Setting up a new safety net for homeowners who lose their jobs would be 'phenomenally expensive' and impractical, Vince Cable, Liberal Democrat Treasury spokesman, said yesterday as he predicted a worsening in the housing market.

The measure has been examined by Treasury officials as one way to limit the fallout from falling house prices and rising repossessions.

But Cable said restoring the policy – which was removed by the Conservatives in the early 1990s – would cost too much.

'The problem is that the government is trying to carry out policies against a background where its finances are already in great difficulties,' he said.

Cable, a former economist, is one of the few politicians to have correctly predicted the downturn in the UK housing market.

Financial Times