Chris Seeks To Help Those Wishing To Become Homeowners
Christopher Chope Conservative, Christchurch
On 17 October, the new Chancellor of the Exchequer told this House that this particular element of the mini-Budget relating to stamp duty land tax would be retained. It was on that basis that the Bill was introduced in the House. It was only a month later that we had the autumn statement when the Chancellor of the Exchequer went back on what had been said earlier.
Victoria Atkins The Financial Secretary to the Treasury
Again, my hon. Friend puts his finger on the point as to the very, very fast-moving economic conditions we have faced in the last few months. He will recall the autumn statement and the great detail the Chancellor went into in terms of ensuring that our approach is fiscally responsible. We had to acknowledge and react to the conditions as we found them then. We are confident that the sunset clause in the Bill will enable us to support our constituents. Indeed, it is happening at this very moment in time, because, of course, we brought in the measures as soon as possible immediately after the original announcement. They are helping, for example, first-time buyers get on to the housing ladder.
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Later in the same debate:
Christopher Chope Conservative, Christchurch 3:00 pm, 10th January 2023
The hon. Lady seems to be obsessed with the issue of second homes. What about the point she made earlier about the number of young people becoming home owners, which has declined so dramatically since 1987? In 1989, 51% of 25 to 34-year-olds owned a home; now about half that number do so. What are the Opposition going to do about it?
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Later in the same debate:
Christopher Chope Conservative, Christchurch
Happy new year, Sir Roger.
In speaking to my amendment (b) to amendment 1 and my new clause 7, I share with the Committee my dismay at the way in which the Government, with their amendments, are transforming this Bill, which originally introduced a permanent tax reduction. The Bill will now increase tax permanently by about £1 billion a year from April 2025.
On 17 October, the new Chancellor confirmed that the mini-Budget’s provisions on stamp duty land tax were safe, yet in his autumn statement, one month later, he announced:
“I will sunset the measure”.—[Official Report, 17 November 2022; Vol. 722, c. 846.]
That is an extraordinary use of language, because it does not fit the definition of a sunset clause set out on the UK Parliament website:
“A provision in a Bill that gives it an expiry date once it is passed into law. Sunset clauses are included in legislation when it is felt that Parliament should have the chance to decide on its merits again after a fixed period.”
I assumed, wrongly, that by introducing a sunset clause, the Government would give this House an opportunity to reconsider the situation before the advent of that sunset period.
That is why I tabled new clause 7, which states:
“The Chancellor of the Exchequer must, three months before expiry of the temporary relief period, publish an assessment of the impacts of the temporary relief provided by this Act.”
That would meet the concerns raised by the hon. Members for Westmorland and Lonsdale (Tim Farron) and for North Shropshire (Helen Morgan). New clause 7 continues:
“(2) This assessment must include an assessment of the impacts on—
(a) the volume and value of housing transactions on the housing market,
(b) any wider costs for the Government, property industry, housing market and/or homebuyers, and
(c) tax revenues.
(3) The assessment must make a recommendation as to whether the temporary relief period should expire or whether the House of Commons should consult on extending it or making it permanent.”New clause 7 would be a proper sunset provision that enables this House to return to the issue before the change is made permanent, but the Government amendments do not embrace that at all.
How does this Bill fit with what the Prime Minister said on 4 January? In quite a long speech, his only reference to taxation was:
“as soon as we can, the Government will reduce the burden of taxation on working people.”
Today, six days after that speech, the Government are asking us to increase the burden of tax on working people with effect from April 2025.
We have also heard in the interim that the Government will forgo the receipt of about £1 billion from the sale of Channel 4, yet as recently as 18 July 2022, when responding to the consultation on that issue, the Government announced that now is the right time to pursue a change in ownership of Channel 4. Why, one might ask, is now the right time both to increase taxes and to abandon asset sales?
Stamp duty land tax is targeted at homeowners and those who aspire to home ownership. Like my hon. Friend Craig Mackinlay, I am opposed to stamp duty land tax because it is arbitrary, clunky and unfair in how it applies in different parts of our country.
For example, if someone lives in Christchurch and the average price of a house is £405,000, that does not mean that they are better off. It means they have to spend more money on the borrowing costs in order to buy an average house for themselves and their family. Someone living in the Minister’s constituency, where the average house price is only £200,000, would have lower borrowing costs and would not have to pay any stamp duty land tax.
Victoria Atkins The Financial Secretary to the Treasury 3:30 pm, 10th January 2023
This is precisely why the Government are so committed to levelling up. Although I know how beautiful my hon. Friend’s constituency is, having had the pleasure of visiting it, in my beautiful corner of England, we do not, sadly, have the transport links that other constituencies have. It is precisely this drive for levelling up, which I know Conservative Members are united on, which may help with some of the issues he sets out so eloquently.
