Council Tax in Your Area | 2022/2023
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Andrew Dixon | Replacing Council Tax could be a political goldmine for Johnson – or Starmer.
This article first appeared in Conservative Home on the 29th March 2022, written by Andrew Dixon, Chairman and Founder, Fairer Share.
Despite Council Tax being highly unpopular, successive governments have put reform in the ‘too difficult to touch’ box. There has been some tinkering: talk of adding new bands to reflect the significant increase in house prices since the current Council Tax system was introduced in 1991, and recently announced rebates to households in bands A to D.
Both highlighted the crucial link between the cost-of-living crisis and the regressive nature of Council Tax. However, the Government is still uninterested in meaningful reform to our outdated and unfair way of taxing peoples’ homes.
With inflation predicted to reach 8 per cent this year and with energy, fuel and food bills on the rise, now is the time for politicians to tackle Council Tax. Doing so would help reduce costs for the vast majority of households across the country. It could also provide major electoral benefits to whichever of the major parties is willing to grasp it.
Extensive polling by JL Partners indicates that voters throughout the UK believe that it is time to replace Council Tax and Stamp Duty with a simpler and fairer Proportional Property Tax, based on current property values rather than values from over 30 years ago. The findings show that, were the Conservatives to back the proposal, they could gain as many as 60 seats and retain the majority of ‘Red Wall’ seats they won in 2019. On the other hand, were Labour to back the policy, it could help the party gain as many as 52 seats including 43 in the ‘Red Wall’, as well as winning back essential seats in Scotland.
The policy has more supporters than opponents in every single parliamentary constituency. Support for the policy is highest among people living in lower value homes in the North and the Midlands as they would benefit the most from significantly lower bills. Across England, households would pay an average £556 less property tax a year, with this annual saving rising to £750 in Blackpool South and as much as £950 in Hartlepool.
The tipping point at which someone is likely to oppose the policy is when they live in a home worth £500,000 or more – in other words, well above the UK average of £260,000. Importantly, the minority who oppose a proportional property tax also say it would not be an issue that would make them vote for an alternative party. So, given the clear electoral benefits, why aren’t our political parties fighting each other to back the policy?
When asked about a Proportional Property Tax, the Government responds by saying the tax would mean “soaring bills for many hard-working families and pensioners who have saved and improved their homes”. This shows a complete lack of understanding of the policy, which has significant safeguards in place to protect those who live in valuable homes but have limited income – the so-called “asset rich, cash poor”.
For those who wish to stay in their high value homes, losses would be capped so that, at the point of transition, no-one would pay more than £1,200 more a year than they currently do. For anyone unable to pay this, there would also be the ability to defer payment until the property was sold.
Although the Government has missed the point about the Proportional Property Tax, the Labour leadership has also displayed a deafening silence on this issue. This reflects that the Opposition has a large number of seats in and around London, where house prices have sky-rocketed in recent years. But the latest polling makes it clear that Labour’s concerns about how these voters would respond to a proportional property tax are misguided.
Meanwhile, a surcharge for foreign-owned, empty, and second homes would ensure that international buyers in London pay amounts in property taxes closer to what they might expect in New York or Paris. This would limit the scope for property being used to facilitate economic crime and act as a much-needed control on skyrocketing house prices. The surcharge generates £4.5 billion in tax revenue, which can be used to lower local tax bills for households up and down the country.
Importantly, the policy would generate a surplus of £5.6 billion for the Treasury. Such proceeds could be used to help fund adult social care or limit the recently announced increase in National Insurance. Doing so would be an eye-catching manifesto pledge.
What other tax reform helps to ease the cost-of-living crisis for hard-working families, boosts the public finances to the tune of £5.6 billion, and wins seats at the next election? The Proportional Property Tax would tick all three boxes. If a different yet beneficial reform exists, neither party has yet shared it with the electorate. This reform could be a game changer for the Prime Minister. As the cost of living rises and Sue Gray looms, it is one he should reach for immediately.
New Polling | Scrapping Council Tax key to winning ‘Red Wall’ seats
Extensive new polling of constituencies up and down the UK indicates that overhauling how our homes are taxed “holds the key” to the Conservatives or Labour winning over ‘Red Wall’ seats at the next election.
