Daisy Cooper
Main Page: Daisy Cooper (Liberal Democrat - St Albans)Department Debates - View all Daisy Cooper's debates with the HM Treasury
(1 day, 17 hours ago)
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Daisy Cooper (St Albans) (LD)
Our tax system is a mess. It is complicated and unfair. It is riddled with cliff edges that distort behaviours and create inequities, and there are exemptions that have not been reviewed for years. Council tax is outdated and hated. Inheritance tax and capital gains allow the super-wealthy to exploit loopholes while the squeezed middle picks up the tab. Business rates are a tax on bricks and mortar that penalise our high streets while online giants corner more and more of the market. IR35 is a sledgehammer to crack a nut for contractors, and research and development tax credits are in such a muddle that they are triggering lots of disputes, even for legitimate claims.
When any one of those taxes is tweaked, it causes problems elsewhere. Time and again, we see that when people want to do the right thing and pay the right amount of tax or query a tax issue, they call His Majesty’s Revenue and Customs, only to have the call handler hang up, or they contact the Valuation Office Agency and have to spend money on an expensive third party that specialises in disputes.
Stamp duty has all the hallmarks of a bad tax. It is a transaction tax and an extra cost that stops people from moving, when they might want to move to start a family, to take up a new job or to take on caring responsibilities. It prevents people from getting on the housing ladder, from upsizing and sometimes from downsizing. It gums up the housing market in a country where we simply cannot afford for that to happen. It disincentivises people from moving and holds back a dynamic economy.
Dr Luke Evans
The Liberal Democrat spokesperson is making some excellent points. Will she therefore support the motion?
Daisy Cooper
No—for all the reasons that I will come to. The hon. Gentleman was a fraction too early. Here’s the rub: stamp duty raises a lot of money, and that is presumably why the Conservatives did not seek to scrap it at any point during all their years in power.
Stamp duty for primary residences in England and Northern Ireland raised around £4 billion in 2023-24, and it is suggested that it will raise £9 billion in 2029-30. The Institute for Fiscal Studies estimates that the cost in 2029-30 will be around £11 billion, with the additional costs in Scotland and Wales taken into account. That means that abolishing stamp duty on primary residences would cost in the region of £36 billion to £44 billion in total over the next five years. For anybody who is not keeping up, that is almost the cost of the mini-Budget, just in slow motion.
The Conservatives say that they want all those cuts to come from public expenditure, but in this motion they do not say where those savings would come from. By my calculations, they could choose to scrap nearly the whole of the Ministry of Justice—given revelations in recent days about prisoners being let out wrongly, it feels like that may already have happened.
The Conservatives could instead decide to end all support for farmers by scrapping the entirety of the budget for the Department for Environment, Food and Rural Affairs, which reached £7.4 billion in 2028-29, including capital—[Interruption.] Well, it does not say that in the motion. Maybe they would want to do away with the cost of clearing the vast majority of the NHS maintenance backlog—a cost they would reach in a single year—or maybe they would want to scrap the £12 billion a year budget for special educational needs and disabilities. It is not clear in the official Opposition motion where the cuts would come from.
There is a strong case for looking at reforming or scrapping stamp duty all together, alongside other property tax reforms and moving to a land value tax. Indeed, some commentators suggest that scrapping stamp duty and council tax together and phasing in a land value tax over time could be one way to move ahead.
Dr Murrison
The average price of a property in St Albans is £642,000 a year. Under the proposals of the hon. Lady’s party, how does she think her constituents would face paying ever more taxes, either through stamp duty land tax or the council tax reforms that she and her colleagues propose?
Daisy Cooper
As the right hon. Gentleman will understand, I am not setting out proposals; I am commenting on the proposals from his party. For the record, I was not setting out Liberal Democrat policy; I was discussing what some commentators have pointed towards. I am sure that in the next two or three years, as we get closer to the general election, the Conservatives will be very interested to read our tax plans, which are under active consideration.
Even if people cannot agree on what should replace stamp duty, they can agree on this: if we change one tax in isolation, there are knock-on negative effects. Far from giving more people the security of home ownership, this measure in isolation would put it further out of reach. How do we know that? We know it because there was a big surge in house prices during the temporary stamp duty holiday in 2020-21; it had a negative impact on house buyers.
If the Conservatives—and, indeed, the Government—are truly interested in growing the economy, surely they will agree that the best and most immediate way to do so is to reverse the damage of their terrible Brexit deal with Europe. Analysis shows that if the Government did a better deal with the EU, within their own red lines, they would raise an additional £25 billion per year by unleashing the growth potential of our exporting British businesses.
Daisy Cooper
Well, I’ll say it again. The way to grow our economy is to do away with the 2 billion pieces of paperwork that have come in since Brexit: enough paper to wrap around the world 15 times—and yet still the Conservatives groan.
Fifteen months ago, it seemed as though the Conservatives were struggling to adjust to life in opposition; now it seems that they are simply enjoying it far too much. That is precisely why the idea of abolishing stamp duty in isolation and funding it through cuts to public services alone is fantasy economics and desperate politics. The announcement at the Conservative party conference had everything to do with the Leader of the Opposition keeping herself in post until after May’s elections and nothing to do with making a serious contribution to the debate on tax reform. This motion is unfunded, unserious and not worth the paper it is written on, and that is why we will not support it.
Bobby Dean
When the hon. Gentleman refers to covid, I think he is referring to total debt, which has increased. We are talking specifically about why the civil service has increased in size. A lot of that can be attributed to the new functions that the UK Government have had to take on.
On the welfare budget, yes, the Government struggled to get through their welfare reforms, but so did the previous Conservative Government. That is why the proposal that half of the £47 billion will come from welfare cuts lacks credibility.
Daisy Cooper
My hon. Friend is making a fantastic speech. It really does irk me that the Conservatives keep talking about the welfare bill going up when they blew a hole in the public health budget, eroded primary and community care, and did nothing to fix social care—and NHS dentistry has been hollowed out. Is it any wonder that when people cannot get the care that they need when they need it, we end up firefighting and spending loads of money on welfare and the NHS further down the line? We should be investing to save.
Bobby Dean
I wholeheartedly agree with my hon. Friend. I made the point earlier that the welfare bill went up on the Conservative Government’s watch, not least because they cut back NHS funding.
Bobby Dean
I thank the right hon. Gentleman for giving way after his fantastic punchline, which everybody really enjoyed.
Bobby Dean
Exactly. He obviously was not paying enough attention to our argument. Yes, we did agree with the analysis that stamp duty is a poor tax, but we could not support the motion, because we do not think there is a credible plan for abolishing it. We would like to see a much more holistic review of property taxes, alongside a credible plan. There is no credible plan in the motion. We do not trust the public spending cut proposals that have been put forward.