This general election campaign has been characterised by two things: Conservative gaffes and Labour’s shiftiness on tax.
Rishi Sunak came to the first leaders’ debate night armed with a somewhat dubious claim that Treasury officials had calculated that Labour’s tax plans would cost households over £2,000.
The Treasury distanced itself from the figure, saying it was based on Conservative assumptions, but the Tories stuck to it, setting the tone for much of the scrutiny Labour were subject to in the following weeks.
Chief secretary to the Treasury Laura Trott came out swinging for Labour soon after, claiming Starmer’s party had neglected to rule out 18 tax rises.
Labour has since been forced to say it would not rise capital gains tax on primary residences (it has – to the City’s dismay – been less categorical on capital gains tax as a whole), and throughout the campaign, has come under pressure on its pledge to introduce VAT on private schools.
Now attention is turning to what Labour might do to council tax bands, the system of tiering properties into different brackets to establish how much council tax residents owe based on the value of their home.
Why aren’t Labour ruling out tax rises?
This week alone, Labour appears to have adopted several different positions on whether it is going to review the council tax bands if (in all likelihood, when) it wins the general election on July 4.
In the last two days, shadow business secretary Jonathan Reynolds and Labour’s shadow paymaster general Jonathan Ashworth both categorically ruled out any changes to the tax in interviews.
Yet Starmer and shadow health secretary Wes Streeting both left more wiggle room when they spoke to journalists on the same day, with Streeting saying on Sunday that Labour “will not make promises we cannot keep or that the country cannot afford”.
And when asked about his plans for the tax on LBC on Tuesday, Starmer said: “What I am not going to do is sit here two and a bit weeks before the election and write the budgets for the next five years.”
The Labour leader added: “What I can say is that none of our plans require a tax rise and that is for a reason and the reason is our focus on getting the economy going.”
This second sentence gets to the nub of why Labour appear so uncertain about their tax policies – which are reliant on a level of economic growth that cannot be taken for granted.
If the UK doesn’t achieve the rate of economic growth which the party is aiming for, then, as Institute for Fiscal Studies (IFS) director Paul Johnson has outlined, the country faces a funding “black hole” of £20bn.
In his latest budget, Jeremy Hunt earmarked public spending cuts to unprotected government departments like the Department for Work and Pensions and the Ministry of Justice as his way to plug the hole.
But Labour has already promised there will be “no return to austerity” were the party to be elected, prompting the constant interrogation around which taxes it will look to hike.
Shadow Treasury minister James Murray appeared to firm up the position even further today, telling GB News: “We’ve been very clear… that we’re not looking at re-banding for council tax.”
What are council tax bands?
Council tax is among the UK’s more divisive taxes. It is split into eight main categories, ranging from ‘A’ to ‘H’, which determine how much a household owes to their council annually based on the home’s value.
However, those valuations were last made in 1991, since when the property market and the value of homes has changed enormously.
The trend is perhaps best illustrated by modern developments and regeneration projects in London vastly increasing the values of areas which, in the early nineties, were comparatively cheaper.
The owner of a luxury £8m flat in Battersea Power Station, for example, will pay less council tax than that of an average-priced, band D house in Hartlepool.
This has led campaigners and commentators from across the political divide to campaign for the bands to be re-calculated based on today’s property valuations.
Why do people want them changed?
The Resolution Foundation, a well-respected left-leaning think tank, has said the way we calculate the tax is in need of “urgent reform”.
Indeed, in 2018, a little-known Labour backbencher published a leaflet advocating for an overhaul in council tax and arguing it was “at the very least” overdue “re-evaluation and revision”.
The backbencher in question – a former economist at the Bank of England – has ascended rapidly up the Labour party ranks in the six years since.
Eventually being made shadow Chancellor in 2021, Rachel Reeves, will almost certainly find herself with the power to introduce the changes should she wish.
As long as her party doesn’t rule them out, that is.