Darling 'mulls stamp duty options'

Pressed about newspaper reports that the Government was planning a temporary suspension of stamp duty, Mr Darling said he was looking at "a range of options".

The proposal was warmly welcomed by the building industry, but Liberal Democrat treasury spokesman Vince Cable warned it would be a mistake to try to "bribe" housebuyers at a time when tax revenues were falling.

Interviewed on the BBC Radio 4 Today programme, Mr Darling acknowledged the shortage of mortgage finance combined with the general mood of economic gloom was pushing down property prices. "It is very difficult to speculate on what will happen to house prices over the next year or so," he said.

"But it is perfectly true that our economy, along with every other economy in the world, is going to slow down and that slowdown is pretty dramatic in many places. In relation to the housing market, there is no doubt that a combination of people's general mood and outlook and the fact that mortgage finance has been constrained is pushing prices down."

Asked about the reports of a stamp duty holiday, Mr Darling said: "I am looking at a number of measures and I am not going to be drawn on that today because we have not concluded what exactly we need to do. It is helping people that is important. I want to look at a range of options that will help people."

An alternative plan said to be under consideration would be to allow buyers to delay the payment of the duty - ensuring that the Treasury did get the revenue eventually.

The Home Builders Federation executive chairman Stewart Baseley warmly welcomed the idea of a temporary suspension. "It is a welcome initiative and shows that ministers appreciate the problems the current housing market situation is causing people looking to buy and sell properties, and the impact it is having on the wider economy," he said.

However, Mr Cable warned that a suspension would further damage the public finances. "The Government shouldn't be trying to bribe people into buying houses in a falling market," he said. "With the economy grinding to a halt, we are already likely to see a shortfall in taxation. Suspending stamp duty, even on a temporary basis, will only make this situation worse."

Stamp duty is currently levied at 1% on homes over £125,000, rising to 3% on those over £250,000 and 4% on those over £500,000. Last year it brought in £6.5 billion for the Treasury.