Stamp Duty Land Tax (Temporary Relief) Bill

Mike Wood Excerpts

2nd reading & 2nd reading: House of Commons
Monday 13th July 2020 Commons Chamber

[Dan Carden]

Of course this is about priorities for Government spending. Time and again, we have called on the Government to put forward a credible plan to build the homes that our country needs. We are also concerned about which parts of the country this Bill will benefit the most. The Institute for Fiscal Studies has said that first-time buyers might be made worse off by the changes.

As the stamp duty threshold for first-time buyers is already set higher—at £300,000—raising the threshold to £500,000 is worth comparatively less for first-time buyers outside London. In fact, it is possible that the Chancellor is removing one of the few advantages that first-time buyers have. Will the Minister comment on the IFS analysis and tell us: will first-time buyers benefit at all?

[Mike Wood (Dudley South) (Con)]

Does the hon. Gentleman not recognise that, in order for housing supply to be available to first-time buyers, existing homeowners need to be able to move house to move up the housing chain? By supporting them to do so through these measures, it makes it easier for first-time buyers to get their first home.

[Dan Carden]

I heard someone say, “We need to build more houses” and that is absolutely correct. But of course, we support anything that stimulates the housing market and jobs in the supply chain thereafter.

Eight hundred thousand fewer people under the age of 45 own their own home today. This Government have been in power since 2010. Home ownership is at its lowest level in a generation. The Prime Minister has repeatedly pledged to “level up” the country. But the benefits of this cut will be concentrated in London and the south-east.

Estate agent Savills identified the local authorities that will see the biggest fall in tax receipts as a result of the change. Wandsworth, Bromley and Wiltshire will see falls of £40 million, £35 million and £29 million respectively. Rightmove estimates that the average saving in the north-east will be just £646, compared with £15,000 in London. Once again, the Government seem to be prioritising the needs of London and the south-east over those of the rest of the country.

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

It is an honour to follow the hon. Member for Redcar (Jacob Young), who made some interesting points about this move. Although, as Members from all parts of the House have said, there are other things we could do with the money—there is an opportunity cost to spending it—there is no doubt that it will make a difference to the economy. The buying and selling of properties has a knock-on effect and creates a multiplier, and that will create some movement. It is worth saying that that does not mean it is the best use that could possibly be made of this money, but given that the Chancellor and the Prime Minister have discovered a veritable rainforest of money trees, this may be a good use for a few of them.

For the good that the measure will do—it is important to concede that—what it will not do is to rise to the challenge of the United Kingdom’s general lack of affordable housing. It has been going on for some time, and this represents a failure to grasp the nettle. I am sure Members will know that Crisis and the National Housing Federation have together come up with a conservative estimate that the UK needs 145,000 new affordable homes per year, 90,000 of which need to be social rented. Shelter takes the view—I think it is nearer to the money—that the number is closer to 300,000. Either way, we need a minimum of 90,000 additional social rented homes a year. The Government will deliver 3,500 this year, but there are just over 3,000 on the social housing waiting list in my constituency alone. That is the scale of the problem, and this measure does not help—it does not hinder, but it does not help.

[Mike Wood]

Does the hon. Gentleman recognise that what probably will help is the £12 billion affordable housing programme announced in the Budget only four months ago?

[Tim Farron]

Potentially—although, to go on a little diversion, we cannot build houses of any kind whatsoever without a workforce. One thing that I wish the Government would take seriously, in looking at their supply chain and the means of reaching their targets, is that we are something like 40% below the workforce required to construct even the Government’s existing programme of development. By the way, the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which we debated the other week, will take that down by another 9%. The Government can announce whatever big numbers they like, but they cannot press-release their way out of a recession; they have to plan their way out of it. There is a lack of long-term or even medium-term planning, but it is better to spend that money than not, and I concede that it will do more good than the proposal that we are debating.

I represent a constituency where we have, bluntly, London house prices without London incomes. The average household income is about £25,000 a year, and the average house price across the constituency is about a quarter of a million. In the Lake district and the dales, which make up more than half the land mass of my constituency, we are looking at an average property price of more like £400,000. Put bluntly, the average person in my constituency is stuffed when it comes to buying a home, and this measure will not help. We lose one in three of our young people, never to return, for this very reason. Long-lasting, real action is required as well as something like this, which I am sure will give a short-term and necessary boost to economic activity.

