These five maps prove it’s time to reform council tax in England

Bristol, where homes are probably quite under taxed. Image: Matt Cardy/Getty.

As local authorities set out their budgets for the year, council tax is set to rise in many regions across England. Councils in Lancashire, Coventry, Cornwall and Surrey, among others, have agreed to hikes of up to 4 per cent.

But while council tax will be crucial to help local authorities absorb cuts from central government, there are serious doubts as to whether the levy is fit for purpose.

First introduced in 1993, council tax is imposed on properties to help pay for local services, council wages and administration. In general, how much council tax people pay depends on which “band” their property falls into. These bands are allocated by property value, ranging from A (the lowest value) to H (the highest value).


But here’s the catch: in England, council tax bands are still based on property values from 1991.

I decided to map out the differences between 1991 council tax valuations and today’s house prices, to see whether the tax is as regressive and arbitrary as some suggest.

The big housing boom

Let’s begin with some numbers. If your house was worth £50,000 in 1991, and its price had risen with inflation, it would now be worth about double that.

If this had occurred uniformly across the country, it wouldn’t be a problem – but we all know that this didn’t happen. Instead, house prices rocketed, particularly in London and the south-east. For example, in 2014 the average price in Burnley was £85,000 (up 166 per cent since 1995), while in Kensington and Chelsea it was £1.2m (up 558 per cent).

The fact that some prices have risen more than others is a major issue, because it means the amount we pay in council tax is increasingly detached from the relative value of our properties. In other words, those whose properties have risen disproportionately in value are paying less than their fair share of council tax.

House Price Growth, 1995 to 2014. Source: ONS.

Looking at average house price growth in the top and bottom 25 local authorities in England since 1995, we can see that prices have gone up across the board – but there is now a much bigger gap between the richest and poorest areas.

With a little help from colleagues at the Consumer Data Research Centre, I mapped out the differences between house prices and council tax bands. Below, I have shown the biggest council tax band for each area in the borough, alongside a small inset map showing average house prices. Both maps are coloured according to the 1991 council tax banding.

Council tax bands vs house prices, 2015 (Islington). Source: Valuation Office Agency/HM Land Registry/author provided.

Starting with the London borough of Islington, we can immediately see that the variation in council tax bands sits in stark contrast to today’s average house prices. In 1995, the first year data are available for, the average house price in Islington was £105,000. By 2014 it had reached £533,000. Most properties in Islington belong in the top band of council tax – but, according to the data, there are no areas where more houses fall under band H than any other category.

Perhaps unsurprisingly, this is also the case across much of London.

House prices by council tax band in London, 1995-2015. Source: HM Land Registry/author provided.

In more rural locations, such as West Oxfordshire, the contrast between council tax bands and current house prices is not as stark. But the variation is now very much out of line with the original 1991 valuations: some areas have gained value more quickly than others.

Council tax bands vs house prices, 2015 (West Oxfordshire). Source: Valuation Office Agency/HM Land Registry.

To take two contrasting examples from elsewhere in England, we can look at Cornwall and Liverpool. In the former, the purchase of second homes has driven up house prices, so much so that the council removed the 10 per cent discount for these properties in 2013, following a change in government regulations.

Council tax bands vs house prices, 2015 (Cornwall). Source: Valuation Office Agency/HM Land Registry.

Meanwhile in Liverpool, where around 60 per cent of properties are in the lowest value band A, the current variation in house prices is also out of line with the 1991 bands. House prices have risen much faster in some areas than others, particularly in well-connected, inner-suburban areas such as Mossley Hill and Aigburth. The effect – as noted by the New Policy Institute – is that “as time goes by, council tax becomes ever more arbitrary”.

Council tax bands vs house prices, 2015 (Liverpool). Source: Valuation Office Agency/HM Land Registry.

When you look at these maps, the absurdity of continuing to use bands set in 1991 is pretty obvious. Naturally, it raises the vexed question of what should be done.

Well, we could re-value properties and introduce new bands, like Wales did in 2005. Or, as in Scotland, we could pursue more radical change. There, ideas for reform include property revaluation, a land value tax, and even a local income tax.

Personally, I would favour some form of land value tax, as proposed by leading economists such as Dame Kate Barker and Joe Sarling. But of course this brings its own set of challenges: for instance, unfairly taxing the Islington resident who had the good fortune to buy a house there in 1991, but who lives alone and never seeks to benefit from the value of the land or property.


At the very least, a widening of the bands at the top and bottom to reflect the growing gulf between the richest and poorest areas (and the residents' ability to pay) would be a start. With detailed data on house prices, and the technology to crunch complex datasets, this should not be an insurmountable problem. The bigger issue is that, politically speaking, such reform is “dramatic and unpopular stuff”.The Conversation

Alasdair Rae is senior Lecturer in urban Studies & planning at the University of Sheffield. He tweets as @undertheraedar.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Older people need better homes – but then, so does everybody else

Colne, Lancashire. Image: Getty.

Towards the end of last year, I started as an associate director at the Centre for Ageing Better, working particularly on our goal around safe and accessible homes. Before I arrived, Ageing Better had established some ambitious goals for this work: by 2030, we want the number of homes classed as decent to increase by a million, and by the same date to ensure that at least half of all new homes are built to be fully accessible.

We’ve all heard the statistics about the huge growth in the number of households headed by someone over 65, and the exponential growth in the number of households of people over 85. Frustratingly, this is often presented as a problem to be solved rather than a major success story of post war social and health policy. Older people, like everyone else, have ambitions for the future, opportunities to make a full contribution to their communities and to continue to work in fulfilling jobs.

It is also essential that older people, again like everyone else, should live in decent and accessible homes. In the last 50 years we have made real progress in improving the quality of our homes, but we still have a lot to do. Our new research shows that over 4 million homes across England fail to meet the government’s basic standards of decency. And a higher proportion of older people live in these homes than the population more generally, with over a million people over the age of 55 living in conditions that pose a risk to their health or safety.

It shouldn’t be too difficult to ensure all our homes meet a decent standard. A small number of homes require major and expensive remedial work, but the overwhelming majority need less than £3,000 to hit the mark. We know how to do it. We now need the political will to make it a priority. Apart from the benefits to the people living in the homes, investment of this kind is great for the economy, especially when so many of our skilled tradespeople are older. Imagine if they were part of training young people to learn these skills.


At a recent staff away day, we explored where we would ideally want to live in our later lives. This was not a stretch for me, although for some of our younger colleagues it is a long way into the future.

The point at which the conversation really took off for me was when we moved away from government definitions of decency and accessibility and began to explore the principles of what great homes for older people would be like. We agreed they needed light and space (by which we meant real space – our national obsession with number of bedrooms as opposed to space has led to us building the smallest new homes in Europe).

We agreed, too, that they needed to be as flexible as possible so that the space could be used differently as our needs change. We thought access to safe outdoor space was essential and that the homes should be digitally connected and in places that maximise the potential for social connection.

Of course, it took us just a few seconds to realise that this is true for virtually everyone. As a nation we have been dismal at moving away from three-bed boxes to thinking differently about what our homes should look like. In a world of technology and factory building, and as we build the new generation of homes we desperately need, we have a real chance to be bold.

Great, flexible homes with light and space, in the places where people want to live. Surely it’s not too much to ask?

David Orr is associate director – homes at the Centre for Ageing Better.