Christopher Chope Conservative, Christchurch
I am grateful to the Minister for that intervention. It comes down to how we define, “levelling up”. The point I am trying to make is that, if somebody is buying an average house in Christchurch, or in her constituency of Louth and Horncastle, it should not make any difference in terms of taxation whether the house is going to cost £405,000 or £200,000. Why should the person buying a house in Christchurch who wants to become a teacher or an NHS employee in the area not only have the burden of having the higher house price—she has referred to some of those issues—but have to pay £10,000 in SDLT for the privilege of moving into the Christchurch constituency to purchase an average-priced house? I do not see any justice in that at all. In levelling up, we should be putting those two categories of person on the same level when it comes to their liability for paying transaction taxes.
My hon. Friend the Member for South Thanet made the suggestion, which I have also made, that we should scrap SDLT. If we want to have a transaction tax, we should introduce one based on, for example, the size of a property, because that would be neutral; it would really be levelling up across the country. Obviously, it would be more popular with some people than with others, but it would certainly be very popular with my constituents and it would meet the criterion of levelling up.
Peter Bone Conservative, Wellingborough
It might be very popular in Christchurch, but it would be very unpopular in Wellingborough and it seems totally unfair to me.
Christopher Chope Conservative, Christchurch
This is the challenge, because some people think that this would adversely affect them. When we were looking at whether we should change the domestic rating system, we always faced the problem of the people who were going to be worse off, who were always the losers and who were going to complain. I accept that, were this to be implemented in the way I am canvassing, it would create some losers who would be unpleasantly surprised. That leads me to my belief that SDLT and stamp duty should be abolished altogether. [Hon. Members: “Hear, hear.”] That is an issue on which we, as real Conservatives who believe in a homeowning democracy, should be able to agree—and it seems from that response that we can agree on it—rather than dividing again in trying to find an alternative to an already unsatisfactory tax.
Let us remind ourselves that, in the 1980s, when we had the beginnings of the property-owning democracy revolution, with more than 50% of people in the 25 to 34 age group being homeowners, we had a stamp duty regime where the maximum rate to purchase any house was 1%. Since this process started under the Blair Government and continued with the coalition—the Treasury is always seeing this as a cow to be milked for taxpayers’ benefit—the proportion of people able to afford to buy their homes has declined significantly. So the challenge I make to the Government, and I hope the Minister can respond to this, is: if we put stamp duty back to 1% as a maximum, what would that do to increase the number of transactions in the housing market, which, as others have said, is ostensibly the Government’s agenda?
On 23 September, HMRC’s policy paper “Stamp Duty Land Tax Reduction” set out the following policy objective:
“This measure is part of government’s commitment to support homeownership and promote mobility in the housing market, in turn supporting economic growth. Increased property transactions also add to residential investment and spending on durable goods.”
Unfortunately, that was withdrawn on 28 November. It would be interesting to know whether that policy objective has been retained by the Government even though the HMRC policy paper has been withdrawn. Another paper issued on 23 September was “The Growth Plan 2022”, which I thought was great, as did many of my constituents. Paragraph 3.30 of the plan stated that the changes to SDLT would
“take 200,000 homebuyers, including 60,000 first-time buyers, out of SDLT entirely.”
Today, however, we are discussing a proposal by the Government, by way of amendments to the Bill, that would put those 200,000 home buyers, 60,000 of them first-time buyers, back into SDLT. Do we really want to do that? Do we really think it will help to move the housing market, boost growth and help people to have the mobility to get to new jobs?
This is not just about people being able to move to a new job by moving house; we also need to think about the damage to the environment being done by the large number of people who are now, having no alternative, being forced to engage in long-distance commuting. Last week, I visited a school in my constituency. The teacher showing me around has been driving regularly from Wales to do a great teaching job in the Christchurch constituency. Fortunately, she is about to move into the constituency, but that is after many, many months of that long-distance commuting. That is highly undesirable. It is bad for the environment and bad for the people involved, because it means that they are sitting behind the wheel of a car for far too long during the working week.
Stamp duty land tax is targeted against homeowners and it will have an adverse effect on labour mobility. Yet the Prime Minister, in his speech on 4 January, was complaining—I agree with him on this—that a quarter of our country’s labour force is inactive and, in this Bill, he is introducing an additional tax on the very mobility that he should be espousing. As my hon. Friend the Member for South Thanet has said, SDLT is a tax on downsizing: it makes it much more difficult for anyone to receive a significant return by selling a larger house and purchasing a smaller one.
My biggest complaint, though, is that the provision hits hardest those for whom homeownership is least affordable. The latest figures, produced by the House of Commons Library in December, show that, in Christchurch, the average house price is now 11.8 times earnings. The national average in England and Wales of eight times is bad enough, but why are we imposing that extra burden on those buying houses in places such as Christchurch? The latest figures from the 2021 census show that the dream of a homeowning democracy espoused by generations of Conservative politicians since Margaret Thatcher, and first raised in 1975, is not one of this Government’s priorities.
