The UK needs to rethink its local taxes. It’s time for land value tax

We’re saying nothing. Image: Getty.

Labour London Assembly member Tom Copley on the future of property tax.

Last week Chris Williamson left the Labour frontbench after he suggested changes to council tax that are not Labour Party policy. Jeremy Corbyn was right to ask for Williamson’s resignation: shadow ministers floating policy ideas that are not part of their briefs, particularly in relation to taxation, is a recipe for chaos. However, the question of how we should reform local taxation is something the Labour Party needs to consider.

Council tax is fundamentally flawed. For a start, taxing people based on the notional value of their property in 1991 is absurd. Indeed, even calling it ‘their’ property isn’t quite accurate, given the tax is paid by the occupier not the owner – so poor tenants living in expensive properties pay more than richer homeowners whose property is worth less.

Council tax bands have never been revalued, so billionaires living in multi-million pound houses pay the same amount as middle-income homeowners. The most expensive property sold in the UK in October last year went for just shy of £16m in Westminster. The cheapest was £18,500 in County Durham. The owner of the Westminster property would pay just £250 a year more in council tax than the owner of the County Durham property. Council tax bands can’t be varied individually either, so if a council wants to raise taxes on the most expensive properties it must raise taxes for the cheaper ones as well.

There is nothing progressive about council tax. It’s time we scrapped it, along with stamp duty and business rates, and replaced it with a fairer system.


In 2015 I led an investigation for the London Assembly into Land Value Tax (LVT). This led to the Tax Trial report which called for the mayor of London to be given the power to trial LVT in part of the capital. LVT is a tax on the annual rental value of land in its “optimum use” (as defined by a public authority).

Unlike council tax and business rates it is not a tax on the property that sits on the land. It is paid by the land owner, not the tenant, and applies regardless of whether the land is developed or not. It is not only a source of taxation but a disincentive for landowners to “land bank” sitting on undeveloped land and waiting for its value to rise.

Since 1995, the value of land in the UK has risen by 544 per cent whereas the value of the buildings sitting it has only risen by 219 per cent. And the value of land is largely determined by its location, not by any effort on the part of the landowner – a point made by Winston Churchill, a proponent of LVT, in 1909:

“Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.”

When the state invests large sums of public money in a project like Crossrail, land values rise along the route. LVT would allow some of that rise in value to be recouped by the taxpayer.  

Some of the same problems with council tax would apply to LVT: for example, what about homeowners who are asset rich but income poor? I’m convinced that a more progressive system could be constructed to allow people to choose whether to defer their payments until they sell their home, and most people wouldn’t be paying any more than they currently pay annually in council tax in any case. 

What LVT would do is generate a lot more revenue from very wealthy landowners such as the Duke of Westminster who can afford to contribute more. Surely that’s a proposal that everyone in the Labour Party can get behind?

Tom Copley is a Labour member of the London Assembly.

 
 
 
 

Community-powered policies should be at the top of Westminster’s to do list

A generic election picture. Image: Getty.

Over the past five decades, political and economic power has become increasingly concentrated in the UK’s capital. Communities feel ignored or alienated by a politics that feels distant and unrepresentative of their daily experiences.

Since the EU referendum result it has become something of a cliché to talk about how to respond to the sense of powerlessness felt by too many people. The foundations of our economy have been shifted by Brexit, technology and deindustrialisation – and these have shone a light on a growing divergence in views and values across geographies and generations. They are both a symptom and cause of the breakdown of the ties that traditionally brought people together.

As the country goes through seismic changes in its outlook, politics and economy, it is clear that a new way of doing politics is needed. Empowering people to take control over the things that affect their daily lives cannot be done from the top down.

Last week, the Co-operative Party launched our policy platform for the General Election – the ideas and priorities we hope to see at the top of the next Parliament’s to do list. We have been the voice for co-operative values and principles in the places where decisions are made and laws are made. As co-operators, we believe that the principles that lie behind successful co‑operatives – democratic control by customers and workers, and a fair share of the wealth we create together – ought to extend to the wider economy and our society. As Labour’s sister party, we campaign for a government that puts these shared values into practice.

Our policy platform has community power at its heart, because the co-operative movement, founded on shop floors and factory production lines, knows that power should flow from the bottom up. Today, this principle holds strong – decisions are best made by the people impacted the most by them, and services work best when the service users have a voice. Our policy platform is clear: this means shifting power from Whitehall to local government, but it also means looking beyond the town hall. Co-operative approaches are about placing power directly in the hands of people and communities.


There are many great examples of Co-operative councillors and local communities taking the lead on this. Co-operative councils like Oldham and Plymouth have pioneered new working relationships with residents, underpinned by a genuine commitment to working with communities rather than merely doing things to them.

Building a fairer future is, by definition, a bottom-up endeavour. Oldham, Plymouth and examples like the Elephant Project in Greater Manchester, where people with experience of disadvantage are involved in decision-making, or buses in Witney run by Co-operative councillors and the local community – are the building blocks of creating a better politics and a fairer economy.

This thread runs through our work over the last few years on community wealth building too – keeping wealth circulating in local economies through growing the local co-operative sector. Worker-owned businesses thriving at the expense of global corporate giants and private outsourcers. Assets owned by communities – from pubs to post offices to rooftop solar panels.

And it runs through our work in Westminster too – with Co-operative MPs and peers calling for parents, not private business, to own and run nurseries; for the stewards of our countryside to be farmers rather than big landowners; and for workers to have a stake in their workplaces and a share of the profit.

Far from being ignored, as suggested in last week’s article on community power, our work has never been more relevant and our co-operative voice is louder than ever.

Anna Birley is policy offer at the Co-operative party.