Even Lynton Crosby must know the Tories are on the wrong side of the energy debate

By defending a broken energy market, the Conservatives have shown how out of touch they are with consumers.

There are only two explanations I can think of for the ill-judged and half-baked response of the Tories to the key announcements unveiled by Ed Miliband this week. The first is that Lynton Crosby has been on holiday. And the second is that they are even more out of touch than we imagined. I doubt, however, that David Cameron would give his pet lobbyist time off the week off before his party’s own conference. So, the latter must be true.
 
Yet even Lynton must have wondered at the hysterical response to Ed’s announcement that we would freeze gas and electricity bills in 2015, for 20 months, while we reset the market. Street lights would flicker and snuff out, companies would leave and investment in renewable energy would grind to a halt. The notion that the energy companies, which have increased average bills by £300 over the last three years, are at risk of going bust if Labour freezes bills for 20 months is frankly ridiculous. And the idea that they need to make excess profits at the expense of the consumer to invest, ignores the fact that profits have gone up over the last four years but investment in clean energy has slumped from £7.2bn in 2009 to £3bn in 2012.
 
Take Centrica, for example, the company that has been most vocal about our proposal. They claim that "if prices were to be controlled against a background of rising costs it would simply not be economically viable for Centrica, or indeed any other energy supplier, to continue to operate and far less to meet the sizeable investment challenge that the industry is facing". The reality is that over recent years, Centrica has made the biggest profits of any of the Big Six but has invested the least in new plants. Rather than delivering the investment everyone agrees we need, they have been paying 74% of their profits out as dividends. The truth is that some of these companies have seen profits from their sales to households rise by 30% in a year, irrespective whether the cost of wholesale generation and purchase has risen or fallen. In fact, the only thing that’s fallen as far as customers are concerned is trust in companies that appear to be operating in a market which for them is more comfortable than competitive. And all this at a time when working people are an average of almost £1,500 a year worse off under this government.
 
Labour’s proposal, advanced with such clarity in Ed Miliband’s inspiring speech at Brighton, is no more than a proportionate, just and necessary corrective to this situation. It will be an intervention on behalf of the people by a government fighting for the interest of the people. And the people should not be expected to stand by and be bullied, or held to ransom, by companies implausibly threatening job losses and capital flight.
 
We might recall the prophecies of doom which accompanied the creation of the minimum wage – a control on the price of labour itself, of course – and the reality that unemployment didn’t increase and businesses were able to compete through higher skills and greater investment instead. A race to the top, instead of a race to the bottom, if you like. So let’s get this policy in perspective and hear no more nonsense about Seventies-style socialism. What Ed has suggested is just the right thing to do by a Labour government that welcomes market mechanisms where they function well and in the interests of consumers, businesses and the society which they inhabit. This is about resetting a broken market and injecting the competition and transparency that we need to restore fairness and trust.
 
David Cameron and his grossly out-of- touch colleagues would do well to stop defending the profits of the energy companies and instead read David Sainsbury’s excellent new book Progressive Capitalism. There, the PM might learn from someone who was at the heart of the New Labour about the necessity of government intervening to set rules and create institutions that can manage markets in the interests of the people, not of the profiteers. And he might also decide the right thing to do is to pinch our proposal and freeze prices sooner than 2015. Consider it a freebie, Mr Cameron, a policy gift from Labour. Keep it; we’ve got plenty more to spare.
 
David Cameron with shadow energy secretary Ed Davey at the Clean Energy Ministerial Conference on April 26, 2012 in London. Photograph: Getty Images.

Owen Smith is a Labour leadership candidate and MP for Pontypridd. 

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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.