Shadow chief secretary to the Treasury Chris Leslie. Photograph: BBC News.
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Labour's axeman puts the left-wing case for deficit reduction

Chris Leslie argues that progressives have a duty to prove they can be fiscally responsible.

After the return of economic growth, few now recall that the next government, whether Conservative or Labour, will implement some of the most severe cuts to public services in modern history. That these reductions are likely to take a place at a time of rising prosperity and after some departments have already been cut by 25 per cent, will make them even harder to defend.

The speech today by shadow chief secretary to the Treasury, Chris Leslie, Labour's axeman in chief, was a reminder of the challenges the opposition will face. If it is to meet its pledge to eliminate the current deficit by the end of the next parliament and to reduce the national debt as a share of GDP (while leaving room to borrow for capital spending), Labour will have to make major cuts to these services it does not choose to prioritise (expect the NHS, childcare, skills and employment to be favoured).

As Leslie said in his speech:

I’m not heading into this expecting popularity. Quite the opposite.

All government departments in the next Labour Government will have to face fundamental questions as never before.

We won’t be able to undo the cuts that the have been felt in recent years. And I know that this will be disappointing for many people.

A more limited pot of money will have to be spent on a smaller number of priorities. Lower priorities will get less.

The key policy announcement was that Labour would not hold one-year spending reviews of the kind recently introduced by George Osborne (almost entirely for political reasons), instead always setting budgets on a multi-year basis. In turn, Whitehall will be expected to provide public bodies and organisations under its stewardship with the same longer-term certainties. Leslie criticised instances of "short-term budget decisions that cost more in the long run":

·         "The closure of fourteen prisons at the Ministry of Justice, creating a shortage of capacity and provoking Ministers to later change tack and commission new ‘Titan’ prison projects which appear unfunded and may even worsen re-offending.

·         "A decision to withdraw the A14 upgrade in 2010 as “unaffordable” at £1.3 billion – yet the resurrection of the same scheme in 2013 now costing £1.5 billion.

·         "The roads maintenance budget for local authorities cut by a fifth in 2013, followed by an about-turn in 2014 with a complex ‘Potholes Challenge Fund’ assessed by Whitehall civil servants on the basis of bureaucratic bids submitted from town halls – hardly progress towards localism.

·         "And not forgetting the bedroom tax, which not only causes great hardship but merely shunts costs from local authority housing benefit and into the more expensive private rented sector element of housing benefit."

But the most intellectually notable part of the speech was Leslie's attempt to make the progressive case for deficit reduction. As he argued, it is those on the centre-left, as the champions of a social democratic state, who have a duty to prove that they are fiscally responsible. The belief that the public sector is invariably wasteful gives the right the licence they need to permanently roll back services.

He said:

Why does it matters so much to get the books into balance?

Because if you believe that as a society we achieve more by coming together and pooling our resources to deliver services from which we all benefit, then we have a responsibility to prove to the taxpayer that this can be done efficiently and effectively.

Public service budgets have got to be sustainable.

We need to continually demonstrate to taxpayers that they can trust the public realm to manage services well.

The alternative risks eroding public confidence and an opt-out culture of private provision for those who can afford it - and sub-standard services for the rest.

There’s no reason why we cannot create decent quality services and a fair society while living within our means.

This is why I believe those on the progressive centre-left of politics should embrace the goal of balancing the books. There is nothing left-wing about running a deficit.

If Labour is to avoid an internal war over cuts in the next parliament, it is an argument he will have to make repeatedly.

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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