Kit Malthouse

I am very sorry to hear about the antipathy of the hon. Member for Pendle and Clitheroe (Jonathan Hinder) towards the south-east. I can assure him that it is not reciprocated, and no doubt the London Members who may or may not be present for this debate will have something to say to him about the wealth and welfare of their residents. Since this Government were elected, I have often called to mind the famous aphorism uttered by Ronald Reagan about Governments’ approach to the economy: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” It feels to me as if, with housing in particular, we are moving into the third of those phases. I contemplate with some alarm the idea that in chasing their huge housing target—noble though it is, and shared by the Conservative party—the Government are about to pump enormous subsidies into the housing market in the Budget. That is precisely the wrong thing to do, particularly for a Government who are struggling to create growth in the economy. What the Government seem to have failed to realise is that if we allow capitalism to function—to do what it is supposed to do—it is brilliant at creating abundance. It has been the single greatest tool for alleviating poverty across the world that humankind has ever known, yet here in this country, Governments—not just this Government but, to my alarm, previous Governments over the past 20 years or so—have not appreciated the formula of incentives required for capitalism to function. It is particularly damaging for it not to function within the housing market, and that is especially salient for the United Kingdom, whose economy is so closely tied to its domestic housing market. Looking at the correlation between the two, it is pretty much one to one: if the housing market is doing well, our economy is doing well, and vice versa. That points to the problem that stamp duty poses. I want to raise a few points about this motion, as well as to say that I agreed entirely with the shadow Chancellor’s excellent opening speech. First, stamp duty is not a tax on wealth, or even on property; it is a tax on decision making. It skews people’s ability to conduct their life as they wish to, and it deters decisions from being made within the housing market and bungs it up so that it does not work for anybody, wherever in that market they sit and whether or not they pay stamp duty. For capitalism to work—for a market to work—there needs to be lots and lots of transactions. There needs to be fluidity and liquidity. That is what achieves a steady price and creates abundance; people know that they can take a risk in a market, because they will find a counterparty. Scarcity is what raises prices, and that is exactly the position we find ourselves in at the moment. Punitive rates of stamp duty do to the housing market precisely what none of us wants them to do, which is to reward scarcity. They push people into other forms of economic activity, with the result that they cannot fulfil the wishes and aspirations of their family.