Future Government Spending
Anne Main Excerpts(10 years, 11 months ago)
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Mr Newmark
It is interesting that the hon. Gentleman should talk about our welfare policies as his side wants to increase spending, whereas we are trying to cap it at a reasonable state—£26,000, which is £35,000 pre-tax, which is higher than the average wage of most people.
Labour was financially reckless in government and, it seems, is even more financially reckless in opposition. Already it has £20.7 billion of unfunded spending commitments for 2015-16, which is £1,200 per household. HM Treasury estimates Labour now has £32 billion of borrowing for 2020-21 and £166 billion over the next Parliament—the next five years—or £10,000 extra per household. I hope voters are listening to that. That is £10,000 extra per household; they should remember that before they go into the ballot box. We have learned today that Labour’s new great tax policy is to increase the cost of a gun licence. So Labour’s policy going forward is, as always, tax more and borrow more.
Mrs Anne Main (St Albans) (Con)
This motion refers to
“sensible reductions in public spending”.
Does my hon. Friend know what these reductions are and how much they might raise, because there is no mention of that whatever? They are just a blank canvas.
Mr Newmark
I know, and I suspect Labour will be going into the election with a blank canvas, and no doubt voters will make their judgment on that.
Going forward, the Government are committed to raising the personal allowance once again—up from £10,500 to £12,500. That is a tax cut for 30 million people and removes 1 million of the lowest paid out of tax altogether. The Conservative Government are committed to balancing the books by the end of the Parliament, which the Opposition party is not, and a Conservative Government are committed to reducing Government spending to 35.2% by 2020, as the hon. Member for Nottingham East (Chris Leslie) pointed out. I remind him that when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor he had borrowing at 35.9%, so we are not talking about a huge difference between the 35.2%, which is apparently an absolute crisis, and the 35.9% in 2000.
To conclude, the Government have a track record to be proud of: reducing spending; reducing the deficit; reducing taxes; and reducing unemployment. Here are the words of Christine Lagarde of the International Monetary Fund—although I will not say this in a French accent. She said:
“Certainly from a global perspective this is exactly the sort of result that we would like to see…More growth, less unemployment, a growth that is more”—
wait for it—
“inclusive, that is better shared, and a growth that is also sustainable and more balanced.”
These are the words of Christine Lagarde this year, on 15 January 2015, at an IMF round-table discussion in Washington.
The Government’s long-term economic plan is working, and hopefully on 7 May the British people will not give the keys back to the guys who crashed the car.
Stewart Hosie
That is precisely why the Government should have taken a flexible approach to deficit consolidation, rather than a fixed-term approach. I will say more about that in a moment.
It is useful today to identify precisely what is on offer, other than the £30 billion of extra cuts that were promised by the Government in January. That is, of course, no more than a continuation of the existing failed policy of fixed-term deficit consolidation and a plan for further attacks on the welfare budget. It is a plan to balance the books on the backs of the poor, which we now understand means taking levels of public expenditure back to those of the 1930s.
Today’s motion calls for a
“different, fairer and more balanced approach”
and I agree with that. The key thing that needs to be changed is the fixed-term approach to cutting the deficit. Instead of that approach, which has self-evidently failed so far, we should have a more flexible, medium-term strategy whose first principle should be about reducing debt to a “prudent” level. It is important that the Government of the day should specify what is or is not prudent, depending on the real circumstances that they face, precisely to deal with the kind of external shocks that the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) has just mentioned.
Stewart Hosie
It is a Labour motion, and I might not even support it. I am merely pointing out that the Tory party told us that the current account would be back in the black, but it is not. We are borrowing almost £80 billion this year. The Tories’ austerity programme has failed.
We need to reduce debt to a prudent level, with the Government of the day specifying what is or is not prudent, depending on the circumstances. A second principle should be that, once debt is reduced, the Government should maintain a balanced budget on average over the medium to long term, not in a way that would prevent them from implementing the steps they believed necessary to achieve their long-term objective, but in order to afford them the flexibility to deal with external shocks over the medium term.
A third principle is that the Government should achieve and maintain a level of net worth that provides a buffer against unforeseen factors. A fourth calls on the Government to manage fiscal risks prudently. A fifth principle is that the Government should pursue policies consistent with a reasonable degree of predictability about the level and stability of tax rates. That is incredibly important, because the tax system, tax rates and tax certainty form a vital component of fiscal stability and fiscal responsibility.
Mr Stewart Jackson (Peterborough) (Con)
What a pathetic, facile motion the Opposition have brought forward for their last Opposition day debate during this Government. They could have introduced a proper costed programme. As my hon. Friend the Member for Wolverhampton South West (Paul Uppal) has said, they could have apologised for the huge number of errors they made in government. All elections, including the one in 63 days’ time, are about hope versus fear. From them we hear fear and smear, but we have a policy of hope, because we have turned around the economy following the disastrous economic legacy left by the Labour party.
Mr Jackson
Absolutely. In more than two hours, we have not heard anything, except in relation to gun licences and, of course, the recycled bankers’ bonuses.
What a contrast between the Opposition and the Labour party on the cusp of the election on 1 May 1997, when I was a candidate and lost by the not inconsiderable majority of 19,500 in Brent South. No wonder Labour MPs are depressed when they are sober and catatonic when drunk, quite frankly, because they know there is an acute contrast between that historic election and now. The Labour Government led by Tony Blair was ambitious, and their programme was thoughtful, forward looking, positive, generous and optimistic. Tony Blair is now persona non grata in the Labour party, and it now has a core vote strategy, with a mean-spirited, peevish, insular, dreary collection of bungs to special interest groups, and smears and caricatures aimed at the Conservative party.
What is more, Labour policy does not stand up to any form of scrutiny. We have heard about the utilities price freeze—a disastrous policy that has damaged the industry and, perversely, will damage the interests of consumers. Wither Labour’s cost of living crisis? Today, the IFS says that prices are being outstripped by wages for the first time since 2007. There is no more cost of living crisis because wages are growing at 2.1% against a retail prices index of 0.9%. On fuel, council tax, food, beer duty and children’s air passenger duty, the Government have made efforts to reduce the cost of living of ordinary families. We have driven up the personal allowance, and we are committed to drive it up to £12,500 in the next Parliament.
Charter for Budget Responsibility
Anne Main Excerpts(11 years, 1 month ago)
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Paul Uppal (Wolverhampton South West) (Con)
I welcome the proposals today that enshrine into law sustainable public finances and aim for public sector net debt as a percentage of GDP to be falling in 2016-17. The argument today revolves around not whether we need to deal with the deficit but how to deal with it. Within that, we must remember that we live in a global market where capital, companies and people can choose where to live and where to be taxed, something that the Government are acutely aware of and have acted upon.
If we are to continue to reduce the deficit in line with the fiscal rules laid out today, aiming for public sector net debt to be falling in 2016-17, and the current budget to be balanced by 2017-18, we need to ensure that our tax system remains competitive. Tax competition and competitive tax rates need not be viewed as dirty words; they are an end to a stronger economy, higher employment and better public services. The problem is that the Labour party believes in two things: first, that higher taxes, corporate or personal, lead automatically to higher revenues; and, more worryingly, that taxation is not just a tool for raising money, but a punishment to be levied on success.
Instead of trying to tax more and more out of people and businesses already sitting around the table, we should be trying to attract more to the table itself, and subsequently ensure that they pay their taxes to the Treasury. Large multinationals choose where to pay tax. This is not the 1930s, where capital was difficult to relocate, although I secretly think that Opposition Members would like to take us back there.
On Sunday, the Leader of the Opposition said that there would be tax rises under a Labour Government. I hope that Labour will come clean about what tax rises it will impose on Britain. My fear, and, I suspect, the fear among Britain’s businesses, is that its first target will be corporation tax, undoing the hard work that we have done in the past four years and turning away companies that wish to be based here.
Mrs Anne Main (St Albans) (Con)
The other tax that my hon. Friend might like to mention is the redistributive mansion tax being proposed to send money north of the border to shore up the Labour party’s support there.
Paul Uppal
My hon. Friend makes a valuable point. In the current modern economy we need to encourage success. As Abraham Lincoln always said, no one is given a hand up by others being pushed down.
Stamp Duty Land Tax Bill
Anne Main Excerpts(11 years, 1 month ago)
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Mr Gauke
That is not our assessment. My right hon. Friend is an eloquent and distinguished advocate of the argument that it is possible to raise more revenue by reducing rates, and he has over many years demonstrated cases where that would apply. I do not believe that we will quite see that dynamic effect to that extent in this case. I think more revenue, and certainly a greater proportion of it, will be raised from properties above £2 million. Undoubtedly, we will see a few more transactions, which will mean additional revenue that would otherwise not come in. On balance, we will see a reduction overall in revenue across the SDLT regime, but we believe that that is none the less the right thing to do to ensure that we deliver a reform that benefits the vast majority of people who pay SDLT.
Under the rules as they applied on 3 December, the amount of tax payable was a percentage of the chargeable consideration—the purchase price—for the acquisition of the property. Different scales of percentages, table A and table B, applied respectively to transactions consisting wholly of residential property and to transactions that consisted of, or included, non-residential property. The clause substitutes a new table A, setting out the new tax rates and bands that apply to a transaction consisting wholly of residential property. It also amends the calculation rules for those transactions, so that each rate of tax applies only to that part of the consideration that falls within the relevant band. The total tax due is then the sum of the amounts of each band.
Mrs Anne Main (St Albans) (Con)
I stress again how welcome the change has been for residents in St Albans, particularly at the lower end of the market where there have been big savings. Has consideration been given to expanding the scheme to commercial properties, and not just keeping it to wholly or partly residential properties?
Mr Gauke
All these matters are kept under review. My hon. Friend has been a consistent and doughty campaigner for reform in this area. If we had exactly the same system in place for commercial property, with the same thresholds and so on, we would be imposing a much greater burden on commercial property transactions, because by their nature they tend to be of a more substantial size. There is a higher level of consideration in place than for most residential property transactions. The argument for reform for residential property was particularly strong, which is why we took these steps. Consideration of whether there is a strong and persuasive case for reform for commercial property is perhaps a matter for another day.
Mr Redwood
First, may I remind the Committee that, as listed in the register of Members’ interests, I provide advice to an industrial company and an investment company?
The Minister has produced what is on the whole an excellent scheme. I support most of it and was one of those, along with my hon. Friend the Member for St Albans (Mrs Main), who was lobbying hard to get this major reform through. I congratulate the Minister and the Chancellor on dealing with the problems that the slab system created. The peaks and the dead areas were damaging to the property market and made it difficult for some people to buy or sell properties in certain price ranges. The system probably distorted pricing as well, to the benefit of some people and the detriment of others. It is therefore good that we have smoothed it out and introduced a more sensible progression up to £937,000, where most of the transactions lie. The new arrangements will represent a fairer, lower-cost system for practically all transactions, which is wholly admirable.
I want to tease out a little more information about the rather pessimistic forecasts of how much revenue will be lost up to the end of this decade. It is clear from the figures that cutting the higher rate of income tax has produced considerable extra revenue, as it was bound to do, given that the previous rate deterred people or meant that they did not come here at all. It is also clear from the figures that the much higher rate of capital gains tax has been very damaging to revenues, which are still miles below where they were prior to the crash. This is a difficult one to call, and I am not saying to the Minister that the proposals would either damage or increase revenues. I am merely suggesting that the Treasury’s forecasts for that lengthy time period could prove to be inaccurate, and that it would be nice to unpack those forecasts in order to understand what the Treasury thinks is going on.
The problem with trying to forecast the revenues at this juncture is that, on the one hand, we have seen a slowing of the mortgage market in recent months through regulatory intervention, and we would therefore expect fewer transactions because the regulators and the banks are now being much tougher about mortgages. On the other hand, however, we have Government intervention trying to mitigate that effect through the very successful and helpful Help to Buy scheme, which I believe to be necessary. It is certainly helping people in my area to buy their own home. However, the net result of these arrangements seems to be a dampening of transactions, and we must bear that in mind when trying to judge the impact of those policies and to assess the impact of the stamp duty change. All things being equal, we should expect to see an increase in the volume of transactions under the £937,000 level because buying such homes will be a bit cheaper, and in certain price bands we will see activity occurring that would not have occurred at all because of the slab effect.
Mrs Main
Does my right hon. Friend share the optimism that I feel, having talked to small businesses in my community, that there could be a knock-on effect from people having a bit more money to carry out home improvements? Those businesses have suffered in recent years because people have not been investing in their own homes.
Mr Redwood
Yes, indeed there could.
This is difficult to predict, because all these things need to be modelled. The level of the reduction in some cases is quite large, and it will be difficult to make up for all that lost revenue through increased transactions. That is why it would be interesting to probe the Treasury a little more on its forecasts. I expect it thinks that there will be quite a big revenue gain where the rate has gone up, but that effect might not prove to be as strong as it hopes, because there will definitely be a disincentive effect at the top end following the introduction of the very top rate for the privileged few who can afford those types of properties. Those people are often in the fortunate position of owning more than one property, and of being able to decide whether they wish to buy property in this country or elsewhere. There will be some kind of disincentive effect, and we need to look at relative taxes and relative prices in relation to London and other centres.
