Council Tax and Stamp Duty Alternatives

However, it is rare—perhaps impossible—to propose a wide-ranging reform where there are not winners and losers. After all, we are proposing to rebalance the property tax system based on principles of fairness. However, there are several mitigations that could be implemented to soften the blow of any change for those who might have to pay more. First, during the transition to a proportional property tax system, any rise in local property tax could be capped at £100 a month for primary residences. That transitional protection would cease upon sale, but buyers could benefit from the removal of punitive stamp duty. Secondly, a deferral mechanism could be put in place, allowing owners who are genuinely unable to pay to defer their tax payments with a modest interest charge. That deferred amount could be paid later on the sale of their property or home, avoiding any debt-related issues associated with council tax collection. Those measures aim to alleviate the impact on individuals while ensuring a fair and manageable transition to the new system.

Of course, there would also be impacts on local government finance. For councils that would generate less revenue from a proportional property tax compared with their current council tax, the shortfall would need to be supplemented through central Government grants or funds redistributed from councils generating higher PPT revenue. The arrangement is not new, and it is a long-standing feature of local government finance. It could be seamlessly incorporated into the proportional property tax system with the following principles.

First, the Government could fully recognise how the proportional property tax affects the revenue-raising capacity of councils when formulating the funding arrangements for local government. Secondly, councils could be granted new powers to independently generate additional revenue. Some councils may experience a decrease in revenue-raising capacity, but there are opportunities to introduce new revenue-raising powers, such as planning reforms and charging more for increased house construction. Again, that would be beneficial for counties such as Cumbria, Devon and Cornwall that are facing the accommodation and short-term let issues that I mentioned earlier.

Thirdly, while some councils might be sceptical about the transition to proportional property taxes because it could result in severe revenue-raising capacity issues, it is important to note that it is the residents in such areas who will benefit most from a decrease in property tax bills. Finally, the policy may also create incentives for companies and individuals to relocate to areas with lower proportional property tax rates, benefiting those communities and eventually increasing the revenues for local authorities. The measure rebalances the local economy and helps level up left-behind areas in one fell swoop.

If taken up, the measures would address the impact on local government finance by ensuring a balanced transition, exploring new revenue sources and considering the overall benefits and adjustments that can be made to accommodate different council circumstances. The reform is crucial for my constituents in Barrow and Furness. It will benefit 96% of the households there, with an average annual saving of £600. It is no surprise that 58% of voters in my constituency support the policy, with only 9% opposing it, according to polling by J.L. Partners. Nationally, voters overwhelmingly back the policy by a ratio of 3:1—in the north it is 9:1. A majority of voters in every constituency support the reform. I fundamentally believe that we should lead with policy and not follow polls, but those are numbers that are worth paying attention to.

Council tax and stamp duty are fundamentally flawed, and many of us recognise that. Politicians from most of the parties represented in this Chamber, along with think-tanks such as Bright Blue, the Institute for Fiscal Studies and the Institute for Public Policy Research, and campaign groups such as PricedOut, Generation Rent and the Intergenerational Foundation, have endorsed the transition to a proportional property tax. Prominent economists from respected publications, including the Financial Times, The Daily Telegraph, The Economist, and The Guardian have also endorsed the reform.

The policy would significantly increase the disposable income of individuals across the country, directly benefiting households and improving the quality of life in local communities. It would free up properties, encouraging efficient use, and, crucially, it is based on the principle of fairness. It represents a genuine and impactful stride towards levelling up and advancement for all. I look forward to listening to what my hon. Friends and colleagues have to say.