Council Tax (New Valuation Lists for England) Bill

My Lords, there is a touch of déjà vu in our debate on this amendment. Reluctantly, I must reiterate some of what I said in Committee, because the effect of the amendment is the same. But I shall address the principle that the noble Baroness stated—the link between reform and revaluation. Essentially, the amendment would prevent any changes from being made to council tax bands—the proportion, the values and the number of bands—without first compiling new valuation lists through a revaluation exercise. The aim is, as the noble Baroness has made clear, to make sure that such changes will always be linked to, and indeed follow, a revaluation. I hope to be able to explain how we are indeed sympathetic to that principle. The effect of the amendment is, however, exactly the same as before. Before I address the issues of principle, I shall say in a condensed form why the amendment cannot work. I have already said that the amendment would require new valuations to be compiled before any changes could be made to the band structure. Dwellings would have to be valued and then allocated to one of the existing 1991 bands. The obvious implication is that, given house price inflation, the vast majority of properties would automatically shift up at least one band. Furthermore, with so many properties clustering in the top few bands, the ability to differentiate between relative rates of council tax for different properties would be lost. One could not, therefore, compile new valuation lists without at least adjusting the value range of each band and without there being serious unintentional consequences on a large number of council tax payers. The noble Baroness has accepted this point, so I will not dwell on it, but these are the impacts which go beyond what is just and rational. I will concentrate on the noble Baroness’s underlying concern—the notion that we would spring changes to the band structure of council tax in isolation from a revaluation and without due consideration. The noble Baroness used the term ““afterthought””. The suggestion is that these changes would be a decision on the spur of the moment. The history of council tax seems interminable, but it is actually quite short. This is the first approach to revaluation. The Government decided to postpone it precisely because they did not wish to make any of these changes before a proper consideration of and consultation on all the issues. We will have that, thanks to Sir Michael Lyons’s final report and recommendations. I hope that the noble Baroness will see this as helping to meet the concerns of her amendment. The expectation when Sir Michael started his work in July 2004 was that his recommendations for the reform of council tax would be fed into the 2007 revaluation. Far from being an afterthought, the link was there and it is there now in our proposal. It is a clear indication that the Government—and any sensible future government—would recognise that revaluation and reform normally go together as one complete, logical package, and not as two separate or separable elements. That is not to say that, under current provisions, reforms could not be brought forward without revaluation. But that would be extremely unlikely, particularly given the detail involved. For clarity, let me reiterate. The Local Government Act 1992 provides for the Secretary of State to make changes to the number of bands, the value range of each band and the ratio between bands. I hope that this provides further reassurance that reform and revaluation are linked. The first two potential changes to the banding system could not happen in any sensible form in isolation from revaluation. If we added another band at the bottom, say, how could we fairly allocate properties to that new band without first carrying out a revaluation, even if that revaluation were to 1991 values? If we changed the value range of each band, how would we know what new values to adopt without again going through a revaluation? The only remotely possible change the Secretary of State could order in isolation from revaluation might be a change in the ratios between bands. But to do so in isolation from revaluation seems to me to be extremely unlikely. Any such fundamental change would surely require the Secretary of State to reassure himself—and everybody else—that the bandings of individual properties provided a reliable basis for the reform. It is in that way that credibility lies. Finally—I address this point particularly to the noble Lord, Lord Hanningfield—the noble Baroness’s own party has indicated in both Houses that it welcomes the use of the flexibility provided by the existing arrangements to adjust the system without the need for revaluation. We discussed the matter in Committee and I know that the noble Lord has given evidence to the Lyons committee, but I am not entirely sure what he or, indeed, other people might have in mind as to the way to proceed. We do not have the details. But it is clear that flexibility would be required in these matters. That flexibility is taken away by the amendment. This amendment, combined with the others proposed this afternoon, seems to me to threaten to paralyse the entire system, and I cannot believe that that is what the party opposite would want. The noble Baroness asked me whether we could revalue but postpone the issuing of bills until after the bands had been changed. Technically, that might be feasible if the necessary legislation were passed, but it would be impossible in practice. Where, I might ask, might local government get its money? Disjunction in the system follows from that. I hope that I have been able to provide reassurance that changes will always be linked: in practice, the structure and the revaluation will always be linked. I hope that that is reassuring for the noble Baroness and that she will be able to withdraw her amendment. I hope that she will also be reassured that there are absolutely no plans to make any changes to the council tax system until we have considered Sir Michael’s report and recommendations.