It would therefore help if we knew a little more about the Treasury’s numbers at this stage of the debate, so that when we review this policy in a year or two, we can see what was right and what was wrong. For example, does the Treasury think that there will be extra revenue from the higher rate? That has clearly not been the case in relation to the two big taxes that I have mentioned. Does it envisage a loss of revenue despite the effect on transactions at the lower level? It would be good to have more detail, so that we can have some benchmarks as we try to assess the financial impact of the policy.
Stamp Duty Land Tax Bill
Anne Main Excerpts(11 years, 2 months ago)
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Mrs Anne Main (St Albans) (Con)
I am delighted with the changes to stamp duty; I have been campaigning for them for a significant period of time. It is worth observing the old adage that success has many parents, but failure is an orphan, as it could be relevant to the campaign. When I was claiming a bit of a victory on this, having campaigned for it for so long, I was amazed to read that the Liberal Democrats had campaigned equally long for the change. Surprisingly, though, not a single Liberal Democrat turned up to the Back-Bench business debate that I secured on the matter on 4 September. Perhaps lobbying is more in the mind than in the actuality.
Let us not be bitter today, as I welcome the proposals. It was good to follow the shadow Minister, as she was raising some of the concerns that I have about a differential tax system. It will have to be addressed, because altering the designation of a property from commercial to residential, or residential to commercial, could provide a way of avoiding tax, as one situation may be seen as more beneficial than the other. To have a dual system running may well cause problems.
I also worry that in areas where it is hard to keep small commercial operations going, the temptation to flip a property’s designation to residential, rather than trying to maintain it as a commercial property, will be even higher if there is also a tax advantage in doing so. I urge the Government to keep that under review, because if the slab system was hated—and it was—it was hated not just for its effect on homes.
John Stevenson
Does my hon. Friend therefore suggest that commercial and residential properties should have the same rates and thresholds?
Mrs Main
I do suggest that. I am sure that budgetary constraint is the reason that has not been done, but I am concerned that that slice system, which will not apply in Scotland and will apply in England only to residential properties, could result in complicated reasons why commercial properties might end up being vehicles for tax avoidance, which would not be good. The slab system was roundly denounced by all parties and all commercial commentators, so I think that is something we should look at.
I welcome the moves to get more young people on the property ladder. In St Albans, the Help to Buy scheme was not utilised at all because, as has been widely observed, if people cannot save up a deposit in a very expensive area, how on earth can they save for the tax to be paid to the Chancellor? The reform is therefore very helpful in that regard. However, we must ensure that we do not allow the properties that we are trying to help—those targeted by lower and middle-income buyers—to be dragged further into the higher levels. In 2003 only 10% of properties were caught by the 3% rate, but just prior to these reforms the figure had risen to 25%. It is important that the Government do not sit back and wait for too long following these reforms, because too many of the families that they have sought to help will be dragged into the higher rates.
According to Savills, which I was talking to today, people in St Albans have already benefited. The amount paid under the previous regime was, on average, £17,273 per transaction. Under the new regime it will be £16,020. That is still very high, but of course that is an average, and the average house price in St Albans is over £500,000, but there are still many houses that fall well below those transaction levels. My constituents are hugely grateful that they can at least start trying to get on to the property ladder without having to pay such an enormous burden to the Treasury. That is welcome.
There are two points that I would like some clarity on. Why have we decided to keep a dual system going when the previous regime was agreed to be so demonstrably flawed? It might be unaffordable, but I think that is almost indefensible. If it is a bad scheme, it is a bad scheme. I do not want business owners and people who wish to aspire to own their own business feeling that they are labouring under a bad scheme that has been roundly denounced, and quite rightly so, by all parties in the House.
The Exchequer Secretary to the Treasury (Priti Patel)
It is a pleasure to respond to this efficient debate, and I welcome the consensus on it across the House. The measure has been debated over the past week, so it is not surprising that we have reached a conclusion quickly today. We have had an effective debate today. This is a landmark reform, as my hon. Friend the Financial Secretary has said. The Government announced it in the autumn statement. It is the most radical restructuring of stamp duty we have seen. It cuts stamp duty for 98% of people who pay it. It eliminates damaging distortions in the housing market, where someone buying a house for £250,001 pays three times as much tax as someone buying a house for just £1 less.
Priti Patel
The reform cuts stamp duty for 98% of people who pay it. That is the point I was making.
The reform reduces the tax bill for first-time buyers. As my hon. Friend the Financial Secretary highlighted, this is about aspiration. Everything about the debate we have had is about supporting home owners, first-time buyers and the principle of aspiration.
In a moment I will move on to the points that have been raised by my hon. Friend the Member for St Albans (Mrs Main). The Labour party made a number of points about how many people have benefited from some of the advice that Her Majesty’s Revenue and Customs provided last week on the transitional support. The Government do not have the current figures on how many home buyers have benefited from the transitional reviews. As with most cases where stamp duty is paid, we get the information only after a transaction has been fully completed. However, we expect that as many as 35,000 transactions will benefit from the transitional rules, which is a substantial number.
My hon. Friend the Member for St Albans and the hon. Member for Redcar (Ian Swales) mentioned stamp duty on commercial properties. They will not be surprised to hear that the Government rightly keep all taxes under review. We have taken swift action on the residential front, as my hon. Friend the Financial Secretary has highlighted, and that was debated in the House last week. That swift action has obviously removed the distortions that acted as a break on aspiration and made it harder for first-time home owners.
The market for commercial property is different and, as I said, we will keep all taxes under review. My hon. Friend the Member for Rossendale and Darwen (Jake Berry) asked about mixed-use buildings. Those are subject to the commercial rules, not the residential rules, as my hon. Friend the Financial Secretary highlighted. The Government keep all taxes under review and will give consideration to mixed-use buildings ahead of future events as part of our normal review process.
My hon. Friend the Member for St Albans touched on Government forecasts. Forecasts of house prices and stamp duty land tax revenues have been verified by the Office for Budget Responsibility. My hon. Friend has been an assiduous campaigner on these issues and had a debate on the subject in the House not long ago. She referred to flipping between commercial and residential rates for avoidance purposes. We are clear that the reform is not an opportunity for avoidance.
Stamp Duty Land Tax
Anne Main Excerpts(11 years, 2 months ago)
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Mr Gauke
I thank my hon. and learned Friend for his thoughtful and timely intervention. He raises an important point and is exactly right in saying that the purchaser of a house worth £275,000, which is the average house price in the UK, will pay £4,500 less in stamp duty land tax than they would have done under the old system. The purchaser of a property worth the London average of £510,000 will pay £4,900 less SDLT, and in every region, nation or city of the UK people will pay less in the vast majority of transactions.
Mrs Anne Main (St Albans) (Con)
I am delighted that the Treasury has been persuaded of the argument I have been making for some time. I recall saying to the Minister that this would be on my Christmas wish list for my constituents, and I have already received e-mails congratulating the Chancellor and his Department on doing this. It is going to save a lot of young people a lot of money when they are trying to get on in the difficult housing market.
Mr Gauke
I am keen that this does not become a Hertfordshire-dominated debate, but let me thank my hon. Friend, who has been tireless in campaigning on this issue. Indeed, she attracted attention to it in an Adjournment debate earlier this year, expressing her views clearly. In particular, she made the case for helping those who want to get on to the housing ladder, and I know that is a big issue in her constituency, as it is in mine, where house prices are above the average. She has made some important points in this area.
Mrs Main
The other point that the hon. Gentleman fails to realise is that the mansion tax that Labour proposes would be on top of this measure, so therefore he is doubly worried about the millionaires whom he wishes to protect. On top of that, Labour would roll up the mansion tax into a death tax for millionaires.
Mr Gauke
As my hon. Friend has raised that point, I will make this observation. Labour says that more money should be raised from properties worth more than £2 million. In 2015-16, this measure will raise more than £300 million from such properties. Obviously, that is a useful sum for the Exchequer, but if the view is that Labour wants to raise £1.2 billion from the mansion tax on those properties, will it drop that figure down to £900 million? That is a question that the hon. Gentleman will no doubt be seeking to respond to later.
Mrs Anne Main (St Albans) (Con)
I am delighted to speak in this debate and am pleased that the Treasury has been persuaded of the need to do this and to find a way of doing it, which was the crucial point. I know that there is no great pot of money out there to throw around, but this measure is vital for young people struggling to get on the housing ladder and for people across the country. Having looked at the average house price in the UK, I know that it will help many families in many constituencies, including my own. If I was being very greedy, I would have said that I would have liked the bands to have been moved up, but I shall rest happy with the fact that we have now got rid of the hated slab structure that caused what I called zombie prices, which no family ever paid. Nobody paid £251,000 for a property, because it incurred an enormous jump in the tax they had to pay.
I believe that one of the reasons why the Help to Buy scheme was not taken up well inside St Albans was that our average house price is so high compared with that in the rest of the country. I found one property at the time that was under £125,000, and that was a studio. Barely any properties came under £250,000. If people cannot save up a deposit, how on earth will they afford to save the tax as well?
This measure is hugely welcome. I am sorry to say to my hon. Friend the Financial Secretary that Lori, who served me my coffee this morning in Lori’s Café, said that her new pin-up is now the Chancellor, because he will save her thousands of pounds when she moves into her retirement bungalow early next year. I said that I would give Lori’s good wishes to the Chancellor, because she has had a happy Christmas present from him.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I share the hon. Lady’s sentiment that this seems to be a very progressive measure, but is she not slightly concerned that the result might be increased house price inflation?
Mrs Main
I think that house prices will even out. If there are more transactions and people put house prices up, there will be house price inflation, but I believe that the Government are trying to tackle that by having a big house building programme. The measure will stop the pressure on people who fall around the bands. People have been told that they cannot charge a certain amount for their house, even if they have put a conservatory on it or improved their kitchen. Some have not made those improvements because they would have been pressed into a different band that would have incurred a large amount of tax.
One point that has not been mentioned so far is the possible knock-on effect on other industries. People were telling me that they were reluctant to put in double glazing, to build conservatories or to do any improvements to their houses, that they were struggling to find enough money to buy furniture as well as to pay the deposit because they had to save for the tax, which they could not roll up into their mortgage if they were first-time buyers, and that they were struggling with the multiples. People were telling me that they were struggling with the concept of the high fees that they would have to pay and worrying how on earth they would buy anything else to do with their property. I think that people selling home improvements, bathrooms, kitchens, carpets and so on will suddenly find that people who were expecting to pay a large tax bill have a little bit extra in their pocket, thanks to the Treasury, that they can afford to use to improve their house. They will say that it is worth their moving house, as they will not have the deterrent. This will free up the market and there will be a lot of knock-on benefits.
We have to be mindful of house price inflation, because it excludes a lot of people from the market, but I am absolutely certain that in my area the majority of people who will benefit will be young first-time buyers who are desperately trying to save that awful combination of a very large deposit, solicitors’ legal fees and a large bung to the taxman. I am truly grateful that the Treasury was persuaded of that argument.
I have crunched a few numbers, and I know that somebody asked whether the Treasury would do this. In St Albans, a young couple buying their first flat would have paid an average of £8,132 in the stamp duty levy and they will now pay £4,597. That is a large chunk of money when people are starting out in life. Similarly, in a terraced property they would save just over £2,000, in a semi-detached property nearly £5,000 and in a detached four-bedroom property nearly £2,500. At every level of average house prices, people will save thousands of pounds. Many young people, unfortunately, are having to try to rely on the bank of mum and dad. There will be quite a lot of relieved mums and dads who have been digging deep and helping with these heavy burdens who will be grateful about the measure.
I raised this issue with the Prime Minister in April and asked whether he would use his good offices to influence the Treasury on the question of places like St Albans, with barely one house worth less than £250,000. I thank the Prime Minister if he did that.
I accept that people higher up the ladder will not find this good news. In a high-value area such as mine, people will say that if they were to move up from their £1.5 million house or even to move down to a £1 million house, they will pay higher stamp duty. As I said, there is no golden pot of money out there to throw around. I hope that coming in to the next general election we as a party will say that we are acting responsibly and that we have looked at where help is most needed, which is where it is being delivered. Unfortunately, there must be a bit of give in the system somewhere and, unfortunately for the people affected, the give in this case is at the higher end of the market.
I would like to think that stamp duty was originally meant to target higher-value houses and was never meant to catch the people it is catching, including, in my constituency, young people starting out on the ladder and people on the lower income scales. Although I regret that some people will find the measure not to their liking, especially just before Christmas, the majority of people trying to get on the housing ladder—in my constituency, the figure is something like 97%—will find it a huge bonus. The people who sell double glazing, carpets or kitchen and bathroom improvements whose small businesses have been struggling as people have not been making the investments that would push them over the threshold will, I hope, find that people are now making those investments.
I wholeheartedly welcome the measure and the only Scrooge-like bit that I would add at the end is, as colleagues have mentioned, to ask that we keep an eye on the drag. I would not like to think that other people would soon be sucked in to the wrong bands. I say the wrong bands, because I think at the heart of the Treasury’s proposal is a wish to deliver home ownership to lower income families, young families and people starting out while expecting those with the broadest shoulders to pay a bit more. I welcome these changes.
Mark Reckless (Rochester and Strood) (UKIP)
It is a pleasure to follow the hon. Member for St Albans (Mrs Main), who has set a superb example to those on the Treasury Bench of how to extol this policy. She also secured a Westminster Hall debate, which was useful in pressing the arguments for it.
Notwithstanding today’s procedural issues, the Treasury deserves credit for introducing this measure. It has taken four and a half years of this Government, but the previous Government had 13 years and the one before that had 18 years without introducing this overdue but incredibly important and beneficial reform.
