13 Labour MPs have joined our call for Council Tax Reform
It's about time. And there's stirrings in the North of England.
This autumn, the chancellor faces an exhausting equation. Rachel Reeves is faced with a £30bn shortfall in her next budget, while voters are growing increasingly impatient for concrete change.
Some MPs have an answer: scrap council tax.
Last month, 13 Labour MPs, mostly from the North, wrote to Reeves asking her to abolish the tax and replace it with a reformed system that would better reflect the reality of house prices in England today.
“If we are to succeed in our mission to transform Britain and fight back against Reform, we must be bold and embrace new ideas that put more money back into the pockets of working people,” they wrote. “One place we can start is by looking at ways we can abolish the outdated, deeply regressive, and increasingly indefensible council tax system.”
They wouldn’t be the first to make such a suggestion. Here at The Lead, we’ve been banging this drum for the better part of a year. In March, we trotted around London’s most expensive borough — which happens to have one of the lowest council tax rates — to show just how regressive the system has become.
It costs on average £20.35 million to live in Knightsbridge, yet council tax is the second cheapest in England – £1,946.32 per year for properties in the most expensive band (band H). Meanwhile, in the UK’s most deprived town, Blackpool, where the average property price sits at £149,543, residents have to fork out more than double the amount of Knightsbridge homeowners, with the most expensive (band H) council tax in the town costing £4,784.42.
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This summer, figures emerged showing council tax debt was at a record high at around £8 billion, up 79 per cent in five years. Those most affected are, unsurprisingly, already the worst off. Data by Debt Justice found that 50 per cent of people in arrears come from the bottom 25 per cent of earners, and 79 per cent come from the bottom 50 per cent of earners. A third of people in council tax arrears live below the poverty line, and this figure doesn’t account for housing costs, which means it underestimates the problem. Vitally, those who miss a council tax payment are most likely to be in the North of England, where property prices are significantly lower than in the South East.
More recently, as part of our nine bold ideas for the autumn budget, we heard from Andrew Dixon OBE the Founder of Fairer Share, who suggested scrapping council tax and stamp duty all together, and replacing them with a proportional property tax.
“The majority of the public, across all major parties, backs a tax based on actual property value, not outdated bands,” he told us. “As Rachel Reeves faces tough fiscal decisions, this is a rare win-win: raise revenue, cut bills, and restore trust in the tax system. Britain deserves a property tax fit for the 21st century.”
Will the chancellor be so bold? Introduced as a remedy to Thatcher’s disastrous poll tax, council tax has become a political hot potato, which is why we’ve ended up with such a regressive system. But it’s reassuring to see those in power offering an alternative.