Andy Burnham has put London and the South East is on high alert for a major attack to promote ‘fairness’.
The Prime Minister gave another hint at a revaluation of council taxes that could hit families hard in areas where property prices have risen sharply over the past three decades.
The comments – made during his debut in the House of Commons last night – came as ministers scrambled for ways to balance the books and fund new spending commitments.
Labor MP Jonathan Brash asked whether Burnham was still determined to replace the “hated council tax system” because people in the North are paying too much.
The Prime Minister responded that he could not immediately go ‘to the extreme’, but added: ‘A council tax system based on 1991 valuations will not ensure fairness across the country.’
Andy Burnham gave a new hint about a council tax revaluation that could hit families hard in areas where property prices have risen sharply over the past three decades
Referring to Labour’s moves to divert central government funding away from London and the South East, the Prime Minister said:The first steps towards reform were taken in last year’s budget.
“We need to reach a consensus on this issue, if that is possible. “I understand what he is saying, but the more widespread reforms may have to wait for another day,” he said.
Governments have long stopped short of ordering a revaluation of council tax across England, fearing anger among voters.
Opponents point out that residents of London and the south-east routinely take out larger mortgages because of higher property prices, and are not necessarily better off.
Others bought homes when values were lower and struggled to pay the higher annual costs.
Mr Brash complained that a typical Band D household in his constituency of Hartlepool pays £2,556 a year, compared to £1,048 in Westminster – which is known for its extremely low council tax.
However, in Croydon the annual contribution is £2,599, in Reigate & Banstead £2,566, residents of Lewes pay £2,756 and in Wealden the level is £2,728.
Mr Burnham has previously expressed his determination to overhaul the tax system, with huge pressure from MPs to raise more money for spending.
He has said he is “convinced” of the argument for a land value tax (LVT), which would be based on the undeveloped value of land.
However, it is far from clear how the details would work in practice. And recently modeling from Tax Policy Associates has highlighted the huge impact it could have on the capital and surrounding provinces – with other areas benefiting.
The think tank concluded that an annual levy of 1.28 percent of the land value would roughly cover current council tax and stamp duty revenues.
But the estimates – which they stressed were only illustrative – suggest that owners of a band F-flat in Islington would have to pay £12,000 a year, rather than £2,900 in council tax.
Someone who bought a band H property in Westminster or Kensington, now worth millions of pounds, should find £44,000 and £54,000 respectively.
Modeling from Tax Policy Associates underlined the huge impact on the capital and surrounding provinces – while other areas could benefit
Off the M25, the owner of a band F house in Guildford would have to pay a fine of £6,200 a year, down from £3,500 in council tax at present.
A band F in Brighton currently attracts similar council tax, but would be eligible for an annual bill of £8,700.
The report suggested there could be transitional arrangements, including credits to offset stamp duty already paid.
But it also emphasizes that delaying tax collection would mean the levy rate would have to be significantly higher.
The model predicts an eye-watering property drop in the affected areas, such as a 19 per cent drop for average homes in Richmond-Upon-Thames.
