Property Taxes

I inform the House that I have not selected the amendment. I call the shadow Chancellor of the Exchequer.

I beg to move,

That this House notes recent reports that the Government is considering a wide range of increases to taxes on property; notes the Prime Minister’s commitment last year not to impose Capital Gains Tax on primary residences; and calls on the Government not to introduce an annual property levy which would tax the family home, higher rates of Council Tax, or a land value tax, or to lower the thresholds or further increase liability to Inheritance Tax, for example, by changing the seven-year gift rule.

I trust you had a good recess, Mr Speaker. I am absolutely certain that the Deputy Prime Minister also had a good recess. We saw many photographs of her down at the seaside, just off the coast in a rubber dingy—rather like many of the other photographs we saw over the summer, given this Government’s reckless policies on illegal migration. She was probably celebrating the acquisition of another property for her property empire, but that celebration was perhaps slightly tinged with a nagging doubt as to whether she had indeed paid enough stamp duty. Well, we will get to the bottom of that in due course.

Those who could not avoid paying the taxes imposed by this Government are businesses right up and down our country, many of which I took the time to visit during the recess. In the leisure sector alone, some 80,000 jobs have been destroyed by the national insurance rises, and this has particularly affected those taking their first job, younger workers, part-time workers and female workers. Jobs are being destroyed.

While the Deputy Prime Minister was lounging on her boat with her wine, this Government were all at sea, like a cork bobbing on the tide, with no control over the events swirling around them. When it came to the economy, although eclipsed by the calamities around illegal migration, we saw recently the panicked reshuffle of the Treasury Front Bench. I offer my congratulations to the Exchequer Secretary to the Treasury, the hon. Member for Chipping Barnet (Dan Tomlinson) and warmly welcome him to his new role. However, I should also tell him that he is joining a sinking ship, whose captain has just had all her authority stripped from her, while all his comrades down below deck are fiercely trying to bail it out. I also offer a fond farewell to the former Chief Secretary to the Treasury, the right hon. Member for Bristol North West (Darren Jones), who no doubt thought he was very clever when he leapt off the sinking ship. He will not be feeling quite so clever when he discovers that the place to which they have sent him is even more dysfunctional than the Treasury Front Bench.

Among all this news of arrivals to our shores, we have had a cruel summer of speculation around tax. We have seen in the skies clouds of kites flown largely by the Treasury as to what taxes it is going to put up. It has all been tax, tax and tax. I am reminded of the Beatles’ song “Taxman”:

Will my right hon. Friend give way?

I will do so momentarily.

It started with broken promises. This was a party that said during the run-up to the general election that it had no intention of raising taxes left, right and centre, and yet within a month or two, this Government did precisely that, with devastating consequences: tax rises on businesses that stifle growth. They talked down the economy by confecting a £22 billion black hole that did not exist. What an irony it was that it was they who brought in the Office for Budget Responsibility to decide whether that £22 billion black hole existed and that the OBR said it could not legitimise the claim—the Government were wrong.

What happened with spending and borrowing? It got completely out of control. The combination of passing on price rises because of the national insurance increases, and the extra borrowing and spending, has led to higher inflation. We are an outlier when it comes to inflation.

Will the right hon. Member give way?

In a moment.

That in turn has seen interest rates higher for longer and the servicing costs on our national debt now running at over £100 billion a year—more than twice our defence spend. I will now give way to whoever was trying to intervene behind me.

Would my right hon. Friend agree that correcting this loss of market confidence demands decisive action from the Government at the Budget, and that that decisive action cannot be taken solely on the tax side? The tax side is what has driven us into this loop. We need decisive action on spending and particularly on welfare if we are to see some restoration of market confidence and get ourselves out of this rut.

My right hon. Friend, as ever, is absolutely right. The reality, as we see in the bond yields at the moment, is that the markets have no confidence in the ability of this Government to get on top of spending. We saw the farce of a Government who came into office scrapping the £5 billion of welfare savings that were already baked into the OBR’s scorecard because we had brought them in, and attempting to bring forward their own reforms only for their Back Benchers to vote them down. My right hon. Friend is so right; this Government do not have the will or the plan to deal with spending, and that is at the heart of the reason why we will all be punished and pay the price of more taxes come the Budget in November.

I commend the shadow Chancellor for bringing forward this subject for debate. He clearly shares my deep concern that I have, and that I think everyone in this Chamber should have, that the Government are considering a further tax on property, despite the fact that the Prime Minister committed to not imposing capital gains tax on residents of this United Kingdom of Great Britain and Northern Ireland. Last year, it was the family inheritance tax; this year, those who own property—those who have scrimped and saved for their house, those who are middle class, those hard workers—have now become the latest target of Labour tax policy.

