A big cut in stamp duty for first-time buyers is being considered for next month’s Budget, the Standard has learned.
The plan is worth thousands of pounds to hard-working young people struggling to get on the property ladder. It is among “bold measures” being studied by Chancellor Philip Hammond for a Budget that will aim to help people in their twenties and thirties and restore “intergenerational fairness” to the system.
Stamp duty is a massive extra cost for people trying to buy their first home, especially in London.
It means a tax bill of £11,427 for the average first-time buyer in the capital, according to the Land Registry, which recorded the average price paid by new entrants to the London property market as £428,546. Even a starter flat costing £250,000 attracts a stamp duty bill of £2,500.
Making this one big change to stamp duty could help first-time buyers
Mr Hammond is looking for ways to restore young people’s faith in the system at a time when senior ministers fear the link between working hard and getting on has been badly weakened.
Ministers say even young professionals on good money in London feel they are missing out on things their parents took for granted, including buying a home.
Cutting stamp duty is among ideas put forward by backbenchers that are being considered in detail. At the same time, No 10 is pressing Transport for London and other public bodies to release unused land for homes to be built on.
“The Budget is a good opportunity to seize the political initiative domestically through bold measures on issues like housing,” said a Tory source.
“A stamp duty cut for first-time buyers would help all those in London whose starter homes are above the threshold of £125,000.”
However, without an increase in new homes, a stamp duty cut could backfire by driving up prices. A stamp duty holiday was used by John Major to revive the market in 1992, and big cuts for young families were advocated by the Tories and picked up by Gordon Brown in 2005. However, Treasury studies have cast doubt on the benefits of cuts unless supply is also boosted.
Tory former minister David Willetts told BBC Radio 4’s Today programme: “If you are 30 now you are probably earning less than someone who was aged 30 10 years ago. Anything that rebalances and helps young people, I’d be in favour of.”
But he said tight public finances meant taxes would have to rise on older people if the young received help: “Any help you give to one part of the population does have to be offset by increases on others.”
Other Budget measures could include a boost for the AI and biotech industries, seen as sectors that can thrive after Brexit.
Mr Hammond believes that the economy is set for a “super-surge of investment” once a deal is struck with the European Union to secure a transitional period after the UK leaves in March 2019.
A number of firms have postponed investment decisions while they wait for the dust to settle on negotiations between Britain and the EU. Once the deal is done, even if it is only a transitional arrangement, they are likely to go ahead with the investment in new plants or equipment and take on staff.
Stamp duty is charged on all homes over £125,000, which means it hits hardest in London. It is charged at two per cent on the value between £125,000 and £250,000, rising to a marginal rate of five per cent above £250,001, then 10 per cent above £925,001 and 12 per cent after £1.5 million.
That means the average purchase in London costing £490,000 results in a £14,000 bill. For £1 million homes, the bill is £43,000.
-What difference does it make to Green belt Purposes if it is publicly or privately owned. With land value capture as proposed in the manifesto zero difference.
-Some publicly owned sites in the Green Belt are inaccessible and terrible places for new Housing – conflict of interest
-If a site needs to be released and meets the exceptional circumstances test it should be whether or not publicly or privately owned. Dropping the test for publcily owned land would make no difference, as the test is met for suitable sites as the need is acknowledged. Dropping the test would have one effect only. To prioritse unsuitable government owned sites.
-Under the NPPF brownfield sites in theGreen Belt can go for housing anyway – most publicly owned sites are brownfield – so it is an announcement for show more than anything else.
-Some Green Belt Land is Needed – but from my GIS based analysis the vast majority will need to be outside the Green Belt – as so much of the Green Bet around London is protected as AONB etc. and most accessible sites near stations are already developed. I will be published an analysis of this soon. An Analysis showing that around 7 times more Green Belt should be created for every area of Green Belt lost
Large swathes of protected green belt land could be bulldozed for housing under plans being considered by the Treasury.
Ministers and officials are examining radical proposals to release public land in the green belt to help ease the housing crisis.
Officials believe the scheme could be self-financing, as land can jump in value more than 100-fold if it is re-designated for housing.
Under one proposal, the government would use the increase in the value of the land to pay for new housing and supporting infrastructure.
The Treasury could also try to divert part of the windfall gain currently enjoyed by private developers when they are granted planning permission.
Large swathes of green belt land across the UK could be bulldozed and used to build homes, to ease pressure on the housing crisis
But it will face fierce opposition on the Tory benches, with several cabinet ministers bitterly opposed to any move that would weaken protection for the green belt.
Earlier this month, the Prime Minister pledged to dedicate her premiership to tackling the housing crisis.
Senior Tories believe it is their best hope of winning back the support of the under-40s.
Mrs May will host a major housing summit in No 10 tomorrow, with developers, councils and housing associations asked to come up with ideas to boost house building.
England’s 14 designated areas of green belt land cover about one-eighth of the country and were designed to prevent urban sprawl. Despite the name, only part of the land consists of green fields.
The Campaign to Protect Rural England says the green belt ‘provides a breath of fresh air for 30 million people’.
