Stamp Duty, unemployment and a glimmer of hope for the Autumn Statement
Could Stamp Duty be contributing to unemployment rates? That was the question posed by the Head of Residential Research, Adam Challis, of property group Jones Lang LaSalle in response to a presentation at Chatham House by Professor Andrew Oswald of Warwick University about the correlation he found between levels of owner-occupancy and unemployment.
These are substantial sums of money... Stamp Duty must add substantial levels of immobility and immobility is associated with higher levels of unemployment. Nobody has looked at the effects of that on unemployment.
Oswald's contention is that owner-occupancy causes higher levels of unemployment in the general population. While he does not claim there is proof that higher levels of unemployment are caused by owner-occupancy levels, he does provide evidence that they are correlated and he suggests three reasons which might explain why more owner-occupancy does cause higher unemployment.
First, owner-occupiers are less likely to move when they get a new job and this results in more commuting which in turn leads to higher commuting costs and congestion for others. This, he says, might deter some people from taking a job and so add to the unemployment rate. Secondly, owner-occupancy leads to reduced mobility which in turn means less knowledge flow through interaction. This, he says, might reduce everyone's productivity and therefore could increase unemployment. Finally, owner-occupiers are more likely to object to new businesses opening near them and other planning matters. So higher levels of owner-occupancy lead to greater levels of resistance in the planning system which, they say, could be reducing the speed at which businesses are created and expanded, leading to higher levels of unemployment.
It's an interesting theory. And if it's true, and if labour immobility is the cause of higher unemployment, then there's a good case to say that as well as all the problems it causes in the housing market, Stamp Duty might also be causing higher unemployment, too. Which is why it is interesting that Exchequer Secretary to the Treasury David Gauke told a Conservative party conference fringe meeting held by the Institute of Fiscal Studies and the Chartered Institute of Taxation that the problems caused by the 'slab' rate structure of the charge are ones that the Government "should seek to address".
Does that mean we might hear some good news in the Autumn Statement in less than six weeks time? Let's hope so. But if you know of anyone who hasn't already signed up to StampOutStampDuty.org, please ask them to add their names to the campaign. It automatically sends a message to your MP for you, adding a little extra pressure for reform and cuts to this truly awful tax! We need all the help we can get.
12:00 PM 20, Oct 2017 Ben Ramanauskas
6:45 PM 10, Oct 2017 Duncan Simpson
9:09 AM 26, Sep 2017 Daniel Pryor
12:03 PM 20, Sep 2017 Duncan Simpson
6:09 PM 18, Sep 2017 Jan Zeber
4:02 PM 18, Sep 2017 Ben Ramanauskas