Council tax is the new poll tax. It’s time for reform

A poll tax protest, Hackney, March 1990. Image: Getty.

Rummage around in the “too difficult to touch box” of policy issues and somewhere near the bottom you’ll find a slip marked “council tax reform”. But as that tax is increasingly becoming as unfair as the poll tax it replaced, politicians need to be bold and reform this failing tax. Here’s why.

The poll tax was a political disaster which is widely credited with precipitating the downfall of Margaret Thatcher as Prime Minister. In response to the failed poll tax, the current council tax system was introduced in 1993 as a pragmatic fudge. Now politicians fear touching the issue again.

But council tax increasingly resembles the unpopular poll tax which it replaced. A new report by the Institute for Public Policy Research (IPPR) out yesterday highlights how this system of taxation is failing.

It is increasingly a regressive tax, with those living in the lowest-value homes paying a higher proportion of council tax with regard to property value, than those living in the highest value homes. A household in a Band A property in London would on average pay nearly five times what a Band H household would pay as a proportion of property value.

The council tax system also takes too little account of people’s ability to pay and punishes the poorest. The devolution of council tax benefit in 2013, together with the cut in the funding provided for it, means that people on the very lowest incomes are paying council tax for the first time since the poll tax – and bills are rising.

IPPR research found that the burden of council tax on London’s poorest households is more than six times greater than those on the highest incomes – and that was before the latest round of increases. At the same time, the number of those in arrears and facing prosecution has also dramatically risen.


Furthermore, the current system is an increasingly unsustainable source of local government finance, not least due to its regressive features, discounts and exemptions. Meanwhile, upward pressures on local government spending are rising.

Council tax, like the poll tax before it, is punishing those on the lowest incomes, and it’s time for an overhaul. There is public appetite for fundamental reform and politicians should no longer ignore the issue. Council tax needs to be reformed to create a more progressive, fair and sustainable system.

In our report focused on the system in London, we propose that the first step should be to devolve council tax to London’s government, as also proposed by the London Finance Commission. London’s unique housing market and strong sub-national governance make it well suited to a pilot devolution deal which could later be rolled out across the country. A reformed system needs a sub-national approach, rather than the current overly centralised one.

Second, action should be taken urgently to protect those on low incomes. A capital-wide council tax benefit system is needed to support London’s most vulnerable households. This will ensure no minimum payment is required of those on the lowest incomes and restore eligibility for support to at least their pre-2013 levels.

Third, in the long-term council tax should be replaced with an annual flat-rate tax proportional to present day property values. This should be levied on owners rather than occupants. A rate of 0.25 per cent would raise the same funds for London as the current system, but 80 per cent of households would benefit from paying lower tax.

Any reforms should also be accompanied by an improvement in public services to ensure the reform commands political and public support.

Reform of council tax will not be easy: there’s a reason why it has remained unreformed in England for nearly three decades. But it’s time that politicians abolished this failing tax, just like the poll tax before it.

Luke Murphy is associate director for energy, climate, housing and infrastructure at the Institute for Public Policy Research.

 
 
 
 

Coming soon: CityMetric will relaunch as City Monitor, a new publication dedicated to the future of cities

Coming soon!

Later this month, CityMetric will be relaunching with an entirely new look and identity, as well as an expanded editorial mission. We’ll become City Monitor, a name that reflects both a ramping up of our ambitions as well as our membership in a network of like-minded publications coming soon from New Statesman Media Group. We can’t wait to share the new website with you, but in the meantime, here’s what CityMetric readers should know about what to expect from this exciting transition.  

Regular CityMetric readers may have already noticed a few changes around here since the spring. CityMetric’s beloved founding editor, Jonn Elledge, has moved on to some new adventures, and a new team has formed to take the site into the future. It’s led by yours truly – I’m Sommer Mathis, the editor-in-chief of City Monitor. Hello!

My background includes having served as the founding editor of CityLab, editor-in-chief of Atlas Obscura, and editor-in-chief of DCist, a local news publication in the District of Columbia. I’ve been reporting on and writing about cities in one way or another for the past 15 years. To me, there is no more important story in the world right now than how cities are changing and adapting to an increasingly challenging global landscape. The majority of the world’s population lives in cities, and if we’re ever going to be able to tackle the most pressing issues currently facing our planet – the climate emergency, rising inequality, the Covid-19 pandemic ­­­– cities are going to have to lead the way.

That’s why City Monitor is going to be a global publication dedicated to the future of cities everywhere – not just in the UK (nor for that matter just in the US, where I live). Our mission will be to help our readers, many of whom are in leadership positions around the globe, navigate how cities are changing and discover what’s next in the world of urban policy. We’ll do that through original reporting, expert opinion and most crucially, a data-driven approach that emphasises evidence and rigorous analysis. We want to arm local decision-makers and those they work in concert with – whether that’s elected officials, bureaucratic leaders, policy advocates, neighbourhood activists, academics and researchers, entrepreneurs, or plain-old engaged citizens – with real insights and potential answers to tough problems. Subjects we’ll cover include transportation, infrastructure, housing, urban design, public safety, the environment, the economy, and much more.

The City Monitor team is made up of some of the most experienced urban policy journalists in the world. Our managing editor is Adam Sneed, also a CityLab alum where he served as a senior associate editor. Before that he was a technology reporter at Politico. Allison Arieff is City Monitor’s senior editor. She was previously editorial director of the urban planning and policy think tank SPUR, as well as a contributing columnist for The New York Times. Staff writer Jake Blumgart most recently covered development, housing, and politics for WHYY, the local public radio station in Philadelphia. And our data reporter is Alexandra Kanik, whose previous roles include data reporting for Louisville Public Media in Kentucky and PublicSource in Pittsburgh, Pennsylvania.

Our team will continue to grow in the coming weeks, and we’ll also be collaborating closely with our editorial colleagues across New Statesman Media Group. In fact, we’re launching a whole network of new publications this fall, covering topics such as the clean energy transition, foreign direct investment, technology, banks and more. Many of these sectors will frequently overlap with our cities coverage, and a key part of our plan is make the most of the expertise that all of these newsrooms combined will bring to bear on our journalism.

City Monitor will go live later this month. In the meantime, please visit citymonitor.ai to sign up for our forthcoming email newsletter.


As for CityMetric, some of its archives have already been moved over to the new website, and the rest will follow not long after. If you’re looking for a favourite piece from CityMetric’s past, for a time you’ll still be able to find it here, but before long the whole archive will move over to City Monitor.

On behalf of the City Monitor team, I’m thrilled to invite you to come along for the ride at our forthcoming digs. You can already follow City Monitor on LinkedIn, and on Twitter, sign up or keep following our existing account, which will switch over to our new name shortly. If you’re interested in learning more about the potential for a commercial partnership with City Monitor, please get in touch with our director of partnerships, Joe Maughan.

I want to thank and congratulate Jonn Elledge on a brilliant run. Everything we do from here on out will be building on the legacy of his work, and the community that he built here at CityMetric. Cheers, Jonn!

In the meantime, stay tuned, and thank you from all of us for being a loyal CityMetric reader. We couldn’t have done any of this without you.

Sommer Mathis is editor-in-chief of City Monitor.