Ed Miliband speaks at the Scottish Labour conference on March 21, 2014 in Perth. Photograph: Getty Images.
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Miliband defines his programme: big reforms, not big spending

What the Labour leader will tell his party's National Policy Forum today.

For Ed Miliband, his speech at Labour's National Policy Forum today is a chance to offer his clearest account yet of the intellectual course he has charted in the last four years. The central message of his address will be that Labour now stands for "big reforms, not big spending". This is both because only far-reaching structural changes to the economy will resolve the problems demonstrated by the financial crisis and the collapse in living standards, and because the deficit the party will inherit means the old answer of hiking public spending is no longer available. 

He will devote a significant section of the speech to outlining Labour's commitment to fiscal discipline, a subject on which some shadow cabinet members believe he has said too little. As he will remind delegates, Labour has pledged to "get the national debt falling as soon as possible in the next parliament" and "deliver a surplus on the current budget". "For all of the cuts, for all of the pain under this government, Britain still has a deficit to deal with and a debt to pay down," he will say. This is an important attempt to manage expectations and to remind NPF delegates (party activists and trade unions) that the generous spending settlements of the past will not be possible. As the experience of François Hollande demonstrates, centre-left governments can't afford to raise false hopes of an end to austerity. 

But the positive conclusion he will draw is that these fiscal constraints mean Labour has to be more, not less, radical in reforming the economy. It is, in a word, predistribution (one that unsurprisingly won't appear in his speech): seeking to achieve more equal outcomes before the government collects taxes and pays out benefits by rewiring the market itself. To this end, Miliband has promised to significantly increase the minimum wage, to end "exploitative" zero-hours contracts, to freeze energy prices, to cap rent increases, to devolve £30bn of funding to city regions (a dramatic break with Labour's centralising tendencies), to create two new "challenger" banks and to introduce worker representation on remuneration committees - radical proposals that do not cost government money. Another word for it, as a source close to Jon Cruddas told me is "Milibandism".

Ahead of Tony Blair's speech on Monday, to mark the 20th anniversary of his election as Labour leader, he will emphasise that he has "moved on from New Labour", but also that he is "not going back to Old Labour". A Labour spokesman told me: "This is not about looking back, this is an Ed Miliband model for 2015, it's not a 1997 model, it's not a 1975 model either."

Miliband will add: "Our programme for government is more radical and more ambitious in the change we seek, crafted for the age we are living in and the challenges we face. Moving on from a time when rising inequality was just a fact of life – or when we acted as if there is nothing we could do about markets that aren’t fair or aren’t working. Not seeing big spending as the answer. Not going back to make do and mend." 

Labour strategists are keen to contrast this rich agenda with what they regard as David Cameron's intellectual exhaustion. One told me: "They [the Tories] have run out of ideas, they have nothing left but a stale form of Thatcherism, which just wants to roll back the state in the hope of being able to offer tax cuts at some point." 

Miliband's bet is that his radical programme will resonate with an alienated electorate longing for answers to the living standards crisis. But Tories will urge caution, arguing that voters can't afford to "hand the keys back" to Labour ("the people who crashed the car") when the recovery remains fragile and the deficit is still high (Conservative strategists rightly regard the message that "the job is not done" as crucial to victory). Which of these two narratives best reflects the country's mood will determine the outcome in May 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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