Thank you to the many constituents who contacted me about the government decision to increase council tax for families. I completely agree with you that this decision was completely misguided in a time when many families are struggling to make ends meet during the worst economic crisis of any major economy.
Councils are on the frontline delivering the services that people rely on and which support and enrich our communities every day. I pay tribute to care staff, refuse collectors, social workers and all local government staff for their significant contribution in the national effort to deal with COVID-19.
Despite financial pressures, the response of local authorities during the pandemic has been remarkable. They have continued to provide social care for elderly and disabled people under very difficult circumstances, found accommodation for rough sleepers at short notice, administered billions of pounds of business rates relief in grants for local businesses, and they have co-ordinated support for people in vulnerable groups who have been shielding.
But, the Conservative Government had already stripped Local Councils of their funding by over 60 per cent in the last ten years. This meant that many were already on the brink of financial disaster even before the pandemic.
I would argue that the structure of council tax is effectively regressive, affecting families on lower incomes more while higher earners pay less. It is therefore extremely worrying that the Government is forcing local councils to increase council tax to meet a £2.5 billion funding gap caused by the coronavirus pandemic. Analysis by the Centre for Progressive Policy said this could mean an average rise of £93 for Band D Households in England.
Councils are facing this gaping hole in their budgets because the Government broke their promise to pay back the cost of getting communities through this crisis. The Chancellor should be taking action to protect family finances and secure our economy, not hitting them with tax rises while cutting them for landlords.
I believe it is crucial that the Government looks in depth at local government finance, including property taxes such as council tax and business rates, and take account of the full impact of COVID-19. The ultimate goal must be to provide certainty and stability for the provision of local public services.
The Government has said it does not have any plans to introduce a new proportional property tax and that residential properties will continue to be taxed through stamp duty and council tax. It also has no current plans for a revaluation of council tax bands. Nevertheless, I can assure you that I will keep in mind the points you raise as I consider issues related to property taxes when they arise in Parliament.