On Monday, it seemed that Rachel Reeves had crossed the Rubicon into complete economic ineptitude. It was reported that the Government was considering a one-year rent freeze for private tenants to soften the financial blow of the Iran war. Under the plans, landlords would be prohibited from raising rents for a limited period of time, which would be accompanied by other measures as part of a wider cost-of-living package to be launched in the coming weeks.
As CapX Editor-In-Chief Robert Colvile put it, this would have been a ‘mind-boggling’ level of state intervention. He was absolutely right. And clearly the Government saw the error of its ways as the Housing Secretary Steve Reed announced this morning that rent controls are in fact not being introduced.
We can only be grateful that the Government has rowed back from the brink. Wherever they have been tried, rent controls have not only failed to make housing more affordable, but have harmed the very tenants they were supposed to protect.
Rather than lowering rents, this kind of state intervention simply forces landlords to sell up, further restricting the stock of rental accommodation, pushing up prices as demand vastly outgrows supply.
Just take a look at Scotland, where the Scottish National Party imposed caps on rent increases at 3% in 2023 but saw rents actually soaring by 6%, the sharpest spike on record. Across the world in Argentina, the chainsaw-wielding libertarian Javier Milei has made deregulating the rental market a core plank of his mission to revive his nation’s fortunes. Since Milei stripped away Argentina’s rent controls, rental listings have skyrocketed, the cost of accommodation has fallen and tenants now have a plethora of properties to choose from.
Of course, if Labour were sincere in their aim to make life more affordable for Britain’s renters, they wouldn’t just be rejecting rent controls, they’d be reforming the planning system entirely and getting on with a housebuilding revolution. In the long term, it is only by building a sufficient number of homes that prices will lower for renters and buyers alike. Yet while the Government has acknowledged this, and talked a good game about delivering more homes, housing starts have fallen across England over the last financial year.
However, although it is welcome that the Government has U-turned on this particular policy, it is ultimately a hollow victory. The very fact it was considering this at all is scary enough, and exposes an uncomfortable truth at the heart of Starmer’s Labour Party.
From its inception, one of the great indignities of this administration has been its attempt to be all things to all men.
Originally, it was trying to appeal to the Right. Accompanying the launch of his white paper on migration – which finally conceded that the importing vast numbers of low-skilled labourers might not translate to high economic growth – the Prime Minister delivered an address which warned that multiculturalism risks transforming Britain into ‘an island of strangers’ and vowed to put an end to the ‘experiment’ of open borders. These were bold words from the former human rights lawyer, but they weren’t to last. It only took a month before he was in The Observer expressing his ‘deep regret’ at having given the speech at all. Someone else had just put the words in front of him.
The inconsistency doesn’t stop there. As part of Labour’s general election campaign, Reeves went on a charm offensive in the City, reassuring business leaders that as Chancellor she would respect the private sector and give it the space it needs to be competitive. In her Mansion House speech last year, she claimed to be ‘rolling back regulation that has gone too far in seeking to eliminate risk’. Yet since then, the Government she serves in has made life far worse for businesses, and killed growth, with its National Insurance rises and Employment Rights Act.
Under pressure from their backbenchers, Starmer and Reeves have now recognised that becoming pale imitations of immigration restrictionists and free-marketeers was a losing battle. So now they’re trying their luck with the Left as the threat from Zack Polanski’s Green Party grows. Hence the brief rent control tease, which I’m certain will not be the Government’s sole flirtation with the economics of populism.
These examples all demonstrate how ideologically rudderless the Starmer Government is. Because it stands for nothing, all the Government can do is hope to become a convincing vessel for the most popular rhetoric and policies being promoted by rivals who actually have a distinct vision for Britain. This is a reckless strategy, and one which can only lead to even more embarrassing U-turns – as well as more worrying dalliances with catastrophic ideas.
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