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Does Ed Miliband think Ed Balls is expendable?

Both Miliband and Balls neither like nor trust each other.

Does Ed Miliband think Ed Balls is expendable? Several months ago the question would have invited ridicule. The shadow chancellor’s prediction of a double-dip recession had proved politically prescient; his warnings on the ill-judged pace and scope of the government’s cuts had been vindicated.

Then came the LIBOR scandal and all of a sudden it was Balls who had questions to answer. Fortunately, the Tories – or more specifically their Chancellor, George Osborne – made a hash of asking them. Caught trying to frame his opposite number, in effect, for encouraging Bob Diamond and Barclays to depress their estimated borrowing rate artificially, Osborne was forced into a premature, Clouseau-like abandonment of his inquiries.

But not before people had been treated to an untimely reminder of the days when Labour was only too happy to see vintage Bollinger flowing into the bowls of City fat cats. It was not welcomed inside the leader’s office.

Tension between the two Eds manifested itself in a debate over whether to keep up the pressure for a Leveson-style banking inquiry or support a select committee investigation once the parliamentary vote on a wider investigation was lost. Miliband’s instincts were to keep pushing for a judge-led inquiry, but Balls, who I understand wanted the issue quickly diffused, prevailed.

Yet the tensions remain. Miliband is said to have three main problems with his shadow chancellor. The first is that both men neither like nor trust each other, a hangover from their time in government and the legacy of Miliband’s appointment, after the leadership election, of Alan Johnson – and not Balls – as shadow chancellor.

The second is that Miliband has embarked on his bid to detoxify the Labour brand, which will identify Gordon Brown as one of the more obdurate stains on the party’s recent past. Brown was singled out as the target of some of Miliband’s more pointed jokes at a Press Gallery lunch in Westminster this past week, and there is a concerted effort under way to put clear red water between the Labour leader and
his former mentor.

Some around Miliband believe their task is not made easier by the sight of Brown’s most trusted former lieutenant sitting next to their man every Wednesday lunchtime at Prime Minister’s Questions. As one of the leader’s supporters said, “Don’t underestimate Ed [Miliband’s] ability to make a clean break with the past, even if it’s his own.”

Third, there is the macro-politics. Miliband acknowledges that Balls has so far been proved right on the big economic issues. But he knows, too, that the key to success at the next election will be to make it a referendum on the coalition’s economic record. Again, Balls’s association with what went wrong for Labour in government worries some of Miliband’s lieutenants.


Balls’s defenders point out that his loyalty to Brown long after it had ceased to be in his interest undermines the calculating stereotype so beloved of his critics. And focus groups indicate that Tory attempts to portray Balls as Brown’s malign henchman have failed to resonate. But the LIBOR debacle reminds us that not all of Labour’s psychodramas have been consigned to the past.

This article first appeared in the 23 July 2012 issue of the New Statesman, Israel: the future

Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.