Labour reshuffle: out with the old ... then what?

Healey and Denham step down ahead of Ed Miliband's first reshuffle.

Well, there was enough speculation that Ed Miliband was planning to reshuffle the shadow cabinet - now he has to. John Denham and John Healey are stepping down from the business and health portfolios respectively.

Healey's correspondence with the Labour leader is online here. The declared reason for going -- the need to spend more time with family. This isn't a huge shock (although obviously it is something of a surprise; if we'd known it was about to happen we would have written about it).

I saw a member of the last Labour government recently -- now happily ensconced in the private sector -- who commented on how tired his former colleagues were, having toiled to the bitter end under Gordon Brown and then struggling to get to grips with opposition. Healey's name came up as someone whose heart didn't seem in it anymore.

It is worth adding that he has not been a triumphant foil to the eminently foilable Andrew Lansley. The NHS reform has been an absolutely disaster for the Tories and Labour have landed a few blows.

But the Lib Dems have also hoovered up a lot of the credit for disrupting Lansley's plans. As I argued in this week's magazine Nick Clegg is deliberately trying to squeeze Labour out of the debate on a range of issues, hoping to make it seem as if the interesting arguments, the ones that matter are within the coalition not between the coalition and the opposition. That has worked all to well on the NHS from Labour's point of view.

There is a fair amount of chatter around Andy Burnham being lined up as a replacement for Healey -- he had the health brief in government. But frankly he hasn't been any more effective against Michael Gove than Healey was against Lansley; less so perhaps. And, over the last few months, I've heard some pretty disparaging noises about Burnham's performance from people around Miliband.

Liz Kendall, Labour's shadow health spokesperson, has impressed a lot of people with her assured grasp of the subject. She has a background in charity and think tank research around health issues, but she was new to parliament in 2010 so it might be a bit brisk to put her in such a high profile brief. Still Ed has said he wants Labour to represent a new generation ...

As for John Denham and BIS -- we'll have to wait to find out why he has jumped. He is another veteran of the last government and was an early and loyal backer of Ed for the leadership; perhaps he too was just plain knackered. Perhaps also he found the business brief frustrating when, let's face it, Labour's position on growth and the economy is coming from Ed Balls's office. The shadow chancellor is not famous for sharing.

There is also a lot of talk about other old timers coming back to lend a hand -- Alan Johnson and Lord Falconer. But then, there is always a lot of talk ahead of a reshuffle. We'll find out the truth soon enough.

Rafael Behr is political columnist at the Guardian and former 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.