What to expect from Miliband's conference speech

A commitment to a mass housebuilding programme and plans to reduce energy price rises will be the centrepiece of his "cost of living" address.

After spending the summer telling voters how much worse off they are under the Tories, the task for Ed Miliband this week is to outline how they'd be better off under Labour. In the 2012 US election, Mitt Romney similarly resurrected Ronald Reagan's famous line - "Are you better off now than you were four years ago?" - but the electorate stuck with Obama because the numbers were moving in the right direction and they doubted Romney could improve them. The Tories hope and expect UK voters will take the same view of Labour in 2015.

So far, as instances of how Labour would tackle the "cost of living crisis", Miliband has pledged to repeal the bedroom tax, to guarantee childcare for all primary school children from 8am-6pm, to "strengthen" enforcement of the minimum wage (including increasing the fine for non-payment from £5,000 to £50,000) and look at increasing it in sectors such as finance, construction and computing, and to require British companies to train a new apprentice each time they hire a skilled worker from outside the EU. Crucially, these all are commitments for 2015, not merely examples of what Labour would be doing were it "in government now". On The Andrew Marr Show this morning, in a notable shift of language, Miliband spoke of how in its "first year of office", Labour would "legislate" to introduce a fairer immigration system.

The two areas which Miliband hasn't spoken on yet but which will dominate his conference speech on Tuesday are energy and housing. On the former, today's Sun on Sunday reports that he will announce plans to stop firms raising prices when their profits soar, to force suppliers to pass on reductions in wholesale costs, to automatically put four million old age pensioners on the lowest tariff and to simplify price plans for consumers, cutting bills by around £140 a year.

On the latter, as I've previously reported, a commitment to a mass housebuilding programme will be the centrepiece of the speech. Asked at a public Q&A in Brighton yesterday "how will you tackle the housing crisis?", Miliband replied: "Simple. We will start building houses again." 

All three parties have identified housing as one of the defining issues of the moment but while the coalition's Help To Buy scheme is inflating demand, it does little to address what Miliband calls the "fundamental problem" of supply. Labour has already said that it would bring forward £10bn of infrastructure investment to build 400,000 affordable homes and is likely to pledge to build a million over five years, a level closer to that required to meet need. In part, this could be achieved by removing the cap on councils' borrowing, a move that Boris Johnson and Vince Cable have been pushing for but which George Osborne has consistently rejected. 

As a policy, a mass housebuilding programme ticks all the boxes: it is easy to explain and offers a powerful dividing line with the Tories. It would stimulate growth and employment, help to bring down long-term borrowing (for every £100 that is invested in housebuilding £350 is generated in return) and reduce welfare spending. It would be a literal fulfilment of Labour's pledge to "rebuild Britain" after austerity, just as the 1945 government did after the war. 

The hope in Labour is that will prove the political game-changer that Miliband so badly needs.

Ed Miliband stands with Andrew Marr after appearing on his morning television show in Brighton. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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The Conservatives have failed on home ownership. Here's how Labour can do better

Far from helping first-time buyers, the government is robbing Peter to pay Paul

Making it easier for people to own their own first home is something to be celebrated. Most families would love to have the financial stability and permanency of home ownership. But the plans announced today to build 200,000 ‘starter homes’ are too little, too late.

The dire housing situation of our Greater London constituency of Mitcham & Morden is an indicator of the crisis across the country. In our area, house prices have increased by a staggering 42 per cent over the last three years alone, while the cost of private rent has increased by 22 per cent. Meanwhile, over 8200 residents are on the housing register, families on low incomes bidding for the small number of affordable housing in the area. In sum, these issues are making our area increasingly unaffordable for buyers, private renters and those in need of social and council housing.

But under these new plans, which sweep away planning rules that require property developers to build affordable homes for rent in order to increase the building homes for first-time buyers, a game of political smoke and mirrors is being conducted. Both renters and first-time buyers are desperately in need of government help, and a policy that pits the two against one another is robbing Peter to pay Paul. We need homes both to rent and to buy.

The fact is, removing the compulsion to provide properties for affordable rent will be disastrous for the many who cannot afford to buy. Presently, over half of the UK’s affordable homes are now built as part of private sector housing developments. Now this is going to be rolled back, and local government funds are increasingly being cut while housing associations are losing incentives to build, we have to ask ourselves, who will build the affordable properties we need to rent?

On top of this, these new houses are anything but ‘affordable’. The starter homes would be sold at a discount of 20 per cent, which is not insignificant. However, the policy is a non-starter for families on typical wages across most of the country, not just in London where the situation is even worse. Analysis by Shelter has demonstrated that families working for average local earnings will be priced out of these ‘affordable’ properties in 58 per cent of local authorities by 2020. On top of this, families earning George Osborne’s new ‘National Living Wage’ will still be priced out of 98 per cent of the country.

So who is this scheme for? Clearly not typical earners. A couple in London will need to earn £76,957 in London and £50,266 in the rest of the country to benefit from this new policy, indicating that ‘starter homes’ are for the benefit of wealthy, young professionals only.

Meanwhile, the home-owning prospects of working families on middle and low incomes will be squeezed further as the ‘Starter Homes’ discounts are funded by eliminating the affordable housing obligations of private property developers, who are presently generating homes for social housing tenants and shared ownership. These more affordable rental properties will now be replaced in essence with properties that most people will never be able to afford. It is great to help high earners own their own first homes, but it is not acceptable to do so at the expense of the prospects of middle and low earners.

We desperately want to see more first-time home owners, so that working people can work towards something solid and as financially stable as possible, rather than being at the mercy of private landlords.

But this policy should be a welcome addition to the existing range of affordable housing, rather than seeking to replace them.

As the New Statesman has already noted, the announcement is bad policy, but great politics for the Conservatives. Cameron sounds as if he is radically redressing housing crisis, while actually only really making the crisis better for high earners and large property developers who will ultimately be making a larger profit.

The Conservatives are also redefining what the priorities of “affordable housing” are, for obviously political reasons, as they are convinced that homeowners are more likely to vote for them - and that renters are not. In total, we believe this is indicative of crude political manoeuvring, meaning ordinary, working people lose out, again and again.

Labour needs to be careful in its criticism of the plans. We must absolutely fight the flawed logic of a policy that strengthens the situation of those lucky enough to already have the upper hand, at the literal expense of everyone else. But we need to do so while demonstrating that we understand and intrinsically share the universal aspiration of home security and permanency.

We need to fight for our own alternative that will broaden housing aspirations, rather than limit them, and demonstrate in Labour councils nationwide how we will fight for them. We can do this by fighting for shared ownership, ‘flexi-rent’ products, and rent-to-buy models that will make home ownership a reality for people on average incomes, alongside those earning most.

For instance, Merton council have worked in partnership with the Y:Cube development, which has just completed thirty-six factory-built, pre-fabricated, affordable apartments. The development was relatively low cost, constructed off-site, and the apartments are rented out at 65 per cent of the area’s market rent, while also being compact and energy efficient, with low maintenance costs for the tenant. Excellent developments like this also offer a real social investment for investors, while providing a solid return too: in short, profitability with a strong social conscience, fulfilling the housing needs of young renters.

First-time ownership is rapidly becoming a luxury that fewer and fewer of us will ever afford. But all hard-working people deserve a shot at it, something that the new Conservative government struggle to understand.