Lib Dem call for mansion tax ruled out by Cameron

The Prime Minister said yesterday a wealth tax on the most expensive properties was a “bad idea”, and will not happen while he remains in Downing Street.

Amid a growing expectation that the next election will deliver another hung Parliament, the Lib Dems have yet to spell out what their “red lines” would be in post-election coalition negotiations – but leader Nick Clegg has hinted that the mansion tax on homes worth £2m or more could feature among them.

He told the Yorkshire Post earlier this month that it was time for the Conservatives to “face economic reality” and accept that further tax rises will be required after 2015.

But Mr Cameron was scathing about the Lib Dems’ cherished plans for a tax on wealth, stating: “I have never been in favour of this idea. I think it’s a bad idea.”

Asked if voters could be confident there would be no mansion tax if he was Prime Minister after the election, Mr Cameron replied: “That’s correct. Stamp duty yes, council tax yes, but I think wealth taxes are not sensible for a country if it wants to support wealth creation, wants to reward saving and people who work hard and do the right thing.”

The Prime Minister’s comments came as he launched the Conservative conference with a flurry of policy announcements, including the acceleration of the Help to Buy state-backed mortgage scheme.

Several major lenders announced they have signed up to the second phase of Help to Buy, which will be launched next week – three months ahead of schedule – as part of Tory efforts to show they are tackling the cost of living.

And plans were unveiled at the conference for a transferable tax allowance worth £200 a year to some married couples, as well as an extension of cancer drug funding and help for armed services personnel to buy homes.

The PM defended Help to Buy against warnings from critics, including Lib Dem Business Secretary Vince Cable, that it risks stoking up a property price bubble.

The scheme – offering Government guarantees to allow buyers to secure properties with a five per cent deposit – has been available for new-built homes from earlier this year, and was due to be extended to existing homes worth up to £600,000 from January.

But Mr Cameron said the Government was right to bring the second phase forward after receiving assurances last week from the Bank of England that there was no bubble.

“I am not going to stand back while people’s aspirations to get on the housing ladder, to own their own flat, to own their own home, are being trashed,” he said.

“If we don’t do this, it will only be people with rich parents who can help them with the deposit who can get on the housing ladder. That is not fair, it is not right.”