Labour MPs urge Chancellor to replace council tax with property value levy at the Budget in move that would hammer the South East

Labour MPs have urged John Healey to introduce a controversial property value tax at the Budget in a move that would hammer families in the South East.

The MPs with seats in the North are calling on the Chancellor to replace council tax and stamp duty with a so-called Proportional Property Tax to bring down bills in Labour-backing areas.

Under the proposals from campaign group Fairer Share for an annual 0.48 per cent tax on all homes, families in London and the South East would see their bills rise by hundreds of pounds per year.

Replacing council tax with a property value levy would see an average home in England liable for an annual bill of about £1,410 per year. This would mean somebody currently paying average Band D council tax would pay about £870 less per year.

But families living in an average home in London would be liable for an annual property tax of about £2,660 – leaving somebody currently paying Band D council tax almost £700 a year worse-off.

Under the proposals a house in the North East would get an average annual charge of about £748, while the equivalent bill in the South East would be £1,824.

Fairer Share said the tax shakeup would slash bills for 77 per cent of households – with average savings of about £550 – and would have ‘political benefits for Labour’ in areas where the party has lost votes to Reform or the Greens.

Andy Burnham has previously backed a property tax based on the value of land, but since becoming Prime Minister he has played down the prospect of imminent reforms to council tax.

Now a number of his MPs are urging him to reconsider. Luke Myer, the Labour MP for Middlesbrough South and East Cleveland, said that council tax is ‘crying out for reform’.

Jonathan Hinder, the Labour MP for Pendle and Clitheroe, said the property tax system is ‘broken’, adding: ‘Now is the time to be bold and grasp the nettle.’

And Jonathan Brash, the Labour MP for Hartlepool, said: ‘A Proportional Property Tax would end the postcode lottery, make the system fairer and put money back into the pockets of struggling households, giving our high streets a much-needed boost too.’

Fairer Share said that, without reform, low and middle-income households face a £900 increase in their council tax bills over the next decade.

The campaign group pointed to new polling from JL Partners showing that Labour voters back a new tax on the value of property by more than six to one and Green voters by more than nine to one. Reform voters also backed it by more than three to one and Tory voters by two to one.

It added that there ‘could also be political benefits for Labour’ as the poll found it would increase the likelihood of supporters of all five parties considering voting for Mr Burnham’s party.

Andrew Dixon, founder of Fairer Share, said: 'A property tax review is the key first step to a fairer system. 

'It must explore a revenue-neutral Proportional Property Tax, which could put much-needed cash in people’s pockets to cover rising food and energy bills, spend supporting local high streets or help them get on the housing ladder.'

He added: 'Tinkering through a mansion tax alone is all pain, no gain - reform should see savings passed onto ordinary households, not pocketed by government.'