Budget Statement

Lord Ryder of Wensum Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Ryder of Wensum (Con)]

My Lords, my interests are set out in the register. I want to speak briefly about the supply-side bottlenecks in the housing market. Thirty-three years ago in an equivalent debate on the Budget in the other place, I called for the abolition of stamp duty. I stated then that stamp duty,

“impedes change by curdling labour mobility”,

and that it is,

“a bad tax because it adds … transaction costs in the housing market … It is a bad tax because it discriminates against achievers and those who, through no fault of their own, lose their jobs but secure new ones in other locations”,

and that it makes,

“a mockery of the capital-owning democracy”.—[Official Report, Commons, 14/3/1984; cols. 449-50.]

A year or two later, I became a Treasury Minister and was partly responsible for taxation under the then Chancellor, my noble friend Lord Lawson. When I felt that I was on the verge of persuading my noble friend, who is a hard man to persuade, to abolish stamp duty he did a runner and inconveniently resigned from the Government. My chance was lost; it remains lost. Yet 33 years later, my views stay unchanged. They are even more hostile to stamp duty because in 2017, the housing market is in a far more dire state than in 1984.

The supply-side measures in the Chancellor’s 2017 Budget are timid. His headline-making stamp duty announcement is nothing new; it merely replicates decisions taken 25 years ago by my noble friend Lord Lamont as Chancellor, and over 10 years later by the noble Lord, Lord Darling, in the same post. The present Chancellor’s approach is potentially damaging. It risks the prospect of fuelling demand and hiking prices without accelerating with necessary speed the land supply for development, a case already propounded by the noble Baroness, Lady Blackstone, and the noble Lord, Lord Campbell-Savours. Of course, the Chancellor could have chosen my preference of abolishing stamp duty altogether or at least, to be perhaps more practical, slicing rates on every band of stamp duty. This would be a fairer and more efficient option than his own because he has now erected yet another market distortion by creating a new, steep cliff edge. I suspect—I fear—that he will come to regret his decision.

Allow me to highlight, if I may, problems in the supply of land for development. The feebleness of successive Government has enabled major developers to control swathes of a slanted market. The bureaucratic and legal expenses involved, with planning applications often taking up to three years, have suffocated supply by being beyond the scope of smaller competitors. An investigation carried out by the Guardian two years ago showed the biggest housebuilders, all within the FTSE 250, holding more than 615,000 plots in their land banks. This amounts to about four times the number of homes built each year. The 615,000 figure included Taylor Wimpey, with 184,000, and Barratt Homes, with 142,000.

The shortage of new homes, due chiefly to a flawed supply pipeline, has led, as the Minister indicated earlier, to average house prices across the UK standing at no less than eight times the national average income. This is unacceptable, and I say to my noble friend that the Conservatives have been in office, either in coalition or in government, for seven years now, and this problem gets worse, yet the way of dealing with it is quite apparent. After all, the housing market once represented a key component of social mobility, the subject of today’s Statement. Now this benefit dwindles year by year, surely to the shame of the Government.

The Chancellor disclosed in this Budget Statement that Sir Oliver Letwin, Member of Parliament, will conduct an interim review—not a review, as reported in the press. Why is this necessary when the reasons for the problems have been apparent for ages, not least to Mr Osborne and, indeed, to the then leader of the Opposition, Mr Ed Miliband? The Government can solve this so-called conundrum by restoring the balance between demand and supply. This requires new planning rules and the Government to press developers to build homes, if necessary through punitive measures, because the housing market at present is not a market at all. It is skewed by an oligopoly perverting the true cost of that market. The Prime Minister and the Chancellor have revealed a lack of urgency by commissioning this interim review. Instead of Downing Street folders demanding action this day, now it seems that there are reminder notes pleading for action this decade, or perhaps pleading for action next decade. Where is the willpower to release the manacles on the housing market? Where is the conviction to defy powerful lobbyists? Where is the steeliness, the belief, to overcome the present iniquities so damaging to the aspirations of young people and so exasperating to proponents of a property-owning democracy?