Finance Bill

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Mr. Field: I am inclined to respond to my hon. Friend's comment that stamp duty is being used as a cash cow by saying, ''You ain't seen nothing yet.'' There is no doubt that the Chancellor of the

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Exchequer and the Government will use stamp duty on residential and commercial property as a vehicle to introduce a largely redistributive agenda. The Government have every right to do that, but I would be happier if they did it honestly and in an up-front way by projecting an entirely redistributive agenda. Let us have an open debate. I appreciate that now is not the time to have a major debate, but the Government's intentions should be clear.

Mr. Flight: I understand my hon. Friend's redistributive reference, but surely in commercial property the level of stamp duty is a major economic issue and not about redistribution. The real question relates to the impact it has on the success of businesses, jobs and so on.

Mr. Field: My hon. Friend is absolutely right. Business is regarded somewhat differently by each side of the House, and he rightly says that stamp duty has a major economic part to play.

Greater concern will arise over a free market. It is valid for Labour Members to point out that we do not have a free market at the moment. The existence of local authority property and a large number of housing associations, and the fact that a significant number of key workers work in monopolistic public services, ensure that we do not. I know as a London Member—as, I am sure, does the hon. Member for Enfield, North (Joan Ryan), who is silent in her role as a Whip—that great concerns exist in the London market; they exist not only in London, but in other hotspots of the national economy. Key workers in both the private and public sectors are consequently unable to get on the residential housing ladder. The Government's meddling with the commercial property area in clause 108 and others—I know that it is an initiative extended from previous years—is a starting point for further meddling in what is an imperfect property market. However, we should not be at all surprised that it will have, as is always the case with Government interventions, some unintended consequences, particularly I fear on the general economy.

I would just point out that one of my concerns about the nature of my constituency appreciate that my constituency is very unusual is that there are some very deep pockets of poverty. Whenever I point out that I represent an inner-city seat, it always gets one or two wry smiles from those on the Government Benches. It is the most inner-city seat of the lot, but it has some very real pockets of poverty.

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I do not think that there is any easy way out, and my basic thesis is that there is too much Government meddling. However, if they are to meddle and say that areas will be considered as disadvantaged for the purposes of such provisions, in parts of London—and Glasgow as well—one needs to draw tight areas, not necessarily in wards, but perhaps within polling districts. The great worry is that there are genuine pockets, perhaps even of a handful of roads, of poverty that will find themselves outside the context of a disadvantaged area, simply because they are surrounded by some relatively affluent areas. By

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being lumped together, it gives rise to the view that there is no longer such a sense of disadvantage.

I can understand that this sort of meddling plays to a very profitable gallery. It is perhaps not entirely coincidental that the two Members who have previously intervened were both Scottish Members, and I suspect that they will welcome the intervention of their right hon. Friend the Member for Dunfermline, East (Mr. Brown). It strikes me that we shall see much more of such meddling, but Conservatives cannot support it, as a matter of principle.

Dawn Primarolo: The debate on new clause 1 has been very wide-ranging. If I may say so, Conservative Members seemed a little confused about what they wanted to complain about. I think that I got the gist of it by the end: they hate stamp duty and want to get rid of it. The main legislation governing stamp duty was put in place in 1891, I think. The only consolidation that was carried out took place in the Finance Act 1999. For a party that now advocates such strong views on stamp duty, it is somewhat interesting that, given the amount of time it managed to be in Government, it did not actually address some of the passionately and deeply held views that Conservative Members are now expressing.

It is true that stamp duty raises considerable revenue: about £4 billion a year. Some 60 per cent. of that figure comes from residential property, and during the debate on the next clause we shall be considering whether commercial property actually pays the level of stamp duty that is set. The new clause concerned the setting of new rates. It is an interesting approach; having complained about the structure of stamp duty, the Conservatives advance a new clause to change the rates without offering any contribution on whether the structure is right in the first place. That is the huge gulf between the Government and the Opposition on the issue.

I shall consider the groups of points in the order in which they were raised. I turn first to whether the relief will work. In response to the idea that the Government are doing nothing in disadvantaged areas except making some changes to VAT and stamp duty, I say, hang on. Hon. Members are missing a few points there. There is a national strategy for neighbourhood renewal that concentrates, in a range of areas, on regeneration and on narrowing the gap between the most deprived areas and the rest of the country. Key to that strategy is the mainstreaming of Government Department resources into the neighbourhood renewal fund and the introduction of arrangements such as stamp duty and the changes to VAT to support that basic principle.

In terms of success, the measure currently in place was turned on on 30 November 2001. By the end of this April, the number of claims from those disadvantaged areas was running at 15,870. When one looks at the breakdown, one finds that the largest number of claims comes from precisely the areas that one would expect—for example, east London accounted for 1,300 applications, in that short period of time, of all the applications made for London,

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which were running at some 3,300. The relief is being targeted very specifically on areas that need support.

Mr. Hoban: Will the Paymaster General give way?

Dawn Primarolo: I shall give way to the hon. Gentleman before I quote all those in the property industry who support the stamp duty measure, because, in sites like the old Hither Green hospital in Lewisham, it provides precisely the mechanisms that hon. Members have claimed it will not.

Mr. Hoban: The Paymaster General referred to success following the turning on of the tap of the lower rate of stamp duty in such areas. Can she tell us what the transaction volumes were before that tap was turned on? I consider that we can call that a success only if it is one relative to what was happening before that date.

Dawn Primarolo: I agree with the hon. Gentleman's point about measuring the success of the policy. I do not have the figures to hand right now, but I can tell him that the Government have commissioned independent research on the effectiveness of such measures, and on that measure in particular, to examine the policy objectives and whether the measures are working. Although other things may also influence the rate of transactions before and after the turning on of the measure, the hon. Gentleman's essential questions, which I believe are behind his intervention, of whether the measure is working and will work and how the Government will monitor it, are important. We are addressing those points by having that research undertaken on our behalf. It is right that the research measuring the objectives in such a case should be independent.

Chris Grayling: Will the Paymaster General give way?

Dawn Primarolo: Yes, although—forgive me—I am trying not to lose my way. Having ordered my thoughts in a sequence to respond to hon. Members, I am in danger of not maintaining them.

Chris Grayling: My point is important, and I am grateful to the Paymaster General for giving way. What she is saying, therefore, is that we do not yet know whether the measure has had an impact.

Dawn Primarolo: No, I am not. I was trying to be generous to the Committee. I think that the measure has had an impact, but it is perfectly reasonable to make the point that its impact should be considered over a longer period than the first year. I am not saying that it has not worked. Consider what those in the industry say. For instance, Andrew Hume, associate director at property consultants Jones Lang Lasalle, said:

    ''This is very good news. Bigger commercial schemes act as catalysts for the regeneration of areas. This will reduce the entry costs for developers in these areas.''

That was reported in The Independent.

If we look at the question of the old Hither Green hospital site in Lewisham, the Evening Standard reported:

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    ''A redevelopment at Hither Green Lewisham—a self-contained site, formerly a Victorian hospital of 7.5 acres—has been conceived to deliver homes below the £150,000 threshold . . . Bellway's chief executive, John Watson, said the stamp duty relaxation has 'given us encouragement to take on the project'''.

I could go on through the press quoting those in the industry who are operating the scheme.

I understand that the hon. Gentleman might be sceptical about the scheme. However, in one debate the Opposition state that we should listen to the industry because it knows best, but when what it says does not suit the Opposition, they claim that it is not worth anything and should therefore be ignored. I do not take that view because I try to be consistent in listening to what is being said.

 
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