Commons statement on Stamp Duty Land Tax - Apr 26

The Financial Secretary to the Treasury (Mel Stride)

• Anneliese Dodds (Oxford East) (Lab/Co-op)

  The Government appear to have arranged to give this statement so that they can pat themselves on the back, while reducing the amount of time spent on customs union with the EU. I appreciate that that issue may be controversial—albeit only for the Government; every other actor seems to feel that some kind of customs union is a good idea—but that should not prevent democracy from running its course on the matter. The Government’s cunning plan to introduce the statement today has spectacularly backfired, because rather than offering an opportunity for congratulation and digression, it has merely provided a chance to indicate the Government’s failure to deal with the housing crisis. 

   

  The Government have said—we heard it again just now—that their stamp duty cut is intended to back home ownership, but home ownership has fallen to a 30-year low under this Government. They say that the cut was intended to help first-time buyers, but there are now a million fewer under-45s who own their own home than there were in 2010. Home ownership was up by some 1 million under Labour, but it has fallen since 2010 under Conservative Ministers as part of this Government’s eight years of failure on housing. 

   

  At the root of that failure is an inability to increase the supply of genuinely affordable housing. I do not need to set out how the stamp duty cut has failed to deal with that issue; I will use the words of the Office for Budget Responsibility, which stated that

   

  “the main gainers from the policy are people who already own property,”

   

  not first-time buyers. In contrast, measures from the Government to increase supply are woefully inadequate. To take just one example, local authorities will only be able to bid into a pot in order to borrow to build—a farcical situation when demand is so pressing. The number of genuinely affordable homes is declining, not increasing, under this Government. 

   

  We parliamentarians see all around us the worst impact of the Government’s failure on housing, whether it is on the people we walk past who are rough sleeping in the city of London—rough sleeping is now at record levels here, as it is in many other cities—or the 120,000 children who are living in temporary accommodation, and whose families come to see us in our constituency surgeries. I am keen to hear the Minister’s response to the question of whether he has commissioned research into the impact of this flagship measure on prices, in the absence of decisive measures to increase affordable supply.

   

  It would be helpful to hear from the Minister how Her Majesty’s Revenue and Customs is dealing with what appears to be a quadrupling of money-back claims related to a malfunctioning online calculator. What HMRC rather amusingly—it is not amusing for the people affected—calls a “ready reckoner” appears to be anything but, in view of its failure to take into account relevant stamp duty discounts. I would be grateful to hear from the Minister when it will be amended so that it properly reflects mixed-use properties.

   

  On the subject of confusion over what stamp duty should be paid, it would be good to hear from the Minister about what the Government are doing to deal with those who make bulk purchases of individual flats, thus avoiding the buy-to-let surcharge. Let us imagine, as a hypothetical example, someone purchasing seven flats, worth between £450,000 and £1 million each, in a seaside town. They might try to do so using their own company, rather than as an individual. If so, I would hope that they registered the beneficial ownership of that company with Companies House—a matter that I look forward to debating with the Minister next week in our consideration of the Sanctions and Anti-Money Laundering Bill. Aside from beneficial ownership, however, by undertaking such a bulk purchase, our imaginary, hypothetical person would avoid a significant amount of stamp duty—say, around £100,000—which could have gone into our cash-strapped NHS. Can the Minister please inform the House what he is doing to deal with that loophole? 

   

  Above all, can we please have genuine action from the Government to deal with our appalling housing crisis—we parliamentarians cannot fail to notice that it is causing much misery to our constituents and blighting the lives of many children—rather than misplaced self-congratulation?

• Mel Stride

  I thank the hon. Lady for her contribution and her questions. She opened by asking what was the motivation for giving this statement today. I reassure her that it is that we believe that housing policy is one of the great issues of our age and we are determined to get on top of it, as the Chancellor set out in the autumn Budget. That is why—to move on to her question about how we will drive up the level of home ownership—the Chancellor made it clear at Budget that a further £15 billion would be made available, taking us up to £44 billion over the next five years, to drive up the supply of new homes. That is alongside planning changes and the review that my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) is undertaking to ensure that where planning permission is granted, houses are actually built. I suggest that we look at our record. Last year there were 217,000 new properties in this country, which is the largest figure since 2005-06. That indicates that our move towards having 300,000 more properties on the market by the middle of the next decade is realistic. 

