Rt Hon Lord Lilley

    Peter Lilley, MP for Hitchin and Harpenden, warned today that the Government were planning to remove vital protection against development on Hertfordshire‘s green spaces, and take away North Herts District Council‘s say on housing and pass responsibility to distant regional politicians.

    The proposals were outlined in a report published by the Treasury on measures to change the housing supply in the country. The report calls for a massive extension of regional planning and regional involvement in housing, new centralised housing targets, and more greenfield and Green Belt development.

    Peter Lilley said: “The recommendations in this report will not solve the crisis in affordable housing that has developed under this Government. Labour‘s policies and tax rises must take much of the blame for the crisis – for example, the average first time buyer in the South East now pays ?1,412 extra in stamp duty alone, money that could otherwise be put towards a deposit.

    “The Government is adopting a centralist, ‘dictate and provide‘ approach in the housing market that will strip local communities of their say, bulldoze green spaces and increase the risk that areas like West of Stevenage will be covered in concrete.

    “We need more affordable housing, not luxury homes in the Green Belt. We should focus on regenerating urban areas and brownfield land so that the right homes are built in the right places near jobs and services.

    “But the Liberal Democrat alternative is even worse – they would place VAT on new housing, which would add ?14,321 to the cost of a new home in the South East and make home ownership even more unaffordable for young people and working families.”


    Notes to editors

    Barker Review into Housing Supply

    The Treasury review into housing supply, conducted by Kate Barker, issued its report on 18 March 2004.

    Its proposals include a massive extension of regional planning and regional involvement in housing – de facto centralisation, new centralised targets, a new land development tax, and more greenfield and Green Belt development.

    ‘Local authorities should allocate a further buffer of land to improve their plan‘s responsiveness to changes in demand. Additional land for development would be brought forward from this buffer when there was evidence of local housing market disequilibrium‘ (p.43)

    ‘Planning authorities should show greater flexibility in using their existing powers to change Green Belt designations where there are strong pressure points in a particular urban area‘ (p.44).

    It calls for ‘planning guidance should be amended to advise regional and local planning authorities on assessing the value of land to society‘, yet admits that the value of much greenfield land should be reduced. ‘Building on intensively farmed land would result in far smaller costs. These alternative land values are part of the framework within which the costs and benefits of housebuilding should be assessed. Moving towards an alternative approach, whereby land for development is assessed according to its relative value in society… including the implication that some Green Belt land should be re-designated‘ (p.43-44).

    The report calls for a massive extension of regional planning and regional involvement in the provision of social housing, taking power and discretion away from local councils and local people.

    ‘Regional Planning Bodies and Regional Housing Boards should be merged to create single bodies responsible for managing regional housing markets, delivering the region‘s affordability target and advising on distributing resources for social housing. The Regional Planning and Housing Bodies would continue to be responsible for the Regional Spatial Strategy and the integration of housing with other regional functions‘ (p.37).

    ‘The establishment of elected regional assemblies will allow various functions and strategies at the regional level to be brought together. However, even in the absence of elected regional assemblies, a streamlined institutional framework is possible and desirable‘ (p.35).

    Stealth increases in stamp duty

    Labour have turned stamp duty into yet another stealth tax. Stamp duty thresholds have not increased with the rate of the rise in property prices. Hence due to fiscal drag, more households are paying stamp duty than ever before. Stamp duty of 1 per cent still kicks in on properties worth ?60,000 or more; since the average first time property now costs over ?60,000, the average first time buyer has to pay stamp duty on their home. Thresholds remained frozen in the Budget and have not changed under the current Government.

    In Q1 1997, the average property for a first time buyer in the UK cost ?48,273; by Q4 2003, it has risen to ?99,019. Hence, the average first-time buyer is now paying ?990 in stamp duty. With the exception of London, the average first time buyer‘s property in every region was below the ?60,000 threshold in 1997.

    Average first time buyer purchase price Q1 1997 Q4 2003 Change in stamp duty
    South East ?57,827 ?141,163 +?1,412
    UK ?48,273 ?99,019 +?990

    Source: HBOS Price Index, historical data series, March 2004.

    Liberal Democrat policy – VAT on new homes

    In their own words, ‘the Liberal Democrats want a single level of VAT to apply to all housebuilding and renovation costs. Yes, this would make the initial cost of a new-built home more‘ (Liberal Democrats Whips Office, internal briefing document, Focus on the Liberal Democrats, December 2002). Liberal Democrats plans would mean VAT to be levied at between 5 or 7 per cent on all new homes. It would add an average of ?9,920 to the cost of an average new home in the UK.

    The Treasury has ruled this out, warning it would have ‘an adverse impact on incentives to develop new housing‘ (HM Treasury, Budget 2004, p.75).

    Liberal Democrats claim that such a tax would affect few people – yet new properties account for 11 per cent of all property sales, and particularly first-time buyers (source: Halifax press release, 26 June 2002). Such a tax would just make housing less affordable, especially those on lower incomes. The tax would do nothing to stop the wrong houses being built in the wrong places.

    Q4 2003 Cost of average new home Effect of VAT at 7%
    South East ?204,588 +?14,321
    UK ?141,715 +?9,920

    Housing data sourced from HBOS Price Index, historical data series, March 2004.