Stamp it Out

There’s been plenty of talk about devolving stamp duty lately. Back in November 2012, the Silk Commission (Part I) recommended devolution of stamp duty as one of a series of minor taxes to be devolved with little argument, and the UK Government recently announced that it would consult on the proposal.

The Welsh Government has said that it’s keen to see this tax devolved because it is “poorly designed” and “distorts the housing market” and is therefore ripe for reform. What type of reform we don’t yet know, although David Cornock has suggested the Welsh Government is keeping half an eye on developments in Scotland, where a new land and buildings transaction tax will replace stamp duty from 2015. The threshold for paying your 1% fee on buying a property will rise from £125,000 to £180,000.

But I’ve had a thought. And if the Welsh Government is serious about wanting to help first time buyers without losing a penny in revenue (and potentially gaining) they might want to pay attention.

For every property sale transaction there are two parties: buyer and seller. That means that a roughly equal amount of tax would be taken if stamp duty were to be shifted from the buyer to the seller. I say ‘roughly’ because the effect of transferring the tax would mean that instead of there being every incentive for the seller to inflate the price of the property – they don’t pay the tax currently – there might be slight downward pressure on prices because as the sale price increases so does the tax burden for the person who is benefitting from the sale price. I don’t think that would have a huge impact on house prices but then I’m not a property economist.

This shift in tax burden would have an immediate impact on the housing market, because struggling first time buyers by definition would have no tax to pay. And while there may be some very wealthy first time buyers who would benefit inordinately, they would be in the tiny minority. Most first time buyers purchase houses of modest price. This would also avoid at least one of the problems associated with government support schemes, principally that taxpayers’ money (in some form) is being used simply to inflate the market and create windfall house price increases for those already owning property.

So that’s the plus point from the buyers’ end of the market. How about the sellers’ end? Well, at some point most of us will be making friends with the worms, so let’s imagine that upon your death your house (if you own one) is sold. As part of your estate, solicitors dealing with your affairs will simply take the tax from the value in the estate. And if your estate is in the negative then the tax man comes pretty high on the debtors’ list. The main snag of this idea as far as I can tell is that if someone purchased well beyond their means and died suddenly, leaving an estate massively in debt, then the Welsh Government could struggle to get that tax revenue. Would the tax impact of that eventuality be counteracted by the activity associated with the increased ability of first time buyers to enter the market? Possibly.

Another advantage of this plan is that it would be a way of redistributing the tax burden from those of middle income (or capital) to the families of those of high income (capital) because stamp duty would be paid by the estate of people with enormous, highly valued houses (for example), who currently pay diddly squat. Is there an issue with selling a house to pay for the care of elderly relatives, and the tax being an additional burden on families with these caring responsibilities? Again, possibly. But as time goes by those families will themselves have benefited from not paying stamp duty on their first purchase.

In terms of timing, the move would be instant so the tax take wouldn’t take the hit. Some people would benefit from the change taking place on a particular date, but as long as the date were announced with a year or so’s notice that shouldn’t be too problematic. It would mean a rush for sellers eager to complete a transaction before the cut-off date with an equivalent resistance from buyers.

I said earlier on in this post that it could be a way to increase the tax take. And this is a further benefit of the idea. Because it’s the vendor, not the purchaser, who would pay stamp duty under this proposal, and the vendor has an asset (house), tax can be levied on any sale price. A 1% tax on someone selling a £100,000 house should cause less problems than for someone trying to buy that house. The obvious exception is if you’ve gone and ended up in negative equity, but it’s difficult to cater for idiots who think that house prices can only ever increase. Who knows, perhaps this revision of the tax would be a means of making people treat house purchase with a little more sobriety.

There’s one more point about this plan. Someone’s bound to say that house prices will equalise in any case and the purchase price for first time buyers will just increase as more competition for available housing arises. My answer to that is that perhaps that’s a possibility – but at least then the increased tax is paid by the vendor, not the first-time buyer.

And if you don’t own a house, well all this nonsense is going to pass you by. As long as the tax take increases – or at least stays the same – you’ll be happy in the knowledge that your’e not subsidising the housebuying circus.

The Contestables

So this post is the contrepoint to the last, during which we determined that there will be 15 seats which cannot possibly change hands in the 2015 UK election. So if you live in Penarth then you’re stuck with Stephen Doughty, whose election as our MP I announced 4 months early. That may be a good or bad thing from your viewpoint. What is certain is that it’s a bad thing for more people than it’s a good thing, as a result of our tired first-past-the-post system that renders so many seats in Wales – in so many different elections – totally pointless non-contests.