I agree with the Town and Country Planning Association and the Nationwide Foundation that we need to redefine what affordability is. We talk about affordability as a percentage of market rent when actually we should be talking about affordability in terms of how it relates to people’s incomes, obviously, because that is what makes something affordable or otherwise. This and previous Governments have used “affordable housing” as a term that is utterly meaningless to the majority of people who are supposedly in the market. Let us take this opportunity to do something radical.

I also agree with the Town and Country Planning Association, and with Shelter, when they say that one of the most useful things that we could do—and since we are in this mood for swift and radical legislation that will make a difference, let us grab the moment—is to reform the Land Compensation Act 1961, which currently fixes the hope value of land at a level based on what would be the most lucrative value of that land rather than pegging it at the actual value of the land. That inflates land prices, inflates house prices, and stagnates the market. If we wanted to reduce the cost of land, reduce the cost of housing and therefore make it more affordable, make sure that every home is zero-carbon, which the Government should also be doing at this time, and make it more likely that land will come forward to be built on in the first place, that is the one thing we would do: it is close to being a silver bullet. In this time of swift legislation and passing whole Bills in a matter of hours, that is what we should use one of these slots for. Radical change is important, and we in this House have the opportunity—and, I think, the mood—to do it.

We should also be reforming viability assessments and preventing developers from changing the goalposts after they have been given planning permission. I want to see developers forced to deliver not just zero-carbon homes but homes that are genuinely affordable, and not then going over the field, digging up a few rocks, and saying, “Oh, I’m sorry, I can’t afford to do the affordables anymore.” This is an opportunity for the Government to make sure that any new building that takes place, and such as I trust will take place, will deliver homes that people can actually afford.

As has already been said by my hon. Friend the Member for Richmond Park (Sarah Olney), who made a really good and important contribution, this move will not help any of the people facing financial ruin, such as the one in four in my constituency who work for themselves, many of whom are directors of small limited companies, newly employed people or new starters. They are the entrepreneurs we need to rely on to build back for our country and to build our economy, and they have been excluded. As she said, we had the launch of the all-party group last week with 200 Members there, many of them Conservatives. My message to friends and colleagues on the Conservative Benches is: this is your moment to put your money where your mouth is and to stand up for those 3 million excluded people in this country, and to say that the Chancellor must back them, because they are not in a position to consider whether they are going to move house; they are in a position of wondering whether they can afford to feed their kids. This is the time when the Chancellor must act.

Just as distressing for us in south Lakeland is the bonus that is being given to people who own second homes. I want to be very clear here: I am not talking about holiday lets, which are crucial to the tourism economy in the lakes and the dales and elsewhere, bringing in visitors who spend their money locally. Holiday lets are part of a tourism economy that is worth £3 billion a year and more, and employs 60,000 people in Cumbria—our single biggest employer—so it is vital that we support that industry. I am talking about homes owned by people as a second property that they visit maybe a few times a year—and good luck to them. I want those people to feel welcome: this is not a personal slight on them. But as somebody who lives among these communities, I cannot deny the evidence of my eyes, which is that excessive second home ownership kills communities. When 50% of the homes in Coniston are not lived in all year round, of course that is one of the reasons why the schools in that community do not have the numbers they would otherwise, of course it is a reason why bus services shut, and of course it is a reason why shops, post offices and others struggle. That is why this boon and bonus to second home owners is an insult to people in the lakes and the dales—the local people struggling to get by there—and why this should be an opportunity not to give these people an additional incentive to take homes out of the local market, but to tackle the incentives that currently exist.

Some 18 months ago, the Government concluded a consultation on whether they should close the loophole that allows second home owners effectively to pretend that the home is a business and therefore avoid paying any tax whatsoever. In the 18 months since—I accept that it has been a busy 18 months—naff all has happened. The Welsh Assembly Government closed that loophole and did so effectively. Why will the Government not take the opportunity to do that and help constituencies like mine? That loophole needs to be closed.

