Labour divisions over EU emerge as MPs launch pro-referendum group

Labour for a Referendum, which has the support of 15 MPs, aims to force Miliband to commit to holding an in/out EU referendum after the next election.

In recent weeks, Ed Miliband has had much fun mocking the Tories' divisions over Europe, but his party now faces some of its own. A new group - Labour for a Referendum - will be launched today with the aim of forcing Miliband to commit to holding an in/out vote on EU membership after the next election. The organisation has the support of 15 Labour MPs, including Keith Vaz (a former Europe minister) and former Northern Ireland spokesman Jim Dowd, three Labour council leaders and more than 50 councillors. It is directed by Labour activist Dominic Moffitt and chaired by John Mills, the founder and chairman of JML and a party donor. 

Vaz said:

I believe that it is the democratic right of the people to make that decision for themselves. I support Labour for a Referendum’s call for the party to support a referendum in our next manifesto.

Dowd said: 

I have been a supporter of this cause for many years and firmly believe the Labour Party must commit to a referendum before the European elections  next year. As the Tories tear themselves apart over this issue, Labour for a Referendum provides the opportunity to unite the party on giving the people a say on our future in the EU.

Its parliamentary supporters are a mixture of the Labour left, who regard the EU as a capitalist club, and the Labour right, who lament its erosion of national sovereignty. Here's the full list: Ronnie Campbell, Rosie Cooper, John Cryer, Ian Davidson, Jim Dowd, Natascha Engel, Frank Field, Roger Godsiff, Kate Hoey, Kelvin Hopkins, John McDonnell, Austin Mitchell, Grahame Morris, Graham Stringer, Keith Vaz.

Three of these MPs, Cryer, Hoey and Hopkins, have also offered their support for the Tory amendment "regretting" the absence of an EU referendum bill from the Queen's Speech.

After Miliband used his speech at the weekend to Progress to reaffirm his opposition to an EU referendum pledge (at least for now), the group warns that Labour "must not let the Conservatives and Liberal Democrats steal a march on this issue and potentially prevent Ed Miliband standing on the steps of Number 10 in 2015." While most in Labour rightly recognise that the EU is not a priority for voters (just 1 per cent name it as "the most important issue" facing Britain and just 7 per cent name it as one of "the most important issues"), some shadow cabinet ministers are concerned that the party could suffer if Miliband is seen to be denying the people a say.

With this in mind, the group highlights past quotes from Ed Balls and Jon Cruddas suggesting that Labour should consider pledging to hold a referendum if elected. Balls said in February: "As long as we don’t allow ourselves to be caricatured as an anti-referendum party, which we’re not – we’ve absolutely not ruled out a referendum...if we allow ourselves either to be the ‘status quo party’ on Europe, or the ‘anti-referendum party’ on Europe, then we’ve got a problem...I think we would be pretty stupid to allow ourselves to get into either of those positions", while Cruddas, speaking before his appointment as the head of Labour's policy review, said in October 2011: "This is about democracy. This is about respecting the people. Successive generations have not had a say on the European debate. This will fester until a proper open discussion is allowed. If we do not have a real referendum then anger and resentment will grow. We have to be bold and let the people into this conversation."

While Miliband has (rightly, in my view) refused to match Cameron's offer of an in/out referendum, it's worth noting that he has said that Labour would not repeal the coalition's EU "referendum lock" under which a public vote is triggered whenever there is a transfer of powers to Brussels. But today's launch will increase the pressure on him to signal that the promise of a referendum on EU membership is at least under consideration for inclusion in the party's manifesto.

It's worth remembering, of course, that it was once Labour, not the Conservatives, that was most divided over Europe. The 1975 referendum on EEC membership was called by Harold Wilson after his cabinet proved unable to agree a joint position (Wilson subsequently suspended collective ministerial responsibility and allowed ministers to campaign for either side, an option that David Cameron may well be forced to consider) and Michael Foot's support for withdrawal was one of the main causes of the SDP split in 1981. Today's launch is a reminder that those divisions have not entirely been consigned to history. While the Tories are now split between 'inners' and 'outers', in Labour the fundamental europhile-eurosceptic divide persists. 

Labour for a Referendum warns that the party "must not let the Conservatives and Liberal Democrats steal a march on this issue". Photograph: Getty Images.

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.