Council Tax Reform

Jonathan Brash Excerpts

Wednesday 19th March 2025 Commons Chamber

[Mr Jonathan Brash (Hartlepool) (Lab)]

Council Tax is, without doubt, the most unfair, regressive and punitive taxation system in this country. It is hammering towns such as Hartlepool. Places with high deprivation and low wages—the very areas that a fair tax system would support—are instead being squeezed to breaking point by a broken system that must be fixed. A Government that stand up for working people, promise change and have a mandate for that change cannot sit back while such fundamental unfairness continues.

The numbers speak for themselves. For a band A property in Westminster, it is £648 a year. In Hartlepool, it is £1,585. A Band H property in Hartlepool pays nearly £3,000 a year more than one in Westminster.

[Richard Foord (Honiton and Sidmouth) (LD)]

The hon. Member makes a good point in comparing his constituency with the situation here in London. To continue that point, on top of council tax, there is the settlement funding for councils, of which London boroughs have received roughly twice as much as shire counties. Does the hon. Member agree that that is also a problem with the current council tax regime?

[Mr Brash]

Certainly, the last 14 years—I note that none of the Conservatives are here—shifted the settlement away from areas of deprivation to more affluent areas. That has had an incredibly punitive effect.

Council tax in Hartlepool represents 9% of median gross pay. Here in Westminster, it is just 2%. Someone can live in a multimillion-pound property in London and still pay less council tax than someone in a terraced house in Hartlepool. It is not right. It is not fair. It must change. An outdated system based on 34-year-old property values can never deliver fairness and has widened regional inequalities.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

Sixty-six per cent of Somerset council’s budget goes to fund social care. That budget is funded through the taxes raised on property based on prices from 1991, as the hon. Member has set out. Does he agree that that is archaic and unfair, and that we should enact real reform to the way we fund local authorities?

[Mr Brash]

I absolutely agree and I will come to social care later in my speech, so I will pick up that point then.

[Jim Shannon (Strangford) (DUP)]

May I commend the hon. Member for bringing forward the debate? He is getting himself a reputation in this House for being an assiduous constituency worker. I wish him well in continuing to do the good work that we all witness.

Does the hon. Member not agree that with the cost of living crisis, working families—that is what we are talking about here—need to know that every penny of tax is wisely spent? Confidence is clearly at an all-time low. Does he further agree that greater openness and transparency as to the use of tax funds can only be a good thing throughout this great United Kingdom of Great Britain and Northern Ireland?

--- Later in debate ---

[Mr Brash]

I absolutely agree. I should first say that it would not be an Adjournment debate without an intervention from the hon. Member. He is absolutely right: we need transparency in the system. One of the biggest problems with council tax is that it has broken the bond of trust between those who pay it and the services that they receive. I will come back to that point later in my speech.

[Grahame Morris (Easington) (Lab)]

My hon. Friend and neighbour makes some excellent points about the unfairness of the council tax system. My view is that it cannot be tinkered with and it is fundamentally flawed. For my constituents and my hon. Friend’s, it is nothing less than a regressive property tax. In Blackhall in my constituency, someone living in a modest band A home worth £35,000 pays almost the same in council tax as a band H property in Belgravia worth many millions of pounds. That is indefensible. Does my hon. Friend agree that if we are serious about tackling growth and improving living standards in constituencies such as mine and his, we need radical reform?

[Mr Brash]

I absolutely agree with my hon. Friend. The tinkering around the edges that has happened in some parts of the United Kingdom will not get the job done.

My hon. Friend mentioned property prices, and they are at the heart of the unfairness. In Hartlepool, 53% of the properties are in band A. Here in Westminster, that figure is 1.2%. In Hartlepool, only 3.7% of the properties are in bands F to H, yet in Westminster it is almost half of all properties. Such a skewed housing base makes it impossible to raise the money to deliver the services that people need. Furthermore, council tax is not a reliable source of income. Nationally, one in 10 people in the UK have been in council tax debt, and nearly 40% of those individuals have reported being threatened with legal action as a result. Outstanding council tax debt already stands at £6 billion.

