Andy Burnham has said there are “big decisions” ahead for his Government on council tax, as he criticised the unfairness of the current system, which means some people pay higher rates than those levied on more expensive homes in London. The new Prime Minister acknowledged he needed to stick to the manifesto on which Labour was elected in 2024, but said he understood how people felt the current system was disproportionate.
It came as No 10 denied the Government was considering replacing council tax and stamp duty with a tax based on property or land values.
Burnham’s support for reform
Mr Burnham has “long been persuaded of the argument” in favour of reforming the current council tax system. Around a quarter of the Labour Party is believed to support overhauling the system, including the internal parliamentary Labour MPs for council tax Reform caucus. The primary driver for the reform is to address wealth imbalances and shift the tax burden to rebalance the economy.
Mr Burnham has previously supported a proportional property tax (PPT) advocated by the Fairer Share campaign, which would replace council tax and stamp duty. It would be charged at 0.48% of the value of a property’s up-to-date market value, rising to 0.96% for empty homes, second homes and those owned by foreign nationals.
Impact on homeowners
It is believed the move would largely benefit homeowners in the North of England. They would likely benefit from substantial savings, while those in London and the South East would face an estimated additional tax bill of £7.5 billion.
Reports from The i paper on Sunday night indicated that the Prime Minister was “actively considering” the flat annual tax rate of 0.48% to replace council tax and stamp duty. However, Downing Street has recently refuted the claims, stating that these assertions are “not true”.
The Prime Minister’s official spokesman added: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events.”
History of the proposal
Mr Burnham first raised the idea of council tax reform during the 2010 Labour leadership contest. He argued a Land Value Tax could replace stamp duty, which he branded a “tax on the aspirations of young people”. He also said in 2021: “There is a really interesting discussion about how we reform property tax. The party can’t tiptoe around it any more. Council tax is bearing too much weight.”
During his Makerfield by-election campaign last month, Mr Burnham also said he was “personally keen to see reform of council tax”. He dubbed it a “highly regressive tax” and said that he saw “a big” case for land and property and business taxation to be changed.
The Prime Minister is likely to outline any definitive changes to property tax during the autumn Budget. While around 100 Labour MPs support an overhaul of the system, some officials have warned that a whole new model could take years to implement.
