Stamp Duty Land Tax (Temporary Relief) Bill
Monday 13th July 2020
(4 years, 5 months ago)
Lords ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2020 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 13 July 2020 - (13 Jul 2020)
Stamp Duty Land Tax (Temporary Relief) Bill
Monday 13th July 2020
(4 years, 5 months ago)
Commons ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2020 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 13 July 2020 - (13 Jul 2020)
Madam Deputy Speaker (Dame Rosie Winterton)
Under the order of the House today, amendments and new clauses to be moved in Committee of the whole House may now be tabled. Hon. Members should table through the Public Bill Office inbox: PBOHoC@parliament.uk. In order to be eligible for selection, Members should table amendments within the next 10 minutes.
The Economic Secretary to the Treasury (John Glen)
I beg to move, That the Bill be now read a Second time.
There is no doubt that the spring and early summer of 2020 will be forever remembered as one of the most testing periods in our nation’s post-war history. Covid-19 is both a health crisis and an economic crisis. It has tested the public and private sectors in equal measure, just has it has tested the population as a whole. But the virus has been brought to heel, and thanks to our collective efforts we are now in a position where it is safe to reopen our economy.
From the outset of this crisis, the Government have sought to protect business, jobs and incomes. The coronavirus jobs retention scheme and self-employment income support scheme have between them preserved millions of livelihoods through the lockdown. Meanwhile, our VAT deferrals and business rates reliefs, alongside the coronavirus business interruption loans and bounce-back loan scheme, have carried many businesses through the hardest months, so that they now have a fighting chance to recover.
In the autumn, the Government will bring forward a Budget and a spending review that will set out a longer-term strategy for the United Kingdom’s economic recovery.
However, this pandemic is not yet over. Even as we step out of lockdown, a great deal of disruption and uncertainty remains. Many businesses have yet to reopen their doors. Up and down the country, people are worried about whether their jobs will be secure when they return to work, and that is why my right hon. Friend the Chancellor of the Exchequer came to the House on Wednesday to set out the Government’s plan for jobs. As a first step, the Government are introducing a one-off job retention bonus of £1,000, available to employers for each furloughed employee who is still employed as of 31 January next year.
There will also be new, high-quality jobs for hundreds of thousands of young kick-starters. We will invest £1 billion to double the number of work coaches and support the unemployed. There will be more apprenticeships, traineeships and skills funding, and we will bring forward £8.6 billion of investment in our public services and infrastructure to trigger new job creation projects around the country. However, we know that some sectors of the economy have been hit particularly hard, and that is why the Government will support the hospitality and tourism sectors by cutting VAT on food, accommodation and attractions from 20% to just 5% for the next six months. It is why the Government have put in place a £1.57 billion rescue package for theatres, museums and other cultural industries, in recognition of the 700,000 people employed in those sectors and to safeguard the incalculable contribution they make to our national life.
Chris Grayling (Epsom and Ewell) (Con)
May I congratulate my hon. Friend and his colleagues on the Treasury Bench for what I think has been an exemplary response to an unprecedented crisis? He describes the challenges that still remain in the economy. Many people still face tough times, particularly in the events sector, where businesses remain as yet unopened. Many of the people who work in the events and entertainment sector have not, for various reasons to do with their employment or tax status, been able to take advantage of the schemes we have seen over the past few months. Will my hon. Friend, together with his Treasury colleagues, look at whether there are additional things we can do to support those sectors and those people in the months ahead, because for them times are still tough?
John Glen
I thank my right hon. Friend for his kind remarks. There is more work to be done, and I acknowledge the challenges faced by different industries in different ways. We will continue to look very carefully at further interventions that we could make and shall make in the Budget later this year.
I turn to the housing market, which is another example of a sector that has experienced considerable disruption and which brings me to the subject of this Bill. The Government’s plan for jobs will support the construction sector by injecting new confidence and certainty into the housing market. It will do so by ensuring that anyone buying a main home for under £500,000 before the end of March next year will pay no stamp duty whatever.
A thriving housing market is critical for growth and jobs in this country. Most obviously, a healthy labour market relies on people being able to move home to be closer to the jobs that match their skills, but the building industry is itself a major contributor to jobs and prosperity in the country, adding £39 billion a year to the UK economy. House building alone supports up to three quarters of a million jobs, and let us not forget the many related sectors that benefit from property transactions: estate agents, removal companies, furniture retailers, DIY stores, self-employed decorators and so forth. The lockdown sadly brought much of that trade to a juddering halt.
Rightmove estimates that 175,000 sellers were prevented from coming to the market between March and May this year. Meanwhile, HMRC data shows that residential property transactions in May were about 50% lower than the same month last year. For the first time in eight years, house prices have fallen.
Matt Western (Warwick and Leamington) (Lab)
The Minister is making a fair argument in support of the construction and housing sector, but, as he just described, the sector is down by 50% in terms of sales. He will appreciate that the automotive and car sector was down by 97% over the two months of April and May and down by 30% in June. Does he not think that that sector is worthy of support as well?
John Glen
I thank the hon. Gentleman for his observations, which he made last week as well. Of course the Government look at all industries. The automotive industry is a key industry, and we are in dialogue with companies across the country looking at the appropriate interventions necessary. Obviously, commercial sensitivities sometimes prevent us from discussing those at the Dispatch Box.
With restrictions easing, the Government have been able to reopen the housing market, and there are signs of tentative movement. Transactions in May were 16% higher than in April. It is crucial to our recovery that we maintain this momentum. People should feel confident to move, to buy, to sell, and to renovate and improve their homes. This is why the Government are cutting stamp duty land tax by temporarily increasing the nil rate band for residential property from £125,000 to £500,000, with effect from last Wednesday—8 July—until 31 March 2021.
Kevin Hollinrake (Thirsk and Malton) (Con)
I draw the House’s attention to my entry in the Register of Members’ Financial interests. I am very supportive of these measures. One of the risks to the housing market is the withdrawal by the lenders of high loan-to-value mortgages, especially for first-time buyers. We know that 90% and 95% loans can become a self-fulfilling prophecy that damages the market. Will the Minister do whatever he can to make sure that our banks support high loan-to-value mortgages throughout this time?
John Glen
I am grateful, as ever, for my hon. Friend’s intervention. Of course, he has enormous expertise in this sector. He is right to say that there is a threat given the changes in the profile of LTV mortgages that are being offered. We hope that that will return to more of the normal schedule that we would have seen pre-pandemic. We will be actively looking at this, and I am in conversations with the banks and building societies about it.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Does the Minister agree that this is actually more than a threat for first-time buyers at the moment—it is a reality? First-time buyers are queuing online for websites of lenders in an effort to get the small number of 5% deposit mortgages. Providing more incentive to people who already own their own home or are part of the buy-to-let market effectively crowds out first-time buyers.
John Glen
I thank the hon. Lady for her point. I would look at it in terms of opening up the market, creating more churn and momentum that allows all participants to be able to get on the housing ladder.
The Government’s cutting stamp duty land tax in this way will mean that nine out of 10 people buying their main home will pay no stamp duty at all, and buyers can save up to £15,000. In my own constituency, the average family looking to buy a home worth £349,000 will go from paying £7,450 in stamp duty to absolutely nothing. Indeed, this Bill will take most properties outside of London and the south-east out of stamp duty entirely.
The Bill is the latest in a long line of measures from this Government designed to support current and prospective homeowners in this country. Historically, stamp duty has been charged at a single rate on the whole purchase price of a property, with different rates for different value bands. The same rate of tax was charged irrespective of the number of properties owned by the buyers. In 2014, the Government reformed stamp duty land tax on residential properties, cutting the tax for 98% of buyers who pay it, unless they are purchasing additional property. In 2015, the Government introduced the higher rates of SDLT, which apply on purchases of additional residential properties such as second homes and buy-to-let properties. Finally, in 2017, the Government introduced first-time buyers relief. This increased the price at which a property becomes liable to pay stamp duty, for first-time buyers, from £125,000 to £300,000, with a reduced rate between £300,000 and £500,000.
Together, these reforms have made the tax system fairer and more efficient. They have cut the cost of home ownership for first-time buyers, helping more than 500,000 families to secure a foot on the housing ladder. This Bill will cut the cost of home ownership further, at a time when personal finances are under considerable pressure. In doing so, it will inject new momentum into the property market, protecting thousands of jobs in both the construction industry and the wider economy.
This stamp duty cut is one of several measures in the Government’s plan for jobs that will benefit families and businesses across the country. From September, homeowners and landlords will be able to apply for a green homes grant of up to £5,000 to make their homes more energy efficient. For low-income households, we will go even further, with vouchers covering the full cost up to £10,000. This, too, will support local jobs, as well as reducing carbon emissions and cutting energy bills for hard-pressed families.
Craig Mackinlay (South Thanet) (Con)
I wonder if the Minister could clarify a couple of points. On the 31 March date, we all worry that this will end up being a cliff edge, as the date approaches. Will that be the date of exchange, which is usual, I think, in these matters? Is he not concerned about that cliff edge? For some people, for no reason of their own, late finishing of their property will mean they fall the wrong side, very expensively?
John Glen
I thank my hon. Friend for his point. We are in a situation where, if the transaction is substantially completed by 31 March, it will be able to qualify for the relief.
Almost four months ago, the Government took the extraordinary step of ordering businesses across the country to close for an extended and unspecified period of time. Millions of people put their lives on hold for the greater good, but now that the virus is under control, the time has come to reopen our economy. Providing infection rates remain low, people should be able to get on with their lives, wherever possible. There are few aspirations more important to the British people than home ownership, and this Bill will ensure that those looking to buy a family home will see their stamp duty bill disappear altogether. It is part of our plan to turn our national recovery into millions of stories of personal renewal. In doing so, it will stimulate the housing market, safeguarding many thousands of jobs and helping Britain to bounce back stronger than before. For all these reasons, I commend the Bill to the House.
Dan Carden (Liverpool, Walton) (Lab)
I welcome this opportunity to debate one of the key planks of the Government’s summer economic update presented to this House last week.
As the Opposition, we have repeatedly said that we will work with the Government where we can to support people through a crisis the like of which none of us has ever known. That is exactly why we called on the Chancellor to abandon his one-size-fits-all approach to support for businesses and workers. It is why we called on him to recognise that this is a sectoral crisis that affects some areas of the economy much more than others, and it is why we called on him to come forward with a full back-to-work Budget that would really target Government support to those who need it most.
Instead, what we got was a limited statement that fell far short of grasping the scale of the challenge the country faces at this time of national crisis. We got blanket giveaways, such as the job retention bonus that risks handing billions of pounds to companies for employees who would have been brought back to work anyway. And we got this Bill, which the Government hope will get the housing market back on its feet and support wider economic growth.
Let me be clear from the outset that we do not oppose the principle of additional support for homeowners and buyers, and action to stimulate the housing market. Many people hoping to buy their first home or move home will have been stopped in their tracks by Government advice at the outset of this crisis not to move house—a measure rightly designed to keep people safe. Since then, those wishing to buy or sell have been trapped in a state of limbo for months on end. Many transactions will have collapsed during the hard lockdown period, with significant potential financial losses in conveyancing fees, solicitor fees and other costs involved in buying or selling a home. We understand those difficulties and uncertainties. The impact of the events of the past few months on house prices and on household incomes will mean that many people can no longer afford to move. Their dream home may now have to remain just that—an impossible dream—so it is right that we consider carefully how we can help them, but I do not think the Government have given careful consideration to the Bill or its impact on the housing market.
The Bill existed only in the Chancellor’s mind a week ago. It is a Bill that the Chancellor did not intend to present to the House today; it was supposed to be part of the autumn Budget process later this year. We know that because the Government themselves told us—or at least someone in Government did. We only have to cast an eye back to The Times article last Monday on the Chancellor’s plans for a
“Stamp duty ‘holiday’ to help rebuild economy”,
to be introduced “in the autumn Budget”.
As is so often the case with this Government, whoever briefed the press about the plans had not read the small print. Had they done so, they surely would have realised that announcing a stamp duty holiday three months early would crash the housing market this summer. It was left to others to point out the flaw in the Chancellor’s cunning plan. My hon. Friend the shadow Chancellor was quick to respond, saying:
“Even the possibility of a stamp duty change later this year”
would
“shut down the housing market in one fell swoop.”
Helen Miller, deputy director and head of tax at the Institute for Fiscal Studies, called the plans “mad.” The former Member for South West Hertfordshire and former Chief Secretary to the Treasury, David Gauke, said:
“Even 2 days of speculation”
over such plans would be
“unhelpful but 4 months…would be hugely counter-productive.”
Alun Cairns (Vale of Glamorgan) (Con)
I am interested in the theme of the debate the hon. Member is pursuing. The negative connotations that he presents apply exactly to the system that already exists in Wales. The Welsh Government have not yet offered any reduction in land transaction tax, in spite of their being given the resources by my right hon. Friend the Chancellor. Will the hon. Member therefore call on them to follow the model that is being pursued in this place? Or will he say that they should not do it and that people should remain—to use the hon. Member’s phrase—in a state of limbo?
Dan Carden
I am grateful for that intervention; I will go through my argument and analysis of the Government’s proposals in the Bill.
We do not know—perhaps the Minister does—who briefed what to whom last week, but the fact that the policy was leaked in advance forced the Chancellor’s hand. Just a day after The Times article appeared, another one in The Telegraph said that the cut would be introduced “immediately”. Policy making by briefing is no way to run a Government; it is either clumsy or irresponsible, or another example of No. 10 advisers running roughshod over the Chancellor.
We would rather the Government focused their energies on helping those people trying to buy or sell their home in such difficult circumstances, which is why, rather than opposing the Bill, we want to probe the Government on who will benefit the most from it. We are concerned first and foremost about whether the Bill will target support at those who need it most. We have serious concerns about the cost to the Exchequer and whether it is justifiable in terms of the Government’s other spending priorities.
We have serious questions about why the Bill includes significant support for second homeowners—plans that were slipped out by the Treasury after the Chancellor delivered his statement. We need to understand why the Government have decided, as my hon. Friend the Member for Bristol West (Thangam Debbonaire) said last week, to direct a huge bung to second homeowners, landlords and holiday-home buyers while millions of people are desperate for support. The provisions in the Bill are an unnecessary subsidy for second homeowners that will only worsen the housing crisis by reducing the supply of homes overall.
Kevin Hollinrake
Does the hon. Gentleman realise that 90% of the people who benefit from the change will be buying their main home, not a second home? Does he think it is a good idea to cut stamp duty at this moment in time? If he does, can he explain why, with the Conservative Government cutting it in this recession and having cut it in the first recession that I went through in 1992, the Labour Government did not cut stamp duty in 2008?
Dan Carden
Our amendment will be about getting to the bottom of exactly who benefits. The hon. Gentleman gives a statistic there and we have others. I will ask the Minister to explain why he thinks that a potential cost to the taxpayer of £1.3 billion for second homeowners is the right priority during a global pandemic.
Matt Western
My hon. Friend is being generous in giving way. That is the nub of the point, is it not? There is need to stimulate the housing sector but, as has been said, we need to look at every sector individually to see how it can be supported. Back in 2008, a huge amount of money was put behind manufacturing, and that is what is lacking here, and in what was announced last week.
Dan Carden
Of course this is about priorities for Government spending. Time and again, we have called on the Government to put forward a credible plan to build the homes that our country needs. We are also concerned about which parts of the country this Bill will benefit the most. The Institute for Fiscal Studies has said that first-time buyers might be made worse off by the changes.