The hon. Member for St Albans has done a lot to push the argument forward and so have other Members. I recall having a conversation with the right hon. Member for Welwyn Hatfield (Grant Shapps)—at that stage at least, he was my friend—in which I made the case for reforming this tax, and he said very clearly that, if we were to do it, it would need to be revenue neutral. However attractive the reform might have been, the number of losers would have made it difficult without the £700 million or £800 million a year that the Treasury is putting in, so there has been a change. If that money oils the wheels of a reform that gets rid of substantial distortions, such as those under the previous tax system, that is a good use of it, and I believe that the Treasury has made the right choice.
My constituents will benefit. Much of our housing stock has been around the £250,000 mark, with rather less around the £500,000 mark. At both levels, the fixed charge of £5,000 once people move past those points has been a significant problem for the housing market and, as the hon. Member for St Albans has said, a lot of the subsidiary industries based around it. That has never been more the case than with the mortgage market review and the general reduction in appetite for some of the riskier lending among banks that has made it difficult for young people and those on the early steps of the housing ladder. They are often capital-constrained and having to find the extra money for the stamp duty almost invariably means that it cannot be spent on something else. It actually often leads to those transactions not happening.
I would criticise, not the Treasury, but the Office for Budget Responsibility for the lack of detailed workings and the lack of comprehensiveness in its forecast for the housing market and how that relates to its estimates for the cost of the stamp duty measure. The OBR has estimated that transactions would rise by 1.1% on account of the reform; I am sure that is a great underestimate. Similarly, the OBR has made an assumption—or a forecast—of a 0.2% increase in residential investment relative to GDP, yet it has assumed that that will be offset by reductions elsewhere in the economy, which it fails to particularise or explain.
I am not impressed, in this area or in others, with the three-men-and-a-dog approach that the OBR has often taken. No wonder it cannot be expected to take on the Opposition spending proposals as well, not least because it just looks at parts of them, casts its eye over them, scans them a bit and says, “That sounds reasonable,” and nods them through. On the housing side, it has not come anywhere near to taking into account the positive impact that the stamp duty reform will have on the economy, in freeing up transactions and increasing labour mobility, especially around the £250,000 and £500,000 pinch points.
I think that the reform will be very significant. The cost estimates are £365 million for this year, £760 million for next year and £840 million the following year. An assumption has obviously been made of a rise in transactions that leads to the annualised costs falling off once we get into the next fiscal year, because there will have been time for the lags to work through and we will be witnessing a rise in transactions on account of the reform. My strong suspicion, however, is that that rise in transactions will be quite a lot more than the OBR has stated, and as the hon. Member for St Albans said, there will be significant add-ons to other industries that depend on the housing market. In my view, as a result of getting rid of the significant distortions that we have had, there will be dynamic, positive impacts on the economy, which the OBR and—as so often—the Treasury have not taken into account. Such thinking has held back good reforms of taxes in these areas.
Mrs Main
The hon. Gentleman rightly said that labour mobility would increase. People have told me that they were deterred from moving into higher house value areas because they would not only have to take on a higher mortgage but find the tax—almost a tax on their ability to find a job—if they moved to a place where there were more job opportunities but higher house values.
Mark Reckless
The hon. Lady is absolutely right, and that requirement comes when people are most capital-constrained, especially in the current mortgage market. So charging the tax in that way restricts mobility, restricts spending on moving home and leads to fewer transactions.
I have had constituents who have moved from St Albans to Rochester and Strood, attracted by our better-value housing stock. The hon. Member for Broxbourne (Mr Walker) made a forecast that my return to the House as the UKIP Member for Rochester and Strood would lead to falls in house prices across my constituency. I am not sure that that will happen, and in any event, I strongly welcome this real supply-side reform. When the Government do the right thing, particularly in an extremely sensible supply-side reform that should free up the market and lead to significantly greater economic activity around the housing market, I am happy to support that reform, for my constituents and for my party.
Mr Jones
Again, I agree. The old system created nothing but distortion in the property market. What will happen now—as I said, I am glad it is going to happen straight away—is that people buying at £250,000, although that is not a realistic price, will pay just 1%, the same £2,500 as before, and 5% only on any amount above that, which will make a massive difference.
Mr Jones
My hon. Friend is right and that was the fair thing to do. We must have sympathy, though, for people who completed transactions before yesterday. The new system cannot be made retrospective, which is a great shame for them, but it is a bonus for people in the process of buying property and for future buyers, especially as it will allow some people to free up some money so that they can go ahead and buy things that they will need for their new home or undertake improvements.
I have many buyers in my constituency who are buying at a price between £125,000 and £250,000, and the reform will make a massive difference to them too. They will not have to pay the full slab rate of 1% on the whole purchase price. The measure will have a major effect not just in the south-east, but in the midlands and the north of the country. Over the years many people, especially those selling and buying on, have added the stamp duty cost to their new mortgage, so they were paying the stamp duty to the Government at whatever rate, and paying that money back over 25 years or for however long their mortgage ran. On a large scale, that would cause a massive cost. The new system should reduce that burden too.
I draw the Minister’s attention to the way in which the stamp duty land tax is administered. From the Finance Act 2004 onwards, a very simple process became extremely time-consuming and convoluted, which increased the cost of conveyancing to many buyers. My hon. Friend the Minister may want to consider examining how Her Majesty’s Revenue and Customs deals with these matters, to see whether some simplification may reduce the administration costs for buyers.
I thank members of the Treasury team for the action that is being taken. It will be a great help for first-time buyers and for people who want to move on. It is a policy for people who work hard and have aspiration. I welcome it in its entirety.
Mr Dominic Raab (Esher and Walton) (Con)
It is a pleasure, as always, to follow my hon. Friend the Member for Nuneaton (Mr Jones), who made a range of important points in typically common-sense language.
I, like others, welcome the Chancellor’s autumn statement. Like business rates reform, which is another aspect I wholeheartedly welcome, a major overhaul of stamp duty is long overdue. I pay tribute to my hon. Friend the Member for St Albans (Mrs Main), who has conducted a tenacious campaign for major substantive reform of stamp duty. If the experience of our hon. Friend the Member for Harlow (Robert Halfon) is anything to go by, she will shortly be elevated to a senior rank. I am sure she will be thrilled by that.
I am delighted that the Chancellor is taking action against what was one of Labour’s most arbitrary stealth taxes. The way it operated was a pretty vindictive assault on aspirational low and middle-income savers. The point has been made that, economically, a well functioning housing market should enable people to engage in mutually beneficial transactions, and make efficient use of housing stock. That is extremely important. A family in a small house should be able to move to a larger one, if they need to do so because of a growing family or if someone is earning more following a promotion. Older couples should be free to downsize when they want, not least to free up cash for other needs. Stamp duty has been a poorly designed tax that has undercut social mobility upwards and downwards.
In my constituency, we have felt that burden disproportionately. Of course, there are many families living in Elmbridge who are on very high incomes, but that does not mean that across the board it is some kind of land of milk and honey. For many of the residents whom I come across, their home is a nest egg built up after many years of saving. They may be asset-rich but income-poor. They may want to downsize to release cash for income or even the costs of care. Stamp duty has had a totally arbitrary impact on them. We also have a problem with key workers, who are vital for the delivery of local public services. They find it unaffordable to live locally and stamp duty has exacerbated that problem.
Above all, we have a wide range and large number of middle-income families, working hard, saving and facing very high cost of living pressures, and affordable housing is a major factor. As of the second quarter of last year, the median house price in Elmbridge was £445,000. That price has almost certainly risen substantially since then, but it does not buy a mansion. I can say that as someone who lives in my constituency. Typically that price would buy a two-bedroom home, which under the old regime would land the buyer with a massive stamp duty bill of over £13,000. According to the most recent market data, a family in a small home looking to buy a larger one would be left facing a bill of £13,000 or more for the average two-bedroom property, and £23,000 or more for the average three-bedroom home.
The cumulative bill is staggering. In 2012-13 my constituents paid £56 million to the Exchequer in stamp duty on residential property, which is more than the total paid in the whole of the north-east of England and a third of the figure for the whole of Scotland. Of course, Esher and Walton is just one area, and there are obviously geographic differences in incomes as well as house prices, but they do not necessarily match up, and they certainly do not tally neatly or consistently in my constituency. Elmbridge is just one example of stamp duty’s geographical unevenness. London accounted for 41% of residential stamp duty in 2012-13, and the south-east of England accounted for a further 22%. England as a whole accounted for 94% of UK stamp duty. It therefore has a very particular geographical burden, and it is not filtered according to income.
Stamp duty is not an economically efficient tax, as we have heard time and again. Stamp duty on residential property distorts the whole structure of the housing market. In particular, the slab structure, under which the relevant rates apply to the full sale price, not just the part above the relevant threshold, has created huge cliff edges, as we have heard this afternoon. It is worth dwelling on the impact of the slab structure. I think that the Chancellor made the point exceptionally well yesterday. A £1 increase in the price of a home, from £249,999 to £250,000, triggers an extra £5,000 tax liability. That cliff edge has been shown to be harmful to home owners and would-be buyers. It is worth remembering that stamp duty is a tax on transactions, so it impacts on the purchaser and the seller.
Property experts London Central Portfolio, together with the Cass business school, have put together an analysis that estimates that close to 14,000 home owners a year are forced to reduce the asking price for their home in order to get under a stamp duty threshold. Other would-be sellers are either unable or unwilling to reduce their prices to below the nearest threshold. That causes bottlenecks in the market and a drought of available properties in certain price ranges in certain areas, which is very harmful to the market and has important social as well as economic impacts.
It is little wonder that the Institute for Fiscal Studies has described stamp duty as
“a strong contender for the UK’s worst-designed tax”,
with a “perverse” and “absurd” structure. The director of the IFS argued earlier this year that in the modern era of broadly based taxation, the case for maintaining stamp duty at all is “very weak indeed”.
Mrs Main
I pay tribute to my hon. Friend, who along with me secured the stamp duty debate in September and who has raised these matters on numerous occasions in the media. Does he share my concern that that debate was very poorly attended by the other parties? Indeed, it was very much Members on the Government side who were concerned about the matter.
Mr Raab
My hon. Friend, as usual, makes her point powerfully. As is so often the case, the real democratic debate and scrutiny is taking place on this side of the House, but at least the Labour party accepts these changes. I hope that in due course it will reflect and put paid to some of its ridiculous notions about a mansions tax, which is really about the politics of envy, rather than sensible economics or social fairness.
I want to move on to the impact of stamp duty, because it has also proved socially unfair. When the additional 3% and 4% rates were introduced in 2000, they were designed for the wealthy. Had the threshold risen in line with house price inflation, only properties worth £1.3 million would attract 3% stamp duty today. The Chancellor’s reforms will make a vital difference and I fully support the direction of travel. The move from the slab structure to marginal rates is far more economically efficient. It will unblock bottlenecks in the market, which also have a negative effect on housing supply and stock. I wholeheartedly welcome this move.
Likewise, I recognise that the vast majority of home buyers, and as a result sellers, will benefit. The tipping point at which buyers will pay more as a result of the reform kicks in at just under £940,000. I have two points to make about that. First—this relates to my earlier point about house prices varying dramatically across the country—there are plenty of three-bedroom homes in my constituency, as I am sure there are in London and in other constituencies, that will already be caught by the new system and will end up paying significantly more. They are not mansions owned by the super-rich; many are owned by people who have saved and so are asset-rich but income-poor. Again, London and the south-east will feel the burden. I do not think that we can always assume that it will hit only those with the broadest shoulders; it will also hit those who have saved and planned their finances over the long term, and it will have a significant impact.
Secondly—this is the missing piece of the jigsaw—given the forecasts for house price inflation, buyers of average-priced homes in many parts of London and the south-east will in a relatively short time find themselves paying substantially more. Over time, the higher rates will, by stealth, hit more and more middle-class buyers and sellers. In London and the south-east, median home buyers could be caught by the new 10% rate within 10 years, depending on how the forecasts for house prices turn out. To be clear, that means that within a decade—more or less—average home buyers could be hit by the 10% rate. Recent experience with the 3% and 4% rates of stamp duty under Labour shows that what starts as a tax aimed at the rich, within a relatively short period of time if we are not very careful ends up clobbering the middle classes. I hope that in the immediate or not too distant future Ministers will address that point square on by indexing the thresholds for all rates to house price inflation. That way, we can learn the lessons and avoid the mistakes of previous Labour Governments.
If we do not address fiscal drag now, and instead kick it into the long grass, we risk ending up over time robbing middle-class Peter to pay working-class Paul, and I do not think that we should be engaged in that, as a matter of sound economics, social fairness, or indeed long-term sustainable politics. Instead, we should be ensuring, as part of our long-term economic plan, that over the long term all low and middle-income aspirational savers and home buyers benefit from these important and welcome reforms.
Stamp Duty (Housing Market)
Anne Main Excerpts(11 years, 5 months ago)
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Mrs Anne Main (St Albans) (Con)
It is a pleasure to serve under your chairmanship, Mr Betts. This debate is broad, and I am sure that there will be various takes on stamp duty. I wanted it to be broad because people will have different views on what we should be doing about stamp duty, which is incurred by many constituents throughout the country.
