Time for Ed Miliband to speak up on child benefit

Labour's new leader needs to start as he means to go on and highlight the flaws in Osborne's rationa

As today's frontpages demonstrate, George Osborne's announcement yesterday that the coalition will be withdrawing universal child benefit has provoked concern and controversy across the political spectrum.

For a newly-elected leader of the opposition, this was surely a great opportunity to get stuck into the counter-arguments and start as strongly as you mean to go on. Add to this the fact that Ed Miliband has long been an advocate of maintaining universal benefits as far as possible. In September 2009, when interviewed by the BBC in his role as Labour's manifesto co-ordinator, he emphasised the importance of a mix of universal and targeted welfare, saying:

"Lots of families need the support that child benefit provides, not just the poorest."

A year on, on The Andrew Marr Show a few weeks ago, he said he didn't support reopening the issue of universal benefits, saying that means testing has "real problems", going on to say:

"I'm all for speaking hard truths. I don't personally think undermining the universal welfare state is the right thing to do."

Why, then, has Ed been so conspicuously absent from the debate since Osborne's speech yesterday?

Yvette Cooper is the only Labour figure who has made it into the coverage today in her capacity as shadow work and pensions secretary, which incidentally can't be doing her profile as a potential shadow chancellor any home. Most of the major papers feature a version of the following quote from her:

"The Government's unfair attack on child benefit is now unravelling. The Chancellor only announced means testing this morning, and already the Children's Minister has admitted that the thresholds need to be looked at again. They have clearly been taken aback by the reaction of parents across the country."

It could well be, as Iain Martin has suggested, that Labour are choosing to stand back and let the Tories face the not inconsiderable opposition from their own party, the Institute for Fiscal Studies, and others, before weighing in with their own defence of universal benefits, and universal child benefit in particular.

But it is now over 24 hours since Osborne's announcement, and Ed's silence is starting to seem less strategic, and more hesitant. There are intelligent and substantive counter-arguments to be made to this cut, as Nicola Smith demonstrated yesterday on Left Foot Forward. This is a big opportunity for him to make a real statement about the kind of leader of the opposition he is going to be, and to set the tone for how Labour are going to respond to the spending review in a few weeks' time. During the summer's hustings, he spoke often about the hard work Labour need to do to get back in power -- now it's time to lead by example and start doing it.

Caroline Crampton is assistant editor of the New Statesman.

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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.