Could there be a General Election in July?

Conversations are ongoing about election timing in Downing Street with sources telling me there is a divide in opinion opening up.

They claim that some very close to the prime minister have now argued that it might be better to call an election straight after the local elections, to be held on July 4.

Sources suggest that the argument made was that Reform UK are inflicting massive damage on the Tories and that waiting longer will not help ease the situation - but perhaps make it worse.

However, I'm also told that senior figures at Conservative Campaign Headquarters (known as CCHQ) still believe that Rishi Sunak's better chance is to wait until autumn when improvements in the economy will have fed through to people's pockets.

And when I put the claims to a senior Downing Street source they insisted they were still working towards an autumn election - pointing to today's GDP figures as an example of how things are improving.

Speaking to economists like Ben Zaranko at the Institute for Fiscal Studies, the Tories are right to think people might feel better off the longer it goes on. After all, wages are now rising faster than prices and people receive pay rises at different points in the year.

But he also points out that the hit over the past four years is so intense that it will still be extraordinarily difficult to assume people will feel good about their financial situation. Even if interest rates fall, mortgages for the hundreds of thousands continuing to come off fixed rate will still be higher than they were a few years ago. And even if the rate at which prices rise slows, they are still way higher than they were back in 2019.

Overall, living standards will be lower at the next election than the last one - something that rarely happens.

Sunak's best hope will be that people blame other factors for the squeeze - the Covid pandemic and Ukraine war, in particular, and credit him with some of the recovery.

But as we saw in 2010 when Labour was punished politically for a global financial crisis, it doesn't often work like that.

And from sources I speak to, hope of a slim path to victory for the Tories has been replaced by acceptance of likely defeat in Downing Street, shifting conversations to how to limit that defeat.

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The go long argument has been made strongly by key strategists, but sources tell me that at least one very senior aide to the PM and others fear the growing threat of Reform from the right.

The party founded by Nigel Farage but now led by Richard Tice is surging in the polls - and largely costing Sunak's party. He will hope that action on small boats (with the ultimate aim being a flight to Rwanda) can help stem that threat, but at the moment it looks likely to be hugely damaging.

One problem for Sunak is that former Tory voters maybe have resisted third parties in 2019 to avoid Jeremy Corbyn becoming PM but every focus group I've listened to suggests that they don't fear Keir Starmer in the same way. The Labour leader is going out of his way to appeal to Conservative voters with a message of fiscal responsibility (although the Conservatives will of course keep arguing that Labour will raise taxes), patriotism and strength on national security - which is what today's nuclear deterrent announcement is designed to do.

Starmer also has a risk to the left of his voting coalition, but it doesn't look anything like as threatening as Reform is to the Tories. Even though Tice's party is unlikely to win many seats - if any (because of our electoral system), they could damage the Tories in seats where they are vying with Labour, as polls show they draw far more support from those who voted Conservative in 2019.

As for Lib Dem votes - with the party opposing Conservatives in every seat but one (they will take on Labour in Nick Clegg's old seat of Sheffield Hallam) - any boost for them, will likely help Labour in the general election.

If the Reform threat could grow in the months ahead, that could amount to a devastating defeat for Sunak, which would explain why some think it might be better to rip the plaster off sooner.

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