§ Although, as I have just explained, this is not a year in which sweeping reductions of income tax are possible, that need not prevent our making sensible reforms in the tax system wherever the opportunity offers.
§ I have frequently drawn attention to the extent to which the tax system has woven itself deeply into the fabric of national life. Tax has been piled upon tax, often with little regard for their interaction. The accidental effects of this tax onslaught have often been as damaging as the direct consequences.
§ This Government came to office pledged to bring more simplicity and consistency to the tax system. We have already undertaken a series of major reviews. I should like here to thank both the Inland Revenue and the Customs and Excise for the heavy load of policy review work that they have carried out during the last nine months. This should all bear useful fruit in the years ahead. This year I have progress to report in three important areas where I believe that fiscal reform can encourage private endeavour—in connection with housing, the national heritage and voluntary organisations.
§ Housing
§ We wish to encourage the private provision of housing as well as wider home ownership. Home ownership adds to the quality of life. Private provision of housing means we can save public resources for other areas where a private sector alternative is not available.
§ My first proposal is designed in particular, to help first-time buyers. I have received representations from many quarters about the burden of stamp duty on house purchasers. Difficulty in acquiring a new home restricts the mobility of labour. Those at the lower end of the market—mainly, young couples—particularly deserve help. I do not think that these considerations justify us in making, this year, an increase in the mortgage interest relief ceiling, which I propose to maintain at £25,000. However, I think that it would be right to raise the starting point for stamp duty on transfers of property by £5,000 to £20,000. The limits for reduced rate bands will be similarly increased, by £5,000, so that the full 2 per 1479 cent rate will now be reached at £35,000. This will cost £75 million in 1980–81, and £85 million in a full year.
§ Too many homes are under-occupied, or even standing empty. This is often a direct, even if unintended, result of rent control: sometimes, it is a consequence of planning policies, which my right hon. Friend the Secretary of State for the Environment is improving. There are also fiscal obstacles to the economic use of the available stock of property. I intend to deal with one of these this year. I propose a new and additional relief from capital gains tax to help people who let part of their homes. At present, these house-owners, when they come to sell, can find themselves unexpectedly faced with a capital gains tax charge. This change will encourage letting, and contribute to the better use of the housing stock.
§ The national heritage
§ Next, the national heritage. The House has already passed a Bill to set up the National Heritage Fund. The Finance Bill will include a provision to treat it for tax purposes as if it were a charity. The fund will be set up with an initial amount of about £12 million at its disposal. The Government will in future make an annual contribution to the fund, including the amount needed for the continuation of the acceptance in lieu system. But we should also do more to make it possible, both today and in the future, for owners of historic houses to look after their properties on behalf of the nation as a whole. The last Government took a similar view and introduced provisions to assist owners to set up maintenance funds for the support of their houses. But that scheme proved to be so restrictive that it has scarcely been used.
§ I intend, therefore, to recast substantially the maintenance fund provisions. If we are going to adopt this method of encouraging the preservation of our heritage—I believe it is the right one—then it is only sensible to make it work. Our fresh proposals will apply to the maintenance of buildings, historically associated contents, gardens, and land of historic, scenic and scientific interest. The overriding condition will, of course, be that the public should have reasonable access. These measures are intended to 1480 cement a bargain between those who have to bear the cost of maintaining the national heritage, and the people as a whole.
§ Voluntary effort
§ The third way in which we aim to assist private action this year is by providing tangible Government support for the widespread and often unsung voluntary effort that goes on at every level of our national life.
§ It is important to do all we can to help charities and to stimulate private benefactors and helpers. A partnership between Government and voluntary effort can be the best way of meeting many pressing social needs, particularly when State spending has to be cut back. With this in mind, I have given careful consideration to the fiscal recommendations of the Goodman committee and of the National Council of Social Service.
§ I propose to double—to £200,000—the capital transfer tax exemption for bequests to charities; and to exempt wholly from development land tax all future disposals of land by charities. Income tax relief for payments to charities made under deeds of covenant, which has hitherto been limited to the basic rate of income tax, will be extended to the higher rates, subject to a ceiling of £3,000 a year. A minor stamp duty easement on deeds will be made. In response to representations, I am reducing the period for tax relief on deeds of covenant from seven years to four years. These measures, which will cost £30 million in a full year, are designed to provide the right conditions for substantial growth in the important partnership between voluntary service and the rest of the community.