More than a dozen Labour MPs have urged UK Chancellor Rachel Reeves to abolish the country’s decades-old council tax system, as pressure mounts on the government to deliver a bold overhaul of property taxation in next month’s budget.
Thirteen MPs, largely from northern constituencies, sent a letter to the chancellor calling for the scrapping of council tax and the introduction of a fairer model that reflects today’s property values—particularly the sharp rise in house prices across London and the south-east over the past 35 years.
MPs Call Council Tax “Outdated and Regressive”
In their letter, the MPs described the council tax as “outdated, deeply regressive, and increasingly indefensible.” They argued that a system based on 1991 property valuations punishes communities outside London, where house prices have risen far less steeply.
“Families in modest homes pay far more relative to property value than those in multimillion-pound houses in London,” the MPs wrote, stressing that reform is essential to ensure fairness and to help Labour achieve its promise of economic renewal.
Pressure on Reeves Ahead of Crucial Budget
Reeves faces a difficult fiscal test, with the Office for Budget Responsibility (OBR) expected to downgrade productivity forecasts—leaving a potential £30 billion hole in public finances. Despite her manifesto pledge not to raise income tax, VAT, or national insurance, experts say the chancellor may have no choice but to pursue structural tax reform to maintain fiscal credibility.
The Institute for Fiscal Studies (IFS) has also urged Reeves to prioritise property tax reform, recommending the abolition of stamp duty and the replacement of council tax with a more modern, value-based system. The Guardian previously reported that the Treasury is considering an annual property tax based on the purchase value of homes as part of this shift.
Growing Momentum for Property Tax Reform
England and Scotland have not revalued homes for tax purposes since 1991, while Wales last did so in 2003. Since then, property values in the south-east have surged six-fold, compared with a threefold increase in the north-east—deepening the regional inequality the MPs want Reeves to address.
The letter’s signatories span Labour’s political spectrum, from the Blue Labour group’s Jonathan Brash and Dan Carden to left-wing figures Andy McDonald and Jon Trickett. They insist a reformed system must reflect current market realities and support households across the UK.
A Treasury spokesperson said the chancellor “will strike the right balance between funding public services and boosting growth,” but stopped short of confirming whether a property tax reform will be announced in the upcoming budget.
Calls for reform have intensified in recent months as Labour seeks to rebuild public trust following the pandemic and economic stagnation. Economists argue that fairer property taxation could stimulate regional growth and address long-standing wealth imbalances between the north and south of England.