But critics argue that much of the land has little landscape value. Using just a small part of it could release land for hundreds of thousands of new homes close to existing towns and cities.
A study by the government’s former housing tsar Kate Barker found that agricultural land in some parts of the country could rocket by up to 150 times its value if it was granted planning permission for housing.
Chancellor Phillip Hammond (pictured) could include the radical proposal’s in next month’s budget
She called on ministers to find a way to ‘capture’ some of the windfall gain for use by the state.
The idea is one of a string of eye-catching proposals being considered for next month’s Budget.
Ministers are also examining whether to allow local authorities to borrow more money to build a new generation of council houses.
Chancellor Philip Hammond is under pressure to intervene to ease the financial pressure on students, with some ministers calling for existing student debts to be written off and replaced by a graduate tax.
And, in a bid to tackle so-called ‘intergenerational fairness’, Mr Hammond has investigated the possibility of cutting income tax rates for the under-30s to make it easier for young people to save a deposit for a house.
One government source yesterday said the Chancellor wanted to unveil a ‘radical Budget – something that is a big offer to the nation’.
The source added: ‘It means memorable stuff that changes thinking and changes people’s futures.’
Communities Secretary Sajid Javid, who is in charge of housing policy, and Work and Pensions Secretary David Gauke are among those urging the Chancellor to be bold.
However, others are urging caution and warning the Chancellor that he could be out of a job if he makes a mis-step.
Alarmed to read this in the new draft National Infrastructure Assessment by the NIC released on Friday –. https://www.nic.org.uk/publications/congestion-capacity-carbon-priorities-for-national-infrastructure/
The high costs of committed investment on the main inter-city routes, as well as of simply maintaining the existing network, limit the scope for expanding rail into new markets.’(page 81)
– despite on page it stating on page 70. The Commission’s modelling projects that, for Great Britain as a whole, road usage will grow by between 37-61 % by 2050 and rail use by 12-43%.
More alarmingly on page 81 it seriously suggests transferring railfreight to road
‘An argument for shifting freight from road to rail is often made on grounds of congestion and environmental benefits. Rail freight will always have its place, and some enhancements may be cost-effective, but the Commission believes the pilots of “platooning” truck convoys on motorways and major A roads may open the way to radical improvements in the efficiency and capacity of major freight distribution by road in the future (see Chapter 5). This would free up rail capacity for enhanced commuter and inter-city passenger services. The Commission will report further on this in the future.
Rail freight is already increasingly limited by network capacity as passenger demand increases. The issues with mixed traffic on the network are well documented – freight trains travelling at 70mph on the same track as passenger trains travelling at 125mph results in a significant capacity constraint.50 Whilst freight can travel at night in some areas, this competes with maintenance work, which also needs access to the track at night.
They seem to swallowed all the cool aid and myths about railfreight
Their misunderstanding seems to come from their selective misreading of data from the DFT https://www.gov.uk/government/statistical-data-sets/tsgb04-freight using a dodgy spreadsheet model – coming to precisely the opposite conclusion of the National Freight Strategy (2016). https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/552492/rail-freight-strategy.pdf which uses the same data.
This probably represents a lack of specialism and expertise in railfreight amongst the commissions limited staff.
They don’t seem to understand that
– platooning is planned, and is far safer and easier, on rail see the Rail Delivery Group Plans https://www.rssb.co.uk/rts/Documents/2017-01-27-rail-technical-strategy-capability-delivery-plan-brochure.pdf There is no comparative advantage here from HGV platooning.
-How is platooning 50 trucks on the slow land of a motorway any different than a dedicated corridor such as rail, as the slow lane then becomes impossible to overtake on or use by car traffic, except at many times the particulate matter pollution, energy cost and maintenance cost of rail http://www.bettertransport.org.uk/media/11-july-2016-serious-obstacles-to-HGV-platooning I would recommend that the commission model a shift or rail paths to platooned trucks from the WCML – to the M1 – assess its capacity and model the two BCRs.
-That railfreight has the highest benefit cost ratio of any category of transport project (over 5.6) -Source institute of mechanical engineers 2016 https://www.imeche.org/docs/default-source/1-oscar/reports-policy-statements-and-documents/uk-freight—in-for-the-long-haul.pdf?sfvrsn=2
-The ‘last mile argument’ applies equally to public transport. You would argue that we need to shift public transport to cars because it can’t reach the last mile? A combination of SFRIS and urban consolidation centres means that as much as possible of medium to long distance routes go by rail and the common problem of road haulage trucks being ½ loaded and 30% of the time empty is solved.
