Magazine article The Spectator

Welcome to Subprime Britain. How Scared Should You Be?

Magazine article The Spectator

Welcome to Subprime Britain. How Scared Should You Be?

Article excerpt

When London radio news is being sponsored by a firm of bailiffs, you know something bad is happening. 'Helping landlords get what they're owed' runs the cheery slogan at the end of the bulletins. As bad as the financial headlines are, this tells a bigger story than anything captured in the headlines -- proof that the credit crunch is not an abstraction confined to the financial markets, but a bitter reality, already claiming victims and leaving tens of thousands to wonder if they will be next. All over the country, the borrowed penny is dropping.

It dropped on me about 3.30 a. m. on the day my wife and I exchanged on our first house -- the very day, as it happens, that Mervyn King first announced that the winged horsemen of the financial apocalypse would be galloping towards us. I slept for about 20 minutes that night, mulling the consequences. And then something else hit me. If I was thinking this, millions of others would be too. Together, they pack a powerful political punch. And I decided to find out who these people are, and where they live.

I am, you see, a political strategist who has left Westminster, but still loves the odd political 'fix'. Until last summer I was David Cameron's campaign director -- wired on a daily, hourly drug of rebuttals, focus groups, data and target seats. The arsenal that today's campaign directors have at their fingertips has been transformed since I worked for John Major ten years ago. Back then, the sophisticated political polling techniques that were commonplace in America had yet to be learned, let alone mastered, here.

To find out who our target voters were, we used what today looks like a blunderbuss -- canvassers' returns, and basic analysis of opinion polls. Now, a new breed of companies has arisen with stunning depth of data.

Most voters would be astonished to learn that, if you know whom to ask, with a few phone calls you can find out everything you want to know about which group of people are most exposed to financial pressures. So -- in the interests of transparency -- this is what I have done for Spectator readers.

I contacted Experian, the credit rating agency. It may not be a household name but it has a vast database about British households. It knows what sort of people live where, how much they earn, what they buy, where they shop, where they holiday, the car they drive, what they eat, and -- critically -- how much they are in debt. It is a GCHQ for companies who want to target people with various products. And for politicians, on the hunt for potential swing voters.

It also reveals where unexploded subprime bombs are most likely to lie. The Experian map (on the opposite page) categorises them in risk: the deeper the colour, the deeper the trouble. Worst is Sheffield Brightside, David Blunkett's seat, which Experian categorises with a subprime 'penetration' rate of 75 per cent. This is a list of households which have clocked up enough credit problems to be placed in the company's 'subprime' category. It now covers 5.1 million households. Of these, 3.7 million are in Labour-held constituencies, accounting for at least eight million voters -- just under a fifth of the electorate, all living on the faultline of the credit earthquake.

In all, 20 per cent of British households are in the subprime category, but this is very unevenly spread. The average Tory constituency is solvent enough to have just 9 per cent subprime penetration rate. For the average Labour seat, it's 30 per cent and in the average Lib Dem seat, 12 per cent. These are not welfare-dependent people, or sink-estate prey for loan sharks. Experian's typical subprime householder has had a county court judgment three or four years ago but is in work, and cleaning up his act. As a result of the credit crunch, however, such people are now at a higher risk of defaulting on their loans.

The 'prosperity' which Gordon Brown has boasted about for the last 11 years was bought on the never-never, a 'golden age' on tick. …

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