The Treasury has blocked the Governments flagship regeneration policy by refusing to abolish stamp duty in poor neighbourhoods.
Chancellor Gordon Brown announced in the March Budget that stamp duty would be abolished in some wards in 88 local authorities designated as priority areas for regeneration, called Neighbourhood Renewal Fund Areas.
The tax cut was one of six fiscal incentives intended to boost regeneration, worth an estimated £1bn to developers over the next five years. But, according to a Whitehall source, the Treasury is having second thoughts about making concessions to entire wards, which it argues would unintentionally benefit less deserving projects.
The source said: “The problem is, if you get rid of stamp duty in wards belonging to boroughs like Greenwich or Tower Hamlets, you will give an undeserved benefit to owners of big, expensive properties. The Treasury would never allow that to happen.”
The Department of Transport Local Government & the Regions is dismayed by the Treasurys rethink. It is concerned that a renegotiation of the parameters of the stamp duty change will hold up all the other regeneration proposals contained in last years Urban White Paper.
One DTLR official said: “The Treasury is holding up the whole shooting match. The other measures have been finalised, but the introduction of stamp duty exemption depends on the DTLR and the Treasury agreeing where the priority areas will be. Developers are holding back because the stamp duty reforms havent gone through.”
Richard Lambert, commercial and residential head at the British Property Federation, said: “Stamp duty reform is a major plank of the Urban White Paper, and the delay is not helping regeneration at all. Developers that might otherwise be interested in marginal schemes are holding back because the schemes are just not attractive enough without the proposed incentives.”
A Treasury spokesman said: “We hope to make an announcement this year, but nothing on stamp duty has been finalised yet.”
EGi News 11/08/01
