Kemi Badenoch has vowed to abolish stamp duty if the Conservatives win the next election, as she unveiled a raft of tax cuts in a bid to win back voters and boost the party’s ratings.
Outlining the major policy announcement to a packed audience at her Tory conference speech on Wednesday, she said the move to scrap the “bad tax” would “help achieve the dream of home ownership for millions”.
The plans, which the Tories say would cost around £9bn, have been praised by economists, but questions remain over how the party would pay for it.
After a lacklustre party conference, Ms Badenoch also used her speech to take aim at Labour, pledging to overturn a series of policies brought in by Sir Keir Starmer’s government, including:
Having focused on securing the UK’s borders by withdrawing from the European Convention on Human Rights in her opening address, Mrs Badenoch then set out her vision of a country where the state “does less but does it better” and “profit is not a dirty word”.
She pledged to impose a “golden rule” on her budget plans, spending only half of any savings made through spending cuts, with the rest going to reduce the deficit.
Committing to freeing up the housing market by abolishing stamp duty on people’s primary homes, Mrs Badenoch said: “Stamp duty is a bad tax. We must free up our housing market, because a society where no one can afford to buy or move is a society where social mobility is dead.”
Stamp duty brought in an estimated £13.9bn in the last financial year, but a large proportion of this is from additional homes and other buildings.
The Institute for Fiscal Studies (IFS) has estimated that abolishing stamp duty on primary homes would cost around £4.5bn and backed the plans.
Paul Johnson, the organisation’s former director, told The Independent scrapping the tax would be his “first port of call” – but called for it to be accompanied by an increase in council tax on higher value properties to claw back some of the money spent.
“It would be great to scrap stamp duty”, he said. “If you’re going to do it, there is a very strong case for increasing council tax on higher value properties. Stamp duty is a drag on the housing market.”
However, he warned it would need to be accompanied by a cut for second homes to prevent the policy from increasing the “distortions and disincentives for rentals”.
“If you got rid of it for first properties and left it there for others, it would even further increase the distortions and disincentives for rentals, so you’d need to reduce it by the same amount at least”, he said.
But former government economist Jonathan Portes accused the Tory leader of having “no remotely credible plan” to pay for her planned tax cuts – dubbing her package of spending cuts “laughable”.
While he agreed that stamp duty is a “very bad tax”, he warned: “She claimed the Tories were the only party offering fiscal responsibility and yet is offering large tax cuts, including this, with no remotely credible plan to fill the gap, since her spending cuts package is laughable”, the ex-Treasury adviser told The Independent.
Tom Bill, head of UK residential research at estate agents Knight Frank said the move would be “warmly welcomed” by buyers and sellers and would “inevitably have positive repercussions for the wider economy and increase social mobility”.
And the Home Owners Alliance backed the policy as a “real vote winner” saying stamp duty has denied the opportunity of homeownership to “too many for too long”.
“Kemi Badenoch is right: it’s a tax that traps households, hampers mobility and suppresses market activity”, they said.
But Theo Betram of the Social Market Foundation warned that the plans would disproportionately benefit “homeowners and those in the south east and London” and said test would be whether the Tories can really make savings “of at least £12bn annually to fund the cut”.
Claiming that Chancellor Rachel Reeves is planning a significant increase in stamp duty, in her Autumn Budget, the Conservatives said they had “cautiously” estimated that scrapping the tax would cost £9bn.
They said it would be paid for from a £47bn pot of savings shadow ministers claim to have found, made up of welfare cuts, downsizing the civil service and further slashing the country’s foreign aid budget.
It comes amid reports that the Treasury is considering a new national property tax on the sale of homes worth more than £500,000 as part of a major overhaul of stamp duty and council tax.
The Tory leader’s address brought to a close a conference that had been overshadowed by questions about her leadership and the threat from Reform UK.
Only yesterday, Nigel Farage’s party announced that 20 councillors had defected from the Tories, while a poll published by More in Common on Wednesday showed the Conservatives continue to languish in third place.
Following the speech, Labour Party chairwoman Anna Turley said Mrs Badenoch had been in “complete denial” on the party’s record, adding: “The public saw the Tories’ disastrous blueprint for Britain across their 14 years of failure in government – and the Conservatives still won’t apologise for the mess they left.”
Liberal Democrat leader Sir Ed Davey urged “one nation” Conservatives to join his party, accusing Mrs Badenoch of deciding to “abandon the traditional British values of tolerance, decency and the rule of law” over plans to leave the European Convention on Human Rights.
And Green Party leader Zack Polanski said Mrs Badenoch had been “speaking to the room, not listening to the nation”.
