Mortgage Mayhem: Fact-Checking the Claims

As the UK gears up for a new parliament, the Labour party has made a bold claim: that the Conservative party’s manifesto would raise the cost of the average mortgage by £4,800. But is this figure based on solid ground, or is it a speculative estimate that relies on several uncertain assumptions?

The Labour Party’s Claim

At a press conference, shadow chancellor Rachel Reeves warned of an “increase in the average mortgage totalling £4,800 over the course of the parliament”. This figure was also published in a Labour party dossier, which stated that “the Conservatives’ plan will mean £4,800 more on your mortgage”. But what’s behind this number?

The Calculations

Labour estimated the net cost of a large number of spending commitments and revenue raisers in the Conservative manifesto, which it claims amounts to £71 billion. However, this calculation makes several significant assumptions. For example, Labour assumed that the Conservatives’ welfare reforms will generate no savings at all, compared to the Conservatives’ own estimate of £12 billion a year by 2029/30. The Institute for Fiscal Studies has cast doubt on the £12 billion figure, but it is not certain that the reforms would raise nothing.

Labour also assumed that all of the £71 billion would have to be borrowed, and that this would result in interest rates being raised, leading to a £4,800 increase in mortgage payments for someone with an 85% mortgage on “the average house in the UK”. However, we’ve not been able to fully replicate Labour’s figure for the impact on mortgages, as some of the detail behind the calculations remains unclear.

GDP per Capita: A Different Story

In Thursday’s ITV seven-party debate, Reform UK leader Nigel Farage claimed that gross domestic product (GDP) per capita “has declined for the last six consecutive quarters”. However, Office for National Statistics figures show that GDP per capita increased in the first quarter of 2024 compared to the previous quarter, although it did fall for seven consecutive quarters prior to that.

GDP per capita graph

Child Poverty: A Scottish Success Story?

In the same debate, the Scottish National Party’s Stephen Flynn said that 100,000 children will “be lifted out of poverty” thanks to the Scottish Child Payment. The 100,000 figure likely refers to modelling which estimates that 100,000 children will be kept out of relative poverty in 2024/25 due to Scottish Government policies. However, that modelling suggests the Scottish Child Payment specifically will keep 60,000 children out of relative poverty in 2024/25.

Child poverty graph

In conclusion, while the Labour party’s claim about the impact of the Conservative manifesto on mortgages may be attention-grabbing, it relies on several uncertain assumptions. As we navigate the complex world of election promises and counter-claims, it’s essential to scrutinize the numbers and look beyond the headlines.

Mortgage graph