Clause 1 - Dates on which new valuation lists must be compiled for England

Part of Council Tax (New Valuation Lists for England) Bill – in a Public Bill Committee at 11:00 am on 15 November 2005.

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Photo of Phil Woolas Phil Woolas Minister of State (Local Government), Office of the Deputy Prime Minister 11:00, 15 November 2005

I shall comment on the hon. Gentleman’s first point, not on his second—I do not think that even Hansard could get me off the hook for that. The hon. Gentleman’s first point comes back to whether a revaluation is revenue-neutral. The Government have made it clear that the proposed 2007 revaluation will be revenue-neutral. In lay person’s terms, that means that the total amount collected from domestic council tax would remain the same.

In practice, differences from the real world would inevitably come out. For example, if the number of houses increased or the collection rates increased beyond the already very high levels of over 96 per cent., the council tax base would increase with them. Notwithstanding that, the business rate revaluation that took place proved to be revenue-neutral, despite the increase in rateable values; that increase reflected the performance of the economy, because non-domestic rates are based on rental values. The differences in yield were explained entirely by the increased number of properties, increased collection rates or other technical matters. However, I doubt very much whether any change in council tax yield as a result of a change from a current valuation to a new one would be welcomed with open arms by the hon. Gentleman and his party, whether or not it was 100 per cent. revenue-neutral.

I can confirm that the Government’s policy is that a revaluation should be revenue-neutral; that is the basis of our policy. However, there is an important point for those in this room, all of whom have followed the debate: it is also the case that changes in systems of funding local government have in the past increased income from local taxpayers. In other words, the   change is often used by local authorities—willingly or unwillingly—to increase the total tax yield. That happened twice under the Conservative Government: once when they introduced poll tax, and once when they introduced council tax.

In fact, hon. Members may remember the revaluation exercise that led to the introduction of the council tax. It involved the Government, through the valuation office, hiring estate agents—one remembers the headlines—to go round with clipboards, lean out of car windows and tick boxes. That led to chaos; there are lessons there. However, I can confirm the important policy point on revenue neutrality.

The case for revaluation is simply that it ensures that property values are fairly reflected in council tax bandings, and that values are up to date and can be sensibly handled by the Valuation Office Agency and other interested parties. After all, we are interested in fairness, but fairness does not depend on passing some arbitrary test relating to the divergence between past and current property prices, as is implied under amendment No. 2.

Indeed, according to that amendment, if the focus were too heavily weighted towards divergence as the overriding factor predicting a revaluation, there would have to be what amounted to an annual revaluation of all properties so that the assessment of divergence could be made. The assessment would have to take into account not just the national picture, but the regional and local levels, to reflect the fact that divergence can and does happen, and has impact, at micro level, just as much as at macro level, if not more so.

Moreover, I have no doubt that such a process would tempt many householders to enter an annual debate on whether the Government should revalue in that particular year—according, presumably, to whether they stood to win or lose under a particular set of figures. In all seriousness, I do not think that that offers any prospect of a sound basis on which to take forward the important decision of when to revalue.

The right way forward is for the Government to propose and justify a date for revaluation to Parliament in light of the Lyons review and the response to it, and for Parliament to consider the merits of that date, and of the Government’s justification for it, in debate under the affirmative procedure, which is provided for in the Bill.

The amendment tabled by the hon. Member for Cambridge is based on the assumption that revaluation takes place only for the purposes of council tax banding, but of course it does not. The work of the Valuation Office Agency in valuing properties is important for the purposes of estate and inheritance, and from the point of view of new properties and properties that have been altered and sold. The revaluation service across government, and acquisitions and disposals, are also based on the work of the valuation office. The hon. Gentleman says that there is no point in revaluation because he does not   want a property tax, but one would still need revaluation if—God forbid and save us from the chaos that would ensue—his policy were implemented.

I hope the hon. Gentleman will admit that I have adequately covered his second point, on divergence, and his third, on the potential unpopularity of a revaluation. I hope he accepts the genuine intention behind the Government’s proposals and the genuine opposition to his amendments. We want to ensure a robust system of local government finance.