Would Clegg’s head be the price of a Lab-Lib coalition?

Shadow cabinet minister John Denham suggests that the Liberal Democrats would need a new leader.

This week brought the "revelation" that Nick Clegg insisted on Gordon Brown's head as the price of a Lab-Lib coalition but could Labour turn the tables on the Lib Dems at the next election?

Should Labour emerge as the single largest party in a hung parliament, many will want to force Clegg's departure before any coalition is formed. In an interview in the latest edition of Fabian Review, John Denham, the shadow communities secretary, suggests that Labour could not work with a Clegg-led Lib Dem party:

It would require a new leader and a new politics. The idea that the Lib Dems can do this now, and then, in a few years, say they'd like to be friends with Labour when they are fundamentally unchanged is out of the question. Many people, including electoral reformers like me who always thought there could be a centre-left coalition with the Lib Dems, have to understand they have taken a historic position which puts them outside that game until they change profoundly.

That Denham, a Labour pluralist who supported attempts to form a "progressive coalition", feels this way suggests that many others in the party do, too. For now, the Lib Dems remain surprisingly united behind Clegg. As Richard Grayson points out in his cover story for the latest issue, the trauma of losing Charles Kennedy and Ming Campbell in quick succession has made the Liberal Democrats extremely leadership-loyal.

But Clegg's fate is now almost entirely intertwined with that of the coalition, which could leave him dangerously exposed if, as expected, the forthcoming spending cuts make the government rapidly unpopular. Should the Lib Dems suffer significant losses in the May 2011 local elections, we will start to hear the first proper rumblings of discontent.

Either way, it makes sense for Labour to begin planning war-gaming scenarios for a hung parliament now. So which Lib Dem figure could replace Clegg and win over a rejuvenated Labour Party? Step forward, Charles Kennedy.

Subscription offer: 12 issues for just £12 PLUS a free copy of "The Idea of Justice" by Amartya Sen.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

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.