The hon. Gentleman is entirely right. Of course, if the Government have got into a situation where they are having to scrabble around and look at property taxes, as we are debating this afternoon, than really nothing is safe from the taxman under this Government.

I gently remind the right hon. Member that since this Labour Government came to power, interest rates have been cut five times—a vote of confidence in our Chancellor, fixing the foundations of our economy. That saves the average family on an average tracker mortgage in my constituency over £100 a month. Will he remind me what happened to interest rates when his party was in power?

As the hon. Lady will know, interest rates are one of the key tools in monetary policy and are applied to bring down inflation. While she is right that there have been five reductions in the level of the base rate, there should have been many more. The reason is—the evidence is there—that this Government have stoked inflation. Inflation is still rising. It is at twice the level or thereabouts that it was on the day of the general election. When a Government stoke inflation, we pay the price through higher interest rates, and that is precisely what has been happening.

My right hon. Friend is right to highlight the massive impact of these tax rises on so many families and businesses up and down the country. Will he comment on how we can have a Deputy Prime Minister who has admitted avoiding paying the tax that she owed and who continues in office? And this, from a party that called for the resignation of people for far lower offences! Does that not expose the rank hypocrisy that seems to run right through this Government?

If the right hon. Lady wants to make the rules, she should live by them. That message will go out to businesses and families up and down the country. There is no way that they can avoid the juggernaut of taxes that are coming down the track.

In return for the right hon. Member’s generosity in giving way, I will say something pleasant about the last Conservative Government. [Interruption.] I know—wait for it! It will be just one thing.

The last Government allowed councils like Westmorland and Furness, run by the Liberal Democrats, to double council tax on second homes. It is right to do that because excessive second-home ownership annihilates communities in the lakes and the dales, the west country and elsewhere. But can I encourage the Conservatives and the party in government now to do something that would do much more to limit the number of second homes than that: bring in a new planning category of use, so that national parks and councils can manage the numbers and save communities?

I thank the hon. Gentleman for his kind words about the Conservative party—I am sure that they are deeply felt and very genuine. What the Deputy Prime Minister should be doing is delivering more homes. It is quite clear that the target of 1.5 million homes, which the Government claim they will deliver at the rate of 300,000 a year, will not be met. I am quite happy to be proven wrong, but I very much suspect that I will not be, unfortunately.

We have ended up in a situation in which a huge black hole is looming. The National Institute of Economic and Social Research puts it at possibly as much as £40 billion. The economic mismanagement of the Labour party is a recurrent theme. In the October Budget—the Government’s first—there was headroom of about £10 billion against the fiscal rules. That, plus £4 billion more, was blown by the time of the spring statement—the emergency Budget. Once again, it appears that considerably more has been blown all over again.

That is no surprise. The U-turns on winter fuel payments and on welfare reform, which we have already discussed in this debate, led to unfunded commitments of around £6 billion—unfunded commitments after the Chancellor had said that the Labour party would never find itself in that position. What she said has simply not happened. What signal does it send to the markets when the Government cannot control spending? In the long-term, it will be interesting to see what the Office for Budget Responsibility has to say about its forecasts for growth. In recent times, 30-year bond yields have hit a 27-year high. We are paying more to borrow than Greece. There is a potential debt crisis looming, and this country could be on the brink—all on Labour’s watch.

The Government inherited bond yields higher than those in many other countries. Right now bond yields are going up in Japan, Germany and the United States. Is the Chancellor responsible for all that?

There is no doubt that under the previous Government there was a need to support the economy. That involved the expenditure of £400 billion, not least on the furlough scheme. I do not remember the hon. Gentleman’s party arguing at the time that we should not do that; in fact, it argued that we should go further still. The Conservative Government stepped in, supported jobs and saved us from going into mass unemployment that many feared would be worse than even in the 1980s, and I take great pride in that. But we are where we are now, and what the Government should be doing is growing the economy, stoking up business sentiment, getting taxes down and getting the economy moving, but they are doing precisely the opposite.

Is not the difference now that we are seeing stagflation—high inflation and the economy not growing as it should be? We are therefore seeing job losses and unemployment going up every month under this Labour Government. Unless they do something drastically different, it will only get worse, and that will impact on our growth prospects and therefore on the prosperity not just of our nation but of the individuals who work and try to thrive here.