Stamp duty land tax first appeared in its current form in 2003, and it is interesting to note that it has not been debated outside its legislative context since then. It was debated briefly in 2006, when the zero-rate threshold was raised from £120,000 to £125,000, but other than that the House has not debated it, yet stamp duty has been putting increasing pressure on home buyers since then.
I am sure that the public find it odd that such a burdensome tax affecting that most British of ideals—home ownership—has not been properly examined by Members in the House. As a Conservative, I am proud to say that I believe we are the party of home ownership. Indeed, it was under Margaret Thatcher in 1980 that we encouraged people to believe that owning their own homes gave them a stake in society and their community, aspiration and a belief that they and their families could get on. I am sure that many people in your constituency, Mr Betts, have aspired to own their own homes and taken up the right to buy introduced in 1980.
It is depressing to realise that, in constituencies such as mine, not a single property will be left below the 1% threshold. Even a tiny one-bedroom flat—an ordinary flat, not in a chichi area—will cost £170,000. I am concerned that by allowing so many people to be sucked into paying ever-higher rates of tax despite the fact that earnings have either risen only modestly or been frozen, such as in public sector jobs, we are denying our families of the future the chance to own their own homes. In 1980, we believed in encouraging families at all income levels to own their own home, and I hope that we have not moved away from that ideal.
Labour introduced the tax in 2003, but I believe that we should move away from politics on this matter, as the tax now sucks in many constituencies represented by Labour Members. Many of them are on the payroll, like Government Members, and will not be able to discuss the matter in this debate, but they know who they are. A quick look on Rightmove, Zoopla or similar sites will show how many constituencies—often ones with areas of multiple deprivation—have hugely expensive house prices. They are victims of what I like to call bracket creep.
The House might be interested to hear a few figures from Zoopla, showing how the tax hits huge numbers of people across the political divide. In Rutland, Leicestershire, the average house price is £319,000. In Witney, Oxfordshire, it is £324,000. In Twickenham, it is £653,000; in Bath, £355,000; in Cheltenham, £304,000; in Southwark, £653,000; in Bethnal Green, £447,000. I hope that I have demonstrated in that snapshot that the issue affects all parties and areas across the country. The Chancellor might be interested to know that the average house price in his constituency of Tatton is £640,000, with a stamp duty liability of £25,600.
As MP for St Albans, I am regularly told tales of woe by home buyers there. When I asked my local estate agents at Collinson Hall what effect they believed the stamp duty land tax was having on the housing market, some of the things that they said were shocking. To quote their e-mail to me:
“I do, however, believe that the real lack of supply of properties in St Albans between £650,000 and £1 million is due to the majority of local people who in earlier times would have been looking to sell in this price range and buy upwards in the market deciding to extend their own property instead of moving, due to the moving costs including SDLT of around 6%. This scarcity is in turn having a direct impact on prices increasing.”
People’s lack of willingness to move and their decision to stay put, rather than be clobbered with the duty, is resulting in a sclerosis in the market.
Shockingly, Collinson Hall went on to say that
“we find that more buyers use stamp duty as a negotiating tool to drive an asking price down, and we do have to be extremely careful when pricing a property that would be close to a stamp duty threshold. For example, if we feel a property is likely to be worth £265,000, the conversation would likely be, ‘You are definitely going to get £250,000 because of the change in stamp duty, but if you price it at £275,000-£280,000’”—
thus inflating the price—
“‘you may get someone that feels it is priced enough over the threshold to justify paying the extra stamp duty.’”
That is bizarre. I cannot believe that we should price houses to move them away from certain thresholds so that in the end people feel, “Well, they’re never going to accept the lower figure, so I’ll pay it.” It is having an effect on the market in areas such as mine.
According to the TaxPayers Alliance, by 2017-18, 87% of homes in St Albans will be in the 3% band or higher. If we believe that the levy was introduced to clobber those who are more affluent, I cannot accept that 87% of all homes in my constituency will catch those people. I have areas of multiple deprivation in my constituency, as I am sure do other colleagues here, and people there are being hit just as hard trying to stay in the area close to their families.
It is getting harder and harder for public sector workers to afford living in higher-priced areas such as my constituency. They are priced out by high house values and doubly clobbered by having to pay stamp duty. A tax that I believe was originally designed for wealthy home buyers now brings so much money into the Treasury that—I say this to the Minister—it is now seen as an untouchable cash cow, too big and too lucrative to be tinkered with.
Collection of stamp duty in its current form enshrines inequality, denies fair access to home ownership and taxes aspiration. It is discriminatory, targeting certain areas of the country regardless of ability to pay. That cannot be fair. Ordinary families are being clobbered the most by the tax. To give an example of how the middle-class postcode tax, as I call it, works, here are three starting salaries for public sector workers: a nurse is paid just over £21,000, a teacher just over £22,000 and a police officer just over £23,000. Those are certainly not riches beyond avarice, but many in the public sector in my constituency and others like it earn such salaries.
If such people are trying to save for their first home, they have a mountain to climb. While they wait to get their finances in place, they will face, according to Zoopla, a crippling average home rental in the south and east of £1,765 a month. They will have to shell out an awful lot of their modest salaries just to live in the area that they serve by working in the public sector. If they are not paying rent, they may be squatting like overgrown cuckoos in their parents’ home, while they pile as much money as possible into their savings pot or piggy bank to get on the housing ladder. If they are young graduates, 9% of their income will already have been sliced directly out of their salary through the tax system to pay for any student loans. They face a housing market that has risen by 27% over the past five years, according to the Office for National Statistics. House prices are zooming out of reach. They will have to scrape together a deposit and fees. Then, if they happen to be a victim of the postcode tax, they will have to save for stamp duty on top of everything else.
The reason why it is a postcode tax is that—as will become apparent if hon. Members go to property websites—in some postcodes, hardly anyone pays any tax to the Chancellor, not even 1% tax on a modest three-bedroom semi-detached house. In other areas, such as mine, the same house has a huge 3% tax bill attached to it. Houses of £500,000 and under are not mansions. They are ordinary family homes for many of us. That is why we must tackle the bands to banish the unfairness of bracket creep.
Take the middle figure among our public sector employees, a young teacher with a salary of just over £22,000. That salary would go a lot further, for example, in Droitwich, a pleasant spa town in the midlands where the average house price is £203,000—well under the 3% limit with a tax duty of just over £2,000. In St Albans, the same house would cost an average of £475,000. According to the latest figures, it would incur a whopping £13,701 in tax.
People working in our public sector, aspiring to achieve the same things, are, in certain areas, having to put a large amount aside to pay tax—and for what? What are they getting that that teacher in Droitwich does not get? They have the same salaries, same job, same hopes and dreams of their own home and, hopefully, a family; but in areas such as mine, there is a massive financial hill to climb, and people are finding themselves unable to access the housing market, no matter how hard they work or save, and doomed, at best, to squeeze into tiny spaces unsuitable for family living.
Is it any wonder that, according to MoneySuperMarket, people are aged 36 before they can expect to get on the property ladder in the south and east? That is nearly middle-aged. By 36 most of us feel that we should have achieved things with our lives. We are sitting on a time bomb. A whole generation will, according to the Office for National Statistics, have their first child when they are 30—before the age at which they can expect to be on the housing ladder—and probably be divorced by 40, possibly due to the pressures of trying to get on the housing ladder, having spent their entire adult lives, or at least the most productive part of their adult lives, unable to put a roof over their own heads and battling financial stresses. That is not the mark of a caring or fair society. I do not believe that that was intended when stamp duty land tax was originally thought of. It is a stealth tax, because people are unaware of exactly how much they are going to pay until they find the house that they want to buy. It is not a tax that allows anyone to figure the amount of savings into paying it. It is variable.
This is a timely debate, as the major parties are now furiously refining their policies, which will later appear in manifestos, and then we will have a chance to thrash things out. It was interesting to see that in a speech in “Total Politics”—it was pointed out to me—the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), prior to the Labour party’s manifesto being made, gave a commitment to get rid of stamp duty land tax for all houses under £250,000. Sadly, that did not make it into his manifesto, or into ours. I should like to know the Labour party’s view of whether there should be movement in the bands.
It is time to give some helpful suggestions to the Chancellor before his autumn statement and tease out from the Labour party what commitments it would like to make to the British public, because as I said earlier, this affects everyone; it does not matter whether people are in a Labour, Conservative or Liberal Democrat constituency.
We have a duty to help the next generation get on the ladder to owning their own home. The Government have recognised this. On 30 April, during Prime Minister’s questions, I asked him about considering stamp duty thresholds and helping young people get on the housing ladder. He said that he was
“very happy to look at the issues that she raises, but the weapon that we have used to try to help young people who do not have rich parents but who can afford mortgage payments is Help to Buy”.—[Official Report, 30 April 2014; Vol. 579, c. 828.]
I agree with the Prime Minister that home ownership should not be about the bank of mum and dad, but in constituencies such as mine, it is about the bank of mum and dad. In many ordinary families, parents do not raid the savings account or the trust fund, but will often downsize to release equity.
It is ironic that in constituencies such as mine parents who trade down to release equity to help their children will usually pay stamp duty on their smaller property as well, and then hand over money to help pay the stamp duty on the son or daughter’s purchase. Taxed on the way up and taxed on the way down.
Although the Help to Buy scheme is a valuable tool that works in some parts of the country, as has been shown by statistics, the areas where it does work are those with lower-priced houses. It is not well taken up in areas with high-value house prices, such as mine. In the two years between March 2012 and 2014, only seven people have used the Help to Buy New Buy scheme in St Albans. No one has just used the Help to Buy scheme. Why? If a buyer cannot scrape together a big enough deposit to qualify for the Help to Buy scheme, how on earth are they going to save to pay the tax associated with it as well? The Chancellor is helping giving with one hand and taking back with the other. That is so unfair. If a young person qualifies for the Help to Buy scheme, where are they getting the money from for the tax due on a high-value property? It cannot be rolled up into their mortgage, so is it the bank of mum and dad again? I think that it would have to be; either that or, hopefully, somebody will lend it to them from another source. Therefore, we are pushing people more into debt.
We must not try to tinker with the Help to Buy scheme, because it will not remain in place in perpetuity for first-time buyers, and it certainly does not help people who are downsizing. Unless we tackle stamp duty, it will be an ever-increasing obstacle to property ownership. The Homeowners Alliance points out that stamp duty has risen 7.1 times faster than inflation, 6.5 times faster than average earnings and 4.6 times faster than house prices. Stamp duty is proving a significant barrier to first-time buyers getting on to the property ladder and slowing existing homeowners’ progress up the ladder. The average stamp duty bill is now the equivalent of 11 weeks’ wages—for what?
Too many constituents of all ages, whether they are moving up or down the ladder, point out the unfairness of being taxed multiple times in high-value areas such as the south and the east. People are taxed if a couple splits up and one has to buy the other out if they want a property; taxed if a divorcing couple have to buy two less expensive properties in areas like mine—they will still pay stamp duty—further diminishing their ability to stay in the area, which is perhaps where their children go to school; taxed if a separated single father tries to buy to stay near his children; taxed if they are elderly and want to downsize to help supplement funds for personal care. Taxed on the way up and taxed on the way down.
Stamp duty land tax is a strong contender for the worst-designed tax, because the relevant rate applies to the full sale price. Transactions of very similar value are discouraged to completely different degrees and there are enormous incentives to keep prices just below the thresholds, as Collinson’s estate agents have pointed out. The Government should move away from this slab structure and tackle the unfairness of paying stamp duty on ordinary homes below £500,000. Overhauling stamp duty, as my hon. Friend the Member for Esher and Walton (Mr Raab) said today in The Daily Telegraph, would fuel growth and increase wider tax receipts, and, above all, it would be fair and increase property ownership for those we say we would like to help.
These artificial ceilings distort the market. Builders tell me that home owners put off doing improvements to homes—I had an e-mail to that effect—that are at threshold level. What would be the point of making those improvements if no money would ever be recouped? Sellers come up with creative wheezes to stay just below the threshold. Such a ceiling reduces labour mobility, because people are discouraged from moving to where suitable jobs are available. Data from the Land Registry show bunching below stamp duty thresholds.
Let me mention a St Albans house move example that could so easily be an example from Cheltenham or Tatton. On average, a person moves four times in their lifetime. In St Albans and many other areas, particularly in the south and east, this could be their property journey: first home, a small flat, average price just over £262,463 and purchase price incurring 3% tax of £7,873; second home, a small terrace, average price of £393,543 but more than £11,806 tax due; third home, a modest family detached, £759,191 and now paying more than £30,000 tax; and when the family flies the nest, hopefully when deposits have been saved up, Mr and Mrs Average in St Albans downsize to their fourth home, a modest semi-detached at £492,802, paying nearly £15,000 in tax. Of course, that family could have moved many more times. Nevertheless, during those four moves, they will have a stamp duty spend of more than £64,000. The average wage is only £37,000 in St Albans, and obviously a lot less for younger people, so that is nearly two years’ pay just to be able to move house, on top of all the fees.
According to a Lloyds survey of my constituency, people in St Albans pay 34% of their disposable income on their mortgage payment, compared with the 28% average. Although stamp duty hits London and the south-east particularly hard, analysis of the data shows that it is a huge burden on the entire country. The key findings of this research are that in 2012-13, more than £4 billion was paid by home buyers in stamp duty, of which £3.6 billion was paid at a rate of 3% or more, which shows that a significant number—indeed, the majority—of homes are coming into this 3% bracket. We should not be clobbering people just because we can. I think that tax should be fair and proportionate and should not suck ever more people of modest means into its remit.
