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Reports that Rachel Reeves is looking at replacing stamp duty with an annual property charge, as well as expanding the scope of capital gains tax on property sales, should be good news. So should reports that Treasury officials have been consulting economist Tim Leunig, who recently proposed a progressive annual tax on property price. But none of these policies would fix the failure that has marked Reeves’s time in office. She scrabbles around for partial fixes without addressing fundamental problems. Labour will not grasp the nettle of a wealth tax; they will do nothing about the Bank of England; they will leave the Office for Budget Responsibility unreformed.

There is no doubt that property taxes in this country are due for demolition. Council Tax, supposedly linked to property prices when it was established in 1991, has not seen its banding system revised since, despite 34 years of world-historic property price inflation since. Today, as Leunig says, “an average home in Blackpool contributes more than a mansion in Kensington”. Stamp duty is an ancient relic. It curses house buyers and further complicates the dysfunctional Heath Robinson machine of the English housing markets.

Everyone can see this, and most will even admit it. But no government has dared to go anywhere near the question of property taxation for decades. An extraordinary hue and cry fires up every time the subject of taxing expensive properties is breached. In 2009, Vincent Cable suggested a 0.5 per cent tax on properties over £1m; this was torched, like so much else, in the Coalition government the Lib Dems entered in 2010. Ed Miliband as Labour leader floated a “mansion tax” to raise £1.2bn; a ferocious press campaign, led, as I recall, by Myleene Klass, saw him back down. In 2017 a somewhat chastened Corbynite Labour party quietly left a footnote in a general election costings document suggesting that his government could perhaps “initiate a review to consider options for reforming council tax”. The result was days of front pages on “LABOUR’S GARDEN TAX BOMBSHELL”.

The problem is London. There, property prices have soared into giddying, edge-of-space levels that leave first-time-buyers needing £140,000 for a deposit. A generation has been trapped in miserable tenancies. But because so many are rich on paper, and rich via their property, reform is painful. Especially for a Labour Party so dependent on its electorate in the capital.

It is possible to be a little smarter about this. On paper, Leunig’s proposal to scrap the Council Tax and stamp duty and replace them with a progressive annual tax on property values is along the right lines. It is “revenue neutral” – it involves only a redistribution while keeping the actual taxes raised for government the same. This would create a happily large number of winners towards the bottom and middle by leaning more heavily on the top. Workers in Blackpool win and oligarchs in Kensington lose.

But that’s on paper. Problems start to emerge when a cash-eager Treasury starts fiddling around the set up. There is no way Reeves’ Treasury will look at a comprehensive tax reform and not attempt to squeeze more revenue out of it. It’d be like asking a toddler to not eat the sweet placed in front of them. It won’t be avoided and Reeves plainly doesn’t want to avoid it.

More likely, she and her officials will offer some diluted variant of the proposals, then find another set of nibbly, seemingly minor tax rises that create a political issue while also failing to resolve the economic problem. (See, for example, the inheritance tax changes for farmers.) Labour’s biggest single tax change to date was a version of this. The increase in employer National Insurance Contributions had a Treasury-spreadsheet appeal. But it mugged off small businesses across the country, and likely produced drags on employment and growth now materialising.

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Economist Andrew Sentance warns of a “1976-style crisis” coming at the end of this year or early next, driven by a combination of higher borrowing and lower growth. Sentance is a former member of the Bank of England’s Monetary Policy Committee and current chair of the Petersen Institute of International Economics. As you can imagine, he is not notably given to hyperbole. The warning rings true. Ever since her one big push on spending, taxing, and borrowing – the £100 billion extra spending at the start of her time in office – Reeves’ plan seems to have relied on nothing more than vibes and hope. On some level, the Chancellor and the people around her genuinely believed that if they said economicsy things, and looked serious, then the gods would smile on them and growth would be rapidly restored. Labour has always had a problem around this. From members to Cabinet ministers, the party is scared of economics.

I tend to think the situation is significantly worse than Sentance and other economists say. In my view, the British failure is only an eye-catching symptom of a more fundamental problem, which is the plunge of the entire system into the open-ended crisis represented by the climate shock: of permanently higher costs to economic activity, permanent instability, permanent drags on productivity and growth. To the ongoing failure of the British economic regime, now limping into its second decade, we must add the grim, emergent properties of the Anthropocene.

It’ll be an (increasingly unlikely) cold day in hell before he puts it in those terms, but the only front-rank politician I know currently talking in terms of fundamental British economic policy overhaul – not just “ending austerity” or wanting to put up taxes a bit more – is, disastrously, Reform’s Richard Tice. Tice’s recent letter to the Bank of England about the truly astonishing sums the Treasury now pays to the Bank for the privilege of running Quantitative Easing, now running to around £30bn a year, was well conceived. The tetchy response from Governor Andrew Bailey strongly suggested Tice has a point – and he does.

Enough of muddling through and hoping for the best from Labour. Enough, also, of allowing Tice and Reform to set the agenda. It’s more than time for the slowly assembling armies of the left to get serious about economic transformation. Wealth tax, slash the Bank of England’s tribute payments, transform the OBR.

[See also: Torsten Bell rises as Rachel Reeves reshuffles her team]

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