Commons rejects Conservative call for scrapping of stamp duty land tax

The motion “called on the government to reduce public expenditure to fund the abolition of stamp duty land tax on primary residences purchased by UK residents, in order to get Britain working, to grow the economy and to give people a stronger stake in their communities through the security of home ownership.”

329 MPs (mostly Labour) voted against the motion while 103 (mostly Conservative) voted in favour. The Liberal Democrats abstained.

The Shadow Chancellor Sir Mel Stride began the debate by accusing the Labour government of economic mismanagement and describing the Chancellor as having “thrown herself headlong into a colossal black hole entirely of her making.” He claimed Labour had “trashed our economy”, adding that “[t]he costs of servicing that [national] debt are now running at £100 billion a year, rising to £130 billion across this Parliament”.

Stride considered SDLT “one of the worst taxes in our tax system,” quoting the Office for Budget Responsibility’s (OBR) estimate that “a 1% increase in stamp duty would lead to a decrease of between 5% and 7% in the number of transactions.” He urged the government to reduce public expenditure to fund the abolition of the SDLT on primary residences, quoting Paul Johnson, former director of the Institute for Fiscal Studies, who said SDLT also “acts to reduce effective supply for everyone.”

Conservative MPs, including Dame Harriett Baldwin, Sir Geoffrey Clifton-Brown, Dr Caroline Johnson, Bob Blackman, Dr Luke Evans, Kit Malthouse and Blake Stephenson, supported the Shadow Chancellor’s remarks, with Baldwin highlighting that “a range of tax specialists… endorsed abolishing stamp duty.” Clifton-Brown said that the government was not only “taxing young people’s jobs… but taxing their chances of owning a home through the increase in SDLT.”

Johnson believed that SDLT “gums up mobility,” making it harder for people to move. Evans cited research suggesting that abolishing SDLT could unlock downsizing among older homeowners. Blackman described the housing market as “virtually stagnant,” suggesting that SDLT was a major barrier to transactions.

Leading for the government, the Chief Secretary to the Treasury, James Murray, acknowledged that SDLT is “hardly a popular tax”, saying: “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. But there is, of course, no cost-free way of doing so”. He argued that if the Conservative Party proposes to abolish a tax that raises nearly £14 billion a year, “it needs a plan for doing so”.  He considered the opposition motion “half-baked,” warning that it echoed the “economic recklessness” of Liz Truss’s premiership. “Three years on from their disastrous mini-Budget, they have learned precisely nothing,” he claimed.

Connor Naismith (Lab) intervened to highlight a lack of clarity from the Conservatives regarding how they would finance this tax cut. He referenced remarks made at the Conservative Party conference about potentially introducing an Australian-style state pension system, suggesting these comments might offer ‘some clues’ of how the policy could be funded.

Liberal Democrat Treasury spokesperson, Daisy Cooper, labelled the UK tax system a ‘mess’, and ‘unfair’, saying that it is “riddled with cliff edges that distort behaviours and create inequities”. She believed that SDLT has “all the hallmarks of a bad tax”. However, she did not back the Conservatives’ motion, arguing that it lacked detail on where spending cuts would be made.

Cooper said there was “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”. This could be “one way to move ahead” she suggested, but the Conservatives would need to wait to read her party’s tax plans.

Jonathan Hinder (Lab) supported “serious property tax reform”, but criticised the Conservatives for not tackling “the most unfair, regressive tax in Britain, which is council tax.” He said, “Someone living in a £1 million London townhouse will pay £1,000 less per year in council tax than a constituent of mine living in a house worth £250,000.” He called this “outrageous” and urged the Conservatives to focus on council tax if they were serious about regional inequalities. He added that “we need a more proportional property tax”.

Likewise, Chris Curtis (Lab) opposed the motion and argued that “council tax is consistently the most unpopular” property tax. He called for “an honest conversation about tax reform, including reform of property taxes” and said, “If we look at only one half of the equation and simply cut stamp duty, we will tilt the system further in favour of the wealthiest households... while telling lower and middle-income families elsewhere that there is nothing in the system for them.”

On the other hand, Kit Malthouse (Con) described SDLT as “a tax on decision making” that “skews people’s ability to conduct their life as they wish.” He argued that “punitive rates of stamp duty do to the housing market precisely what none of us wants them to do, which is to reward scarcity.” He believes that the tax is “pro-cyclical and crashes when the government need it most”, adding that during the 2007-08 crash, stamp duty receipts fell by 60%. Although there was a brief surge in receipts recently, they have since declined significantly.

Another Conservative MP, Blake Stephenson, highlighted that since 2003, “there has been a 224% increase in the cost of buying a home; average earnings have risen by just 190%.” He argued that, “[b]y abolishing stamp duty on primary residences, we can make it more than 2% cheaper” for families to buy the average house.

Andrew Lewin (Lab) stated: “If our objective is to give millionaires a tax cut, abolishing stamp duty in one sweep is a good way to implement that policy.” He urged rejection of the Conservatives’ motion in favour of ‘a package’ of reforms to “get Britain building again”. Jim Dickson (Lab) proposed adding more council tax bands for higher-value properties.

Bobby Dean (Lib Dem) argued that scrapping SDLT “will not be a silver bullet” and called for “a holistic approach to redesigning the property tax system.” He labelled the proposal “an unfunded tax cut that lacks real credibility.” Another Lib Dem, Gideon Amos, supported this message, adding that the vast majority of first-time buyers would be completely unaffected by the Conservatives’ proposals: “by triggering a big increase in house prices, the policy would mostly benefit those who are selling homes at high prices.”

Sir James Cleverly, Shadow Secretary of State for Housing, Communities and Local Government, responding to Labour and Lib Dems' criticism, saying: “We do not fund a tax cut, because it is the British people who fund government spending, so when government spending is eased, it eases the burden on the British taxpayer.” He argued that “[w]e need liquidity in the property market” and that “removing the stamp duty land tax will achieve” this. He added that, by doing so, around 2.8 million people could release their homes onto the market. The shadow minister urged those MPs who want to ‘do right’ by small businesses and future generations to support this motion and scrap the “deeply counterproductive tax”.

The Economic Secretary to the Treasury, Lucy Rigby, called SDLT “an effective tax that raises billions of pounds annually,” stating its contribution is “vital to the upkeep of our public services.” Abolishing it “would take billions out of the public purse—£13.9 billion alone.” She vowed that the government would “face into” difficult decisions to deliver “economic stability, investment and reform.”

You can read the full debate here.