Credibility is Labour leader’s hygiene factor

New leader needs to convince people that the deficit was not mismanagement but a way of avoiding a d

Pat McFadden MP was absolutely right to argue today that if Labour only opposes cuts there is a "danger of being tuned out by the electorate". But in many ways, the electorate has tuned Labour out already and the challenge is to tune it back in.

Being credible on the deficit is now a hygiene factor for Labour's next leader. All the candidates, and Labour's frontbenchers, are leading opposition to the unfairness of the Budget and the cuts to come in October's Spending Review. This is politically necessary, but not politically sufficient. Labour will get elected again, not on the determination of its opposition, but on the credibility of its alternative.

The perceived wisdom of the 1992 shadow Budget is that setting out proposals in opposition for necessary tax rises -- or indeed, spending cuts -- is political suicide. But it was a significant move this week from Ed Balls that started this debate, after he told the BBC's Laura Kuenssberg that it was a "mistake" for Labour to promise to halve the deficit in four years.

It was a major scoop for her, but did he mean to go public with this view? He hasn't yet said what his alternative would be and so has left himself a credibility gap for the other candidates to probe at the next hustings, in London this Friday.

The dilemma remains: how does Labour prove credibility without being explicit about either alternative cuts or tax rises? It almost certainly can't be done.

At the end of last week, Ed Miliband said Labour shouldn't be locked into the 2:1 ratio for cuts and tax rises, as stated in Labour's manifesto. He said the new leader should outline cuts by the time of October's Spending Review and suggested that tax rises play a bigger role. Andy Burnham has since joined the call for more tax rises and has been bold and consistent in arguing that raising the NHS budget while cutting the social care budget is a mistake.

These are more forward-looking attempts at gaining distinction and they do help move Labour on from what felt, at the time, like a credible deficit reduction plan on page 6 of Labour's manifesto. Page 6 was the core script for all Labour spokespeople during the election, and in interview after interview, Ed Balls and others made it sound credible. Having lost an election so dominated by the Tory campaign against a National Insurance rise, Labour now needs a new deficit reduction plan that is not politically tarnished.

David Miliband has suggested doubling the banking levy and introducing a "mansion tax". Ed Balls would start the 50p income-tax rise at £100,000 and Ed Miliband would make it permanent. Yet all the candidates are struggling for credibility, because these tax rises don't add up to the spending cuts they are seeking to prevent and the VAT hike they voted against last night. Demos has costed an alternative, but it is not the only option.

McFadden is right that the Tories and Lib Dems want Labour to "retreat to its comfort zone" so that they can argue Labour is responsible for the deficit and that "they alone are capable of facing up to Britain's problems".

Labour's next leader needs to win two arguments at the same time. The first is that the deficit was not mismanagement, but a decision taken to prevent recession turning to depression. The second is that Labour's new leader can now be trusted to reduce it. The public will not accept one without the other.

Richard Darlington is head of the Open Left project at Demos.

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Richard Darlington is Head of News at IPPR. Follow him on Twitter @RDarlo.

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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