George Osborne and Ed Balls walk through the Members' Lobby before the Queen's Speech at the State Opening of Parliament on June 4, 2014. Photograph: Getty Images.
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Osborne refuses to rule out raising VAT after promising £2bn for NHS

The Chancellor says he"doesn't have any plans" to increase the tax: the same phrase he used before the 2010 increase. 

George Osborne's promise of £2bn extra for the NHS is an attempt to neutralise one of Labour's strongest attack lines. By providing new money for the health service in Wednesday's Autumn Statement, the Chancellor hopes to render the opposition's pledge to spend £2.5bn extra irrelevant. In a shameless act of political plagiarism, he used his appearance on the Marr show to announce a further increase: the £1.1bn the government will receive in bank fines over the foreign exchange rate scandal will be used to fund improved GP services (Ed Balls last weekend called for the money to be spent on the NHS). By arguing that the £2bn of new funding has only been made possible by the Tories' "long-term economic plan" and their commitment to deficit reduction, Osborne aims to use Labour's weakness on fiscal responsibility to undermine its strength on the health service (the issue on which it polls best). 

In his own interview on Marr, Balls described the extra £2bn as "crisis money" made necessary by the coalition's "mismanagement" of the service. He also questioned whether it was merely a "one-off bung". But the Tory Treasury Twitter account was quick to reply that the money would be "baselined" (i.e. included in new calculations of future NHS spending) making it a permanent rather than a temporary increase (something confirmed by Osborne in his appearance). 

But the awkward question remains: how will all this be paid for? After Osborne's NHS spending promise, it is even harder to see how he will meet his pledge to eliminate the deficit by the end of the next parliament while simultaneously avoiding further tax rises and cutting taxes by £7.2bn (increasing the personal allowance to £12,500 and the 40p rate threshold to £50,000). Most economists believe that he will fail on at least one of these fronts. 

It was telling, then, that Osborne repeatedly refused to rule out raising VAT, stating that he "doesn't have any plans" to do so: the exact formulation used before the 2010 increase. Given the historic tendency of governments to raise taxes immediately after the election, it is right to be suspicious. But Osborne clearly believes that the Tories' polling strength on the deficit means that they can get away with such fiscal recklessness in a way Labour never could. 

After today's high octane politics, the opposition's hope is that Osborne's intervention will only raise the salience of the NHS and ultimately benefit them. The Chancellor's gamble is that it will achieve the reverse. By at least giving the appearance of providing an answer to the funding crisis (Labour would still spend more) he hopes to deny Balls and Ed Miliband any benefit from running on this issue. 

George Eaton is political editor of the New Statesman.

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The Conservatives have failed on home ownership. Here's how Labour can do better

Far from helping first-time buyers, the government is robbing Peter to pay Paul

Making it easier for people to own their own first home is something to be celebrated. Most families would love to have the financial stability and permanency of home ownership. But the plans announced today to build 200,000 ‘starter homes’ are too little, too late.

The dire housing situation of our Greater London constituency of Mitcham & Morden is an indicator of the crisis across the country. In our area, house prices have increased by a staggering 42 per cent over the last three years alone, while the cost of private rent has increased by 22 per cent. Meanwhile, over 8200 residents are on the housing register, families on low incomes bidding for the small number of affordable housing in the area. In sum, these issues are making our area increasingly unaffordable for buyers, private renters and those in need of social and council housing.

But under these new plans, which sweep away planning rules that require property developers to build affordable homes for rent in order to increase the building homes for first-time buyers, a game of political smoke and mirrors is being conducted. Both renters and first-time buyers are desperately in need of government help, and a policy that pits the two against one another is robbing Peter to pay Paul. We need homes both to rent and to buy.

The fact is, removing the compulsion to provide properties for affordable rent will be disastrous for the many who cannot afford to buy. Presently, over half of the UK’s affordable homes are now built as part of private sector housing developments. Now this is going to be rolled back, and local government funds are increasingly being cut while housing associations are losing incentives to build, we have to ask ourselves, who will build the affordable properties we need to rent?

On top of this, these new houses are anything but ‘affordable’. The starter homes would be sold at a discount of 20 per cent, which is not insignificant. However, the policy is a non-starter for families on typical wages across most of the country, not just in London where the situation is even worse. Analysis by Shelter has demonstrated that families working for average local earnings will be priced out of these ‘affordable’ properties in 58 per cent of local authorities by 2020. On top of this, families earning George Osborne’s new ‘National Living Wage’ will still be priced out of 98 per cent of the country.

So who is this scheme for? Clearly not typical earners. A couple in London will need to earn £76,957 in London and £50,266 in the rest of the country to benefit from this new policy, indicating that ‘starter homes’ are for the benefit of wealthy, young professionals only.

Meanwhile, the home-owning prospects of working families on middle and low incomes will be squeezed further as the ‘Starter Homes’ discounts are funded by eliminating the affordable housing obligations of private property developers, who are presently generating homes for social housing tenants and shared ownership. These more affordable rental properties will now be replaced in essence with properties that most people will never be able to afford. It is great to help high earners own their own first homes, but it is not acceptable to do so at the expense of the prospects of middle and low earners.

We desperately want to see more first-time home owners, so that working people can work towards something solid and as financially stable as possible, rather than being at the mercy of private landlords.

But this policy should be a welcome addition to the existing range of affordable housing, rather than seeking to replace them.

As the New Statesman has already noted, the announcement is bad policy, but great politics for the Conservatives. Cameron sounds as if he is radically redressing housing crisis, while actually only really making the crisis better for high earners and large property developers who will ultimately be making a larger profit.

The Conservatives are also redefining what the priorities of “affordable housing” are, for obviously political reasons, as they are convinced that homeowners are more likely to vote for them - and that renters are not. In total, we believe this is indicative of crude political manoeuvring, meaning ordinary, working people lose out, again and again.

Labour needs to be careful in its criticism of the plans. We must absolutely fight the flawed logic of a policy that strengthens the situation of those lucky enough to already have the upper hand, at the literal expense of everyone else. But we need to do so while demonstrating that we understand and intrinsically share the universal aspiration of home security and permanency.

We need to fight for our own alternative that will broaden housing aspirations, rather than limit them, and demonstrate in Labour councils nationwide how we will fight for them. We can do this by fighting for shared ownership, ‘flexi-rent’ products, and rent-to-buy models that will make home ownership a reality for people on average incomes, alongside those earning most.

For instance, Merton council have worked in partnership with the Y:Cube development, which has just completed thirty-six factory-built, pre-fabricated, affordable apartments. The development was relatively low cost, constructed off-site, and the apartments are rented out at 65 per cent of the area’s market rent, while also being compact and energy efficient, with low maintenance costs for the tenant. Excellent developments like this also offer a real social investment for investors, while providing a solid return too: in short, profitability with a strong social conscience, fulfilling the housing needs of young renters.

First-time ownership is rapidly becoming a luxury that fewer and fewer of us will ever afford. But all hard-working people deserve a shot at it, something that the new Conservative government struggle to understand.