Nigel Farage at a pub on May 23, 2014 in Benfleet. Photograph: Getty Images.
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Ukip has won the European elections

Labour narrowly beats Tories.

3:38am update: After an interminable wait for the London result, owing to the farcical peformance of Tower Hamlets council (which ended up postponing its count until Tuesday), the final numbers are finally in:

Ukip 27.5 per cent - 24 seats (up 11)

Labour 25.4 per cent - 20 seats (up 7)

Conservative 24.0 per cent - 19 seats (down 7)

Green Party 7.9 per cent - 3 seats (up 1)

Lib Dems 6.9 per cent - 1 seat (down 10)

SNP 2 seats (N/C)

Plaid Cymru 1 seat (N/C)

Nigel Farage has got his "earthquake". Just two regional results are in from the European elections, but Labour has privately conceded defeat. The swing to the Farageists in the north-east and the east of England is too great for any other outcome to be conceivable.

A Labour source told me that all signs pointed to a Ukip victory, "a result we've been expecting for months", in a contest in which the nationalist right is thriving. In France, the National Front has won the contest and in Denmark the anti-immigrant People's Party topped the poll. While Labour has become the first main opposition party not to win the European elections since 1984, party sources are emphasising that the Tories are on course to finish third in a national contest for the first time in history and that David Cameron will become the first Conservative leader since John Major not to win the European elections.

They also rightly point out that the contest is a historically poor guide to general election results. In 1989, the Greens finished third with 15 per cent of the vote but won just 0.5 per cent at the national contest three years later. In 1999, William Hague's Tories triumphed but went down to a landslide defeat against Labour in 2001. Ukip polled 16 per cent in 2004 and 17 per cent in 2009 but failed to exceed three per cent in the subsequent general elections. In an age of euroscepticism, a pro-European party  like Labour was always bound to struggle to withstand the purple wave.

Ukip's triumph was hardly unexpected (indeed, it would have been seen as a failure for Farage if his party had finished second), but it is worth reflecting how remarkable it is that a party that has no MPs, runs no councils and that won just 3 per cent of the vote at the last general election, topped the poll. Not since 1910 has a party other than Labour and the Tories finished first in a national contest. Farage will rightly enjoy his moment in the sun. The question now is whether he can sustain Ukip's momentum by winning seats at the general election.

George Eaton is political editor of the New Statesman.

Photo: Getty
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As long as the Tories fail to solve the housing crisis, they will struggle to win

The fall in the number of homeowners leaves the Conservatives unable to sell capitalism to those with no capital. 

For the Conservatives, rising home ownership was once a reliable route to government. Former Labour voters still speak of their gratitude to Margaret Thatcher for the Right to Buy scheme. But as home ownership has plummeted, the Tories have struggled to sell capitalism to a generation without capital. 

In Britain, ownership has fallen to 63.5 per cent, the lowest rate since 1987 and the fourth-worst in the EU. The number of private renters now exceeds 11 million (a larger number than in the social sector). The same policies that initially promoted ownership acted to reverse it. A third of Right to Buy properties fell into the hands of private landlords. High rents left tenants unable to save for a deposit.

Rather than expanding supply, the Tories have focused on subsidising demand (since 2010, housebuilding has fallen to its lowest level since 1923). At a cabinet meeting in 2013, shortly after the launch of the government’s Help to Buy scheme, George Osborne declared: “Hopefully we will get a little housing boom and everyone will be happy as property values go up”. The then-chancellor’s remark epitomised his focus on homeowners. Conservative policy was consciously designed to enrich the propertied.

A new report from the Resolution Foundation, Home Affront: housing across the generations, shows the consequences of such short-termism. Based on recent trends, less than half of millennials will buy a home before the age of 45 compared to over 70 per cent of baby boomers. Four out of every ten 30-year-olds now live in private rented accommodation (often of substandard quality) in contrast to one in ten 50 years ago. And while the average family spent just 6 per cent of their income on housing costs in the early 1960s, this has trebled to 18 per cent. 

When Theresa May launched her Conservative leadership campaign, she vowed to break with David Cameron’s approach. "Unless we deal with the housing deficit, we will see house prices keep on rising," she warned. "The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing instead of more productive investments that generate more economic growth."

The government has since banned letting agent fees and announced an additional £1.4bn for affordable housing – a sector entirely neglected by Cameron and Osborne (see graph below). Social housing, they believed, merely created more Labour voters. "They genuinely saw housing as a petri dish for voters," Nick Clegg later recalled. "It was unbelievable." 

But though housebuilding has risen to its highest levels since 2008, with 164,960 new homes started in the year to June 2017 and 153,000 completed, this remains far short of the 250,000 required merely to meet existing demand (let alone make up the deficit). In 2016/17, the government funded just 944 homes for social rent (down from 36,000 in 2010). 

In a little-noticed speech yesterday, Sajid Javid promised a "top-to-bottom" review of social housing following the Grenfell fire. But unless this includes a substantial increase in public funding, the housing crisis will endure. 

For the Conservatives, this would pose a great enough challenge in normal times. But the political energy absorbed by Brexit, and the £15bn a year it is forecast to cost the UK, makes it still greater.

At the 2017 general election, homeowners voted for the Tories over Labour by 55 per cent to 30 per cent (mortgage holders by 43-40). By contrast, private renters backed Labour by 54 per cent to 31 per cent. As long as the latter multiply in number, while the former fall, the Tories will struggle to build a majority-winning coalition. 

George Eaton is political editor of the New Statesman.