Doubling council taxes on better-off homes would help Labour town halls “seize the initiative” and halt Tory cuts, a key ally of Jeremy Corbyn has declared.
Shadow minister Chris Williamson said that his radical plan to hike the tax on wealthier properties, while freezing it for less expensive homes, was one answer to “relentless” austerity suffered by local councils.
In an interview with HuffPost UK, Williamson said that his ‘Differential Progressive Council Tax’ proposal would require popular support in local referendums, but said the argument was winnable as it was about local budgets “for the many, not the few”.
The Shadow fire minister, who also floated the idea of a “local purchase tax” to help councils raise their own funds, stressed his proposal was not official party policy and would be up to local parties to adopt.
The plan would involve freezing council tax for properties rated in Bands A to C, which are worth less than £68,000.
Homes in Band D, worth between £68,000 and £88,000 and considered the ‘average’ by Whitehall, would pay 20% more.
More expensive homes would see progressively higher rates, right up to a 100% increase for the highest band H, which covers properties worth more than £320,000.
Dubbed ‘the Williamson model’ by Labour activists, the proposal has been welcomed by members of the grassroots group Momentum across the country.
But none of the party’s councils has yet backed the idea, amid fears that it would prove too radical and unpopular with voters.
Councils across the country are this month setting their tax rates and budgets for the coming year, with many including Tory boroughs set to use new freedoms to increase bills by up to 5.99% to meet social care costs.
Communities Secretary Sajid Javid is set to confirm plans which councils say offer inadequate funding, with many warning council tax bills will have to go up by up to £200 a year, the highest rise in 14 years.
Bristol’s Momentum branch has proposed a variation of the Williamson plan, which would triple council taxes on the most expensive homes, although directly-elected Mayor Marvin Rees has not endorsed the idea.
Labour expects to win a swath of town halls in this May’s local elections and is hoping to hammer home its advantage in London, where all 32 boroughs’ seats are up for grabs.
Williamson, a long-time ally and close friend of the Labour leader, won back his Derby North seat in the 2017 general election as part of the wider ‘Corbyn surge’.
He has been a leading supporter of Momentum, touring the country to help promote new branches of the group from Cleveland in the North East to Banbury in the South.
A former leader of Derby City Council, he said that his idea was borne out of frustration with the succession of cuts to his local area’s budget by the Conservatives.
“It was my team, when we were discussing the situation in Derby. A lot of people were contacting us about the latest iteration of funding cuts in Derby and the council has now decided to basically externalise the provision of the library service to the third sector. A lot of people are concerned as I am.
“A lot of local people said ‘what are you going to do about it?’ And they sometimes think the MP has got a lot more power than they have. I can’t instruct the Labour group to do anything really. So we put our thinking caps on and this was an idea that we came forward with.”
Williamson added: “Unless the Government has a change of heart, this could be the only a way of arresting the cuts and generating some income to start to grow local services. Obviously it would be up to the local area.
“There is a lot of support for it. Regrettably no local authority has taken the plunge and implemented it yet. I can understand the anxiety because it would no doubt attract a lot of adverse publicity.
“You can imagine the Daily Mail and Daily Express would go to town on a proposition like this.
“It’s not a panacea, it’s a response to a terrible situation. I think it’s an argument that could be won.
“This is not Labour party policy, it’s an idea I came up with at a local level and it’s got a little bit of traction in other parts of the country. It’s a reaction to an emergency that local government has been placed in.”
The proposal seeks to exploit Section 10 of the 2012 Local Government Finance Act 2012, which added a new power allowing councils to reduce a person’s liability to pay in accordance with the authority’s Council Tax Reduction Scheme. The power states that liability may be reduced “to such an extent as the billing authority thinks fit.”
Williamson added that to curb the impact on poorer homeowners living in expensive properties, a council tax discount scheme would need to be funded by the whole project.
“The benefit of this is that it also enables you to ensure that somebody who is asset rich but income poor could be protected through a local council tax support scheme.
“What you couldn’t have is a situation where somebody is on a widow’s pension in a big house and gets a big bill that would be an untenable scenario. And it would undermine the whole concept of the proposal. This would give them the resources to give a greater priority to a more general council tax support scheme so that everybody in that situation was entirely protected.”
Williamson said he understood why some Labour councillors were uneasy about the idea of a tax rise, but explained the party needed to be bolder on policy.
“Some groups have been a little bit anxious about running with the idea because there is obviously a cost with running a referendum. On that basis they worry that we are already a financially difficult place and if we run a referendum and then we don’t win it then we’ve got that additional cost.
“I come back to the Bob Crow argument: ‘If you fight you might lose, but if you don’t fight you will always lose’. The fact is we are losing. The cuts have just been relentless. It seems to me a desperate measure like this would give local government the chance to seize back the initiative. We’ve been on the back foot in local government for seven years, longer in many ways.”
