Council tax disparity put us on back foot
Date published:
The Chamber’s latest column for The Journal by Erika Armanino, knowledge and research executive
Recent research has highlighted a growing disparity in council tax rates across the UK, with households in the North East paying 18% more than those in Central London.
This raises important questions about the impact on both residents and the wider business community in our region. Council tax is a crucial source of funding for local services, but despite paying higher rates, the North East often has fewer resources to invest in economic growth compared to southern regions.
This imbalance places businesses and residents in a difficult position. While they rely on well-funded local services to thrive, the burden of higher taxation – on both households and businesses – can weaken consumer confidence and investment.
At the heart of the issue is the way council tax is structured. Property values, which determine tax bands, have not been reassessed since 1991. As a result, areas like London, where property prices have soared, often see lower tax burdens in proportion to income and wealth.
Meanwhile, the North East, with lower average wages and higher levels of deprivation, is paying disproportionately more – a situation that adds financial pressure to both residents and businesses. For employers, this disparity could have long-term consequences. A higher cost of living makes it harder to attract and retain skilled workers, reducing the region’s competitiveness. Small businesses may struggle as disposable incomes shrink and consumer spending slows. A fairer, modernised approach to local taxation could help address these inequalities, ensuring the North East has the resources it needs to grow without placing an undue burden on businesses and households.
The North East Chamber of Commerce will continue working with policymakers to advocate for reforms that support a balanced and sustainable regional economy.