As the stamp duty threshold for first-time buyers is already set higher—at £300,000—raising the threshold to £500,000 is worth comparatively less for first-time buyers outside London. In fact, it is possible that the Chancellor is removing one of the few advantages that first-time buyers have. Will the Minister comment on the IFS analysis and tell us: will first-time buyers benefit at all?
Mike Wood (Dudley South) (Con)
Does the hon. Gentleman not recognise that, in order for housing supply to be available to first-time buyers, existing homeowners need to be able to move house to move up the housing chain? By supporting them to do so through these measures, it makes it easier for first-time buyers to get their first home.
Dan Carden
I heard someone say, “We need to build more houses” and that is absolutely correct. But of course, we support anything that stimulates the housing market and jobs in the supply chain thereafter.
Eight hundred thousand fewer people under the age of 45 own their own home today. This Government have been in power since 2010. Home ownership is at its lowest level in a generation. The Prime Minister has repeatedly pledged to “level up” the country. But the benefits of this cut will be concentrated in London and the south-east.
Estate agent Savills identified the local authorities that will see the biggest fall in tax receipts as a result of the change. Wandsworth, Bromley and Wiltshire will see falls of £40 million, £35 million and £29 million respectively. Rightmove estimates that the average saving in the north-east will be just £646, compared with £15,000 in London. Once again, the Government seem to be prioritising the needs of London and the south-east over those of the rest of the country.
Andrew Griffith (Arundel and South Downs) (Con)
Will the hon. Gentleman give way?
Dan Carden
I will not because I want to make some progress. I know I am taking up a lot of the time in this debate.
The Government should be taking action to remedy the housing crisis, as part of a wider plan to solve the economic crisis, but as the Bill stands, we cannot be confident that it will do much at all for first-time buyers, never mind the millions facing a housing emergency. It may remove a disincentive to move house and temporarily increase transaction volumes, but of course house sales are currently depressed for other reasons, such as the difficulty of getting a mortgage, people not thinking that their job is secure and huge uncertainty about future house prices.
That is why we propose an amendment to help us to understand the full impact of this cut in stamp duty across the sector. It is a straightforward amendment, which will ensure that we get a clearer picture of how that stamp duty holiday will work for different groups. If the Government believe in transparency in policy making, they have nothing to fear by backing the amendment.
A change as significant as this should not be introduced without a mechanism for assessing how it works and who benefits most. When it comes to the housing sector, Government should be focused on the almost 5 million people in housing need across Britain today. We are in the midst of a housing emergency—an emergency created by decades of underinvestment in affordable social housing. The impacts are stark and have been exacerbated by the covid-19 pandemic, with many people forced to shield and isolate in wholly inappropriate living conditions. The Government should bring forward emergency legislation to provide protection for those who get into arrears as a result of loss of income during the covid-19 crisis. They should change the law to prevent no-fault evictions and change the law on arrears so that people in the rented sector—both social and private tenants—are given breathing space without the threat of eviction if they are unable to pay rent as a result of the crisis. Instead, millions fear the lifting of the ban on evictions on 23 August. Labour’s priority is in investment in social housing, not more support for second home owners.
Craig Mackinlay (South Thanet) (Con)
I warmly welcome this reduction in stamp duty land tax as part of the covid-19 stimulus provisions. The Minister has outlined very ably the stagnation that we have seen in the housing market over the past few months, with lockdown viewings obviously impossible. That has led to a very serious situation for conveyancers, solicitors, removal companies and all those involved in the supply chain of getting houses sold.
I very much welcome what is, actually, a simplification. We have gone down from six rates to just four. It gives us an opportunity to ask ourselves what is stamp duty land tax for and what is it doing to the residential market. We levy taxes in this country broadly for two reasons. Obviously, the first is to fill the public purse so that the public services that we all know and love—the defence of the realm, our policing, the NHS and everything else—can be paid for. We all realise that that tax cake has to be made up across myriad taxes, allowances and complications—a fairly mind-boggling number of them—and I am not sure that our 23,000 pages of tax legislation are much to be proud of. None the less, SDLT has proven itself to be a useful fill-up to the public purse, and it has been increasing in recent years. The residential market for the last four quarters has provided £8.4 billion in SDLT receipts for the Treasury.
We often use nudge theory—the second arm of tax if you like—to change behaviour. We use taxes to change behaviour, and we saw that with the £300,000 threshold for first-time buyers, which was introduced in November 2017 to help and encourage people into their first homes. We have also used SDLT with the 3% surcharge that came into place under the higher rate for additional dwellings rules that was introduced in April 2016. It is difficult to see exactly what the effect of that higher rate has been because we do not have the equivalent data from before that change happened in the second purchase market. None the less, it was imposed for good reasons and we can discuss that. It was used to dampen down the potential buy-to-let market, allowing more properties to be available to those genuinely seeking owner-occupation. Of that £8.4 billion raised in SDLT over the past four quarters, £3.8 billion has been in that 3% higher rate charge.
The Government have also introduced other tough tax measures, such as limiting the higher rate tax relief for landlords on their interest payments. That has come in over a phased period from 6 April 2017. There has been a restriction of lettings relief, operative from April 2020, for those who used to live in their own home and have now rented it out and it has subsequently been sold. There has been a number of red tape increases, so, for many small landlords, the pursuit of having rental properties has been somewhat dimmed over the past few years—so perhaps these measures have had the effect. There is no doubt that the £300,000 first-time buyer limit has been beneficial in many areas.
We have therefore used SDLT, as a nation, to flex behaviour—to encourage what we perceive to be good behaviour and discourage what is perceived to be bad behaviour, and that is not uncommon across the tax system. We see high rates of tax on alcohol and cigarettes to try to discourage bad behaviour, but then we enter that debate about what is fair. What is fair in capital taxes? We have capital taxes on inheritance tax, capital gains tax and, obviously, SDLT. Are they simply measures to fill the Treasury pot? Are they designed to be penal measures? Are they designed to be redistributive measures? Obviously, there is a wide debate to be had about the suite of taxes that we have, and we probably have 650 different views in the House about what is fair and reasonable.
The reduction in SDLT, with the first £500,000 at 0%, has “nudge” written all over it, because it is deemed a good thing to encourage people to keep the housing market rolling round. The rates that were in effect have obviously been perceived as an impediment to the normal functioning of that market, so, very thankfully, SDLT has been removed for most people until 31 March.
I do not think it even needs stressing that property transactions create a lot of business activity. That is taxable business activity: the conveyancers; the estate agents; the builders; the VAT on DIY sales. Commonly, the kitchen or bathroom gets changed as one of the first measures, and the lids come off the tins of paint that are purchased elsewhere.
But have we created fairness? Is the progressive SDLT banding system, which is continuing, fair? Is it fair that someone who buys a certain type of property in Kent pays more than someone who buys exactly the same type of property in, say, County Durham or elsewhere? They obviously face a higher charge because the value is greater, but then they are penalised for the property price because they enter a higher band. That unfairness is simply due to what could be called national and local planning failure over many decades. That extra SDLT has to be paid out of net salary that has been saved, or perhaps out of additional loans—or, for those lucky enough, from the bank of family.
Labour mobility will be really important in the future. I do not think we will see how important until this period of crisis with covid-19 is over. Employment will change and opportunities will change, and there will be a need for people to pursue jobs elsewhere. SDLT restricts their choice, because someone has to be not just a bit sure but very, very, very sure that the purchase they are making, with the incumbent SDLT, is really the right one. We dare not make a mistake when there are potentially fives or tens of thousands of pounds at stake.
I encourage the Chancellor, in his Budget later this year, to ensure that job mobility forms part of the tax system. Someone may have to rent a property elsewhere to test the area and the market, and they may have to rent out the old property that they leave elsewhere. Surely, there should be a tax relief on that new rent that they pay, against the rental income on the property that they had to leave to seek employment elsewhere. That could certainly be used elsewhere to help to nudge behaviour.
If we are going down the route of nudging through the tax system, let me suggest something that I have often proposed: downsizing relief for the elderly. Far too many elderly people are stuck in a property that is far too big for their current needs. They might have lost their partner, and they are now residing in a property that is simply too big. However, faced with the potential for a big SDLT charge if the rates come back into play after March, many older people will say, “Well, I’m simply not going to pay it. I don’t want to pay £5,000 or £10,000 just to move.” They will stay stuck in an inappropriate property, effectively blocking the bigger properties that many families are crying out for.
My message to Ministers today is that the new rates for SDLT should become permanent, for regional fairness, for job flexibility—that will be really important—and to encourage property transactions. We all know that property transactions create positive taxable work into the future, through either VAT or profits that are taxed through self-employment or a corporate regime.
My concern is that we are now creating a cliff edge. I think that, in the first weeks of April next year, we will all face stories of people who just could not quite get the job done before the cliff edge of 31 March, perhaps because a house that was meant to be built had problems or the builder was delayed; myriad issues could emerge. I feel very sorry for those who, for reasons not of their own making, will find themselves on the wrong side of that cliff edge date that we are creating. So I sincerely welcome these changes, but please let us make them permanent.
Matt Western (Warwick and Leamington) (Lab)
It is a pleasure to follow the hon. Member for South Thanet (Craig Mackinlay). I have some sympathy with several of his points, particularly the one about the cliff edge. We must always be careful, when we introduce any sort of action to stimulate any market, to ensure that it does not have unintended consequences. However, I disagree with his points about capital wealth and growth. I have a fundamental view about earned income resulting from a person’s labour: capital wealth and growth should have no advantage, in the form of a lower taxation regime, over income earned through labour.
The last economic crisis had a huge impact not only on the housing sector but on every sector. Many current Members were in the House during that time—I was not—and we need to understand what the learnings of that crisis were. One thing that we have clearly observed is the extraordinary growth in capital wealth over the past 10 years, and this is where I have a frustration. What I really wanted to see in the Chancellor’s statement last week was a series of sector deals to address each market. Housing would certainly have been one of them, as would its associated industries, but I mentioned in my intervention just how important I believe manufacturing is and should be. If the Government’s ambition is to level up, we need to know what is going to happen to our crucial and vital manufacturing sector, whether aerospace or the automotive sector. Those are the sectors that urgently need the Government’s attention, because they are the ones that stepped up to the plate when required to do so. When the Government needed help—with getting ventilators and personal protective equipment manufactured, for example—it was our manufacturing sector that we turned to. Of course the construction industry plays an important role, and infrastructure investment is vital, but our manufacturing sector has to be there for us tomorrow, and that is where I want to see more urgent and substantial action from the Government.
Last week’s announcement contained an array of measures, but I was disappointed that the Government did not extend the furlough scheme for longer. The hon. Member for South Thanet talked about the cliff edge in March, but I fear that the cliff edge that we are going to see in terms of unemployment over the coming weeks will be quite terrifying. I was also deeply disappointed that no support was provided for our steel industry, our aerospace sector and particularly our automotive sector, which I guess is the one closest to home for me in my constituency, where so many jobs depend on it.
This announcement on stamp duty is a terrific windfall for those who are thinking about buying or selling, but also for those who are already in the process of doing so. I have been speaking to people over the past week, and I have already come across several who have said, “This is wonderful! We were going to sell the house anyway.” Now they will benefit from an average of £4,600. Of course, there is a huge difference between those who are going to sell their house and maybe get a benefit of £4,600 and those who are selling a property at around £500,000, who will suddenly get the benefit of an extra capital gain of £15,000. If this is supposed to be about levelling up, I cannot believe that giving an additional, enhanced reward to those who are already wealthy is really on the Government’s agenda.
Kevin Hollinrake
The hon. Gentleman is aware that it is the purchaser who pays stamp duty, not the seller. This measure will make it more likely, when a person puts their house on the market, that they will transact, sell it and move. That has a knock-on effect into the rest of the economy.
Matt Western
I thank the hon. Member—I would perhaps describe him as a friend—for that point. Yes, it is the purchaser who pays, but the person who is selling will probably be buying too, such is the chain of sales in the sector. I therefore do not see it as a one-off benefit. It will be a benefit throughout the chain.
I fear that this move is not in tune with the wider public mood. Actually, they want to see more support for those on lower incomes. Perhaps the £1.3 billion that would have been yielded could have been used to better purpose.
Looking at the relative inequality of the past decade, it seems we have not learned from the last economic crisis. That is underlined by figures from the Resolution Foundation, which show the change in median household wealth between 2008 and 2018. The average household saw a loss in wealth of 2% in the west midlands, 12% in the north-east and 13% in the east midlands, while in London the average household gained 78%.
For me, there is an issue with the second homes sector. Previously, a second home owner or buy-to-let landlord would have paid an additional 3% stamp duty surcharge, which would translate into a figure of 8%, rather than 5%. These changes mean that anyone looking to buy a second home at between £250,000 and £500,000 will pay just 3%. Coming back to a point that was made earlier, we need to know the scale of the issue. What proportion of transactions are for second properties? In the last 12 months, 34% of all purchases were made by second home owners. That has to be a concern, because it affects the market to the detriment of first-time buyers.
Andrew Griffith
I understand the hon. Gentleman’s concerns about rewarding behaviour that was going to happen anyway, but does he accept that the identical criticism could be levelled at a scrappage scheme, which I believe he has advocated?
Matt Western
I understand the hon. Gentleman’s point, but he will know that the automotive sector has been frustrated for many months. Many buyers in the automotive sector are holding off because they do not know whether they should be buying a petrol car, a diesel car, an electric vehicle, a hybrid or whatever. A lot of people have held off changing their vehicle because of the huge changes brought about by the transition in that sector. That is why it is important to the automotive manufacturing sector that we help buyers change their vehicle. All that is happening at the moment is that the purchasing decision is being stalled ever longer. It is not the same in the housing sector.
This £1.3 billion could have been used to fund local authorities, which are seeing a financial hit of £1.2 billion as a result of covid, and to help them through these difficult times.
The Institute for Fiscal Studies has concluded that first-time buyers may be worse off as a result of these proposals. The stamp duty threshold for first-time buyers is currently £300,000, whereas the average price of a property is just £208,000 across the country. That means that most are unlikely to gain from the hike in the threshold from £300,000 to £500,000.
Rob Roberts (Delyn) (Con)
I am confused as to how the hon. Gentleman draws the conclusion that somebody will be worse off from paying exactly the same as they otherwise would have done. The hon. Member for Liverpool, Walton (Dan Carden) said exactly the same thing—that first-time buyers will lose out. They will not lose out. They were exempt before, and they will still be exempt. It is poor form on his part to mislead first-time buyers into thinking that they are being penalised in some way by this measure.
Madam Deputy Speaker (Dame Rosie Winterton)
I hope the hon. Gentleman is not accusing the hon. Member for Warwick and Leamington (Matt Western) of misleading anyone.
Matt Western
Thank you for your help in clarifying that point, Madam Deputy Speaker. What is happening is very simple. The hon. Gentleman is suggesting that there is an advantage that there is certainly not, because what will happen is that those who would have gained the benefit—in other words, those who are below the threshold—will see others who can afford a higher cost pay more, therefore possibly precluding them from purchasing a property. As a result of this measure, I think we will see higher house prices and higher rents. At a time when there is pressure on wages and probably a significant spike in unemployment coming up, that is a real concern. I also think that the benefits will be felt more in the south-east and London.
