moneysupermarket.com: Government's new bailout scheme

Commenting on the Government's new bailout scheme, Kevin Mountford, head of banking at moneysupermarket.com said: "However necessary these measures are, the bigger question remains - why are we, the taxpayer, being asked yet again to bail out businesses that have been managed irresponsibly in recent times?

"Despite the cost of bailing out the banking sector again, consumers should be reassured by the move - the consequences of leaving it to rot would be far more devastating. One thing can be guaranteed though - taxpayers will be watching closely and expecting to see solid results as opposed to the hot air that has been the only outcome to date.

"If these measures are to have any success, the Government must put some weight behind its calls on the industry to free up lending and encourage savings. In short, it must help the industry develop the tools to sort itself out in a transparent way.

"The measures proposed by the Government might seem severe at first glance, but they are necessary if Britain is to climb out of recession and stave off a depression."

Commenting on the scheme's impact on housing and on Northern Rock, Louise Cuming, head of mortgages at moneysupermarket.com, said: "This move is unlikely to address the critical problem with new lending. Lenders want to improve the quality of their mortgage book and are doing this by over-stringent underwriting policies.

"If this move does free up new money, it will again be to the chosen few who are seen to pose the lowest risk. Until that is extended to borrowers with little equity, the current predicament will continue. Responsible lending generally precludes lending to those without a 10 per cent deposit or a stable credit background, such as the first-time buyers who are needed to restart the market.

"In the middle of this the Government continues to flip flop over its intentions for Northern Rock. In the same breath today, the Government has praised the beleaguered bank for reducing its loan ahead of schedule by getting rid of mortgage customers - and called on it to increase mortgage lending. One could be forgiven for being a little confused.

"Those looking to take their first step on the property ladder will really need to shop around to try and find a deal suited to their circumstances. The products paraded around to great fanfare on the TV and in branch windows are generally reserved for those with sizeable deposits and exemplary credit profiles."