Miliband's Leveson strategy looks crazy. It might just work

The Labour leader has made enemies of the British press. Now he has to present himself as the outsider taking on tabloid bullies.

The path that Ed Miliband has chosen in response to Lord Justice Leveson’s proposals – demanding that they be implemented in law – is not, to put it mildly, risk free. As I noted yesterday, Miliband’s position became much tougher as soon as it became clear that Leveson was not going to land David Cameron or Jeremy Hunt with any substantial charges of malfeasance in their relations with News International.

The report notes the intimacy of politicians with the Murdoch empire, accepts that there was influence and concedes that the public might reasonably come away from the episode with a perception of impropriety. But there is no tangible evidence of an explicit deal in which commercial interests where procured with favourable political coverage. (The anti-Murdoch stalwarts will insist that, like any Mafioso relationship, explicit deals didn’t need to be spelled out because everyone understood the rules of the game – but for corruption allegations to stick in a way that would have seriously damaged the Prime Minister you need something more than a few cosy canters over the Cotswolds.)

So when Cameron stood up in the Commons yesterday he had a little knoll of moral high ground to climb on to. He can’t get too sanctimonious about Leveson’s verdict on his relations with News Corp because Rebekah Brooks and Andy Coulson are still facing serious criminal charges. There is ample potential embarrassment for Number 10 there. In the event of convictions – and they must of course be presumed innocent – Cameron’s judgement would be shredded.

Still, Leveson deposited a bit of political capital in the Bank of Cameron and the PM clearly decided to spend it all at once – rejecting the Lord Justice’s central premise that any new regulatory arrangements need to be underpinned by law. That puts Cameron on the side of the newspapers (a pretty good place to be in politics) but on the wrong side of hacking victims who, reasonably enough, wonder what the point in asking Leveson to come up with a plan was if the plan wasn’t going to be implemented (not such a good place to be).

As a liberal-minded Tory, Cameron’s resistance to “crossing the Rubicon” of statutory involvement in press regulation is doubtless sincere. That taking such a position was sure to make him the toast of newspaper editorial meetings was also no doubt a significant factor in his considerations. If Cameron can hold his current line – and a parliamentary vote would be close given that the Lib Dems look ready to side with Labour – the next election will be fought with the Tories as the party that saved the press from an Ofcom-style regulator.

It doesn’t take a great leap to imagine how tricky that campaign could get for Miliband, and how hard newspaper endorsements will be to secure, if he has a manifesto promising to do to editors the horrible things that Cameron wouldn’t.

In a crude cost-benefit analysis, I’d imagine the anguished cries of hacking victims are worth withstanding for the PM if it procures him a favourable press wind, especially since wider public interest in the whole Leveson issue is low. By 2015 it will be very old news.

So has Miliband blundered or been wrong-footed? Not quite. I don’t think he had much choice but to back Leveson’s plan. To the non-journalist’s eye it is pretty reasonable. There are important arguments as to why any statute that covers newspaper behaviour is morally odious, intrinsically undemocratic, unworkable or all three. As a journalist, I instinctively gravitate towards that view, which has been made well enough elsewhere for me not to have to repeat it here.

It is also worth nothing that Leveson was at great pains to pre-empt those arguments, that other perfectly functional democracies have laws that cover media practice and that, quite obviously, there is no danger of what Miliband is advocating turning into a regime of regulation under which militias of jackbooted Ofcom thugs confiscate presses and lock up columnists. Journalists love to feel like dissidents, especially very well-paid journalists who are really part of the Establishment but want to retain the frisson of being subversive. And no industry ever gladly embraced more regulation.

In other words, Miliband is not setting himself against press freedom, he is setting himself against British newspapers. And while they are powerful, they are not as powerful as they used to be. They might give him a rough ride, but most of them were almost certainly going to do that in the run up to the next election anyway.

