Clegg’s contradictions

The Liberal Democrats need to sort out their line of attack on Labour’s “deficit deniers”.

One of the (many) downsides to the Liberal Democrats being in coalition with the Conservatives, and Lib Dem press officers like Lena Pietsch having to serve under Tory spinners like Andy "Bully" Coulson, is that the Lib Dems have had their talking points written for them, word for word, by their Conservative coalition partners.

Take the deficit. I've blogged before about Clegg and Cable's humiliating and inexplicable U-turn on the issue of spending cuts and the timing of deficit reduction, but have you noticed how Tory-esque their attacks on Labour's economic policies seem to have become in recent weeks? The whole Osbornian "deficit denier" stuff has been swallowed wholesale by the Lib Dem front bench.

Last month, in a joint press conference with the Tory party chair, Sayeeda Warsi, the Energy Secretary, Chris Huhne, said it was "inexcusable" that none of the Labour leadership contenders had come up with any policies to tackle the record Budget deficit. And on Sunday, Danny Alexander wrote to the Labour leadership candidates, accusing them of "opportunism rather than economic competence".

And in yesterday's PMQs, stand-in Nick Clegg, the deputy PM, told the Tory MP Mark Pritchard::

They [Labour] were irresponsible in government, and they are now living in denial in opposition.

He told the Labour MP Nic Dakin:

One hundred thousand members of the public have made suggestions about how we can try to bring some sense to our public finances without hitting the vulnerable and without hitting front-line public services. Have we heard a single suggestion from anyone on the opposition benches? Not a single suggestion.

But, in the same session of PMQs, he said to the Labour MP Joan Walley:

I simply ask the Honourable Lady and her colleagues whether they have any qualms about the fact that her party and her government announced £44bn-worth of cuts but never had the decency or honesty to tell the British people where those cuts would fall.

Hang on! He accepts that Labour had planned "£44bn-worth of cuts", but accuses Labour leadership contenders -- including David Miliband, who is sticking to the Brown/Darling deficit reduction plan -- of being in "denial". Contradiction?

And he tells Dakin (above) that we have not "heard a single suggestion from anyone on the opposition benches" about how to fix the public finances, despite being well aware of the various proposals that have emerged from the five leadership candidates during the course of the campaign.

Take David Miliband, for example, who wants to abolish charitable status for private schools and introduce a mansion tax.

Take Ed Miliband, who wants to retain the bankers' bonus tax.

Take Ed Balls, who wants to introduce a 50p tax rate on those earning more than £100,000.

Take Andy Burnham, who wants to end the ring-fencing of the NHS budget.

Take Diane Abbott, who wants to scrap Trident (something the Deputy PM once wanted to do!).

Now, I accept that most of these proposals have yet to be fleshed out in detail, and none of them on their own (or, for that matter, combined) will eliminate or even halve the structural deficit, but to pretend that we've had nothing but silence from in-denial Labour leadership candidates is simply untrue and absurd.

It also, as I said, flatly contradicts his other line of defence -- Labour planned cuts, too! -- which he deployed against Joan Walley yesterday, and again on the Today programme this morning against John Humphrys.

Get your story straight, Nick!

UPDATE:

I hear Danny Alexander refused to appear on Newsnight yesterday to debate Ed Balls. The shadow schools secretary has, of course, been praised for his grasp of economics and fiscal policy by, among others, centre-right figures such as Irwin Stelzer, Martin Wolf and Boris Johnson (!).

Check out Balls's reply to Alexander's letter to the candidates here.

You can read Mehdi Hasan's politics column each week in the New Statesman magazine.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.