Miliband stands firm on the 50p tax -- or does he?

Labour leader committed to 50p tax rate "for the foreseeable future".

As Mehdi noted at the weekend, Alan Johnson and Ed Miliband are engaged in a political struggle over the 50p tax. Johnson views it as a short-term response to the financial crisis and would like to scrap it at the earliest possible opportunity; Miliband views it as a social democratic achievement and would like to make it permanent.

For those who missed it, Johnson said in an interview with the Times (£):

I am only backing 50p for the times we are in. It is not ideal; five years ago (we) wouldn't have done it. Our policy has to be based on fairness and what encourages people to do well.

Today, a spokesman for Miliband has responded, insisting that "we remain committed to it for now and for the foreseeable future". That may seem clear enough but the precise formulation -- note the telling reference to "the foreseeable future" -- leaves Miliband with a significant amount of wriggle room.

Having won the argument on progressive taxation, it would be foolish for Labour to retreat now. The 50p tax is popular with voters, raises vital revenue and acts as a brake on runaway inequality. It is also an important symbol of Labour's commitment to a fairer society.

Johnson's comments on the 50p rate, combined with his firm opposition to a gradute tax (he is said to have had a "blazing row with Miliband over the issue at the party conference) represent a serious challenge to Miliband's authority. He must not back down.

George Eaton is political 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.