The hypocrisy of Mr Clegg

Ed Miliband exploded housing onto the Election agenda today with his speech about Labour’s proposals for the private rented sector.(previously discusssed on Red Brick for example here and here).

It provoked some ridiculous responses, some stupid responses, and some downright hypocrisy.

Eric Pickles, after 5 years of doing sweet F A for private tenants, chose to quote the right wing Swedish economist Assar Lindbeck, almost but not quite correctly, claiming that he said ‘Next to bombing, rent control is the most effective way to destroy a city’. I think Eric should reflect a little more on his huge cuts in local government finance and the destruction of local services before he says that.

When the policy was first announced, Labour was attacked by Grant Shapps for ‘Venezuelan style rent controls’. The Tories still cannot decide whether to denounce the scheme as an appalling left wing attack on the nature of capitalism or to brand it as ‘a gimmick’, to quote Boris Johnson today. The reds under the beds theme has been carried on by the Resident Landlords Association who called it ‘a 1970s left wing policy’.

But the accolade for rank hypocrisy goes to Nick Clegg, rumoured to have once been Deputy Prime Minster. The gruesome Clegg really went to town, starting by saying the policy was ‘superficially attractive’ before concluding that ‘more and more landlords will simply quit altogether’.

That struck me as strange because I have a habit of reading party manifestoes, and the Lib Dems have traditionally been in favour of both greater security of tenure and restricting rent rises. Their 2015 Manifesto contains some interesting statements, talking for example of ‘new ‘family friendly tenancies, which limit annual rent increases’. In a section called Protecting private tenants and leaseholders, amongst other things they say:

More and more people – including families – are renting in the private sector for the long term. We believe private renting is an important part of the housing market, but the balance has shifted too far against the tenant, and more needs to be done to help people making a home in rented property.

We will:

  • Improve protections against rogue landlords and encourage a new multi-year tenancy with an agreed inflation-linked annual rent increase built in.
  • Enable Local Authorities to operate licensing schemes for rental properties in areas where they believe it is needed.
  • Establish a voluntary register of rented property where either the landlord or the tenant can register the property, to improve enforcement and tax transparency.
  • Ban letting agent fees to tenants if the transparency requirements we introduced are not successful in bringing fees down to an affordable level by the end of 2016.
  • Extend the use of Rent Repayment Orders to allow tenants to have their rent refunded when a property is found to contain serious risks to health, and withhold rent from landlords who have not carried out court-ordered improvements within a reasonable period of time.

Now the space between this policy on private tenancies and rents and Labour’s is negligible, but even so the great Leader chose to attack Labour rather than show a measure of agreement. He could have tried to win the policy argument but instead chose to have a dig at Miliband. Once again he put himself on the Tory side of the rhetorical argument even when his party policy is a reasonable one. Believing one thing and saying another to make a political point is the sort of hypocricy that Clegg says he hates.

Today certainly has been a field day for the nation’s amateur economists, or political journalists as they are sometimes known. Andrew (‘Andy’ to his pal Boris Johnson) Marr warmed to the theme, twice telling Ed Miliband that all reputable economists say that rent controls lead to reduced investment and supply. I don’t think he’s done enough research.

The Tories have been quoted all day saying that it is always wrong to interfere in markets, but they can be dismissed for spouting nonsense as they have already supported huge interventions in housing markets (eg with the Help to Buy). One clever chap talked about rent control leading to sub-optimal outcomes.

This ‘free market’ critique beggars at least 3 questions.

  • First, Labour is not proposing ‘classic’ rent controls but a mechanism for making rents predictable during a tenancy, along the lines of the German model, which is regarded as having successfully regulated private renting there for many years, even by economists. The rent policy is part of a raft of proposed changes, including standard 3 year tenancies and a clamp down on fees charged by lettings agents.
  • Second, the UK rental market, especially in London, simply cannot be viewed through a simplistic Boris Johnson-style classic economic supply and demand model – a kind of flawless world of enterprise and perfect knowledge that predicts that price controls will lead to reduced supply. In the real world, landlords have been in direct competition with potential home owners to buy existing properties in a highly complex and rapidly changing market, but one in which landlords have possessed significant advantages. Very little of the demand for buy to let has led to new supply because most buy to letters have bought existing property.
  • Third, private renting is just not a ‘free’ market to start with, it is surrounded and underpinned by any amount of rules, especially around mortgages, and it receives remarkably favourable tax treatment. The ‘market’ is also distorted by the existence of housing benefit. Government having a say on rents is just another brick in the wall of sensible regulation. As the private rented market is already staggeringly sub-optimal, it is almost quaint for these people to have such faith in the ‘free’ market: regulated markets do much better.

In a day of knocking copy, I also wonder if Generation Rent were pleased or distressed to see the Telegraph headline: Labour’s rent controls could see families evicted, left-wing campaign group warns’. I find it hard to believe that private tenants think that Labour’s proposals will ‘make no difference’ as Generation Rent claimed.

This entry was posted in Uncategorized. Bookmark the permalink.

4 Responses to The hypocrisy of Mr Clegg

  1. Paul Calland says:

    Be fair to Cleggie Steve, he has to keep Dave sweet so Tories in Hallam vote for him or if all else fails his ermine depends on Dave. Never mind facts, logic or sensible policy option for a broken housing market.

    Excellent piece by the way. Maybe Labour might restrict rent increases for council tenants and HA’s to inflation, abandon affordable (they aren’t) rents thus making huge savings on HB. This could be paid for by retrospective grant funded from cutting the tax breaks (£5 billion pa) to private landlords.

  2. Steve Barwick says:

    Very good blog, Steve

    Spot on regards where Clegg choses to position himself undermining the prospect of progressive coalition at every step

    Fear that with the missing 2% that would have come with a usual turn out for labour in Scotland we are in danger of not getting to 323 even with if could agree with rump of lib dems. And if really no kind of agreement with snp at all that leaves door open to another ConDem coalition. Or perhaps a second general election?

    All the best (we need it!)


    PS do you know about Connect’s evening event tmw? I will forward details later in case you not seen.

    Steve Barwick
    Connect Communications

    Office address: Third floor, Millbank Tower, 21-24 Millbank, London SW1P 4QP; Tel: 020 7592 9592

    Connect Communications is a trading name of Connect Public Affairs Ltd, registered in England: 03449749;
    registered office: First Floor, Thavies Inn House, 3-4 Holborn Circus, London EC1N 2HA

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s