Council Tax (New Valuation Lists for England) Bill

My Lords, I ought first to express my gratitude to all noble Lords who have spoken in this debate. It presages an interesting Committee stage, not least because of the quality of contributions. I think we have had four leaders or ex-leaders, and one leading member taking part, and perhaps more will join us when we look at the detail of the Bill. I am also grateful for the support in broad terms that both major opposition parties have given to the Government’s proposition. That tells me that we will have an interesting and challenging time in Committee discussing what we all accept is a sensible but short measure. I was interested to hear my noble friend Lady Hollis speak from her particular perspective. I shall discuss her contribution when responding to various points. We have had a useful start and I look forward to the detailed examination that will occur—in which no doubt I shall play a small part—when my noble friend Lady Andrews returns to take control of the Bill. We believe that the provisions are essential if we are to formalise the postponement of revaluation announced last September. As it stands, revaluation must happen on 1 April 2007. It is only through the provisions of this Bill that the Local Government Finance Act 1992 will and can be amended and postponement formalised and achieved. As I said earlier, the Bill provides the time and space for Sir Michael Lyons to complete work on his extended remit to publish his final report at the end of the year. Beyond that, it gives us the flexibility—that is very important—to revalue as part of a fully developed package of funding reforms. The Government have been asked on many occasions to predict when they believe revaluation will happen. That has been repeated this afternoon. I am sure noble Lords will recognise that, just as we now recognise that 2007 is not the right time, we cannot sensibly gaze into the future and say now when the time will be right and appropriate. We have a lot more work to do and we will want to take very careful account of, and see a wide-ranging debate on, the fruit of Sir Michael Lyons’ later report. When and how to revalue will depend very much on the wider picture that emerges in the light of Sir Michael’s recommendations. As the Minister for Communities and Local Government said at the time of the announcement on 20 September last year: first, function, then, finance, then, revaluation. That is a very sensible formulation. That provided us with the opportunity to say that we did not think that revaluation would occur in the lifetime of this Parliament. That position is backed up by the Bill which maintains the principle of revaluation but allows sufficient flexibility for it to happen at the most appropriate time. Indeed, by removing the requirement for there to be no more than 10 years between revaluations, the Government are seeking to provide that maximum flexibility not only in the timing of the first, but of each subsequent revaluation. If we accept that it is right not to set a date now for the first revaluation, it follows that it would not be sensible to seek to predict when would be the right time for the second or subsequent revaluations. To remove the date of the first revaluation without in turn removing the predetermined time-frame for future revaluations would greatly reduce the Government’s flexibility in an entirely unnecessary form. A number of questions were asked that were either directly or indirectly related to the Bill. The noble Baroness, Lady Hanham, made a point about secondary legislation that I anticipated she would. I confirm that the situation is as she describes. This merely follows the precedent of other comparable secondary legislation in the original 1992 Act, such as bringing forward the date of future revaluations from the 10-year maximum or changing the number of valuation bands. The noble Baroness speculated what the effect of the additional council tax bands would be. Again, that is a matter on which we shall have to await the findings of the Lyons’ report. But it is essential to understand that the existing bands could be revalued at the same time as property so, other things being equal, if a property has not risen in value by more than average, it should not end up paying more tax. The noble Baroness made the assertion that revaluation in Wales can be taken as an indicator of the effect of revaluation in England. Wales cannot be seen as any indication of the way revaluation will be carried out in England, or of its effect. The Government are committed to revaluation in England being revenue-neutral. I made that point at the outset; and that is the situation. That is our intention and our desire. The noble Baroness also referred to the powers of valuation officers and the assertions in the press that those powers are increasing. Many of those assertions seem to have been stimulated by the very active role taken by Ms Spelman in another place. Valuation officers have the same powers now as they were given by the party of the noble Baroness, Lady Hanham, back in the Local Government Finance Act 1992. Nothing has changed, and there are no plans to extend their powers. It is a matter of regret that much speculation and falsehood about the way in which the tax works has been dangerously stimulated by some commentators and some politicians. Ultimately, that can only damage the tax and its credibility, and that is not in anyone’s interest. I would have thought particularly for the party opposite, which is committed to council tax, that to undermine its credibility does nothing to help the tax in the longer term. I would not have thought that was a desirable outcome, and I would caution against a campaign that operates in that way. The noble Baroness also made a passing point about the alleged £2.2 billion hole in local government finance. This Government have provided substantial additional funding for local government in the provisional settlement announced in December, and we have made it clear that there will be stability in local government by announcing a two-year package, which by and large has been welcomed. We have had a 39 per cent real terms increase in support for local government since our Government came into office in 1997; something which I do not think could have been envisaged had the party opposite continued in office from the 1997 general election. The noble Baroness, Lady Hanham, also made a point about the Valuation Office Agency embarking on a widening scale of taxes, window taxes and so on. She referred to press inquiries about ““spies in the skies”” and the linkages of different IT systems. There have been press inquiries and parliamentary Questions, which have promoted information. It is clear and unequivocal that less than 1 per cent of properties are internally inspected annually by the Valuation Office Agency, and it is a sad fact that has not been reported. Much of the press speculation seems to rest on the assumption that it will be a universal approach. It is not a universal approach; it is not universally necessary and nor is that the way in which the Valuation Office Agency operates. I want to kill off this issue about there being a ““spy in the sky””. The Valuation Office Agency has no contracts with any organisation undertaking aerial photography and no intention of using that in the way in which has been erroneously reported in many sectors of the press. The IT system built for the Valuation Office Agency only contains information that the VOA already holds. It has simply digitised that information and employed new technology to improve its efficiency and effectiveness. It should be congratulated on that, and I have no doubt that it will have longer-term benefits, particularly when at some later date a revaluation exercise has to be undertaken. When the noble Baroness, Lady Hanham, finished, my noble friend Lady Hollis made a very important contribution to the debate about the importance of local accountability. I recognised a lot of the arguments that have been deployed, familiar as I am with local government and coming from a strong local government background. It would be surprising if I did not express some sympathy with those arguments, particularly on the importance of local accountability in the funding of local government. I agree in part with what the noble Baroness said. Sir Michael Lyons picked up the issue in his interim report. Of course, the arguments are complex and there is surely a strong case, too, for a system of equalisation. Indeed, I sense that the noble Baroness supports the principle of equalisation, which is certainly easier to implement in the nationalised system of business rate collection. There is no doubt in my mind about the value of equalisation, although I recall raising questions about the system at the time of its introduction. Before the nationalisation of the business rate, many local authorities had within their boundaries the capacity to raise substantially greater revenue than did local authorities whose areas had a poorer business base, whether that related to offices, factories, workshops or whatever. I remember some of those inequities and I believe that the nationalisation of the business rate ironed those anomalies out.