A Tory motion to scrap stamp duty has been defeated following a heated Commons debate – but MPs from all parties agreed it is ‘a bad tax’ in need of reform.
The motion from Mel Stride, shadow chancellor of the exchequer, called on the government to reduce public expenditure to fund the abolition of stamp duty on primary residences.
Stride said the ‘horrendous and terrible’ tax ‘gums up’ the entire system of house purchasing, reducing supply for first-time buyers while blocking the aspirations of growing families who want to upsize and ‘empty nesters’ who want to downsize.
A ‘huge advantage’ of abolishing stamp duty, Stride added, would be the generation of more transactions to the benefit of conveyancers, surveyors and estate agents. ‘Above all’, he added, ‘it will increase the effective supply of housing’, which he said would lead to a fairer society and stronger economy.
Acknowledging stamp duty ‘is hardly a popular tax’ which is imposed during the ‘complex and stressful’ homebuying process, chief secretary to the Treasury James Murray pointed out it had raised £13.9 bllion in the last financial year and said Tory proposals were ‘simply not serious’.
‘If there was a cost-free way to get rid of stamp duty, I would not expect long queues of people lining up to keep it’, he said. ‘But there is, of course, no cost-free way of doing so.’
Liberal Democrat deputy leader Daisy Cooper agreed stamp duty ‘has all the hallmarks of a bad tax’ that stops people from moving, but said abolishing it is not a viable solution – and to do so would have a negative impact on homebuyers.
‘There is a strong case for looking at reforming or scrapping stamp duty all together, alongside other property tax reforms and moving to a land value tax’, she said. ‘Indeed, some commentators suggest that scrapping stamp duty and council tax together and phasing in a land value tax over time could be one way to move ahead.’
“Even if people cannot agree on what should replace stamp duty, they can agree on this: if we change one tax in isolation, there are knock-on negative effects. Far from giving more people the security of home ownership, this measure in isolation would put it further out of reach.
“How do we know that? We know it because there was a big surge in house prices during the temporary stamp duty holiday in 2020-21; it had a negative impact on house buyers.”
Andrew Lewin, Labour MP for Welwyn Hatfield, welcomed a debate focused on boosting homeownership – but said more homes, not scrapping stamp duty, was the answer.
“If we seriously want more homeowners, the real answer lies in building more homes of all tenures; in offering mortgage guarantees to help those who earn enough but cannot raise the deposit to get on the ladder; in continuing to support low-cost home ownership models, such as shared ownership; in planning reform; and in embracing a new generation of new towns.”
In response, shadow minister for education Saqib Bhatti said the government would not meet its housing targets, adding:
“They are killing off aspiration and confidence in the economy, and house builders will not want to meet the targets – unless, of course, they are met with huge subsidies.”
Pointing out ‘most serious economists’ agree stamp duty is a bad tax, Bhatti said the Tory’s funded policy should be ‘something we should all take seriously’.
However, Rachel Taylor, Labour MP for North Warwickshire and Bedworth and a former property solicitor, said the Conservatives’ argument was false and abolishing stamp duty would have little impact on the purchase of average-priced homes.
“I am not saying whether stamp duty is a good or a bad tax. I am saying that I do not support simply abolishing it without any thought about the impact that that will have on the poorest people in our society.
“The Tories have dressed up this fantasy tax cut as standing up for first-time buyers, but as a former property solicitor, I can tell them for a fact that that argument is completely false. In my constituency, a first-time buyer purchasing a property at the average price pays no stamp duty. This tax cut would be of no benefit to them whatsoever.”
James Cleverly, shadow secretary of state for housing, communities and local government, accused Labour and Lib Dem MPs of ‘contorting themselves’ to find excuses not to replace stamp duty. He added:
“I genuinely do not understand why. Some 2.8 million people could release their homes on to the market; if each of those homes had two or three spare bedrooms, that would immediately eclipse the 1.5 million homes that Labour is desperately trying to convince the country will be built under its tenure. It could be done almost immediately, without a brick being laid, and – more importantly – without the need for any Government subsidy.”
Closing the debate, economic secretary to the Treasury Lucy Rigby said the Conservatives’ motion was ‘fundamentally flawed’ and reiterated the government’s commitment to building 1.5 million new homes.
In a message reminiscent of David Cameron’s 2015 Tweet offering a choice between ‘stability and strong government’ with the Conservatives, or ‘chaos with Ed Milliband’, Rigby concluded:
“We are a government who will not duck the difficult decisions but face into them, because that is the only way that we will deliver a decade of national renewal and a thriving economy for the people of this country.
“That is what today’s debate is about: backwards with fiscal irresponsibility from the Conservatives or forwards with economic stability, investment and reform under this Prime Minister and this Chancellor.”
The Opposition Day motion was defeated by 326 votes to 103.
One Response
You cannot abolish Stamp Duty and take a view on £13 billion. Opposition for opposition sakes is not serious. If you are going to oppose, do it seriously and come up with solutions.