Luke Robert Black MBE is the Director of Engagement for the Next Gen Tories and former Chairman of the LGBT+ Conservatives.
Okay – hear me out. I’ve deliberately framed this article in the most negative way that I can. But I’ve done so to prove a point, and I hope you’ll see why.
At the Conservatives in the City event last month, with the Conservative Shadow Minister Katie Lam MP, I asked Katie if there was any scope to expand the party’s popular Stamp Duty policy to shares too.
Why? Well on the doorstep, at least in London, this policy has been significant and came up unprompted by millennial and Gen Z voters when I was canvassing across the city.
Part of the Kemi’s wider New Deal for Young People, I saw first-hand how this policy was resonating with a demographic our party has long ignored – and a demographic that finds no other party addressing its needs beyond taxing them out of work entirely, or accusing them of all being lazy and working from home all the time.
I should also perhaps declare an interest here too. Personally, stamp duty is a huge barrier to my fiancé and I.
We, like so many our age, want to move into our long-term home – or what the Left increasing calls ‘homes for the rich’. The first place we bought, whilst good, isn’t large enough for the family we hope to one day have and the better life we want to live.
I would also like a wine fridge. Yes, I am a cliché.
But we are also keen to sell our ‘starter home’, for want of a better word, which will in turn free up a new home for the next young couple looking to get their first rung on the property ladder. This liquidity mechanism in economics is called housing filtering, and we want to play an active role in it. For Conservatives, both this liquidity mechanism and this wider aspiration seem self-explanatory, but is no less a foreign concept to many in the UK who do not support free markets, property rights and capitalism.
So why, then, should a Conservative Party seeking election in 2029 look to extend this abolition of this tax to shares? Why do this when the estimated £3.8bn cost to the government could be perhaps spent on more popular measures like giving every NHS worker a ~6 per cent pay rise, or shave off well over £100 of every household’s energy bills? Surely these are better vote winners than lining the pockets of rich investors?
Well, it’s about the articulation of trade-offs. It’s about being able to confidently explain, and predict, second, third and fourth order consequences. It’s about being able to justify longer-term visions to an electorate that wants everything now – and doesn’t want to pay anything for it in return. Remember, this is the electorate that will reliably support significant increases in the NHS budget, but when asked if they want taxes to go up will not reply with the same alacrity.
In an era of shortening attention spans, AI slop and a click-bait media landscape across all geographies, political decisions seem to be increasingly myopic. Journalists of all political affiliations instead give greater airtime to knee-jerk reactions, ‘drama’, bolder opinions and simpler answers.
Complex answers are, I guess, boring and difficult to fit into a headline. For example, the local elections over the last two years have seen parties elected with simplistic and unrealistic plans to great electoral success. Pop down to Kent and see how Reform’s repeated promises to cut council taxes are going. Those living under newly formed Green councils will experience something similar, I am sure.
So why frame this proposal like this? And why advocate for this change in the first place? Given the pressures on public services, a tax cut to the evil and nasty fat cats that invest in the stock market is a hard sell.
But Stamp Duty acts as a drag on investment, liquidity in the UK’s capital markets and our growth more generally. The discussion, although not easy to have, is less about the short-term cost of £3.8bn, and where else the money could be spent, and more about whether removing that friction could strengthen the UK’s capital markets and generate broader economic benefits over time.
Like in the housing market, where Stamp Duty acts as a friction between buyer and seller, slowing down the process, putting off older households from down-sizing and reducing profits for all involved, the same is applied to stocks and shares. Removing this friction would, have a similar impact on UK businesses, and, in effect, create more jobs, increase wages, drive growth and prosperity too.
This is because for British companies scrapping stamp duty isn’t an abstract tax change. Instead, it directly affects their ability to raise growth capital at home, achieve stronger valuations against international competitors, and to scale their business here in the UK.
We are lucky that these businesses have stayed here. In staying here, we keep their great products and services. For life sciences, tech businesses or deep tech, like Mestag Therapeutics, Raspberry Pi or Pragmatic Semiconductor, we keep their innovation, R&D and pioneering technology here too.
As Katie pointed out at the event last month, far too UK businesses many struggle to raise capital after the start up stage and feel like their hand is forced to look elsewhere.
So, by reducing trading costs and improving greater liquidity in the wider market, we don’t just make UK markets more attractive to investors, but we do the same for the businesses they invest in too. This would operate at every level – whether it’s your tech bro investing in a new tokenised fintech platform at their Seed stage, or your passive investor buying shares in a FTSE 100 or 250 business. Businesses of all sizes would see a direct valuation effect according to the IFS – even if they were exempt from paying the duty in the first place
Alongside the obvious upside on valuation, it would make the UK more competitive. The UK is unique in applying such a broad type of tax on transactions on its own equities. Countries against whom we wish to compete, like the USA, do not tax transactions in like this. As such, we have a small disadvantage in applying this duty on our plc businesses.
Even though investors don’t pay stamp duty in an IPO, they do, however, pay 0.5 per cent every time they buy shares afterwards. This matters because that future cost feeds back into IPO demand and pricing – sometimes depressing appetite. All small but not unimportant factors that businesses will consider when weighing staying here or heading to warmer shores with deeper pockets.
Much of this is challenging to communicate to a country which has a very low risk appetite for investing in the first place, and a media environment that often frames business profits as an exclusively negative thing. No one likes the establishment doing better – it’s all Reform and the Greens seem to talk about nowadays.
But it’s an argument we as Tories should get better at making. It’s one we have made before. A rising tide lifts all ships. Grow the cake instead of how we cut it. We’re all in this together – yes, the investors too.
