Vote Labour and pay £1,440 more on your mortgage

Earlier today the Conservatives launched this poster (click to enlarge) and related petition:

Nick Herbert MP, Shadow DEFRA Secretary, commented:

“Labour’s classic response to every problem is to create a new tax.  The dog tax will just pile more cost onto ordinary owners whose pets pose no risk to the public while failing to tackle the problem of dangerous dogs."

I'm a great believer in micro-campaigning in this internet age but if the Tories are going to be launching poster campaigns they really need to be about the big issues. And the biggest issue is the deficit.

In today's Telegraph Andrew Porter is absolutely on the money:

"Instead of shouting about the arcane details of Greece’s deficit, the Conservatives should surely be looking at what in practical terms a Greek outcome would mean for voters in Britain. What would it do to their monthly mortgage payments? As senior Tories privately accept, some voters believe the worst of the economic storm is now over. If Mr Osborne wants voters to believe that a Labour win would make things worse, he must spell out just what that will mean for the monthly budgets of families in marginal seats."

I'm not an expert number cruncher so forgive me if these numbers aren't perfect but let's assume an outstanding mortgage of £140,000 with repayment terms over 25 years.  Adding 0.5% to the interest rate on a £140,000, 25-year repayment mortgage adds about £40 to the monthly payout. If Labour won again, bond yields are likely to rise quite quickly by about 0.5% to 1%, and this would pass through pretty much at par into mortgage rates. A full-blown Greek crisis would add 3% to rates or £240 per month to mortgage bills. I've produced a poster that is based on a realistic 1.5% mortgage hike. Others with more expertise than me could produce more permutations and watertight figures.

Here's my poster (click to enlarge):

The poster campaign could be attached to a web-based ready reckoner.

You can be absolutely sure that Labour are going to run a scare campaign based on 'Tory cuts'. We need to fight fire with fire... and soon. There's a case for waiting until Labour's Budget and reacting to what Darling announces. I'd be inclined to act sooner than that and start setting the terms of economic debate - as George Osborne did last year.

Tim Montgomerie