Saturday, 30 November 2013

Tory U-turns a warning to Labour

Carney might say that a likely 17% rise in house prices in two years does not mean there is "an immediate risk to financial stability", but it certainly suggests yet another gamble by the Chancellor has failed to reap rewards.  His Funding for Lending scheme, giving access to banks to very cheap money yet again, was originally intended to benefit small and medium sized businesses until it was hi-jacked by the greedy buy-to-rent brigade, and lasted so long unchecked because it resulted in low mortgage rates and house price rises, with the  accompanying pre-election feel-good factor. The truth is the Tories have been banking on no interference from the Bank of England, and the continuation of low interest rates, until the Tories are "swept back into power in 2015", on the back of the homeowners` vote. Labour must be very wary, especially with an Autumn Statement due next week, because the Tories are clearly prepared to adopt any populist policy, such as caps on Pay Day Lenders, accept U-turns, as with the FLS, resort to any measures, no matter how low, such as the personal attacks on Miliband, and even accept the idea of a freeze on energy prices, albeit in a different guise. Expect, too, yet more emphasis on "efficiency", not only to keep the financial sector on board, but because in Tory-speak, this means job losses, and lower unemployment figures would trigger the Bank of England to raise interest rates.
     Labour have only a few days to commit themselves to some obvious and electorally popular policies, because they are almost certainly pencilled in for Osborne to announce next week, and a start could be made with an immediate rise in both the minimum wage and tax-free allowance, acceptance of the EU`s version of the Tobin tax, a cap on all private rents, with a commission on the rental system to follow. Miliband must ensure he gets his "retaliation in first", making it absolutely clear to the voters whose side he is on, people not City. Obfuscation and prevarication must be avoided, as clearly the Tory election campaign is well under way.

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