Council Tax (New Valuation Lists for England) Bill

I am very pleased to have that contribution from the noble Lord as it will help me when we come to the next amendment and the issue of linking reform and revaluation. I shall bear in mind what he says. I am also grateful for his support for the council tax. In a way, that reinforces the difficulty posed by the amendment, which would bring nothing but cancellation. For that reason, we cannot accept a proposal that would effectively leave us with a council tax system which is becoming increasingly out of date, more difficult to administer—particularly for the Valuation Office Agency—and more and more discredited in the eyes of the taxpayer. I know how seriously noble Lords opposite take the point about discrediting council tax and the need for credibility, and I put it to them that this is a very serious point. The Opposition have argued at other times in another place that revaluation is unnecessary because distortions in the property market realign. That may be true at a national level—indeed, we have seen some evidence of convergence where house price differentials between regions are decreasing—but it is never likely to be true at local or street level. Indeed, in his interim report, Sir Michael points out that there are serious local distortions in that regional figures mask large differences in house prices between and within the authorities in each region. I should also say that house price movement is not the only reason why a revaluation may be desirable. So to take away the flexibility ever to revalue would be very worrying. We have declared on many occasions that any revaluation would be revenue-neutral, and that continues to be our position. That does not mean that some properties will not move up, or indeed down, a band if they have been subject to a change in value which is significantly different from the average. That must be fair in the sense that the system is fundamentally a property value-based tax. If a property has changed significantly in value, then that should be reflected in the banding at the time of revaluation. When Sir Michael Lyons has concluded his independent inquiry into local government funding and made his final report at the end of the year, he will make recommendations for the reform of the council tax system. It was to allow ourselves the scope to take those recommendations on board—in a wider context, with clear and certain information—that we took the decision to postpone. Revaluation is linked to wider questions about the structure of council tax, the operation of council tax benefit and, critically, the need for a shared understanding of the role of local government and of councils’ accountability to service users. One of the interesting things about the interim report was the way in which Sir Michael exposed the difficulty people have in understanding where funding flows from and what it accounts for in local and national services. That is why we extended the inquiry’s terms of reference, asking Sir Michael to consider and review the changing role of local government and how the agenda for devolution and decentralisation could improve services. The Bill gives us time to properly consider all the options for local government funding, but the amendment would severely restrict those options.