John Stevenson: Property tax reform is key to levelling up the country and the Conservatives’ electoral chances

3 Feb

John Stevenson is the Conservative MP for Carlisle.

The 2019 general election was won and fought on a clear mantra of “getting Brexit done”. Now that we have left the European Union and as we eventually emerge from the pandemic, it is time for the Prime Minister to re-focus on his mission to level up the UK.

Let’s be in no doubt that the Conservative Party’s electoral chances in 2024 depend to a large extent on whether people across the UK, and especially in the “Red Wall”, feel and see the benefits of this agenda. This was always going to be the case, even before the outbreak of Coronavirus. The pandemic has simply underlined some of the economic and social issues that have existed in Britain for too long. As a result, the task of levelling up has become more urgent.

The first challenge to overcome is one of definition. Who can explain what levelling up actually means? I understand work is going on behind the scenes to do exactly this. This needs to happen at pace alongside a clear set of metrics which can track progress on measures to which people can relate, from local healthcare and educational outcomes to unemployment levels and spending power. By regularly assessing progress in each of these metrics, locally accountable political leaders can identify specific challenges that are relevant to their community and put in place relevant improvement plans.

Second, the public are going to want to see results. Alongside the progress tracker, the Government and local MPs are going to require specific examples which they can use on the doorstep to show that constituents, their families and their communities are better off as a result of voting Conservative.

Brexit and then Covid have limited the amount of time and resource the Government can spend on working up specific policies which can be delivered before the country next goes to the polls and which chime with the electorate. Major infrastructure programmes are needed but these are often projects that take years to initiate and have little traction at a community level until final completion. As the saying goes, all politics is local.

Of course, the state of the public finances is also a huge problem for the Government. Any change of policy has to therefore be assessed on whether it delivers against a clearly defined vision of levelling up, whether local people can see and feel the benefits in their everyday lives, and whether it is cost-neutral or (ideally) a revenue raiser for the Treasury.

This is why a fundamental reform of property taxation is so appealing and could form a key component of the Government’s efforts to level up the country. The current system is out of date, confusing, unpopular, unequal and most importantly unfair. The Chancellor has acknowledged the need to make the system fairer and property taxes would be the ideal place to start.

The two obvious examples which irritate people from every walk of life are council tax and stamp duty. Council tax is based on property values from 1991 – 30 years out of date. That means that someone living in a house worth £100,000 pays around five times more tax as a share of property value than someone living in a home worth £1 million. Just 29 per cent of the public believe that council tax is calculated fairly and only 26 per cent believe that their own bill is set at the correct level.

Council tax has failed to keep up with the substantial increase in property values, especially in London. This has deprived the Treasury and local councils of much needed revenue and meant that lower income households outside the capital are paying more as a proportion of their home’s actual value than they should be. This has a profound impact, through no fault of their own, on their disposable income.

Stamp duty is a property tax which is an attack on aspiration and ownership. By taxing property transactions, stamp duty discourages homeowners from moving – be it an older couple downsizing or a growing family upsizing – that would lead to more efficient use of the country’s housing stock. The fall in transactions ultimately results in fewer new homes being built because the market signals, to which housebuilders respond, are distorted. Rishi Sunak’s stamp duty holiday to date has mitigated this damage, and wholesale abolition would be an even more potent remedy.

A fairer system would be to completely abolish both council tax and stamp duty and replace them with a new property tax which reflects the current value of people’s homes. A proportional property tax if you will. By setting that tax rate at 0.48 per cent the campaign group, Fairer Share, has calculated that over three quarters of households would be instantly better off.

The average household would see an additional £435 a year in their back pocket, while in some areas of the country such as Bishop Auckland and Bolsover the average household could respectively be £900 and £750 better off each year. Importantly the revenue raised would be split between central government to redistribute across local authorities in the form of grants, and local authorities would take a proportion of the overall rate.

From a political perspective, 97 per cent of households located in the “red wall” seats in England that the Conservatives took from Labour at the last election, would be better off. Traditional Tory seats would also fare well from this policy. In the Chancellor’s own constituency of Richmond, Yorkshire, 92 per cent of households would be better off to the tune of £600 while in South Cambridgeshire the average household would save £350 each year.

Obviously, creating a fairer, more transparent, and up to date property tax system would also mean that some households would end up having to pay more every year to reflect the current price of their home. That is why it is important that any such policy protects these people, who through no fault of their own or indeed through their own renovation work, have benefited from their home increasing in value.

To that extent, Fairer Share is proposing a monthly £100 cap on the total increase any one household could pay which would disappear at point of sale. At the same time – and to help those who are cash poor but living in a high value property – the new tax could be deferred until there is a change of ownership meaning that they wouldn’t lose out financially from the policy.

