Osborne’s Stamp Duty wheeze comes at a price – and won’t solve Britain’s housing crisis

The headline announcement of the Autumn Statement – the rabbit that Osborne pulled from his mottled hat at the end of his speech – was a reform of the Stamp Duty system. Osborne’s new system will see Stamp Duty rise gradually in accordance with house prices, rather than increasing at “cliff edge” points on the scale.

It’s hard to argue against, because it works in a similar way to the income tax system, which most people would accept makes sense. And it may instill a little bit of sense into the housing market in some parts of the country, where house prices jump from £240,000 to almost £300,000 on the basis of a single one off levy.

However, the Stamp Duty wheeze comes at a price – as Osborne’s games always do. This measure (a simplification, as the right will certainly call it) could cost the taxpayer around £400 million each and every year. That’s a substantial amount of money over the course of a Parliament, and could undo a great deal of government damage. It could – for example – pay to eliminate the Bedroom Tax.

More importantly still, the UK’s housing market remains fundamentally broken and in a sustained period of crisis. That’s not because of Stamp Duty, it’s because not enough homes are being built to satisfy demand – creating an extreme shortage of supply and spiralling prices.

If Osborne was serious about solving Britain’s real problems he’d have announced a plan to build more houses today. Instead, he’s far more focussed on winning the election, which is why his housing rabbit was Stamp Duty reform – largely benefitting those fortunate enough to already be on the housing ladder.