British newspaper journalists are also not the most popular bunch of people in the land, rubbing shoulders with politicians down at the bottom of the league of public confidence. Miliband’s whole project is based on the hope that he might position himself as an outsider, a ripper-up-of-rules, a breaker of cosy consensuses etc. It is all pretty fanciful given his Westminster pedigree but it is the best plan he’s got so he has to at least be consistent with it. That means, in this case, being on the side of the victims of appalling intrusion and malpractice. It means framing the forthcoming battle as one in which the leader of the opposition is taking on the tabloid bullies and the Prime Minister is sticking to the old rules, defending his friends and looking out for the powerful few. It’s a long shot. It could work. Rubicon crossed. Alea iacta est.

One final thought. British newspapers have worked themselves up into a right lather over Leveson and his purported threat to press freedom – and not without reason. It is hard to avoid the feeling that some of that froth is displaced anxiety about the obsolescence of the whole newspaper business model. Leveson barely touched on the internet, blogs, Twitter etc. Yet no-one currently working in print media can be confident that ink-on-paper will still be part of their lives in 10 years, let alone 20 or 30. So to a considerable extent the whole Leveson debate feels like a row about how to tidy up the mess in a museum that fewer and fewer people want to visit.

Print journalism is pathologically insecure at the moment; no wonder it doesn’t like the prospect of being restrained further. Ultimately, the questions of whether there are limits to free speech, where they are, and what responsibilities fall on those who publish are all going to have to be decided with reference to what goes on online. Leveson is destined to be remembered as an important chapter in the politics of this parliament, an epitaph for a particularly raucous phase in the life of British newspapers and a mere footnote in the story of 21st Century media.

Ed Miliband with actor Hugh Grant, who has been campaigning for stricter press regulation. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Show Hide image

Has Brexit burst the British housing bubble?

The fall in value of the pound is having a negative impact on property prices.

The high cost of housing in the UK has almost nothing to do with supply and demand. What matters is political control. Rents are high because landlords have gained the upper hand politically. The consequences are vividly illustrated in Ken Loach’s new film focusing on inequality in Britain, I’ Daniel Blake.  As a student in the 1980s I paid £9 a week to rent a room in a shared house in Newcastle upon Tyne. Private rent was low because for decades before then rents had been regulated. It was the lifting of that regulation that meant rents could rise so that now students have to borrow vast sums of money just to have a place to live. Today’s students pay many multiples more in rent than I ever did, and millions of families with children are also struggling because they have to rent privately.

Because rents have been allowed to rise as high as landlords can get away with, the landlords have been encouraged to buy up more and more properties that were once social housing or lived in by a family, who had bought the property with a mortgage. The number of people renting privately doubled between the last two censuses of 2001 and 2011. That has never happened before. It was the end result of years of deregulation and the withdrawal of our government from representing our interests in housing. Well-regulated private renting is a benefit, but without rent regulation it becomes a social evil.

Housing prices are not determined by supply and demand because you do not have a choice about needing to be housed. Allow an unregulated market to develop when social housing is also being cut and there is no choice not to buy what is on offer, other than sleeping on the streets. Prices will go sky-high. The purchase prices for mortgage borrowers also rise to astronomical levels as first-time buyers are competing with landlords to buy properties, and so have to be able to secure a mortgage equal to the amount a landlords can wring out of people desperate for a home.

In the first blog in this series on affordable housing published by Taxpayers Against Poverty, Stephen Hill, director of C2O Futureplanners, explained: “There are over one million less affordable homes than there were in 1980. The population has grown by nearly nine million people. Incomes at the median level are flat, and secure employment is increasingly scarce.” He is correct, but the situation is even worse than that — it is not lack of housing that is the problem. Each annual census in the UK records the amount of housing that exists at each point in time. It does this by recording the number of rooms in homes over a certain size. The number of rooms per person has risen at every census since 1981.

The 2011 census was the first to count bedrooms and found that in England and Wales there were 66 million for a population of 55 million (21 million of whom were married or in a civil partnership). So even if we make the ludicrous assumption that only married people share a bed and no children use bunk-beds, there were at least 22 million bedrooms empty on census night 2011. We have not been building a huge number of new houses or flats in recent years, but we have been adding extensions on to our existing homes and so we now have more housing than we have ever had before, per person and per family. We just share it out more unfairly than we have ever done before.

If housing prices were about supply and demand then our surplus of bedrooms would result in falling prices, but this is not a free market. You are not free to buy a flat that has been left empty in London to appreciate in value by its owner. They do not want to sell, or sometimes even rent it out, and you almost certainly would not have the money even if they did.