A poll of 4,000 people conducted by JL Partners for the Fairer Share campaign group reveals widespread support for replacing Council Tax and Stamp Duty with a Proportional Property Tax (PPT) which would be levied on the current value of properties rather than on 1991 levels. Such a move could lead to bills falling for 77% of the country, with the average household likely to be £556 a year better off.
The polling, which included MRP modelling, looked at the impact the policy could have on vote share in every single constituency in the UK. The results show how, with all things being equal, a Proportional Property Tax could be a ‘game changer’ at the next election.
Key findings include:
- Were Labour to introduce a PPT, the policy could help the party gain as many as 52 seats including 43 in the so called ‘Red Wall’. They could also make gains in Scotland and would see their vote share increase among swing voters by net 15%.
- Were the Conservatives to back the policy, their share of swing voters would increase markedly with 41% of undecideds more likely to lend their support to the party. Replacing Council Tax could see them gain as many as 60 seats in the next general election compared to their current position and hold on to the majority of Red Wall seats they won in 2019.
Blue = Conservative Red = Labour Orange = Liberal Democrat Yellow = SNP
With Council Tax bills expected to rise across the country for many households from April, the research also highlights how reform of the way property is taxed is supported by every single constituency in England:
- Nationally, voters back the policy by over 3:1 (52% versus 17%). It is even more popular with voters in the North who support it by 9:1 (61% versus 7%).
- Support is highest among people living in lower value homes in the North and the Midlands who would benefit the most from significantly lower bills.
- The tipping point at which someone is likely to oppose the policy is when they live in a home worth £500,000 or more. Given the average house in the country costs £269,000 the policy is clearly popular across the board.
- Support falls to 41% in areas such as Islington where the average price of a home is £839,000. However, there is still net support for the introduction of a Proportional Property Tax.
Blue = Support Red = Oppose
Fairer Share argues that a Proportional Property Tax introduced at a flat rate of 0.48% on the value of a property would raise a surplus of £5.6billion for HM Treasury and is a way for the Government to overhaul a deeply regressive and unfair system. The policy also includes a surcharge for second homeowners and foreign owners of UK property, proceeds of which (£4.5 billion) have been used to lower bills for low and middle-income households up and down the country.
Findings from the polling add to the growing pressure for change with leading politicians from across the political spectrum publicly supporting calls for change including a number of MPs in Red Wall seats.
What has been said about the research?
Andrew Dixon, Chairman of Fairer Share, said:
“People up and down the UK are sick to the back teeth of council tax. They overwhelmingly want a fairer system in its place that reflects the true value of their homes. Our polling shows just how strong that feeling is and how reforming our property taxes holds the key to success at the next general election.
“Were Labour to replace council tax they could gain millions of votes and potentially win over significant numbers of swing seats, most notably in Scotland and across the Red Wall. The Conservatives love to say they reflect the ‘will of the people’. Yet they appear to be tone deaf to the economic and political benefits of a proportional property tax.
“The reality is that it is time to bring our property taxes into the 21st century and backing a system of proportional property tax should be a no brainer for both Boris Johnson and Keir Starmer.
My question to both leaders is what other tax reform eases the cost-of-living crisis for hard-working families, provides a £5.6 billion surplus for HM Treasury and delivers countless key seats for Labour or the Conservatives at the next general election?”
James Johnson, founder of JL Partners and former head of polling at Downing Street said:
“Both parties currently sit in a quagmire. The Conservatives are falling behind Labour in the polls, while Labour is still not trusted enough to win convincingly. This research shows that a proportional property tax could well be the way for either party to convince the electorate they are the party for them.
Rarely do individual policies move the dial as much as this one does: it is highly popular with swing voters, and our modelling shows that it can bolster Conservative and Labour support – depending on who backed it – in the North and the Midlands but also across the country.”
John Stevenson, Deputy Chairman of the Northern Research Group and MP for Carlisle:
“If the Conservative Party wants to deliver for voters and retain the ‘red wall’ seats that we won at the last general election then making our property taxes fairer is one of the ways to do it.
We can now see clearly that voters in many marginal constituencies and others are overwhelmingly in favour of scrapping Council Tax. In its place they want a system of proportional property tax that would mean lower bills for the majority of households up and down the country.”
Aaron Bell, MP for Newcastle-under-Lyme:
“This polling confirms something that I have long suspected. Abolishing council tax and stamp duty and replacing them with a fairer property tax is the right thing to do for millions of people up and down the country. And, with voters across the UK backing a proportional property tax by over three to one, I believe it is also the right thing for the Conservative Party, helping secure for the long-term the support of those voters who switched to us in 2019.”
Simon Fell, MP for Barrow and Furness:
“Now we know that the majority of people in constituencies up and down the UK want a simpler and fairer property tax system, there is no excuse for politicians not to deliver. Rather than sticking with an unjust and outdated council tax system, my party should go into the next general election promising voters a modern and progressive proportional property tax.
This much-needed reform would lift a disproportionate burden from young people while delivering lower bills for millions of hard-pressed households across the country.”
Dame Margaret Hodge, MP for Barking:
“Our existing system of property taxation in the UK is deeply flawed and highly regressive. Now we can see that voters overwhelmingly want a fairer system, we urgently need to have serious debate about delivering exactly that.
As the Government preside over a cost-of-living crisis and we head into a spring of tax hikes and soaring prices, there is a stronger case than ever for looking closely at a proportional property tax which would result in permanently lower bills for most households with no cost to taxpayers."
Dan Carden, MP for Liverpool Walton:
“Standing by an outdated and unfair system of property taxation is a betrayal to millions of households across the country. Regressive Council Tax hikes alongside a brutal cost of living crisis mean many across the country, especially the poorest households and people in the North, will suffer and struggle to make ends meet.
Not only would replacing Council Tax and Stamp Duty with a more progressive system help struggling families in communities like mine, but it has the support of voters across the country who want to see change.”
Grahame Morris, MP for Easington:
“The Government must stop talking about levelling up and start acting. Council Tax is a grossly unfair and disproportionate tax holding back our regions. Proportional Property Tax is a simple, efficient, and effective means of generating revenues, supporting families, and easing the cost of living.
A Proportional Property Tax would help level up the UK and reduce the economic divide that has persisted in our country for generations. The policy has widespread public support and growing political support; it is time for change.”
How killing off council tax would deliver for voters in the West Midlands and beyond
This article was published by the Centre for the New Midlands on the 7th March 2022, written by our Founder, Andrew Dixon.
It is no secret that our council tax system is broken. The Institute for Fiscal Studies has described council tax as “highly regressive” with respect to property value and “increasingly arbitrary and unfair”. The absurd nature of the current system is underlined by the fact that households in Birmingham must pay out 0.75% of their property value in tax whereas the average household in Battersea pays just 0.11%.
What is less well-known is that we could easily replace council tax with a system that would not cost the Exchequer a penny and would lead to lower bills for the majority of households in the UK, with some of the biggest savings going to people in the West Midlands.
The Fairer Share campaign that I chair is calling for council tax and stamp duty to be replaced with a simple proportional property tax set at a flat rate of 0.48% of a property’s value. Since we kicked off our campaign in 2020, we have seen growing signs of support in the House of Commons with MPs from both parties now backing the plan. Among those in favour of a proportional property tax are Aaron Bell, Conservative MP for Newcastle-under-Lyme. “Abolishing Council Tax and Stamp Duty and replacing them with a fairer property tax is the right thing to do for millions of people up and down the country. It is also the right thing for the Conservative Party to do if we are serious about delivering to those who voted Tory for the first time in a generation,” he has stated.
In March last year, Boris Johnson was asked at Prime Minister’s Questions to get behind a proportional property tax which “would create a transparent property taxation system, generate revenues that local government needs and ease the tax burden on hard-pressed families across the country”. We are still working on the Prime Minister but earlier this year the Government did make what looked like a small step in the right direction with council tax rebates given to households in bands A to D. However, the reality is that the one-off payment does not go anywhere near far enough and in many cases is misdirected, often towards people on high incomes living in Band D properties in trendy neighbourhoods where houses sell for millions of pounds.
At best the recent changes to council tax are merely tinkering around the edges of an unfair system that hits young people and households in the Midlands and north of England the hardest. To really deliver for voters in the red wall and beyond, the Prime Minister should act now to kill off council tax and stamp duty and bring in a proportional property tax that would mean lower bills for around 76% of households across England. Overall, £6.5 billion per year would be saved by council tax payers outside central London, representing a huge boost to countless communities and their local economies.
Admittedly, not everyone would be quids in. Some homeowners in London may see a small increase in their annual bills, reflecting the extreme rise in house prices over the past 30 years. But across the country renters would pay nothing and to ensure there are no ‘losers’ on day one of the policy being implemented our campaign is proposing a cap on the increase in tax of £100 per month, not far off the price of a daily cup of coffee.
Households in the West Midlands would be among the biggest winners under a proportional property tax. For example, in Bell’s Newcastle-under-Lyme constituency, 97% of households would be better off with average savings of £600. In Birmingham Ladywood 98% of households would benefit with an average saving of £600. And in Walsall North 100% of households would reap the rewards with an average saving of £800.
Additional research has shown that replacing council tax and stamp duty with a proportional property tax could free up almost 600,000 homes within 5 years, with more than 50,000 of these in the West Midlands. The research by WPI Economics found that of a total of the 595,000 homes, 315,000 would be transactions for better space allocation and 135,000 would be second homes released as primary residences. The rest would be vacant homes released as primary residences and homes built due to previously uninitiated planning permission. This reform therefore, not only addresses the cost of living crisis but also addresses the challenges posed by the affordability and accessibility of housing.
This year we have also commissioned in-depth national polling to establish what voters make of proportional property tax. The findings, which will be published shortly, should make all MPs sit up and take note. In short, we found that voters in constituencies up and down the country have an appetite for a proportional property tax that could well translate into votes for whichever party takes action.
With council tax due to rise yet again in April and the cost-of-living crisis set to deepen, our message to the Government is clear. If they are serious about levelling up and delivering for voters who are struggling with their bills then a proportional property tax has to be part of the package. It is time for ministers to recognise that council tax is an outdated and unjust system that is hurting many middle and low incomes households in modest homes. In its place we should have a modern, simple, proportional property tax that would put more money in the pockets of people across the West Midlands, and up and down the country.
Andrew Dixon
Chairman & Founder
Fairer Share
Jill Mortimer MP | The red wall deserves a fairer council tax system
This article first appeared in The Times on the 10th February 2022, written by Jill Mortimer, Member of Parliament for Hartlepool.
The Government’s Levelling Up White Paper is a far-reaching plan to unlock the potential of people and places in every part of the country in the years ahead. But as the cost of living crisis bites, it’s clear that the levelling up agenda needs to work for people in the weeks and months ahead. Alongside long-term plans and medium-term missions, we need short-term solutions to put more money in peoples’ pockets.
I know that the Government gets this. The white paper recognises that certain communities and people need greater support in the more immediate term. The policies set out by the Secretary of State for Levelling Up will begin to have visible effects, on high streets and in local communities, in the next few years.
More immediately, action is being taken to limit the impact of soaring energy prices on poorer households. Under plans announced by the Chancellor last week, millions of people in council tax bands A to D will be given rebates on their bills worth hundreds of pounds. This will be a vital financial lifeline for many of my own constituents, who do not live in expensive homes yet have been facing council tax bills of more than £2,000 a year.
By focusing on these council tax bands, the Government is ensuring that a broad range of households in modest homes are supported, including the very poorest and thousands of middle-income families. By and large, this is a demographic that deserves to reap the biggest benefits from levelling up. But why stop at a one-off payment?
The Government could and should still go further to fix one of the most outdated and unjust of all the taxes we currently have in the UK and put more money in peoples’ pockets. The absurdity of the council tax system is such that households in my own constituency currently pay out an average 1.31 per cent of their property’s value every year, while for residents of Westminster the council tax burden stands at just 0.09 per cent. In other words, council tax rates in Hartlepool are higher than they are for comparative bands in many other, and often much more affluent, areas of the country.
Even with the rebates, council tax will still be a system that favours millionaires rather than the millions. By taking bolder action to minimise the pain caused by council tax, the Chancellor would be steering the levelling up agenda towards a place where it can make a real difference to voters’ wallets today rather than in a decade’s time.
To deliver for voters in the red wall and beyond, the Government could revisit the outdated council tax banding system, which is based on 1991 prices and favours taxpayers in those areas where house prices have surged the most. This would be a much-needed step in the right direction. We should look closely at killing off council tax and replacing it with a fairer system that works for Hartlepool and the majority of the country.
In April, households are expected to see gas and electricity bills rise by 50%. This comes to about £600 for an average bill and, just like with council tax, Britain’s poorest households are set to be hardest hit. According to the Resolution Foundation, the poorest will see their energy spend rise from 8.5% to 12% of their total household budget. This is three times the proportion for the richest.
It is essential therefore that action to put more money in peoples’ pockets is at the heart of the levelling up agenda. In constituencies such as mine, many voters cannot wait until 2030 to find out how they may be better off. They are looking for answers today and the levelling up agenda needs to urgently provide them.
Responding to the Government's flagship Levelling Up White Paper, Fairer Share's Founder and Chairman, Andrew Dixon said:
“With the publication of the Levelling Up White Paper, Boris Johnson is promising jam tomorrow while refusing to lower bills today. If he was serious about levelling up, the Prime Minister would act now to bring in a tax policy that is pro-red wall and pro-working people. That means listening to many of his red wall MPs and backing a Proportional Property Tax. Doing so would make 76% of households better off to the tune of £435 a year, while sticking with the current system only means ever higher bills for already-stretched households. The reality is that the levelling up white paper is a dead duck and levelling up will never take off as long as the Government refuses to kill off our unjust and outdated council tax regime.”
New Report | Reforms to Council Tax could raise £4.5 billion each year from foreign buyers
Replacing Council Tax and Stamp Duty with a Proportional Property Tax would raise as much as £4.5 billion from foreign homeowners, empty homes and second homes.
This was the finding from our new report released this week, assessing the impact of international investors on the UK property market, and how property tax reform could help our economy in the future.
Introducing such a Proportional Property Tax, levied on the existing value of peoples’ homes rather than 1991 values (as is the current practice), would lead to 76% of households being better off, with an average saving of £435 per year.
Currently, foreign buyers in Westminster, for example, only pay a maximum of £1,655 a year. The much-needed reform of property taxes would see a surcharge of 0.96% levied on all foreign owned, second and empty homes. This would mean that an international buyer purchasing a £6.2m house in Westminster would pay £59,520 each year in local tax.
Council Tax is deeply regressive with those in low value homes paying more in proportion to the price of their home than those in high value homes. For example, in the Durham constituency of Easington, a family living in a home worth £100,000, presently pays over 1.4% of their home’s value in Council Tax every year. This rate is 52 times higher than the 0.03% rate which the £6.2m home mentioned above in Westminster would pay.
Whilst London remains the prime market for foreign investors, recent data shows that since 2010, overseas ownership has tripled to 250,000 homes across England and Wales, pricing out local households out of the market.
The report reveals that the policy’s surcharge would bring in as much as £4.5 billion in tax revenue, reduce bills for 76% of households and would also free up as many as 600,000 homes over 5 years, including a quarter of a million homes for 1st time buyers.
Calls for replacing Council Tax are set to grow louder this year as the cost of living crisis intensifies. Our polling carried out last year highlighted how Council Tax was the most disliked tax in the country with over 50% saying it was worse than Income Tax, Inheritance Tax and Capital Gains Tax.
The latest findings put further pressure on ministers to bring in a Proportional Property Tax, which has the support of a number of Labour and Conservative MPs, think tanks and the CLG Select Committee.
- John Stevenson MP for Carlisle, stated, "If we are to fix the housing market so that more young people can have a home of their own, then ministers should give serious consideration to taxing the high numbers of foreign investors in the UK. The best way of achieving this could be through a Proportional Property Tax, freeing up homes up and down the country.
- Lord David Willetts a former Conservative Minister, has previously said, “We've got to help young people get started on the housing ladder, and [a Proportional Property Tax] would bring more houses onto the market and would mean that people in low-value houses will not be paying so much tax”.
- Andy Burnham, the Mayor of Greater Manchester, also argued for replacing Council Tax with a new levy based on the value of your property, stating “The party can't tiptoe around it anymore”.
- The CLG select committee published a report in July last year recommending the introduction of a PPT, stating, “Council Tax is also an increasingly regressive tax that again penalises those in more deprived areas. A revaluation is long overdue”.
Reflecting on the report, our Founder, Andrew Dixon said:
“The Government is under increasing pressure to get to grips with the housing crisis and ensure foreign homeowners pay their fair share of property tax. Adopting a Proportional Property Tax would mean lower bills for the majority of households in the UK while the surcharge on these purchases would lead to hundreds of thousands of homes coming onto the market for UK residents.”
This article first appeared on Bright Blue's website, as the winner of the 2021 Tamworth Prize, which this year called for entries on how the Government could revive 'left-behind' areas.
When William IV appointed Sir Robert Peel as Prime Minister against the expressed will of the electorate, Peel was forced to prove that his brand of Toryism was in the electorate’s best interests. Boris Johnson finds himself in a very similar position today. Through the electoral benefits of Brexit, the Conservatives have found themselves controlling large swathes of the north – if he’s to stay in Government he must finally take regional inequality seriously – levelling up is the Government’s attempt to do exactly that.
New research into cash benefits has found that the best way to increase someone’s welfare is often to put more money into their pockets. A literature review conducted by the economist Ioana Marinescu found that unconditional cash transfers consistently are found to improve health and educational outcomes, and decrease criminality and drug & alcohol use. Moreover, a recent randomised control trial has found that these schemes can even increase the incentive to work. However, giving people direct payments is not the only way to increase the amount of money in people’s pockets. An easier way is to finally fix council tax.
The way council tax is currently calculated really makes no sense. It is based upon property valuations that are now 30 years old making it extremely regressive. This is because wealthier regions have seen higher levels of house price inflation than less well-off regions. The effect is that those in London pay council tax based on massive undervaluations and those in the north are largely paying based on overvaluations. To make things worse the rates are set locally forcing poorer authorities with higher welfare bills to set higher rates than wealthier ones. Consequently, the effective tax rate in the north east is now 3.5x larger than it is in London. Given this it is no wonder that over 3.5 Million people are currently behind on their council tax bills.
By fixing the council tax system, we can lessen the burden put on the areas that need assistance by putting more cash in hands and increasing their quality of life. The best way to do this is the proportional property tax. This, as advocated by Fairer Share, would put a 0.48% tax on current property values. As well as evening up the divide caused by the out of date valuations we currently use, this move would also be broadly progressive and result in cash savings each year for 76% of households nationwide – the average household saving as much as £453 per annum.
The most important benefits of this policy will be seen in precisely the areas the Government are targeting with their levelling up agenda. Across the 44 Red Wall seats that the Conservatives won in 2019, 97% of households would be better off with the average gaining £660 every year as a result of this change. Furthermore this wouldn’t just be a bribe to Conservative voters. Evidence from the Resolution Foundation indicates that it is the young who would benefit most from this reform – people who are unlikely to vote Conservative.
Thus, the Conservatives should introduce the proportional property tax not just because it would win them votes, but also because it’s the right thing to do.
Moreover, it will also help level up another group that suffers disproportionately under the current system. More than a fifth of young people currently live in overcrowded or concealed housing – and the tax system supports this. Those who live in under crowded conditions with multiple unused bedrooms currently have little incentive to downsize and so that stock is not made available. What PPT would do is incentivise those living in houses larger than they require to sell and purchase somewhere smaller to reduce their tax bill. Inadvertently this decision would increase the supply, and thus lower the cost, of those larger houses allowing more young people to live in homes appropriate for their needs.
