London was bracing for a significant property tax increase as Andy Burnham was poised to replace Sir Keir Starmer as Prime Minister. Within hours of Starmer's resignation announcement, London Mayor Sir Sadiq Khan warned Burnham not to cut investment in the capital, emphasizing that the entire country benefits from a thriving London.
Concerns grew that the former Greater Manchester Mayor could adopt anti-London policies as he seeks to channel billions more in public funding to the regions. One measure that could hit wealthier Londoners, if Burnham becomes Prime Minister, is a land value levy to replace council tax and stamp duty.
Land Value Levy Could Add £1,000 to London Property Taxes
The major reform, which Burnham has previously supported, could mean an extra £1,000 in property tax for hundreds of thousands of Londoners. A land value levy is likely to impact London the hardest, similar to the existing 'mansion tax', due to the city's higher property values compared to other regions.
Burnham could become Prime Minister within weeks after Starmer resigned on Monday, becoming the shortest-serving Labour Prime Minister. Following his decisive victory in the Makerfield by-election, Burnham was expected to be given a 'coronation' to become Labour leader and Prime Minister after former Health Secretary Wes Streeting said he would not challenge him.
Burnham's Past Support for Land Value Tax
Burnham has long backed a land value tax (LVT) to replace council tax and possibly stamp duty. 'I've long been persuaded of the argument for a land value tax,' he said recently. 'I'm personally keen to see reform of council tax. It's a highly regressive tax. I see a big case for land and property and business taxation to be changed.'
Five years ago, he argued: '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.' Sixteen years ago, when launching his first Labour leadership bid, he said: 'The LVT, an annual tax on the market rental value of land, would allow for the abolition of stamp duty - a tax on the aspiration of young people to put down roots and get on with life.'
Impact on Different Income Groups
If council tax alone were replaced by a land value levy on a cost-neutral basis, people on higher salaries would pay around £1,000 more, according to a Policy Engine analysis by Vahid Ahmadi and Max Ghenis. The research concluded that the bottom income decile would gain £481 a year on average, while the ninth decile would face a £991 increase and the top decile £966. Many people in these two groups live in the capital.
Heathrow Third Runway in Jeopardy
Separately, a third runway at Heathrow could be thrown into jeopardy, especially if Ed Miliband becomes Chancellor. Net Zero Secretary Miliband has previously opposed a bigger Heathrow, and Burnham has argued that such airport investment should happen in the regions. However, ditching the plans would be unpopular with some unions.
