OBR member Steve Nickell told the Treasury Select Committee the key question about the scheme, announced in the Budget, was whether it would drive up house prices. He continued: “By and large, in the short run the answer is yes.”

“In the medium term, will the increased house prices stimulate more house building? The historical evidence suggests not very much.”

When questioned further, he refused to condemn government policy outright, but added: “I’ve told you what I think the impact of the scheme is.”

The former Monetary Policy Committee member also dismissed MPs’ concerns about the levels of household debt, describing it as an inevitable result of a forty-year rise in owner-occupation and consequently the appearance of more and larger mortgages.

He said unemployment, rather than higher interest rates, was linked to an increase in repossessions: “If you look at the history of what people can afford, it’s actually driven by unemployment – people can’t afford their mortgages when they lose their job.

“If they’ve still got a job and their mortgage rates go up because interest rates go up, they pay. They just cut back on something else.”

Banks should be taking more risks with their lending, he added.

The mortgage guarantee component of the government’s Help to Buy Scheme was welcomed by brokers but has come under fire since its announcement in the Budget.

Last week, the government was forced to deny that it would be used to subsidise the purchase of second homes after accusations from Labour.