There is a huge squeeze on the availability of mortgages right now. I am not sure to what extent the hon. Member for Delyn (Rob Roberts) is familiar with it. I am not hugely familiar with it—I will be open and honest—but my understanding is that the availability of mortgages is under pressure. First-time buyers are struggling to get hold of mortgages, for which they need a much higher deposit than they would have needed three or six months ago. They are now looking for a deposit of 15%. Back in my day, it was possible to get a mortgage with a deposit of a couple of per cent., or maybe even 0%, such was the need to get the housing market going at the beginning of the 90s.
The handling of this has not helped. Clearly there was a need for sectoral schemes and stimulus to help the wider economy, but this seems to have been rushed out. These advantages for second home owners, buy-to-let landlords and so on seem to have been slipped out after the Chancellor’s announcement. I do not think that this will be to the benefit of first-time buyers, and that is a massive disadvantage of the whole scheme. It will potentially worsen the housing crisis, and I echo the point made by the hon. Member for South Thanet: there is a real risk of a cliff edge come the end of March next year.
I would like to see these moneys being redirected into social rented council houses, because we desperately need to address this crisis. That would have been terrific. I am not sure that the public will really welcome this, because it is a short-term benefit, and there are much wider issues in the economy that need to be addressed. I urge the Government to rethink this strategy and bring forward measures for the wider economy—particularly, as I keep saying, for the manufacturing sector.
Sara Britcliffe (Hyndburn) (Con)
The measures that the Government recently announced are an enormous leap forward to get our country up and running again. This pandemic is threatening so many jobs and livelihoods, even in my constituency of Hyndburn and Haslingden. The past few months have been necessary to save lives, but now we need to look to the future and how we can kick-start the economy.
The toils of buying a property are numerous and have been experienced by many. They include working with estate agents, solicitors, mortgage brokers, surveyors—the list goes on. This Government are making it easier and less expensive for buyers who might have been put off purchasing due to uncertainties in the market. Removing stamp duty will save people thousands of pounds—moneys that they can invest in their local economy, which this Government are pushing everybody to do.
According to The Guardian, which I admit is not my usual morning read, Accrington has been recorded by property website Zoopla as among those receiving the most property inquiries in the country since lockdown. People are, very understandably, looking to move to my constituency or relocate locally within Accrington. Either way, the scheme is good news, as many properties will become more affordable thanks to the temporary removal of stamp duty. I am dismayed that the shadow Minister expressed disapproval at our cut to stamp duty—a policy that will put more money in the pockets of hard-working families.
The Conservative party’s priority is clear: create and protect jobs, and support people in finding the ones that are out there. By kick-starting the housing market and boosting confidence, we will drive growth and create jobs. As the Prime Minister’s new deal confirms, a £12 billion affordable homes programme will support up to 180,000 new affordable homes for ownership and rent over the next five years. That builds on the 464,500 new affordable homes built since 2010 and opens up thousands of new jobs.
I am proud to have had the opportunity to speak in this debate, as this plan will give confidence to new buyers and those moving up the property ladder. I thank the Treasury on behalf of those in my constituency benefiting from this scheme. I also thank it for the tremendous work it has done during the pandemic to save jobs and livelihoods across Hyndburn and Haslingden, for which many are eternally grateful.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I rise to speak not as somebody who opposes owner occupation but as somebody who celebrates it. I am new Labour to my core. I want choice and opportunity for all, and this stamp duty measure does not do that. Members would have to believe that we have a perfect housing market in which supply matches demand, but we do not have enough properties of any tenure—whether to rent, buy or socially rent. This measure will squeeze out the people we all want to benefit.
Who benefits from this measure? People in London. Who does not benefit? People in the north-east and the north-west, who already do not pay those levels of stamp duty.
Miriam Cates (Penistone and Stocksbridge) (Con)
Will the hon. Lady give way?
Siobhain McDonagh
No.
The measure allows us to believe that we can change the housing market by tinkering at the edges, but we know that tax forgone is money that cannot be spent on something else.
Owner occupation has reduced since 2000 from a height of more than 70% to 62%, while private renting has gone up by 20%. People aged between 35 and 44 have seen a three times increase in their private rents. I say to hon. Members, from a south London perspective, that no good comes from that. The families I see in private rentals will never escape into owner occupation, as I and my parents had the opportunity to do.
The only way to solve the housing market is by building more homes of all tenures—renting and buying. It is not just me, a Labour MP, who believes that. Sir John Armitt, the chair of the National Infrastructure Commission said only last week that the planning system was not the main obstacle to affordable homes and that there was no point hoping
“somebody’s going to decide that they’re going to build lots of homes, even though there isn’t a market for the homes or they’re not going to make a profit…The last time we built 300,000 homes plus was in the 1960s and 1970s, 50 per cent of those were private sector homes, 50 per cent delivered by local authorities…To get to 300,000 personally, I don’t see how we get there in a meaningful way without some sort of government intervention with local authorities, or with the housing associations, to deliver more affordable homes on a large scale.”
When first-time buyers come to us as Members, they will talk to us not about the fact that stamp duty is going up, but about the fact that they cannot get a mortgage: that the banks and building societies are requiring deposits not of 5% or 10%, but of 15% — increasing deposits, and at increasingly high percentages to get those mortgages. Let us contrast that with the situation for private landlords: a bank is more happy to lend, as they have more equity and more money, so they are a safer bet.
With an employment market that is going to be so difficult in the autumn, and with young people being disproportionately impacted by losing their jobs, there is a real problem. I say this not to score political points, but because I am personally worried that the divisions in our society will undermine our society. If we make it harder for people to own, they will resent those who do so. If young people cannot get on to the property ladder because they cannot save or keep enough to pay their rent and also save for a deposit, they will resent their grandmother or grandfather for their ability to live in their house, and that does not help anybody.
I would like to end by talking about the people who cannot even be part of this debate, who come to my advice surgery, as they probably go to other Members’ advice surgeries: people who are living in one room in a shared house with their children. I do not know whether it is a London or south-east phenomenon, but I wish others could join me on a Friday to talk to people who work as carers, in shops and in the hospitality trade, and who are disproportionately from black and ethnic minority communities, who have their family in one room and share that house with perhaps four or five other families. Not for them the ability to protect themselves from coronavirus by using their own bathroom and having access to their own kitchen; they are never, ever going to have a bathroom and kitchen of their own, in the 21st century.
These are people who strive and work, who get up early in the morning, who come home late at night to earn what none of us would go out to work to earn, and who live in conditions that are truly appalling. These people will never get access to housing because their landlords are not going to evict them. Their landlords are making loads of money from them, so why would they evict them? Nevertheless, if we want these people to believe that there is hope—that there is a better future, that there is a reward for work—we must give them some opportunity to buy their home or rent a decent place at a price they can afford.
We talk about mortgages that are two and a half or three times people’s salaries. I see people who are paying 70% or 80% of their take-home pay to keep their accommodation. Their hopes for their kids and their hopes for their futures are dampened. We can all pretend that this does not matter, that we live in a stable society and that it will be okay, but it will not be okay, because coronavirus has shed so much light on how unfair and unequal our society is, and those of us who have are threatened as much by that as those who do not have, because we cannot sustain a democracy in that environment.
So this stamp duty measure is, in the overall picture, a small issue, but if it goes to those who already own their home or want to buy a bigger and better home at the expense of the young people trying to make out in life, we will all suffer. We need to look at this situation and be broad-minded and ask how we solve this problem forever.
I want to leave Members with a statistic. One in 10 adults in this country owns a second home while four in 10 adults own no home. That is not a sustainable future for our country, for our democracy or for the families in that position.
Virginia Crosbie (Ynys Môn) (Con)
I have to declare that I have first-hand experience; I was helped to buy my first flat in the 1990s when the Chancellor was Nigel Lawson and the Conservatives introduced a stamp duty holiday then. My flat was tiny and it was right on the top floor—there was no lift—but it was my own.
In the wake of the covid-19 lockdown across the UK, many sectors are facing significant challenges, and the UK Government have done and continue to do much to help across the board. My constituency, like many coastal communities in the UK, has been particularly badly hit because it is highly reliant on tourism income. The UK Government have provided a range of support to help people survive the impact of the crisis, through stage 1 of their recovery plan, from furlough payments to resilience funds. Stage 2 of the plan encompasses a number of different packages to support the economy as we emerge from lockdown, including the kick-start scheme to help 16 to 24-year-olds into employment by paying the first six months of their wages and the stamp duty land tax temporary relief that we are debating today.
Coastal communities such as mine, which are highly tourism dependent, face two significant housing-related challenges as we emerge from lockdown. The first is the challenge of a significant downturn in direct income due to the shortened holiday period this year, which will have an impact on the ability of local people to pay mortgages and to purchase property. The second, more hidden issue relates to holiday homeowners. In some coastal areas, the level of second home ownership is high. Many of these owners have been hit by having no holiday rental income, while being expected to pay higher premium council taxes and potentially having reduced income from their primary employment. That brings a risk of a surplus of properties coming on to the local market, resulting in a localised property price crash. That is one issue the Bill will help to address. It will give a much-needed boost to the housing market by significantly reducing the stamp duty on property purchases, and the Chancellor’s decision to offer this temporary relief at a time when it is so needed will make a great contribution to restarting the UK economy.
I wish to end by thanking the Treasury and welcoming the Bill. I urge the Welsh Government to follow the example set by the UK Government and introduce a similar scheme in Wales, to stimulate the housing sector, so that my constituents and those all across Wales can be supported at such a crucial time.
Sarah Olney (Richmond Park) (LD)
I should declare an interest, in that I moved house earlier this year, about four weeks before lockdown started, when the purchase of a family home in a constituency whose house prices are significantly above average meant that I paid a fair chunk of change in stamp duty. Given that this year, more than any other, we have all had cause to be grateful for and celebrate our public services, I am glad to have made that payment and to have been able to support our NHS in such a way. Having had that experience, I have had a lot of thoughts about stamp duty as a tax, not all of them supportive, as I do not think it is a very fair or efficient tax. As the representative of a constituency with considerably higher than average house prices, it is a tax that affects my constituents far more than most. However, I am standing here today to oppose this cut, because in the current circumstances I have to ask: is this the best use of the £3.8 billion that the Chancellor will lose in revenue as a result?
I have heard from estate agents in my area—again, we have a reasonably healthy housing market in Richmond Park—and they are telling me that, even before the announcement last week, they were beginning to see a healthy return of interest from potential buyers. I am sad to say that that is probably because, as we know, the three drivers of the housing market in normal times are death, divorce and debt. I do not need to explain to anybody here, because they will all have seen it in their constituencies, why those three particular drivers of the housing market have been so prevalent this year and will continue to be so next year.
I am not entirely certain that the housing market is the sector we really need to be supporting with our tax revenue at this time. As I say, even without the stamp duty cut announced last week, we were already starting to see the revival of the housing market and all those associated industries that the Minister mentioned in his speech—the solicitors, the removal firms and all the construction firms such as plumbers, bathroom fitters and associated industries. They were already starting to come back, and there is huge pent-up demand from people like me. I bought a house in February with the intention of doing it up, and I have to tell the House that this has been a very frustrating three months for me: I really want to get a new bathroom very soon, and I plan to do so.
I am not certain that the housing market is the market that really needs supporting at this time. I am not certain that the construction market and the other markets that the Minister referred to are the best uses of this money. I pay tribute to the hon. Member for Mitcham and Morden (Siobhain McDonagh) and support what she said. When we think about the individuals who are most in need of Government support, it is not those who are able to secure mortgage finance. In the mortgage market, people have to have a fair amount of money already in the bank to put down a deposit, but they also have to have a reasonable expectation of future income in order to be able to service a mortgage.
I think we can all agree that unemployment undermines the housing market more than anything else—more than the need to pay stamp duty. We all know that because we saw it last week—even the day after the Chancellor’s statement, we saw some of our major retailers announce job cuts—and we all know that there is more to come. That, far more than anything else, is going to undermine our housing market and with it all the sectors the Minister mentioned.
We know that unemployment is the biggest drain on our economy, and we all know that there have been sectors and individuals that have struggled far more than others during this time. I just want to draw attention again to that group of people—we estimate there to be about 3 million of them—who were left out of all plans for support. As summer turns to autumn, when their mortgage holidays end or when their landlords are no longer barred from evicting them, they face real fears about how are they going to pay their mortgages or rents, as well as about the businesses they set up or the new jobs they accepted at the beginning of this crisis. In my constituency, I have a lot of people who were on contract work. All that has fallen away, and they have had no income now for months and months.
Jacob Young (Redcar) (Con)
Would the hon. Lady concede that those people she is talking about are exactly why we need to get the housing sector going again? Those self-employed people who work as plumbers and electricians, who may not have been eligible for some of the support the Government offered, are the reason why we need to do this.
Sarah Olney
No, I would not concede that, and I will tell the hon. Member why: it is because we are talking about sectors that are not going to be improved or helped by a revival of the housing market. A lot of people in my constituency are working in the creative industries, for example.
Siobhain McDonagh
I am not sure whether the hon. Lady saw the article in The Sunday Times yesterday identifying not only first-time buyers as people having problems in securing mortgages, but self-employed people, because of banks and building societies being concerned about their future incomes.
Sarah Olney
I thank the hon. Lady for making the point better than I could, in response to the hon. Member for Redcar (Jacob Young), because it is precisely that: uncertainty about people’s futures is the biggest barrier to their securing the kind of mortgage finance they will need to purchase a house, stamp duty or no stamp duty. That is the absolutely crucial point, and it is why I am asking the Treasury whether it thinks the £3.8 billion could have been better spent.
To refer back to those self-employed people, some of them could have been helped. Some people have benefited from the furlough scheme and have been entitled to up to £2,500 a month. Some of our self-employed people have missed out on support, but they could have had that £2,500 a month for three months: we could have helped 500,000 of them with the £3.8 billion that we are spending instead on this stamp duty holiday. That is really important because, apart from anything else, we are talking not just about self-employed people, but about company directors and people who have set up recently, and they are the people who will be creating the jobs of the future. They will be the engine of this recovery. They are looking at the new opportunities available in the post-coronavirus world, and they have the energy, enthusiasm and the get-up-and-go to start rebuilding business and our economy in a way that I believe would have happened anyway with our housing market. By not helping those people, we limit the prospects of new business, which is the engine of new jobs, and we destroy livelihoods. That will stimulate the housing market because those people will now have to sell their houses because they cannot pay the mortgages that they secured on them. I do not believe that that is quite what the Minister had in mind.
Above all, the feeling among so many self-employed people and company directors that I have been speaking to is that we have undermined their confidence, and that will ultimately be the biggest impact of this. They thought that that this was a Government who prized entrepreneurship, supported small businesses and wanted companies to thrive, and I am so disappointed, after everything that has been said in this place by so many MPs across all parties. My hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) set up his all-party group on this issue last week and has 200 MPs representing their constituents who have been excluded. I cannot tell the House how disappointed I am that after all that, the Chancellor of the Exchequer came to the Dispatch Box last week and announced this stamp duty cut instead of proper, real support for the people we are going to be depending on in the weeks and months to come.
However much I personally feel that stamp duty is a bad and wrong tax, I still say that the £3.8 billion could have been better spent at this time, and I am really disappointed that the Government did not take that opportunity.
Jacob Young (Redcar) (Con)
It is a pleasure to follow the hon. Member for Richmond Park (Sarah Olney). As has been discussed, housing is one of the sectors that has been worst hit by coronavirus, so I welcome the Bill on the back of the Chancellor’s announcement last week to temporarily cut stamp duty. This measure will go a long way to bringing back confidence in the property market and starting to drive growth in that sector once more. Property transactions were down 50% in May this year compared with last May, and this is the right way to kick-start sales again.