In summary, I am deeply concerned about this proposal. It will do some good and I can see the economic arguments for it, so we will not formally oppose it when it comes to any Division, but we must understand what it is and what it is not. It will increase demand, but among those it will help are those lucky enough to have multiple homes. It does not help those who are desperate to put food on the table and pay the rent. The Government are not helping the excluded and this was the chance to do that. The proposal has some economic value. It will help to kick-start the economy in the short term and that is welcome insofar as it goes, but it is a scattergun attempt to build back quicker, not build back better. If we do not build anything new either, it is simply a case of “buy, buy, buy”, not “build, build, build.”

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[Mike Wood (Dudley South) (Con)]

We have faced a huge human health crisis, and we are now working to prevent that horrific health crisis being accompanied by a similar economic crisis. The Government have delivered an extensive package of support measures for workers and for companies through the coronavirus job retention scheme. They have delivered support for the self-employed through grants, loans and a wide range of measures to help protect jobs and ensure that despite the enormous impact of this outbreak, businesses are able to see a way through it and are able to continue to employ people, and the self-employed or those in small businesses can see a way to get through the outbreak to rebuild in the better times ahead.

Sadly, of course, many people have already lost their jobs and, even more sadly, many more are likely to lose their jobs over the coming months, as businesses take time to adjust—to adapt their businesses to order books which, in many cases, are unlikely to return to pre-crisis levels for some time. We need to do what we can to minimise those job losses and to help as many people as possible to return to work and to stay in work, because we know, as we have seen from previous recessions, that jobs can be lost very quickly during economic downturns. It can take many, many more years to replace those jobs and to bring people back into work. With a shock as sharp and as deep as the one that we have seen over the past few months from this pandemic, measures such as this and the many others that the Chancellor has announced over the past four months are not only appropriate, but unprecedented and certainly necessary.

If we are to prevent enormous numbers of people from losing their jobs, enormous numbers of businesses from closing for good, and enormous numbers of families from being deprived of the security and prosperity of paid employment, we need the economy to recover, which means that we need consumers to start spending. We need consumers to have the confidence to return to something approaching economic normality. If people do not have confidence in the economy, they do not part with their cash. When that happens, there is a risk of a vicious circle of economic decline, with inevitable large job losses as a consequence. It is crucial that we break that cycle and promote spending, which is why I support this legislation today.

This measure is designed to bring forward spending. Certainly, the largest piece of spending that almost anybody makes is investment in a home. We need to make sure that consumers have the confidence to make those decisions over the next few months as we rebuild our economy rather than put them off for a year or more, because, naturally, caution, for many of the reasons that the hon. Member for Richmond Park (Sarah Olney) mentioned, may make people concerned about such large spending as we come out of this health crisis. Our economy needs this economic activity to recover. It needs people to be spending. It needs a successful and vibrant housing market, because, as many hon. Members have said, the housing market is not purely about those businesses and those industries that are directly associated with it—the estate agents and the removal firms—but something that goes far beyond that. It goes through construction, to the decorators, the small businesses, the self-employed carpet fitters and the gardeners. In many cases, much of their work centres around people who are moving into new homes and wanting to make them to their taste.

As chair of the all-party group for furniture and furnishings I know how much of furniture manufacturing and retail in this country depends on a successful and thriving housing market. By stimulating that market—by bringing forward to the next six or nine months the decision to buy a house that could be put off for a year or more—we are protecting those jobs by giving confidence to those companies, to those employers, and to those small businesses that there will be a housing market and that there will be people wanting to redecorate, to refit their bathrooms, to redo the garden and to buy new furniture. This measure will give them the confidence to invest in their staff and to keep their workforce as close to normal levels as much as possible. That seems to me to be a good investment. When the question is asked as to whether this is the right way for the Chancellor to spend resources, I invite right hon. and hon. Members to consider what the alternative is. I do not see the evidence locally that the housing market is instantly bouncing back without further intervention and support. I am not seeing a huge amount of confidence; quite the reverse. As the hon. Member for Richmond Park said, people are nervous about the plans that they had put in place either to buy their first home or to move up the housing ladder. In many cases they are saying, “Perhaps now is not the right time.” If the measures in the Bill can help to bring forward those decisions and to make sure that that spending happens as soon as possible, that will protect the jobs and the prosperity that our constituents rely on. That is why I will support the Bill this evening.