Andy Burnham has indicated that council tax reform is on the agenda as Labour MPs intensify calls for change. The new Prime Minister and Greater Manchester mayor warned of “big decisions” ahead for the Government on council tax.
Economists Call for Property Value Tax
Economists have said replacing stamp duty and council tax with a proportional annual charge based on property values would be a significant step forward. Thomas Pugh, chief economist at RSM UK, argued that a property value tax would be more progressive, boost the housing market, improve productivity, and encourage better use of existing housing stock.
“There has been a lot of talk about a land value tax recently, which from a purely economic point of view is a much better tax, but given the complexity in disentangling the value of land and property – a simple proportional payment based on the value of the property uprated in line with the regional national house price statistics would be a much simpler way of getting almost the same thing. Don’t let the perfect be the enemy of the good,” Pugh said.
Burnham Highlights Inequities
Speaking on the BBC’s Panorama, Burnham pointed out the system’s unfairness: “There are people here in Greater Manchester who pay a much higher council tax than people living in much larger homes in London.”
Burnham said Chancellor Rachel Reeves “was right to start to reform council tax to create some fairness there in relation to people in homes that are of much greater value, who haven’t seen their council tax go up over the years because of the failure to revalue the banding. So that’s an example of something that I think was right and fair.”
Burnham, who has previously said he has been “persuaded” of the argument for change, stressed the need to remain consistent with Labour’s 2024 manifesto. “We need to honour the manifesto upon which Labour was elected, and if I was to bring forward any changes, obviously people would rightly say, well, is this consistent with that manifesto? So there are big decisions ahead, you are right about that,” he said.
No 10 Denies Reports of Immediate Reform
Number 10 has denied reports that the Government is actively considering replacing both council tax and stamp duty with a 0.48% annual charge on a home’s current value or a land value tax. The denial followed coverage in the i newspaper. According to the Fairer Share Campaign, a flat-rate annual charge could save households in areas such as Hartlepool about £950 a year.
Labour MPs have stepped up calls for action. Jonathan Brash, the Hartlepool MP and chairman of the cross-party group of MPs on council tax reform, said: “Council tax is one of the most unfair taxes in Britain, and nowhere is that injustice clearer than in towns like Hartlepool.” Brash has previously noted that band A homes in Hartlepool cost nearly 2.5 times as much as those in Westminster.
Mortgage Industry Voices Support for Change
Mortgage industry figures echoed Pugh’s support for fundamental change, arguing that stamp duty in particular has become a major barrier to a functioning market. Rohit Kohli, director at Romsey-based The Mortgage Stop, said stamp duty “has become a habit the Treasury can’t kick, and everyone pays for it.”
“First-time buyers in the South face a significant tax bill on top of deposits that are already eye-watering. Meanwhile, families wanting to upsize get no relief. People approaching retirement who want to downsize are raiding their pension pot to cover the stamp duty on their next home, effectively being penalised for doing exactly what the market needs them to do,” Kohli said.
Jamie Elvin, director at London-based Strive Mortgages, described stamp duty as “a tax on moving and one of the biggest obstacles to a healthy housing market.” He added: “It discourages young families from upsizing and older homeowners from downsizing, leaving many homes occupied inefficiently and reducing the number of properties coming to market. The result is lower mobility, fewer transactions and wider economic consequences for everyone connected to the housing sector. Reforming stamp duty would help unlock movement across the entire market.”
Craig Fish, director at London-based Lodestone Mortgages, said: “Stamp duty has no place in a modern housing market and needs complete reform, not tinkering around the edges. Every downsizer who stays put because the bill doesn’t add up is a home that never comes back onto the market, and every first-time buyer priced out by the same tax is a household locked out altogether.”
Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages, likened the tax to airline baggage fees. “You’ve already committed to the journey, chosen your destination and budgeted for the main cost, only to discover another unavoidable charge before you’re allowed to proceed. The difference is that when someone decides not to travel, the impact is mostly personal. When someone decides not to move home because of stamp duty, the consequences ripple through the housing market,” Perkins said.
Samuel Mather-Holgate, managing director at Swindon-based Mather and Murray Financial, called stamp duty “a bad tax because it punishes people for moving home and gums up the entire housing market.” He added: “A fairer alternative would be an annual property tax, potentially with protections or means-testing for those on lower incomes. That would remove the huge upfront penalty for moving and create a stronger incentive for people to live in properties that better suit their needs. Taxing the transaction discourages the very activity needed for a healthy housing market.”
Current System and Future Pressure
Stamp duty is currently levied on sales from £125,000 upwards, though first-time buyers pay nothing on purchases up to £300,000. The relief ends on properties priced above £500,000. Council tax bands, meanwhile, remain based on 1991 valuations in England, locking in disparities that Burnham and others argue have become indefensible.
While No 10 has ruled out immediate radical change, the combination of Burnham’s intervention and the chorus of industry voices, led by Pugh’s call for a simple proportional system, keeps the pressure firmly on the Government as it weighs the “big decisions” ahead.