Enough of doubting the system. But ‘The Impregnables’ got me thinking, following on from this comment:

These ultra-safe seats are important for political parties for much more reason than it’s nice to have them in the bank. Firstly, almost no electoral effort has to be made, which means that the parties can target their resources at other seats – either to defend or to expand their territory. But secondly, and most importantly, these politicians can concentrate on the machinations of government or legislation, without worrying too much about their constituents. It means that they can become Ministers, or focus on becoming experts in subject areas, can serve with distinction on Committees and toady up to lobbyists without casting one eye over their shoulder at their electorate.

How many of today’s Welsh Ministers represent impregnable constituencies?

• Carwyn Jones – Bridgend – impregnable
• Jeff Cuthbert – Caerphilly – not impregnable
• Alun Davies – Blaenau Gwent – impregnable
• Mark Drakeford – Cardiff West – not impregnable
• John Griffiths – Newport East – impregnable
• Lesley Griffiths – Wrexham – not impregnable
• Edwina Hart – Gower – not impregnable
• Jane Hutt – Vale of Glamorgan – not impregnable
• Huw Lewis – Merthyr Tydfil & Rhymney – impregnable
• Carl Sargeant – Alyn & Deeside – impregnable

and the Deputy Ministers:

• Vaughan Gething – Penarth & Cardiff South – impregnable
• Ken Skates – Clwyd South – not impregnable
• Gwenda Thomas – Neath – not impregnable

Labour has 29 constituency Assembly Members, 14 of whom are impregnable. So it looks like Carwyn’s sticking with the probabilistic outcome that he pays no attention to how safe a seat they represent by a 50% count of impregnable Ministers (adding in the Deputies pushes it slightly under 50%). If that’s not interesting then at least it’s a now-established fact.

But back to the contestables.

How do I determine which seats are contestable? I’m going to sift them according to the parties either holding the seat or for whom the sesat is a top 10 target. So, drum roll, let’s look at those seats chased by all four parties:

• Aberconwy – realistic contestants (>20% of vote) – Conservative, Plaid, Labour
• Clwyd South – realistic contestants – Labour, Conservative

Next those seats where three parties are in with a shout:

• Cardiff Central – realistic contestants – Labour, Lib Dem
• Cardiff North – realistic contestants – Labour, Conservative
• Carmarthen West & Pembrokeshire South – realistic contestants – Conservative, Labour, Plaid
• Clwyd West – realistic contestants – Conservative, Labour, Plaid
• Preseli Pembrokeshire – realistic contestants – Conservative, Labour
• Vale of Glamorgan – realistic contestants – Labour, Conservative
• Vale of Clwyd – realistic contestants – Labour, Conservative
• Ynys Mon – realistic contestants – Plaid, Conservative, Labour

Well, I don’t know about you, but that analysis feels unsatisfactory. What we’re really looking for is a ranking, based on statistics. So let’s reassess our methodology. Firstly, the margin of victory must be the key sign of a contested seat. That’s our first basis of calculation. But there is a factor associated with a seat being contested by more than two parties. So I’m going to assign an additional weighting for the ‘multiple contestant factor’ – that is, where more than one party is within a certain percentage of the 2011 victor.

This is the top 10 contested constituencies in Wales, in order of most contested (if you’re interested in the following 10 or my methodology, take a peep at the calculations here):

• Cardiff Central
• Carmarthen West & South Pembrokeshire
• Aberconwy
• Llanelli
• Cardiff North
• Ceredigion
• Preseli Pembrokeshire
• Brecon & Radnorshire
• Ynys Mon
• Montgomeryshire

There are a few surprises in amongst that lot. Why is the Vale of Glamorgan ranked only at number 11, for example? Clearly some of our top 10 are less likely to change hands than the Vale. That’s because I ranked all parties equally when considering the marginality of seats. And I’ve already noted that some parties will be looking to expand their holdings while others will be struggling to hold their current crop. But I’d be willing to bet that of those seats that change hands in 2015, several of them will be on this list of Contestables. And funnily enough, not one Minister holds a seat in the top 10…

The Impregnables

So we’ve examined which of the seats in Wales will be targeted by the Conservatives, Labour, the Lib Dems and Plaid at the next election. I’ll be considering where the tightest contests are going to be in my next post. But for now we’ve got a proposition even more fascinating – which seats are the impregnables? Where are the incumbents guaranteed to be elected, no matter what happens between now and 2015?

