Anyone following the news this week would have formed the distinct impression that the Government was about to change the rules on stamp duty to stimulate a failing property market. How they were going to do that was slightly up in the air.
Ministers were looking at various options: suspending it; postponing payment (in effect an unsecured, interest-free loan by the state to housebuyers); turning it into a marginal tax, so the higher rate is only payable on that portion of the property's value above the relevant threshold, rather than on the whole price. All sensible stuff perhaps, and, differing in detail only, another splendid example of the Government's ability to purloin a Tory policy when it cannot think of one of its own. And then mess it up.
They messed it up because they failed to think it through, especially the impact of floating such an idea in the current market conditions. Usually floating ideas in the press unattributably is a harmless enough practice. A government decides it would like to slaughter the first-born, say, but is worried about reaction on the backbenches and the lobby groups. So they leak the idea to a paper, and reaction is gauged. You end up with slaughter of the first-born in pilot scheme areas.
But the stamp duty idea was different. If you offer up the possibility of a saving in the future cost of buying a home, you create a fresh incentive for buyers to bide their time, the opposite of your aim. A fresh incentive, that is, on top of the much larger one of simply watching prices fall off a cliff.
The Chancellor, Alistair Darling, went on the radio on Tuesday to perform his usual trick of not answering any questions. He has perfected this, skilfully deploying all the tiresomely transparent little lines politicians habitually use to dodge the issues, stuff like "not ruling anything in/out", "let's see what the review says", "that's speculation", "we're committed to doing everything we can", "I think what your listeners are really interested in is this" and "it would be foolish to commit ourselves when the future is uncertain".
He's a bit like one of the athletes in Beijing, except here the event is the endurance test of how long he can say sod all about anything before Paxman or Humphrys runs out of time. Darling's performance was close to a personal best. But he won't be getting a gold medal. He succeeded in not answering the questions about stamp duty rather too well, and thus allowed the idea to run that the Government were indeed planning something. It was stupid, and costly.
Peter Bolton King, chief executive of the National Association of Estate Agents, said: "This uncertainty is a very, very dangerous thing – just to make a comment without backing it up in what is a very delicate market. Although we have called for a stamp duty holiday, I wish he hadn't said it."
Yesterday it was the turn of a Treasury spokesman to clarify: "Recent news stories suggesting the government has put forward a proposal on stamp duty are simply wrong. These stories are based on speculation." I wonder where that speculation originated. Surely not HM Treasury? Then again, the statement continues, "As has been said on many previous occasions, the government has made clear that there are a number of options we will need to consider to help businesses and people get through what is undoubtedly a difficult time." Er, so where does that leave us?Reuse content