It is a standard Conservative principle that the individual knows best when it comes to spending their own money – and modern economic evidence supports this. If we want to level up forgotten regions it cannot be done effectively through central state planning as this will only end up with bureaucracy taking over and inefficiencies ridding the project of its potential to create Adam Smith’s dream of universal opulence.
Like Peel abandoned Wellingtonite traditional Toryism in his Tamworth Manifesto to deliver 98 additional seats, Boris Johnson must too abandon council tax. Given the financial pressures the coronavirus has placed upon families, anything other than abolition would be actively causing harm to the poorest people in the country. PPT is the simplest way of creating a fairer system of property tax and would help put more money in the hands of those who need it most, and relieve the burden of council tax arrears that 5% of Britons are currently experiencing.
Tom is a Law student at City, University of London and is the winner of the Tamworth Prize 2021.
This article first appeared on Politics.co.uk on November 29th 2021, written by Grahame Morris, Member of Parliament for Easington.
Boris Johnson's social care plan is like a "classic Covent Garden pickpocketing operation", Keir Starmer said last week to much applause from Labour MPs at PMQs and some arresting headlines afterwards.
The image of Johnson and Rishi Sunak as street pickpockets worked well, as it did when Rachel Reeves deployed it in her well-received Budget response last month. It also forms a line of logic that leads Labour into some interesting new territory on how we tax homes fairly.
“It is not just broken promises; it is also about fairness,” said the Labour leader about the revised social care cost cap, which no longer includes council contributions towards total fees. “Under the Prime Minister’s plans, a person with assets worth about £100,000, most of it tied up in their home, would have to pay £80,000. They would lose almost everything.”
Labour is yet to detail our own social care plan, but the direction of travel is clear. Evidently, the leader rejects the concept of all homeowners paying the same towards social care regardless of the value of their property. Those living in areas in the North of England where house prices have hovered around the £100,000 mark for some years should not get the same treatment as millionaires living in London and the South East where prices have sky-rocketed, he suggests.
The position makes sense, coming in the wake of Labour analysis released at the weekend, showing how poorer Northern homeowners will end up losing a larger proportion of their wealth than better-off people under the changes. Homeowners in the North East will be particularly badly affected, with average prices under £186,000 in nearly 90 per cent of constituencies, while those in London and the South East will be less adversely impacted.
"In the so-called red wall, 97 per cent of households would be better off as a result of a proportional property tax"
But if Labour is to level the playing field then why stop at social care? The current council tax system also does exactly what he is railing against by forcing homeowners in modest homes in the North and the Midlands to pay out much more than their southern counterparts as a share of their home’s value every year.
In London and the South East, there are eight constituencies in which the average household pays no more than 0.20 per cent of their home’s value. But in many constituencies in the North and the Midlands, households must pay out a considerably higher share of their home’s value - going up to a whopping 1.41 per cent in my own constituency of Easington in East Durham. As a result, we currently have the absurd situation in which residents in my constituency face a council tax burden 14 times higher than that faced by residents of Kensington – and 24 times higher than people living in Westminster.
If we are to attack the government’s social care cap for hitting those with fewest assets the hardest, Labour should criticise the current council tax regime on the same grounds. Going further, we should be supporting plans to fix the problem without spending more money – by simply abolishing council tax and stamp duty and bringing in a fairer system of proportional property tax.
Under the model proposed by the Fairer Share campaign, property owners would pay 0.48 per cent of their property value each year and this tax would bring in exactly the same amount of revenue as stamp duty and council tax. Around 76 per cent of households across England would gain under the new system, seeing a reduction in the amount of tax they pay on their primary residence.
In the so-called red wall, 97 per cent of households would be better off as a result of the policy with an average saving of £660 per year. We need new ideas to rebuild Britain and Labour backing such a radical and progressive policy would help us beat the Tories at the next election.
Judging by his comments this week, Starmer already supports the principle behind a proportional property tax. The logical next step for him is to get behind a policy that is increasingly and unsurprisingly gaining support from the public as well as from MPs on all sides.
