Council tax revolution could cost southern families thousands more

Andy Burnham has signaled he is prepared to revisit Britain’s property tax system, raising the prospect of higher bills for some homeowners as his government searches for a fairer way to fund local services without breaching its fiscal rules.

The Prime Minister suggested the current council tax system, based on property valuations dating back to the early 1990s, has created significant regional disparities that disadvantage many households outside London and the South East.

Speaking about possible reforms, Burnham argued that homeowners in parts of northern England often pay proportionately more council tax than those living in substantially more valuable properties in the capital.

There are people here in Greater Manchester who pay a much higher council tax than people living in much larger homes in London,” he said, describing previous efforts to reform the system as “right and fair.

Ministers are understood to be examining several options, including a proportional property tax, a land value tax or changes to the threshold for the existing mansion tax. Any overhaul would represent one of the most significant changes to Britain’s property taxation in decades.

The issue is politically sensitive. Labour’s 2024 election manifesto ruled out increases in income tax but made no equivalent commitment on council tax, leaving ministers with some room to pursue reform while remaining within their broader fiscal framework.

Burnham insisted any changes would remain consistent with Labour’s manifesto and reiterated his commitment to maintaining strict fiscal discipline.

The debate comes as the Prime Minister links tax reform to wider pressures on public finances, warning that the NHS risks becoming unsustainable without a long-delayed overhaul of adult social care.

For the Treasury, property tax reform offers the prospect of addressing longstanding regional inequalities. For homeowners, however, it could mark a significant redistribution of the tax burden between areas where property values have diverged sharply over the past three decades.