William Eichler 19 March 2020

Council tax ‘arbitrary and unfair’, think tank says

Council tax ‘arbitrary and unfair’, think tank says image

Financial experts have criticised the current council tax arrangements and called on the Government to reform them as part of the ‘levelling up’ agenda.

The Institute for Fiscal Studies (IFS) described council tax as ‘highly regressive’ with respect to property value and ‘increasingly arbitrary and unfair’.

Property values in London have risen over six-fold since the mid-1990s, compared to less than three-fold in the North East of England.

However, according to the IFS’ new study, council tax bands and bills, as well as central Government top-ups to councils’ revenues, are still based on relative property values in 1991.

The bill for a Band H property is just three times that for a Band A property, despite the former properties’ being worth at least eight times as much as the latter properties even in 1991.

The think tank, whose research was funded by the IFS’s Local Government Finance and Devolution Consortium and the Nuffield Foundation, argues that a revaluation and reform of council tax would help close the economic gap between UK regions.

The IFS researchers calculated that if properties were revalued based on values in the first quarter of 2019, and Government funding for councils adjusted to account for this, average bills would fall in the Midlands and North and much of the South West, and increase in London and its environs.

They also found that if council tax were made proportional to property values, the changes in average bills by council would be much larger. Average bills across most of the Midlands and North would fall by over 20%.

The think tank estimates about 2.6 million - or 11% of - households would see their bills fall by more than £200 a year, while a similar number would see them increase by more than £200 a year.

It stresses, however, that there would be many more winners than losers, with young adults, disabled adults and households with low and middle incomes, in particular, benefitting.

‘The failure to revalue council tax for almost 30 years means the tax bills households face bear less and less relation to the values of their properties,’ said Stuart Adam, a senior research economist at the IFS and an author of the report.

‘At a minimum the government should therefore revalue properties and put in place a cycle of regular and frequent revaluations to stop us getting in this situation again. Ideally it would undertake more radical reform too.

‘Reform would create millions of losers as well as winners, which means doing it would probably involve some political pain. But it must be done at some stage, or we would still be basing council tax in 2091 on relative property values in 1991 – an absurd state of affairs. With a government with a large majority, the next few years looks like as good a time as ever.’

For more on this see the IFS' David Phillips' feature in The MJ, 'Government should grasp the council tax nettle'.

Participatory budgeting image

Participatory budgeting

Evgeny Barkov explains what participatory budgeting means and how it can reveal what citizens need.
For your free daily news bulletin
Highways jobs

Principal Flood Risk Officer

Lancashire County Council
We have an exciting opportunity for a Principal Floor Risk Officer Lancashire
Recuriter: Lancashire County Council

Duke of Edinburgh Youth Support Worker

Essex County Council
£14597.0 - £19106.0 per month
Please note this is a part time contract - annualised hours 106 per year. Therefore the actual salary range is from £995.44 up to £1049.79 per annum. England, Essex, Harlow
Recuriter: Essex County Council

Head of Internal Audit

Kent County Council
Up to £97,000 + benefits
We now have an exciting opportunity to strengthen and shape our Audit function, as... Maidstone, Kent
Recuriter: Kent County Council

Director of Children’s Services

St. Helens Metropolitan Borough Council
circa £120,000
This is an exceptional opportunity for someone who wants to make a real difference to the children, young people and families of our Borough. St Helens, Merseyside
Recuriter: St. Helens Metropolitan Borough Council

Assistant Director, Social Care & Public Health Commissioning

Bolton Metropolitan Borough Council
c£71,000 to £89,000 per annum
Reporting to the Director of Strategic Commissioning you will lead Commissioning in the context of a developing Integrated Care System.  Bolton, Greater Manchester
Recuriter: Bolton Metropolitan Borough Council

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue