Following Labour’s recent electoral victory, the need for a fairer, modernised property tax system is more pressing than ever. A letter addressed directly to Prime Minister Keir Starmer calls on the government to reform Council Tax and tackle the inefficiencies of Stamp Duty. This pivotal moment offers Labour a unique chance to align its policies with its manifesto commitments to drive economic growth, promote fairness, and improve housing accessibility.

Our sincere thanks to Jonathan Brash (Hartlepool), Liam Byrne (Birmingham Hodge Hill & Solihull North), and Grahame Morris (Easington) for spearheading this initiative, and to the many individuals and organisations that endorsed this call for change. It is inspiring to see such a distinguished coalition come together on this crucial issue.

You can read the letter in full below.

Dear Prime Minister,

Council Tax
Congratulations on your election success and the formation of a new Government. Your manifesto’s focus on economic growth and commitment to a progressive tax system is timely and crucial. An urgent priority should be reforming Britain’s outdated property taxes, which would significantly help Labour meet its manifesto commitments.

Council Tax is particularly problematic. Based on property values from over 30 years ago, it no longer reflects current prices. Its flat-band structure means someone in a £100,000 home pays six times more, as a share of property value, than someone in a £1 million home. This regressive nature disproportionately burdens young people, low-earners, and those in less prosperous regions. Reforming Council Tax to reflect actual property values would directly support Labour’s commitment to reducing economic inequality and easing the financial strain on struggling households.

The impact is stark: lower-income families are increasingly falling into debt. As of March 2024, outstanding Council Tax debt in England reached £6 billion, a 9% rise from the previous year. This surge in arrears is largely due to rising Council Tax rates, which have increased by up to 5% in many areas to cover escalating costs. Addressing this debt crisis through reform would help Labour meet its manifesto goal of ensuring economic stability and security for all.

If the Government wins a second term and delivers a decade of renewal but leaves Council Tax unreformed, then taxes in 2034 will be based on 1991 valuations. This is unsustainable.

Stamp Duty also presents challenges. While more progressive than Council Tax, it discourages homeowners from moving, leading to inefficient housing use. This stifles labour mobility and contributes to broader economic inefficiencies, such as people declining job opportunities due to the cost of moving. Reforming Stamp Duty could encourage a more dynamic housing market, aligning with Labour’s goals of boosting productivity and economic growth.

Both taxes have fuelled house price inflation and inefficient land use. Council Tax’s failure to keep pace with rapid house price growth over the past three decades has deprived the Government of essential revenues and inflated the housing bubble. Investors and second home buyers, who now represent about a quarter of all residential property sales, are crowding out owner-occupiers. Tackling these issues would help Labour fulfil its commitment to increasing home ownership and making housing more affordable.

To address the housing crisis, a multifaceted approach is required, including the modernisation of planning regulations, an increase in housing supply – especially social housing – and, most importantly, tax reform. The tax should be based on land values or updated property values, encouraging the efficient use of housing. To ensure fairness it should be based on individuals’ ability to pay. Such reforms would support Labour’s broader goals of building a fairer society and ensuring access to decent, affordable housing.

A fairer system is urgently needed to restore social cohesion, meet Labour’s manifesto promises, and ensure that taxes raise sufficient revenue for public services while distributing the burden equitably. Reforming Council Tax and Stamp Duty is a critical step toward achieving this vision.

Yours sincerely,
Jonathan Brash – Member of Parliament for Hartlepool
Liam Byrne – Member of Parliament for Birmingham Hodge Hill & Solihull North
Grahame Morris – Member of Parliament for Easington

Claire Aston – Director, TaxWatch
Sir Vince Cable – Former leader of the Liberal Democrats
Martin Daunton – Emeritus Professor of Economic History, University of Cambridge
George Dibb – Associate Director for Economic Policy, IPPR
Andrew Dixon – Chair, Fairer Share
Liz Emerson – Co-Founder, Intergenerational Foundation
David Gordon – Director, Bristol Poverty Institute
Rebecca Gowland – Executive Director, Patriotic Millionaires International
Emily Grundy – Director, Institute for Social & Economic Research, University of Essex
Gavin Kerr – Author of The Property-Owning Democracy
Robin McAlpine – Director, Common Weal
John Muellbauer – Professor of Economics, University of Oxford
John Myers – Director, YIMBY Alliance
Polly Neate – Chief Executive, Shelter England
Avner Offer – Chichele Professor of Economic History, University of Oxford
Robert Palmer – Executive Director, Tax Justice UK
George Peretz KC
Freddie Poser – Executive Director, Priced Out UK
Andrew Purves – Author of No Debt, High Growth, Low Tax
Ben Rich – Chief Executive, Radix Big Tent
Josh Ryan-Collins – Professor of Economics & Finance, UCL Institute
Murad Qureshi – Chair, Labour Land Campaign
Ryan Shorthouse – Chair, Bright Blue
Chris Smith – Managing Director, Centre for the New Midlands CIC
Will Snell – Chief Executive, Fairness Foundation
Danny Sriskandarajah – Chief Executive, New Economics Foundation
Beth Stratford – Economist and Honorary Fellow, UCL
Rory Sutherland – The Spectator
Ben Twomey – Chief Executive, Generation Rent
Cllr Tony Vickers – Co-founder, Liberal Democrat ALTER
Torrin Wilkins – Director, Centre Think Tank
Lord Ian Wrigglesworth Kt