Brown unveils housing market support plan

With consumer confidence crumbling in the face of the credit crunch and rocketing energy bills, his Labour Party is some 20 points behind the Conservatives and on that showing would easily lose the next general election.

House prices in Britain are falling and home repossession orders in England and Wales have risen to their highest level since the housing market crash of the early 1990s.

The government said the housing package would help vulnerable families struggling with mortgage payments avoid losing their homes and bring forward funding for new social housing from existing budgets.

The government and property developers also plan to offer five-year interest-free loans for some first-time buyers - both to help people move into affordable homes and support the house building industry.

Communities Secretary Hazel Blears said the package was aimed at "people who just need that little bit of extra help to keep them afloat."

"I think it's the responsibility of government ... to do what we can to help the decent people who want to stay in their homes," she told GMTV television.

A government source said those measures would cost about 1 billion pounds.

LEADERSHIP SPECULATION

Brown's political fightback comes after a summer which kicked off with speculation he could soon be ousted as Labour leader and ended with data showing the British economy failed to expand in the second quarter of 2008.

That was the first quarter the economy has not grown since a recession in the early 1990s, ending Brown's ability to boast of uninterrupted growth since Labour took office in 1997.

Data on Monday showed that the number of new home loans approved in July fell for the 12th consecutive month and the government may consider tinkering with an unpopular tax on home purchases, known as stamp duty.

The government may offer homebuyers the option of paying the tax at a later date or perhaps cut the rate of stamp duty for homes of a certain value, or for first-time buyers.

Blears refused to be drawn on whether the government planned changes to stamp duty, saying it was a question for Chancellor Alistair Darling.

Brown also plans later this week or next to look at ways to help households cope with the rising cost of fuel bills, perhaps by asking utility firms to pay money into a voluntary fund that could be used to make poor households more energy efficient.

The prime minister is hoping for an economic rebound to boost his popularity in time for the next election that is due by the middle of 2010. But he must also resolve the dissent within his own party and questions over whether he is the right person to lead Labour.

While speculation of an imminent leadership challenge has waned, there will still be a lot of focus on the prime minister's speech to his party's annual conference later this month.

"We've got our work cut out. The coming 12 months will be the most difficult 12 months the Labour Party has had in a generation," Darling said an interview published on Saturday.