Stamp Duty Land Tax (Reduction) Bill

John McDonnell Excerpts

2nd reading
Monday 24th October 2022 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I will be extremely brief and fulfil my commitment to the shadow Secretary of State for Levelling Up. The reason I rise to speak is that I met a group of constituents at the weekend and I said that I would use this debate to identify and explain the situation that they are facing in my constituency. I have listened to the Minister and to the sentiments that she put forward, which are well intentioned in many ways but do not reflect the reality of what my constituents are facing at the moment.

We have a housing crisis in my constituency, with overcrowding on a level we have not seen in maybe decades. We have homelessness, and there is no longer access to housing via council housing because our council housing stock has mainly been sold off. I do not think any new council houses have been constructed directly by the council.

The problem we face is that wage levels, after 12 years of austerity, mean that most of my constituents, particularly the young ones, are nowhere near striking distance of being able to purchase their own home, despite everything we have done, working with the financial sector, to encourage them to do so. Many people living in the rented sector and hoping to purchase their own home are seeing their wages devoured by the rents they have to pay. They cannot save up for a deposit, and when they look at mortgage rates, particularly after what has happened over the past few weeks, they have no hope of being able to cover mortgage costs.

Frankly, this Bill is no help whatsoever to my constituents. It is interesting to look at who it does help. When the former Chancellor, and soon-to-be Prime Minister, introduced similar measures during the pandemic, they benefited corporate landlords and the banks. I have 4,000 new properties being built in my constituency, and most of them will go to corporate landlords. Many will go to people moving from outside the area because of the Elizabeth line, and few will benefit local families or local young people.

We are seeing a boom in private landlordism in my constituency, where the buy-to-let property experience is one of high rents, poor maintenance and harassment by landlords, who are often completely unregulated. The Minister and the Government have said much about the Bill helping first-time buyers and about the doubling of the threshold benefiting all, but the Bill will largely benefit landlords and the banks that lend to them. As the hon. Member for Westmorland and Lonsdale (Tim Farron) mentioned, the Bill will also benefit second home purchasers.

I find it extraordinary that incorporated landlords can still offset 100% of their mortgage interest against profits. Between 1990 and 2020, we saw 41,700 landlords incorporate themselves in order to benefit from what is actually a tax-avoidance scheme. My hon. Friend the Member for Ealing North (James Murray) mentioned the cost of this programme in the previous debate. On the estimate made on the day of the mini-Budget a few weeks ago, the cost is £1.655 billion. I find it hard to see how this is compatible with what the new Chancellor is saying about a new wave of austerity having to be forced upon us because of the mismanagement of the economy in recent weeks.

The Opposition will oppose this Bill, and I fully agree. This is not the time for such a measure. We could assist first-time buyers to get on the housing ladder through housing supply and reducing overall property costs. If the Government insist on proceeding with this Bill, we could protect the first-time buyer measures by paying for them through an excess profits tax on the landlords and banks that are profiting from the Government’s measures.

Finally, I repay the debt I owe my constituents from the weekend by saying that this Bill will not help people in my constituency. We need a new council house programme, a reduction in interest rates and investment in housing on a scale never seen before. We need housing that is accessible and affordable to all. Otherwise, I will have more homeless people, more people living in overcrowded properties and, yes, more people sleeping in beds in sheds trying to survive the next winter.

I plead with the Government to drop the Bill. I hope the incoming Prime Minister will not see this as a priority and that at next week’s Budget we will have a more rational debate about housing policy.

--- Later in debate ---

[John McDonnell]

Will the Minister look at the issue of the 100% offset that incorporated landlords now have against profits?

[Richard Fuller]

Of course I am happy to look at all suggestions, including the one the right hon. Gentleman has made.

This measure will mean that around 43% of transactions each year pay no stamp duty whatever, which will help to support the housing market. I say to both Opposition spokesmen—the hon. Members for Ealing North and for Hampstead and Kilburn—that as result of this measure first-time buyers in their constituencies who would not have qualified for zero stamp duty will now qualify, and Labour will today be voting against that. I would also say to the right hon. Member for Wolverhampton South East (Mr McFadden) and the hon. Member for Leeds West (Rachel Reeves), the shadow Chancellor, who are not in their places, that the average mover buying the average house in their constituencies would not have qualified for zero-rate stamp duty land tax before this measure, and Labour will again be voting against that tax cut today.

This measure will boost labour mobility, support hundreds of thousands of jobs and businesses, increase transactions to boost the property industry, and continue the Government’s record of supporting people, including younger people, into home ownership. For those reasons, I commend the Bill to the House.

Question put, That the Bill be now read a Second time.