‘Red Wall’ Tory MP tells Jeremy Hunt to bring back Thatcher mortgage relief or lose election
A leading “Red Wall” Conservative MP has urged Chancellor Jeremy Hunt to introduce mortgage relief for voters struggling with “staggering” increases in repayments or face losing the next election.
Writing for i, Jonathan Gullis said he was “shocked” that 35,000 households could face up to £1,000 increases in their monthly repayments this year if interest rates hit 6 per cent, which markets have predicted by early 2024 due to stubbornly high inflation.
He warned Mr Hunt that ignoring the political effects of this and failing to come up with “radical” schemes to support people would cost the Tories the next election.
The Office for National Statistics (ONS) announced on Wednesday that the rate of Consumer Prices Index inflation stayed at 8.7 per cent in May, the same level as in April, despite experts forecasting a fall to 8.4 per cent.
The Bank of England is now widely expected to once again raise base interest rates to 4.75 per cent on Thursday in a further effort to rein in inflation, adding further costs to borrowing and mortgages.
Mr Gullis said constituencies like his in Stoke-on-Trent North would be hit “particularly hard” by the “staggering impact” a rates rise will have on mortgages.
Mr Hunt has rejected calls to provide mortgage relief, arguing it would be inflationary.
But Mr Gullis said there was a way to help households that does not mean big subsidies like the furlough scheme or energy bill support.
He called on the Government to recreate Margaret Thatcher’s and then-chancellor Geoffrey Howe’s 1983 scheme to allow borrowers to claim tax relief for interest payments on their mortgage, describing it as a “huge success story” that allowed more people to own their own home.
Addressing criticism of the scheme from the likes of former Labour chancellor Gordon Brown, who scrapped it, Mr Gullis urged Mr Hunt to ensure it is designed in a way that does not primarily benefit second-home owners and other rich people, and to mitigate the effect on renters.
“This dream is the bedrock of the modern conservativism, giving people the freedom to spend their money how they see fit,” Mr Gullis said.
“Mortgage income relief at source (Miras) was a revelation and I firmly believe that the Government should explore how we can make it work today.”
Mr Gullis warned that the Tories would pay the price at the next election if the Chancellor failed to act.
“It is impossible to ignore the political impact of this, and if the Conservatives are to have any chance of winning the next election, we must come up with radical new ideas to support people.
“The Government have ruled out subsidy packages like they did on furlough and energy bills, and I agree with them on this.
“If we were to do this at this time with interest rates the way they are, it will only serve to exacerbate the problem and drive inflation higher.
“However, there are more innovative ways in which the Government can support households who need it most.”
On Tuesday, the Chancellor rejected calls for mortgage relief. Mr Hunt said: “Those schemes that involve injecting large amounts of cash into the economy right now would be inflationary.
“So much as we sympathise with the difficulties and will do everything we can to help people seeing their mortgage costs go up, we will not do anything that would mean we prolonged inflation.”