At the heart of this decision are jobs, because buying and selling homes creates jobs and economic activity, whether that is the estate agents, solicitors, mortgage advisers, surveyors, removal companies, electricians, builders, joiners, plumbers or painter- decorators. One house sale can make a huge economic ripple, which is why this intervention is so important. I am proud that the Government have delivered an unprecedented level of support for businesses and self-employed people throughout this pandemic so far, but we must now move on to the next phase of getting back to trading and creating jobs, and we must do so in a way that keeps people safe.
As we progressively get back to business, cutting stamp duty is part of a package of measures that will help our economy to get back on track. Thanks to this measure, 90% of the people buying a main home this year will pay no stamp duty at all. This will give thousands of families across the country the necessary incentive to buy or sell their home. Whether they are moving on to the property ladder or moving up, selling their home or renovating, this activity will create jobs—the jobs that we need to recover from this crisis.
We should also keep in mind that stamp duty is an important source of revenue for the Government, and when so many people are relying on public money for the duration of this crisis, it is important that we find ways of unburdening the public purse. That is why, as well as supporting existing jobs in the housing sector, we are taking this opportunity to build on top of that and deliver even more homes and create more good-quality, sustainable jobs.
Long-awaited reforms of the planning system will make it easier for landlords to convert existing commercial property into housing and further stimulate the market, and our new green homes grant will mean that new home owners can increase the energy efficiency of their homes, creating more jobs for people who work in home improvement.
As a result of the pandemic, some aspects of our economy will change permanently, such as our approach to working from home. More sectors have gone into standstill and require a restart. We are all aware of cases in our own constituencies where tradesmen in the housing sector have not been eligible for support through the self-employment income support scheme or the coronavirus job retention scheme. Getting the housing market restarted is vital to their livelihoods, as I mentioned to the hon. Member for Richmond Park. This is our cause: to protect, support and create jobs.
Cutting stamp duty is not a bung for homeowners, as Opposition Members would say; it is about the hundreds of thousands of jobs that rely on a thriving housing market. Much lies ahead of us, and this could be the most challenging phase of our recovery yet. However, I have every confidence that with a gradual approach and temporary, focused support from the Government where needed, we can not only recover but thrive in a new post-covid economy.
Tim Farron (Westmorland and Lonsdale) (LD)
It is an honour to follow the hon. Member for Redcar (Jacob Young), who made some interesting points about this move. Although, as Members from all parts of the House have said, there are other things we could do with the money—there is an opportunity cost to spending it—there is no doubt that it will make a difference to the economy. The buying and selling of properties has a knock-on effect and creates a multiplier, and that will create some movement. It is worth saying that that does not mean it is the best use that could possibly be made of this money, but given that the Chancellor and the Prime Minister have discovered a veritable rainforest of money trees, this may be a good use for a few of them.
For the good that the measure will do—it is important to concede that—what it will not do is to rise to the challenge of the United Kingdom’s general lack of affordable housing. It has been going on for some time, and this represents a failure to grasp the nettle. I am sure Members will know that Crisis and the National Housing Federation have together come up with a conservative estimate that the UK needs 145,000 new affordable homes per year, 90,000 of which need to be social rented. Shelter takes the view—I think it is nearer to the money—that the number is closer to 300,000. Either way, we need a minimum of 90,000 additional social rented homes a year. The Government will deliver 3,500 this year, but there are just over 3,000 on the social housing waiting list in my constituency alone. That is the scale of the problem, and this measure does not help—it does not hinder, but it does not help.
Tim Farron
Potentially—although, to go on a little diversion, we cannot build houses of any kind whatsoever without a workforce. One thing that I wish the Government would take seriously, in looking at their supply chain and the means of reaching their targets, is that we are something like 40% below the workforce required to construct even the Government’s existing programme of development. By the way, the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which we debated the other week, will take that down by another 9%. The Government can announce whatever big numbers they like, but they cannot press-release their way out of a recession; they have to plan their way out of it. There is a lack of long-term or even medium-term planning, but it is better to spend that money than not, and I concede that it will do more good than the proposal that we are debating.
I represent a constituency where we have, bluntly, London house prices without London incomes. The average household income is about £25,000 a year, and the average house price across the constituency is about a quarter of a million. In the Lake district and the dales, which make up more than half the land mass of my constituency, we are looking at an average property price of more like £400,000. Put bluntly, the average person in my constituency is stuffed when it comes to buying a home, and this measure will not help. We lose one in three of our young people, never to return, for this very reason. Long-lasting, real action is required as well as something like this, which I am sure will give a short-term and necessary boost to economic activity.
I agree with the Town and Country Planning Association and the Nationwide Foundation that we need to redefine what affordability is. We talk about affordability as a percentage of market rent when actually we should be talking about affordability in terms of how it relates to people’s incomes, obviously, because that is what makes something affordable or otherwise. This and previous Governments have used “affordable housing” as a term that is utterly meaningless to the majority of people who are supposedly in the market. Let us take this opportunity to do something radical.
I also agree with the Town and Country Planning Association, and with Shelter, when they say that one of the most useful things that we could do—and since we are in this mood for swift and radical legislation that will make a difference, let us grab the moment—is to reform the Land Compensation Act 1961, which currently fixes the hope value of land at a level based on what would be the most lucrative value of that land rather than pegging it at the actual value of the land. That inflates land prices, inflates house prices, and stagnates the market. If we wanted to reduce the cost of land, reduce the cost of housing and therefore make it more affordable, make sure that every home is zero-carbon, which the Government should also be doing at this time, and make it more likely that land will come forward to be built on in the first place, that is the one thing we would do: it is close to being a silver bullet. In this time of swift legislation and passing whole Bills in a matter of hours, that is what we should use one of these slots for. Radical change is important, and we in this House have the opportunity—and, I think, the mood—to do it.
We should also be reforming viability assessments and preventing developers from changing the goalposts after they have been given planning permission. I want to see developers forced to deliver not just zero-carbon homes but homes that are genuinely affordable, and not then going over the field, digging up a few rocks, and saying, “Oh, I’m sorry, I can’t afford to do the affordables anymore.” This is an opportunity for the Government to make sure that any new building that takes place, and such as I trust will take place, will deliver homes that people can actually afford.
As has already been said by my hon. Friend the Member for Richmond Park (Sarah Olney), who made a really good and important contribution, this move will not help any of the people facing financial ruin, such as the one in four in my constituency who work for themselves, many of whom are directors of small limited companies, newly employed people or new starters. They are the entrepreneurs we need to rely on to build back for our country and to build our economy, and they have been excluded. As she said, we had the launch of the all-party group last week with 200 Members there, many of them Conservatives. My message to friends and colleagues on the Conservative Benches is: this is your moment to put your money where your mouth is and to stand up for those 3 million excluded people in this country, and to say that the Chancellor must back them, because they are not in a position to consider whether they are going to move house; they are in a position of wondering whether they can afford to feed their kids. This is the time when the Chancellor must act.
Just as distressing for us in south Lakeland is the bonus that is being given to people who own second homes. I want to be very clear here: I am not talking about holiday lets, which are crucial to the tourism economy in the lakes and the dales and elsewhere, bringing in visitors who spend their money locally. Holiday lets are part of a tourism economy that is worth £3 billion a year and more, and employs 60,000 people in Cumbria—our single biggest employer—so it is vital that we support that industry. I am talking about homes owned by people as a second property that they visit maybe a few times a year—and good luck to them. I want those people to feel welcome: this is not a personal slight on them. But as somebody who lives among these communities, I cannot deny the evidence of my eyes, which is that excessive second home ownership kills communities. When 50% of the homes in Coniston are not lived in all year round, of course that is one of the reasons why the schools in that community do not have the numbers they would otherwise, of course it is a reason why bus services shut, and of course it is a reason why shops, post offices and others struggle. That is why this boon and bonus to second home owners is an insult to people in the lakes and the dales—the local people struggling to get by there—and why this should be an opportunity not to give these people an additional incentive to take homes out of the local market, but to tackle the incentives that currently exist.
Some 18 months ago, the Government concluded a consultation on whether they should close the loophole that allows second home owners effectively to pretend that the home is a business and therefore avoid paying any tax whatsoever. In the 18 months since—I accept that it has been a busy 18 months—naff all has happened. The Welsh Assembly Government closed that loophole and did so effectively. Why will the Government not take the opportunity to do that and help constituencies like mine? That loophole needs to be closed.
In summary, I am deeply concerned about this proposal. It will do some good and I can see the economic arguments for it, so we will not formally oppose it when it comes to any Division, but we must understand what it is and what it is not. It will increase demand, but among those it will help are those lucky enough to have multiple homes. It does not help those who are desperate to put food on the table and pay the rent. The Government are not helping the excluded and this was the chance to do that. The proposal has some economic value. It will help to kick-start the economy in the short term and that is welcome insofar as it goes, but it is a scattergun attempt to build back quicker, not build back better. If we do not build anything new either, it is simply a case of “buy, buy, buy”, not “build, build, build.”
Miriam Cates (Penistone and Stocksbridge) (Con)
It is a pleasure to follow the hon. Member for Westmorland and Lonsdale (Tim Farron), who made a very passionate speech.
The health of our housing market is an indicator of the health of our whole economy. Buying a property or moving house does not just involve the exchange of money and the transfer of deeds; it supports other associated industries, as has been said widely already, and a large number of jobs in many trades such as plumbers, builders and electricians. During the acute phase of covid-19, many sectors of our economy were forced to grind to a halt, including the housing market, where in May 2020 property transactions were down by 50%. Other sectors have received welcome relief on a sectoral basis from the Government’s measures to boost our economy, such as grants for the retail, leisure and hospitality businesses, and the eat out to help out scheme, which was announced last week. The housing market also needs a stimulus to catalyse its restart, so I welcome the temporary relief to stamp duty land tax, which will do just that.
In normal times, when the market is in equilibrium, stamp duty should be paid just like any other tax. Right now, however, as we emerge from a period of sharp decline in housing sales, the market is far from equilibrium and it is right to take most property purchases out of stamp duty to encourage transactions to return to normal levels. A cut to stamp duty is, of course, a response to the covid-19 economic slowdown, but it is also the first of many measures that the Government will introduce to fix our housing crisis. Any action to reduce the cost of moving will be welcome to my constituents in Penistone and Stocksbridge where, as elsewhere in the country, many local people cannot afford to own their own home or to move up the property ladder as their family grows. Parents and grandparents are worried that the next generation will not be able to afford to stay local and will instead have to leave our towns and villages and our wonderful communities.
The measure we are debating today will provide a welcome short-term reduction to the cost of moving, but it will also encourage older people to downsize, releasing larger properties for growing families. The hon. Member for Mitcham and Morden (Siobhain McDonagh) rightly said earlier that there are many properties outside London and the south-east that may not necessarily benefit from the cut, but even though the average house prices are a lot less—in Penistone and Stocksbridge I think the average house sale last September was £172,000— there are always, at the top of the chain, properties that are subject to stamp duty land tax. They are often the properties that are the hardest to shift and take the longest to sell. Any reduction in the price of those properties to get them moving and get them shifted will affect the whole chain right down to the bottom to the first-time buyer.
As well as a short-term measure to restart the housing market, there is strong consensus across the House that to fix our housing market in the longer term we must build more homes. I am pleased, therefore, that the Government intend to bring in reforms of our planning system that will enable more houses to be built more quickly. That is particularly necessary in cities like Sheffield, where the local authority still has no local plan, or even a draft local plan, which means there is no evidence-based understanding of or consensus on where and what types of housing should be built. That puts greenfield sites in danger when brownfield sites are still available.
We need to increase the supply of housing and evidence suggests that we need to build over 300,000 new homes each year, both to keep up with demand and to address the backlog. We are all aware that there has been a sharp increase in the number of young people who are living with their parents—a rise of nearly 50% in 20 years. As has already been said, in many cases that is because not enough affordable homes are available. The Government’s housing reforms and the Prime Minister’s £12 billion affordable homes programme will rightly address that issue and give young people the opportunity to own their own homes, with all the benefits of security, pride and a feeling of rootedness that home ownership brings.
I take a moment to consider another less welcome reason for the increase in demand for housing. Over the past two decades, the number of people living alone in the UK has risen by 20%, and the number of 45 to 64-year-olds living alone has increased by 53% over the same period. One of the principal reasons for the increase is the number of middle-aged men who live on their own, largely as a result of relationship breakdown. When marriages and partnerships end, one household becomes two, property costs can double, children no longer have the benefit of both parents under one roof, and, for those adults left living alone—often fathers—loneliness and its associated effects on wellbeing can follow.
Inevitably, of course, not all marriages and cohabiting relationships will last. When there is irretrievable breakdown, new households must be formed, but if relationship breakdown is one of the key drivers for housing demand, we must address the causes of such breakdowns, not because of the impact on housing but because of the impact on people. Relationship breakdown is costly—emotionally, psychologically and financially—and it has a huge impact on children. As we look to address one of the UK’s greatest challenges—a lack of housing—let us also focus our efforts on addressing another one and consider how Government, local authorities, the voluntary and faith sectors, and local communities can better support couples and families to stay together.
Throughout the crisis, my right hon. Friend the Chancellor’s timely measures have acted as a shock absorber, lessening the impact of the most significant economic event of modern times. The temporary relief on stamp duty will give the housing market a much needed boost and pave the way to deeper, more long-term and more holistic reforms to end our housing crisis.
Antony Higginbotham (Burnley) (Con)
Throughout the coronavirus pandemic, this Government have been committed to protecting people’s livelihoods, whether the help was to workers, the self-employed or businesses large and small. In my constituency, we have all appreciated that support. Today’s debate on changes to stamp duty is about yet another measure that the Government are taking to ensure that as we start to recover, people up and down the country are given the confidence they need to get things back up and running.
The housing market is vital to the UK’s prosperity, and I wholeheartedly welcome the plan to temporarily increase the threshold. For my constituents who want to buy a house, be that in urban Burnley or Padiham, or rural Worsthorne or Cliviger, that means a saving of hundreds of pounds on a semi-detached property, or thousands of pounds on a detached property. That means more money in the pocket of the hard-working families across my constituency who are looking to upsize as their family grows, taking almost every house purchase in Burnley out of the stamp duty bracket completely. If ever there was a time to ensure that people keep more of the money they earn, now is it. We have always been the party of opportunity, aspiration and low taxation. Through this measure, we deliver on all three, protecting jobs in the process.
Over recent years, we have been tackling the issue of housing supply through schemes designed on the Government side of the House, including Help to Buy and through reform of the planning system, but this crisis has brought a new challenge—a challenge of demand. House sales have plummeted rapidly, and it is clear from this Bill that the Government are committed to taking action. It will give homebuyers the confidence to buy again.
The challenge of supply remains. The laws of economics say that that will remain the case unless action is taken. Only by getting buyers buying again will we get our builders building again, our roofers roofing again, our electricians electrifying again and our joiners joining again. Getting people back to work. is what “jobs, jobs, jobs” means—getting people back to work by stimulating the economy. For that reason, I will support this tax cut and the Bill.
Saqib Bhatti (Meriden) (Con)
I am speaking in favour of this relief of stamp duty because, as we all know, housing is a huge element of our economy. Making it easier to buy and sell will lend our economy a much needed boost across the board. The housing market, like the rest of the economy, has endured a huge shock, with the first fall in house prices in eight years and the number of transactions falling by 50%. We all knew that was going to be the case, but the case for intervention was also clear.
