§ It is one thing to encourage the investment of capital by increased capital allowances. The other side of the coin—perhaps equally important—is to encourage the provision of the savings to finance this investment. It is also essential to remove the existing disabilities to increasing our invisible earnings.
§ The Stamp Duty on stock transfers and on house conveyances was doubled in 1947. I am convinced that this was a mistake. The 2 per cent. rate of duty is substantially higher than in any other country in Europe or North America and has many unfortunate effects. It drives business, and therefore invisible earnings, from London. It is a strong 489 disincentive to investment in Britain by people in other countries. It discourages investment in productive industry, not least by the small investor. It tends to raise the cost of issuing capital.
§ And in the field of house property, despite various reliefs given in the past especially for purchase of small houses, Stamp Duty certainly increases the cost of buying a house, obtaining a mortgage, or buying a lease, and so adds to the difficulties of moving from place to place and from job to job. I am, therefore, satisfied that this level of Stamp Duty is a disincentive to increasing our invisible income, an obstacle to growth and a hindrance to the full development of our economy.
§ I therefore propose to restore the duty on transfers and conveyances to the original level of 1 per cent. I also propose to raise the exemption from Stamp Duty for house purchase from £3,500 to £4,500. A number of other duties which were doubled in 1947 will also be halved, for example, the duties on mortgages and leases. Full details will be given in the White Paper.
§ I propose to make changes in the rules affecting bearer securities to help to improve our invisible earnings. These securities have always been attractive to foreign investors. I intend to remove the ban on them that at present exists under the Exchange Control Act, and to take other necessary measures such as restoration of the right to exchange Government stock into bearer where this right originally existed.
§ As a result of the reduction I have just announced in the transfer duty, the existing rates on bearer securities of 6 per cent. and 4 per cent. will be reduced to 3 per cent. and 2 per cent.
§ I propose, at the same time, to deal with a number of anomalies in this field. In particular, provision will be made in the Finance Bill to alter the existing basis for the calculation of duty on bearer from nominal to market value. Without this change it would be very profitable to convert into bearer form registered securities whose market value is well in excess of nominal value. By changing the law I shall prevent the loss of revenue, and, at the same time, avoid giving an encouragement of an artificial character to the conversion of registered into bearer securities.490
§ The cost of all these Stamp Duty changes, which will take effect from 1st August, will be about £27 million in the current year and £40 million in a full year.