Asked how he would sell the policy on the doorstep to voters, the 62-year-old leftwing veteran said that the pitch had to be that many people living in less expensive homes would welcome a freeze in their tax and an end to all council cuts.
“In Derby’s case, it would have been a very easy proposition to sell on the doorstep because 85% of the public in Derby live in Bands A to C.
“So you would be able to go to people on the doorstep and say the choice is this ‘you can either have your council tax effectively frozen and see an end to all cuts in public spending on council services and then see some modest growth in which ever area the council decided…or to reject it and to see you council tax rise by 6% this year and see ongoing cuts in council services’.
“For those people in Bands D and above it’s a more difficult argument to sell because they would be the ones paying the biggest amount. But the way it was modelled in Derby, somebody in Band D would be paying an extra 20%, which would work out at about five or six pounds extra a week. And obviously it would be progressively more.
“You’d have to make the case but the thing about this is whoever went with it would have to sell it on the doorstep. People would have to vote for it and so to have that democratic endorsement means this is only possible by virtue of public support.
“This is just an opportunity for local authorities to consider where they could set a higher council tax and then discount it back so that for people in the highest bands, Band H, they would have the biggest increases, and then in the bands below that they would see a more modest increase. To the point where people in properties Band A to C you could effectively freeze the council tax. So if you like it’s a budget for the many not the few.”
The shadow minister said that it was time the party thought more radically about local government finance as a whole.
“[This] is very much a redistributive budget at local level. Council tax is not fit for purpose, it’s a regressive tax and this helps to address that in some ways. There are far too few bands.
“What I would like to see is some consideration to being given to offering local government other levers to raise finance. A local purchase tax or whatever. I’m thinking aloud here. Council tax is far too blunt an instrument. It’s an incredibly unpopular tax, it’s become a bigger burden on people.”
Williamson, who was a shadow local government minister in Ed Miliband’s frontbench team, said that he had been heartened by the response in Bristol’s Momentum group.
A copy of the local group’s budget plan has been passed to HuffPost and it includes a reference to ‘the Williamson model’.
“I know some of the councillors there are [open to it]. Whether Marvin [Rees] will want to run with it, I don’t know. They are an incredibly well organised group in Bristol and have a super accountant among their number and she’s been able to give that financial rigour and put forward very detailed proposals. It’s going to be horses for courses depending on the local area.
“Momentum is helping to give voice to people coming forward with these progressive ideas. There’s a lot more scope for it to grow. Momentum is a platform where people can share these ideas and put them forward in a way in which in the past, with the bureaucratic way the Labour party has been organised, has been more difficult to do.”
Williamson said that Labour had protected more councils in less wealthy areas of the country when in office, but under the Blair and Brown eras had still been too controlling from Whitehall.
“This [Differential Progressive Council Tax] is a potential stopgap measure but there has to be a root-and-branch review of how you think about how local government is financed.
“Having been the leader of a local authority for a number of years I’ve always been of the view that we should be greater masters of our own destiny rather than dance to central government’s tune. This was the same when we had a Labour government in office.
“All areas have had big funding reductions since 2007 as part of the austerity programme. Local government was singled out for the biggest reductions of all. Then on top of that local authorities in Labour areas have had the biggest cuts in funding.
“There was far too much of a parent-child relationship under the new Labour era, although that started to ease a bit towards the end, we became a tick-box mentality. It was seen by far too many I think in the new Labour era as a delivery arm for central government.”
Labour under leaders before Corbyn had allowed the party to be cornered on cuts by accepting that austerity was needed, he said.
“The terms of the debate have most certainly shifted. It used to frustrate the life out of me that we were forever debating issues on the kind of Conservatives’ agenda, the neoliberal agenda.
“So we were always at a disadvantage. Whenever I saw our spokespeople going in to bat on an issue on TV they were always asked ‘how much are you prepared to cut?’ It’s not about cutting. I was always of a view that cuts are a bad thing and investment in public services is an engine for growth.”
Williamson recalled that when he was council leader in Derby, he had been forced to accept public-private finance schemes.
“It wasn’t my choice but frankly it was the only show in town. Before I became leader I did the first PFI scheme in Derby but I coined a local phrase about ‘innovative pragmatism’.
“We sort of utilised it [PFI] to bend it to reflect our Labour values. But in order to get the funding in we did embrace it.”
He said one project to get substandard homes refurbished had used the local in-house building team to renovate low rent homes managed by a housing association.
Even after Blair’s victory in 1997 “there was still a presumption [in favour of the private sector’s role] and the mindset had shifted with local government officers and there was this New Labour watchword of ‘what matters is what works’.
“And we still had that sense in a lot of local authority areas that externalisation, privatisation was the right way to go. Even in Derby we didn’t even know they were doing this.
“We discovered that almost by stealth officers were externalising our home care service. We chanced up on this and said ‘what the hell is going on here?’ And there was a line in the sand of ‘no more externalisation’.”