Labour attacks 'skyrocketing' rent rises

Councils would be given the power to limit "skyrocketing" rent increases, John McDonnell has said, as he set out Labour's approach on the economy.

The shadow chancellor pledged to help people "at the mercy of an unforgiving, unrestrained housing market".

And he said a future Labour government would build 100,000 council homes a year and boost home ownership.

Ministers said the "proposals for excessive state regulation" would "destroy investment in new housing".

At a conference on the economy hosted by Labour in London, party leader Jeremy Corbyn said government intervention was needed to solve the housing crisis.

He said the party would "always seek to distribute the rewards of growth more fairly" and pledged to break with the "failed economic orthodoxy that has gripped policy makers for a generation".

Labour's proposed National Investment Bank will boost the UK's infrastructure, he added.

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In his speech, Mr McDonnell said Labour would not win the next general election unless it showed that it was a responsible custodian of public money.

"We can reject the dreadful choice of austerity and maintain solid government finances," he said.

He highlighted reviews Labour had set up into the workings of the Treasury, HM Revenue & Customs and the remit of the Bank of England's monetary policy committee.

BBC News political correspondent Chris Mason said the shadow chancellor was seeking to take on critics that have suggested the party is only ever capable of grumbling about the government, rather than setting out an alternative.

But he said, coming four years before the next general election, the speech was big on vision, but short on detail.

Council-backed mortgages

The measures put forward at the conference will be subject to consultation, and will not immediately become party policy.

They include powers to regulate private rent rises - similar to those pledged by former Labour leader Ed Miliband in the party's unsuccessful general election campaign - below the rate of inflation for the duration of a tenancy.

Critics previously said Labour's pre-election proposals would reduce investment in housing stock.

The "local rent regulation" suggested by Mr McDonnell would be available to councils in each area, rather than set nationally.

The National Landlords Association welcomed Labour's focus on making housing more affordable but warned the party not to "pull the rug from under the feet of responsible landlords", while new Labour mayor of London, Sadiq Khan, told the BBC he did not favour rent controls in the capital.

Mr McDonnell said there would be a new "forum" for elected mayors who are in charge of cities across the country.

"For the first time, national economic policy making will be influenced directly by local decision makers representing their metropolises and their local communities," he told the conference.

The forum will look for solutions to the "housing crisis" with Labour favouring an extension of local authority-guaranteed mortgages.

Mr McDonnell said he wanted to see more local authorities following the examples of Manchester, Warrington and Sandwell by "offering cheap, local authority-backed mortgages to first-time buyers in particular".

He criticised the workings of the government's Help to Buy scheme, saying it was not targeted at people who need assistance the most.

"Labour would make it a mission to ensure that families and young people on ordinary incomes aren't locked out of home-ownership," he said.

He said new council homes would be a "top priority", funded by savings in the Housing Benefit bill.

Tax haven

The shadow chancellor said Labour governments under Tony Blair and Gordon Brown had relied too heavily on tax revenues from financial services, and public-private partnerships to fund infrastructure projects, and did not do enough to clamp down on tax evasion and avoidance .

"It helped create an unfair tax system," he said.

But he said in opposition, the party was holding the Conservatives to account and a future Labour government would ensure the UK would "no longer act like a tax haven for the super-rich".

Mr Corbyn pledged Labour would break with the "failed economic orthodoxy"

Addressing the Labour proposals on housing, a Department for Communities and Local Government spokeswoman said the government was "creating a bigger and better private rented sector".

She added: "The vast majority of tenants across the country are seeing their rents remain stable, and are happy with the service they receive from landlords.

"These proposals for excessive state regulation would destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent."