THREE former chancellors have raised concerns that the Government's Help to Buy mortgage guarantee scheme could create problems in the housing market, amid warnings of an inflating bubble in London and parts of the South-East.

Lord Lamont, who served as Conservative chancellor from 1990-93, told the Financial Times that he was concerned about the scheme, which provides support for home purchases of up to 600,000 where buyers are struggling to raise deposits of more than five per cent.

"What will happen is that demand can be increased quickly, through measures like Help to Buy, but supply can only be increased slowly," said Lord Lamont.

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"My concern is that it will become even harder for young people to buy a home in the future," he added.

George Osborne's Labour predecessor at the Treasury, Alistair Darling, told the FT that successive administrations had presided over bubble after bubble, which all burst eventually.

"We keep repeating the same mistakes, "said Mr Darling. "Supply of housing is the biggest single thing. Unless supply can be increased substantially, we will exacerbate that situation with schemes like Help to Buy."

Lord Lawson, who ran the Treasury under Margaret Thatcher, is reported to have called on Mr Osborne to end the scheme in London and halve the maximum value of properties bought under the programme from £600,000 to £300,000.