Millions of Families Could Face Soaring Bills as Andy Burnham Vows to Overhaul Council Tax in Labour Lurch to the Left
Andy Burnham has opened a new and potentially explosive front in Britain’s tax debate by calling the current council tax system unfair and signalling support for a major overhaul of property taxation.
The issue could become one of the most politically dangerous decisions of his premiership. While Burnham has not committed his government to abolishing council tax, he has made clear that he believes the existing system is deeply flawed. He has also previously expressed support for the principle of a land value tax and backed arguments for replacing outdated property taxes with a system more closely linked to the value of homes and land.
That prospect has immediately raised a difficult question.
If the government changes the way homes are taxed, who will pay more?
For millions of families, the answer could depend on the value and location of their property.
The controversy comes at a particularly sensitive moment. Household finances remain under pressure, while Burnham has made the cost of living one of the central themes of his new government. His administration has already promised measures designed to reduce household expenses, including removing VAT from domestic electricity bills from October.
A substantial property-tax reform could therefore appear contradictory.
On one hand, Burnham wants to present Labour as a government putting money back into people’s pockets. On the other, a radical overhaul of council tax could create significant increases for some homeowners.
That is why the debate is likely to become so fierce.
The current council tax system is based on property valuations from 1991 in England, meaning that the tax bands do not reflect the enormous changes in house prices that have occurred over the past three decades. Burnham has highlighted precisely this problem, arguing that people in Greater Manchester can sometimes pay more council tax than owners of substantially more valuable homes in London.
His criticism has a powerful political foundation.
A house that was worth £100,000 in the early 1990s may now be worth several times that amount. Yet its council tax band may still be determined by its value decades ago. Meanwhile, another property that was comparatively expensive in 1991 may have experienced a very different increase in value.
The result is a system that can appear arbitrary.
Supporters of reform argue that this is fundamentally unfair.
Why should someone living in a modestly valued home pay a similar amount to someone living in a property worth several times as much?
That argument has attracted support from the Fairer Share campaign, which has advocated replacing council tax and stamp duty with a proportional property tax. Its proposed system would charge approximately 0.48 per cent of a property’s value each year, with higher rates for second homes and certain other properties.
At first glance, such a system may appear straightforward.
A more valuable property pays more.
A less valuable property pays less.
But the political consequences could be enormous.
Consider a homeowner who purchased a house decades ago for a relatively modest sum. The property may now be worth £1 million, but the owner may not have anything close to £1 million in cash. They may be retired, living on a fixed income and relying on their home as their main financial asset.
Under a property-value-based tax, that homeowner could face a substantially larger annual bill.
This is where the slogan of “fairness” becomes much more complicated.
A tax can be fair according to one measure and deeply unfair according to another.
Taxing wealth may appear reasonable because a high-value property represents substantial economic resources. But taxing unrealised housing wealth can create serious problems for people who are asset-rich but income-poor.
This would be especially sensitive in parts of London and the South East, where property values have risen dramatically.
A proportional property tax could potentially transfer a substantial amount of the tax burden away from some lower-value homes and towards high-value properties. That may be exactly what reformers want.
But those homeowners are voters too.
And many are not necessarily wealthy in the conventional sense.
They may be pensioners who bought their homes many years ago. They may be families whose property increased in value simply because the housing market rose around them. They may have significant assets on paper without having the income required to absorb a large annual tax increase.
This is why the proposal could become politically explosive.
Burnham has attempted to distance himself from the most dramatic interpretation of the plans. In July, he explicitly ruled out replacing council tax, saying that such a change would not be happening at that stage. The House of Commons Library has also recorded that the government was not proposing to replace council tax and stamp duty with the Fairer Share model.
That distinction is important.
There is a major difference between saying that council tax needs reform and announcing that council tax will be abolished.
Nevertheless, Burnham’s remarks have ensured that the issue is unlikely to disappear.
He has already described council tax as unfair and argued that properties of very different values can currently face disproportionate bills.
That gives his opponents an obvious political opening.
They can argue that Labour is preparing to increase taxes on homeowners.
For a party already facing questions about the overall tax burden, that could be damaging.
The Conservatives and Reform UK would have a straightforward message: Labour says it wants fairness, but ordinary families could ultimately be asked to pay more for living in their own homes.
