A bid to replace an ‘outdated and unfair’ council tax system across County Durham has failed after opposition councillors voted against it.

Labour proposed introducing a new Proportional Property Tax, as it says the current scheme is unfit for purpose at a time when households are struggling to cope with the cost-of-living crisis.

Councillors agreed to consider introducing a ‘fairer system’ to replace council tax in 2021 but Labour claims the authority has failed to deliver any benefit to residents.

A motion was proposed by Blackhalls councillor Rob Crute, who said the burden of council tax falls disproportionately on hard pressed households.

“This is already a case today more than ever before given the additional pressures of the current cost of living crisis; high inflation; soaring energy prices; punishing government austerity, which continues to remove funding to public services, local councils and our communities,” he told a full council meeting.

“We need to consider the benefits of introducing a Proportional Property Tax – a fairer system that relieves the hardest hit of the heaviest burden, reduces housing market inequalities, frees up homes to those who needs most; a system that puts money into people's pockets, and kickstarts local economies.

“Property tax should be based on actual property wealth, the burden should be shared proportionately, it should be simple to understand, easy to administer, and hard to avoid. It should be fair with wealthier regions supporting poorer ones and it should relate to a household’s ability to pay.”

The Northern Echo: Cllr Rob Crute from Durham County Council, deputy leader of the Labour group and shadow cabinet member for finance.Cllr Rob Crute from Durham County Council, deputy leader of the Labour group and shadow cabinet member for finance. (Image: The Northern Echo)

Cllr Crute’s call came as Durham County Council is set to increase council tax by five per cent to help cope with its deficit. But Labour members say there are other options that can be taken to ensure that the public don’t have to pay the price.

“It doesn’t have to be like this. We can do something about it by kickstarting real change by supporting this motion,” cllr Crute added.

However, his bid was overthrown by the council’s coalition leadership, as Conservative leader cllr Richard Bell’s counter proposal was approved. The cabinet member for finance said the authority had recently written to the government about its reservations towards the current scheme.

He said: “We once again raised our concerns over how outdated and regressive the current council tax system is, and how in county Durham we are disadvantaged by our low tax base, and consequential low tax raising capacity.

“A full-scale review of the current system with all the options being considered would be the most appropriate way forward. And that is what we have called for.

“But whatever system replaces council tax unless it is accompanied by reform of allocating funding from central to local government we will not solve our problems of underfunding.

“There are simply not enough high earners of expensive houses in County Durham compared with more affluent areas, whatever system were to be adopted, nor enough business ratepayers for that matter. That is why our amendment calls also for a fairer way of distributing support from central government.”

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But Labour criticised the newly adopted scheme as being too vague and lacking in detail. The party’s leader, cllr Carl Marshall said their scheme would enable ‘progressive and positive’ change.

“I think it's important to remind members how committed this council is to ensuring low-income households are supported,” Cllr Bell added. This is reflected in our delivery of up to 100% support to the local council tax reduction scheme for all claimants, pensioners, and those of working age.

“This council does more than any other council in the region, and possibly even in the country to support our vulnerable residents and their council tax bills.”