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Chamber and committees

Meeting of the Parliament (Hybrid)

Meeting date: Wednesday, August 26, 2020


Contents


Parliamentary Bureau Motions

The Presiding Officer (Ken Macintosh)

The next item of business is consideration of Parliamentary Bureau motion S5M-22531, on approval of a Scottish statutory instrument on land and buildings transaction tax.

Motion moved,

That the Parliament agrees that the Land and Buildings Transaction Tax (Tax Rates and Tax Bands) (Scotland) Amendment (No. 2) (Coronavirus) Order 2020 (SSI 2020/215) be approved.—[Graeme Dey]

Patrick Harvie wishes to speak on the motion.

18:31  

Patrick Harvie (Glasgow) (Green)

Thank you, Presiding Officer, for the opportunity to speak for a few moments on the proposal for a cut to land and buildings transaction tax. I start from a position of accepting that, when introduced, LBTT was a modest improvement on the stamp duty tax that went before it. However, it remains a flawed system that is inefficient, creates unwelcome consequences, is not progressive and should be replaced with a more modern system of property taxation, as the Mirrlees report recommended nearly a decade ago.

Even if the tax cut that is being proposed was seen in isolation, I would question whether a tax cut that is directed at those with the wealth to buy a £250,000 home should be a priority at the current time. There are surely people who are more in need of help and to whom the resources that are paying for the tax cut could be directed. At the Finance and Constitution Committee, I asked the Minister for Public Finance and Migration what tax policies that could have benefited those in greater need were considered as an alternative. He told me:

“Those are questions that we all need to ask ourselves”,—[Official Report, Finance and Constitution Committee, 19 August 2020; c 6.]

but he offered no answer. I can only assume that he did not consider any alternatives at all.

Of course, we do not see that policy in isolation; we cannot help but see it in the wider context of housing and the property market. That gives us more reasons to oppose it. As the Scottish Fiscal Commission sets out at paragraph 1.14 of its report, the tax cut will lead to an increase in prices. Why would it not? With less tax or no tax to pay, but with the same overall budget to spend, buyers will simply be in a position to bid a little bit higher for the property that they want to buy. The argument is not new. It is well understood that that kind of consequence will arise from such tax cuts. That is why the Fiscal Commission made that prediction. The minister accepted that when he moved the motion on the SSI at the committee.

At the same time, the Scottish Government is continuing to increase so-called help-to-buy schemes for first-time buyers. That is another measure that will have the same effect—both directly and indirectly—of driving the cost of housing ever higher. At both ends of the market, Government policy will drive up prices when we should be doing exactly the opposite. We should be seeking to reduce the underlying cost of housing rather than pouring more money into the system, which will inflate prices further.

Why is that being done? It appears to be an almost unthinking response to a United Kingdom policy change. We should not be following in lockstep with the tax policies of a right-wing UK Government; we should not be directing tax cuts at those who need them the least; and we should certainly not be doing so in a way that makes the problem of high housing costs even more severe. We should be following through on the long-overdue reform of local taxation and replacing an outdated and perverse system of property tax with a modern alternative. That is why the Greens will oppose the measure tonight.

Thank you, Mr Harvie. I call the Cabinet Secretary for Finance, Kate Forbes.

18:35  

The Cabinet Secretary for Finance (Kate Forbes)

This provisional affirmative order provides for the temporary changes to the LBTT bands and rates that I announced in the chamber on 9 July, when responding to the chancellor’s economic update. For transactions with an effective date of between 15 July 2020 and 31 March 2021, the starting rate for residential LBTT is increased from £145,000 to £250,000.

Members will be aware that this is the first time that a change to rates and bands has been made outside the Scottish budget process. Our view was that it was necessary to act, and to act quickly, given the immediately destabilising impact of the UK Chancellor of the Exchequer’s 8 July SDLT announcement on Scotland’s housing market—an announcement of which we were given no advance notice aside from the media speculation. No change to LBTT has been delivered as quickly as this in order to deal with the negative impacts, and all the relevant policy, analytical, legal, operational and other tasks that are required to deliver the change were completed within five working days of the initial announcement.

