This article is more than 6 years old

This article is more than 6 years old

Pressure on the Bank of England and the chancellor to scale back the Help to Buy programme has risen after three former chancellors, including two Conservatives, warned that the scheme needed revision and might be fuelling a house price boom.

It comes after the Organisation for Economic Cooperation and Development this week called for a rethink, with Labour claiming the chancellor, George Osborne, is cynically stoking a housing boom to gather votes before the election.

Vince Cable, the business secretary, has voiced doubts and suggested the scheme could be operated regionally so that it could be scaled back in the south-east, the centre of the house price boom.

The second phase of the scheme guarantees very high loan-to-value (LTV) mortgages. The Treasury plans to offer £12bn of financial backing over the next three years, supporting £130bn of high LTV lending.

UK house prices have grown by 9.1% in the past year, according to figures from the Office for National Statistics.

Lord Lamont, a Tory chancellor in the early 1990s, told the Financial Times that Osborne was "well aware of the potential problems" with Help to Buy.

But he said he was concerned about the scheme, and it was not in the public interest for house prices to become even more expensive or for mortgage levels to return to their 2007 peak.

"What will happen is that demand can be increased quickly, through measures like Help to Buy, but supply can only be increased slowly," he said. "My concern is that it will become even harder for young people to buy a home in the future."

Alistair Darling, chancellor in Gordon Brown's Labour government, told the FT that successive administrations had presided over "bubble after bubble", which all burst eventually.

"We keep repeating the same mistakes," he said. "Supply of housing is the biggest single thing. Unless supply can be increased substantially, we will exacerbate that situation with schemes like Help to Buy."

Lord Lawson, who ran the Treasury under Margaret Thatcher, called on Osborne to end the scheme in London and halve the maximum value of properties bought under the programme from £600,000 to £300,000. Broadly this has been the position of the business secretary.

Ed Balls, the shadow chancellor, also wants a cut in the threshold to £400,000.