If a tax has a negative impact on society, as Members of Parliament, we should tackle it. It too easy to say, “There is a black hole. Let’s fill it.” I read in the paper yesterday that Mr Speaker has decided to spend £100,000 more in his budget. We spend a lot of money in the House moving the furniture around and decorating things that seem perfectly fine to me. We waste money, left, right and centre, in Departments, on ministerial cars, and so on, and even, I would say, giving free school meals that we cannot afford or need to give to children in areas such as mine, for example. We can look at other budgets. Why are we clobbering young people trying to own their own home? It is not fair; it is too simplistic and too easy; and the desperate aspiration to get on the housing ladder means that people will have to stump up somehow, if they wish to do it.
It is obvious that the first two brackets are catching significant numbers of ordinary people, many of whom can least afford it. I call on the Minister—I am pleased to see him here—to go back to the Chancellor, persuaded of the case that we should get rid of this unfair postcode tax on thousands of ordinary families with homes worth less than £500,000. They are being stamped on by the Treasury, and it is just not fair.
Mr Dominic Raab (Esher and Walton) (Con)
It is a great pleasure to serve under your chairmanship, Mr Betts, I think for the first time. I congratulate my hon. Friend the Member for St Albans (Mrs Main) on securing this important debate with her characteristic tenacity. I can only reinforce the compelling arguments she has made, which I am sure will be conveyed to the Chancellor through Treasury Ministers and Parliamentary Private Secretaries. I hope that that will result in further action on this important issue.
I start on the key point of principle of economics: a well functioning housing market should enable people to engage in mutually beneficial transactions and make efficient use of existing housing stock. We know that we have a problem with the supply of housing stock, which is all the more reason to make the best use of the stock we have. I pay tribute to the coalition for its efforts to increase the overall housing supply and, in particular, the supply of affordable housing.
What does that principle mean for the average person? A family in a small house should be able to move to a larger one, if they need to or if they have a growing family, or because of a promotion from working harder. Older couples should not be forgotten. They want to be free to downsize when and how they want, not least to free up cash for other needs. They might want to go travelling, if they are in good health. They might want or need to use the money for care, or they might want to realise some of the value from their assets and free up some money from them. We should not be creaming money off people with those real social needs. The key point is that stamp duty is a poorly designed tax that undercuts that type of social mobility in both directions.
Further to what my hon. Friend said, I have all sorts of horror stories from my constituency, where we feel the disproportionate burden of stamp duty. Some families in Elmbridge are on very high incomes, but overall, looking beyond the small minority who are doing incredibly well and are very affluent, the truth is—I see this day to day, week to week and month to month—that it is no land of milk and honey. The vast majority are hard-working people on low and middle incomes. We also have pockets of acute deprivation and, in particular, as I alluded to, elderly deprivation. For many residents, their home is a nest egg that has been built up after years of saving. They may be asset-rich in statistical terms, but they are income-poor. They might want to downsize or need to release the cash for income or the cost of care, and stamp duty has an utterly arbitrary impact on them.
As my hon. Friend said, many key workers in local public services simply find it unaffordable to live locally, and stamp duty exacerbates that problem. Above all, I want to take time to speak out as a voice for the many people in low and middle-income households. They are working hard and facing high cost of living pressures, of which affordable housing is a major factor. As of the second quarter of last year, the median house price in Elmbridge was £445,000. That does not buy a mansion. Typically, it fetches a nice, but relatively modest-sized, two-bedroom home. According to market data, a family in a small home looking to buy a larger one would face a bill of £13,000 on the average two-bedroom property and a bill of £23,000 on the average three-bedroom home.
Mrs Main
Is my hon. Friend as concerned as I am about families growing up in cramped environments? What space is there for children to study? There is a direct correlation between people living in cramped conditions and achievement in life. If we are not allowing people to move up, that could be part of the problem.
Mr Raab
My hon. Friend has made a typically astute point. The problem has a social impact as well as an economic one. Let us remember that stamp duty costs are on top of the tax on income, the money that families scrape together for a deposit, the legal fees, which are increasingly high, and the money for a survey. The cumulative bill in my constituency is staggering. To give a sense of the big picture, for 2012-13, residents in my constituency paid £56 million to the Exchequer in stamp duty on residential property. That is more than the total paid in the whole of the north-east of England. I am not trying to set off some sort of north-south divide, but at some point in the debate on the redistribution of wealth, there needs to be some recognition that it is not just the uber-wealthy and the super rich who are paying the burden; it is middle England, the middle classes and those on relatively low and middling incomes.
The amount of stamp duty paid in my constituency is equivalent to a third of the figure for the entirety of Scotland. Frankly, in constituencies such as mine, stamp duty feels like an assault by the taxman on hard-working, middle-income savers, who are precisely the people we should be incentivising, not walloping—I would have said “clobbering”, but my hon. Friend has used that word. Of course, Esher and Walton is just one example of the geographic unevenness of stamp duty. London accounted for 41% of residential stamp duty last year, with the south-east accounting for a further 22%. England as a whole accounts for 94% of UK stamp duty. The tax clearly has an arbitrary effect in different areas of Britain.
More broadly, the tax is not economically efficient. If we look at the raw economics—I know my hon. Friend the Member for Harlow (Robert Halfon) and the Minister care deeply about economic efficiency—we see that it is an inefficient tax. Stamp duty on residential property distorts the whole structure of the housing market. My hon. Friend the Member for St Albans has mentioned the slab structure, under which the relevant rates apply to the full sale price, not just the part above the relevant threshold. That creates huge cliff edges. A £1 increase in the price of a home, from just under £250,000 to just over, triggers an extra tax liability of £5,000. The cliff edges have been shown to harm both home owners and would-be buyers. After all, why would someone put an offer in for a property at £255,000, when for the extra £5,000 in bricks and mortar, they would pay more in stamp duty? They would not—no one does, and the data from all the estate agents bear that out.
Data on the distribution of transactions show that most buyers are simply unable or unwilling to meet asking prices just above the £250,000 threshold, because of the extra £5,000 penalty in stamp duty. As a result, the property experts London Central Portfolio, together with the Cass business school, has estimated that 13,800 home owners a year are being forced to reduce the asking price of their house to get under a stamp duty threshold. Other would-be sellers are either unable or unwilling to reduce their prices to below the nearest threshold. That causes bottlenecks in the market and a drought of available properties in certain price ranges in certain areas, until market prices rise far enough to justify the additional stamp duty, which takes a while. That deters buyers and sellers and reduces labour mobility, as my hon. Friend pointed out, because people are discouraged from moving to where suitable jobs are available, which damages the economy as a whole. It is little wonder, therefore, that the Institute for Fiscal Studies has described stamp duty as
“a strong contender for the UK’s worst designed tax”,
with a “perverse” and “absurd” structure. The director of the IFS argued earlier this year that in the modern era of broadly-based taxation, the case for maintaining stamp duty is “very weak indeed”.
However, it is not just the economic distortions and inefficiencies that we should care about. Frankly, Government Members have perhaps been a bit too defensive about coming out and saying squarely, as my hon. Friend has, that this is socially unfair and wrong. That is illustrated by the data from my constituency and the impact of the 1% rate, let alone the 3% rate. Take a family—a two-salary couple who both earn £15,000 a year—who are mortgaged to the hilt to buy a property. The usual limit, which is strictly enforced, is debt at four times joint salary. They have scraped together the money for a 10% deposit, and that way they can buy a property at £150,000. Why should they pay £1,500 extra in tax at that point? It is just a penalty. It might seem like a small percentage of the price of the property, but for families on tight margins, working hard, it is utterly punitive.
When the additional 3% and 4% rates were introduced in 2000, they were designed to target the wealthiest, and had the original threshold for the 3% rate risen in line with house price inflation, it would be levied only on properties worth £1.3 million or more today. In 2000, 391,000 homes were exempt from stamp duty. Today, that number has almost halved. That is the level, scope and scale of the fiscal drag we are discussing. The average UK house price in 2000 was around £110,000, which is well below the 3% threshold, but the average price today, according to the Office for National Statistics, is £265,000, which is well over the 3% rate, landing middle-income home buyers with a bill of some £8,000. If we are really in the business of supporting and encouraging savers, how on earth can we justify such a penalty? Sales in the 3% band covering homes worth between £250,000 and £500,000 increased from 8% as a proportion of total sales in 2003 to 19% in 2013. According to London Central Portfolio and the Cass business school, revenue from the 3% band has almost tripled since 2000, rising from £724 million to close to £2 billion this year.
Such a fiscal drag is not only a serious problem in its own right, but should also serve as the starkest of warnings to anyone in any party who is tempted by a mansion tax, as proposed by Labour and the Liberal Democrats. That is perhaps why no Labour Back Benchers are here to justify either the stealth tax implemented by the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), or their current proposals.
Mrs Main
I am pleased that my hon. Friend mentions the mansion tax, because there has been much rhetoric about it catching only the wealthiest. I completely agree with him that people felt that the 3% stamp duty threshold was not for them and only for the wealthiest, but in areas such as mine and his, it will soon become a mansion tax for the ordinary and not the wealthy.
Mr Raab
My hon. Friend is absolutely right. When the Liberal Democrats originally started discussing a mansion tax, it was to be levied on homes worth £1 million, and when everyone complained about fiscal drag, stamp duty and the like, it was increased to £2 million. What is most interesting is that if the Liberal Democrats use that extra money for the perfectly laudable objective of increasing the personal tax allowance still further, there is a black hole of something like £6 billion in their spending plans, so they would have to increase the net of their mansion tax. The lesson from stamp duty that the Labour party has offered us, which the Liberal Democrats ignore and which Conservatives must take on board, is that what starts out as a tax on the rich always ends up—I will use the word my hon. Friend used—clobbering the middle classes. That is the stark reality that we must guard against.
Stamp duty should be abolished for homes under £500,000 and the remaining thresholds should be indexed to house price inflation in primary legislation. It would be a dynamic tax cut that would probably—it can never be guaranteed—raise additional revenue. I set out in a report for the Centre for Policy Studies how we could fund the change up front by cutting back on the waste mentioned by my hon. Friend. Extra revenue could be raised while a major economic and social issue is dealt with.
Stamp duty has morphed into a vindictive stealth tax on aspirational Britain. It distorts the housing market. It warps labour mobility. It penalises savers. It wallops those on relatively low and middle incomes. The case for reform is overwhelming.
Mrs Main
One of the worst cases that I have heard is of people selling properties with planning permission for a large extension, so that they do not then pay stamp duty on the builder building the extension, but simply on the property that they have bought. That is the most outrageous case that I have heard recently.
Mr Jones
That can also happen.
We need to look at the slab rate again and to consider the distorting effect that it has on the market and the difficulties that it causes people, whether buying or selling—for people who want to sell because they want to downsize, or people who want to sell because they want to move on. That is one of the reasons why some of the suggestions that I have heard over the years to charge stamp duty to the seller would also be completely inappropriate and unacceptable; it would place a massive burden on those trying to sell the investment that they have often worked for over many years.
I make a final plea to Ministers. If they are ever minded to make any changes to how stamp duty is charged or to its rates, will they be extremely careful about how they do it? Back in the dark days of the great Labour recession in 2008, following pressure from the Conservative party, the then Prime Minister and Chancellor decided to create a stamp duty holiday. They announced it with great fanfare in the press and on the media, but it was probably six or seven weeks before the policy was implemented.
I can tell hon. Members that a flat property market was depressed further, because people did not want to conduct transactions between when that announcement was made and when the measure came in, because that would not make financial sense and they could save money. I implore Ministers to make any changes carefully and to consider the implications for the overall housing market, which is extremely important to our economy. The housing market is now on the move, which is part of the reason why our services sector in this country is doing so well.
I ask Ministers to consider the issue extremely carefully. It affects not only the south-east or London, but all parts of the country in differing ways. It creates massive distortion, because of the slab rate. I ask the Minister to consider it carefully not only in reply to the debate, but in his work on our party manifesto.
Shabana Mahmood
I am grateful to the hon. Gentleman for his intervention. I have received submissions from various experts on the matter and we are looking at it very closely. We are clear about our start position. We do not want more modest properties to be brought into the mansion tax regime, and we are looking carefully at the details of our ultimate policy to ensure that that does not happen. I have had conversations with people about the issue, but I cannot tell him today what we will ultimately be able to take forward.
Mrs Main
For clarification, before the hon. Lady moved on to her mansion tax, she mentioned the slab structure, which was introduced by a Labour Government. Do the Opposition have any plans in their manifesto to tackle the slab structure at the same time as introducing the mansion tax? I am sure that she has received representations on that.
Shabana Mahmood
I am grateful to the hon. Lady for her intervention. She is right. I have received representations about the slab structure, as, I am sure, has the Minister. It is one feature of stamp duty that causes particular consternation, as we have heard from all hon. Members who have spoken in the debate today. I cannot make a manifesto commitment today, but I will make it clear later in my speech that we are alive to the issues raised today and that we are looking at them carefully.
I was pleased that the right hon. Member for Wokingham (Mr Redwood) made a customary reference to the Laffer curve. I feel that these debates are not quite what they should be if there is not at least one reference to the Laffer curve. I was pleased that he was able to make that point.
