Stewart Hosie
Main Page: Stewart Hosie (Scottish National Party - Dundee East)Department Debates - View all Stewart Hosie's debates with the HM Treasury
(11 years, 7 months ago)
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Stephen Williams
The Chief Secretary to the Treasury is indeed a Liberal Democrat. I am sure my right hon. Friend has given this policy issue a great deal of careful thought with his advisers and I am sure that if he were standing where I am standing today, he would be making similar points to those that I am making.
There are two parts to new clause 5. As well as calling for a study of—we now know—how to raise £2 billion through a mansion tax, however ill defined the composition of that tax would be, it is also meant to fund a tax cut for millions of people on middle and low incomes, as part of a fair tax system. Again, that is simply not specific enough. We do not know what it means. I am guessing—I can guess, but it would not be fair for those in the Treasury to have to guess how they would have to do such a study—that the purpose is to fund the reintroduction of a 10p rate of income tax. That is my guess, but it is a well informed guess, because the Opposition’s amendment 4 to clause 3, which we will come to tomorrow, suggests that they want to reintroduce a 10p rate of income tax. Again, however, neither that amendment nor new clause 5 gives us any detail for how that would work or, for instance, to what income band it would apply.
Perhaps that it is because the history of the 10p rate is such a miserable memory for Labour Members. I remember the 2007 Budget, which was the last one the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) introduced, when he scrapped the 10p rate of income tax specifically to fund a reduction of the rate of income tax from 22% to 20%. However, the coalition Government have made the principle of the 10p rate of income tax completely redundant, because we have introduced not a 10p rate on people with very low incomes, but a zero rate. I am sure that most of our constituents, whether in Chorley or Bristol West, would much prefer to pay a round tax rate of zero on their low earnings than 10%, which appears to be—although we are not sure—what the Labour party is proposing.
I will therefore not be supporting new clause 5 in the Division Lobby and I would invite all my Liberal Democrat colleagues not to support it either. We are completely clear as a party. We support the introduction of a mansion tax. We are clear about how it should be contrived, on whom it should be levied and how the proceeds from it should be spent. We do not need anybody else to do a study for us—whether the Labour party or the Treasury—to tell us how it might work. It is a great shame that after three years in opposition, at the first opportunity that Labour has taken to say, just tentatively, what it is in favour of—rather than talking about the long list of things that this Government have done that it is against—and just a few weeks after converting to a mansion tax, the Opposition need somebody else to tell them how it will work.
Stewart Hosie (Dundee East) (SNP)
That was an interesting half hour. It has changed entirely what I had planned to say, such is the power of the hon. Member for Bristol West (Stephen Williams), although I suspect not necessarily in a way he would like.
A review of the workings of the support given to the housing market, which new clause 1 would provide, is necessary to ensure that there are no abuses, but perhaps also to make it clear to all sides that the support being provided is not necessarily for affordable homes, but for the building sector—although it would be better if it were primarily for affordable homes. I think it would be quite useful to have a report on that.
On new clause 5, I was initially intending to ask the hon. Member for Nottingham East (Chris Leslie) to provide a little more detail, in the way that the hon. Member for Bristol West did. There are a number of reasons for that, but mainly it is because it might direct the Treasury towards where it might want to look. If, for example, the mansion tax were to be based on council tax banding, then, as we saw in Cardiff where a re-banding took place, it was not necessarily the wealthiest who ended up paying more; 64% of households ended up paying more, which was not a very good outcome. Secondly, if it is paid on the basis of stamp duty land tax, as currently configured, the Exchequer yield would be received only on the sale of the property. Quite clearly, it would not capture all the excess wealth from every property valued at over £2 million. If the mansion tax is to be a new tax, duty or levy, it would have been useful to have it explained.
There may well be a perfectly sensible case to make for a mansion tax, and I thought that that was what the hon. Member for Bristol West was trying to do at the beginning of his speech. As he went on, however, things became rather more confused. I paraphrase, but I think quite accurately, that the hon. Gentleman said that the mansion tax would apply only to a mansion or big house where a person or people lived. If this mansion or big house has one or two rooms that are put out to let, but perhaps not advertised particularly well, it could become a bed and breakfast or a hotel—no longer necessarily remaining a residential property where a person lives.
A number of interventions and discussions took place about farm houses or estates that might breach the threshold. Again, a house where people lived seemed to be the criterion, but one could easily imagine an associated outbuilding converted to house a few chickens, which could change the building from being a residential property. It was interesting to hear that. The hon. Member for Bristol West also referred to the building being the key, even within the curtilage of land on which crops were grown. If an ornamental garden with fruit trees that could be harvested lies inside the curtilage of land but the property is worth £3 million or £4 million, it could, according to the hon. Gentleman, be exempt.
Stephen Williams
I am glad that the hon. Member for Dundee East (Stewart Hosie) is phrasing his questions in this way, but I suggest that he direct them to Labour Front Benchers, as it is, after all, their new clause and they have failed to provide the detail. I provided more detail in my speech in order to be helpful. I can answer all the hon. Gentleman’s questions, but I think he should wait for my pamphlet, which I can assure him will knock on the head all those anti-avoidance issues that he raises.
