Council Tax (New Valuation Lists for England) Bill

It is a great pleasure to follow the hon. Member for Southampton, Test (Dr. Whitehead). I agreed with many of the points that he made at the beginning of his speech. Sadly, I did not agree with what he said about local income tax, but it seems that we shall have to take up that debate on another occasion. Two aspects of this debate are quite bizarre, one of which the hon. Gentleman mentioned. That was the fact that it seems very difficult for hon. Members to stick to the point of the debate. One reason for that is easily explained: it is difficult to separate valuation from the rest of local government finance. Some reference to those other matters is necessary in order to understand the decision that we face tonight. The other point is fascinating, and relates to the internal debate on the two sides of the House. It became increasingly difficult to tell whether a speaker was speaking from the Conservative side of the debate or from the Government side. A serious point lies behind that difficulty as well. There are inherent difficulties with the council tax, and both sides are finding it difficult to come to terms with that. It is the most regressive major tax in the Government’s taxation armoury. Indeed, it causes the whole taxation system to be regressive: the top 20 per cent. pay less tax overall than the bottom 20 per cent. of the income distribution. We all have constituents who face extraordinary council tax bills. I have one who has to pay 10 per cent. of his income in council tax, which is an extraordinary figure. This leads to the conclusion that we have reached, which is that the whole council tax system ought to be abolished and replaced by a different system. My own position on the Bill is simple, and the hon. Member for Southampton, Test got close to identifying it. For me, revaluation is a pointless and expensive exercise that should be scrapped. It is pointless because the council tax is inherently unfair and should be replaced by a better tax, namely local income tax. It is expensive because it has already cost about £60 million and is likely to cost another £100 million, if not more. Those resources would be much better spent on almost any other aspect of local government expenditure. The Bill means that the Government will be in a position to call off this wasteful and pointless exercise, and I therefore support it in principle. I would, however, like to see some changes made to it in Committee, and I shall mention at least one of them later. First, however, I want to challenge the Conservatives’ position on the Bill, which is puzzling. Their amendment says that the House should decline to give the Bill a Second Reading because it does not cancel the council tax revaluation. However, as the hon. Member for Southampton, Test said, we all know that the Government will use the power that the Bill will grant to call off the 2007 revaluation. The current law is clear: there is an obligation to hold a revaluation in 2007 under the terms of the Local Government Act 2003. If the Bill were to be defeated tonight, therefore, that would remain the law and the 2007 revaluation would continue. The Conservatives’ position is puzzling in another way. I differ from the hon. Member for Southampton, Test, at this point, because the Second Reading debate of the Bill that became the Local Government Finance Act 1992 shows that it was always thought that revaluation would be necessary at some point under the council tax system. That Second Reading debate makes fascinating reading, and I recommend it to all hon. Members, especially for the remarks by Labour Members who were in favour of something called ““fair rates””—a concept that seems to have disappeared completely—and for the views of the right hon. Member for Sheffield, Brightside (Mr. Blunkett) and the then Member for Dagenham, who held fascinating views on the invasion of privacy that would result from the introduction of the council tax valuation system. Nevertheless, little was said in the 1991 debate about the revaluation issue, except in so far as Conservative Members said that the need for revaluation was a serious problem in the old rating system and would also be a problem in the fair rates system. That problem would not be eliminated under the council tax, however, but simply reduced. The then Secretary of State for Scotland, Mr. Ian Lang, in the debate on Tuesday 12 November 1991—a Second Reading debate that was held over two days, which I have yet to see in the House in my time, although perhaps it is not necessary for this Bill—stated:"““The banding system irons out much of the effect of relative changes in property values within an area which, under the rating system, brought regular pressure for revaluation. The need for general revaluations is therefore much reduced. If, however, such a revaluation were required, say, 20 years hence, the same house in band D would probably remain a band D house, provided that its relative position within the range of property values had not changed so much as to take it outwith the new parameters for that band.””—[Official Report, 12 November 1991; Vol. 198, c. 918.]" Council tax does not therefore eliminate the need for revaluation, but merely reduces it. The then Conservative Government expected to have a revaluation in around 2011, only four years later than that provided for in the 2003 Bill. The puzzle in the Conservative position is that if clause 1 of the Bill that we are considering tonight had been included in the 1992 Act, no one would have turned a hair. It would have been perfectly compatible with the policy of the then Government. We have heard tonight that Conservative policy now is that there must be primary legislation every time a revaluation is suggested. No one said that in 1991. It strikes me as somewhat over the top to require primary legislation for what would in effect be a one-clause Bill, as opposed to a positive resolution of the House under the current arrangements. Let me turn to the one aspect of the Bill that requires further attention. Hon. Members have referred to the difficulty that politicians have in bringing to fruition revaluations of property-based or near-property-based tax. The technical reasons for introducing such revaluations have been well explained, especially by the hon. Member for South Ribble (Mr. Borrow). They are related to divergence in property values. The relevant divergence is at the individual property level, not at the district or regional level. Those technical advantages of revaluation, however, are always outweighed by the political cost. Ministers of whatever party find it impossible to revalue without paying a very high political price.