“He has picked the pockets of working people to protect the estates of the wealthiest" Labour’s leader told the Prime Minister at PMQs last week. I agree, and Labour should now apply the same principle and replace outdated council tax with a new, progressive and fairer proportional property tax.
Grahame Morris is Labour MP for Easington
This article first appeared in The Yorkshire Post on November 24th 2021, written by Andrew Dixon, Chairman and Founder, Fairer Share.
What exactly does the Prime Minister have against homeowners in the North?
For some time households in Yorkshire and beyond have been served up a rotten deal by our outdated and unjust council tax system. And now the Government made matters even worse with a social care cost cap that will hit Northern households hardest.
But as Boris Johnson stands accused of betraying the North, he still has an opportunity to get back in the good books of Northern voters. If he wished to do so, the Prime Minister could deliver serious cash savings to voters across the North just by fixing our broken council tax system ahead of the next general election.
For now, after a week of negative headlines in the North, the pressure is mounting on Ministers to do something that will work quickly and effectively. With the scaling back of the long-trailed Integrated Rail Plan, the Prime Minister found himself at odds with Northern MPs, regional leaders and industry figures, not to mention voters. But the rail plan was only the half of it.
With less fanfare the Government also quietly slipped out details of a new social care cap on home and care costs that will hit Northern households the hardest. The move to amend the cap will save Government hundreds of millions of pounds as subsidised care will not count towards the lifetime maximum.
It is argued that this means people with fewer assets – especially in this region – will end up losing a larger proportion of their wealth than better off people. Essentially, those who live in areas where house prices have not sky-rocketed in recent years stand to lose most.
According to Labour analysis, two thirds of poorer Northern homeowners will pay more towards their care under the changes. Don Valley, where the average property value is £155,000, is one of the constituencies expected to be hit hardest, while homeowners in the North East will be particularly badly affected, with average prices under £186,000 in nearly 90 per cent of constituencies. Meanwhile London and the South East will be less adversely impacted.
"The absurdity of the current council tax system is such that residents of Bradford East face a council tax burden nine times higher than people living in Westminster."
That would be bad enough if households in the North and Midlands were doing well out of other Government policies. Yet the same households are also the biggest losers under our current outdated property tax system based on house price values that are a year older than the very first text message and four years older than DVDs.
Presently, the average household in London presently pays out 0.24 per cent of their home’s value in council tax every year. Meanwhile, the average household in Yorkshire pays out 0.76 per cent and the figure is even higher in the North East. The absurdity of the current council tax system is such that residents of Bradford East face a council tax burden nine times higher than people living in Westminster.
There is no justification for the current unfair system. Especially when there is a straightforward and pain-free solution at hand. Unlike social care, the council tax problem can be easily solved without spending more money – by simply killing off council tax and stamp duty and bringing in a fairer system of proportional property tax.
Under the model proposed by the Fairer Share campaign, property owners would pay 0.48 per cent of their property value each year and this tax would bring in exactly the same amount of revenue as stamp duty and council tax.
A proportional property tax would mean lower bills for 19 million households across England, with households in the Midlands and the North seeing the biggest savings. In Don Valley, 98 per cent of households would see lower bills, with an average annual saving of £550. In Barnsley East, 100 per cent of households would see lower bills, with an average annual saving of £700. Across the ‘red wall’ some 97 per cent of households would pay less.
Unsurprisingly, a proportional property tax has been backed by a number of red wall Conservative MPs. Despite the pressure from his own side and Commons rebellion on Monday night, the PM is still sticking with the status quo when it comes to council tax. But with a cost of living crisis gripping the UK, and a social care cap and council tax system that together look like a double whammy of levelling down, it is surely time for the Prime Minister to change course.
Ultimately, if Johnson is committed to pushing through his rail and social care reforms against the interests of the North, then the least he can do is make property taxes fairer for households from Barnsley to Bishop Auckland.
He should accept that the game is up on council tax and seize the opportunity to move forward with a fairer system, delivering lower bills for millions of people in the North of England. By doing so, the Prime Minister could finally give Northern voters something tangible to celebrate.
Andrew Dixon
Chairman and Founder
Fairer Share