The Green Party has, understandably, raised concerns this afternoon about the impact on house prices and costs that home buyers might face. The Scottish Fiscal Commission’s costing for the measure does consider that there will be an impact, but it estimates that such an impact is likely to be “small”.

However, I recognise that we need to provide significant support to those who have been hardest hit by the pandemic. That is why, on the same day, I announced £100 million for skills and jobs, including the job guarantee scheme, to ensure that young people, in particular, have work or training opportunities.

On Patrick Harvie’s point, we have considered and implemented a number of other changes to provide the support that people in Scotland need quite desperately right now. We know that the latest LBTT statistics show that transactions in the first four months of the year are down by almost 60 per cent compared with the same four months last year; therefore, the measure is providing some help to home buyers and companies throughout the housing market at a difficult time. We have also announced other initiatives: we have put in place support through the first home fund and other shared equity home ownership schemes.

Throughout the pandemic, we have had to balance our resources to support economic recovery but also, most critically, to help those hardest hit during the pandemic. The LBTT measure is just one form of our support, but our support is there, whether it is for businesses or for communities, to ensure that we get through the crisis and support economic recovery.

The Presiding Officer

Thank you, cabinet secretary. The question on the motion will be put at decision time.

The next item of business is consideration of 17 Parliamentary Bureau motions. I ask Graeme Dey, on behalf of the bureau, to move motions S5M-22530 and S5M-22532 to S5M-22544, on approval of SSIs, and S5M-22545 to S5M-22547, on designation of lead committees.

Motions moved,

That the Parliament agrees that the Health Protection (Coronavirus) (Restrictions) (Scotland) Amendment (No. 10) Regulations 2020 (SSI 2020/236) be approved.

That the Parliament agrees that the Care Homes Emergency Intervention Orders (Coronavirus) (Scotland) Regulations 2020 (SSI 2020/201) be approved.

That the Parliament agrees that the Health Protection (Coronavirus, Restrictions) (Aberdeen City) Regulations 2020 (SSI 2020/234) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (International Travel) (Scotland) Amendment (No. 3) Regulations 2020 (SSI 2020/209) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (International Travel) (Scotland) Amendment (No. 4) Regulations 2020 (SSI 2020/221) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (International Travel) (Scotland) Amendment (No. 5) Regulations 2020 (SSI 2020/224) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (International Travel) (Scotland) Amendment (No. 6) Regulations 2020 (SSI 2020/229) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (International Travel) (Scotland) Amendment (No. 7) Regulations 2020 (SSI 2020/233) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (International Travel) (Scotland) Amendment (No. 8) Regulations 2020 (SSI 2020/235) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (Restrictions) (Scotland) Amendment (No. 5) Regulations 2020 (SSI 2020/190) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (Restrictions) (Scotland) Amendment (No. 6) Regulations 2020 (SSI 2020/199) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (Restrictions) (Scotland) Amendment (No. 7) Regulations 2020 (SSI 2020/210) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (Restrictions) (Scotland) Amendment (No. 8) Regulations 2020 (SSI 2020/211) be approved.

That the Parliament agrees that the Health Protection (Coronavirus) (Restrictions) (Scotland) Amendment (No. 9) Regulations 2020 (SSI 2020/232) be approved.

That the Parliament agrees that the Health and Sport Committee be designated as the lead committee in consideration of the legislative consent memorandum in relation to the Medicines and Medical Devices (Scotland) Bill.

That the Parliament agrees that the Rural Economy and Connectivity Committee be designated as the lead committee in consideration of the supplementary legislative consent memorandum in relation to the Agriculture Bill.

That the Parliament agrees that the Finance and Constitution Committee be designated as the lead committee in consideration of the legislative consent memorandum in relation to the Trade Bill.—[Graeme Dey]