Council tax bands need overhauling, northern business group says

Council tax bands in England should be overhauled to fix a crisis in council funding, a group representing northern businesses has urged.

The Northern Powerhouse Partnership (NPP) says the decades-old property valuations underpinning the bands should be redone to make them fairer.

It wants Chancellor Jeremy Hunt to commit to a national revaluation in March's Budget.

The government says it has no plans for a nationwide band revaluation.

NPP's chief executive, Henri Murison, told the BBC that the current council tax system was "essentially broken".

In a letter to Mr Hunt, he said the Treasury should carry out a revaluation of all homes in England before the next general election, expected later this year.

The NPP's suggested overhaul would also include higher bands for expensive foreign-owned properties, to level the field between richer and poorer councils.

Current council tax bands are based on a property's value in 1991 in England and Scotland, 2003 in Wales and 2005 in Northern Ireland.

NPP, launched by former chancellor George Osborne to push policies to boost economic growth in the north of England, says the current bands are unfair.

In his letter to the chancellor, Mr Murison said changes would address the "emergency in local government, and particularly those councils with the lowest tax bases and the greatest needs".

This week, the government announced an extra £500m for councils next year - which Mr Murison called "a start, but it's nowhere near enough".

NPP says a homeowner in Hartlepool living in a house worth £150,000 is paying more than £200 a year more in council tax than someone in Westminster in a property worth £8m.

While Mr Murison accepts that "fixing that problem is actually going to take a long time", he has called on the government to make council tax fairer within local areas before the next general election.

"At the moment," he added, "you could be living in a house worth twice as much, just down the road from someone and be paying less council tax.

"And that's not really fair on the person down the road, is it? And that could be solved relatively easily and quickly as long as the revaluation work had been done."

Local Government Secretary Michael Gove, in charge of the council tax system in England, announced a review of the regime in November 2022.

But a year later, one of his ministers told MPs there was "no review in the formal sense of the term".

Mr Murison said Mr Gove has been "a great reformer" but said in the area of "levelling up" economic inequality amongst different regions, he had been "thwarted a bit by his government colleagues".

"If he was given free rein, I think we could have seen state council tax reform before the general election, but I'm not sure No 10 necessarily have the reforming zeal that perhaps Michael does."

NPP has also called for additional council tax bands to be created for foreign-owned properties worth more than £2m.

They would be known as super bands and the money would be redistributed to councils around the country, it has suggested.

Conservative peer Lord Pickles, who served as David Cameron's communities and local government secretary between 2010 and 2015, said reforming council tax would be "profoundly unpopular".

He told the BBC: "It should be reformed. It's long overdue being reformed. There should be a revaluation, business rates should be reformed because you can't reform one without the other.

"And governments for many generations have avoided doing that because it will be profoundly unpopular.

"As communities secretary I avoided doing it, but I think I had a reasonable excuse, given the economic circumstances."

Any revaluation of properties in England is likely to negatively impact voters seen as being part of the traditional Conservative base, such as older voters, wealthier voters and those in the South.

Lord Pickles said it would be "physically impossible" to introduce meaningful change to the system before the next general election.

But he recommends "whoever wins the next general election, that this is something they'd do immediately".

One senior Westminster source said "revaluations are always problematic because the people that do well out of it say thank-you and forget it within the year and the people that don't [do well out of it] remember it until the next election".

They said wholesale reform "wouldn't be possible this side of an election, but I wouldn't put it past them to signal something" that the next government could build on.

A spokesperson for Mr Gove's Levelling Up Department said it had "no plans to conduct a nationwide revaluation of council tax bands".

"Councils are ultimately responsible for their own finances and for setting their own council tax," they added.