I acknowledge the passionate views of hon. Members in this debate. There has been a vigorous campaign on the issue. I suspect that many hon. Members are less concerned about what I have to say about Labour policy and more concerned about what the Minister might do ahead of the autumn statement on 3 December. We saw a similar vigorous campaign ahead of the Budget earlier this year. In the lead up to that Budget, the expectation was that there might be a doubling of the threshold to £250,000 and the introduction of a stamp duty tax credit system, but the Government did not ultimately go down that path. I suspect we are seeing a similar build-up of lobbying for the Government to do something in the autumn statement.
Shabana Mahmood
I am grateful to the hon. Gentleman for his intervention. I think the point that the deputy leader was making was about progressive taxation and the argument that those who are wealthier should pay more. That is the thinking behind our mansion tax policy. His Government have presided over more people being brought into the 40p tax band, for example, and he could ask his Minister about that today.
Stamp duty is a matter of growing concern to the public and a significant burden on people wanting to buy a new home, particularly first-time buyers. I acknowledge the strength of feeling among hon. Members and throughout the country, but I am not in a position to make a spending commitment via this debate. Stamp duty brings in a large and growing amount of revenue, and any policy change in this area would have to be fully funded. Our start point as an incoming Labour Government in 2015 would be the current Government’s spending plans for 2015-16 and any change to that spending round would have to be fully funded. That has been the thinking behind the policies we have unveiled. They are all fully funded and primarily involve switching from one area of spend to another to deal with some of our child care priorities and other measures.
The difficult financial position that an incoming Labour Government in 2015 would inherit means that we would have to make some difficult choices. Given that, our focus has been wider reform of the housing market and how it might stimulate greater home ownership. In particular, the problem of housing supply has become acute in the past few years and is causing many problems, such as people having to rely on the bank of mum and dad and home ownership occurring much later in life. The hon. Member for St Albans made a point about that, and it is true.
We are seeing the biggest housing crisis in a generation and we are not building even half the homes we need to keep up with demand. The shortage of decent homes has much wider social and economic costs and we heard about some of those relating to inflexibility in the labour market, as well as the impact on people in overcrowded homes and the impact on children’s health and educational outcomes.
What can we do to build more homes? That must be the centre point of getting more sense and fairness into our housing market. We supported the Help to Buy scheme, but we would have preferred a scheme that focused more on first-time buyers. Our policy shows that the Government have simply not understood that boosting demand without boosting supply risks putting prices out of reach of the very families and young people we particularly want to help to get on the housing ladder. That is why we have committed ourselves to building 200,000 homes a year by 2020. That is probably not enough, and we should build many more than that, but it is an ambitious start point. We currently have a housing commission, led by Sir Michael Lyons, which is looking at a detailed road map, so that we may be able to deliver our vision.
Mrs Main
Does the hon. Lady share my concern about the Help to Buy scheme? It has proved to be a good scheme in the north by helping people, but has not worked in the south because people must save the stamp duty as well as being helped with the mortgage deposit. We cannot get past that with the current Help to Buy scheme. Stamp duty is the barrier, especially in the south, no matter how many houses are built.
Shabana Mahmood
I take on board the hon. Lady’s point. She is certainly right about the interplay between the Help to Buy policy and the burden that remains with stamp duty. As I have said, in constrained financial circumstances, difficult choices must be made and we have preferred at this stage to look at how we might do the one central thing that we know can reform the housing market and get more homes within the reach of more people: build more homes. That must be the start point, and that is the key issue with the Help to Buy scheme. It is not a bad policy and we should be helping people to buy homes, but we must boost supply, and we are failing to do that at the moment.
Shabana Mahmood
I am grateful to the hon. Gentleman for his intervention. We have made it clear that that is a central commitment of our party. We acknowledge that we simply did not build enough homes when we were in government. No Government for 20-odd years have built enough homes. We recognise that without boosting supply we will simply not have fairness and sense in our housing market. That is why we set up the Lyons commission. We want to ensure that we have a detailed road map. We will unveil it in our manifesto ahead of the general election and it will show exactly how we will realise our ambition in government.
Shabana Mahmood
I disagree with the hon. Lady. I think that it is right to set targets and ambitions, and it is right that we look to such experts to help us to get to that position. We are looking partly at the expense of land and the housing market in different parts of the country. We will discuss those issues in greater detail as we get closer to producing our manifesto.
The Financial Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship, Mr Betts. I congratulate my hon. Friend the Member for St Albans (Mrs Main) on securing the debate and putting forward her case with such tenacity, if I may borrow that word from my hon. Friend the Member for Esher and Walton (Mr Raab). I thank my hon. Friends the Members for Esher and Walton, for Richmond Park (Zac Goldsmith) and for Nuneaton (Mr Jones) and my right hon. Friend the Member for Wokingham (Mr Redwood) for their contributions to the debate.
I also thank the hon. Member for Birmingham, Ladywood (Shabana Mahmood) for her remarks. She said that she thought that the hon. Members present would be more looking to me, as a Minister, to outline possible thoughts for the autumn statement than expecting her to say anything about Labour party policy in this matter. I am sure that my right hon. and hon. Friends would not expect me to outline any announcements for the autumn statement, but I suspect that they did not expect to get much from the shadow Minister, either.
Ensuring that there is good-quality, affordable housing for all and an effective housing market is an important priority for this Government. As my hon. Friend the Member for St Albans said in her opening remarks, home ownership is very important to us. It is very important to the Government and the Conservative party. I entirely endorse and share her views about the importance of ensuring that as many people as possible have the opportunity to own their own homes.
Although I understand the concerns raised today that stamp duty is putting people off moving and preventing people from getting on the housing ladder, the fundamental point is about the high cost of property. Removing or reducing stamp duty land tax will not by itself address the fundamental issues. I will deal with SDLT and the various points that have been raised, but as other right hon. and hon. Members have acknowledged, we have to look at the housing market as a whole; in particular, it is worth highlighting the steps that the Government are taking to increase housing supply. Those measures, combined with support for home buyers, are, we believe, the right way to address this issue. That is why we have introduced a range of measures to get Britain building again, to fix the broken housing market and to help hard-working people to get the home that they want.
We are supporting home buyers, including through the Help to Buy scheme—a major package of measures to increase the supply of low-deposit mortgages for creditworthy households. We are also increasing housing supply through schemes such as the £474 million local infrastructure fund, the £19.5 billion of public and private investment in the affordable rented sector and the £1 billion Build to Rent scheme to support the growth of the private rented sector, because we believe that those matters are important.
Mrs Main
My point is about the Help to Buy scheme. Has the Minister done any analysis of the situation in areas such as mine, where, over two years, only seven people have availed themselves of the Help to Buy scheme? Has he considered that that could be because people still simply cannot afford to use the scheme?
Mr Gauke
Undoubtedly, the vast majority of those who have made use of the Help to Buy scheme have been at the lower end of the market in terms of house prices and have generally not been in London and the south-east—the greater south-east, if she will forgive a fellow Hertfordshire Member of Parliament for using that phrase. That, however, was the intention of the Help to Buy scheme—for it not to be focused at the top end of the market and more expensive homes.
I acknowledge my hon. Friend’s point that much of the activity has been away from areas such as London and the home counties, but that is not something that we are necessarily ashamed of. However, I will deal with her fundamental argument. I know the point that she is making—that stamp duty land tax has prevented use of Help to Buy in some parts of the country.
Let me return to the issue of the housing market. We are maintaining stability in the housing market by keeping interest rates low and supporting improvements to the mortgage market—and that is working. The number of first-time buyers is at a six-year high, mortgage approvals are up 8% on last year and repossessions are at their lowest level since 2007. More than 150,000 households have been helped to buy or reserve property since spring 2010 through Government-backed schemes. That includes nearly 50,000 supported through our Help to Buy schemes.
Housing supply is up. Almost 480,000 new homes have been delivered since April 2010. Starts on new homes in the past year totalled 137,780—up by 22% on the previous year and the highest annual total since 2007. The construction sector has been growing for 16 consecutive months and is currently experiencing the sharpest rise in house building orders since 2003, while companies are taking on new workers at the fastest rate since 1997. A growing pipeline of new projects is also emerging from the reformed planning system. Last year, successful applications for major housing schemes were up 23% and planning permissions were granted for 216,000 new homes.
The Government remain committed to improving the housing market, and that will remain a vital part of our long-term economic plan. That is why at the last Budget we introduced programmes including the £525 million builders finance fund and a £6 billion extension for the Help to Buy equity loan scheme, to run until 2020. We also announced our plans for an urban development corporation to deliver a garden city at Ebbsfleet and deliver up to 15,000 new homes.
In June, we announced that £400 million would be made available to support 20 housing zones to provide new homes on brownfield land. We remain on track to deliver 170,000 new affordable homes in the four years to March 2015, and a further 165,000 between 2015 and 2018. That will constitute the fastest rate of affordable house building for 20 years, a record that well withstands comparison with that of our predecessors. We must remember that the housing market, like the rest of the economy, is recovering after having suffered a severe downturn following the financial crisis, but we have taken measures to ensure that it is moving in the right direction. That is important to today’s debate, which is about ensuring that there are opportunities for people to own their own home.
I recognise that stamp duty land tax is an important issue, and my constituency, like that of my hon. Friend the Member for St Albans, experiences many of the issues that have been raised. The Government, however, remain committed as a priority to tackling our record deficit. SDLT is an important source of Government revenue; it raises several billion pounds each year to help pay for the essential services that the Government provide and support, and to reduce the deficit.
In 2013-14, SDLT raised £9.3 billion, a substantial sum—money that we need. I appreciate the argument that we have to ensure that taxes bring in the requisite revenue, and that it is perfectly possible for a tax rate to be too high and above the optimum level. My right hon. Friend the Member for Wokingham and I have often argued in the House of Commons Chamber in favour of the reduction of the top rate of income tax from 50p to 45p, which is a good example. I am not convinced, however, that the case is as strong in this context and that reductions in SDLT would pay for themselves.
My hon. Friend the Member for St Albans made the case for increasing the SDLT threshold to £500,000. On a static analysis, if we were to do that for 2015-16, the cost would be £4.2 billion. That static analysis does not take into account the behavioural response, but I do not believe that the behavioural impact of increasing the SDLT threshold to £500,000 would substantially reduce that cost. We should bear in mind that that is a substantial amount of money, especially at a time when we have to be careful with the public finances.
It is also worth pointing out that the majority of the revenue comes from those who buy the most expensive homes: 52% of SDLT residential yield comes from properties bought for more than £500,000, despite the fact that such properties represent only 6% of transactions. A third of all residential transactions do not involve the payment of any SDLT, which is a higher proportion than in 2007, when that figure was 29%.
Consumer Rights Bill
Anne Main Excerpts(11 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Damian Hinds
Clearly, I was not saying that. I was asking the hon. Lady whether she wanted to comment on the growth of home credit and rent to own. We have had many opportunities in this House to discuss a cap on the cost of credit, and she and I—and she and many other Members—have had an opportunity to discuss some of the practical aspects. There will now be a cap on the total cost of credit, but that is not to say that the definition of that is without difficulties. It remains a tricky thing to do. All of us, including her, who take a close interest in these issues know that there is no single silver bullet solution that solves any of these market problems. We need regulation, empowerment for consumers, financial education and sensible alternatives. This House is at its best when we are discussing what those practical approaches might be, and I welcome the new clauses, which allow us to talk about those very things. I have an awful lot of sympathy for the sentiment behind new clause 11, which was put forward by the hon. Member for Makerfield, and for what is behind new clauses 7 and 9, but we must be wary about seemingly straightforward legislative solutions that may not deliver all they purport to.
We always talk in the plural when we refer to rent-to-own companies, but in reality there is one really big company. There is a problem with the pricing and marketing of these companies. I have recently been added to the BrightHouse e-mail marketing list. I do not know what I have done to deserve that honour—I am not sure whether I should take it as a compliment—but I am now bombarded with messages saying how easy it is to pay weekly, and it is those messages that go to the heart of the problem. To be fair, the slightly misleading approach that we are talking about does not necessarily apply just to rent-to-own companies. We could say that it applies to every pay-monthly mobile phone contract, through which we not only pay for our calls but finance the phone, but it is never advertised how much is for the phone and how much for the calls. We always see it as one all-together monthly amount.
Mrs Anne Main (St Albans) (Con)
My hon. Friend is making very measured comments. It is true that no one party has a handle on debt in this debate. Many of us are concerned about the matter. Does he agree that companies such as Emmaus in my constituency have helped to ensure that people do not have to take on ridiculous payback terms, by enabling them to access good refurbished second-hand goods free of charge if their circumstances allow? I pay tribute to companies such as Emmaus that have helped many people in difficulty who need goods.
Damian Hinds
I am not familiar with Emmaus, but I am sure that it is an admirable organisation. I can mention Furniture Helpline in my constituency, and there are many others throughout the country.
Damian Hinds
The hon. Gentleman is absolutely right. [Interruption.] My hon. Friend the Member for St Albans (Mrs Main), who is sitting next to me, mentions catalogues: catalogue credit has worked on that basis for a long time, stressing the weekly repayment amount. There is also an ability to shift the amount that is apparently the cost of the product and how much is paid for the financing—in the case of catalogues, that is often zero, but the base price is inflated to allow for that.
My worry about the approach in the new clause tabled by the hon. Member for Makerfield is that I do not know how we would make the price comparator work. She made an important point about product numbers. As electronic comparison capability increases, it will be important to be able to make a direct like-for-like comparison, and adding an extra letter to a product number to make such comparison impossible should certainly be cracked down on.
