Funding the Future: Popular, pro-growth tax rises to fund spending on social care, council homes and support for young families

For decades, economic policy has been limited by short-termism and top-down, lever-based policies which fail to drive national system-change. Demos now aims to build a ‘Citizen Economy’ – one which strengthens the public legitimacy needed for long-term decisions, and engages with questions of culture, social relationships, pride and place to unlock economic systems-change. The tax system is central to this diagnosis. A lack of public legitimacy has prevented successive governments from making the bold changes needed for a fairer, simpler, pro-growth tax system.

The 2026 Budget provides an opportunity to turn the dial. While calls for a perfectly efficient tax system are important, we cannot overlook the political constraints. A perfectly efficient tax system requires building public legitimacy for bold reform. This Demos series, A Citizen Budget 2026, lays out how the government can build that legitimacy through pro-growth tax reforms. 

This paper sets out three tax reforms to fund investment in social care, council house-building and support for young families. It proposes expanding the existing mansion tax to raise £1 billion for a National Care Service; replacing stamp duty and council tax with a single proportional property tax to support council house-building; and limiting tax-free pension lump-sum relief on larger pension pots to raise around £1.4 billion for expanded free childcare. Drawing on public polling, the paper finds that all three reforms are seen, on balance, as making the tax system fairer, demonstrating how clearly linking tax reforms to public priorities can build legitimacy for the spending commitments of the future.