Real estate in the UK is the cornerstone of our economy. Housing stock is worth more than £7 trillion, and the real estate sector is responsible for tens of thousands of jobs. For many homeowners, confidence and security in the worth of their homes allow them to feel secure in how they live their lives. Housing is not just bricks and mortar, but the stable anchor that creates the foundation for our lives. Stimulating the housing market will boost confidence throughout our economy and create jobs.
I welcome the continued commitment to remediate brownfield sites, which will mean that more land becomes available, increasing supply while alleviating pressure on our green belt. This cut will protect, support and create jobs, from estate agents and surveyors to builders and manufacturers. Along with the green homes grant, the Government are providing the housing sector and homeowners with some welcome assistance and support, as we make our way to recovery as a nation. It will mean less money paid in tax and more money in the pockets of those who may want to spend it in other parts of the economy. More homeowners, fewer taxes, more security—that is a fundamentally Conservative solution to one of the biggest crises in a generation.
Economists like to make predictions, and normally I am cautious of such forecasts, mostly because ultimately our economy is made up of people. It is not just numbers and theory, but individuals who behave in ways that spreadsheets and graphs cannot always predict, and I say that as someone who spent most of their professional life as a chartered accountant. However, one projection that seemed a certainty was that our economy would suffer some potentially devastating consequences following the shock of covid-19. Fortunately, in our Chancellor we have someone who has a calm head and a steady hand at the helm, ready to weather the storm.
For me, this cut is not just about stimulating demand, nor is it just about recognising the importance of housing as an economic asset. It is also about recognising that allowing people to own a house is to allow them to own a stake in society. Cutting stamp duty will have not only huge economic benefits, but huge societal benefits. We cannot just talk about buyers and sellers as if they are numbers on a chart. They are newly weds moving to a new home to begin a new life, and children spending Christmas in a new house, perhaps having their own bedroom for the first time. They are retired grandparents, downsizing so that a new family can move in and make new memories.
I encourage my right hon. Friend the Chancellor to review the positive impacts of the stamp duty holiday on the economy and to consider the benefits of maintaining the cut for longer. When we are back in smooth waters, perhaps he will look at some of the long-term reforms that may be available for the tax.
We say that a man or a woman’s house is their castle, and that is just as true now as it has ever been. The right to own a property is the cornerstone of individual liberty. I do not mean mansions or second homes; I mean, as William Pitt once said:
“It may be frail—its roof may shake—the wind may blow through it—the storm may enter—the rain may enter—but the King of England cannot enter!”
To own one’s home is more than a financial decision; it is safety, security and independence, and I commend the Chancellor for his role in allowing more people to achieve all three of those things.
Mike Wood (Dudley South) (Con)
We have faced a huge human health crisis, and we are now working to prevent that horrific health crisis being accompanied by a similar economic crisis. The Government have delivered an extensive package of support measures for workers and for companies through the coronavirus job retention scheme. They have delivered support for the self-employed through grants, loans and a wide range of measures to help protect jobs and ensure that despite the enormous impact of this outbreak, businesses are able to see a way through it and are able to continue to employ people, and the self-employed or those in small businesses can see a way to get through the outbreak to rebuild in the better times ahead.
Sadly, of course, many people have already lost their jobs and, even more sadly, many more are likely to lose their jobs over the coming months, as businesses take time to adjust—to adapt their businesses to order books which, in many cases, are unlikely to return to pre-crisis levels for some time. We need to do what we can to minimise those job losses and to help as many people as possible to return to work and to stay in work, because we know, as we have seen from previous recessions, that jobs can be lost very quickly during economic downturns. It can take many, many more years to replace those jobs and to bring people back into work. With a shock as sharp and as deep as the one that we have seen over the past few months from this pandemic, measures such as this and the many others that the Chancellor has announced over the past four months are not only appropriate, but unprecedented and certainly necessary.
If we are to prevent enormous numbers of people from losing their jobs, enormous numbers of businesses from closing for good, and enormous numbers of families from being deprived of the security and prosperity of paid employment, we need the economy to recover, which means that we need consumers to start spending. We need consumers to have the confidence to return to something approaching economic normality. If people do not have confidence in the economy, they do not part with their cash. When that happens, there is a risk of a vicious circle of economic decline, with inevitable large job losses as a consequence. It is crucial that we break that cycle and promote spending, which is why I support this legislation today.
This measure is designed to bring forward spending. Certainly, the largest piece of spending that almost anybody makes is investment in a home. We need to make sure that consumers have the confidence to make those decisions over the next few months as we rebuild our economy rather than put them off for a year or more, because, naturally, caution, for many of the reasons that the hon. Member for Richmond Park (Sarah Olney) mentioned, may make people concerned about such large spending as we come out of this health crisis. Our economy needs this economic activity to recover. It needs people to be spending. It needs a successful and vibrant housing market, because, as many hon. Members have said, the housing market is not purely about those businesses and those industries that are directly associated with it—the estate agents and the removal firms—but something that goes far beyond that. It goes through construction, to the decorators, the small businesses, the self-employed carpet fitters and the gardeners. In many cases, much of their work centres around people who are moving into new homes and wanting to make them to their taste.
As chair of the all-party group for furniture and furnishings I know how much of furniture manufacturing and retail in this country depends on a successful and thriving housing market. By stimulating that market—by bringing forward to the next six or nine months the decision to buy a house that could be put off for a year or more—we are protecting those jobs by giving confidence to those companies, to those employers, and to those small businesses that there will be a housing market and that there will be people wanting to redecorate, to refit their bathrooms, to redo the garden and to buy new furniture. This measure will give them the confidence to invest in their staff and to keep their workforce as close to normal levels as much as possible. That seems to me to be a good investment. When the question is asked as to whether this is the right way for the Chancellor to spend resources, I invite right hon. and hon. Members to consider what the alternative is. I do not see the evidence locally that the housing market is instantly bouncing back without further intervention and support. I am not seeing a huge amount of confidence; quite the reverse. As the hon. Member for Richmond Park said, people are nervous about the plans that they had put in place either to buy their first home or to move up the housing ladder. In many cases they are saying, “Perhaps now is not the right time.” If the measures in the Bill can help to bring forward those decisions and to make sure that that spending happens as soon as possible, that will protect the jobs and the prosperity that our constituents rely on. That is why I will support the Bill this evening.
Greg Smith (Buckingham) (Con)
It is always a pleasure to follow my hon. Friend the Member for Dudley South (Mike Wood). I fully agree with his comments.
This House has in recent months been required very necessarily to pass legislation to restrict our freedoms in order to defeat the virus, so it is an absolute pleasure to speak in support of an emergency measure that expands freedom. There is no more important asset to any individual or family in this country than the roof over their heads. The ability, under the provisions of the Bill, to purchase a home worth up to £500,000 without the burden of any stamp duty at all will not only support our economic bounce-back but, more importantly, bring the dream of home ownership a step closer for thousands of first-time buyers, give those who may be downsizing the confidence that they will not unnecessarily lose thousands of their precious savings, and enable growing families to move up the ladder.
This morning, I spoke to estate agents in my constituency —including Brian Russell of Russell & Butler in the town of Buckingham—and the news of the temporary stamp duty cut has been warmly received, with massive interest from buyers and sellers over the past few days. With 75% of the properties currently on that particular estate agent’s books being under £500,000, it goes without saying just how significant this tax cut is locally in Buckinghamshire.
Last Friday, I was pleased to visit Barratt Homes and David Wilson Homes at their development at Kingsbrook near Broughton in my constituency to see the measures that they have put into place to ensure that house building continues at pace in a covid-secure way. Their sales team reported that they are seeing people coming back through the doors again, enthused by the stamp duty holiday.
House of Commons Library data shows that across my constituency the median value of house prices last September was £395,000, albeit with some significant variance in different parts of the constituency, with homes around Worminghall, Long Crendon and Cuddington having the highest median value of £575,000 and the median in Buckingham north at £287,500. That says to me that no matter where people want to live and move across the 335 square miles of the beautiful Buckingham constituency, the Bill is worth many thousands of pounds, if not tens of thousands of pounds, to potential buyers. As many Members have said, if people are buying homes and keeping that market buoyant, that can only be good news for the economy as a whole—for the three quarters of a million jobs supported by the house building sector alone, not to mention our estate agents, removal firms, decorators, plumbers, kitchen fitters, landscapers and the wide array of retailers and suppliers that benefit most from people moving home, from furniture makers such as Ercol and Hypnos beds in Princes Risborough in the south of my constituency, to interior companies such as Secret Messages Interiors in Buckingham or Mood Home and Lifestyle in Winslow, which I visited recently. Even the lawyers—even the lawyers, Madam Deputy Speaker—benefit.
The economic chain set off by house building cannot be stated often enough. However, stamp duty changes alone may not complete the picture. The estate agents I have spoken to over the past few days have advised me that there are other factors hampering the full recovery of the housing market, particularly for first-time buyers, the most significant of those being a banking sector that is making it harder to borrow. While mortgage lending clearly falls outside the scope of the Bill, in order to achieve the aim of the Bill, it is vital that the banking sector and lenders are listening and that they get behind what the Government are trying to do—a point that my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) made in his intervention.
There are no 95% loan-to-value mortgages available for first-time buyers today. Only three lenders even offer 90% loan-to-value mortgages, so the majority of first-time buyers face the daunting prospect of raising at least a 15% deposit. That is £75,000 for a £500,000 four-bedroom home in Steeple Claydon or £52,500 on a £350,000 three-bedroom cottage in Tingewick. The stamp duty reduction on those two examples for first-time buyers is a massive boost, saving £10,000 in the case of the £500,000 home and £2,500 in the case of the £350,000 home. It undoubtedly closes the gap, but the wider point is that we are still talking about enormous sums of money—years and years of savings and sacrifice. To boost the market further, the banks must start to be more realistic about permitting 90% and 95% loan-to-value mortgages once more, to truly open up the market.
Most property transactions currently take an average of 16 weeks, which is much longer than it needs to be. We are only 38 weeks from the end of this temporary stamp duty cut, so time is of the essence to make the most of it. If any accompanying deregulation to speed up transactions can be brought forward, that will only help many more thousands of aspiring homeowners and movers.
In conclusion, this Bill is enormously welcome. It is bold in its aim of boosting our housing market and supporting people to achieve home ownership. I will be voting for it with great enthusiasm, but at the same time, I encourage my right hon. Friends on the Treasury Bench to seriously consider other measures that we could bring forward to make it even stronger. Who knows? Perhaps this tax-cutting pilot, once proved so successful, could become a more permanent feature of the housing market.
Laura Farris (Newbury) (Con)
It is a pleasure to follow my hon. Friend the Member for Buckingham (Greg Smith). The Chancellor said last week that Governments rarely get to choose the moments that define them. Apart from making the decision as to whether or not to lead the country into armed conflict, I can think of few more daunting prospects than preparing a country that is on the brink of an economic recession of significant scale and depth right in the middle of a global pandemic.
I will confine my comments to the housing market and the time-limited decision on stamp duty. I hope Members will forgive me if I contextualise this as part of what the Chancellor said about jobs in his statement last week and his attempts to stave off long-term unemployment, which, if we are honest, every Government of every stripe in the post-war period have struggled with when it takes root.
When going through a moment of history, it can be difficult to be clear-eyed about what is happening, but we know that covid-19 discriminates directly on the basis of age. From a health perspective it has the most serious consequences for the old, and from an economic perspective it has the most serious consequences for the young, in terms of both their labour market opportunities and their potentially facing a higher tax burden in the longer term.
One of the reasons I welcome this stamp duty cut is what it says to young people’s hopes of home ownership. It reaches first-time buyers and young buyers. In my constituency, the average house price is £350,000. That is an immediate tax saving of £4,500. I appreciate that a first-time buyer may be buying house worth less than that, but they were very unlikely to fall below the £125,000 previously, so it is a direct saving of several thousand pounds to them.
When I researched what a first-time buyer in my constituency looks like, I got two figures—32 and 33—but it struck me that it does not much matter, because both those ages are positioned squarely in the middle of the millennial demographic: people born between 1981 and 1996 and aged between 24 and 39, so they came of age somewhere between the beginning of the financial crisis and now, over a decade later, during a global health pandemic and, potentially, a deep recession. It is critical that there is a renewed imperative to focus on people in that demographic, who I think have, with some justification, felt a little ignored in the last 15 years, so I welcome a policy that gives them a direct financial boost.
The second consideration, which many Members have raised, is the importance of returning confidence in the housing market to jobs more generally. Construction is a £39 billion-a-year sector. It employs nearly 5% of my constituents, but that figure increases to over 8% if we take into account the secondary industries—the tradesmen we have talked about. In 2019, well over 1,000 new householder developments were approved in west Berkshire. That number has completely fallen off a cliff during the period of stagnation that we have seen in the last three months, yet we face the same pressure on housing supply. The same people want to move up and out—those having babies, settling down or living with their parents. I welcome an initiative that will get those jobs moving.
My final point I hope answers the concern expressed by the hon. Member for Richmond Park (Sarah Olney) about the excluded—the 3 million. If she will forgive me, I think it is important that we do not just treat them as an amorphous lump of people. When I think about some of the people in my constituency who contacted me, they were small business directors doing things such as garden design; peripatetic workers doing things such as removals, whose income is hard to trace, whose employment status is not completely clear and who have fallen through the cracks; and even, dare I say it, Instagram influencers specialising in renovation and interiors.
It is easy to say, “Well, they’re not very well-known careers” or “They’re not someone we would treat with a lot of respect,” but we should treat those people with respect. They are young, they are dynamic and they are providing a service at every Budget, and they have not always qualified for Government support. You do not need to move house to redo your garden or your interior, but moving is a huge catalyst for that kind of work, and those people directly benefit from this decision on stamp duty.
To conclude, I welcome the time-limited stamp duty break that the Bill offers, and particularly its focus on millennials, on jobs and on freelancers.
James Sunderland (Bracknell) (Con)
It is always a pleasure to follow my hon. Friend the Member for Newbury (Laura Farris), who is a fellow Berkshire Member.
The Chancellor’s summer statement was just what the country needed to kick-start the economy out of its doldrums. With coronavirus impacting a falling housing market, his decision to temporarily cut stamp duty until March 2021 was the right thing to do, and I welcome the Bill. However, far from just allowing purchasers to save their cash, this measure offers a real incentive to get our housing market going again and for people to spend what they save. It also allows our builders to get building—not just in the already congested south-east but to level up with real investment right across the UK.
One of the indicators of a recession is falling confidence in the property sector, with homeowners becoming more entrenched. The path ahead will not be easy, so the priority is to launch a pre-emptive strike that incentivises everyone to grab the opportunities that lie ahead. The imperative, therefore, is to support people, jobs and the economy by catalysing the housing market and boosting business confidence by driving growth. Raising the threshold at which stamp duty applies, from £125,000 to £500,000, means that more than 90% of those getting on to or moving up the property ladder will pay no stamp duty at all. In addition to the measure being a serious tax break for the majority, those who can most afford it will still be required to pay their share of duty above £500,000, and it is right that a progressive system of taxation remains in force.
