Daily catch-up: Autumn Statement surprise, and other unexpected developments

Now for something completely different – six things that are completely different, in fact

1. Monty Python Venn diagram, via The Herringman. An excellent trailer for my analysis of George Osborne’s Autumn Statement.

2. Dead rabbit bounce. The Chancellor produced his surprise: a sensibilisation of stamp duty on house purchases, removing the stepped rate changes and replacing them with graduated rising rates that apply only to the amount above each threshold. This means lower stamp duty on 98 per cent of transactions.

Paradoxically, however, Osborne’s cut in stamp duty means house prices will rise. The Office for Budget Responsibility estimates that prices will rise by 1.4 per cent for every 1 per cent cut in stamp duty. About as unexpected for most people as the Spanish Inquisition.

It is easy to see that any cut in stamp duty is likely to be made up by an equivalent rise in house price, because the main determinant of prices is buyers paying as much as they can afford. Thus the main effect of the stamp duty cut is a windfall gain for sellers. But the OBR expects prices to rise, by more than required to recoup the tax cut, because buyers will be able to put the saving from stamp duty towards their deposit, which has a multiplier effect on the price that can be afforded. In addition, the stamp duty cut costs the Government £800m, which is being pumped into the housing market, which will encourage more properties to change hands.

The relevant part of the OBR report is here, thanks to Bob.

Stamp duty is a bad tax. It discourages people from moving house, making the allocation of space inefficient (old people more likely to stay in houses too big for them; young families more likely to be stuck in houses that are too small), suppressing economic activity on doing up houses; and restricting labour mobility. Last night’s change to the structure of rates, while an improvement, fails to deal with this basic problem. Stamp duty should be abolished and the revenue made up by a rise in council tax, including a new mansion-tax band, of a quarter.

Part of the ritual of the Autumn Statement, Budget and leader’s party conference speech is my What He Said And What He Meant. George Osborne gets the treatment in today’s Independent.

3. Public service announcement of the day via Jason Groves:

“Station announcement informs us escalator is ‘operating a staircase service’ – or, as it’s normally known, not working.”

4. Me too, although I am even older. Jon Baines:

“Today, at the age of 45, I had the horror of being told that The Moody Blues’ song was ‘Nights in White Satin’, and not Knights.”

5. Birth announcement in the Courier-Mail, Brisbane, on Tuesday, via Lisa Dart:

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6. And finally, thanks to Simon Feilder for this:

“Cub Scouts is meant to be inclusive and welcoming but I got kicked out for being ‘immature’ and ‘disruptive’ and ‘36 years old’.”