Damian Hinds
It is difficult, but if we are talking about a big plasma TV or a washing machine, equivalent products and other brands are also available. The basic problem, however, is not that the information is not available, because the idea that people do not have the ability to make such comparisons becomes less and less true every month, with smartphones and so on. The difficulty relates to money advice, and encouraging and prompting people to make the comparison. We do not solve that problem by adding small-print text about the total cost, the annual percentage rate, the total cost of credit, the reminder that “your house may be at risk”, blah, blah, blah. All those things do not solve the problem of how we encourage people to make that comparison and do the analysis to ensure that they are not worse off than they need to be.
That leads me on to new clause 6 and the so-called
“annual report on the level at which a levy on lenders in the high cost consumer credit market should be set”.
There is a levy that applies to lenders, so I assume that the requirement for a report is a device to call for something that might be in place anyway. Debt advice is also provided. We could argue that, at the high-cost end of sub-prime, such lenders should make a greater contribution, because of the detriment associated with them, but that does not require primary legislation.
The new clause would also have the Government make provision for affordable credit to be available through credit unions. I would argue strongly that the Government have brought and are bringing forward measures to ensure that affordable credit is available to vulnerable customers through credit unions. Through the credit union expansion project, tens of millions of pounds are being made available to modernise and upgrade the sector. Through regulatory reform—the passing, finally, of the legislative reform order—the increase in the monthly interest rate cap from 2% to 3% makes competition with high-cost, short-term lenders a little more possible. Also, as we were discussing, the cap on the interest charged in the commercial sector will at least help to slow the apparently inexorable rise of that sector. There are also things that the social lending sector must do. It has to step up to the plate on its marketing, branding and consistency of product offer. There will have to be consolidation in the sector to provide the services that people want.
I do not know whether the idea behind new clause 6 in the mind of the hon. Member for Walthamstow came from the recent IPPR report, on which she commented, which suggested that a one-off levy on high-cost lenders would facilitate a great expansion in the social lending sector.
Mrs Main
Will my hon. Friend speak a little more slowly? The hon. Member for Walthamstow (Stella Creasy), on the Opposition Front Bench, is having trouble tweeting. She is trying to provide a running commentary on his speech and perhaps if he went a little more slowly she would catch up.
Damian Hinds
I will always follow the hon. Member for Walthamstow, so I shall pay great attention to what she has tweeted after the debate.
I have a lot of sympathy with any measures proposed to help support the growth of the credit union sector. A lot of things in the IPPR report are welcome and positive, such as the idea of having credit unions in post offices, Church of England facilities and so on, but with respect to all concerned I would say that those are hardly first-time-out occurrences of the proposals. A back-stop reclaim facility, through the benefit system, could also have some benefits.
However, the idea—this is the main point—that some huge one-off capitalisation of credit unions would help to facilitate their growth, is not right. Under the previous Government, we had the growth fund, and I am not here to diss that. It was a well-intentioned initiative and will have done a lot of good. Such things are also eroded over time, however, and by definition if one has a big one-off capitalisation one ends up having to address a slightly more costly part of the market, which contributes to that erosion. What we need to do to help support and facilitate the growth of credit unions is what this Government are doing. We are trying to get them on to a sustainable footing with modernised systems, working collaboratively together to get the marketing and branding right so that the sector does not need a subsidy for ever but reaches a scale at which it can address more and more consumers, meaning that fewer and fewer consumers need or want to access the types of lenders we have been discussing today.
Mrs Main
Does the Minister think there is any merit in making people aware, potentially at school age, of exactly what they can afford and how they can manage their personal finances? People often get themselves into a mess before they approach some of these loan sharks and high-interest places. It might be good if we started this off at an earlier age.
Jenny Willott
The hon. Lady makes an extremely important point. There are some really good schemes in schools across the country, but provision can be a bit patchy. I have worked in schools in my constituency that are doing exactly that. Such matters can be extremely complex for people to understand, and learning about them as part of the school curriculum before they get into debt can be extremely helpful.
Stella Creasy
We have had an interesting debate. I acknowledge that there is interest in this issue, as well as experience and expertise, on both sides of the House, which has been reflected in most of the speeches. I pay particular tribute to my hon. Friend the Member for Makerfield (Yvonne Fovargue) who, for all of us, is a touchstone on issues involving the consumer credit market.
I put on the record my support for the work of the hon. Member for East Hampshire (Damian Hinds) on the credit union movement. However, I must say that I brook no argument from him when Government Members have had three chances—not one, not two, but three chances, or an almost biblical opportunity—to deal with payday lending and the cost of credit, but voted against it.
In 140 characters, the hon. Member for St Albans (Mrs Main), like Shelley’s grandmother, shed much heat but not a lot of light on what Government Members will do about the issues that are to come. Our new clauses are about the new forms of legal loan sharking and the new nightmares experienced by many of our constituents. The hon. Lady is making a tapping noise. Is that her calculating the amount of money people have to pay out to the debt management and logbook loan companies?
Mrs Main
The hon. Lady is doing herself a disservice. We are not point scoring. Many Government Members have concerns about debt. The tapping noise I was making refers to the fact that she seems unable to listen to comments from Government Members, and just tweets her own self-promotion endlessly.
Stella Creasy
The hon. Lady may be horrified about letting the public know what she and Government Members have been saying, but we are not. Government Members may be confident in their commitment to the idea that they are somehow tackling the cost of living, but when it comes to opportunities to make progress on such things as logbook loans or debt management fees, they have nothing to say and they should rightly be held to account not just in the House, but online. She would do well to reflect on such matters.
I want to move on to what hon. Members have mentioned in the debate, but may I tell my hon. Friend the Member for East Lothian (Fiona O’Donnell) that I consider us to be master and apprentice in our dress today? She pointed out that the Government seem to have a problem with the doors when it comes to voting the right way on consumer credit matters.
Let me pay tribute to the Minister and the members of the Sharkstoppers campaign. To hear a Minister in this Government talking about the action that they will take on payday lending is a tribute to the work of all those campaigners across the country. I want to give her the benefit of the doubt when she says that this Government want to make payday lenders pay their fair share. She was extremely honest about the fact that she has no idea how much money payday lenders will contribute to the cost of providing debt advice. We want to return to the issue in the Lords once we get that information, but we are happy to wait for the Minister to come back with the sums, to show that payday lenders are paying their fair share. We are pleased that the Financial Conduct Authority is looking at the outrageous practice of charging people in debt with debt management fees, and we will wait to see what the Government bring forward, and consider these issues again in the Lords in terms of whether fees should be abolished outright.
Stella Creasy
The new clauses and amendments are designed to make progress on issues of precisely that kind. One of the problems of ticket touting is trying to identify who is responsible for the crime that is taking place. Making the seller of the ticket give the details of that ticket will enable us to identify its provenance and who is selling it. We shall then be able to crack down on the people involved, whether it involves the rugby world cup or another event, so that organisations will not have their tickets sold on when they do not wish that to happen. It will give that kind of flexibility, and it reflects the all-party group work done on some of these issues. I hope there will be support from across the House.
Stella Creasy
If the hon. Lady wants to suggest some tweets, I will happily take them, but I am sure everyone will appreciate it if we can move on to the question of letting fees.
Stella Creasy
There are already criminal elements to what we are talking about. What we are talking about in this legislation is the information provided to a consumer—this is, after all, a consumer rights Bill—that could help address the problems caused by ticket touting, and it reflects the work being done by the all-party group. [Interruption.] Well, this is a separate issue about what we can do for consumers, and with that in mind I want to move on to new clause 22 because, as I have said, there is a lucky dip element to the amendments before us and it is about letting fees.
I pay tribute to the work done in this area by my colleague my hon. Friend the Member for Wolverhampton North East. I see first hand in my constituency the problems caused by increasingly difficult access to housing and affordable housing, particularly within the private rented sector. We know that 9 million people in England are living in rented homes and they are paying on average over £1,000 more a year in rent than they did in 2010. That is why we have to reform the private rented sector. The costs that people are facing are unsustainable. I have families in my constituency spending between 60% and 70% of their monthly income on rent alone. They cannot make ends meet.
There is a wider debate to be had about the length of tenancies and the levels of rent, but this amendment, like the previous amendments I was speaking to, relates to consumer legislation, and in particular the specific issue of fees and whether they should be charged.
Mark Durkan
The other point the Government make is that this will be the subject of a European directive in a couple of years’ time. I would only make the point that we should not have to wait for a European directive, and that it would be better if a meaningful European directive were transposed through existing legislation. New clause 15 would provide exactly those powers and that legislation.
Mrs Main
I would like to speak to new clauses 13 and 22, and make a small reference to new clauses 18 to 21.
New clause 13 was explained so eloquently by my hon. Friend the Member for Shipley (Philip Davies) as being a matter of consumer choice. I have a huge degree of sympathy with that, but I will explain why I cannot support him today. We should all know exactly what we are eating. We should have a good deal of information about how animals have lived and died. I have major concerns that Europe does not have the same high standards of animal welfare that we have in this country, yet we import meat from those animals that have been raised with living standards we do not find acceptable and have outlawed, such as farrowing pens for pigs.
Briefing from the Eurogroup for Animals, published in 2011, gives some interesting information about European standards of animal husbandry and, indeed, animal slaughter—much of the meat involved enters our own food chain—and makes it clear that many of us should be very concerned about those issues. That organisation opposes the slaughter of all animals without their being stunned beforehand. The briefing states:
“In 2010, the European Commission requested from Member States official data regarding numbers of animals ritually slaughtered within their territory.”
Unfortunately, there was a real lack of data. According to the briefing,
“most of the countries do not have reliable figures available as no traceability exists to differentiate between animals”
when it comes to how they have been slaughtered. Of course, I am concerned about how they have lived as well. There is also a significant over-slaughtering of animals for halal and kosher meat within the food chain to allow for the amount of demand that might arise in countries that import such meat, which means that there is no way of showing what happens to animals that have been killed in that way and where they end up in the food chain.
This is indeed a labelling issue, but I must say to my hon. Friend the Member for Shipley that, according to some of the information that has been gleaned through the examination of people who do not wish animals to be killed without being stunned, it is almost impossible to trace the meat involved, and that without Europe-wide traceability, his proposal will be totally unenforceable. I appreciate that many consumers would like to know how the animals were treated, where and in what conditions they were raised, the extent of the confinement in which they were placed, and how they were slaughtered. While I agree with my hon. Friend’s sentiments—I, too, believe that consumers should know exactly what they are purchasing—I therefore cannot support his new clause.
Let me now say something about the tenancy issues that have been raised. I quote my hon. Friend the Member for Shipley a great deal, because he talks a lot of good sense, and his heart is often in the right place. However, I believe that if we put all the onus on landlords when it comes to any fees associated with the checking of tenants—they often have to be checked now because of the rules on residency, which govern whether they have the right to rent in this country—those fees will go into the chain, and other ways will be found to put up rents. I cannot believe that the Labour party wants that to happen.
A small letting agency in St Albans, which contacted me about the Labour party’s proposal, is deeply unhappy about it. Given that the agency provides a service enabling people to go into its office, choose from the properties that are advertised, be shown round and so on, why should a fee not be incurred for the benefit that the potential tenant enjoys? The landlord may enjoy a different benefit in the form of the checking of the tenants; the benefits are not always exactly the same.
I suggest that the Government should be extremely cautious before accepting any blandishments from the Labour party, which constantly tries to impose all the cost on businesses. We, as consumers, also want a degree of protection.
Mrs Main
I am afraid that this is a very short debate.
Part of those fees go towards ensuring that there is a market for people who want a good choice of tenanted properties that they can go and look at.
Let me now add my few words to the extensive debate about tickets. The hon. Member for Washington and Sunderland West (Mrs Hodgson) made a very good point about touts who would potentially sell tickets back. That is a flaw, but I have a huge amount of sympathy with those who have bought a ticket that cannot be used for some reason. I do not see how it can be wrong to sell that ticket on, as I might sell on anything else that I might have purchased. My hon. Friend the Member for Shipley made the valid point that if a major company selling tickets en bloc wants to try to stop the practice, it should be working with the Government for that purpose.
I do not wish us to outlaw the selling on of tickets that people may have purchased quite rightfully and of which they then wish to dispose. I feel that that would creep into other areas and start applying to people who buy the latest thing from Kate Moss At Topshop, the latest pair of trainers or the latest toy, and then choose to sell it on. I think that that is a slippery slope, and I do not wish to go down it.
Consumer Rights Bill
Anne Main Excerpts(12 years ago)
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Stella Creasy
I am conscious of time and I would like to make a little progress, but I will let the hon. Lady intervene if she is quick.
Mrs Main
It slightly confuses the matter if the hon. Lady tries to bring secondary ticketing within the scope of the Bill. That is more about how touts get hold of tickets, rather than what people choose to pay should they buy a ticket from a secondary ticketing market. It would confuse the Bill’s good intentions if she tried to drag all that in.
