Committee (3rd Day)

Part of Cities and Local Government Devolution Bill [HL] – in the House of Lords at 4:00 pm on 29th June 2015.

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Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 4:00 pm, 29th June 2015

My Lords, I support the comments made by my noble friend Lord Smith about the increasing frailty of the existing council tax structure to bear the responsibility we ask of it. I believe I am right in saying that, had the older rates system remained in place, the most expensive properties, compared to the median average, would be in a ratio of something like 20:1. In fact, the ratio of the top band to band D—the fulcrum point on the council tax scale—is only 3:1. That shows just how narrow the redistributive effect of council tax has become.

In the past, the Government have resisted looking at council tax revaluation, even though a full-scale revaluation went through fairly smoothly in Wales, without any great hiccups in the procedures. A few years ago, some of us did some work on this. It was clear that it would be desirable to revalue all properties—but at the very least, you could fish the top band. I was advised, by the Valuers’ Association and the Government’s valuation service that that would represent less than the valuations which happen now whenever a flat becomes a shop, a shop becomes a flat or a house is sold and is given a new valuation. So the amount of work required to allow local authorities to increase the bands above the current top band would be quite modest—I am assured of that by the district valuers who carry out this work, day in, day out, on other use changes and so on and so forth—and would allow us to stretch more fairly and produce more revenue in a way that was more reasonable.

Certainly the compression that has come from council tax bands compared to the old rate bands is probably, in my understanding, the narrowest in the OECD. In America, Australia and most of the countries in Europe, the property range of bands is far wider than we now have in the UK as a compression of council tax. As I said, we have only about three or four bands above the band D fulcrum compared to the 20:1 ratio that we used to have under the old rates system. So it is a perfectly serious proposition that this would be a fair and appropriate way to increase revenues to local authorities and to reflect local need and local ability to pay.