Stamp Duty Land Tax (Temporary Relief) Bill

Pat McFadden Excerpts

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

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

It has been a pleasure to listen to this debate and the many interesting contributions. I cannot mention every Member who has spoken, but we have had a lot of interesting contributions. The hon. Members for South Thanet (Craig Mackinlay) and for Runnymede and Weybridge (Dr Spencer), and perhaps one or two others, urged the Government to abolish stamp duty completely. The hon. Member for Dudley South (Mike Wood) spoke of the importance of confidence in the market in the face of impending job losses.

In a thoughtful contribution, the hon. Member for Penistone and Stocksbridge (Miriam Cates) spoke of the impact of relationship breakdown on housing transactions. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) spoke of the appalling conditions that many families find themselves living in, and eloquently set out how distant is the dream or aspiration of home ownership for so many people. The hon. Member for South Cambridgeshire (Anthony Browne) gave us the benefit of his long experience in these matters in calling for an increased rate for second homeowners.

Stamp duty holidays are a familiar feature of economic crisis management. As has been referenced in the debate already, in 2008 the then Chancellor, Alistair Darling, raised the level at which stamp duty was paid in an effort to kick-start the housing market, which had been hit hard by the global financial crisis. At that time, the measure had a positive effect and brought forward an increase in the number of transactions. This time, we do not yet know of the effect.

As my hon. Friend the Member for Liverpool, Walton (Dan Carden) said, another thing that we do not know is whether the Government really intended to introduce this measure, at least at this time. We saw the briefing, the counter-briefing, the leak and the counter-leak; in the end the Government have announced it now, rather than in some post-dated way that would have simply killed the housing market stone dead. After all, why would anyone choose to buy a house now if they were promised a tax cut on the transaction in some months’ time?

It is normal, of course, for the Treasury to weigh up its options for a statement such as last week’s. There is nothing wrong with considering different ideas, accepting some and rejecting others, but for that exercise to work, it has to be done in private. If the leaks were not a problem, Government Members must ask the Prime Minister why he was railing against them at the end of last week when he was discussing these measures. Once it was out in the open, the Chancellor had to act, so the first question to be asked about this policy, before we even get to its merits, is: was it the result of a £4 billion leak? If that is the case and the Chancellor was effectively bounced into this policy as a result of information coming out in an unintended way, this must be the biggest plumbing bill of all time. We might never know, so let me turn to the merits of the policy itself.

The reason the Chancellor gave for the measures before us was that housing transactions had fallen sharply in April and May. It is true that housing is a very important part of our economy, for all the reasons that we have heard in the debate. Governments of both colours have supported the ambition of people to own their own home, as we do today. Depending on where you live, stamp duty can be a significant cost to house buyers. Although the history of temporary cuts in stamp duty rates tells us that, over the longer term, they might make little difference to the volume of transactions, they can serve to bring forward demand when a market has been hit for one reason or another. When people move house, there is a positive knock-on effect, and we have heard about many of those effects today, whether it is the purchase of new furniture or electrical goods or the employment of people doing repairs and renovations.

We do not oppose this measure. We support the desire for people to own their own homes. We certainly do not celebrate the reduction in home ownership over the past 10 years or the fact that 800,000 fewer people under the age of 45 own their own home today compared with 10 years ago—and 10 years is important. The Government have had a decade to address the question of home ownership. I put it to all the champions of home ownership who have spoken in the debate: are they really proud that it is harder to own a home now than it was when they came into office 10 years ago? Are they really proud that it is so much more difficult for younger people to get on the housing ladder? I do not think they can be proud of that decade-long record.

As with a number of the measures announced last week, we have concerns about how well this is targeted. Stamp duty has changed over the years, with different rates put in at different levels. If the Chancellor really wanted to announce a stamp duty holiday, was it necessary to extend it to buy-to-let landlords and people purchasing second homes? What will be the benefits for overseas buyers, some of whom have seen the most expensive London property almost as a reserve currency? Both those groups are already treated differently within the existing regime, and they could have been treated differently in this change. That is why we have tabled a new clause calling for a report on the effect of this decision on these very different groups of homebuyers. We are for measures that help hard-working people to buy their own home, but we are not for measures that simply channel funds to areas where they are not needed or that go against the grain of some of the changes that have been made to stamp duty in recent years.

That takes me to a wider point about the measures announced last week. The job retention bonus has been criticised by a number of commentators for having a significant dead-weight cost—that is to say, giving money to businesses for doing things they would have done anyway. That is why the measure was not signed off by the head of HMRC, who questioned the “value for money” of the proposal. It was of course absolutely essential for the Government to step up and support the economy during a lockdown that was imposed for public health reasons, and the costs of not doing so, both economically and socially, would have far outweighed the costs of doing so. But that does not mean that the Treasury and the Chancellor are absolved of the duty to target that support properly on measures that really can make a difference to the recovery, or to use taxpayers’ money wisely.

Like all Budgets and all Budget statements, the measures announced can look a little different after a few days’ examination and scrutiny, and that has proved to be the case with last week’s statement. Within 24 hours of this supposed statement for jobs, thousands of job losses in Boots and John Lewis were announced—great British companies in a sector that got almost no attention from the Chancellor last week. So the question, above and beyond the detail of the measures before us tonight, is whether, after last week’s statement, all these measures match up to the scale of the economic and, in particular, the jobs challenge that the country is facing. We called for a Budget for jobs because we have heard the warnings about the danger to jobs in many parts of the economy. This is not a crisis that affects all sectors equally. The Chancellor conceded that point with his targeted cut in VAT for tourism and hospitality. It is absolutely right to help those sectors, but there are others that desperately need help too—retail, manufacturing, aviation, transport and many more.

There is one more crucial point. Getting the economy moving again is not just a matter of the kind of measures that we are debating this evening, because the health response and the economic response have to go together. It is not just the lack of a £10 discount that is stopping people eating out; it is fear—fear and lack of confidence that the Government are adequately on top of the public health situation. After tens of thousands of deaths, and with the Government’s boast of a world-beating track-and-trace system having been turned to dust, it is little wonder that there is fear and lack of confidence. If the Government really want to get the economy moving again, they have to give the public the confidence that they are on top of the public health crisis as well as putting the right economic support measures in place.

We do not oppose these measures, but we remain convinced that the economic and health responses must be brought together, and that more measures than those announced last week will be necessary to help the economy through the very tough period for jobs that is already upon us.