The EU referendum leaflet that embarrassed Clegg

Lib Dem leader struggles to explain away election leaflet that called for a "real referendum" on EU membership.

Nick Clegg had a rough ride on the Today programme this morning after presenter Justin Webb reminded him of a Liberal Democrat election leaflet calling for an in/out referendum on the EU. Clegg is now oppposed to a vote on EU membership but not long ago he was calling for a "real referendum" and attacking Labour and the Tories for not doing the same.

The leaflet in question declared:

It's been over thirty years since the British people last had a vote on Britain's membership of the European Union.

That's why the Liberal Democrats want a real referendum on Europe. Only a real referendum on Britain's membership of the EU will let the people decide our country's future.

But Labour don't want the people to have their say.

The Conservatives only support a limited referendum on the Lisbon Treaty. Why won't they give the people a say in a real referendum?

Asked why he no longer supported an early referendum, a tetchy Clegg pointed out that his party's election manifesto stated that an in/out referendum should only be held "the next time a British government signs up for fundamental change in the relationship between the UK and the EU."

But as you'll have seen, the leaflet was less specific, simply calling for a "real referendum" and not tying this pledge to a treaty change. Indeed, it criticised the Tories for only supporting "a limited referendum on the Lisbon Treaty."

As in the case of tuition fees, it's another example of a populist campaign promise that Clegg couldn't live up to. Whether eurosceptic or europhile, British voters are likely to agree on one thing: you can't trust the Lib Dems.

The leaflet row aside, most of the interview was devoted to Clegg denouncing those who argue that Britain should seek to repatriate powers from the EU. "I don't agree with the premise that we can on our own, unilaterally, simply rewrite the terms of the membership of this European club," he said. He went on to warn that the uncertainty created by a referendum pledge could have a "chilling effect on growth and jobs". Rather than vowing to bring back powers from Brussels, Clegg suggested that the government should wait to see whether a new treaty emerges and whether it impacts on Britain (something that would trigger a public vote under the coalition's "referendum lock").

Intriguingly, however, he suggested that the distance between himself and David Cameron was smaller than thought because Cameron's plan to renegotiate British membership was linked to a future treaty change. Thus, if there is no treaty change (as may well prove to be the case), there will be no renegotiation and no repatriation of powers. This is a point that Tory MPs will want reassurance on when Cameron delivers his speech on Friday.

Nick Clegg at the EU headquarters in Brussels. Photograph: Getty Images.

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.