Council Tax (New Valuation Lists for England) Bill

I am delighted to follow my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer). To make the arid subject of local government finance cogent and amusing shows what considerable skill and experience he has. My hon. Friend the Member for Mole Valley (Sir Paul Beresford) has done the House a huge service, because we have had an interesting and much needed debate this afternoon, but if he presses his amendment to a vote I shall probably not vote with him. My main reason for not supporting the amendment is that I believe that it is premature. The Government set up Sir Michael Lyons’ inquiry to look into local government finance and it will be interesting to see what Sir Michael comes up with; only then, after careful consideration, should we decide what is to be done. Local government finance has got into an almighty muddle. When council tax accounted for a relatively small proportion of income, people were not so worried, but now that it takes up so much greater a proportion of income—particularly for people on fixed incomes such as pensioners and other poor people—it is becoming a much greater problem. Any property tax should, as far as possible, reflect open market value. My hon. Friend’s amendment is therefore on the right lines—although, as many of my hon. Friends have said this afternoon, it would have been much better and would more accurately have reflected my party’s policy on the matter if it had allowed local authorities, not the Secretary of State, to make the decision. I have considerable worries about the Secretary of State being able to make such an order. If the Minister is inclined to accept the amendment, will he tell us on what basis the Secretary of State would make an order obliging an individual authority or a group of authorities to undertake revaluations? The measure amends section 22 of Local Government Finance Act 1992, as amended by the Local Government Act 2003, and we are seeking again to amend that section. On what basis would the Secretary of State make such an order? I can think of a number of reasons why he might, but I wish to probe the matter further. In an area where, when the council tax was originally introduced, property prices were not rising at anything like the present rate, it was envisaged that properties would be put into a band and, provided they were put into the correct band, all properties would increase in price relative to each other. However, in the past few years property prices, particularly in the south of England and the commuter belt of London, have increased very fast. That has led to a huge disparity not only within individual billing authorities, but between billing authorities. As I mentioned in an intervention, new properties are immediately put on to the valuation list in their full market band, whereas older properties are not. That immediately leads to a distortion. One could see good reason for ordering a revaluation in an authority that had had fast rising prices, such as my own in Cotswold, or in another authority—perhaps that of my hon. Friend the Member for Northampton, South (Mr. Binley)—where a large number of new properties had been built. Those are two good reasons for ordering a revaluation. A third reason might be that large numbers of properties had been extended. The moment a property is extended, it tends to be revalued and put in an upper band. Because of the distortion of stamp duty, many people are finding it cheaper to extend their property than to do what they would have done in the old days—sell a smaller property and buy a bigger one. That is happening to a lesser and lesser extent.