Luke Robert Black MBE is the Director of Engagement for the Next Gen Tories and former Chairman of the LGBT+ Conservatives.
Okay – hear me out. I’ve deliberately framed this article in the most negative way that I can. But I’ve done so to prove a point, and I hope you’ll see why.
At the Conservatives in the City event last month, with the Conservative Shadow Minister Katie Lam MP, I asked Katie if there was any scope to expand the party’s popular Stamp Duty policy to shares too.
Why? Well on the doorstep, at least in London, this policy has been significant and came up unprompted by millennial and Gen Z voters when I was canvassing across the city.
Part of the Kemi’s wider New Deal for Young People, I saw first-hand how this policy was resonating with a demographic our party has long ignored – and a demographic that finds no other party addressing its needs beyond taxing them out of work entirely, or accusing them of all being lazy and working from home all the time.
I should also perhaps declare an interest here too. Personally, stamp duty is a huge barrier to my fiancé and I.
We, like so many our age, want to move into our long-term home – or what the Left increasing calls ‘homes for the rich’. The first place we bought, whilst good, isn’t large enough for the family we hope to one day have and the better life we want to live.
I would also like a wine fridge. Yes, I am a cliché.
But we are also keen to sell our ‘starter home’, for want of a better word, which will in turn free up a new home for the next young couple looking to get their first rung on the property ladder. This liquidity mechanism in economics is called housing filtering, and we want to play an active role in it. For Conservatives, both this liquidity mechanism and this wider aspiration seem self-explanatory, but is no less a foreign concept to many in the UK who do not support free markets, property rights and capitalism.
So why, then, should a Conservative Party seeking election in 2029 look to extend this abolition of this tax to shares? Why do this when the estimated £3.8bn cost to the government could be perhaps spent on more popular measures like giving every NHS worker a ~6 per cent pay rise, or shave off well over £100 of every household’s energy bills? Surely these are better vote winners than lining the pockets of rich investors?
Well, it’s about the articulation of trade-offs. It’s about being able to confidently explain, and predict, second, third and fourth order consequences. It’s about being able to justify longer-term visions to an electorate that wants everything now – and doesn’t want to pay anything for it in return. Remember, this is the electorate that will reliably support significant increases in the NHS budget, but when asked if they want taxes to go up will not reply with the same alacrity.
In an era of shortening attention spans, AI slop and a click-bait media landscape across all geographies, political decisions seem to be increasingly myopic. Journalists of all political affiliations instead give greater airtime to knee-jerk reactions, ‘drama’, bolder opinions and simpler answers.
Complex answers are, I guess, boring and difficult to fit into a headline. For example, the local elections over the last two years have seen parties elected with simplistic and unrealistic plans to great electoral success. Pop down to Kent and see how Reform’s repeated promises to cut council taxes are going. Those living under newly formed Green councils will experience something similar, I am sure.
So why frame this proposal like this? And why advocate for this change in the first place? Given the pressures on public services, a tax cut to the evil and nasty fat cats that invest in the stock market is a hard sell.
But Stamp Duty acts as a drag on investment, liquidity in the UK’s capital markets and our growth more generally. The discussion, although not easy to have, is less about the short-term cost of £3.8bn, and where else the money could be spent, and more about whether removing that friction could strengthen the UK’s capital markets and generate broader economic benefits over time.
Like in the housing market, where Stamp Duty acts as a friction between buyer and seller, slowing down the process, putting off older households from down-sizing and reducing profits for all involved, the same is applied to stocks and shares. Removing this friction would, have a similar impact on UK businesses, and, in effect, create more jobs, increase wages, drive growth and prosperity too.
This is because for British companies scrapping stamp duty isn’t an abstract tax change. Instead, it directly affects their ability to raise growth capital at home, achieve stronger valuations against international competitors, and to scale their business here in the UK.
We are lucky that these businesses have stayed here. In staying here, we keep their great products and services. For life sciences, tech businesses or deep tech, like Mestag Therapeutics, Raspberry Pi or Pragmatic Semiconductor, we keep their innovation, R&D and pioneering technology here too.
As Katie pointed out at the event last month, far too UK businesses many struggle to raise capital after the start up stage and feel like their hand is forced to look elsewhere.
So, by reducing trading costs and improving greater liquidity in the wider market, we don’t just make UK markets more attractive to investors, but we do the same for the businesses they invest in too. This would operate at every level – whether it’s your tech bro investing in a new tokenised fintech platform at their Seed stage, or your passive investor buying shares in a FTSE 100 or 250 business. Businesses of all sizes would see a direct valuation effect according to the IFS – even if they were exempt from paying the duty in the first place
Alongside the obvious upside on valuation, it would make the UK more competitive. The UK is unique in applying such a broad type of tax on transactions on its own equities. Countries against whom we wish to compete, like the USA, do not tax transactions in like this. As such, we have a small disadvantage in applying this duty on our plc businesses.
Even though investors don’t pay stamp duty in an IPO, they do, however, pay 0.5 per cent every time they buy shares afterwards. This matters because that future cost feeds back into IPO demand and pricing – sometimes depressing appetite. All small but not unimportant factors that businesses will consider when weighing staying here or heading to warmer shores with deeper pockets.
Much of this is challenging to communicate to a country which has a very low risk appetite for investing in the first place, and a media environment that often frames business profits as an exclusively negative thing. No one likes the establishment doing better – it’s all Reform and the Greens seem to talk about nowadays.
But it’s an argument we as Tories should get better at making. It’s one we have made before. A rising tide lifts all ships. Grow the cake instead of how we cut it. We’re all in this together – yes, the investors too.