Westminster blog

It has been described by one former cabinet minister as the ultimate Keynesian move  – the nationalisation of the housebuilding industry.

Frank Dobson, former health secretary, said this would be a way of spending money to create “useful wealth”. ”I think he [Mr Brown] has got an appetite for this. He is attempting to minimise the impact on everyone else from banking lunacy and he’ll be looking for anything practical.”

But the industry is alarmed by the suggestion that the government could take stakes in ailing housebuilders, whose share prices have collapsed dramatically in the last year.

“We can’t see any benefits there would be for the government to do this at the moment,” said the Home Builders Federation. It is a non-option.”

Yvette Cooper, chief secretary to the Treasury, indicated today (Sunday) that officials were not yet examining the idea.

Asked by Sky News about the possible nationalisation of builders, she replied: “We have got to make sure we keep supporting housebuilders who are being affected by what’s happening right across the economy right now. That’s why we are bringing forward some of the money the government is putting in for affordable housing.”

Jon Cruddas, the influential Labour backbencher – who recently declined the job of housing minister- has urged Gordon Brown to buy stakes in housebuilders.

This would help hit the target of 3m new homes by 2020, provide more social housing and help protect jobs, he told the FT.

Neal Lawson, chairman of Compass, the left-wing pressure group, said part-nationalisation of housebuilders was one of the radical ideas which MPs should examine.

Taxpayers are already part-owners of two housebuilders, Crest Nicholson and McCarthy & Stone, because of the bail-out of HBOS – which holds large stakes in the two companies on its balance sheet.

Share prices in some builders such as Barratt Development and Taylor Wimpey have fallen by more than 95 per cent as a result of the slowdown in the residential market. Concerns are growing about the prospects for their survival if the housing downturn worsens.