David Cameron was a little misleadingly reported this morning as advising British households to pay back credit card debt. In fact he said that they were doing so and implied that this was a good idea.
In that, he was right given the high rate of interest that has to be paid on credit card debt. Whether more generally households should reduce their debt rapidly is more questionable, despite its high level.
The effect would be to slow down the economy even more by reducing demand on top of the impact of the government's measures to reduce its own debt. With mortgage rates low and house prices falling it may a good time for some to take on new mortgages in order to buy homes.
Indeed the Conservatives are trying to encourage new housebuilding by changes to the planning laws. David Cameron's remarks are moreover likely to be treated with cynicism by students or prospective students who owing to policy decisions taken by his government will have little choice but to take on more debt.
The problem for Conservatives trying to appeal to voters outside their core support base is that they are perceived as privileged - the more so in the case of the background of David Cameron and George Osborne than was true of Margaret Thatcher and John Major--with no experience of the financial constraints of ordinary families earning low to middle incomes. This is greatly exacerbated at the present time when everyone is being asked to make sacrifices but such sacrifices bite much more on the less well off who do not have financial resources to fall back on.
At the time of the local elections in May the adverse effect on popularity of the harsh programme of cuts to bring down the deficit to manageable levels by 2015 appeared to be falling much more on the Liberal Democrats than the Conservatives. But this may not continue to be the case.
The Conservatives have to retain the additional votes they won in the last election in cities and in the north if they are to avoid returning to the situation that prevailed from 1997 to 2005 when their support was heavily concentrated on the countryside and rich suburbs, and skewed towards the south and these people are going to be hit by the new economic slowdown which is approaching combined with low wage rises and high inflation. In order to avoid a widening feeling of divide between the privileged and the rest of the country they may need to at least try to make it seem that the former are being called upon to contribute.
George Osborne's earlier talk of eliminating the 50% tax rate, whatever the arguments in favour of so doing, would have sent a message that better off groups did not need to make any sacrifices. In the event, Osborne's conference speech ruled out any such tax cut up to 2015, but that may not be enough.
The message from Labour's Ed Balls that there is an alternative of less austerity and more economic growth runs up against the danger that the UK could slip into the market perception that the deficit is not on a clear downward track to ensure solvency in countries like Spain with similar government debt and deficit figures to the UK. But as the situation gets worse--which seems likely--it will sound more tempting to voters.