As the former chancellor who warned presciently during last summer’s leadership contest that Liz Truss would crash the economy, Rishi Sunak’s calm competence was meant to be his key electoral selling point. But after Thursday’s half-point rate rise by the Bank of England left thousands of voters facing eye-watering mortgage hikes, a shirt-sleeved Sunak was reduced to insisting he was “totally, 100% on it” when it comes to fighting inflation. With a general election looming in 2024, many of those likely to be hit hardest – as cheap mortgage deals expire and force borrowers on to rates of 6% or even more – are in seats the Conservatives only just held in 2019. The hit to incomes for those affected is likely to be significant: analysis by the Institute for Fiscal Studies earlier this week showed that almost 1.4 million people – 690,000 of whom are under 40 – would see their disposable incomes fall by more than 20% as they roll off mortgage deals.
And unfortunately for the prime minister, many of those likely to be worst affected are concentrated in seats he will be very keen to hold on to in 2024. Analysis by the Liberal Democrats of the proportion of mortgage holders in each constituency across the country shows that third highest in the list is Mid-Bedfordshire – where one of four unwanted byelections will take place in the coming months. Other constituencies in the top 10 for mortgage holders are Dominic Raab’s constituency of Esher and Walton – which he has already decided not to fight – as well as Cheadle and Wokingham, all of which are on the Lib Dem leader Ed Davey’s list of winnable Tory seats. “If you look at the map of areas being hardest hit, it’s all those blue wall commuter belt areas, and they tend to be ultra-marginal,” said a Lib Dem source. Of the top 50 seats with the most mortgage holders, 48 of 50 are currently Conservative, many with narrow majorities. And as the elections expert Patrick English put it in a recent blogpost, “if a huge proportion of voters in a given constituency are applying for or renegotiating mortgages around about the time of a general election and are faced with sky-high rates at levels not seen since the 1980s, they aren’t likely to reward the governing Conservatives for the financial pain that will cause them”. Davey and Keir Starmer have been working hard to ensure the public associate Sunak and his party with the mortgage mess, just as George Osborne and David Cameron blamed the Labour prime minister Gordon Brown for the financial crash of 2008. As Davey put it on Thursday: “Homeowners are being treated as collateral damage by Rishi Sunak. This latest rate rise will scar family finances for years to come, all because this Conservative government crashed the economy.” Labour has been hammering home the slogan “Tory mortgage penalty” to characterise the sharp increase in repayments many have faced. The party has even produced an online ad aping the famously damaging Conservative election posters from 1992 that warned of “Labour’s tax bombshell” – this time with the slogan “Tory mortgage bombshell” and a large black warhead daubed with the message: “You pay £2,900 more a year under the Tories.” Sunak sought to shrug off Starmer’s taunts about mortgage rates at Wednesday’s prime minister’s questions by pointing to the fact that inflation is high globally, but Labour strategists think this holds little water with voters – particularly when the prime minister made halving inflation one of his five pledges on taking office. “Voters tend to think that it may not be the government’s fault but it is their responsibility,” said one Labour adviser. “I don’t think blaming global factors is a winning argument. There’s just a sense that the government is getting things badly wrong, in the round.” Martin Lewis, the consumer finance campaigner, has been urging the government to do more and pointing to banks’ rising profits, adding to the sense that ministers must bear some responsibility. Cheap borrowing, with interest rates at below 1% for 13 years from March 2009 to May last year, helped to mask an extended period of stagnant wages and deep public spending cuts, which are now being keenly felt. Some at Westminster have questioned whether Sunak’s plan to wait until late 2024 for an election looks quite such a good bet now that rates are expected to remain higher for much longer than previously thought. But the elections expert Rob Ford, speaking for the academic network UK in a Changing Europe, said the prime minister was likely to continue to wait in the hope that things may change for the better or fresh events overtake the current crisis. “Micawberism and wishful thinking are incredibly powerful forces – and the more unpleasant the outcome you’re facing, the stronger they tend to become,” he said. “The belief that something might turn up to make these things go away will be a hard one for these people to shake. “In this parliament to date, we’ve had two events that have completely upended the whole political agenda: the pandemic, and then the invasion of Ukraine and the subsequent cost of living crisis. Who can say with any confidence what the next year and a half can bring? Nobody knows.”