Council Tax (New Valuation Lists for England) Bill

My Lords, it is a great pleasure to follow on from the noble Baroness. On these Benches, we concur with just about everything she said about local autonomy and the importance of financial autonomy to build strong and healthy local government. It is remarkable that this Bill is the only legislation which has come forward from the OPDM in the 15 months since I became a Front-Bench spokesman. It is a modest Bill designed to stop something happening. After a three-year period of review, re-evaluation, more review and assessment, we are still waiting for something to happen. If we had abided by the strict letter of the parliamentary rules of engagement and simply discussed the terms of the Bill, our debate would have been much shorter. The Minister broadened out the debate and discussed wider local government issues and so has rather given us licence to do the same. Even in its brevity, the Bill displays one of the saddest aspects of modern local government in that it gives the Secretary of State power to revalue properties when he feels like it. So it is another example of how local government operates at the whim of the current interests of central government, rather than of good local government. The original intention to have revaluation after the general election was always naked self-interest on the part of central government, but it was at least transparent—if you do not mind ““transparent”” and ““naked”” in the same sentence. The problem with the current system is that it was originally intended to be based on notional values. We would have broad bands which would act as comparators in terms of property values. But as council taxes increased way beyond the levels of inflation and way beyond the levels originally envisaged, the pressure to do something has become greater. We were told in the run-up to this that revaluation was not about increasing the total tax take, but was simply about the way in which this burden would be distributed. It always struck us on these Benches that it was a classic response of this Government to avoid radical reform and instead tweak the existing system. Had revaluation taken place, it would simply have made a bad system more complex and created new inequities to add to the old ones. One of the key problems is that the current system is based on property values from 1991. That is for anyone who has not sold their house. If you have sold your house, then your house will have been revalued and you may well be banded completely differently from the identical house next door. As council tax increases, that sort of inequity makes people very cross. It will get worse. If we have no revaluation at all, if it is postponed for 15 or 20 years, the disparities between people who have been revalued and those who have not will simply get worse. The Bill is a fig-leaf to cover the Government’s embarrassment over local government finance. It is now so complicated that very few people really understand it. I work for a think-tank that, when trying to obtain figures from departments, simply could not get the Department for Transport figures and the OPDM figures on local government transport spending to meet up and agree, because the system is so complicated. It is no wonder that Michael Lyons has found that the public do not understand local government finance when so many professionals do not understand it either. The current system is outrageously unfair and, worse than that, it is now becoming profoundly undemocratic. Local government now raises less than a quarter of what it spends and even that small proportion is subject to government control through the capping regime. Each year in this body, the mother of Parliaments, we hold a debate over whether some small rural district council can spend four pence a year extra per resident. I have to say that it is no wonder local people wonder what central government are doing. The situation is deeply unfair to many of the least well-off in our society. Many people now pay something like 10 per cent of their income in council tax. It was never envisaged to be at that kind of level. Any decent review of local taxation should at least examine whether that sort of situation is justified. Hundreds of people living in private rented accommodation pay a tax on an asset which belongs to someone else, so it cannot even be argued that this is a decent property tax. On the other hand, many people have purchased properties at much reduced rates under right-to-buy schemes and now find themselves with an asset that is notionally valued at a level at which they cannot afford to pay the council tax. To deal with many of the worst inequities we have an increasingly complicated system of means-tested benefits which add to the administrative burden of collecting the tax in the first place. And, as we know, there is significant under-claiming and take-up of these benefits, as is always the case with means-tested benefits. People are either nervous about the system or, especially for older people, there are cultural difficulties about claiming such benefits. They feel that it is an admission of failure if they have to do so. The position is so complicated that it has allowed scare stories of the sort described by the Minister to take hold. If the situation were more transparent, these stories simply would not hold water. So I do not have an awful lot of sympathy with the department for having got into a situation where newspapers can run stories and people believe them. After a full consultation and a White Paper published in 1999–2000, it was agreed that revaluation would take place on a 10-year basis. Members of the Official Opposition agreed that any property tax would need to be subject to some sort of revaluation in the way that rates used to be. The Valuation Office Agency had geared itself up for a national revaluation and spent an estimated £45 million preparing for the exercise. It has now had to make total staff reductions of around 1,250, but at some point all that capacity will have to be restored if the Government decide that revaluation is necessary after all. Members on these Benches will support the Bill because we do not want to see revaluation and we do not support council tax at all. We would like to see the Lyons review carried out with nothing ruled in or out, and then a proper national debate on how local services should be paid for. After that, we shall see.