Replacing council tax and stamp duty with a proportional property tax is the right thing to do for millions of people up and down the country. This reform would have an impact beyond the regional. Ten years of low interest rates have led to increasing asset prices making houses unaffordable for the young and potentially driving them into the arms of the opposition. A solution needs to be found to protect the votes of tomorrow.

Politicians are still chastened by the memory of the negative reaction to the bungled and unpopular poll tax. And since then, council tax and stamp duty have become so unpopular that politicians are anxious about even raising the topic.

But “politics” can no longer be the excuse for failing to implement meaningful property tax reform. The changing political landscape may well be the catalyst for reform. It is the right thing to do from a political perspective, demonstrating that fairness is at the heart of everything the Conservative Party stands for.

With the next election beginning to loom on the horizon, this is a policy which will work on the doorstep and become the perfect flagship policy for the Prime Minister’s vision of levelling up the country.

John Stevenson: The Government’s obesity strategy risks punishing businesses – at a time they need help most

22 Jan

John Stevenson is the Conservative MP for Carlisle.

As a country, we are too fat. This is an inescapable fact. High obesity levels lead to many other problems and health complications, which cause misery to those affected. And the Government – rightly – wants to do something about this.

To my mind, this can only happen by working with the food and drink industry itself. The food and drink industry in our country is incredibly advanced – employing nearly half a million people and with a turnover of £105 billion.

It is the largest manufacturing industry in the country, accounting for almost 20 per cent of the sector’s turnover. Food and drink has a manufacturing footprint all over the country, and with Nestle, McVitie’s and other food plants in my own constituency, I know just how important it is.

As the Chair of the All-Party Parliamentary Group on Food and Drink, I also know that the research and development departments in the UK’s food and drink industry are world leading. Reformulation and portion control efforts have led to some impressive innovations and have had a real effect on consumption.

However, it seems in looking for strategies to tackle the obesity crisis, the Government is going the way of banning, restricting, and prohibiting – and I was more than a little disappointed to the see its recent consultation and response on promotions of products “high in fat, sugar and salt.”

These proposals include a total ban on online advertising, which comes on the heels of other measures that will restrict or impose costs on industry, including restrictions on promotions and even where these foods (which would include the likes of sausage rolls and peanut butter) can be located in a shop.

These proposals are considered by the Government as a cornerstone of its obesity strategy announced earlier this year. But according to its own impact assessment would only reduce calorie intake by just 2.8 calories a day.

This will have a small impact on obesity, but a real impact on product innovation, the ability of new companies to compete in the market, the price of the weekly shop and – yes – informed consumer choice.

But worse of all, this all comes at probably the most terrible time possible for the industry – the end of the UK/EU transition period and in the middle of a global pandemic. At a time when some government Departments are rightly looking at measures to give business a much-needed boost, other parts of government are introducing restrictions. This doesn’t appear to be joined-up thinking.

It is evident that these proposals will stifle investment. Businesses in the UK will be deterred from developing and innovating new, healthier product ranges, while advertising and promotional restrictions will act as a barrier for businesses abroad from entering the UK market. With a food and drink industry keen to play its part to tackle obesity, shouldn’t the Government be working in collaboration with the UK’s largest manufacturing sector rather than penalising it?

It is marketing that helps shift consumer behaviour towards healthier choices over time and long-lasting habits to remove calories from diets. Without this, food and drink manufacturers have no tools to encourage consumers to switch to their products which they have been working hard to make healthier.

Indeed, introducing these measures would lead to the position where products that have been reformulated so that calories and sugar levels have been reduced cannot be advertised to consumers, or placed in certain positions in a supermarket. Scrapping years of hard work by industry to make healthier products surely cannot be the Government’s intention.

The food and drink industry and its advertisers already use sophisticated online tools to target advertisements to adult audiences, overseen by the Advertising Standards Authority. Existing rules and sanctions can be used and tightened, and this would raise UK standards further (which are already some of the strictest in the world). It is disappointing that the Government has disregarded this as a route forward.

As we all celebrated Christmas, albeit in a much more limited way than normal, it occurred to me just how amazing our food and drink industry is. Amid a global pandemic, national restrictions, and a tense and tight Brexit finish, our shop shelves remained stacked, the food we needed was produced, and the goods we rely on for our celebrations were on the tables – just as normal.

I know that this does not happen by accident. There is a tremendous amount of work that goes on behind the scenes for this to occur. I do think that the food and drink industry, and the workers who make up the industry, have been some of the unsung heroes of the past year.

It would be a shame, therefore, at these most difficult of times for the Government to take this blunt approach to the UK’s largest manufacturing industry and for consumers to be stripped of choice and information. Let’s ensure the Government and the industry continue to work together to fight the common enemy – obesity.