George Osborne, followed by Mark Carney, arrives at the Lord Mayor's Dinner at Mansion House. Photograph: Getty Images.
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Why an interest rate rise could help the Tories

It would benefit savers and could be seen as a sign of a return to economic normality.

It was just a month ago that Mark Carney sought to dampen expectations of an interest rate rise, stating that rates may remain low "for some time". But in his Mansion House speech last night, the Bank of England governor took a dramatically hawkish turn. He told the inhabitants of the City of London: "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect." With the markets currently forecasting a rise in spring next year, Carney's remarks suggest rates could increase from their record low 0f 0.5 per cent (where they have been for more than five years), before the end of 2014. Increasingly troubled by "early signs" of a housing bubble, the governor has signalled his willingness to deploy the most powerful weapon in the Bank's arsenal.

While economists debate the merits and demerits of the move, what would the political consequences be? It's generally assumed that a rate rise would be damaging for the Tories, one reason why cynics suggested that Carney (who was personally apppointed by George Osborne and awarded a bumper £800,000 salary) would postpone any increase until after the general election. Past Conservative governments, disproportionately reliant on the support of homeowners, consistently sought to avoid rate rises clashing with polling day. Indeed, it was precisely to end such politically motivated policy that Gordon Brown made the Bank of England independent in 1997.

But the politics of a rate rise may be more complex than they appear. A poll last year by YouGov for the Times found that 31 per cent of people believe an increase would leave them better off, compared to just 23 per cent who believe they would be worse off and 32 per cent who thought it would make little difference either way. While some Conservative supporters would curse a rise in their mortgage costs, others would be cheered by a better return on their savings. As Osborne's most recent Budget demonstrated, there are votes to be won in courting this group. The over-60s, who have suffered most from ultra-loose monetary policy, are desperate for signs of a return to normality and, crucially, are the most likely group to turn out.

More broadly, a rate rise could be viewed as a signal that the economy is finally back on track after years in intensive care . Osborne has already publicly claimed that the possibility of an increase is a "mark of success", an assessment that some voters will undoubtedly agree with. Labour argues, with much justification, that a rate rise would be more accurately described as a mark of a failure. As Ed Balls said in response to Osborne's Mansion House speech, it is the government's unwillingness to act on housing supply that has led to the danger of "a premature rise in interest rates to rein in the housing market which ends up hitting millions of families and businesses." But if Osborne is as relaxed as he appears about the possibility of a rate rise, he may not be wrong to be so.

George Eaton is political editor of the New Statesman.

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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.