What does this really mean for those who stand to gain most benefits? Take Bracknell as the classic example of a modern, vibrant and rewarding place to live. Nestled between the M4 and the M3 in east Berkshire, Bracknell is characterised by near full employment, one of the lowest rates of council tax in the country, a strong job market, high-tech research and development facilities, and an abundance of international companies. Although it has taken a hit during the pandemic, I remain confident that Bracknell will bounce back and that its previous optimism for the post-Brexit economy will return.
I urge the decent, hard-working and pragmatic people whom I proudly represent to look ahead with confidence. Although the average house price in Bracknell is an eye-watering £325,000, the temporary cut in stamp duty will result in a direct saving of more than £5,000 for all those who buy at that level. Of course, if someone is starting on the housing ladder or looking to move up it, they will not have to pay anything on a property worth under £500,000. That is a massive incentive for anyone who aspires to save for a deposit, start a family, build an extension, get a better job or simply move to a bigger house, and it will mean more money in their pocket. Therefore, as well as boosting the economy at a time when it is most needed, the Government will continue to allow people to keep most of what they earn, through fair and progressive taxation that incentivises entrepreneurship, hard graft and enterprise. Indeed, for those in any doubt, the Conservative party remains the party of working families, and this is just another example of what can be done when the country most needs it.
Of course, no cut in stamp duty can be an indefinite blank cheque, as it is still necessary to raise the necessary revenue to pay for our public services. However, further concessions might be possible. I therefore urge the Minister to consider some further tweaks. First, several of my constituents have written to me urging for the cut in stamp duty to be backdated to the beginning of the pandemic. I do not know whether that is precedented, fair or possible for a new policy, but it is one to be considered.
Secondly, stamp duty is a drag on the housing market, and any continued relief beyond March 2021 is to be welcomed. I therefore urge the Minister to consider tax measures that encourage rather than hinder social mobility. Increasing the threshold further or spreading payments out over a longer period may be beneficial.
Lastly, further refinement could be considered for those who are resident in the UK as UK citizens, as opposed to overseas investors or those purchasing second homes. While we must encourage foreign investment and entrepreneurship right across our post-Brexit nation, taxpayers who can afford to pay more should do so, if we are serious about incentivising those just starting up the ladder. Aspiration through hard work and enterprise must be rewarded.
To conclude, I welcome the Bill and salute the Chancellor for his unprecedented, generous and unparalleled support for our economy. Cutting stamp duty in the short term is absolutely the right thing to do, but I also urge him to conduct a wider review so that this tax goes further in what we ask it to do.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
It is a pleasure to follow my hon. Friend the Member for Bracknell (James Sunderland).
I am delighted that the Government are bringing forward changes to cut stamp duty, to scrap it entirely on homes under £500,000 and to raise the threshold at which it applies. I have spoken to estate agents in Runnymede and Weybridge and they are concerned for the next 12 months. A cut in stamp duty will help people to buy their own home and support the housing sector.
But any intervention in the housing market is difficult. The housing market is already highly distorted and the broader measures we need to fix it are not easy, given the relatively inelastic supply of housing and the fact that the market is in fact several markets, formed of those who buy to live in their own home, those who buy as an investment and those who buy to let or as a business. And of course people often want to buy for several of those reasons and then need to change.
Chewing over how to fix the housing market more broadly is beyond the scope of this debate, but for any market to function effectively it must be free from substantial barriers to transactions. Given the costs involved in buying a house, any stamp duty that is calculated as a percentage of sale price will lead to large duties owed and transactional disincentives. The measures we are debating today will increase the turnover of house sales and improve mobility, supporting people who want to downsize and freeing up houses for young families, enabling more people to own their own home. This will support all the industries linked to housing and create and support jobs. I am perplexed to hear Opposition Members say that they believe that generating economic activity will not support and create jobs. I would love to hear the conversations they have with the lawyers and conveyancers when they say that more houses being bought and sold will not lead to more work and will not lead to more people wanting to refurbish their bathroom or whatever.
This Government have put in place a world-leading package of measures in response to coronavirus and while I welcome these bold changes I ask Ministers whether we can be just a little more bold, and not just cut stamp duty, but scrap it entirely. Stamp duty puts the brakes on the turnover of house ownership. It prevents mobility and, perversely, locks capital into housing as a result, with the arbitrary thresholds for different rates providing further market distortions. How can we aspire to home ownership while at the same time taxing those merely for buying? Taxes are often used to disincentivise behaviour—the tax on tobacco and the introduction of a sugar tax, for example—but the housing market is the only example I can think of where a tax is applied to behaviour, such as buying a house, that the Government want to support people to do. Indeed they have put in other incentives to enable people to buy a house, such as Help to Buy and shared ownership. Across Runnymede and Weybridge people have shown me that, while covid has posed challenges, it has also demonstrated opportunities for change and improvement. So I thank the Chancellor for these changes, but ask him to go even further and stamp out stamp duty entirely for home ownership.
Kevin Hollinrake (Thirsk and Malton) (Con)
It is a pleasure to follow my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), and I will address one or two of his points, but first I must draw the House’s attention again to my entry in the Register of Members’ Financial Interests, and also apologise to the shadow Minister, the hon. Member for Liverpool, Walton (Dan Carden), as I inadvertently misled the House earlier when I said that Labour did not cut stamp duty in 2008; actually, they did, from a £125,000 threshold to a £175,000 threshold, but they crashed the housing market so badly that it made no difference whatsoever, which is why I cannot remember it. Interestingly, however, at the time, despite what he said in his speech, they made no dispensation in terms of buy-to-let investors—stamp duty was just cut across the board, regardless of what the property was for, so there was not some carve-out only for homeowners. According to the research, one thing that cut did do was boost activity, by 20%. Activity was at a very low level, as transactions were normally at 100,000 a month but they were down to 40,000 a month, so it was a pretty painful time, but the cut boosted activity, from that low level, by about 20%. Labour then withdrew the measure pretty early and activity fell away again, which is one of the reasons why we had such an extended recession from 2008 onwards.
I think certain Members have missed the point of the measure we are debating today. It is not just about helping some people get on to the housing ladder; it is also about activity. We all know that the housing market is a major driver of activity right across the economy. That is why many hon. Members have asked why on earth we are taxing something that is a major driver of activity across the economy. This is a transaction tax, and is therefore bound to slow the market down even in good times, let alone times such as this when we are trying to stimulate the economy.
This is not just about driving activity. Residential stamp duty brings in important revenue—about £8.3 billion every year. When my hon. Friend the Member for Runnymede and Weybridge talked about stamping out stamp duty entirely, I saw the sweat on the Minister’s brows as he was thinking, “Where are we going to find that £8 billion?”
The Financial Secretary to the Treasury (Jesse Norman)
My hon. Friend will be pleased to know that actually I remained as implacably calm as I always am. As a test of all colleagues who want to scrap taxes, I invite them to do exactly what he is doing and supply the missing revenue with some other suggestion. I did not notice that in the speech of my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), but I am still waiting; I look forward to hearing that before we finish.
Kevin Hollinrake
The Minister is absolutely right, and I will come to that.
The Conservative Government have improved the system of stamp duty significantly. It used to be a ridiculous slab tax that created distortions all the way through the market, but we made it into a slice tax—perhaps a slam tax—that gets very expensive at the higher levels and deters activity at the top end.
On the Minister’s point about where on earth we are going to get the money from, the reality is that this nation will come under huge tax pressure over the next few decades, not just the next few years. According to the Office for Budget Responsibility, because of the demands of healthcare and social care, if we do not change the tax system and claim more tax, our national debt will grow to three times our GDP—it is one times our GDP today—so we cannot simply scrap taxes without introducing alternative measures.
I am going to propose a measure. I would like the threshold remain at £500,000, as my hon. Friend the Member for South Thanet (Craig Mackinlay) proposed. We have to find that £8.3 billion annually, so we have to look at annual property taxes. The council tax system, under which people pay pretty much the same whether they live in a castle or a cottage, cannot be right. We need to revisit it and have a proper discussion about it. It is controversial. Some people think it is right that people who own bigger houses should pay more, and other people think it is wrong. We should certainly have a conversation about that.
The think-tank Onward recently proposed that there should be a council tax revaluation, and even the Prime Minister suggested back in 2014 that we should look at it. The thing about it is that it is simple. We can scrap stamp duty completely up to £500,000, and keep it at that level. We can also adjust the bands to make it cheaper for people in lower-value homes, to help people on lower incomes, and make it more expensive for people in higher-value homes.
It is simple, but it is not easy. Simple and easy are two completely different things. As Ronald Reagan said, there are simple solutions, but there are no easy solutions. If we are to tackle some of the unfairnesses in society, we must not duck the tough issues; we must look at the things that make the system unfair in the first place. This is an excellent measure, and I will support it tonight if we enter the Lobbies.
Anthony Browne (South Cambridgeshire) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests. I am on the advisory council for the Institute for Fiscal Studies, which I am about to quote, and back in 2012 I co-founded the HomeOwners Alliance, Britain’s only consumer group for homeowners, because I was alarmed by the prospects of the home ownership gap—the 5 million aspiring homeowners who cannot own their own home. We have done a lot of work promoting policies to help people get on to the housing ladder.
I was concerned about the home ownership gap because, as Opposition Members said, home ownership levels have declined. What they did not say was that home ownership levels went up almost every year for the past 100 years and stopped in the year 2000—three years after the new Labour Government came in. They then started declining for a decade or so. They are now going back up again. I commend the Government’s policies for increasing home ownership levels.
Various people on both sides of the House have mentioned the deposit barrier. It is a huge barrier for first-time buyers who are trying to save up a deposit. The reason banks have increased the deposit requirement and got rid of 95% loans is that house prices are falling, as the latest data shows. Therefore, if people take out a high-value mortgage, they end up in negative equity. That is why banks are legally required to do only affordable lending. The best way to help homeowners get high loan-to-value mortgages is to have a confidently stable or rising housing market, where there is no risk of negative equity. This measure will do that.
In my time at the HomeOwners Alliance over the past decade, I have done a lot of policy work on stamp duty and written loads of reports on it, including one back in 2012 or 2013 that argued for a differential stamp duty system for second home owners and property investors. There is absolutely no reason why they should benefit from the low stamp duty rates for first-time buyers and so on. I lobbied the Treasury, No. 10 and the Ministry of Housing, Communities and Local Government, and I was delighted when they finally introduced it as the stamp duty premium for additional homes. I would not have introduced it in quite the way they did, but the policy has made a big difference.
Two months ago, I called on the Government to introduce a stamp duty holiday to kick-start the housing market, so naturally I am delighted that the Government have done it.
Anthony Browne
Not at all; I am sure lots of people called for it. I am just showing that I am consistent in my views.
Stamp duty—SDLT—is one of the most unpopular taxes, and not just with homeowners and the public, but with economists. The Institute for Fiscal Studies—a very wise organisation—has called for stamp duty to be abolished outright, because it is one of the most economically inefficient taxes. It is always worth listening to the IFS. I serve on the Treasury Committee, and we took evidence last week from Nick Macpherson, the former permanent secretary at the Treasury. He said he really dislikes stamp duty because it is a transaction tax that reduces transactions, and it has a very bad impact on labour mobility and bungs up the whole labour market. He would certainly not be sad if it went.
We know that there is huge pent-up demand in the housing market. That is not just about Brexit uncertainty and all the missing transactions from the coronavirus crisis; there was pent-up demand beforehand, partly because stamp duty rates have been so high. Before the financial crisis, there were on average about 1.7 million transactions a year. In recent years, there have been about 1.2 million a year. We are about 30% below the pre-financial crisis average. A large part of that is because of stamp duty, although there are other reasons.
The housing market is very sensitive to changes in stamp duty. That is why Opposition Members said earlier, “Don’t speculate about stamp duty changes. Just get ahead and do it.” That is what the Government have done. That is why a cut in stamp duty is so effective in rapidly driving up activity in the market and releasing the animal spirit—the huge backlog of people who want to move are released to get on with it. As several of my hon. Friend have mentioned, we have already seen the number of transactions shoot up in the past few days, which is very much to be welcomed.
Several Members on both sides of the House have worried about the £3.8 billion in forgone revenue. I have a solution to that, which I will come to in a minute. However, I do not think the figure will be anywhere near £3.8 billion. That is just the forgone revenue from stamp duty that has been calculated by the Treasury. That is slightly unlikely because the whole stamp duty take last year was £4.5 billion just for primary residential homes, if we get rid of the additional premium.
We have heard about all the additional economic activity that goes along with housing transactions—the builders, the furniture makers, the removal companies, the lawyers and so on. All that is taxed at 20% VAT. On average, only about half the tax paid in a single housing transaction goes on stamp duty; the other half goes on all the associated economic activity through VAT to the Government. If we scrapped stamp duty outright but the number of transactions doubled, the revenue to the Government would be the same. It just comes not as stamp duty but as VAT.
However, that is not the proposal I was going to make to help my Treasury friends with the £3.8 billion. There is another £3.8 billion: the latest available figures show that the amount of money the Treasury made from the additional premium for second homes was also £3.8 billion, as it happens. That is made on a rate of 3% above the existing stamp duty. If we increased that 3% to 6%, there may be a slight decline in transactions, but basically we would raise another £3.8 billion. That is what I proposed a couple of months ago—that we should increase the rate for second home owners and property investors, and use that to cut stamp duty for people buying a home for what houses are for, which is to have a place to live in.
So I very much welcome this policy. I urge the Government to look at increasing the rate for second home owners, not now, when we are in the middle of the financial crisis, but when we get back a bit to normality. Let us make this a flat rate. There is no social or economic reason why people buying second homes or homes for investment should get discounted rates on lower-valued properties. This should be a flat rate, like VAT, where it is the same whatever the value of the transaction. Lastly, we should give strong consideration for this temporary cut in stamp duty to be made permanent.
Robbie Moore (Keighley) (Con)
It is a pleasure to follow my hon. Friend the Member for South Cambridgeshire (Anthony Browne), who speaks with great passion and knowledge on this subject.
Coronavirus has had a devastating impact on the housing market, with property transactions falling by up to 50% in May and housing prices falling for the first time in eight years. One of the most important areas for job creation is the whole housing sector, so we need mechanisms with which to stimulate, loosen the barriers, open the market and instil confidence in people to buy, sell and renovate. The Chancellor’s announcement last week introducing a temporary SDLT cut until 31 March next year by increasing the nil rate threshold to £500,000 plays a key role in doing that. It is estimated that this measure will mean that approximately 90% of people buying their main home this year will pay no SDLT, which is great news. I believe the conversation on SDLT should go even further, and I would welcome exploring its removal for buyers altogether, with perhaps the consideration for such a tax to be transferred to the seller. Alternatively, as was suggested by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who is no longer in his place, we could look at an ongoing annual property tax review.
Through last week’s announcements, we have seen, yet again, that the Chancellor is on the side of business and jobs. This temporary SDLT cut is yet another tangible, significant weapon in our Government’s armoury to reignite the economy through our overall plan to create jobs. House builders alone support nearly 750,000 jobs, with millions more people relying on the availability of the housing sector and housing market to find work.
One of the first visits I undertook as the proud new Member for Keighley was to Keighley College, where I was lucky enough to meet one of its level 1 students who was undertaking a construction course. I witnessed him building a wall in one of the college’s classrooms for the first time, where he started to learn the skills needed for the building trade and the ropes required to get on. With its principal, Steve Kelly, and his awesome team, who are full of enthusiasm and want the very best for their students in Keighley, I went on to see students undertaking fabrication and welding, electrical, plumbing, gas safety and engineering courses, all with students who were determined to progress, upskill and get a job.
