Labour should challenge the Tories to match pledges on house building and the living wage. We will see then if they really are on the side of those who want to work hard and 'get on'.
Matthew Whittley is a recent graduate, Labour party member and works as a researcher for a Midlands-based housing association
Despite Osborne failing on every conceivable measure of economic competence, Labour still lags behind the Tories in the polls on the economy. To start restoring trust, Labour needs to take control of the economic debate.
For too long the Labour Party has been on the back foot. One area where Labour could gain ground on the economy is the ballooning housing benefit bill, currently costing the taxpayer £24 billion a year. A commitment to reduce this would demonstrate that Labour is serious about tackling the deficit.
Despite the coalition’s attempts to cut it, the bill is forecast to increase over the coming years. As has become clear, the housing benefit bill cannot be meaningfully reduced without tackling the root causes – high rents and low wages – something the Tories haven’t even begun to attempt. Two things are required: a mass house building programme and the introduction of a living wage.
Investing in new homes is both economically sensible and socially necessary. We are in the midst of nothing short of a housing crisis. Home ownership is in decline and out of reach for the vast majority of young people without access to a bank of mum and dad; it would take 22 years for someone on an average low to middle income to save for a deposit.
This wouldn’t be so much of a problem if there was social housing, but thanks to Thatcher’s Right to Buy scheme (which has facilitated the sale of 1.8 million homes to date), as well as successive governments failing to replace them, there are now 1.8 million households on the waiting lists.
That leaves private renting as the option of last resort. But research by Shelter has shown that two thirds of private renters are struggling to keep a roof over their heads as rents continue to soar while wages remain flat.
The coalition government, whose 2010 Comprehensive Spending Review slashed capital funding for new homes by 60 per cent, has presided over the lowest levels of house building since the 1920s. In doing so they have demonstrated a reckless complacency and clearly haven’t grasped the scale the crisis.
Labour should make a manifesto commitment to build 1.5 million homes over a five year parliament. That may sound a lot, but this is what we need just to keep pace with demand. Around 220,000 new households are forming annually, but last year only 115,620 homes were built.
We also need to ensure that work really does pay, which can only be achieved by legislating for a living wage, not by slashing benefits. The case for a living wage is compelling. A living wage – £8.55 per hour in London and £7.45 for the rest of the UK – is what the Centre for Research in Social Policy has calculated to be the minimum required to meet basic living costs, yet a fifth of workers don’t receive it.
Over 90 per cent of recent housing benefit claimants are in work. The National Housing Federation has estimated that by 2015 1.2 million working people will be reliant on housing benefit to stay in their homes. The Institute for Fiscal Studies projected a saving to the Treasury (in higher income tax receipts and lower benefit and tax credit spending) of £6 billion if all private sector employers increased wages to a living wage, not to mention the boost it would provide to consumer spending.
Low wages and high rents are not only costing tenants, but taxpayers too. The state is subsidising landlords who charge extortionate rents and employers who fail to pay enough to cover basic living costs. This is absurd. With the General Election only two years away, Labour should add flesh to the bones of the one nation theme by committing to a mass house building programme and a living wage.
Investing in housing would help kick-start economic growth and boosting supply would bring rents under control. A living wage would put money into people’s pockets, helping to stimulate local economies and reducing the burden on the taxpayer in the process. Moreover, it would show that Labour has answers to the housing and living standards crises, while at the same time sending the message that Labour understands the importance of deficit reduction.
Last month, a ComRes poll found that 58 per ent think the coalition’s economic strategy has failed and that it will be ‘time for a change’ in 2015. There couldn’t be a better time for Ed Miliband to outline an alternative.
The spiralling housing benefit bill presents an opportunity for Labour to show that borrowing for investment can stimulate growth and reduce the deficit in the long-term; an opportunity to show that social justice can be combined with economic efficiency; and an opportunity to start making up ground in the economic debate.
Labour should challenge the Tories to match pledges on house building and the living wage. We will see then if they really are on the side of those who want to work hard and ‘get on’.
22 Responses to “Taking control of the economic debate: Why Labour should commit to a mass house building programme and a living wage”
blarg1987
So you are admititng the debts can be easily turned around then?
