Labour MPs call on Rachel Reeves to scrap council tax

"If we are to succeed in our mission to transform Britain and fight back against Reform, we must be bold and embrace new ideas that put more money back into the pockets of working people. One place we can start is by looking at ways we can abolish the outdated, deeply regressive, and increasingly indefensible council tax system. Created in the early 1990s and still based on property valuations from 1991, it bears little resemblance to the realities of today's housing market."

"Reeves needs to find between 20bn and 30bn as a result of the OBR changes, but is also under pressure to increase the amount of headroom she has against her fiscal rules to give the markets more certainty about future borrowing. Labour ruled out raising income tax, VAT or national insurance in its 2024 manifesto commitments that ministers say Reeves intends to keep at this budget, despite her decision to raise national insurance last year."

Thirteen Labour MPs, mainly from northern England, have written to Chancellor Rachel Reeves calling for abolition of council tax and replacement with a system that accounts for rising house prices. Council tax remains based on 1991 property valuations, creating a regressive system that penalizes communities outside London and the south-east. Reeves faces a 20bn–30bn fiscal gap after an OBR downgrade of productivity and must add headroom to her fiscal rules. Labour manifesto commitments rule out raising income tax, VAT, or national insurance, increasing pressure to pursue broader tax reform rather than minor adjustments.

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