Although some have criticised the government’s new Help to Buy scheme for inflating the housing market, Lloyd’s Banking Group’s chief Antonio Horta-Osorio has defended the project.

Lloyds TSB is currently 38 per cent owned by the taxpayer after it was bailed out in 2008 because of a collapse in equity markets after the worldwide economic recession that took place following the US sub-prime mortgage crisis.

But even though the firm has a large public liability, Mr Horta-Osorio argued in an interview with the Financial Mail on Sunday that the Help to Buy scheme will encourage younger people to get on the housing ladder and have a more stable capital base.

“It is harder to get mortgages above 75 per cent loan-to-value . I think, given that this market anomaly is just a temporary problem, it makes sense to have a temporary scheme,” the chief executive added.

Lloyds TSB is very influential when it comes to the UK’s mortgage sector, as it currently holds around 25 per cent of the entire country’s arrears.