Interest rate rise could hit homeowners during 2015 campaign

In amidst Bank of England Governor Mark Carney’s comments today, which essentially announced that the economic recovery is officially underway, was a new piece of forward guidance that could have an impact on the 2015 election. The Bank announced that there was now a 2 in 5 chance that unemployment will fall to 7% by the end of 2014, and 3 in 5 chance that it will fall to 7% by the middle of 2015, instead of its previous prediction of late 2016.

This is important because it is the main metric by which the Bank will consider increasing the base interest rate – meaning that homeowners could be hit by rising mortgage bills just as they go to the polls in 2015. With the Chancellor aware that many are yet to feel the economic recovery in their pockets, and conscious of how important homeowners are as voters, the Government will be keen to ensure that people don’t feel the recovery slipping away at a crucial point in the electoral cycle.

The unpopular Bedroom Tax and Lib Dem politics

One of the most interesting pieces of polling in recent history was produced by the modernising now-Cabinet Minister Francis Maude for the Conservatives in 2005. Maude showed that people were positive towards Conservative policies when they were tested blind, but when they were shown those same policies and told they were Conservative, support fell away. The messenger mattered as much as the message.

Something similar is in evidence with the Government’s spare room subsidy. Polling this week found that the public approve of the concept: if the taxpayer is funding housing then the housing should not be larger than is required. The reality, however, is that when people hear this policy described in its more common form – as the bedroom tax – support fades away. In a similar fashion to the poll tax, though not to the same extreme, for many the bedroom tax has come to represent something more than a policy.

That explains why Labour has been working so hard to generate political advantage from it, including through an Opposition Day Debate this week. It also partly explains why two Lib Dems, including the party’s President and potential future leadership contender Tim Farron, voted with Labour and against their own Government to abolish the measure (a vote which Labour lost).

Farron’s rebellion is not just designed to be popular with voters: it’s also a clear attempt to further build support in the party. Farron has consistently positioned himself to the left of his leader, a stance that’s so far made him a popular President among Lib Dem members. It’s worth remembering that the Lib Dems are a party that only narrowly – by just 400 votes – selected Clegg as leader over the more left-wing Chris Huhne.

Battleground A&E

A&E is the part of the NHS that’s most under stress, and facing one of the worst winters in years it’s fast turning into a no-win situation for the Government. Today’s Keogh Report is part of the Government’s efforts to tackle this, but the reality is that either way Health Secretary Jeremy Hunt is likely to come under pressure. That’s because proposing a ‘two-tier’ A&E – a phrase that in itself could prove a strategic error, as it implies one is more valuable than the other – either won’t work, thus leading to a headache for the Government, or it will work and the Government will be accused of changing the rules just before winter in an effort to massage the figures.

Jake Rigg

Jake Rigg

Jake is the Managing Director at Keene Communications, specialising in government relations activities on financial services, tax and competition in the UK and the EU. He also specialises in planning and stakeholder engagement.

He was formerly Head of Policy at the Society of Trust and Estate Practitioners (STEP). With degrees in history and economics from the Universities of Oxford and London, Jake is a Fellow of the Royal Society of Arts, a trustee of the European Association of Philanthropy and Giving and advises several governments on public policy. He also advises clients on CSR and philanthropy activities.
Jake Rigg

About the Author

Jake is the Managing Director at Keene Communications, specialising in government relations activities on financial services, tax and competition in the UK and the EU. He also specialises in planning and stakeholder engagement. He was formerly Head of Policy at the Society of Trust and Estate Practitioners (STEP). With degrees in history and economics from the Universities of Oxford and London, Jake is a Fellow of the Royal Society of Arts, a trustee of the European Association of Philanthropy and Giving and advises several governments on public policy. He also advises clients on CSR and philanthropy activities.