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DERMOT MURNAGHAN: Now the Help To Buy scheme has always been controversial and some critics say the second phase of the programme which will allow some people in England to get 95% mortgages could lead to a housing bubble. Well we’ll find out sooner rather than later because the Prime Minister is now launching the scheme three months earlier than expected. It conveniently coincides with the launch of the Conservative party conference which opens today so is this a well thought out policy or a knee jerk reaction to Labour’s increasing poll lead? In a moment we’ll be hearing from three senior Conservative figures John Redwood, Peter Lilley and Nick Herbert. So from Wokingham I’m joined by the former Cabinet Minister, John Redwood; from Offey in Hertfordshire by the former Social Security Secretary, Peter Lilley and from here in the studio, the former Police Minister, Nick Herbert. A very good morning to you all gentlemen, we’ll start with you Mr Herbert and this issue of the cost of living seems to be going to be the defining issue for the upcoming election. Have the Conservatives really lost control of that and Ed Miliband, with his headline grabbing pledge to freeze energy prices, has stolen a march on you?

NICK HERBERT: No, I don't think so because for the last two years we’ve been unveiling policies which are designed to help people with the cost of living. If you think for example about the policy to raise income tax thresholds, that’s helped 24 million people by an amount, by the time we get to the next election, that will be considerably more than any unworkable energy price freeze could deliver and that’s ordinary hard working people who are paying tax, paying less tax, in fact millions of them being taken out of tax altogether. If you think of the council tax freeze that has happened year after year enabled by the coalition government policy, if you think of the action that we’ve taken on fuel duty where the Labour fuel duty rises that were planned have been cancelled and actually fuel duty has been cut. All of those are policies that are designed to ensure that we are on the side of hard working people but in the end I think it is actually a bigger argument that counts and that is about the economy and getting growth back in the economy and getting people’s incomes rising again as well as how much money we’re taking away from people and it’s on that that I think that Conservatives feel an optimism that on that big argument that we are being seen to win it, that the action we took was right, that economic growth is coming back and that Labour was on completely the wrong side of that argument.

DM: Okay, let me just canvas views amongst your two colleagues about whether they agree that the Conservatives really are seen at the moment as being on the side of those people who are struggling to make ends meet. John Redwood, don’t you think the Labour party has spun a narrative here that your party is on the side of the better off and they’re the ones looking after hard working strugglers?

JOHN REDWOOD: Well that’s what they always say but as you just heard, the coalition government has been doing a lot to try and ease the squeeze on their living standards. The really big squeeze on living standards occurred at the end of the Labour period and Mr Miliband, who was quite right that people want cheaper energy, is of course the cause of the dearer energy that we’ve got to tackle because it was his policies when he was Climate Change Secretary that have added so much to the bills. So we know what we’ve got to do, there is an economic recovery now underway, we’ve started to make up for the lost output and the lost jobs of the late Labour years and now we’re doing that, we need to ease the squeeze on people’s living standards and I think there will be more policies in the next couple of years in the run up to the election to go further but the council tax freeze helps, the cancelling of the fuel duty rises helps, but we really need to get in and tackle those energy bills as well as the cost of housing where there is a good announcement today.

DM: Okay, let’s move on to Peter Lilley, of course from the Energy Select Committee as well, he knows an awful about the issue, so picking up from what John Redwood said, Mr Lilley, how do the Conservatives counter those rising bills?

PETER LILLEY: Well we ought to be in the business not of freezing bills at the currently high level but reducing them insofar as government can by, as John Redwood said, removing the Miliband taxes, the green costs of energy, by forcing us to replace coal and gas as his Bill did, by wind which is twice as expensive, offshore wind which is three times as expensive and sunlight which is four or five times as expensive. We ought to phase out that, we ought to increase competition to reduce any excess profits and return those to the consumer and go hell for leather for shale gas which in the States has brought down the cost of gas by two-thirds. So we should be in the business of trying to reduce energy bills, let Miliband keep it at a high level if he wants.

DM: Okay, let me move on to this Help to Buy. Nick Herbert, is this going to counter the headlines that have been grabbed by Ed Miliband? Why the rush to bring in Help to Buy when commentators and economists were already saying, well three months hence it might not be needed because there is a bit of a housing bubble building in places.

NICK HERBERT: Well the policy had already been devised, it is being brought forward by three months because its ready and I think that’s a good thing because I think it’s a fantastic help to young people who want to get their foot on the housing ladder, for whom properties have just become increasingly unaffordable. They can’t get together the size of deposit that is necessary because the banks won’t lend to the amount that is necessary and what the government is doing is standing behind the banks and I think that that will enable what is an important Conservative vision which is of property ownership, of people realising that dream. I think that is widely shared still amongst the public, people want to be able to get on and we want to enable that and not to hold people back. So I think it’s a good policy, it will be kept under review by the Bank of England which is right but I think it is a mistake to say that there is a housing bubble and so on already so we don’t need this, that’s a very London-centric view, it certainly is not outside of London.

DM: Well London and the south-east which is a massive part of the housing market, you can’t just dismiss it.

NICK HERBERT: And the Bank of England will keep it all under review but in the rest of the country prices have barely moved and they are still much lower than they were. What we want to do is help people get their foot on the ladder and at the moment they cannot get the deposit together and the banks won’t lend to the amount that is necessary so the important thing to understand about the policy is that it is the government standing behind the banks for that level of the deposit and that’s what will help people get in.

DM: But it is the economic coherence of all this. Let me just bring in John Redwood on this, we’ve just discussed energy prices where I think we all agree that inflation if it is 10%, 7% or whatever the energy company is going to put up prices by, is a bad thing yet here we are talking about property and saying we’d like to see prices rise by 7%, 10% or whatever it is because people will feel better off. Isn’t this what got us into the muddle in the first place?