The Chancellor’s announcements last week on SDLT, along with many other packages, are most welcome, as it is vital that we use every mechanism to kick-start the whole housing market and get its wheels in motion, so that, in turn, the construction industry, which attracts a huge number of employees, can start moving again, and so that keen and enthusiastic students such as those at Keighley College can learn a trade, with the comfort of knowing that they will be greeted with a job at the other side.
This is such an important debate, as it actively aims to create, secure and protect jobs. Many Conservatives have contributed to the debate, but only two Labour Back Benchers have done so. In summary, this Bill demonstrates that this Conservative Government are on the side of those hard-working families who want to get on the housing ladder and progress. For those first-time buyers, it loosens the market, while ensuring that those hard-working families have more money in their pocket.
Rob Roberts (Delyn) (Con)
It is a pleasure to follow my hon. Friend the Member for Keighley (Robbie Moore).
As we continue to move forward out of lockdown, it is important that we support and revitalise the housing market, helping those getting on or moving up the property ladder, as well as protecting jobs within the sector and the supply chain. I support this Bill to cut stamp duty temporarily for many current and future homebuyers. This will hugely benefit those looking to access the housing market as nearly 90% of people, as we have heard, will pay no stamp duty at all as a result of this change.
Yet in my Delyn constituency, we have a sense of unfairness. Just eight miles across the border into Wales, we will not be able to benefit from the changes in this Bill simply due to our location. In Wales, land transaction tax, the Welsh equivalent of stamp duty, penalises first-time buyers already. It incentivises young people to move out of Delyn and similar constituencies down the England-Wales border to places that are more accessible and more affordable, taking their economic activity with them to the detriment of our Welsh towns and communities.
Rob Roberts
My hon. Friend makes an excellent point. The hon. Member for Liverpool, Walton (Dan Carden) mentioned that the Chancellor had a cunning plan. Well, Labour’s very own Baldrick must be running things in Wales, where live property viewings can take place only after the property has been unoccupied for 72 hours, though quite how that works in getting properties moving is beyond me.
Buyers are already being encouraged to purchase property in England rather than in Wales, and I would urge the Welsh Government to follow the lead of my right hon. Friend the Chancellor in supporting the housing market and matching the stamp duty measures announced in this place. This will not only boost the local economy and housing market, but make it easier and more affordable for first-time buyers in Wales. As always, if this policy is adopted by our friends in Cardiff Bay, it will probably be two weeks later, it will probably be called something slightly different. Instead of changing the stamp duty threshold to £500,000, it will be labelled “amending the land transaction tax lower limit to half a million pounds”—anything to give the shockingly poor Labour Administration in Cardiff the ability to say that it is their policy and they can determine the wording.
I would say to the First Minister that if he does his regular job of prevaricating on this measure, a massive volume of property transactions will be lost and we will drift even further into more of the economic difficulty that Labour has presided over in Wales for two decades. He should stop sitting on his hands, and do something for the people of Wales to ensure that we can move forward with as minimal a loss of economic activity as possible. I look forward to the Senedd elections in May next year, when the people of Wales can rightly get rid of this appalling Labour Government.
Moving on, data from HomeOwners Alliance suggest that the average time it takes to sell a property, from listing to completion, is about six months. I appeal to my right hon. Friend the Minister to consider extending this scheme from nine months to 12 to 15 months, because restricting it to nine months runs the risk of a measure designed to be a stimulus primarily just providing a windfall to people who are already engaged in the market, rather than attracting more properties into it. An extended stamp duty holiday past next March will also aid the long-term recovery of the housing market, preventing a boom scenario that could slow down when the scheme finishes. As the Government are rightly serious about supporting both buyers and jobs within the whole housing industry, increasing the term to 12 to 15 months will allow construction companies and house builders to make informed and strategic decisions about how to move forward beyond that period, and will in turn assist the long-term economic recovery of the market.
That being said, I welcome the changes the Bill introduces. I believe that temporarily scrapping stamp duty on all homes under £500,000 is the right thing to do to boost confidence and encourage growth in the housing market, and I again urge the Welsh Government to take forward similar plans as soon as possible.
Felicity Buchan (Kensington) (Con)
I promise I will be very brief. I warmly welcome the temporary cut to stamp duty. This will benefit approximately 90% of new homebuyers in the country. However, alongside some of my Conservative colleagues, I urge my right hon. Friend the Minister to be bolder and broader, and to look at a fundamental reform of stamp duty. Stamp duty, ultimately, is a tax on social mobility and aspiration. It prevents people from moving house to pursue new job opportunities, it prevents growing families from moving to more appropriate accommodation and, at the same time, it prevents those who want to downsize.
In my constituency, stamp duty has unintended consequences. People cannot afford the stamp duty to move to a bigger house, so what do they do? They start to renovate and to extend their existing house. For people who live in dense terraces in central London, that often means basement excavations, with all of the nuisance and noise that they cause to neighbours. Similarly, a lot of people who are in private rented accommodation are put off buying because they are concerned about the amount of stamp duty.
I completely accept the comments of the Minister that we cannot simply cut taxes without thinking about where revenue will come from, but I argue that the current levels of stamp duty at 5%, 10% and 12% are punitive levels of taxation. Certainly in my constituency, we have simply seen the number of transactions fall. I had a look at the numbers in Kensington: from 2015-16 to 2018-19, the fall in the total number of transactions was 38%, and the fall in the value of those transactions to the Exchequer was 26%. My hon. Friend for South Cambridgeshire (Anthony Browne) made the point about what we lose not only in stamp duty, but in building and renovations and in lawyers’ fees.
I welcome this measure. I am not naive—we need tax revenue in future—but I feel that this tax needs to be looked at in detail and can be finessed.
Andrew Griffith (Arundel and South Downs) (Con)
It is a pleasure to follow not only my hon. Friend the Member for Kensington (Felicity Buchan) but so many of my colleagues who were elected for the first time in December 2019.
I warmly welcome the scrapping of stamp duty for purchases of up to £500,000. With average house prices of about £450,000 in Arundel and South Downs, that will help some but not all my constituents directly. However, everyone will benefit from the resulting boost to the economy—the construction industry, painters, decorators, plumbers, electricians, brick makers, timber merchants, furniture and removal companies, and my hard-hit local garden centres, growers and landscape designers—and, because the supply chain stretches across the whole country, the whole Union will benefit.
The measure is temporary, but after such an excellent debate and such warm words from our colleagues, I wonder whether I can tempt the Minister to settle on this particular piece of fiscal real estate more permanently. In fact, we could make it an early down payment on the vital work to come of simplifying the tax system that he has inherited—a system that, despite the honourable and herculean endeavours of HMRC, is essentially broken.
According to the World Bank index, the UK is a creditable eighth in the world for the competitiveness of our tax rates, but a rather less competitive 27th for ease of understanding and paying taxes. That is no surprise with a tax code that now runs to more than 10 million words. Along with my Front-Bench colleagues, we have an excellent Chancellor with a sharp intellect and a ferocious work ethic, but it would take him a whole year to read it—by which time it would be Budget time and, like Sisyphus, he would have to start all over again.
What better time is there to start a crusade for fairer, flatter and simpler taxes, and I note the comments made by my hon. Friends the Members for Runnymede and Weybridge (Dr Spencer) and for Keighley (Robbie Moore)? What better place to start than a tax that does for housing transactions what the window tax did for windows? It is wrong to think of stamp duty as a modest percentage of the price: although the purchase price of a property can be spread over 20 or 25 years, stamp duty has to be paid in a lump sum up front, so it is much more like a deposit, which is the biggest hurdle for generation rent. At a time when interest rates are at all-time lows, it is about not affordability but access to up-front capital. In that sense, we can think of stamp duty as a tax on social mobility. If someone has capital, or their family does, they can quickly pass go, but if their bank of mum and dad—or perhaps just mum or just dad—happens to be empty, getting on or moving up the ladder is much harder.
It is not as if the housing market was working perfectly, even without the Bill. Prices are out of reach for first-time buyers while empty-nesters are penalised for downsizing. Planning permissions are already in place for more than a million homes—all that the nation will ever need—but those homes are not getting built. Labour tax raids on pension savings destroyed confidence and channelled savings instead into buy-to-let. The planning system incentivised developers to build homes in exactly the wrong places, because that is where the arbitrage is the greatest. Intervention is heaped on intervention, so that, like a teenager’s carpet, we can no longer see the original pattern. I shall return to that subject on behalf of my constituents in West Grinstead, Adversane and Henfield, whose lives are being blighted by the prospect of inappropriate and unsustainable developments.
Finally, let us remember that the rate of tax is a floor, not a ceiling. If the hon. Member for Liverpool, Walton (Dan Carden), the shadow Chancellor or any of their supporters wish personally to pay more, that is a right that we on the Government Benches would never seek to deny them. I know that the Minister would be happy to let them know the details for where to send the cheque. Now is a time to be bold and decisive and to act fast. The Bill and the measure in it fully meet that objective, and I am proud to support it.
Mr Pat McFadden (Wolverhampton South East) (Lab)
It has been a pleasure to listen to this debate and the many interesting contributions. I cannot mention every Member who has spoken, but we have had a lot of interesting contributions. The hon. Members for South Thanet (Craig Mackinlay) and for Runnymede and Weybridge (Dr Spencer), and perhaps one or two others, urged the Government to abolish stamp duty completely. The hon. Member for Dudley South (Mike Wood) spoke of the importance of confidence in the market in the face of impending job losses.
In a thoughtful contribution, the hon. Member for Penistone and Stocksbridge (Miriam Cates) spoke of the impact of relationship breakdown on housing transactions. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) spoke of the appalling conditions that many families find themselves living in, and eloquently set out how distant is the dream or aspiration of home ownership for so many people. The hon. Member for South Cambridgeshire (Anthony Browne) gave us the benefit of his long experience in these matters in calling for an increased rate for second homeowners.
Stamp duty holidays are a familiar feature of economic crisis management. As has been referenced in the debate already, in 2008 the then Chancellor, Alistair Darling, raised the level at which stamp duty was paid in an effort to kick-start the housing market, which had been hit hard by the global financial crisis. At that time, the measure had a positive effect and brought forward an increase in the number of transactions. This time, we do not yet know of the effect.
As my hon. Friend the Member for Liverpool, Walton (Dan Carden) said, another thing that we do not know is whether the Government really intended to introduce this measure, at least at this time. We saw the briefing, the counter-briefing, the leak and the counter-leak; in the end the Government have announced it now, rather than in some post-dated way that would have simply killed the housing market stone dead. After all, why would anyone choose to buy a house now if they were promised a tax cut on the transaction in some months’ time?
It is normal, of course, for the Treasury to weigh up its options for a statement such as last week’s. There is nothing wrong with considering different ideas, accepting some and rejecting others, but for that exercise to work, it has to be done in private. If the leaks were not a problem, Government Members must ask the Prime Minister why he was railing against them at the end of last week when he was discussing these measures. Once it was out in the open, the Chancellor had to act, so the first question to be asked about this policy, before we even get to its merits, is: was it the result of a £4 billion leak? If that is the case and the Chancellor was effectively bounced into this policy as a result of information coming out in an unintended way, this must be the biggest plumbing bill of all time. We might never know, so let me turn to the merits of the policy itself.
The reason the Chancellor gave for the measures before us was that housing transactions had fallen sharply in April and May. It is true that housing is a very important part of our economy, for all the reasons that we have heard in the debate. Governments of both colours have supported the ambition of people to own their own home, as we do today. Depending on where you live, stamp duty can be a significant cost to house buyers. Although the history of temporary cuts in stamp duty rates tells us that, over the longer term, they might make little difference to the volume of transactions, they can serve to bring forward demand when a market has been hit for one reason or another. When people move house, there is a positive knock-on effect, and we have heard about many of those effects today, whether it is the purchase of new furniture or electrical goods or the employment of people doing repairs and renovations.
We do not oppose this measure. We support the desire for people to own their own homes. We certainly do not celebrate the reduction in home ownership over the past 10 years or the fact that 800,000 fewer people under the age of 45 own their own home today compared with 10 years ago—and 10 years is important. The Government have had a decade to address the question of home ownership. I put it to all the champions of home ownership who have spoken in the debate: are they really proud that it is harder to own a home now than it was when they came into office 10 years ago? Are they really proud that it is so much more difficult for younger people to get on the housing ladder? I do not think they can be proud of that decade-long record.
As with a number of the measures announced last week, we have concerns about how well this is targeted. Stamp duty has changed over the years, with different rates put in at different levels. If the Chancellor really wanted to announce a stamp duty holiday, was it necessary to extend it to buy-to-let landlords and people purchasing second homes? What will be the benefits for overseas buyers, some of whom have seen the most expensive London property almost as a reserve currency? Both those groups are already treated differently within the existing regime, and they could have been treated differently in this change. That is why we have tabled a new clause calling for a report on the effect of this decision on these very different groups of homebuyers. We are for measures that help hard-working people to buy their own home, but we are not for measures that simply channel funds to areas where they are not needed or that go against the grain of some of the changes that have been made to stamp duty in recent years.
That takes me to a wider point about the measures announced last week. The job retention bonus has been criticised by a number of commentators for having a significant dead-weight cost—that is to say, giving money to businesses for doing things they would have done anyway. That is why the measure was not signed off by the head of HMRC, who questioned the “value for money” of the proposal. It was of course absolutely essential for the Government to step up and support the economy during a lockdown that was imposed for public health reasons, and the costs of not doing so, both economically and socially, would have far outweighed the costs of doing so. But that does not mean that the Treasury and the Chancellor are absolved of the duty to target that support properly on measures that really can make a difference to the recovery, or to use taxpayers’ money wisely.
Like all Budgets and all Budget statements, the measures announced can look a little different after a few days’ examination and scrutiny, and that has proved to be the case with last week’s statement. Within 24 hours of this supposed statement for jobs, thousands of job losses in Boots and John Lewis were announced—great British companies in a sector that got almost no attention from the Chancellor last week. So the question, above and beyond the detail of the measures before us tonight, is whether, after last week’s statement, all these measures match up to the scale of the economic and, in particular, the jobs challenge that the country is facing. We called for a Budget for jobs because we have heard the warnings about the danger to jobs in many parts of the economy. This is not a crisis that affects all sectors equally. The Chancellor conceded that point with his targeted cut in VAT for tourism and hospitality. It is absolutely right to help those sectors, but there are others that desperately need help too—retail, manufacturing, aviation, transport and many more.
There is one more crucial point. Getting the economy moving again is not just a matter of the kind of measures that we are debating this evening, because the health response and the economic response have to go together. It is not just the lack of a £10 discount that is stopping people eating out; it is fear—fear and lack of confidence that the Government are adequately on top of the public health situation. After tens of thousands of deaths, and with the Government’s boast of a world-beating track-and-trace system having been turned to dust, it is little wonder that there is fear and lack of confidence. If the Government really want to get the economy moving again, they have to give the public the confidence that they are on top of the public health crisis as well as putting the right economic support measures in place.
We do not oppose these measures, but we remain convinced that the economic and health responses must be brought together, and that more measures than those announced last week will be necessary to help the economy through the very tough period for jobs that is already upon us.
The Financial Secretary to the Treasury (Jesse Norman)
I thank all hon. and right hon. Members for what has been a very interesting debate, across the Chamber. I also thank the Labour Members for their support on this measure, because it is wise on their part but also indicates that they share at least this aspect of the Government’s vision for the economy.