Stewart Hosie
I am almost at a loss for words at the suggestion that anyone could imagine that the world will hold its breath waiting on a Liberal Democrat pamphlet! [Interruption.] I do not want to digress, Mr Hoyle, but that is a mind-boggling proposition.
The confusion in the hon. Gentleman’s contribution was far from saying that new clause 5 does not make sense; rather, it confirmed why the new clause was necessary. There are so many flaws, omissions and potential avoidance mechanisms in the Liberal Democrats’ proposals—and we had all assumed that they were worked up to some extent when they went into this miserable Government—that it makes perfect sense for the Treasury to investigate them with all their flaws to determine whether they, or another version of them, are even workable. If the hon. Member for Nottingham East chooses to press new clause 5 to a vote, we will be happy to support it.
Sammy Wilson (East Antrim) (DUP)
One of the common themes that has emerged on the Opposition Benches throughout the debates on the Budget is that the Government can and should do something to stimulate the economy by means of additional capital spending. One way of doing that—and one way of rapidly stimulating the construction industry—is to build houses; and, of course, many other social benefits arise from house building.
The Government have chosen a particular path towards the stimulation of house building, and I am not sure whether they have chosen it simply in order to avoid the registration of additional borrowing as part of Government debt. The means by which they have decided to stimulate the housing market—this is significant, because it is stated in the Red Book—will have no implications for central Government public sector net borrowing; it will have an impact only on the central Government net cash requirement. It seems that the Government may be engaging in the contortions described by the hon. Member for Nottingham East (Chris Leslie) in order to avoid certain Treasury accounting arrangements, rather than considering what policy will prove effective.
That is the first thing that we should consider. The second was alluded to by the hon. Member for Dundee East (Stewart Hosie). If the sole intention is to stimulate the housing market and the construction industry and it does not really matter who buys the houses or benefits from the policies, the Government ought to make that clear. Such a move would have various side effects, perhaps benefiting people who, in the opinion of many Members, do not need help with housing. If the policy is to provide a general stimulus across the board which is not relevant to the size of people’s incomes, to whether they are first-time or second-time buyers or to whether they are buying to let or buying to live in their houses, that should be made clear to us.
I do not think that the Government should be afraid of new clause 1. One of its two policy schemes, the guarantee scheme, does not involve any expenditure, because it will come into operation only if a house has to be sold at less than the price that was paid for it. There is evidence that such schemes work. In the Irish Republic, the National Asset Management Agency introduced its 80-20 scheme in an attempt to stimulate demand for some of the properties that it had taken over, and I hope that it will introduce the scheme in Northern Ireland as well. It owns property there, and is currently putting it on the market. There is evidence that the guarantee enabled people to secure loans that would not normally have been available to them, because the lenders had been relieved of some of the risk.
The right hon. Member for Delyn (Mr Hanson) asked whether such schemes would apply throughout the United Kingdom and in all the devolved Administrations. He mentioned the potential for distortion in the housing market, suggesting that people might move from one country in the UK to another in order to take advantage of them. I understand that the guarantee scheme will apply throughout the United Kingdom.
The second scheme involves equity loans. I do not think that the Government should be worried about scrutiny of its likely effectiveness. For some time, Northern Ireland has operated a co-ownership scheme which enables people to rent half a property and buy the other half. We were able to negotiate that with the banks because all the risk was being taken by Co-ownership Housing and the public purse, which would be responsible for the first 50% of any loss. The banks have actually dropped the requirement for a 20% deposit. The good thing is that there has been no cost to the public purse; it has simply been borne by the banks not requiring the deposit, because the risk has been taken out of the house purchase.
Stewart Hosie
Before the hon. Gentleman moves on, he is making a number of very serious points about the financial transaction part of housing support, but I hope he agrees that the one downside is that it does not allow that cash—such as it is—to be used for capital spending in any way apart from housing, and that it is being paid for by a real-terms cut in the Revenue departmental expenditure limit over the next two years.
Sajid Javid
The hon. Gentleman raises a good point, which is that it is the Government’s duty to carefully consider what is meant by a second home. He has given as an example the situation in which someone has no intention of owning two homes, but is in the process of moving home. Let me share another example. There are couples who unfortunately get divorced, and there may be a need for another home as the family splits. The question then arises, is that a second home or not? It is sensible for the Government to examine such issues carefully as we flesh out the details.
Sajid Javid
In the interests of time, I must press on and answer some of the questions that were raised, including by the hon. Gentleman.
The hon. Member for Edinburgh North and Leith (Mark Lazarowicz) and others asked about the devolved authorities, in particular Scotland. The mortgage guarantee scheme is a UK-wide scheme and will be available to all UK residents, including of course those in Scotland and other devolved areas. The mortgage equity scheme is an England-only scheme as housing is a reserved issue among the devolved authorities.