The response from Labour would be equally straightforward: the current system is outdated, and reform is necessary because homeowners in different parts of Britain can face very different tax burdens despite living in properties of comparable value.
Both arguments have political appeal.
The bigger question is what happens to the money.
Council tax is not simply a general tax collected by Westminster. It is a crucial source of funding for local government services, including social care, waste collection, libraries, housing services and other local responsibilities.
English councils already face significant financial pressure.
The average Band D council tax in England for 2025-26 was £2,280, an increase of £109, or 5 per cent, compared with the previous year.
That figure illustrates how important council tax has become to household budgets.
Any replacement system would therefore have to generate sufficient revenue to keep councils functioning.
And that creates another dilemma.
If Burnham reduces the tax burden on lower-value properties, the government would need either to collect substantially more from expensive properties or provide additional central funding to councils.
Neither option is politically painless.
Increasing taxation on expensive homes would provoke resistance from homeowners in wealthier areas. Increasing central government funding would place additional pressure on the national budget.
Britain’s fiscal position leaves little room for easy answers.
Burnham’s government is already facing difficult decisions over spending, defence, welfare and economic growth. His chancellor, John Healey, must prepare for a difficult autumn Budget while maintaining the government’s broader promises on taxation. Recent reporting has highlighted the limited financial room available to the administration.
This makes a major council-tax overhaul particularly risky.
The government cannot simply promise that everyone will pay less.
There will almost certainly be winners and losers.
And that is precisely why the political language surrounding the proposal matters.
Burnham has framed the issue around fairness rather than taxation.
That is clever politics.
Nobody wants to be told that their taxes are going up. But many people can be persuaded that the tax system needs to be fairer.
The problem arrives when voters discover what “fairer” means for their own household.
A homeowner whose annual bill falls will probably support reform.
A homeowner whose bill rises by hundreds or thousands of pounds may not.
The situation becomes even more complicated if council tax reform is combined with changes to stamp duty. A system that eliminates stamp duty could reduce the upfront cost of buying a home while increasing annual taxation on property ownership.
That might encourage people to move more frequently because buying and selling becomes less heavily taxed. It could also change the economics of owning expensive property.
But once again, the distributional effects would vary dramatically.
A young person trying to buy their first home could benefit from the abolition of stamp duty. An older homeowner with a valuable property could face higher annual bills.
The political winners and losers would therefore not necessarily be divided simply between rich and poor.
They could be divided between generations, regions and different types of homeowners.
That is why Burnham needs to tread carefully.
His wider political project depends upon convincing voters that Labour can deliver tangible improvements to their lives. Cheap bus fares, lower energy bills and greater investment in public services can reinforce that message.
A controversial property tax could undermine it.
Yet doing nothing also carries risks.
The council tax system is undeniably old. The government itself has acknowledged that aspects of its administration have remained unchanged since 1993 and recently introduced reforms intended to give vulnerable households more time to deal with missed payments.
The wider system, however, remains built around valuations that are decades out of date.
Eventually, any government attempting to modernise taxation will have to confront that problem.
Burnham has therefore walked into one of the most politically sensitive areas of British economic policy.
His argument is attractive in principle: property taxation should reflect modern Britain rather than a snapshot of the housing market from 1991.
But the practical consequences could be far less attractive for households that suddenly find themselves paying more.
That is the central contradiction.
A reform designed to make taxation fairer could leave some families feeling substantially poorer.
Burnham’s political opponents will seize on that possibility. They will argue that Labour is moving to the left, expanding the role of government and preparing new ways of taxing wealth and property.
Burnham will insist that reform is about fairness rather than ideology.
The truth is likely to be more complicated.
A modern property tax could potentially correct genuine distortions in the existing system. But any serious reform would need protections for people on low incomes, careful transitional arrangements and a clear explanation of exactly who gains and who loses.
Otherwise, “fairness” will become little more than a political slogan.
For now, Burnham has not committed his government to abolishing council tax or introducing the most radical version of a property-value tax.
But he has opened the door to a debate that Britain has avoided for decades.
And once that door is open, it may be difficult to close.
Millions of families will be watching closely.
Because the ultimate question is not whether council tax is outdated.
It is whether Andy Burnham can reform it without creating a new generation of angry taxpayers.
That could prove one of the defining tests of his premiership.