Council Tax (New Valuation Lists for England) Bill

I mentioned briefly my assumption that a transitional relief scheme would be needed in such circumstances, as was the case when the poll tax was abolished and the council tax brought in. That was also the case with the business revaluation, which proved to be successful and did not cause the controversy of the Welsh revaluation. Under local or local area revaluations, the VOA could be faced with a constant cycle of recalibrating, revaluing and publishing draft lists, and then providing compiled lists to individual billing authorities. That would inevitably lead to more costs and, in the long term, the use of more staff resources. Let me turn to the impact that the amendment would have on the finance settlement and the grant distribution system. Imagine for a moment a scenario in which one billing authority was revalued. Let us say that in that case revaluation led to a reduction in its overall tax base because properties, on average, moved to lower bands—hon. Members have cited examples of circumstances in which that could happen. At the outset, that appears to be entirely desirable for the householders concerned. The expectation would be that the grant distribution system would compensate the billing authority for its reduced tax base by shifting a larger proportion of the overall grant pot into that area. However, we encounter a problem at that point because the grant pot is of course finite. Without another authority revaluing and increasing its tax base at the same time, which would effectively rebalance the whole system, we would not have the extra funds that would be needed. Everyone else would thus get less, effectively on the say so of the authority concerned. Without any compensation through the grant distribution system, the billing authority would be faced with two options: either cover the deficit through efficiency savings or service reductions; or increase its tax rate, which would effectively mean asking its council tax payers to pay the same amount of council tax overall as they did before the local revaluation ever happened. Any overall benefit from revaluation would therefore be cancelled out. On the other hand, a billing authority with an increasing tax base going through a similar revaluation would be handed a windfall increase in tax yield, which would be left unadjusted until the next three-year settlement period. We have gone on record on many occasions saying that we accept the case for revaluation and that it is right to maintain a fair alignment between house prices and council tax bands. The amendment implies that it might be right to realign one subset of properties while leaving all the others unaligned, but how can it be fair that one person benefits from a reduction in band through a revaluation while their neighbour, who happens to be in a different authority that is not revalued, does not? As some speakers noted, we would be faced, I fear, with a flood of appeals as the public became increasingly concerned and confused by the ensuing unfairness. The amendment appears to be based on an assumption about the factors influencing the housing market—an assumption that is fundamentally flawed. It is that influences on the market could—indeed, must—operate at a local level in isolation from national factors. Why else would we ever conceive that revaluation could be justified in one billing authority separately from all others? Micro-economic factors play their part, but to revalue only on the basis of such factors would destabilise what is, after all, a national tax system based on relative values across the whole housing market.