Ed Miliband (pictured yesterday at the Shree Swaminarayan Temple, north London) is pressing on with his controversial cap rents, despite warnings from experts that plans will backfire . Labour's plans to impose rent controls are ‘economically illiterate’ and will slash investment in new housing, leading to more tenants being evicted by their landlords, experts warned last night. Ed Miliband yesterday confirmed he would press on with controversial plans to cap rents despite warnings from housing experts, business and even Labour figures that they will backfire. He said rent controls – demanded by the militant Unite union that bankrolls Labour – would give millions of ‘forgotten’ renters a fairer deal by helping those stuck in so-called Generation Rent by soaring house prices. But the Generation Rent campaign group said his plans were ‘riddled with loopholes’ and may make tenants’ lives worse. Under the proposals, landlords would have to offer three-year tenancies and would be banned from raising rent above inflation during this time. Alex Hilton, director of Generation Rent, said long tenancies were welcome but the proposal would give landlords an incentive to evict their tenants and would not keep rent down, adding: ‘This is because they have no plans to limit rent rises between tenancies – or after your first three years are up. ‘Worse than this, Labour’s planning new ways for landlords to evict you within that period, for example to sell your home or get it back for other reasons. These loopholes are scary when you think they’re attached to a big financial incentive to use them – because that’s the only way they will be able to put rent up in the first three years.’ In another loophole, hundreds of thousands of properties owned by buy-to-let investors could be excluded altogether. Most buy-to-let mortgages specify maximum tenancies of one year. Labour sources said these landlords would be able to offer short tenancies ‘where contractually obliged’. Senior Tories called the proposal ‘drivel’ and said it would suppress house building and push rents up. Chancellor George Osborne described the plan as a ‘totally economically-illiterate statement that grabs headlines, but is dismissed by every expert who looks at it’. The Confederation of British Industry said the way to tackle the housing crisis was to build more homes, and warned the plans could discourage investment, thereby forcing up rents in the long term. The Labour leader said rent controls – demanded by the militant Unite union that bankrolls Labour – would give millions of ‘forgotten’ renters a fairer deal by helping those stuck in so-called Generation Rent . Senior Tories called the proposal ‘drivel’ and said it would suppress house building and push rents up. Pictured: Mr Miliband and Boris Johnson on the Andrew Marr show today . Some senior Labour figures also have concerns, with former minister Tessa Jowell warning against a cap last week, saying: ‘Before taking a step like that you have to be clear it doesn’t have unintended consequences.’ Yesterday, however, she insisted she supported the plan. Housing spokesman Emma Reynolds was forced on the back foot yesterday after footage emerged of her in 2013 saying: ‘I don’t think rent controls are going to work in practice.’ Yesterday, she said she meant ‘Seventies-style controls’ and said Labour’s plan was different. Rent controls were widely blamed for a reduction in rented housing in Britain and Europe in the Seventies as investment dried up. The bad old days: A Manchester slum . Rent controls have already proved a disaster in Britain after they were introduced in the First World War. The measure was supposed to be temporary – but was only dismantled by Margaret Thatcher in the Eighties. During this time the private rented sector collapsed from 90 per cent of the country’s housing stock to less than 10 per cent. By the Seventies, rent controls were widely blamed for the slum conditions in much of Britain’s remaining private rented stock. Landlords, unable to make a sustainable return, neglected homes and dragged their feet over the most basic repairs. Unscrupulous operators such as Peter Rachman, whose name became a byword for exploitation, drove out tenants who had legal rent protection to replace them with others who were not covered by the law. Gordon Brown’s favourite economist Paul Krugman, a Nobel prize-winner, has warned that attempts to control rent always fail, writing: ‘Almost every freshman-level textbook contains a case study on rent control, using its known adverse side-effects to illustrate the principles of supply and demand.’ The socialist Swedish economist Assar Lindbeck once said: ‘Next to bombing, rent control seems in many cases to be the most efficient technique for destroying cities.’ Alan Ward, of the Residential Landlords Association, warned that rent controls could result in a return to the ugly conditions of the past, adding they ‘would lessen investment in new homes when we need more and serve only to paper over cracks in the market’. He said: ‘For some, it is easier to achieve a cheap political point by calling for rent controls than provide a prescription for growth in the private rented sector. Ultimately, tenants would lose as they find themselves forced into slums rented by Rachman landlords operating outside the legal market.’ David Cox, of the Association of Residential Letting Agents, said rent controls led to a fall in supply and the standard of homes because ‘landlords do not have the money to invest in ongoing maintenance’. Sam Bowman, of the Adam Smith Institute think-tank, said rent controls were ‘a stunningly bad idea that could clobber renters’. He said they would give landlords a huge incentive to raise rents at the start of a tenancy, adding: ‘Labour has unwittingly announced a policy that could devastate cities and exacerbate the housing crisis.’ The Institute of Economic Affairs said the proposal ‘would result in higher rents, a reduction in the quality of rented property and in the supply of homes to rent without improving affordability’. Nicola's political balancing act . She has spent the whole election campaign tilting to the left. But yesterday Nicola Sturgeon was trying her best to stick to the centre – even leaning to the right at times. Balancing act: Nicola Sturgeon was trying her best to stick to the centre – even leaning to the right at times . The Scottish First Minister went to an election campaign event at the JUMP Gymnastics Club, Cumbernauld . However, it was not political gymnastics being performed by the SNP leader. Instead she was joining youngsters on the beam and parallel bars during a visit to a gym in Cumbernauld, Scotland. Miss Sturgeon was launching her party’s youth manifesto, joined by actor Martin Compston, the star of police drama Line of Duty. Compston said Scottish Nationalist MPs would ensure the voices of Scotland’s youth were heard.
Ed Miliband is pressing on with his plans to cap rent above rate of inflation.
Housing experts, business and Labour figures have warned it will backfire.
Generation Rent campaign said Miliband's plan is 'riddled with loopholes'
Tories said 'drivel' proposal  would suppress house building and push up rents.