Stamp Duty Land Tax Bill

John Stevenson Excerpts

Wednesday 10th December 2014 Commons Chamber

[Mr Gauke]

I am grateful to my hon. Friend for raising that point, because the Government have addressed this issue fully during this Parliament. A few years ago, SDLT was starting to develop a reputation as a tax that was easily abused—he mentioned one means by which that was done—but this Government have introduced several measures to deal with that. We have seen a substantial decline in the marketing of SDLT avoidance schemes, and the introduction of the annual tax on enveloped dwellings has been successful in discouraging avoidance. He is right to highlight the issue, but we are making changes in the context of an SDLT that is perhaps less leaky than when we came into office a few years ago. That enables us to make our changes, which benefit properties in a way that is, none the less, affordable for the Exchequer. As the Chancellor made clear last week, the policy will deliver a tax bill cut for 98% of people who pay SDLT, and the previous economic distortions in the system have been removed, which benefits the housing market generally.

[John Stevenson (Carlisle) (Con)]

First, I apologise for being late, as I was serving on a Delegated Legislation Committee. I welcome the reforms for the residential market, but do the Government have any intention to introduce similar provisions for the commercial market?

[Mr Gauke]

I am grateful to my hon. Friend for raising that point, which we debated briefly last week. Particular issues with the residential market meant that we needed to address that quickly, and some of the pressures to reform the system applied particularly to the residential market. Clearly, any Government will want to keep this matter under review, so I would not want to rule out looking at the commercial market. However, the imperative was to press on for the residential market, and no doubt commercial property and SDLT is a matter to which the Government will wish to return in the future. I know that he welcomes these reforms, and I should point out that more than 99% of transactions in his constituency will benefit from our changes.

--- Later in debate ---

[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.

--- Later in debate ---

[Priti Patel]

These are now devolved matters, as the hon. Lady knows. As part of not only the devolution process but future policy formation, I have no doubt that discussions will take place.

[John Stevenson]

I am grateful for the earlier clarification about the Government’s position on commercial property. Can the Minister clarify the position on agricultural property?

[Priti Patel]

Agricultural property would be treated in the same way as commercial property. I hope that answers my hon. Friend’s question.

On housing supply and affordable housing—a point made today and last week from the Opposition Front Bench—all the work that the Government have put in place in relation to the stamp duty land tax measure has been about supporting aspirational home ownership and making home ownership a reality for as many households as possible. This Government support more home ownership, and stamp duty reform is part of that. We are investing billions of pounds to provide affordable homes including, as my hon. Friend the Financial Secretary mentioned, £4.5 billion during the spending review period to provide more than 170,000 new units, and a further £3.3 billion to deliver more than 165,000 more homes over three years from 2015. We have also speeded up reforms to planning. Housing starts in England are at their highest level since 2007, which we all welcome. In the autumn statement last week we announced a package to do even more, by introducing measures to support more than 133,000 new homes. My hon. Friend the Financial Secretary touched on rent-to-buy and help-to-buy schemes.

In conclusion, our long-term economic plan has supported home ownership through stamp duty land tax reform and increased supply through the measures that I have just outlined. Importantly, the economy is growing, the deficit is falling, and employment is at a record high. These are all economic measures that should be welcomed across the country. We are building a stronger, sustainable and healthier economy. The autumn statement set out a modest fiscal tightening and does not shy away from the challenges that remain.

Against that backdrop, we believe that aspiration should be supported. For centuries it has spurred people on. The Bill backs those who aspire. I am proud to be part of a Government who stand by aspiration and advocate it. This Bill reforms a fundamentally flawed system and will help make the dream of owning a home a reality, while cutting the tax bill for the overwhelming majority of people affected by it. There is consensus on this, as we heard this afternoon, and I hope the House will give the Bill a Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.

Stamp Duty Land Tax Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Stamp Duty Land Tax Bill:

Committal

(1) The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee, on consideration and on Third Reading

(2) Notwithstanding the practice of the House as to the intervals between stages of Bills brought in on Ways and Means Resolutions, proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be completed at one day’s sitting.

(3) Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion, on the day on which proceedings in Committee are commenced, two hours after the commencement of proceedings in Committee.

(4) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion, on the day on which proceedings in Committee are commenced, three hours after the commencement of proceedings in Committee.

(5) Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee, to any proceedings on consideration or to proceedings on Third Reading.

Other proceedings

(6) Any other proceedings on the Bill (including any proceedings on consideration of any Message from the Lords) may be programmed.—(Gavin Barwell.)

Question agreed to.

Wales Bill (Programme) (No.3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Wales Bill for the purpose of supplementing the Order of 31 March 2014 in the last Session of Parliament (Wales Bill (Programme)), as varied by the Order of 30 April 2014 in that Session (Wales Bill (Programme) (No. 2)):

Consideration of Lords Amendments

1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement at today’s sitting.

2. The Lords Amendments shall be considered in the following order: Nos. 1 to 13, 17 and 14 to 16.

Subsequent stages

3. Any further Message from the Lords may be considered forthwith without any Question being put.

4. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Gavin Barwell.)

Question agreed to.