Treasury urged to set out plan to ‘un-gum’ housing amid call to axe stamp duty

Treasury ministers have been urged to say how they will “un-gum” the housing market, as the Conservatives called for an end to stamp duty.

Sir Mel Stride likened Chancellor Rachel Reeves to Captain Mainwaring from Dad’s Army, after a Labour backbench protest earlier this year saw ministers delay their plan to slim down eligibility for the personal independence payment (Pip) until after a review.

But Chief Secretary to the Treasury James Murray described the Tory plan to axe stamp duty as “half-baked”, with the “ghost of Liz Truss” haunting the Commons chamber ahead of Halloween.

“There are choices here,” Conservative shadow chancellor Sir Mel said.

“It does not have to be like this.

“We can actually reduce taxes if we get on top and control government spending. At my party conference, we set out £47 billion of savings across government, including £23 billion in savings across the welfare budget.

“What did the Government do when they tried to tackle the welfare budget?

“They showed us that this is a Dad’s Army of a government with a Captain Mainwaring of a chancellor – no match even for the rabble behind them.

“We know that we need to have responsible tax cuts. That means they need to be funded and they need to lean into growth, and that is why we have announced that were we in government, we would be abolishing stamp duty on primary residences.”

Buyers in England pay stamp duty on their new home if it costs more than £125,000 and is their only residence, at rates of 2% or higher.

First-time buyers pay no stamp duty land tax up to £300,000, with a relief on homes which cost between £300,001 and £500,000.

It brought about £13.9 billion into the Treasury in 2024-25, according to Mr Murray.

The Conservatives used their “opposition day” in the Commons to call on “the Government to reduce public expenditure to fund the abolition of stamp duty land tax on primary residences purchased by UK residents”. MPs rejected their plea by 329 votes to 103, majority 226.

Sir Mel described the tax as “one of the worst taxes in our tax system”, which “stands in the way of younger people getting onto the housing ladder”.

He quoted from former Institute for Fiscal Studies (IFS) director Paul Johnson, who warned the tax “gums up” the housing market.

“It stops people moving to where the work is, to get better jobs to further themselves,” Sir Mel, a former work and pensions secretary, told the Commons.

“Who wants to move to one place and pay stamp duty, then move to another to pay more stamp duty, to move to another to pay more? It does not add up.”

Mr Murray said “no Treasury ministers, particularly in the weeks immediately before a budget, will speculate on tax changes”.

Ms Reeves will set out her tax and spend decisions at the Budget on November 26.

“Let’s be honest, stamp duty is hardly a popular tax,” Mr Murray said.

“Moving house, buying a home, is a complex, often stressful process.

“Stamp duty has to be paid at a point when most people feel they probably have enough to worry about already. 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 this.”

Asked by Conservative former minister Andrew Murrison how he planned to “un-gum” the housing market, Mr Murray replied: “We are the party who are getting on with building. We are the party who are making those changes to the planning system to get those homes built.”

Mr Murray said: “What I find impossible to believe from the party opposite is we now have a shadow chancellor claiming to have a plan for £23 billion of welfare cuts when he himself was the work and pensions secretary, presiding over the biggest increase in welfare spending in decades.

“You know, that is a record which gives him no credibility whatever in this debate.”

The minister warned that reducing public expenditure “is the sum” of the Conservatives’ proposal and added: “It may be Halloween on Friday but the ghost of Liz Truss is here today because the economic recklessness that the former prime minister embodied is back in front of us in this chamber today.”

Chris Curtis, co-chair of the Labour Growth Group, branded stamp duty a “dreadful tax” but said scrapping it would need to come as part of wider changes.

The MP for Milton Keynes North said: “(Stamp duty) discourages the very behaviour we should want to encourage, people moving homes that no longer suit them and into properties that do.”

He added: “If we ignore (council tax) and just focus on stamp duty, then we’re only going to make that broken system worse.

“We should set a path to reduce and ultimately reform the way we do stamp duty, but we should do it as part of a broader package that shifts tax away from transactions and towards ongoing occupation of higher value properties.”

Daisy Cooper, the Liberal Democrats deputy leader, agreed stamp duty has “all the hallmarks of a bad tax” but said “it raises a lot of money” which would need to come from elsewhere.

Conservative MP Kit Malthouse, a former housing minister, insisted he could “easily find the money”, including through welfare reforms that the “Labour Party bottled on”.