Balls challenges Osborne to offer new Treasury guarantees for housebuilding

If the Chancellor is willing to offer £12bn of guarantees for mortgage lending, why won't he support New Towns?

While pledging to dramatically expand the rate of housebuilding in the UK if elected (to at least 200,000 a year by 2020), Labour has had less to say about how it will achieve this target. But in a speech to the National Housebuilding Council today, Ed Balls will begin to fill in some of the gaps. 

The shadow chancellor will promise to look at reviving development corporations along the lines of those that constructed the post-war New Towns, noting that they had the power "to acquire, own, manage and dispose of land and property; undertake building operation; provide public utilities; and do anything else necessary to develop the New Town." But he will also warn that they are not a sufficient solution to the problem. Balls will say: "These Corporations generated revenue by selling land and housing, receiving rental income and receiving commercial income. However, they needed up front funding to build the infrastructure and housing which could later be sold at a profit."

In a notable challenge to George Osborne, he will call on the Chancellor to expand the level of Treasury guarantees available for housebuilding. Having offered £12bn of guarantees for mortgages on properties worth up to £600,000 (in the form of Help to Buy), why won't he do the same for New Towns? As Balls will say: 

George Osborne has shown himself willing to use the Government’s balance sheet to guarantee some house building – but in particular demand through guaranteeing household mortgages. And yet we read that the New Towns which you heard about a year ago have stalled.

The Government is providing guarantees of up to £12bn for Help to Buy. He should now step up to the plate to back the supply of new houses in New Towns.

Providing guarantees to Development Corporations could be essential to provide backing for a large-scale growth programme to provide confidence, reduce risk and give credibility to the development.

We cannot afford to dither any longer - and I cannot see a stronger case for the full throated backing of the Chancellor than a step change in housing supply.

To do that we will need the full backing of the Labour Government, including the Treasury, for new towns - willing to devolve the powers, determined to provide the resources, and showing the leadership and vision that is sadly lacking in Government at the moment.

One issue not mentioned in the extracts released by Labour is that of council borrowing. Were the current cap on borrowing to be lifted, local authorities could fund a major expansion of social housing. The Chartered Institute of Housing estimates that raising the caps by £7bn could enable the construction of 60,000 homes over the next five years, creating 23,500 jobs and adding £5.6bn to the economy. As Boris Johnson argued in refrence to London in his recent manifesto 2020 Vision, "We should allow London’s councils to borrow more for house building - as they do on continental Europe - since the public sector clearly gains a bankable asset and there is no need for this to appear on the books as public borrowing."

Yet for entirely ideological reasons, Osborne has rejected this suggestion. Unlike in other European countries, borrowing by councils appears on the national balance sheet making the deficit appear larger than it is. For a Chancellor determined to ensure that borrowing falls every year (to the extent that he delayed payments to institutions such as the World Bank and the UN and forced departments to underspend by £10.9bn), regardless of other policy objectives, lifting the cap is out of the question.

But if Labour is to even get close to building the number of new homes required, it will surely need to do so. As a recent Policy Exchange report noted, he UK needs a minimum of 1.5 million new homes from 2015 to 2020 simply to meet need, 300,000 a year. Around 221,000 new households are expected to be formed each year over this period and there is a significant backlog. Thus, even the eventual target spoken of in Labour circles - a million in five years - falls short. Unlike the Tories, with their reckless aim of stoking a new property boom, Balls and Labour are certainly asking the right questions, but they're not offering all the answers yet. 

Ed Balls speaks at the Labour conference in Brighton earlier this year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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On Brexit, David Cameron knows exactly what he's doing

It's not a dead cat - it's about disarming the Leave campaign. 

If you’re explaining, you’re losing. That’s the calculation behind David Cameron’s latest entry into the In-Out (or Remain-Leave in new money) battle. The Prime Minister has warned that were Britain to leave the European Union, the migrant camp at Calais – popularly known as “the Jungle” – could move to Britain. But Eurosceptic campaigners have angrily denounced the remarks, saying that there’s little chance of it happening either way.  

Who’s right? My colleague Henry Zeffman has written a handy explainer of the ins and outs of the row, but the short version is: the Eurosceptic campaigners are broadly right.

But the remarks are very far from a gaffe by Downing Street or Cameron, and they aren’t a “dead cat” strategy – where you say something offensive, prompting a debate about that instead of another, trickier issue – either.

Campaigners for Remain have long been aware that immigration remains their glass jaw. The line wheeled out by Cameron has been long-planned. Late last year, senior members of the In campaign discussed what they saw as the danger points for the campaign. The first was a renegotiation that managed to roll back workplace rights, imperilling the support of the Labour party and the trade unions was one – happily avoided by Cameron’s piecemeal deal.

That the deal would be raked over in the press is not considered a risk point. Stronger In has long known that its path to victory does not run through a sympathetic media. The expectation has long been that even substantial concessions would doubtless have been denounced by the Mail, Telegraph and Sun – and no-one seriously expected that Cameron would emerge with a transformative deal. Since well before the general election, the Prime Minister has been gradually scaling back his demands. The aim has always been to secure as many concessions as possible in order to get an In vote – but Downing Street’s focus has always been on the “as possible” part rather than the “securing concessions” bit.

Today’s row isn’t about deflecting attention from a less-than-stellar deal, but about defanging another “risk point” for the In campaign: border control.

Campaign strategists believe they can throw the issue into neutral by casting doubt on Leave’s ability to control borders any better. One top aide said: “Our line is this: if we vote to leave, the border moves from Calais to Dover, it’s that simple.” They are also keen to make more of the fact that Norway has equally high levels of migration from the European Union as the United Kingdom. While In will never “own” the issue of immigration, they believe they can make the battle sufficiently murky that voters will turn to the areas that favour a Remain vote – national security, economic stability, and keeping people in their jobs.

What the row exposes, rather than a Prime Minister under pressure is a politician who knows exactly what he’s doing – and just how vulnerable the lack of a serious heavyweight at the top makes the Leave campaign(s). Most people won't make a judgement based on reading up the minutinae of European treaties, but on a "sniff test" of which side they think is more trustworthy. It's not a fight about the facts - it's a fight about who is more trusted by the public: David Cameron, or Iain Duncan Smith, Chris Grayling or Priti Patel? As one minister said to me: "I like Priti, but the idea that she can go against the PM as far as voters are concerned is ridiculous. Most people haven't heard of her." 

Leave finds itself in a position uncomfortably like that of Labour in the run-up to the election: with Cameron able to paint himself as the only option guaranteeing stability, against a chaotic and muddled alternative. Without a politician, a business figure or even a prominent celebrity who can provide credibility on the level of the Prime Minister, any row about whether or not Brexit increases the chances of more migrants on Britain’s doorsteps helps Remain – and Cameron. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.