JOHN REDWOOD: Well we’re not saying we want a big property price rise, we’re saying we want more transactions in the market and younger people in particular who want to own their first home, to give them a bit of help to do so in a situation where we inherited totally broken banks in some cases and banks under strong regulation after a set of mistakes in other cases, so there isn’t the bank finance available for all the mortgages people want, so there is this very useful transitional help which I think is necessary in the market. Those who think that there’s a housing bubble already should really get out of Kensington and Chelsea and they are very lucky to be able to live there because flats there are extremely expensive, but in the rest of the country there aren’t enough transactions, prices have been very stable over the last year and they are still well below the levels they reached in the Labour boom and bust phase in 2007/08.

DM: I’ll put it to Peter Lilley in a minute but the answer to energy going up, Peter Lilley put it very well, let’s not freeze it at high prices, let’s get the cost falling – why not do that with housing? Why not build more houses and depress the price and that way people can get on the housing ladder?

JOHN REDWOOD: Well the action being taken in the housing market is leading to more houses being built. They were at a very low level two or three years ago, that is beginning to rise and this government is very keen to see more housing being built but the housing market is quite unlike the energy or other markets because most of the houses that people can buy or can try and buy are already built. The amount of new building each year adds very few proportionately to the total so what happens to the second-hand stock is absolutely vital to whether people can fulfil their ambition to own a home or not and you do need to have finance available for them to be able to buy them.

DM: Peter Lilley, I’m confused, do you want to see house prices go up or down? Do you want to see them go down for people who can’t get them and people who have got them want to see them go up in value, what are the Conservatives trying to do here?

PETER LILLEY: I agree with John, we’ve got to build as many more houses as we can, that’s not actually going to cause house prices to collapse but it will stop them going up too much and it will mean more people will be able to have their own home. Conservatives have always been about enabling young people to become home owners as soon as possible and the Labour party has always wanted them to be tenants of the state, beholden to the state. It’s a huge difference and it’s right that we’re doing something to help as many young people become home owners as we can but that will really only be possible if we build more homes.

DM: Okay and this other big issue arising out of the Labour party conference as we move on to your own, do you see Labour as now finally moving and firmly moving to the left, giving the Conservatives then what, the centre ground for themselves or perhaps still UKIP to deal with and a move to the right for the Conservatives?

PETER LILLEY: I don't think UKIP are going to occupy the centre ground, hopefully the Conservatives will occupy the common sense ground which the bulk of people of all party affiliations agree with nowadays that we ought to have a competitive free enterprise economy generating wealth and then ensuring through the state social services that those who are most vulnerable, most in need, are properly cared for and protected and that’s the vision most of us share. On the left they are more interested in state control than they are actually in growth and prosperity and freedom than we are on the centre right.

DM: But Nick Herbert, there are so many of your activists, and you know this better than I do, who are concerned about UKIP, who are talking about well why don’t we do local pacts, if it won’t come from Central Office let’s do deals on the ground here come the general election and if you’ve got a eurosceptic MP sitting here perhaps you might persuade UKIP not to stand against them?

NICK HERBERT: Well I don't think UKIP would do such a deal but I think what I would say to them is when it comes to the general election there will a choice and the fundamental choice will be between a Conservative government led by David Cameron and a Labour government led by Ed Miliband and I think that that will be a choice which will make people reflect very hard and mid-term, inevitably, there are protest votes, protest movements, we’ve seen that before and I think that will tail off. We’ve got a good policy on Europe which the whole party can and has united behind which is on the referendum, we all voted for the Referendum Bill which opposed and hasn’t been supported by the other parties so I think we’ve got a very good chance by the time we get to the next election of uniting behind that and of saying to people who in the middle were disappointed – and I think as much as anything actually that has been to do with the economy but with the economy coming back now, with growth coming back, I think we will go in with a very strong hand to play.

DM: Okay and let me ask John Redwood, comparing the leaders here as Nick Herbert did, we saw Ed Miliband’s speech, an hour without notes, we know Mr Cameron can do that but Mr Miliband also pulled a rabbit out of the hat so to speak with this energy price freeze. Does Mr Cameron have to counter that or is it stay with the policies that we already know?

JOHN REDWOOD: I think it is stay with the main policies we’ve outlined but also announce some new ones during conference and beyond conference and for the manifesto because clearly the government’s policies are constrained by the Liberal Democrats in the coalition and we will want a more distinctive set of policies come the general election and in particular on Europe, where the Liberal Democrats don’t really want to renegotiate the relationship and are blocking a referendum this parliament, we will be the one major party offering a renegotiation – because we know we need a new relationship with the European Union, most of them want to complete the political union, have a common government to back their common currency, Britain isn’t going to be part of that so we need to sort out what sort of a relationship we have with them which is far less intrusive and leaves us more in control of our own affairs. I think that will be a very attractive offer to most people in the public and it will be backed up by an in/out referendum so that if we can’t negotiate the kind of relationship we want, the British people can say we’d rather have withdrawal than put up with something that doesn’t work for us. So I think that come the election people will see that that is a very attractive offer, particularly if they are Eurosceptics. Meanwhile Mr Miliband is consolidating his left-wing support but his idea on energy prices just won’t work. I think as people examine it over the weeks ahead they’ll see that one of two things will happen, either the companies will find ways round it, putting prices up before and after the freeze or there will be serious price controls and so we won’t get the investment and then the lights will go out.

DM: Okay, well the lights are going out, so to speak, on you now Mr Redwood. Thank you very much indeed for your time there and thanks also to Peter Lilley and Nick Herbert for that discussion.