Miliband pledges that a Labour government will scrap the bedroom tax

Labour leader announces: "We’ll scrap the bedroom tax by abolishing the shady schemes of tax loopholes for the privileged few which the Tories keep inventing."

Last month, I revealed that one of Labour's "policy goodies" for conference was likely to be a pledge to scrap the bedroom tax - and Ed Miliband hasn't disappointed.

The party has announced tonight that a Labour government will repeal the measure, which has already forced around half of those tenants affected into rent arrears, a quarter of those for the first time ever. Significantly, rather than merely another policy that Labour would enact "were it in government now", this is a manifesto commitment. 

The National Housing Federation and the National Audit Office have predicted that the measure could end up costing more than it saves by forcing social housing tenants into the more expensive private sector (due to the lack of one-bedroom council properties available) and by increasing rent arrears (which deprives councils of revenue). But in order to demonstrate their commitment to fiscal discipline, Miliband and Ed Balls have still outlined how they will raise the £470m the Treasury claims the measure will save this year.

Labour has said it will: 

- Reverse the £150m tax cut for hedge funds announced in the 2013 Budget.

- Abolish George Osborne's "shares for rights" scheme, which businesses have been using to avoid capital gains tax (shares sold at a profit are exempt) and which the OBR has forecast could cost up to £1bn. 

- Prevent construction firms avoiding tax by falsely listing workers as self-employed. 

Miliband will say tomorrow: 

One Nation Labour is meeting here in Brighton talking about the most important issue facing families in Britain: the cost of living crisis.

Under David Cameron life is getting harder and harder with prices rising faster than wages in 38 of the 39 months that he has been in Downing Street. And working people are an average of almost £1,500 a year worse off under his government.

But we have a Tory-led Government which listens only to a privileged few. Tax cuts for millionaires and tax breaks for hedge funds.

I am leading a different Labour Party, a One Nation Labour Party, which listens to and will stand up for ordinary families like that of Danielle Heard, who I met this week.

We’ll fight for her like she has fought cancer heroically for 14 years. She is disabled and battling cancer again. But now her family must pay £80 a month they can’t afford under this government’s hated bedroom tax.

The bedroom tax – not what the Tories call the spare room subsidy – the bedroom tax: a symbol of an out of touch, uncaring Tory government that stands up for the privileged few – but never for you.

So we will scrap that tax. And what’s more I can tell you how.

We’ll scrap the bedroom tax by abolishing the shady schemes of tax loopholes for the privileged few which the Tories keep inventing. Tax cuts for hedge funds, the billion pound black hole created with a scheme for workers to sell their rights for shares, and by tackling scams which cheat the taxpayer in construction.

That’s what a One Nation Labour government will do. That’s a party that will fight for you.

The Tories will respond by arguing that Labour has abandoned its commitment to fiscal responsibility and returned to its old spending ways. But unlike on other issues, such as the benefit cap, they find themselves on the wrong side of public opinion. A ComRes poll published today by the National Housing Federation (NHF) found that 59% of the public believe the policy should be abandoned, up from 51% when it was introduced in April. Four-fifths of Labour supporters (79%) favour its repeal, along with 65% of Lib Dems and 34% of Tories. 

And one doesn't have to look far for evidence why. As I noted, a survey by the NHF of 51 housing associations found that more than half of those residents affected by the measure (32,432 people), fell into rent arrears between April and June, a quarter of those for the first time ever. 

Ministers have defended the policy, which reduces housing benefit by 14% for those deemed to have one 'spare room" and by 25% for those with two or more, on the basis that it will encourage families to downsize to more "appropriately sized" accommodation. But they have ignored (or at least pretended to ignore) the lack of one bedroom houses available. In England, there are 180,000 social tenants "under-occupying" two bedroom houses but just 85,000 one bedroom properties available to move to. Rather than reducing overcrowding, the policy has largely become another welfare cut, further squeezing families already hit by the benefit cap, the 1% limit on benefit and tax credit increases (a real-terms cut) and the 10% reduction in council tax support. 

The measure is also coming under increasing fire from the Lib Dems. Shirley Williams described it as "a big mistake" at the party's conference and delegates passed a motion calling for "an immediate evaluation of the impact of the policy, establishing the extent to which larger homes are freed up, money saved, costs of implementation, the impact on vulnerable tenants, and the impact on the private rented sector." It also called for "a redrafting of clear housing needs guidelines in association with those representing vulnerable groups including the disabled, elderly and children." 

Whether or not the coalition eventually goes as far as scrapping the measure, to prevent Labour surfing a wave of public outrage, it is hard to see it surviving in its current form. 

Ed Miliband speaks at the TUC conference at the Bournemouth International Centre on September 10, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
Show Hide image

Owen Smith calls Jeremy Corbyn "a lunatic"

The Labour leader's campaign call on Smith to apologise to "people suffering with mental illness". 

Owen Smith has called Jeremy Corbyn “a lunatic” at a rally.

The Pontypridd MP and Labour leadership hopeful told supporters “what you won’t get from me is some, you know, lunatic at the top of the Labour party” while speaking in Hammersmith.

It represents a considerable racheting up of direct hostilities between the two candidates, who will discover which of the two has won on 24 September. At the start of the contest, Smith pledged to appoint Corbyn to the post of party president should he win.

Footage of the event was obtained by the Independent’s Tom Peck, who attended the rally.

A spokesperson for Corbyn's campaign said: "Owen Smith has degraded this contest by descending into personal abuse. He should apologise to people suffering with mental illness, many of whom would have been dismayed and upset to to hear such offensive language used in public by a Labour politician.

"He should also withdraw his remark, and spend time with people suffering from mental health problems to develop some sensitivity in his use of language. This is simply not the language that someone standing to lead our party should use, and it injects an ugly tone into this contest that no Labour member wants to see."

Smith, speaking on Radio 4, apologised for "a poor choice of words", saying that the remarks referred not to Corbyn but himself. "Someone said I'd been running about like a lunatic earlier on", he added. 

A senior source close to the leadership poured scorn on Smith: "Owen's biggest weakness is Owen. He has decent staffers, but it's lions led by a donkey".