Alistair Darling, the Chancellor, last September announced a 12-month stamp duty holiday on properties worth less than £175,000. But the measure has done little to slow the fall in the property market.

In a report for Progress, a Labour think tank, Mr Leslie says that the Treasury must now go further, suspending stamp duty this year on all sales below £1 million. There should also be a new "home purchase tax credit" worth £1,000.

The housing measures should form part of a new "fiscal stimulus" package of tax cuts for businesses and increased public spending programmes, Mr Leslie says.

He also calls for measures to help savers hit by record low interest rates, and a new state-backed "equity release scheme" for pensioners carrying out home improvements.

Mr Leslie suggests that even more borrowing may be needed to ensure that 2009 marks the "bottom of the recession".

"Injecting money into the economy in 2009 will allow the country to return to growth more quickly than if we let the market continue to spiral downwards, which would lead to even greater budget deficits in the longer term," Mr Leslie writes.

The Prime Minister has signalled that he may be willing to go further in the Budget, perhaps



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