Most of the ideas for giving home ownership a tonic, such as tax breaks for people with negative equity or increased mortgage tax relief, would be inflationary or costly or both. After years of tax manipulation and distortion in the housing market, home ownership is at last returning to the place it had in our economy 40 years ago, when people regarded a home as a place to live rather than a speculative investment. The economic damage wrought by house price inflation in the Eighties ought to remind the Chancellor, if not the Tory right wing, of the hazards of such intervention. Moreover, since some 68 per cent of homes are owned by the people who live in them, money to help one group of home owners has, in practice, to be taken from another group. If this redistribution has any impact at all, it could well be neither fair nor effective.
Nevertheless, the 300-year-old stamp duty is one area of housing finance that deserves a rethink. It is a penalty for moving home, levied at 1 per cent of the sale price on houses over pounds 60,000, which brings the Treasury some pounds 750m a year. That may be a large sum in absolute terms, but it is a modest proportion of the total public finances. When house prices were soaring, it was probably harmless to secure a small part of those gains for the taxpayer. Now that prices are stagnant and many labour markets tight, a tax on mobility is indefensible.
If potential Tory voters were persuaded that a 1 per cent tax makes a difference, abolition would be politically useful. More houses in the South are worth over pounds 60,000, so that removal would benefit the so-called "Tory heartlands" (that is, the ones where the Tories lose by-elections to the Liberal Democrats by slightly fewer votes). John Redwood and the right wing '92 group of Tory MPs are pressing for targeted bribes, through the tax system, to electorally important groups such as home owners. But what they want is a seriously inflationary restoration of Eighties mortgage interest tax relief levels, not the relatively minor business of ending stamp duty.
However, trapped between an impending interest rate rise and a tight spending round, the Chancellor has little room for manoeuvre. It should be possible for him to resist the cries of his right-wing backbenchers who oppose inflation except in house prices and state subsidy for consumption except in home ownership. He need not abolish the duty altogether. Either raising the threshold at which it is paid, or levying it only on the portion of the purchase price above that threshold might give a useful small fillip to house sales.
For many people unable to sell or buy for other reasons, the change would be largely symbolic. But many Tory MPs would find a little symbolism rather welcome right now. Provided that they do not imagine that it will do much either for the housing market or their party's voter appeal, they should give the idea the stamp of approval.