It is in the housing market that the majority of investments are made in the UK, housing is where most wealth is held. As we become more and more economically unequal it is through housing that we most clearly see that most of us are losers while just a few (who own multiple properties) are winners. Recent UK governments have been allowing wealth and income inequalities to rise and rise.

As Fred Harrison explained in the second blog in this series, government has not only withdrawn from regulating housing rents and profits to avoid this winner-takes-all-economics — it is now even prepared to provide £2bn to buy properties that home builders can’t sell so that they don’t need to lower prices even if landlords and first-time buyers will not buy their properties. The government sees renting-seeking as a social good, and believes that the market in housing should be regulated less and less with each year that passes, other than intervening to keep prices high and rising. Meanwhile, street homelessness rises, evictions rise, the debt of mortgage holders rises, housing prices rise and a small minority of the population become richer. So how will it end?

You might have thought that prices would stop rising when landlords stopped buying properties because the return on their investments in terms of rent would not making it worth their while paying, say, one million pounds for a three-bed house in a part of London near a tube station. Suppose that the most a family could pay was £20,000 a year in rent. The landlord’s “return” on their investment would only be two per cent a year, ignoring wear-and tear and anything else that they might be able to off-set against paying tax. If the forces that were actually at play were “supply and demand” then surely prices have to stop rising when people can no longer afford the rents?

However, landlords have another return: the escalating value of the property itself. If the property is rising by five per cent a year in value then they are making a seven per cent return when they rent it out, even if annual rents are just two per cent of its value. The rise of five per cent a year is due to speculation which is itself partly fed by a belief that the government of the day will do all it can to protect their investments, but it will only do that up to a certain point.

Because it needs to raise taxes a little given the state of the national finances, the UK government is now withdrawing its support of reckless profit taking by smaller landlords. In October 2016 a group of buy-to-let landlords lost their appeal in the courts to try to continue to be able to claim their mortgage interest payments as a business expense. From 2017 only the largest of landlords who set up companies to rent out their properties will be able to continue to do that.

The government knows that the housing market is in trouble. That is why Philip Hammond, the current Chancellor, announced that their “Help to Buy” scheme (which was aimed at the very best-off of potential first time buyers) will end in December 2016. The government knows that with the risk of falling house prices in future it cannot afford the guarantees that “Help to Buy” created. “Help to Buy” schemes were the previous Chancellor, George Osborne’s biggest spending commitment. They were designed to help inflate the housing market and keep prices rising, but eventually every speculative bubble has to burst.

On 21 September the first reports of a stalling market were released under headlines that included: “Q2 UK house sales at an all-time quarterly low says Land Registry”. UK Land Registry figures now show housing prices to have fallen in London by 7% so far in 2016, with the number of sales roughly halving. Investors have stopped buying; if a recent investor wants to sell they have to do so at a loss. Nationally prices fell by 4.5%.

So what happened to the magic-money-tree? In short the pound fell in value and it has been continuing to fall ever since the UK voted to leave the EU. There was always going to be “the event” that triggered the end of speculation and it is looking more and more likely as if Brexit was that event. Once the pound begins to fall in value then any overseas investor knows that if they buy property in the UK, even if its value in pounds does not fall, it will be worth less to them in future.

Suddenly UK housing is not a safe asset. Suddenly prospective landlords actually have to try to rely on their tenants’ rent to pay back their borrowings. Suddenly housing prices change despite no great alteration in supply or demand. Suddenly the whole edifice looks unsafe, not just for the majority of young and almost all poor people in Britain, but for the large majority of the population.

It was never “supply and demand” that determined our housing costs and profits. Relying on that belief did not result in greatly improved cheaper housing for most people, but it was easy to claim that somehow tomorrow would be better if we just left it to the market — until we left it to the ever more unregulated market for too long. Housing costs, prices and supply are determined by governments, including those that shirk their responsibilities and have too much concern for the economic fortunes of the affluent few.


This is part of a series of blogs on affordable housing published by Taxpayers Against Poverty. You can read others in the series on their website or sign up to attend their seminar in Parliament on the 16th November here: