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Sunday, August 10, 2008

The stamp of authority

The Sunday Times reports that the Chancellor of the Exchequer, Alistair Darling has been accused by his own backbenchers of acting “irresponsibly” for creating confusion over proposals for a “stamp duty holiday”.

The Government had attempted to seize the initiative a few days ago by touting scenario of the Government abolishing stamp duty but the failure of the Chancellor to confirm or deny the rumours just created uncertainty and left many house buyers in limbo.

The National Association of Estate Agents (NAEA) said that one in four members had seen agreed house sales fall through as a direct result of the uncertainty. According to the paper, Darling has confirmed that officials are considering the move but insists he will not be “bounced” into making a quick decision. Stamp duty receipts from property sales were worth £6.4 billion to the Treasury in 2006-07. Suspension would enlarge the sizeable hole in public finances.

Personally, I have never been convinced that reform of stamp duty has anything but the most marginal of impacts on the housing market. It certainly does not offer any significant help to those at the lower end of the market seeking to get on the housing ladder for the first time, and that is where government efforts should be directed.

The fact that the number of home repossessions increased by 48% in the first half of this year demonstrates the need to invest the £6.4 billion cost of this reform into affordable housing to buy and to rent not political gimmicks like abolishing stamp duty.

This latest episode illustrates very well how Labour have lost their surety of touch on the economy and that, faced with a impending recession and stagnant opinion polls, they are starting to panic.

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