-The case for rail rests on mid-long distance trips – the area where there is most potential for shifting from road to rail
-As Freight on Rail demonstrates it is a common myth to assert ‘Even if rail freight were doubled, freight travelling by road would only drop by a few per cent’ On the contrary, rail freight can make significant in-roads into long-distance HGV trips (which account for the majority of tonne kilometres as well as 50% of total lorry mileage). It is these HGV trips (at the margin) which most affect the trunk road network. This is because Government figures show that nationally almost 30 per cent of lorries are driving around completely empty and overall HGVs are around 50% loaded hence the road haulage reductions are non linear – simple spreadsheet models wont show this up – national logistics models (for example in Cube) as done for example in several national transport strategy such as Indonesia and Indonesia do (both done by the worlds leading logistics modeller Len Davies) – Source DfT empty running figures & Centre for Sustainable Road Freight (CSRF) report December 2014. The correct modelling, which the commission seems unaware of is in the AECOM/Arup model commissioned by DfT in 2016 https://www.arup.com/publications/research/section/future-potential-for-modal-shift-in-the-uk-rail-freight-market This includes recommendations for 1.5 billion of rail freight investment estimated to save – in terms of carbon price alone let alone reductions in congestion and increase in speed of delivery – of over 150 million pounds. It is the carbon savings of road to rail transfer which help give it such a high BCR. It seems the commission has not modelled the negative carbon cost of rail to road transfer
– The typical freight train matches the speed of semi-fast passenger trains and thus takes a similar amount of capacity, express trains and mail trains run at 110mph whilst the latest intermodal trains can now do 90mph and new coal wagons are designed for operation at 75mph. So why base an analysis on old coal trains which are rapidly dying out. As in Edwards Watkins vision for the Great Central Railway express freight and regional metro services can travel at the same speed on the same track leading to no decrease in ‘strategic capacity’. Many old coal trains are now being repurposed as fast logistics use.
– The largest freight trains in the UK can remove up to 160 HGV journeys from our roads – Value of Freight July 2013 Network Rail
Three things the commission have got right
- Old style bulk haulage is a dying market – except for construction and demolition waste – so there is a strong case for rail freight in growth corridors
- New technologies require a rethinking of conventional modal carbon and energy assumptions – however physics will always still favour rail
- There are conflicts between rail freight and rail passenger paths – in some cases where there is a conflict passenger paths must come first. However this could result in unacceptable road congestion on key parts of the motorway network already suffering from unacceptable junction hopping. The answer is to build new rail freight paths on restored raillines, shared with regional metros running at the same speed (as per Great Central Restoration – which links naturally to SFRIs and logistics hubs such as DIRFT, Magna Park and Hams Hall) and especially high BCRS for dedicated dynamic freight loops and chords with new technologies allowing freight trains to reieneter lines at speed – as several of the above reports suggest.
We therefore recommend that the NIC study and review their position on railfreight as there is already a – justifiable- backlash brewing from the rail freight industry.
Looking at national logistics strategies and corridor growth studies around the world we fin in Malaysia, India, China, The Silk Road, Indonesia, indeed everywhere they are based around logistics modelling, increasing use of inland poets, SRFIs, Urban consolidation centres and Special Economic zones (freepoerts) are uniquely the NIC approach the correct one here? Sadly it seems more likely the NIC in this one area in an otherwise exciting and visionary report, are the ones who have made a mistake due to lack of expertise.
Like the Demantia Tax another daft idea
Philip Hammond is planning a Budget raid on older workers to pay for tax breaks for younger people as he battles to save his job. The Chancellor of the Exchequer is understood to be examining ways to link tax to age to promote “intergenerational fairness” in next month’s Budget.
Tax breaks would be offered to workers in their 20s and 30s, paid for by cutting reliefs for older and better off workers.
One Whitehall source said the Budget, to be unveiled on November 22, would be a “bold” attempt to “restack the deck for the next generation”.
The policy, already dubbed a “tax on age”, will be controversial because it will target voters who are more likely to vote Conservative. The Tories’ disastrous election result in June was blamed on a poorly-thought through “dementia tax”.
Workers in their 20s and 30s need a tax break to pay for student debt – which of course means they cant save in many cases for a deposit on a home. But higher marginal rates for workers in their 50s and 60s is not a good idea. Large amounts of tax revenues come from higher paid and highly experienced workers in this age bracket. Who in many cases can work in any country that will take them. Therefore the tax take drop will be disproportionate. Also it will fall hardest on the old and asset poor, particularly that bracket of post boomers in their 40s who could not save for a deposit on a home, are asset poor, and with higher rates going into their 50s might never do so. Such a policy would seem to be a precision guided weapon on the swing voters the tories need to attract.
It, as ever, it is much better to tax what cant move, fixed wealth and assets such as land. A programme which could be said, at least partially, to be in the manifesto with its promise for the state to take unearned uplifts in land value and would chime perfectly with the governments agenda of housebuilding. A tax of assets with the take from development land paying for infrastructure – the programme of the new National Infrastructure assessment just announced by the NIC, plus New Towns Garden Cities to house the 700,000+ overspill from London plus 500,000+ from Birmingham, Oxford, Cambridge, Bristol and other Growth Towns (which modelling shows could add as much as 2 1/2-4% to GDP), and a tax on existing houses paying for a tax break to the young – providing and its a big qualifier they only get the relief if they pay down debt or save for a deposit on a house, would be a bold move politically impossible to resist. It would also massively increase capital formation in the UK, ringfencing it to UK projects (construction and housebuilding) which banks couldn’t take overseas – just what we need in Brexit Cliff uncertain times.