Ed Miliband delivers his speech on banking reform in London on January 17, 2014. Photograph: Getty Images.
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Why Miliband is right to keep banging on about living standards

Voters will still be worse off in 2015 than in 2010 - Labour's "cost-of-living" strategy remains its best hope of victory.

Ed Miliband needs to find a new script - that has been the response of most of Fleet Street to the Labour's leader Budget reply. Eight months after Miliband made the "cost-of-living" his party's defining theme (and years after he first used the phrase), commentators are desperate for him to change the subject. In part, this reflects the natural journalistic desire for novelty but it also reflects the belief that, with the economy recovering, this attack line has run its course. Yet for at least two reasons, Miliband (to invert David Cameron on Europe) is right to keep "banging on" about living standards. 

First, while the gap between average wages and prices has narrowed in recent months, real incomes are still declining. As the ONS figures published yesterday show, average weekly earnings rose by 1.4 per cent from November 2013 to January 2014, 0.5 per cent below the current rate of inflation. For most people, in other words, there is still no recovery at all. And in an economy as unequal as Britain's, the headline average (hugely inflated by high pay at the top) is an imperfect guide to living standards. Even after wages finally creep above inflation (as they are forecast to do this year), there will be no rise in real incomes for the millions of public sector workers who have had their salary increases capped at 1 per cent and for those most reliant on benefits. 

For the rest, after five years of falling living standards, it will take more than a few months of growth to make up the ground lost since the crisis. In 2015, as the IFS has repeatedly pointed out, real incomes will still be far below their 2010 level, with voters currently an average of £1,600 a year worse off. As Ed Balls noted at his post-Budget briefing yesterday, this will be the first time that living standards have ever been lower at the end of a parliament than at the start (paving the way for Miliband's "Reagan moment"). Indeed, based on the RPI measure of inflation, the OBR forecasts that wages will be flat until 2019; there will be plenty of people who feel no better off in the next decade, let alone in the next year. 

This leads to the second reason why Miliband is right to maintain his "cost-of-living" focus: voters believe Labour is most likely to make a difference. While the Tories enjoy a large lead as the best party to manage the economy and the deficit, Labour continues to lead as the party best-placed to improve living standards (with a five-point advantage in the most recent YouGov poll).

The key for Miliband is to shift political debate towards the latter and away from the former (as he did in his conference speech). It was this strategy that Barack Obama successfully deployed during his 2012 campaign. In meetings with the Labour team in London and Washington DC, Obama aides including his pollster Joel Benenson emphasised how important the president’s stance on living standards had been to victory in tough times. A report on the election by the veteran Democrat Stan Greenberg for Miliband pointed to polls showing that while Mitt Romney had led on "handling the economy"(51-44%) and "reducing the federal budget deficit" (51-37%), Obama had led on understanding "the economic problems ordinary people in this country are having" (51-43%) and on "looking out for the middle class" (51-40%). That Obama triumphed should not be surprising. As one Labour strategist told me, "for most voters, living standards are the economy". The Tories would like nothing more than for the opposition to stop talking about how voters are worse off than they were in 2010, which is precisely why it would be madness for Miliband to do so. 

If Labour is to win the election, it won't be enough to convince voters that they're poorer under the Conservatives. It will also need to convince them that 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 do any better. The Tories hope and expect UK voters will take the same view of Labour in 2015. 

But the challenge for Miliband is continue to develop his party's offering on wages, jobs, housing and energy, not tear up the script entirely. Labour's "cost-of-living" strategy still represents his best hope of victory in 2015. 

George Eaton is political editor of the New Statesman.

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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