Reeves won’t scrap single person council tax discount

Officials had previously refused to say whether the single person council tax discount would be scrapped
Officials had previously refused to say whether the single person council tax discount would be scrapped - Stephen French/Alamy Stock Photo

Rachel Reeves will not scrap the single person council tax discount, Treasury officials have said.

The measure means people get 25 per cent off their council tax bill if they live alone, reflecting the fact that they benefit from fewer council services than couples or families.

Downing Street officials had previously refused to say whether or not the discount would be scrapped at the Budget next month.

But on Sunday the Treasury confirmed that the Budget will not contain measures to scrap the tax break, which is claimed by millions of households including four million pensioners.

Analysis from the TaxPayers’ Alliance previously found that scrapping the discount would have raised £5.4 billion, £1.9 billion of which would have been taken from single pensioners.

That is is much higher than the £1.5 billion the winter fuel allowance cut is expected to raise.

Rachel Reeves, the Chancellor
Rachel Reeves, the Chancellor, will not scrap the single person council tax discount in her Budget - Ian Forsyth/Getty Images

Although the Treasury has ruled out scrapping the single person council tax discount, there could be other means by which the Government could launch a council tax raid in the Budget.

An overhaul of council tax bands, last evaluated in 1991, could affect millions of households.

In 2020, the Institute for Fiscal Studies (IFS) found that properties in band H, the highest cband, produced three times as much tax as those in the lowest, despite being worth at least eight times their value.

Changes suggested by the think tank could affect 17 per cent of households in England – 4.2 million – and see them lose an average of £1,230 a year, while up to 10 million would gain more than £200 a year.

In March, a spokesman for Ms Reeves, the then shadow chancellor, said Labour “has no plans to introduce this in government”.

Bespoke wealth tax ruled out

Ms Reeves also ruled out a bespoke wealth tax in the upcoming Budget, telling The Sunday Times ahead of the Labour conference:  “I’m not looking at creating some new tax or a wealth tax.”

Her confirmation comes despite Unite, one of Labour’s major union backers, being expected to bring forward a motion at the conference to demand a one per cent tax on the wealthiest

Erkan Ersoy, the national coordinator for the union, told a fringe event on Sunday: “The myth of trickle-down economics has to be challenged. It has never trickled down. Demand for a one per cent tax for the richest is a tactical step that my general is pushing.”

At the same event, Richard Burgon, the MP for Leeds East who was suspended from Labour after voting against the Government over the two-child benefit cap, called for a wealth tax of two per cent.

“We really need a fresh start under this new Labour Government when it comes to the issue of living standards and the funding of public services,” he said. “We need to steer clear of the siren voices on the political Right, in the media, for austerity and for cuts to living standards. The winter fuel allowance is an example of that.

“Of course there are alternatives – a two per cent wealth tax on assets over £10 million, for example, that would raise up to £24 billion a year, and that affects less than 0.1 per cent of the population, 20,000 people.”