How Ed’s getting redder by the minute
ACEASELESS criticism of Ed Miliband is that he sometimes seems to be little more than a student union politician. And with his juvenile remarks this week that he wants to impose limits on increases in rents, he has shown once again that he values a cheap headline over wise policy-making.
For a man with a degree in politics, philosophy and economics from Oxford, the Labour leader displays an alarming lack of knowledge of how economics works in a free society, and how wealth is created.
He doesn’t seem, for example, to have studied history and considered whether there might be a link between the shortage of rental properties in London in the Fifties and the rent controls that then operated.
Nor does he seem to ask why, despite London then being full of bomb- sites, run- down housing and with building restrictions loosened, few developers were willing to step in.
The answer is simple: it was not financially worth anyone, apart from such people as the notorious slum landlord Peter Rachman, renting out property.
MR MILIBAND also ignores two causes of the present housing crisis. One was the decision by the Labour government of which he was a member to allow unlimited immigration from the EU, which created huge extra demand for accommodation. The other was Gordon Brown’s economic policy that brought Britain to its knees in 2008, and reduced the funds available for investment in property.
The fact is that building to let or to sell is a commercial risk, and few were prepared to take that risk during great economic uncertainty.
By saying a Labour government would limit rent rises, landlords will inevitably switch their investments away from property — which will simply exacerbate the problem. Also, Mr Miliband’s idea of restricting the fees paid to estate agents for lettings will either make them shed staff or find other ways of squeezing money out of home-buyers and sellers.
Indeed, having already promised to cap energy prices and seize land from housebuilders, what we are witnessing is a return to the wretched days of Seventies statism. I jest, but perhaps, next, Mr Miliband might suggest food prices should be frozen — after all, most farmers vote Tory.
Shamefully, he is fixated by the belief that the State has the answer to everything. Yet once Soviet- style distortions are imposed on the laws of supply and demand, the effect on wealth creation and growth are usually devastating.
THE sort of economy Mr Miliband seems to want — in which governments order restrictions on the price of any commodity that people find expensive — is one that is heading for ruin.
If you want evidence of this, just look at what is happening in France. There, the Socialist President, Francois Hollande ( (who ho is much ch admired ad i ed by b Mr M Miliband) is running a tightly regulated, high-tax-and-spend economy that is now in crisis and from which many companies are relocating abroad. One of Mr Miliband’s colleagues has told me that, if he becomes PM, the Labour leader wants to operate a ‘socialist’ government.
The trouble is that history shows that, invariably, socialist governments do not improve living standards or make life easier for poorer people, because they drive away the wealth creators that provide employment, and who pay the taxes that fund welfare safety nets.
Equally worrying, state controls of rents and energy prices — and any other similar new wheeze — are a brilliant way to destroy whatever economic recovery the country is now enjoying.