Stella Creasy
The hon. Lady does not quite recognise that a contract involves both a vendor and a purchaser, and the terms of a contract can apply to both. That is the point of the amendments we will table. On secondary ticketing, for example—the Secretary of State should be interested in this as the Member for Twickenham—legislating to make the rugby world cup an event of national significance would require tickets to be resold through recognised ticket vendors at face value, as happened in 2012. It would then be illegal to sell tickets through any other means. Indeed, viagogo already has tickets on sale for that event at huge mark-ups, and tickets do not even go on sale until the autumn. Some 2.3 million tickets will be sold at between £7 and £15 for children, with a top price of £700 for adults. That means that touts will be able to cash in on those prices on top of that, and damage the affordable ticketing policy of the organisers. Surely it cannot be right for us not to include in the Bill a way of ensuring that if someone wants to sell a ticket at a certain price, they can.
George Freeman
The hon. Lady makes an interesting point, some of which is dealt with in the Bill. It will be interesting to see whether it is picked up in Committee.
Consumers spend more than 59 million hours a year dealing with goods and services problems, which costs an estimated £3 billion a year to the British economy. The Bill is deregulatory by nature, which means that consumers and businesses will find it easier to resolve problems with faulty goods and substandard services, and, for the first time, corrupted digital downloads. I noted with great interest that the executive director of Which?, Richard Lloyd, has said that the Bill
“brings consumer law into the 21st century, extending rights into digital content for the first time, and making it easier for people to understand their rights and challenge bad practice.”
The House will agree that that is a welcome step.
I welcome the fact that underpinning the Bill is the principle of fairness and helping customers when things go wrong, as they sometimes do. The measures will provide a firm foundation for empowering consumers, which will benefit businesses that treat consumers fairly.
Many businesses provide their customers with enhanced rights, but the truth is that even the best businesses still spend significant time and resources—more than they should have to spend—understanding the law and training their staff to apply it. The Bill will benefit businesses by reducing many of the burdens they face because of complicated consumer law. I particularly welcome the competition affairs tribunal.
My support for the Bill is genuine, but I wanted to mention one or two aspects of it that reveal, within our society, a view of consumer rights that is, at times, rather too narrow and that does not embrace broadly enough a concept of true consumer and citizen empowerment on the scale we need to drive a sustainable recovery and to reform how we deliver public services and put this country back on its feet. There are three specific areas in which the challenge of unleashing citizen and consumer power are urgent.
First, some markets—banking, utilities and telecoms—are holding back our recovery. Secondly, I am struck that the consumer rights conversation is framed around consumables, point-of-purchase rights and commercial rights in the commercial market. Many of those concepts could and should apply equally in the public sector and public services. Thirdly, it is also important to have active and empowered consumers in supply chains to drive them. That subject may not entertain all hon. Members, but I know that the Secretary of State feels particularly strongly about it.
In the bigger markets—banking, utilities and telecoms —we inherited from the previous Government an extraordinary concentration of power. One or two institutions had a very unhealthy predominance in each of those key markets, which are vital to the proper functioning of a free market economy. What we need as we try to recover from that toxic legacy of debt and dysfunctional markets is an insurgency of empowered consumer citizens to drive a new paradigm of choice, and to demand and insist that that which is available in so many fields of public life is available in banking, utilities and telecoms.
In banking, why is it still so difficult for bank customers to take their accounts to different banks? I would like to see consumer power, and consumer frustration with some banks, driving much more insurgency and the creation of new banks. First Direct appeared nearly 20 years ago, which was a stunning moment for our generation, who had never seen an online bank. We tapped the mouse and wondered whether it could be trusted and whether it would work. It turns out that First Direct was a stunning new entrant that catalysed all sorts of reforms in banking market. Why not have more now? Our banking sector is dominated by too few big banks, which were propped up by a very unhealthy burst of crony capitalism under the previous Government and shored up in the crisis that that incubated. We need to release customers to drive that insurgency in banking.
I would argue that the same is true with some of the utilities. Following privatisation in the ’80s, we saw those markets consolidate under the previous Government. For 13 years, we did not see or hear very much about that. We have inherited, particularly in energy, a small number of big companies that now pass on substantial global commodity price rises to customers, who have all too little real choice and power to drive across the market. To a lesser extent, the same is true for telecoms and broadband. We still see a very powerful monopoly provider in BT. Of course, other providers are able to operate on the railway tracks, but I do not think that in the telecoms market, given the extraordinary empowering impact of the underlying core technology, we have seen a parallel opening up of consumer power. Going the final mile to get broadband into deep rural areas to drive a rural renaissance, in my constituency and in East Anglia more generally, will require us to support consumers through some sort of voucher mechanism—I welcome the steps the Government are taking on this—to be more empowered to choose satellite, digital or any one of the insurgent broadband providers appearing on the market.
On public services, as important as the measures in the Bill are and as important as this subject is, they are still framed, as is the wider public debate on consumer rights, within the notion of point-of-purchase and consumerist trade descriptions legislation. It is principally concerned with the rights of the consumer at the point at which they buy a consumable. However, the concepts, ideas and rights enshrined in this useful Bill could and should go further. In fact, a number of the reforms that the Government are rightly unlocking in other areas of government will demand that they do. For example, why can patients in the health service, parents in the education system, or even pupils—possibly not young pupils, but sixth-form pupils—not have greater choice, transparency and consumer rights in the public services they receive? I would argue that a sixth former in a failing school who is receiving a bad education has just as many rights as the consumer of faulty electronic goods at a supermarket checkout. We need to extend this principle more broadly across public services.
Mrs Main
My hon. Friend is making a powerful point. On education, many students are not aware of how little time they will have in lectures or interactive courses when they apply for degrees. Expanding transparency to what exactly students are purchasing when they take a course might be helpful.
George Freeman
My hon. Friend, as ever, makes an extremely interesting and shrewd observation. The truth at the heart of public services is that the taxpayers provide the money and the Government, as best they can, the service. In that loop, something is lost: a direct connection between the recipient of the public service and the point of payment. Most of the recipients of public services have, of course, already paid for them through their taxes, but the sacred moment of the empowerment of the consumer gets lost in a complex chain of public service delivery. She makes the point that we need to look across our public services at how we can restore that moment. I would like more parents and pupils in schools to feel that the choice they make—choosing which school to send their child to—is a choice that the system respects. I wholly welcome the reforms that the Secretary of State for Education is putting in place to that end.
I want to mention health care, in particular, as we are seeing an extraordinary change in modern health care. I do not think it is too profound or bold to claim that health care is going from something that traditionally, in the 20th century, was done to us by Governments when they decided we needed it, to being something that modern consumer health care citizens do for ourselves. We are seeing across the NHS much greater patient demand for information, transparency and choice. We are seeing click health care and modern patients wanting to be able to access information and be empowered. That is all to the good if we want a new generation of citizens empowered to understand what causes disease—how lifestyle, diet and even genomics affect one’s predisposition to disease. We want to empower consumer citizens to prevent disease. We will not do that without empowering them to make choices and receive information. That is why I have a ten-minute rule Bill on the very subject of releasing patient data to patients within the framework of acknowledging that it is their data—our data. By giving patients back their data, we empower them to use them better for public health care.
George Freeman
The hon. Gentleman pre-empts precisely the point I was about to make about balance in supply chains. The manufacturer at the end of the supply chain has a duty to understand, monitor, measure and take responsibility for the supply chain, but we also need to provide for consumers to exercise their rights and understand the supply chain.
I want to talk about the two areas I have most experience of: the Government’s industrial strategies for life sciences and agricultural technologies. The central thrust of the agri-tech and food strategy, which we launched last summer, is that corporate interests in reducing costs and dependence on agrochemicals, energy and labour are now very much aligned with consumer interests and demand for increasingly green food with low-carbon, low-plastics and low-water footprints. The challenge in global agriculture is how to measure those inputs and communicate to consumers clearly and simply at the point of purchase that the thing they are buying comes with a low-carbon and low-water footprint. A proper system for measuring that will also make Britain a leader in the technologies required to hit those targets. I pay tribute to my hon. Friend the Member for South Thanet (Laura Sandys), who has done a lot of work on resilience in supply chains and the importance of this agenda. I suspect we will get the benefit of her comments in a moment.
That agenda applies equally in the field of medicine. The challenge of discovering drugs for modern patient groups has seen the industry reinvent itself and move away from spending 15 years and $1 billion on developing a blockbuster drug that it can present to Governments as working for everybody. The more we know about disease, genomics and different patient groups, the more we know that different people get the same disease in different ways, and the challenge is to help the industry develop drugs around the patients whom we know will benefit. Then we can give the right drugs to the right people, instead of wasting drugs and having to set dosages at levels that make drugs ineffective in those for whom they work well in order to prevent side effects in those for whom they do not.
That agenda is driving a completely different way of discovering drugs—one where the NHS works with patients—and creating extraordinary opportunities for the UK to lead the world in providing targeted and ultimately personalised medicine, but it requires a different way of thinking about patient rights. We need to think of patients as having the right to be involved in NHS research; to access the best medicines available; and to access and use data, both personalised and anonymised, to support research. I understand that the Bill does not address that area of consumer rights, but the House will have to return to it in the coming years.
Mrs Main
On supply chains and consumer rights, my hon. Friend might be aware that the all-party group on Bangladesh visited that country last September to look into the Rana Plaza collapse. One thing that came out of our report was the suggestion that consumers should be able to identify whether garments have been produced ethically through a supply chain that does not use people who work in bonded workshops or sweatshops or who are badly treated and not paid a fair wage for a fair day’s work. That is the driving force. I know the Minister is considering a kitemark for garments so that people can be reassured.
George Freeman
My hon. Friend makes another excellent point. If we are to seize the benefits of globalisation and embrace our potential to play a role in those emerging markets, we could help set in place a framework in which citizens of the globe can buy products from the global supply chain confident that they are not supporting sweatshops or irresponsible capitalism. That is a deeply inspiring and progressive purpose for this country in the next cycle of growth around the world.
Consumer rights are not the sexiest subject in public debate—it is not something one hears discussed in those terms down at The Dog and Duck—but it sits at the heart of a lot of the issues the electorate, citizens and taxpayers in this country are grappling with. I do not want to be overly partisan, but under Labour we had 13 years of what increasingly—and perhaps surprisingly—became an example of crony capitalism, and the nation is now grappling with that inheritance: an overconcentration of wealth, privilege and power, and in key markets, such as banking and elsewhere, a small number of providers. As a consequence of that crisis—the black hole in the public finances, the structural deficit—we will have to unleash the powers of modern consumer citizens to drive enlightened public services and a more entrepreneurial and innovative recovery. Consumer rights—consumers of public services as well as private goods—sit at the heart of that. Consumers must be able to understand and demand the right standards from all those supplying them goods and services—whether at the till in the supermarket, on a global website or in the public services on which we all rely—and to hold them to account.
Scotch Whisky Excise Duty
Anne Main Excerpts(12 years, 1 month ago)
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Ian Paisley
I am not the representative of Irish whiskey, but I do have the Bushmills distillery in my constituency. It employs 102 people, but it also supports a vital tourist industry; there are more than 140,000 visitors each year to the distillery. Does the hon. Gentleman agree that the tax impacts on jobs not only in Scotland, but in my part of the United Kingdom? Indeed, 90% of what is manufactured in my constituency’s distillery is exported globally, but if the Government continue with the escalator, we are going to have high taxation on products that are exported. That is a bad signal to send to an industry.
Mrs Anne Main (in the Chair)
Order. Please make interventions brief. There are a lot of Members in this room. If everyone has interventions of that length, Mr Donohoe will run out of time.
Mr Donohoe
I am grateful, Mrs Main. I hope that Members will note what you have said. What the hon. Member for North Antrim (Ian Paisley) said is important. He is from another part of the United Kingdom and correcting this wrong tax at the Budget is as important to him and his constituents.
Graeme Morrice
I congratulate my hon. Friend the Member for Central Ayrshire (Mr Donohoe) on securing this debate. The Minister may not be aware that there is a considerable number of whisky producers in my constituency, including the North British Distillery in West Calder, Glenmorangie and Glen Turner in Livingston, and Ian MacLeod Distillers in Broxburn. This last wrote to me recently to express concern about the fact that, in the past five years, while we have seen a 44% increase in taxation on whisky, there has been a 12% reduction in UK sales.
Graeme Morrice
Given the current 80% taxation on whisky, will the Minister seriously consider approaching the Chancellor before the March Budget—
Graeme Morrice
To look at freezing alcohol duty and at the abolition of the duty escalator?
Nicky Morgan
Mrs Main, I take the hint that you want me back on my feet and moving towards the conclusion of my speech.
I assure the hon. Gentleman that I will give this matter serious consideration in the run-up to the Budget. I shall certainly discuss it with my colleagues in the Treasury, including my right hon. Friend the Chancellor of the Exchequer.
Air Passenger Duty
Anne Main Excerpts(12 years, 3 months ago)
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Mrs Anne Main (St Albans) (Con)
On a point of order, Madam Deputy Speaker. May I ask through the Chair whether any application has been made for a statement on the recent developments concerning the Arctic 30? I am sure that many of us will be pleased to hear tonight that the charges against them have been downgraded from piracy to hooliganism. Some are related to, or friends of, Members, and one is a constituent of the Prime Minister, as my right hon. Friend has said. Is there any chance of them now being granted bail, and what does the development mean in terms of the possibility of their being repatriated home to this country?
Madam Deputy Speaker (Dawn Primarolo)
As the hon. Lady will know, that is not strictly a point of order. The matter of statements is something the Government themselves determine and I have no knowledge of that, but she has had the opportunity to raise her point in the Chamber and, importantly, to get her views on record. I am sure that those on the Treasury Bench have taken note of what she said.