Toby Perkins Shadow Minister (Education)
Hear, hear.
Christopher Chope Conservative, Christchurch
I think it is very sad and embarrassing that His Majesty’s loyal Opposition should be crowing at that statement.
Toby Perkins Shadow Minister (Education)
Just to clarify, I am not remotely crowing. I entirely agree with the hon. Gentleman. This Government have hugely failed on allowing people to buy their own homes. It is a national disgrace. I support what he is saying; I am not remotely crowing.
Christopher Chope Conservative, Christchurch
I accept that I used the wrong expression in suggesting that the hon. Gentleman was crowing. But may I set out the basis on which I have these concerns? In the Prime Minister’s speech on 4 January, there was not one mention of the word “housing”, let alone any mention of the expression “home ownership”. Why is that? We obviously have a real crisis in housing and home ownership on our hands. We are facing a potential fall in house prices this year—predicted by Oxford Economics to be about 12%, but who knows? Having stamp duty land tax, even at temporarily reduced levels, will mean that the burden of the reduction in house prices will be borne by those people trying to sell to a greater extent than would otherwise be necessary, because potential purchasers will have to budget for making SDLT payments to the Government.
You can tell, Mr Evans, that I am very concerned about the Bill. When I see that the Prime Minister has declared that the people’s priorities are the Government’s priorities and that we will rebuild trust in politics through action, all I can say is that I do not believe that the new measures in the Bill accord with the people’s priorities because I think those priorities are for a permanent reduction in stamp duty land tax and even, potentially, the abolition of that tax, rather than reintroducing it at a higher level in 2025.
When I was talking earlier today to a member of the Government’s Treasury team, I was told that one reason why my amendment (b) could not be accepted by the Government was that it had not been cleared by the Office for Budget Responsibility. I ask rhetorically, “Who is in charge?” Are we really saying that the Office for Budget Responsibility is able to forecast things to the extent of £1 billion here or £1 billion there? I do not think it can, and if that is the best that the Government can do in arguing against amendment (b), I hope they will think again about whether to accept it.
We cannot carry on as we are now, where the average age of a first-time buyer is now 34 and the average house costs 5.5 times the earnings of a first-time buyer; 25 years ago, it cost only 2.1 times as much. Abena Oppong-Asare on the Opposition Front Bench referred repeatedly to the Resolution Foundation reports on these issues, which draw our attention to the fact that young people are unable to get on to the housing ladder. The reports introduced quite an interesting statistic for me: 1.3 million young people who would have owned a home in 1989 are not able to own one today.
I do not know whether those 1.3 million young people would be more likely to vote Conservative if they were homeowners, but I suspect they probably would, and I think that is one reason the pressures against home ownership, which were begun very softly by the Blair Government, are still pursued by the Opposition parties. That is also why, instead of facing up to the need to address stamp duty land tax, the Opposition are now trying to divert attention on to those who own second homes.
On the question of second home owners, let us think about families. At the moment, if a husband and wife are married with children and they buy a second home, they are already penalised. If two adults are in a relationship with each other, but each one has a separate house that they occupy individually, and they then share at weekends or perhaps during the week, so that they have two homes between two people, they would not be caught by any of the regulations relating to second homes.
Let us think about the law of unintended consequences. Do we really want to introduce even more regulation that will probably have the perverse consequence of making more young people say, “Why should we to get married? As soon as we do, instead of being able to have two homes as we currently can, we will only be able to have one.”
On that point I will close my remarks. This Bill presents a great opportunity to debate a such big issue; I hope the Government, if they are as radical as they say they are, will come forward with some proposals to abolish stamp duty land tax. I think that would be a very popular manifesto commitment.
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Later in the same debate
Christopher Chope Conservative, Christchurch
Does my hon. Friend also agree that somebody in Christchurch who is having to buy an average priced house at the cost of £405,000—as compared with someone in Louth and Horncastle, who can buy the same house for £200,000—should not be taxed double, in a sense, in addition to having to pay a higher mortgage?
Anthony Browne Conservative, South Cambridgeshire
I thank my hon. Friend for that intervention. He proposed earlier that stamp duty should be based on the area of the property; I have some reservations about that for economic efficiency reasons. One of the considerations of taxation should be the ability to pay. If someone is buying a house for £400,000, clearly they will be able to pay a bit more tax than if they were buying a house for £200,000. But if the Government follow my proposal to get rid of stamp duty on residential properties altogether as an objective, his constituents will not have to pay any stamp duty whatsoever. They will pay the same stamp duty as the people buying houses in Louth.
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The entire debate and voting can be accessed by CLICKING HERE
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