Stamp Duty Land Tax (Reduction) Bill

Jonathan Edwards Excerpts

Committee stage
Tuesday 10th January 2023 Commons Chamber

[Tim Farron (Westmorland and Lonsdale) (LD)]

Sir Roger, it is a pleasure to serve under your chairmanship.

The Government’s proposal in the Bill will do some marginal good, reducing the cost of buying for some people. The danger is that it meets the needs of a very small number of people. The overwhelming majority of people living in my constituency who cannot afford a home are not in the waiting room, shall we say, to be able to access a new home on the basis of this change. If we think, for example, that £250,000 constitutes the price of an affordable home, we are not in touch with reality—certainly not in the Lake district and the rest of Cumbria. I do not propose to vote against the Government’s proposal, because I can see how it could do some good at the margins, but if we were really bothered about the fact that most people cannot afford to be a first-time buyer with a home of their own, we would be tackling the lack of development of new council homes, social rented homes across the board and shared ownership, and we would be looking at making better use of the current stock.

The reality is that whatever benefit the stamp duty cut might have brought to families has already been quashed and exceeded by the additional cost they will have to bear through mortgage interest rate increases resulting from the Government’s failures. I am told that in the financial markets, those who are in the know refer to the increased mortgage costs, which dwarf any benefit that the stamp duty may bring to new homeowners, as the moron premium—I promise you that those are not my words, Sir Roger. That is the consequence of a very foolish decision that this Government made just a few months ago.

That is not to say that there is no benefit in what the Government are choosing to do. However, my new clause 3, which—with your permission, Sir Roger—I shall move today, would give the Government the opportunity to recognise that there are unintended consequences. We know that because they have already happened. We all remember that in July 2020, when the current Prime Minister was Chancellor of the Exchequer, there was a stamp duty holiday for purchasers of properties of a value of up to £500,000. The impact on the Lake district was instant and catastrophic: 80% of all new house sales in our community were in the second home market. Some 84% of properties in Elterwater, and more than 50% of properties in Coniston, are not lived in. Communities that were already on the margins might have lost enough full-time occupants that they cannot sustain a local school, post office or bus route or have any community life whatever.

There have also been consequences for our workforce. We are all rightly focused on the impact of the massive pressures on our health and social care services; in the lakes, they are under even more pressure because the homes that care workers and health workers once lived in are no longer available to them. That possibility has been wiped out, partly because of a well-intended but poorly informed decision that the current Prime Minister made as Chancellor in July 2020. We have learned that lesson, so there is no excuse for the Government to act without thinking about the unintended consequences and making some attempt to mitigate them.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

I agree fully about areas of high housing pressure where people in local communities cannot buy their own home. May I commend to the hon. Gentleman what we have done in Wales? The Welsh Government have brought in a land transaction tax to replace stamp duty, which is a devolved matter, as the Minister said. Under that system, anybody who buys a second or third home pays a premium on that tax, which comes out of the first property as a disincentive to buying more than one home. Furthermore, in areas of high housing pressure, local councils can choose to treble council tax; indeed, my county council, Carmarthenshire, has announced that it will double council tax on second homes.

[Tim Farron]

Yes. Most of our good ideas were somebody else’s first, so there is no harm whatever in looking at what devolved Administrations such as the Welsh Senedd Government have done. There are positives there from which we could learn, but it is also good to learn from our own mistakes—and the Government made a well-intentioned mistake two and a half years ago, with a very damaging impact on the lakes, on many other rural parts of England and across the United Kingdom.

Let me ram home what that means. It robs us of the life of our communities and the services on which we rely, but it also robs us of a workforce. That means fewer people working not only in social care or health, but in our hospitality and tourism industry. The lakes are the second biggest visitor destination in the country, with 20 million visitors a year, but with a very small population. The workforce that services all the folks here and the many others who holiday in the lakes have nowhere to live any more. We are in the terrible situation of facing a recession nationally but, bizarrely, having more tourist demand in the lakes than we can meet. We cannot meet that demand because we do not have the workforce, and one reason is that the Government have been negligent in providing and ensuring enough affordable homes for people in our communities.

I support the Opposition amendments that would ensure that the stamp duty cut is not available for the purposes of buying a second home; I think that is wise. My new clause 3 would place a responsibility on the Secretary of State to look every year at the policy’s impact on the number of second homes bought, not just in communities like mine but across the country.

The Government know what is happening. The evidence is before their eyes: their temporary stamp duty cut in 2020, a well-intentioned attempt to boost the economy at the beginning of the pandemic, had the immediately negative consequence of hollowing out communities in my area in Cumbria and in Northumberland, the west country and other parts of the UK. I am not theorising; it has already happened. My communities were badly hit by a well-intentioned but foolish Government policy. Why would the Government not accept new clause 3, which would allow them to do something about a policy that is positive on the whole, but that they know has a negative consequence on communities such as mine?

We will not vote against the Bill. We recognise that it does some good, although we think it is a bad use of public money. We could do so much more with that money by investing it in affordable homes for local families, ensuring more council homes and making sure that we tackle inequalities in rural communities in particular. We reckon that there is a marginal benefit from the Government’s policy, but there is a disbenefit for communities such as mine. Will the Minister take new clause 3 on board and agree simply to review the situation year on year, to prevent communities such as mine in the lakes, the dales and the rest of Cumbria from being hollowed out? Otherwise, they will be turned into ghost towns, their workforces will be eradicated and no young people will be able to set up a home there—all because of a decision with an unintended consequence of which the Government cannot now claim to be unaware.