Sir Keir Starmer has warned about potential housing price “shocks” across the UK in the wake of dramatic mortgage rate rises.
The Labour leader today told City A.M. there’s “no market confidence” in the government and that “we are going to see these shocks in mortgages and housing as a direct result of it”.
Starmer met with a series of business leaders and mortgage brokers in the Midlands today to discuss the reaction to the mini-Budget unveiled by chancellor Kwasi Kwarteng two weeks ago.
Mortgage rates have soared after yields on government bonds spiked post-Budget, leading to fears the UK could experience a housing market crash after years of rapid growth in prices.
Savills has said a downturn could easily wipe out the estimated 13 per cent growth over the past two years in the London housing market.
When asked if he is concerned about a potential housing crash, Starmer said: “I can see further shocks coming out of this unless the government changes course.
“The broader thing is confidence, because we talk about the market reaction as an abstract – it’s not. It’s people investing huge amounts of money who don’t have confidence in what the government did in that kamikaze mini-Budget.”
It comes as Kwarteng today met with banking and building society executives to discuss how to stabilise mortgage rates, which have now hit an average of 6 per cent – a 14-year-high.
The Treasury said the chancellor would “work closely” with the sector on mortgage rates.
A series of polls over the past week-and-a-half have shown Labour leading the Conservatives by between 25 and 33 points, which would deliver a massive landslide victory for Starmer’s party in an election.
Prime Minister Liz Truss used her Tory party conference speech yesterday to say Labour is part of an “anti-growth coalition” who are opposed to her tax cuts, alongside “the Lib Dems, the SNP, the militant unions [and] vested interests dressed up as think tanks”.
Starmer said the real anti-growth coalition was Truss and the Conservative party.
“The Prime Minister two weeks ago took the economy like a car and drove it into a wall, which is about an anti-growth as you can possibly be – it is a destroyer of growth,” he said.
“Even to have the gall to talk about an anti-growth coalition is quite something. She’s been heading up the low/no growth coalition for 12 years.”
Labour has said it would reverse most of the government’s mini-Budget, which includes a cancellation of a Corporation Tax hike and a series of supply side reforms.
Starmer indicated he would also be in favour of reinstating the bankers’ bonus cap if Labour wins the next election.
“We would deal with bankers’ bonuses,” he said.
“In a sense, that is symbolic of Liz truss’ approach. In answer to the question from working people ‘how will you pay my bills this winter’, she says I’ll take the cap off bankers’ bonuses. So we’ll deal with that.”
Kwarteng will outline a medium-term fiscal plan next month, which is expected to outline how the government will bring the Budget back into surplus.
There has been widespread speculation the government will look at breaking a previous promise to increase benefits in line with inflation in a bid to cut future spending.
A series of Conservative MPs – including two cabinet members – have spoken out against this prospect and there have been rumours Starmer has spoken to senior members of Truss’ backbench about a parliamentary rebellion.
Starmer said he would “work with anybody who’s prepared to ensure that those that are most in need don’t suffer the consequences of the kamikaze budget”.
“If I revealed to you all the discusssions that go on in parliament then most of them wouldn’t succeed, but I think it’s a pretty open secret that many members of the Conservative party don’t agree with this course of action,” he said.
“Because they know it is desperately unfair.”