Council Tax (New Valuation Lists for England) Bill

I am grateful to the noble Baroness for her clear explanation, which is the one that she thought she would make. The effect of the amendment would be to prevent any changes being made to structure of the council tax system—that is to say the proportion of council tax between bands, the values attributed to each band or the number of bands—without first compiling a new valuation list through a revaluation exercise. That is to ensure that reform of the council tax band structure will always be linked to a revaluation. I cannot see that major reform of the system of this nature would ever take place without also a revaluation; it is self-evident that the two elements go together hand in glove, and we were clear about that during the passage of the Local Government Act 2003. That is not to say that the current legislation precludes such changes in isolation from revaluation, but I believe it to be unlikely, not least for the practical problems it would present. It is worth reflecting that, when Sir Michael Lyons was appointed in July 2004, the expectation was that his recommendations for reform of council tax would be fed into the 2007 revaluation. It was postponed, for the reasons that we have rehearsed, but the link would certainly have been there. I want to argue, therefore, in the first case, that the amendment is unnecessary as a matter of practice; moreover, it suffers from a major problem: it is unworkable. I want to explain the detail of the language and meaning involved. I must ensure that we are all clear about the definition of a compiled list. A compiled list has a very precise definition. Section 22 of the Local Government Finance Act 1992 provides that the compiled valuation list must show:"““each dwelling . . . in the billing authority’s area””," and, most importantly for this debate,"““which of the valuation bands is applicable to the dwelling””." It also makes allowance for other,"““such information . . . as may be prescribed””." But the crux of the matter is that a compiled list allocates dwellings to bands, which is where we can start to see why this amendment is unworkable. Let us look at the process of revaluation and the intrinsic link that there must be between revaluation and any structural reforms in order for either the reforms or a revaluation to work. The Local Government Finance Act 1992, as amended by the Local Government Act 2003, stipulates that properties must be valued at an antecedent valuation date two years ahead of the date of compilation of the final list, and that that date will always be 1 April of the relevant year. In addition, a draft list must be compiled by 1 September in the year before compilation of the final list. Any changes that alter banding, whether the proportionate relationships between bands, the value range within bands or the number of bands, must evidently be based on the best, the most sound and the most recent evidence about property values if they are to be fair, transparent and sensible. To achieve that, the logical sequence of revaluation might be: the date of revaluation is set; the Valuation Office Agency—the VOA)—revalues properties; any reforms to the bands are announced to take effect from the date of revaluation; the VOA places properties within the new band structure using the new valuations; draft notices of valuations and banding are sent to all householders to allow them to correct any inaccuracies; any necessary amendments are made; and, finally, the new lists are compiled and bills issued. There is a sensible sequence of events leading to a successful revaluation, with revaluation and reform going together as one complete package and the compiled list the culmination of the process. Bear in mind that any revaluation would involve some measure of change or reform simply because, if nothing else, the value range of each band would have to be changed to reflect the housing market at the time, otherwise there would be mass movement of properties up or down the bands depending on the prevailing state of house price inflation or deflation. The amendment would effectively separate that logical link. Although it may not be the intention of noble Lords opposite, it would, perversely, lead to the completely illogical position that any revaluation could use only the existing banding structure, because there could be no change to the bands until after a new valuation list had been compiled. In practice, that would mean: the date of revaluation is set, as before; the VOA values properties, again as before; but now a compiled list would come into force on the prescribed revaluation date—1 April of the chosen year—with new valuations but using the pre-existing band structure. Bills would be issued against this list, because they would be bound to be, and only then would it be possible to make the necessary changes to the band structure to account for inflation and any other reforms thought desirable. So we are talking horses and carts here. Surely we can all agree that that is unworkable. Not only would it have the immediate effect of dramatically changing the council tax take, but it would most likely impact most severely on households currently in the lower bands. They could move up several bands by pure virtue of any house price inflation since the last valuation. The amendment would also make it impossible for valuations and bands ever to be revised because not even minor reform could take place in any circumstances without revaluation. Again, I think that that is an unintended consequence. It is clear that Parliament understood the link to be logical, too, as was made clear in the Local Government Finance Act 1992 and the Local Government Act 2003. It has also received more recent political endorsement. Mr Pickles in another place seems to have got the point but also to contradict his colleagues in this House. His argument against the need for revaluation was that adjustments to the system could be made, if necessary, without revaluation. He said that matters relating to council tax banding and people’s ability to pay,"““could be taken care of by adjusting the banding””.—[Official Report, Commons, 7/11/05; col. 45.]" They could not if this amendment were agreed to. It seems, therefore, to fly in the face of official policy in the other place. I do not want to over-egg the pudding but the amendment is tautologous and therefore redundant. Moreover, it would be positively harmful by forcing revaluation on the basis of out-of-date valuation bands, causing significant increases and even greater inequalities, followed possibly by structural reforms that would catch up a few years later with reality. With that in mind, I hope that the noble Baroness will accept that the amendment is not workable and that revaluation and reform go together as a logical package and sequence.