Treasury deletes misleading claim about benefits of Kwasi Kwarteng’s budget

Claimed benefits for average earner would need someone to have a wealth of over £400,000

Chancellor of the Exchequer Kwasi Kwarteng speaking to the media ahead of the Conservative Party annual conference at the International Convention Centre in Birmingham. Picture date: Monday October 3, 2022 (Aaron Chown/PA) (PA Wire)

The Treasury has deleted a misleading claim about the supposed benefits of Kwasi Kwarteng’s budget for average earners.

The chancellor’s department had claimed someone on £30,000 a year could save around £12,700 from the package of measures if they were buying a “typical” terraced house in London.

But it emerged that someone applying for an ordinary mortgage would need to have a deposit of around £440,000 in order to benefit.

The message was posted from the Treasury’s Twitter account in the wake of the budget, but has now been deleted after a fisking by fact-checkers.

FullFact said the figures were “accurate in and of themselves” but that the Treasury’s number relied on “a very specific set of assumptions”.

Officials had claimed that a London first-time buyer on £30,000 a year purchasing “a representative terraced house” would save £11,250 on stamp duty and £1,050 on the household’s energy bills from the budget as well as £400 in tax.

But the Treasury admitted that by a “representative terraced house” in London they were referring to the Land Registry’s figure of around £555,000 for July 2022.

To purchase such a house with an ordinary mortgage – where banks will lend up to 4.5 times someone’s salary – would mean someone on £30,000 a year would need a deposit of over £400,000

The vast majority of the saving claimed from the budget came from the cut to stamp duty in the budget. Prior to the budget, someone buying a home would have paid £17,175 on SDLT, and after it they would have paid £5,925 after – a saving £11,250.

The claim was notable because the budget was been criticised for giving huge benefits to high earners against those on lower or average incomes.

Mr Kwarteng was forced to U-turn on his plan to abolish the top rate of tax on Monday, saying it had become a “distraction” from the government’s agenda.

Tory poll ratings have sunk to record lows following the so-called "fiscal event", with Labour opening up a lead in excess of 20 points with several pollsters.

But an analysis by the Resolution Foundation think-tank found that even with the U-turn on that measure, the richest households would still gain 40 times as much from the budget tax cuts than poorer families.

The richest 5 per cent of households stood to gain £3,500 on average next year, compared to a £90 average cash gain for the poorest fifth of households, the analysis says.

Commenting on the deletion of the tweet, an HM Treasury spokesperson said: “While the figures used were statistically accurate, we recognise that certain assumptions were made about the profile of the typical first time buyer which were not reflected in this tweet.

“We take responsible messaging very seriously – which is why we have deleted the tweet in question.”