we’ve had over the last couple of weeks, when actually it’s a really positive bill that we should all want to celebrate.”
Supporters of same-sex marriage argue that separate civil partnerships perpetuate the notion that same-sex relationships are not as valid as heterosexual ones and that legal rights are still not exactly the same as those conferred by marriage.
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Muslim parents will be robbed of their right to raise their children according to their beliefs”
Letter from 500 Muslim leaders to David Cameron, Nick Clegg and Ed Miliband
Campaigners also say same-sex marriage is increasingly being recognised by other countries, most recently France.
But in a separate letter to Mr Cameron, Labour leader Ed Miliband, Lib Dem Deputy Prime Minister Nick Clegg and more than 500 Muslim community leaders and imams attacked the plans.
They wrote: “We believe that marriage between a man and a woman is the cornerstone of family life, the only institution within which to raise children.
“We are concerned that this radical change to the institution of marriage will impact what is taught in schools. Muslim teachers will be forced into the contradictory position of holding private beliefs, whilst teaching a new legal definition of marriage.
“Muslim parents will be robbed of their right to raise their children according to their beliefs, as gay relationships are taught as something normal to their primary-aged children.”
Under the bill, the Church of England and the Church in Wales will be banned from offering same-sex marriages because of their strongly stated opposition, unless they change canon law. Other religious organisations will be able to “opt in” to holding ceremonies.
There are currently no plans for similar legislation in Northern Ireland, but there are already plans for a bill to allow same-sex marriage in Scotland.