Burnham's Budget must not kick the can on fairer property taxes
Terraced houses in Hartlepool (Alamy)
5 min read
The Prime Minister promised Labour conference he was ready to do what his predecessors wouldn’t.
From reforming the pensions triple lock to public ownership of water, energy and more, Andy Burnham has shown a willingness to address the things politicians usually avoid.
So, let's add another policy area to that list: property taxes. If we want to deliver the laudable ambitions set out at conference, we cannot leave our broken housing tax system untouched.
We cannot claim to be levelling the country while families in towns like Hartlepool continue to face bills that bear so little relationship to property wealth
The Prime Minister has long recognised the problem. During the Makerfield by-election, Andy Burnham rightly called Council Tax “regressive” and said he wanted to see it reformed. He highlighted the absurdity of ordinary households in Greater Manchester paying more than people living in far more valuable homes in London. During his 2010 leadership campaign, he also called stamp duty a “tax on the aspirations of young people”.
For my constituents in Hartlepool, this is not an abstract argument about tax policy. It is a question of fairness that hits household budgets every month.
The average Band D Council Tax bill in Hartlepool is around £2,556 a year, compared with approximately £1,047 in Westminster. That is a staggering difference of more than £1,500. Yet the homes in Westminster are, on average, worth considerably more. How can we justify a system in which where you live can matter more to your Council Tax bill than the value of your home?
In England, Council Tax is still based on property valuations from 1991. More than three decades of house-price changes have left households paying bills that bear little relationship to what their homes are worth today.
The result is a system that places a disproportionate burden on many households in less affluent areas, while homeowners in places that have enjoyed the greatest increases in property values continue to benefit from outdated valuations. The average Band D Council Tax bill in England has risen by almost a third since 2021, but increases have been uneven and increasingly disconnected from household wealth.
Stamp Duty compounds the problem. By penalising people for moving, it clogs up the housing market, discourages older homeowners from downsizing, makes it harder for families to find homes that meet their needs and adds to the costs facing people relocating for work.
The campaign group Fairer Share argues for replacing both taxes with a Proportional Property Tax (PPT). Levied annually on homeowners, rather than tenants, at 0.48 per cent of a property’s current value, its modelling suggests that 77 per cent of households would pay less, with average annual savings of £556.
For Hartlepool and across the country, that could mean hundreds of pounds staying in the pockets of local families rather than disappearing into an unfair tax system. That is money that could be spent in our shops, cafés, pubs and restaurants. At a time when our high streets need every possible boost, the link between fairer taxation and stronger local economies should not be overlooked.
Successive governments have avoided wholesale reform, allowing the system to reach breaking point. Andy Burnham has rightly highlighted the intolerable pressures facing social care, with some councils spending as much as 80 per cent of their budgets on care for older people. But if we are serious about putting local government on a sustainable footing, we must confront the tax system that helps determine the resources available to every community.
Labour has already started tackling one part of the problem. Our mansion tax surcharge will revalue properties worth more than £2m and impose an additional charge on their owners. That is a welcome recognition that those with the most valuable homes should make a greater contribution.
But addressing the under-taxation of the wealthiest homeowners alone will not resolve the disproportionate bills facing households elsewhere. We cannot claim to be levelling the country while families in towns like Hartlepool continue to face bills that bear so little relationship to property wealth.
That is why the government should announce a comprehensive review of Council Tax and Stamp Duty in the Budget. It would allow ministers to examine different approaches, including a Proportional Property Tax, assess their effects on households and local government, and begin building a lasting consensus for change.
A PPT embodies the “common ground” politics the Prime Minister spoke about at conference. It has attracted support from politicians and think tanks across the political spectrum. Fairer Share’s polling suggests that public appetite for reform is substantial, with more voters supporting a Proportional Property Tax than opposing it.
Of course, any reform must be carefully designed. We need to consider how to protect people on low incomes, those who are asset-rich but cash-poor, and the financial stability of councils. We must also ensure that local government is not left worse off as a result of changes to the way property is taxed. But these are reasons to undertake serious work, not excuses for further delay.
The Budget offers the Prime Minister an opportunity to put his convictions into practice. For constituents in Hartlepool, fairer property taxation could mean lower bills, more money circulating in our local economy and a fairer relationship between the wealth of an area and the taxes its residents pay.
Burnhamism is about confronting the problems other politicians leave untouched, challenging the status quo and making the country work for people who too often feel it does not work for them.
If we mean what we say about fairness, aspiration and giving every community a chance to succeed, we cannot keep kicking the can down the road. It is time to fix our broken Council Tax system.
Jonathan Brash is the Labour MP for Hartlepool
