Ever since Andy Burnham emerged as Sir Keir Starmer’s successor, the newspapers have been full of reports about possible changes to property taxation.
Much of the speculation has centred on how his government intends to fund an ambitious programme of spending while keeping to Labour’s manifesto commitments on the main taxes.
Burnham, however, says many of those reports have confused policy ideas with government policy.
Unsubstantiated rumours
“I don’t know actually where some of the stories that have appeared over the last 24 hours have come from,” he told The Times. “Somebody within, I don’t know, 100 yards of me can say something and then all of a sudden it’s my policy. Or someone can pass me something, and then I support everything within the document. It’s just not the case.”
One of the more credible rumours was the replacement of council tax and stamp duty with a single annual property tax based on 0.48% of current property values. The proposal came from the influential Fairer Share Campaign and has attracted support from MPs from across the political divide.
Burnham has now ruled that proposal out, saying “That won’t be happening.”
Council tax changes not ruled out
He has, though, not ruled out further changes to council tax, acknowledging that there are still “big decisions” ahead. He has argued previously that the current system is unfair because it is still based on property values from 1991. He has highlighted that it has led to the anomaly where households in Greater Manchester are paying as much, or even more, in council tax than owners of much larger and more valuable homes in London.
He also failed to rule out reports that the mansion tax threshold could be reduced from £2 million to £1.5 million. The move would almost double the number of homes liable to pay the tax, from around 127,000 to 243,000, and increase annual revenues from about £430 million to an estimated £800 million.
The focus has now, however, shifted to how the government could fund the estimated £18.5 billion annual cost of social care reform. It is one of Burnham’s key priorities as Prime Minister.
Burnham to use political capital
“Whatever political capital I have,” he said, “I will put into fixing broken social care, and I would not want to leave office without having brought in the substantial change.”
Press reports suggest the most likely option is replacing inheritance tax with a flat 10% levy on all estates.
It is an idea, however, that has proved politically toxic in the past. In 2010, when Burnham was Health Secretary, he proposed using housing wealth to help fund social care, but when the Conservatives branded it a “death tax,” his plans were quietly shelved. Seven years later, in 2017, Theresa May also attempted to tap housing wealth to help fund social care. Her proposals were labelled a “dementia tax”, forcing a manifesto U-turn and helping turn an expected Conservative landslide victory into a hung Parliament.
So, it is clear that although Burnham has ruled out replacing council tax and stamp duty with a proportional property tax, he has left plenty of other options on the table. His plans for property taxation may only become clear when he delivers his first Budget this autumn.
