Change council tax system to stop poorer areas being charged more – Labour MP

A Labour MP has called for changes to how council tax is calculated, estimating that some households could save up to £1,500 a year.

Jonathan Brash (Hartlepool) said a “proportional property tax”, based on actual property values, would “radically rebalance the system”.

Mr Brash branded the current scheme “the most unfair, most regressive, and most punitive” taxation system in England, where deprived areas pay more.

He pointed to the disparity in payments for the same band properties between Westminster City Council and Hartlepool Borough Council, with residents in central London paying £648 for a band A property each year compared to £1,585 in the North East town.

Meanwhile, a band H household can expect to pay nearly £3,000 more in Hartlepool compared to Westminster.

“You can live in a multimillion-pound property in London and still pay less council tax than a terraced house in Hartlepool. It is not right. It is not fair. It must change,” Mr Brash said.

Council tax in England is calculated based on notional property values in April 1991.

The adjournment debate on Wednesday evening in the House of Commons heard one in 10 people have been in council tax arrears, and across England outstanding council tax debt stands at £6 billion.

Mr Brash told MPs that residents are growing increasingly unhappy at council tax rises continuing on an annual basis while councils cut services. He warned it could aid populist politicians.

“I would warn ministers – fix council tax or face the electoral consequences,” he said.

He added that a proportional property tax, based on current values, would make the system fairer. He admitted that some will be worse off but it would mainly affect the wealthy.

“If we are not prepared to make the wealthy pay, so that the poor can pay less, then what exactly are we for?”

He continued: “We can fix a broken system, we can ease the burden on working families, and we can restore trust in government at all levels.

“We have a moral duty to right a 34-year-old wrong, to find a sustainable solution to this injustice, cut council tax bills and to deliver real change for the people we represent.”

Local government minister Jim McMahon said: “The Government has ruled out a re-evaluation of council tax within this parliament, and so that means that we must find other ways to readdress the discrepancies of tax-raising ability through other means.”

Mr McMahon said Labour had updated the way councils are funded, and given multi-year settlements to local authorities. He said the Government had recently consulted on local government funding reform.

He said: “We propose that we update the way we account for council tax in determining local authority funding allocations, so future allocations more effectively account for the differing ability to raise council tax income across the country.

“This means that somewhere like Hartlepool, where the tax base is weaker because of the number of homes in band A to C, will not be treated the same as an authority in the South East which has a high number of homes in band E to H, and therefore has a greater council tax revenue-raising power.”