Stamp Duty Land Tax (Reduction) Bill

Tim Farron Excerpts

Committee stage
Tuesday 10th January 2023 Commons Chamber

Government amendments 13 and 14 amend clause 2 to rename the Bill the Stamp Duty Land Tax (Temporary Relief) Bill to reflect the sunset clause that will now end on 31 March 2025. The Bill comes into force on Royal Assent, but applies in relation to transactions with an effective date on or after 23 September 2022 until 31 March 2025. As a result of the resolution passed by the House of Commons under the Provisional Collection of Taxes Act 1968, the Bill’s provisions have been in force since 23 September 2022. Our constituents who have bought a home in the last few months have had the benefit of those reductions. We very much look forward to supporting homeowners, including first-time buyers, in the coming two years with the Bill.

[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.

[Several hon. Members rose—]

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[Anthony Browne (South Cambridgeshire) (Con)]

It is an honour and a delight to follow my hon. Friends the Members for North Devon (Selaine Saxby) and for Christchurch (Sir Christopher Chope). May I say at the outset that I completely agree with my hon. Friend the Member for Christchurch that you should be Sir Nigel, Mr Evans? If I call you Sir Nigel, will I have as much time to speak as my hon. Friend?

It is a pleasure to speak because, as the chair of the Back-Bench Treasury committee, I have done a lot of work on stamp duty policy, and I have had a slightly perverse interest in stamp duty for the last decade or so and written various policy papers and research reports on it. We all support raising the level of home ownership. In fact, rates of home ownership started to decline under the previous Labour Government. There is a home ownership gap of about 5 million people who want to own their own home but cannot. I will support all measures—well, pretty much all measures—to increase home ownership. Clearly, we are teetering on the brink of recession and need to promote economic growth, so I very strongly support the broad thrust of the Bill in cutting stamp duty to help people get on to and up the property ladder and to stimulate economic growth. I have some reservations about the proposal being temporary and about it applying to second properties.

I will address some of the key themes of stamp duty policy. We have heard various calls today—not least from my hon. Friend the Member for Christchurch—to abolish stamp duty outright, and in fact, I have called for that before. But it is not just Conservative MPs who think that stamp duty should be abolished outright; the Institute for Fiscal Studies, on whose advisory council I sit, talked in its magisterial work on taxation policy—the Mirrlees review—about all the damage of stamp duty and called for it to be abolished.

Lord Macpherson, a former permanent secretary at the Treasury, gave evidence fairly recently to the Treasury Committee, on which I sit, about tax policy. He highlighted all the damage that stamp duty did to the economy, for many of the reasons that my hon. Friends the Members for Christchurch and for South Thanet (Craig Mackinlay) set out earlier. Lord Macpherson certainly would not be sad to see its demise.

I want to raise a slightly more nuanced point than the outright abolition of stamp duty, which would lead to a big problem with revenue, as it raised £14 billion last year in total—about £4 billion for commercial property and £10 billion for residential. That would be a hole. My more nuanced argument is that people buying houses to live in are overtaxed, but people buying properties either as second homes or for investment are undertaxed. Exactly 10 years ago, in 2013, I wrote a paper arguing for a higher rate of stamp duty for people who are buying homes not to live in. Fundamentally, homes are for living in. Two years later, the Government introduced that policy. It is now the additional premium. I do not think the Government introduced it in the right way and there are all sorts of problems with it, but I will not go into detail on that now. The stamp duty regime at least recognises the difference between people buying properties for investment or as second homes as opposed to people buying properties to live in as their homes. That tilts the property market in favour of those buying homes to live in, which is welcome.

[Tim Farron]

I apologise for intervening on the hon. Gentleman in his good, interesting speech. He said that it is possible for stamp duty purposes to distinguish between a second home and a first home. That means it would clearly be possible to distinguish between second homes and first homes for planning purposes, which would give local authorities the power to ensure that they protect a minimum number of homes for local families. I gave the Government the opportunity just before Christmas to vote for an amendment to do that—why does he think they did not do so?

[Anthony Browne]

I thank the hon. Member for that intervention. I must admit I do not know the reasons behind that, but it clearly is possible, at least from a taxation point of view, to distinguish between homes for investment and homes for living in. From a planning point of view, there are probably other considerations.

[Tim Farron]

It is political will, I would say.

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[Tim Farron]

To follow up on that, is it not right to say that people who have second homes pay additional council tax only if those homes are empty and unfurnished, so a very small percentage of those who have second homes will be affected? Does the Minister understand the evidence that the 2020 stamp duty cut fuelled a second home boom? On that basis, why has she done nothing to listen to rural communities such as mine about that and to mitigate it in some way by accepting my amendment or that of the Opposition?

[Victoria Atkins]

If I have understood the hon. Gentleman correctly, he has misunderstood the measures in the Bill, which introduces a premium on second homes of up to 100% and a strengthening of the existing premium on empty homes. I appreciate his point about empty homes, if people are moving or returning to their second homes, but that is not the scenario everywhere—indeed, in my constituency, I can think of examples where that is not the case. We are trying to use practical measures so that local communities can decide how to deal with it through council tax.

I was talking about complexity. We want to ensure that the system is as simple as possible for taxpayers, which is why we have the consistency of rate bands between the standard rate and the rate for additional dwellings.

Amendment (b), which was tabled by my hon. Friend the Member for Christchurch, seeks to extend the period from 31 March 2025 to 31 March 2028. It is important that the Government maintain a commitment to fiscal responsibility and that requires difficult decisions, as I have set out. The Chancellor was clear about that in the autumn statement, and I hope that the ministerial team have been clear about that when we have spoken at the Dispatch Box. The Government will continue to take difficult decisions to get the public finances on a sound footing and to get debt falling in the medium term.

We therefore announced that the stamp duty cut will end in March 2025 as part of that commitment. It will remain in place until then to support the property market through what we all acknowledge are difficult times. We believe that we have struck the right balance between ensuring support for the jobs and businesses associated with the housing market and the Exchequer cost.

The remaining amendments tabled by hon. Members on both sides of the Committee refer to reports and reviews, if I may summarise them in that way. As my hon. Friend the Member for South Cambridgeshire reiterated, it is a fundamental principle that we are loth to include reporting and reviewing requirements in primary legislation. In any event, we do not believe it to be necessary, because the Government already publish a wealth of data on those matters. For example, HMRC publishes data on property transactions and stamp duty land tax receipts, including data on the use of first-time buyers’ relief. To help hon. Members to understand what that means for our constituents who are first-time buyers, the Bill will mean that they can access up to £8,750 in relief. It is a great shame that Opposition Members propose to vote against that relief.

The Department for Levelling Up, Housing and Communities also publishes the English housing survey. Data on property prices, including at a local level, is published through the Land Registry. The Government published a summary of the measure’s impacts, including on the Exchequer, in November’s autumn statement. I hope that hon. Members who have asked for that data and those reviews will look at that wealth of information and draw their own conclusions.

I thank hon. Members for this debate, which I very much welcome, but I commend the Bill to the Committee. I particularly commend the Government amendments to enable first-time buyers in our constituencies to get on to the housing ladder, and to help other constituents move up the housing ladder and continue to thrive in our country in the next couple of years.