Finance (No. 2) Bill

David Drew Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 21st February 2018 Commons Chamber

[Neil O’Brien]

I am pleased to speak in favour of the reforms to stamp duty for first-time buyers and to speak against the Opposition’s new clause. The changes to stamp duty mean that 95% of first-time buyers will pay less tax; in fact, 80% will pay no tax at all. First-time buyers will be getting a tax reduction of up to £5,000, which will be hugely welcomed by younger people in my constituency.

I support this reform for three reasons. The first is that it is part of a wider rebalancing of the tax system towards younger people and people who do not own a home of their own. In that context, it is worth thinking about these measures alongside the measures that we took in 2015 to reform the tax treatment of buy-to-let and second homes. Those reforms increased stamp duty on the purchase of additional properties. So we have this reform, which supports first-time buyers, and we also have a set of reforms that improve fairness and reduce the demand for housing as an investment asset. Together, these reforms tilt the balance of the system towards younger people and first-time buyers. Dare I say that they are redistributive measures, and I am surprised that the Opposition are opposing them? Given that younger people are the most affected by our failure over a generation to build enough houses in this country, it is right that we should tilt the tax system towards them.

Earlier in this debate, my hon. Friend the Member for Croydon South (Chris Philp) offered the Minister a suggestion for a revenue raiser, and I wonder whether I could do the same thing. Perhaps we should go even further in rebalancing the tax system towards young people and consider further reform of the private residence relief. The Minister will recall that, in 2013, we changed the way in which the exemption worked to make the system fairer and to end some of the abuses that happened under Labour, and I encourage him to look again at this issue, particularly given that a number of other countries have tighter restrictions on that important exemption. Such a move would complement the 75 anti-tax avoidance measures that we have already taken, which have raised £160 billion for public services.

The second reason why I support these measures is that, as the Mirrlees review and many other economists have pointed out, stamp duty is fundamentally a bad tax that reduces mobility. Obviously, the Chancellor is unable to abolish it at this stage, given that we are still in the process of cleaning up the biggest deficit in this country’s entire peacetime history and the situation in which, disgracefully, the Government were borrowing a quarter of all the money being spent. None the less, we are making important progress on ending this bad tax. These changes follow the ending of the absurd slab system that Gordon Brown had built up and the £300 million tax cut that accompanied that. This further reduction in stamp duty land tax, this time for younger people, is hugely welcome, and I hope that the Treasury will continue to chop away at this bad tax.

The third reason why I support the measures is that, even as we bring about longer-term reforms to increase supply, they can provide immediate support for younger people and those who do not own their own property. I agree with the hon. Member for Oxford East (Anneliese Dodds) that we must have higher supply. France has been building roughly twice as many houses as this country since 1970, so its house prices have gone up half as fast.

[Dr David Drew (Stroud) (Lab/Co-op)]

I am pleased to hear what the hon. Gentleman says, but why are so many of the housing measures, including support for local authorities, being delayed for a year before being properly implemented?

[Neil O’Brien]

I am afraid that I am not entirely sure what the hon. Gentleman is driving at, and I am conscious of the time.

I support the measures before us because they will provide immediate benefit, and they form part of a wider strategy to support first-time buyers, including Help to Buy, which has helped 230,000 people to get a home of their own, the lifetime ISA, which gives people a 25% bonus as they save for a deposit, the huge support for shared ownership and new supply measures, such as the housing infrastructure fund and the huge increase in funding for affordable housing in the 2015 spending review. My younger constituents will warmly welcome the end of stamp duty for first-time buyers, as will many older constituents—parents and grandparents.

The hon. Member for Oxford East rather made the case against her own measures by drawing on the huge amount of published detail about and analysis of our proposals. I have in my hand the OBR’s estimate of residential SDLT elasticities, and it notes the significant degrees of uncertainty. The creation of the OBR was a welcome reform, because it makes things more transparent, and it is right that the OBR is cautious in its forecasts. We created the OBR because Gordon Brown fiddled the figures and changed the economic cycle and led us to disaster by doing so. It is also right to stress the uncertainty around such measures, because it is fundamentally difficult to model things in the housing market.

When we introduced the annual tax on unoccupied dwellings, which I am sure the hon. Lady supports, we raised four times more money than predicted, so things are difficult to predict. However, my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) has already made the important point that even if we believe that the £5,000 would be entirely capitalised into the price of a house, my young constituents would be £5,000 better off as a result. In Harborough, Oadby and Wigston, that is still a significant sum of money, so I am hugely glad to be able to support these important reforms today and to oppose the Opposition’s amendments.