Stamp duty revolution is pure politics - and I love it

Pretensions of whiggish libertarianism, which may well reflect his own ideological leanings, are as nothing compared to his predominant tactical imperatives. He is a product of the professionalised political class of the age; the Tory election architect and strategist supreme.

Nowhere is this more apparent than during his bi-annual set piece policy announcements.

His speeches have come to conform to a formula: lengthy preamble setting out the most positive interpretation of economic data; confirm pre-announced tidbits; final flourish to leave Labour reeling. And it works.

At this week’s Autumn Statement he came out fighting on the economy and taunted the opposition with improved borrowing and deficit projections over the next five years. In reality his numbers are precarious and rely on an £18bn windfall from lower interest on accumulated debt, itself subject to the beneficence of markets.

No matter, it muddied the waters sufficiently to blunt Labour’s main attacking tool. I’d have done the same if I was him.

Reducing the tax bill for most through a more progressive regime, raising more money overall in the long run and simplifying the system.

As for the headline-grabbing peroration, this time the revolution in stamp duty, this too was politically pitch perfect and elegantly recaptured any initiative lost in the wake of the two Eds’ clumsy-by-comparison ‘mansion tax’ plans.

Labour reckons this latter would raise £1.5bn (some disagree and numbers are vague) of an additional £2.5bn it wants to pump into the NHS each year.

Despite the stamp duty changes equating to an £800m tax cut in the near term, with a surge in property transactions that is expected to eventuate the Office for Budget Responsibility reckons by 2019/2020 receipts will be £8bn higher at £19.5bn.

As a result of this and other tax generation measures, Mr Osborne has pledged £2bn a year to the health service immediately, rising in the future.

At the same time, the loathed ‘slab’ structure of stamp duty, which results in vertiginous cliff-edge thresholds and a valuation no-mans land for buyers around the various bandings, has been removed.

I can attest to the benefits of this. I’m house hunting and in my area of Greater London a three-bedroom house seems to cost either below £250,000, at which point the tax bill up until yesterday was £2,500, or tens of thousands more. Even a pound above this level added £5,000 to the Treasury coffers.

Under the new rules, which are cut in the income tax mould and apply each higher tax charge only on the amount above the previous threshold, on a hypothetical house worth, say, £251,000 I would pay £2,550, instead of a previous £7,530.

All bar 2 per cent of people will pay the same or less. Wealthier people buying houses worth more than £937,000 are the only losers, with those buying properties above around 2m - Labour’s mansion tax level - bearing the brunt of the tax under the new model.

Reducing the tax bill for most through a more progressive regime, raising more money overall in the long run and simplifying the system. This is the holy grail for economic conservatism in the era of austerity.

Ed Balls says his party will still apply the new additional levy. In truth he’s floundering, the rug being ripped out from under his party just as it was with the move to clamp down on energy companies.

Labour wanted to make policy around property taxation about the tax that could be paid by the richest, but the political ground has now moved to the levies that should not be paid by those at the bottom of the housing market ladder.

All of this is also further evidence of Mr Osborne’s ability to turn almost any political situation to his advantage. He did the same elsewhere in the statement with his ‘Google tax’ on a quarter of multi-nationals’ ‘aggresively’ diverted profits, which has generated positive headlines.

The truth is, I don’t care a jot about why the stamp duty reform was introduced. Politics is about policymakers both prospective and incumbent competiting for the right to govern. It’s all one-upmanship and grandstanding.

Policies like this, and others such as the upcoming pension freedoms, are proof it works.