   

  The hon. Lady asked specific questions about the effect of stamp duty relief on house prices, and she will know that the OBR forecast a small impact of 0.3%. She will also know that that projection did not take into account the various supply-side measures that I have mentioned, and other measures that we have undertaken. She asked about the specific case of properties bought within a corporate wrapper, and I hope she will be familiar with the annual tax on enveloped dwellings, which stands at 15% if the property is put into the wrapper. Indeed, on the basis she outlined where a property is then rented out, ongoing charges recruit tax in that way.

• Kevin Hollinrake (Thirsk and Malton) (Con)

  May I draw the attention of the House to my entry in the Register of Members’ Financial Interests? I welcome the Minister’s statement, and express my support for stamp duty relief for first-time buyers. That measure exists to reverse the trend of declining home ownership that began in 2003, and it is the right thing to do. Will the Minister confirm the commitment made in the autumn Budget to increase the amount of housing supply delivered by small and medium-sized developers, as they are a crucial part of solving the housing crisis in the UK?

• Mr Speaker

  The hon. Gentleman should not undersell himself; he is an illustrious estate agent, and I have now drawn wider attention to that important fact.

• Mel Stride

  My hon. Friend is right to mention smaller builders, and we recognise the importance of ensuring that finance is available to them. They play a key role in providing new housing, and I confirm that the £630 million announced in the Budget for the small-site infrastructure fund will be going ahead, as will measures that we have taken to support bank lending specifically to smaller builders.

• Tom Brake (Carshalton and Wallington) (LD)

  If the Government are serious about boosting housing provision, will the Minister join me in congratulating councils such as Sutton Council, which is building council homes for the first time in 30 years? What more can the Minister do to support it to provide homes that are genuinely affordable?

• Mel Stride

  I have already, at length, gone through the various measures we have taken to support increased housing supply. Given that I have been urged to stray towards brevity rather than to respond at length, I will leave it there, other than to say that we will have our foot firmly to the floor. When it comes to council housing, we have of course built twice as much since 2010 than the Labour Government built during their 13 years in office.

• Mr Speaker

  I say to the House that I have not detected much beetling taking place. I exhorted colleagues to beetle across to the Chamber if they wished to take part in the next debate, but by my reckoning, fewer than half the would-be contributors to that debate have landed in the Chamber. I hope there will be some beetling or toddling of a hasty kind pretty soon.

• Antoinette Sandbach (Eddisbury) (Con)

  Hundreds of families in my constituency have benefited from Help to Buy, and I very much welcome the changes in stamp duty. How many people in the north-west have benefited from those changes?

• Mel Stride

  I thank my hon. Friend for her question. Mr Speaker, at one point you wanted me to respond rather quickly. If you now wish me to go a little more slowly to allow others to attend the Chamber, I am at your disposal.

• Mr Speaker

  That is extremely accommodating of the right hon. Gentleman, and I would expect no less of him. He can rest assured that the next debate will start no later than 12.30 pm, and preferably earlier, notwithstanding the fact that his own erudition is endlessly intoxicating.

• Mel Stride

  Thank you, Mr Speaker. My hon. Friend asked about the north-west, where 6,900 individuals benefited from stamp duty relief between 22 November and 31 March this year.

• Mr Speaker

  Things are hotting up now.

• Dr David Drew (Stroud) (Lab/Co-op)

  My area has many thousands of extant planning permissions that have yet to be brought forward. How will the Treasury try to get those planning permissions to a state where we can build houses? Is it about time that we had a sensible debate on land value taxation?

• Mel Stride

  The hon. Gentleman raises an important point: there is little point in land that has planning consent if properties are not swiftly built on it. My right hon. Friend the Member for West Dorset (Sir Oliver Letwin) is conducting a review into exactly that matter, and we will come to the House in due course with our proposals.

• Jeremy Quin (Horsham) (Con)

  Horsham has very high house price multiples, and I welcome the Government’s efforts to help first-time buyers with that vital first step on the ladder. I also welcome the impact of that policy from a macroeconomic perspective. The Financial Policy Committee at the Bank of England has talked about broadening home ownership as a way of encouraging and improving financial stability. That should have an important impact, which I also welcome.

• Mel Stride

  I thank my hon. Friend for his kind words. As well as the many advantages and benefits of home ownership for individuals, society and the economy, his point about financial stability is right and another reason why the Government are determined to make progress.