If it is as much as you keep preaching that happened in 5 years, alot can be reversed.
PFI contracts were cooked books as many civil servents and ministers who signed those contracts had vested interests in said companies.
Simplist solution is to challange the contract on the grounds of fraud and refuse payments many PFI companies and loaded with debt so they will default so goverment gets alot of the services back for peanuts.
As a I said in earlier posts debt consolidation will help bring it down also and long term planning goverment looksat 5 year cycles rather then whole life costs which will change tendering and provide lower prices.
I accept there will also have to be tax rises also.
However you have not said how the pension debt can baloon by 3 trillion in 5 years either you were not truthful about what debt was drawn up pre 2005 or your figures are wrong.
LB
Yes. By saying to everyone in the UK, in particular civil servants you aren’t getting a pension. For those expecting a state pension, you won’t get welfare either.
PFI is peanuts in comparison to the true detb.
As for the pension debts, not my figures, the governments. If you want to do something about that, here is the ONS contact details, give them a ring and say they are lying.
http://www.ons.gov.uk/ons/site-information/information/contact-us/index.html
In part they are. The current figure of 5,300 bn is an underestimate.
1. Assumptions of increases in life expectancy
2. Rectangularisation of the mortality curve.
3. Assumptions they hold assets. The biggest joke of it all, because they don’t.
4. Assumptions that the assets (AA corporate bonds) never default.
The last two are the bggies in manipulating the figures down.
However, since you know the figures to be wrong, it means you know what the number is? You don’t. You’re just making it up, which is another form of lying isn’t it.
Just like those in the PFI industry, you want other people’s money, you don’t give a shit they will be destitute as a result, so long as you get your cut.
So which part of that con are you making a living from? You don’t say. Like you don’t put up numbers.
You don’t say in the ‘restructuring’ who doesn’t get paid. Who loses out on the spending side. Restructuring means cuts. Name the cuts.
LB
Levy (2012) explains that the last official figure for the state pension schemes’ obligations was produced by the Government Actuary’s Department (GAD), as at 31 March 2005, at £1.347 trillion,
and
In summary, the estimates in the new supplementary table indicate a total Government pension obligation, at the end of December 2010, of £5.01 trillion
http://www.ons.gov.uk/ons/dcp171766_263808.pdf
Where do you get your numbers from to dispute them? So easy for you to post a link to show that you aren’t making it up.
My betting is that you’re a civil servant, and the thought that you are going to lose hundreds of thousands of pounds of pensions is too much to bear.
The cost of 5,000 pounds of pensions, is 152,000 pounds. If you’re a decent whack in the public sector you are going to lose vast amounts of cash.
After all, given the choice between a hospital for the masses or paying you lots of cash, you are going to loses. Illegal yes, immoral? No.
blarg1987
If i am a civil servant you work for a far right think tank, paid for by multi nationals to rubbish everything, which of course is not true.
Notice the report gives the full value as what you state but it does say it takes into account pay as you go systems as well whcih people have not contributed to and may not necesarilly get when they retire.
LB
Not at all. You’ve looked at it the standard left wing, if you point out problems you must be scum attitude.
The debts are as they are. The lowballed ONS estimate is massive. You have to add on the borrowing and other debts too in order to get an accurate figure.
That debt is too large to be paid.
Where you are right, is that means restructuring, and in the case of the state that means.
1. Screwing people with taxes
2. Screwing people with cuts
3. Screwing people by not paying debts.
You’ve pretty much admitted that is what restuctucturing means in the private sector.
I’m asking, and you’re dodging, what that equates to the state sector.
Who gets screwed and for how much.
No doubt you will come back, we need growth. However as the overspend is 28%, and growth of the order of 1-2% at most, its not going to work when spending is going up at over 2% (rising in real terms).
End result, is that those who need help the most get screwed.
Those that trusted the state for their pension (well they had no choice in most cases), get to be destitute.
Even migration doesn’t solve it. If you get in migrants who don’t pay a lot of taxes, they consume more than they pay in tax, and so they can’t pay anyone’s pension.