This week I spoke to Caroline, a development officer in Hartlepool who supports many of the most vulnerable in our community. She told me of one working family for whom council tax, even with the reduction, is now the equivalent of more than a third of their mortgage payment. Dad works and mum is a full-time carer for their disabled son. They live in fear of not being able to pay. They do not understand where their money goes and they do not feel any benefit, only financial pain. How can we sustain such a system? How can we stand by while it punishes the very people we are supposed to represent?

At the heart of this broken system is social care, as has been mentioned already. Nearly 70% of Hartlepool’s budget is spent protecting the most vulnerable children and adults in our town, and that is mirrored in areas of need across the country. No one in their right mind would design a care system funded by a regressive tax levied on small, struggling communities, yet that is exactly what has happened and it has been getting worse. In Hartlepool, officers have made a rough estimate that if social care were removed, a typical band D property would see its bill drop from £2,400 to less than £1,000.

Elsewhere, the scandal in children’s social care is slowly bankrupting local authorities. Private providers, often owned by faceless hedge funds, are profiting on the backs of vulnerable children. The costs are staggering. In Hartlepool, the top four private providers charge an average of £12,000 per child per week. That is £624,000 a year for just one child. For Hartlepool, that is the equivalent of more than a 1% rise in council tax for one child’s care. Local councillors face the impossible choice: protect the most vulnerable or impose even more council tax pain on their residents.

The most pernicious thing about this regressive tax is the impact it has on trust. “No taxation without representation” is the saying, but as council tax bills go up, services are cut. Residents are no longer receiving the representation their money is supposed to deliver. Most people, thankfully, do not need social care, but they do need bin collections, clean streets, well-maintained parks, green spaces, museums, leisure centres and libraries —all things that make somewhere a place—yet these are repeatedly cut because of this failed system.

This is breaking the bond between councils and the public, and when people feel they are paying more but getting less, they stop believing in the system. When voters feel ignored and abandoned, they do not stop voting; they will vote for anyone with easy answers. Populist politicians with no real answers will step into this gap and exploit this frustration. I warn Ministers: fix council tax or face the electoral consequences.

There are alternatives. Andrew Dixon and the Fairer Share campaign have advocated for a proportional property tax that would ensure contributions were based on actual property values. Some 70% of households in the north-east would be better off. Nearly a third would save as much as £1,500 a year—money that could help struggling families put food on the table, heat their homes and buy their children the things that they need. Yes, some would lose out, but it would, and should, be the wealthy in our society shouldering that burden. If we are not prepared to make the wealthy pay so the poor can pay less, what exactly are we for?

[Jonathan Hinder (Pendle and Clitheroe) (Lab)]

I pay tribute to my hon. Friend the Member for Hartlepool (Mr Brash) for securing this incredibly important debate, and I agree with every word he says. Does he agree that a reformed system would reduce the cost of living for ordinary people and, depending on how the Government wanted to reform it, actually increase revenues for the Government to spend on better public services?

[Mr Brash]

Absolutely. A properly balanced system could provide the services we need and put more money into the pot to ensure those services are delivered. That is partly the problem with this system: it is so broken that it punishes people in deprived areas, and it still does not deliver those services.

I know Ministers have said they are not looking to reform the council tax system in this Parliament, but even if an overhaul of the entire system is not possible, there are still ways to improve things, and I hope the Minister will advocate for them. The Casey review of social care should recommend taking social care out of local authorities. The Children’s Wellbeing and Schools Bill, by promoting regional co-operation, can create economies of scale to take the burden off council taxpayers. Under the English devolution proposals, financial devolution must be part of the discussion. If we are to have larger authorities that are more remote from the taxpayer, the residents must see the benefit in their pockets.

This Government promised change and to fix the foundations, but the public’s most direct contact with government is through local councils, whose foundations are crumbling. If Ministers ignore council tax reform, they do so at their peril. We can fix a broken system, ease the burden on working families, and restore trust in government at all levels. We have a moral duty to right a 34-year-old wrong, find a sustainable solution to this injustice, cut council tax bills and deliver real change for the people we represent.