In a speech yesterday, the Chancellor of the Exchequer, Alistair Darling, announced several measures which have been designed to help the economy and provide additional protection for those individuals who are struggling to keep up with the repayments on their mortgage or home owner loan.

The announcements came as part of the pre budget report form the Chancellor, which will see the Government borrowing record amounts in order to try and give a boost to the UK economy and those with secured loans on their homes.

The plans include setting aside £15 million to provide a free debt advice service for those borrowers who may be facing financial difficulty with their secured loans and other debts, along with extra benefits for those losing their jobs by extending the Income Support for Mortgage Interest scheme to cover home owner loans of up to £200,000.

Banks are also set to receive an additional £100 billion through an extension to the Governments recapitalisation scheme as early as next month and according to the Chancellor, the major banks have agreed to allow customers with secured loans up to three months arrears before they commence repossession proceedings, also the regulation of the banking system will be made “drastically” more effective.

Mr Darling also announced that VAT would be cut to 15 per cent from next week, in an attempt to encourage people to start spending on the high street again, although stamp duty will remain on property purchases, which many people have been calling on to be abolished.

Whether or not these changes will have any impact on the economic crisis remains to be seen, but many experts claim that the only way to restore the economy is to enable the banks to ease their lending criteria and start offering loans to customers once more. Hopefully the cash injection into the banking system will help this process, but banks need to be forced to pass these benefits on to their loan customers.