My starting point is any seat that doesn’t feature in the top 10 target list of any other party. That gives us the following initial sift:

• Aberavon – Labour
• Alyn & Deeside – Labour
• Blaenau Gwent – Labour
• Bridgend – Labour
• Penarth & Cardiff South – Labour
• Cynon Valley – Labour
• Dwyfor Meirionnydd – Plaid
• Islwyn – Labour
• Merthyr Tydfil & Rhymney – Labour
• Ogmore – Labour
• Rhondda – Labour
• Swansea East – Labour
• Torfaen – Labour

Is there anything that strikes you about this list of 13 impregnable constituencies? Something that should make Labour apparatchiks rub their hands with glee? Perhaps the notion that 92% of them belong to Labour. These ultra-safe seats are important for political parties for much more reason than it’s nice to have them in the bank. Firstly, almost no electoral effort has to be made, which means that the parties can target their resources at other seats – either to defend or to expand their territory. But secondly, and most importantly, these politicians can concentrate on the machinations of government or legislation, without worrying too much about their constituents. It means that they can become Ministers, or focus on becoming experts in subject areas, can serve with distinction on Committees and toady up to lobbyists without casting one eye over their shoulder at their electorate. Everyone else knows their tenure on the gravy train is potentially limited and that they therefore need to be working their constituency as well as everything else. That will necessarily reduce their ability to be good parliamentarians. 

I said initial sift because there’s an additional factor to consider. The ‘top 10’ of the four political parties is anything but evenly balanced. Number 10 on Labour’s list is Arfon, where they’re already scooping up 26% of the vote, while the Conservatives are picking up the same percentage in their equivalent seat of Wrexham. For Plaid, the figure in seat 10 (Cardiff West) is 20%, but for the Lib Dems, Preseli Pembrokeshire yields just 8%. So I’m going to withdraw the competitiveness of the Lib Dems for anywhere they’re not polling 20%. That adds in the following to the impregnables:

• Newport East – Labour
• Pontypridd – Labour
• Swansea West – Labour

Are there any other factors to take into consideration? Any of the seats listed above that aren’t actually impregnable?

Just one. I mentioned it here. And it means that Rhondda leaves the list.

Well, pity the poor fools who live in one of the 15 impregnable constituencies. After all, we’ve already proven that your vote is totally irrelevant at a UK general election. And for these suckers it’s doubly true, because whatever you do there’s no chance you’ll winkle out the incumbent.

Who do these poor fools, these suckers include? You and me, my friends, who live in Penarth and Cardiff South.

A Surprising Dichotomy

For someone with a smattering of CSEs to her name, you’d be surprised at the interest I’ve got in academic research, even if Kevin Mahoney of UKIP puts his faith in reading tea leaves. And Richard Wyn Jones has been at it again, revealing wondrous insights about the English mind.

In this latest research, he uncovered that the more ‘British’ an English person feels, the more favourably inclined towards the European Union she is. But the more ‘English’ an English person feels, the less he is likely to support the European Union. What’s more – and probably hardly a shock to the system – there is a pronounced trend towards Euro-scepticism in those who support parties further to the right of the political spectrum.

But one of the other interesting findings is that the right-wing parties harbour individuals (in England) who have a preference for an English passport over a British passport. So, in order of furthest to the right (at the UK 2010 General Election):

• UKIP – 59% of supporters would prefer an English passport; 35% would prefer British passport
• Conservative – 47% preference for English passport; 49% preference British
• Labour – 35% preference for English passport; 55% preference British
• Lib Dem – 33% preference for English passport; 55% preference British
• Understandably, Plaid Cymru supporters in England were not canvassed

It’s quite a finding. The more right wing an English person is, the more likely they are both to want to withdraw from the European Union and to favour greater independence for England.

But here’s the kick. Let’s look at Wales. Here, the more right-wing you are, while you are presumably as likely as your English friends to want to withdraw from the European Union, you are more likely to refute the idea of greater independence for Wales.

So in order of most right-wing:

• UKIP – open warfare among those ‘relaxed’ about devolution and those seeing an opportunity for harvesting anti-devolution votes
• Conservative – Leader of the party in Wales has recently confessed that some members “are still fighting the battles of the devolution referendum of 1997”
• Labour – open warfare between the pro-devolutionists and anti-devolutionists
• Lib Dem – have run a ‘long campaign’ for a federal UK
• Plaid – support full independence for Wales

Why does the right wing in Wales bitterly oppose independence for Wales at the same time that their brothers in England are most fervent supporters for greater independence for England? That’s a question only the right-leaning population of Wales can answer.

What’s good for the goose is good for the right-wing gander. But not, it seems, in Wales.