Rachel Reeves has squeezed the UK economy from every angle. She has hiked taxes, borrowed too much and kept households and businesses in suspense by warning of all the tough choices Labour has to make.
Last year’s drawn-out approach left the nation sweating over what might be coming in her maiden Budget. Today, she’s repeating exactly the same mistake. The next Budget is not due until 26 November, but firms have already put plans on hold while they wait.
Talk of further tax grabs is sapping confidence, with pensions, savings, capital gains and even family homes rumoured to be in the firing line.
Reeves urgently needs to deliver some good news, yet so far all we hear are new ways she plans to raise money.
A growing chorus of property experts think they know the solution. Instead of hammering taxpayers, she could slash one levy that gums up the economy at every level.
That tax is stamp duty. It’s widely seen as one of the most damaging of all because it penalises mobility.
While first-time buyer relief softens the blow at the bottom end, the charges climb steeply as people move up the ladder, making progression much harder.
Anybody relocating for work can face bills running into tens of thousands of pounds, simply for the privilege of buying in a new town.
The damage doesn’t stop there. Older homeowners who might like to downsize find that the cost of buying a smaller property wipes out much of the financial benefit.
Many stay put instead, blocking the market and leaving families trapped in homes that don’t suit them.
Harry Goodliffe, a broker at HTG Mortgages, said: “Stamp duty chokes up downsizers, movers and investors, which keeps the whole market sluggish”.
Mortgage broker Riz Malik at R3 Wealth also reckons Reeves is missing a trick claiming: “Get rid of stamp duty, and the property market will be flying.”
Craig Fish of Lodestone Mortgages reckons said ditching the levy would unleash activity, boost confidence and spark growth. Ultimately, a cut could pay for itself.
The benefits wouldn’t stop at homeowners. A stamp duty cut would ripple through the wider economy, giving a lift to builders, plumbers, electricians, decorators and estate agents as activity picked up.
Kate Allen of Finest Stays reckons it would “light a fire under the property market” and bring some much-needed feelgood factor back into our lives. And about time too.
It would be a novel approach for Reeves to make people feel better off rather than worse. Sadly, this one is probably beyond her.
Stamp duty raises around £15billion a year, although scrapping it purely for homebuyers rather than second-home investors would limit her losses.
Extra economic activity could help fill the gap, but there’s also an ideological issue.
Labour is wedded to the politics of high tax, even at the expense of growth. Axeing stamp duty would be seen as favouring homeowners above others, and that jars with the left’s instincts.
My suspicion is that Reeves and her colleagues simply don’t like the idea of people moving freely, spending money and getting on in life.
That means November’s budget risks being another dose of tax misery rather than the growth-boosting break Britain badly needs.
Reeves has the power to turn sentiment around overnight. If she refuses, the UK economy is destined to remain stuck in the doldrums. And I’m pretty sure she will.