With the leave of the House, I wish to respond to the Minister’s speech. I thank him for eventually making it to the Chamber to move his motion and introduce the debate—just when I thought I had this place sussed out, something else happens to remind me of the many different ways of interpreting parliamentary procedure and rules. I have learned something new today, for which I am grateful.
As we indicated yesterday, once the Chancellor had made the autumn statement, we will support the measures today and the Bill next week. I have seen the draft clauses and explanatory notes—there are only two clauses and one schedule—and we will consider the technical detail ahead of the debate next week, but in the meantime I have a few questions for the Minister. If he cannot answer them today, I hope he will give us further details in time to inform our debate next week.
The reforms to SDLT apply only to residential properties; the previous stamp duty system—the so-called slab system—remains in place for commercial properties. Beyond mere electioneering, what is the Government’s reason for focusing the proposals on the residential market? As he knows, in Scotland, where the Scottish Government will take control of stamp duty next April, the land and buildings transactions tax will apply to both commercial and residential properties, meaning that Scotland will have the system for both types of property, whereas we will retain two different systems. It would be helpful to understand the Government’s thinking and any assessments the Treasury has done on having two different systems.
In the context of corporation tax possibly being devolved to Northern Ireland, where different circumstances apply, have the Government done any modelling on the potential for unhealthy tax competition if we have this differential in the way in which stamp duty operates on commercial property in Scotland and England? It would be helpful to know how much work the Government have done on that point and whether they plan to introduce further proposals.
What assumptions have the Government made regarding house price increases as a result of the stamp duty changes? It looks like we are seeing a 1.4% increase in prices against a 1% reduction in stamp duty at the lower end, and it seems also that the tax take from stamp duty will rely on a 5% annual increase in property prices. Have the Government assessed whether that might price more people out of the property market? As the Minister will be aware, the OBR’s assessment accompanying the autumn statement states that house prices will continue to rise faster than incomes, which will risk pushing home ownership further out of reach for many people. Will he share with us the Treasury’s assessment and modelling in relation to the stamp duty changes and the impact on home ownership and prices?
The last time the Minister and I debated stamp duty—in a debate introduced by the hon. Member for St Albans (Mrs Main) in Westminster Hall—it was one of the only debates the House has had on stamp duty in recent times. It was a good opportunity for Members to raise issues of concern, and we discussed at length the difficulties with the system of stamp duty that the Government have now changed—the slab structure and so-called cliff edges, which no doubt created significant price distortions around the thresholds.
Many Members from all parties, housing specialists and commentators have long complained about the structure of stamp duty. The Institute for Fiscal Studies, the Mirrlees reviews and others all agreed that the tax was badly designed. Furthermore, it has undoubtedly been an increasing burden on buyers. From 1997 to 2005, house price inflation averaged more than 10% a year, and the proportion of property transactions attracting stamp duty rose from about half to more than three quarters over roughly the same period.
Measures to alleviate the burden focused primarily on thresholds and stamp duty holidays: the threshold was doubled in 2005; temporarily increased by £50,000 for one year in 2008; and doubled again for first-time buyers for three years from March 2010. Stamp duty has continued to be a significant burden, however. It has increased by 30% between 2009-10 and 2013-14. We have seen continued growth in the housing market and more people have been brought within the higher tax bracket, all of which have increased the burden significantly. This is therefore a sensible measure, and we will support it.
Measures to alleviate the burden on buyers are welcome, but we are experiencing the worst housing crisis for a generation, and we need much more action on housing supply if we are to get our housing market into better shape and help more young people and families to realise their dream of home ownership. I made this point to the Minister in the Westminster Hall debate as well. I am sure the Government will say that they are taking action on supply through the measures in the autumn statement and in their national infrastructure plan, but most of the announcements made in the flurry of activity over the past couple of days were in fact reannouncements of existing schemes and money, and many of the projects are already in the planning system.
The truth is that this Government have presided over the lowest levels of house building in peacetime since the 1920s. We are not even building half the homes we need to keep up with demand. We also know that home ownership is at its lowest level for 30 years and that, in the next few years, the average deposit is going to rise to £72,000, a sum that is far beyond the reach of many of our constituents, and certainly of my constituents in Birmingham, Ladywood. We needed to see much more action from the Government yesterday on getting homes built as well as on dealing with the issues on the demand side. We have set out our proposals, including a policy of getting 200,000 homes a year built by 2020. It would have been good if the Government could have taken a similarly ambitious approach to house building in their autumn statement yesterday. We also need to deal with the underlying causes of the housing crisis.