The dangers of stamp duty are numerous and far reaching
‘Build, Baby, Build’ has become the core mantra of Labour’s growth agenda – an admirable and achievable one given the previous 14 years of failure to get Britain building again. But red hats, glossy comms, and repeated slogans can only go so far when one child in every classroom is in temporary accommodation, and new starts in cities are at an all-time low.
Legislation, such as the Planning and Infrastructure Bill, will go some way to increase the viability of sites which are currently blocking the government’s 1.5 million homes target. This has been welcomed by industry, and young people, and backs up Labour’s cornerstone economic policy. Likewise, the new list of amendments for buildings in London will increase density whilst delivering more affordable housing – despite lowering the required quotient per development. These are reforms so effective that even the Conservatives have opted out of partisan point scoring and criticism.
But there is one significant tax change that Rachel Reeves can make that would unleash a new era of building, and it has nothing to do with developers, brickies, or planners at all – the abolition of stamp duty land tax. So egregious is this tax that everyone from the left-wing New Economics Foundation through to my own right-of-centre organisation, the Adam Smith Institute, are resolutely linked arm-in-arm in our horror at the damage that this 30 year old tax has caused.
The dangers of stamp duty are numerous and far reaching. In the first instance, they trap young families in cramped, smaller homes as they often cannot afford the cash-payment on top of their deposit, especially if their first home is over £300k or it is their next home. It is generationally iniquitous – the price of a house has grown well above wage inflation – to expect young, hard working families today to pay tax on an ever-inflating home.
It also traps lonelier older people into spacious housing after their partner has passed away. Research by Arco shows that 60% of over-65s live in overly-spacious houses – stamp duty is regarded as the primary blocker, alongside emotional attachment, to downsizing. Whilst we grapple with a demographic and loneliness crisis, it cannot be right that our arbitrary and damaging tax system pushes up costs so much for health and social services, whilst also keeping vulnerable people of all ages locked in adequate housing.
Finally, there is the damage that this tax causes to the working people who are our nations builders – bricklayers, electricians, roofers, plumbers, and so many more. Because stamp duty stops the buying and selling of houses, it means fewer houses can be built – that means less secure work, lower pay, and fewer skills being invested into our workforce. It’s no surprise that our construction sector is historically old, as we have historically not been building enough houses to encourage young people into this workforce. If we abolished this tax, we would see 38,000 new homes built every-year, which means jobs on construction sites, and 349,000 new sales every-year, which means more work for tradespeople.
You may ask why I am asking Labour members and activists to scrap a tax which was previously at the forefront of the Conservative Party Conference. The reasons are simple – this is a tax which is holding back the government’s mainstay goal of backing the builders. I am also a young person, who wants to buy a house and raise a family, but like so many others, I am priced out. I may vote a different way, but you and I are no different in what we want to see, where we want to live, and how we wish to flourish.
So Chancellor, the case is clear. Stamp Duty is probably our most damaging tax, and even when budgets are tight, you have the chance to significantly boost the UK’s productivity, give hope to millions of people young and old to live in a house of their choosing. Let’s Back the Building by smashing this tax.
Maxwell Marlow is the Director of Public Affairs at the Adam Smith Institute
Left Foot Forward doesn’t have the backing of big business or billionaires. We rely on the kind and generous support of ordinary people like you.
You can support hard-hitting journalism that holds the right to account, provides a forum for debate among progressives, and covers the stories the rest of the media ignore. Donate today.
