13 July 2023

When mortgage-paying business owners are cancelling holidays, it’s game over for the Tories


Sometimes something is so obvious it’s easy to miss.

Like the impact of rampant inflation and the ugly reality of mortgage repayments jumping to previously unthinkable levels is going to have on how people vote in next year’s general election.

This particular moment of clarity happened on Tuesday evening in a focus group I was moderating. I was chatting to a bunch of lower middle class Home Counties residents who had all voted for Boris Johnson in 2019 when suddenly an owner of a small electricians business piped up:

‘A couple of years ago I thought we were working quite hard and doing ok. Now I’m worried we might actually be poor.’

Around the (virtual) room everyone nodded.

Cutting to the punchline, it soon became apparent that none – not one – of these Boris Tories in a large Home Counties town would vote Conservative if an election was happening tomorrow.

It’s hardly psephological rocket science to suggest the state of the economy is what drives election results – the economy is knackered, so it is inevitable Rishi Sunak will lose – but I’m going to go out on a limb and say this is something bigger. If the Tories are not careful, they’re looking at electoral annihilation.

Their enormous – this isn’t hyperbole, enormous – electoral problem is that their core voters, the people who should be their bedrock – now feel poor. Not less well-off, but actually poor. This isn’t a wobble about the jobs market – people are cancelling holidays. As one of my focus group participants put it slightly shame-faced, ‘I now head to Aldi for bargains. The days of Waitrose are long gone’.

This was a group of hard-working home-owners. The majority owned their own businesses. And yet they seemed genuinely terrified about the prospect of having to negotiate a new mortgage deal.

Who do they blame? The Conservative government of course. Liz Truss is not an anomaly to these people. She is not a blip.

And things are only going to get worse. The day after my focus group – Wednesday – the news websites were plastered with extraordinary projections of what was going to happen to mortgage repayments over the next couple of years. Many homeowners – more than a million – will be paying back more than an extra £500 per month, according to the Bank of England.

As one savvy commentator pointed out, that’s the equivalent of a £10,000 pay cut.

None of this should have come as a surprise. A few weeks ago, the economics department at the firm where I am a partner, Public First, produced an analysis that next year mortgage rate rises would, in the words of my boss Rachel Wolf, ‘dwarf last year energy bills crisis’.

But as with the polls and their projections of Labour landslides, it’s when you actually talk to people about their real lives that this data becomes real. These are ordinary people being forced to make sacrifices by political and economic decisions way out of their control. They have done nothing wrong.

I realised on Tuesday that this is an issue that makes the never-ending NHS crisis pale into electoral insignificance.

Since the Truss interregnum, the shadow chancellor Rachel Reeves has become fond of asking people if they feel better or worse off under the Conservatives than they did a few years ago.

But that question no longer goes anything like far enough. Voters who felt like they were doing ok – with their car and their house and their fortnight on a foreign beach – now actually feel like they’re teetering on the brink. And they blame the Government. No culture war or flights to Rwanda are going to change that.

Perhaps the only, tiny, glimmer of hope for Team Sunak is that somehow they wrestle the economy into working order and bring down inflation by the turn of they year, and at the same time for some as yet unidentifiable reason the Starmer Project implodes. Both of these feel ambitious in the extreme just now.

As is stands, Keir Starmer could sit and do nothing at all, silent, for the next year and a bit and he’d still walk the next election. It’s game over.

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Ed Dorrell is a partner at Public First.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.