This pandemic represents, as the right hon. Member for Wolverhampton South East (Mr McFadden) said, not merely a public health crisis but a profound shock to our economy. That is why, last Wednesday, my right hon. Friend the Chancellor unveiled the Government’s plan for jobs. The purpose of that plan, as he articulated, was to protect, to support and to create jobs across this country.
As we have heard in this debate, the property market has been particularly hard hit, with almost 90% fewer mortgage approvals in May than in February, before the lockdown at began. Not only is this a source of terrible frustration and uncertainty for buyers and sellers who must put their lives on hold in that respect as in so many others, but the reverberations have been felt across the economy. More than 24,000 people are directly employed by house builders, with hundreds of thousands more in the supply chain, and there is a knock-on effect for removal companies, furniture stores, painters and decorators, and many other businesses large or small that benefit when people move—a point nicely made by my hon. Friend the Member for Dudley South (Mike Wood) when he talked about his role as chair of the APPG on the furniture industry, and rightly so.
There are, however, signs that the market is beginning to recover, with some 16% more transactions in May than in April. It is in the interests of both homebuyers and the wider economy that that trend should gather momentum and speed over the coming months. That is why the plan for jobs included a commitment to increase temporarily the nil rate band of residential stamp duty tax from £125,000 to £500,000. Alongside the green homes grant, the aim was to inject momentum back into the housing market so that the economy can start to move forward once again. The Bill today puts that commitment into action and will ensure that the new band can take effect from 8 July—last Wednesday—until 30 March 2021.
Turning to the points raised in the debate, the right hon. Member for Wolverhampton South East asked whether this policy was designed in some way to benefit second home owners. I can reassure him that it is quite untrue to suggest that the measure will disproportionately benefit second home owners. Although those buying second homes or buy-to-let properties will benefit, and make a very important economic contribution in so doing, they will continue to pay an additional 3% on top of the standard stamp duty land tax rates. Let us not forget that it was this Government who introduced the phasing out of finance costs relief, as well as the higher rates of stamp duty land tax for the purchase of additional property—all steps towards a more balanced tax treatment between homeowners and landlords.
The hon. Member for Liverpool, Walton (Dan Carden), in his opening speech, talked about the limited scale of this package of measures. All I can say to him is that his memory is a lot shorter than many others, as £30 billion used to be considered a rather large amount of money. Certainly, it was no slouch of a budget statement to announce that much. It is a measure of how much our times have changed that that should be seen to be the case.
The right hon. Member for Wolverhampton South East raised the question of whether the Government were reacting in some sense to a leak which, nevertheless, would have itself encouraged forestalling. I can tell him that I have dozens of officials across the Treasury thinking about tax strategy who have the concept of avoiding forestalling ingrained, tattooed on their eyebrows and embedded in their heart like the word “Calais” on the heart of Queen Mary in the 16th century. The idea that they would ever have contemplated that is risible. They did not.
Let me turn to some of the other comments that were made in the debate. The hon. Member for Warwick and Leamington (Matt Western) shared with us his concerns about growing wealth inequalities. I understand that. Would he, or maybe the hon. Member for Liverpool, Walton, like to clarify his position on a wealth tax? Would he be in favour of that? What is the Labour party’s position? He is welcome to intervene on me if he has a view on that, as is the hon. Member for Liverpool, Walton, who perhaps could do so in Committee. It is causing us a certain amount of uncertainty and it must be causing voters even more.
The hon. Member for Mitcham and Morden (Siobhain McDonagh), in a very thoughtful speech, invited the Government to build more. I can direct her, if I may, to an article in The Guardian on 14 November last year, which points out that house building in England is at a 30-year high. As colleagues have mentioned, we have a £12.2 billion affordable homes programme in place at the moment, so she can take it as read, I hope, that both sides of the housing market are very well attended to at the moment.
My hon. Friend the Member for Runnymede and Weybridge (Dr Spencer) raised whether we should scrap stamp duty all together. I was perhaps slightly harsh, but I always take it as an additional measure of credibility when colleagues can come forward, as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) did—and my hon. Friend the Member for South Cambridgeshire (Anthony Browne)—with a specific suggestion for how the gap could be filled. What was charming about my hon. Friend the Member for South Cambridgeshire was that although he believes the abolition of this tax will fire up the market, temporarily at least, he did not seem to think that doubling the additional tax would have any effect on the market. I thought that was an interesting economic contribution and I invite him to raise that possibility with his friends at the Institute for Fiscal Studies, since he is a board member or senior advisor there.
Let me wind up by saying that this is an important measure, which comes at a time when the pandemic has tested our economy to the limit. Through our collective effort, we will bring this virus under control. We have done so and we will continue to do so, and we will support our economy as it reopens in a way that is safe. For those reasons, I commend this Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).
Mr Deputy Speaker (Mr Nigel Evans)
Order. Before I ask the Clerk to read the title of the Bill, I should explain that, in these exceptional circumstances, although the Chair of the Committee would normally sit in the Clerk’s Chair during Committee stage, in order to comply with social distancing requirements I shall remain in the Speaker’s Chair carrying out the role of Chairman of the Committee. We should be addressed as Chairs of the Committee rather than as Deputy Speakers.
Stamp Duty Land Tax (Temporary Relief) Bill
Monday 13th July 2020
(4 years, 5 months ago)
Commons ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2020 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 13 July 2020 - (13 Jul 2020)
The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)
With this it will be convenient to discuss the following:
Clause 2 stand part.
New clause 1—Review of impact of Act—
“(1) The Chancellor of the Exchequer must lay before the House of Commons within three months of Royal Assent a review of the impact of this Act. (2) Such a review must include an assessment of the impact of the Act on— (a) first-time buyers, (b) existing owner-occupiers moving home, (c) buy-to-let investors, (d) those buying second homes, and (e) overseas buyers.”
Member’s explanatory statement This new clause would require the Chancellor of the Exchequer to report to Parliament on the impact of the Act, and in particular its impact on different groups of property owner.
The Financial Secretary to the Treasury (Jesse Norman)
This Bill increases the nil rate band of stamp duty land tax from £125,000 to £500,000 from 8 July 2020 and runs until 31 March 2021. If I may, I will speak to clauses 1 and 2, and also to new clause 1 tabled in the name of the Leader of the Opposition.
This Bill contains two clauses. Clause 1 provides for the thresholds at which stamp duty land tax is due on residential property to be increased for a temporary release period, with effect from 8 July 2020 to 31 March 2021. The effect of this is that the first £500,000 of consideration for standard purchases of residential property will be free of tax, whereas previously only the first £125,000 was free of tax. The clause changes the rules in relation to other elements of stamp duty land tax, which are affected by the temporary holiday, such as the higher rate for the purchase of additional properties and first-time buyers’ relief. The higher rate traditional dwellings will continue to apply in addition to the standard rates of stamp duty land tax. This means that for purchase of additional dwellings, the first £500,000 of the consideration will be subject to the higher rates of 3% on top of any existing SDLT rates. Further, the clause ensures that section 57B and schedule 6ZA of the Finance Act 2003, which gives effect to first-time buyers’ relief, is temporarily disregarded until 31 March 2021.
Finally, the clause makes sure that no additional checks will be due when a contract is completed after the temporary relief period has ended, if the transaction was substantially performed within the temporary relief period. This is provided that the only reason for additional tax becoming due is the return to the standard rates of SDLT after the end of the temporary relief period.
Clause 2 provides that the Bill may be cited as the Stamp Duty Land Tax (Temporary Relief) Bill. The Bill comes into force on Royal Assent, but applies in relation to transactions with an effective date on or after 8 July 2020. As a result of the resolutions passed by the House of Commons under the Provisional Collection of Taxes Act 1968, the Bill’s provisions have effectively been in force since the 8 July 2020.
I shall briefly turn to Labour’s new clause 1, which calls for a review of the impact of the Act. To that I would respond that Her Majesty’s Revenue and Customs routinely publishes quarterly and annual statistics and analysis of stamp duty land tax data, including on first-time buyers and those purchasing additional dwellings. The Government also already closely monitor those statistics and keep stamp duty policy under constant review. As part of that, we will continue to examine the effect of the temporary rate change. This is a straightforward Bill to enact the temporary relief to stamp duty land tax announced last week by my right hon. Friend the Chancellor. I therefore commend clauses 1 and 2 to the House and ask the House to reject new clause 1.
Dan Carden (Liverpool, Walton) (Lab)
It is a pleasure to speak in the Committee stage of the Bill. The Bill was only published at the beginning of the debate, and it has just two clauses. I will direct my remarks primarily to our new clause 1. We are asking the Government at least to accept the principle behind the new clause. I do not think the Financial Secretary to the Treasury was able to put our minds at rest on the question of which people and groups will benefit from the cut set out in the Bill. He said that it was quite untrue that it would benefit the owners of second homes or multiple homes, but I think we need a review to give us the facts. We need to find out whether first-time buyers, existing owner-occupiers moving home, buy-to-let investors, those buying second homes and overseas buyers are among groups that will benefit from the policy.
The Financial Secretary did not give us a clear response to the fact that £1.3 billion of the cost of this scheme looks likely to benefit those who are already home owners. We want the Government to commit to reviewing the Bill’s impact in an open and transparent way. We want to know whether such a large sum will deliver value for money and what the broader impact of this will be on the housing sector. The Government should want to consider how this, their flagship policy, will contribute to solving the housing crisis and how it will impact on the economy overall. Our new clause will help to achieve that, and the Government should accept it.
Wera Hobhouse (Bath) (LD)
Covid-19 has highlighted the deep inequalities that existed long before this pandemic. Many people have been left desperate for support. Hundreds of thousands of people already have less money coming in, and hundreds of thousands have lost, or will lose, their jobs. The Government have thrown an eye-watering amount of money at our economy, but we do not yet know how this increasing mountain of debt will be paid back, or by whom. In the meantime, paying bills, rents and mortgages has become hard for millions of households. We must therefore question whether this tax cut should be a priority for the Government. It is expected to cost £3.8 billion, yet it will mainly benefit the wealthiest. The average earner, including the young generation who are struggling to pay ever-increasing rents, let alone be able to put down enough money to buy a house, will see nothing of it. The discount might provide a tax holiday for the privileged few, but it completely ignores the fact that the majority of people are unable to buy a home of their own now, and are never likely to do so in the future.
In my constituency of Bath, the availability of housing for first-time buyers is limited and house prices are expensive. The average house price in Bath is currently more than £430,000. A first-time buyer would qualify for £10,000 under the new rates, but even that would provide little benefit to a first-time buyer in my constituency who cannot secure a deposit or who faces an unaffordable mortgage. The cut to stamp duty will not solve the real problems at the heart of the housing crisis. Housing is one of the most important sectors for job creation—I agree with the Minister on that—but where is the focus on building social homes for rent? Social homes are the only way to provide secure and affordable housing for everyone, but, most importantly, for those on lower incomes. The private sector has completely failed to build social homes, and only a huge Government infrastructure programme to build social housing, as we saw in the ’50s and ’60s, will bring our social housing stock back to where it needs to be. That would create the jobs we need as well as the homes we need. Surely at this time, genuinely affordable homes are more important than ever, and more important than a stamp duty cut.
Lastly, the climate emergency has not gone away during covid, and we know that emissions from homes account for 30% of UK emissions. Decarbonising homes is therefore crucial to getting to net zero. Improving the energy efficiency of social housing is something that the Government could do straight away. They could also require landlords to achieve minimum levels of energy efficiency in order to be able to rent their homes. We need a Government with a vision to get the economy going, not a tax cut for only the few.
Jesse Norman
I thank the hon. Members for Bath (Wera Hobhouse) and for Liverpool, Walton (Dan Carden) for their comments. There may be some slight misapprehension from the hon. Gentleman—I did not actually say what he said I said. I said it is not true that this measure will disproportionately benefit second home owners, and that is because it has a proportionate effect across the whole population of home ownership. However, he should also be reassured that we in the Treasury keep a very careful watch over these taxes. They are monitored and assessed and their impacts are regularly reported on.
As I said, the Bill will help to deliver a Government aim to ensure that people feel confident to move, buy, sell, renovate and improve their homes, and it is a policy that the Labour party has indicated that it supports. On that basis, I commend clauses 1 and 2 to the House and respectfully ask that it does not support new clause 1.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
Third Reading
Jesse Norman
I beg to move, That the Bill be now read the Third time.
Mr Deputy Speaker, let me say how gracefully you migrated from being Chairman to Mr Deputy Speaker without any of us really noticing the change—thank you for that brilliant transfiguration. It is extraordinary to think that it is now four months almost to the day since my right hon. Friend the Chancellor of the Exchequer stood before the House to deliver the Government’s first Budget. That proved to be the first in a series of very large economic interventions from this Government, all of which have been designed to buttress our public services and protect the most vulnerable in our society from this virus, while also supporting people’s jobs and livelihoods through the lockdown. Four months on, as he said, a “new phase” has begun in the Government’s economic response to covid-19 with the publication of our plan for jobs.
As the Chancellor made clear when he addressed the House last Wednesday, there is no room for dogma or ideology in this approach. If the first phase of our response focused on protection, this second phase is focused on the need to give everyone the opportunity of good and secure work in the future. However, it is certainly not the last measure that we will enact. The Government have said that they will bring forward both a Budget and a spending review in the autumn, when we will be in a better position to put our public finances on a secure footing and consider the long-term fiscal measures required for a sustained and successful recovery. Nor should we forget that many of the programmes that the Government have introduced to date still have a significant time to run. They include the coronavirus jobs retention scheme, the furlough scheme and the self-employment income support scheme, which will continue through the summer and the early autumn before ending in October.
However, at this moment millions of people are still facing considerable uncertainty and fearing for their jobs right now. They need to know that there is hope for the future, which is why we have acted with a plan for jobs. This Bill—I hope soon it will be an Act—is a very important part of that plan for jobs, and I commend it to the House.
Dan Carden
The Opposition will not be opposing the Bill. We are acutely aware that people need support after months of lockdown when they were unable to buy or sell their homes, but while we are not opposed to giving homeowners and buyers additional support to get through this crisis, we have concerns about who will benefit most from the Bill.
Last week, we should have had a back-to-work Budget that targeted support at the sectors and jobs most affected by this terrible crisis, but we did not get one. Instead, we got scattergun giveaways that will not deliver for those who need it most—giveaways such as this Bill, which was frantically pulled together at the end of last week after more clumsy miscommunication at the highest level of Government.
Last week’s statement was another example of rhetoric over reality with this Government. It was cobbled together to get as many likes as possible, without due consideration for the long-term impact on the economy. It did nothing to target support to those who need it most during this difficult time. It did nothing for those who have so far been excluded from Government support during this crisis. Above all, it did nothing to address the Government’s failure to get an effective test and trace system in place so that people can feel confident leaving their homes and returning to some sort of normality.
As my hon. Friend the shadow Chancellor put it so succinctly last week, families are not staying home because they are waiting for a tenner off a meal. They are staying home because they are still worried about coronavirus. We do not just need incentives; we need confidence.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Stamp Duty Land Tax (Temporary Relief) Bill
Friday 17th July 2020
(4 years, 5 months ago)
Lords ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2020 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 13 July 2020 - (13 Jul 2020)
Royal Assent
Wednesday 22nd July 2020
(4 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Amendment Paper: HL Bill 119-R-I(Corrected-II) Marshalled list for Report - (15 Jul 2020)