Council Tax (New Valuation Lists for England) Bill

My Lords, I wish I could be as short and as succinct as the noble Baroness. I appreciate, as she said, that this is a short Bill, but it has given rise to significant and very helpful debates. For that reason I am very grateful that we have had the opportunity to return to this matter at Third Reading. I am afraid that I shall have to reiterate some of the arguments I put in Committee and on Report about this amendment because it remains technically unworkable and, in effect, unnecessary. I believe that in concept it is unwanted not just by the Government—noble Lords would expect me to say that—but also by the noble Baroness’s own party and by local councillors and taxpayers who, as a result, would find themselves with a council tax system that is tied for ever to increasingly out-of-date valuations with no legislative scope for reform. Again, I have to explain, as I did in Committee and on Report, why the amendment leaves us with an unworkable system. Two major flaws are at issue and I shall deal with each of them in turn. The first relates to the concept of a compiled list and what it means specifically as defined in the Local Government Finance Act 1992. The amendment is based on retaining that notion. The second flaw is the removal by this amendment of any mechanism for a specific date to be set for revaluation. Through this amendment, subsection (1A) of the Bill would read:"““A new list must be compiled, in relation to billing authorities in England, on a date prior to the making of any order under section 5(4) and (4A) of this Act””." The essential point is that ““compilation”” means in law the coming into force of the list. It is followed up by a very strict process and a timetable which attaches, not least, to the publicising of the list. That is the problem. In layman’s terms, it means not simply that the Valuation Office would be required to revalue properties at the prevailing values at the time, without there being at that stage any changes to bandings, but that a new statutory valuation list must come into force for each billing authority in England before any changes can be made to the band values, to the number of bands or to the proportions across bands. The new compiled list would have legal force, and properties would have to be reascribed at their new values to the existing council tax bands, and council tax paid accordingly. That is what the law requires us to do. The effect would be disastrous. As I explained both in Committee and on Report, this would inevitably mean that the vast majority of properties would move up the bands, probably by more than one band, by the pure virtue of house price inflation. More than that, we would see a bunching of properties towards the top end of the scale, dramatically reducing the level of differentiation between properties of different values and people of different means. I know that noble Lords opposite are very concerned about that. Inevitably, it would build inequity into the system and would penalise many of our most vulnerable taxpayers. The logical sequence of the process should be revaluation to give us up-to-date values, reform informed by that and reflecting changes which in banding are necessary and fair, and then compilation, the coming into force of the list. Almost perversely, the amendment dictates revaluation, compilation and then reform and I am sure that is the opposite of what the noble Baroness intends. The technical effect of the amendment is perverse; compilation is surely the culmination of the process and not the mid-point. I remind the noble Baroness that on Report she said,"““I believe that it would be short-sighted in the extreme to plan to have reforms as an afterthought to revaluation.”” [Official Report, 1/3/06; col. 264.]" I agreed then and I agree again because reforms should not and cannot be an afterthought to revaluation. That is the situation that this amendment would predicate. It would require new, revalued lists to be compiled and bills to be issued to taxpayers, because the legislation says they must be, before any reforms could be implemented or, if I understand the intention behind the amendment, even contemplated. The noble Baroness went on to say that the amendment was,"““intended to bring an order to [revaluation], starting with the basic value and proceeding to the banding and then to the issuing of bills.”” [Official Report, 1/3/06; col. 265.]" That may be the intent, but it is not the effect. Let me now turn to the second, and very significant, technical drawback to the amendment, which is its removal of any provision to set a specific date for a future revaluation. The current drafting of new subsection (1A) reads:"““A new list must be compiled, in relation to billing authorities in England, on 1 April in each year specified by order made by the Secretary of State.””" This amendment removes the concluding phrase,"““specified by order made by the Secretary of State””." As other parts of the Bill remove the previously planned revaluation date of April 2007 and the 10-year maximum cycle of revaluation after that, we are left with no mechanism through which any future revaluation can be initiated; and because of the link that the amendment makes between revaluation and reforms, there is no possibility of ever reforming the system in the very way that the intention behind the amendment envisages. So if we were to accept the amendment, far from bringing certainty to the process—we spent some time talking about the need for that in Committee and on Report—it would lock up the present system for ever, with no possibility of either revaluation or reform at any time in the future. Beyond those technical problems, why do I suggest that the amendment is unnecessary? I recognise the noble Baroness’s true intent and what she is seeking to achieve. She said on Report :"““The whole point of the amendment was to ensure that the council bands could not be changed between now and a revaluation, or unless a revaluation was proposed””. [Official Report, 1/3/06; col. 264.]" The idea is to ensure that revaluation and reform always go together as one package with reform being informed by a prior revaluation. I tried my hardest during that debate to reassure the noble Baroness that I cannot see that there would be a situation where the two would not go hand in glove. To revalue without reforms would lead to perverse changes in the balance of the system of the sort I have just described, and to reform without revaluation would be extremely difficult as the necessary information on which to make informed decisions would not be available. The amendment is unnecessary because it does not add anything useful. It takes away valuable flexibility in the system that may, in some unforeseen circumstance, be needed in the future. Finally, I also said that the amendment was unwanted; not just by the Government but by the noble Baroness’s own party. In Committee, I quoted Mr Pickles, who was speaking from the Opposition Front Bench on Second Reading in the other place. He was espousing his party’s belief that revaluation is unnecessary and that inequities in the system could be remedied, if need be, without revaluation. He said that matters relating to council tax banding and people’s ability to pay, for example,"““could be taken care of by adjusting the banding””.—[Official Report, Commons, 7/11/05; col. 45.]" I am afraid that this amendment directly contradicts, and renders unworkable, the policy which Mr Pickles described. I have repeated myself, and I hesitate to go on doing so, but I must stress once more that the Government have always been clear about the link that they see between reform and revaluation. It was expected that Sir Michael Lyons’s work looking at reforms to local government finance would be fed into the 2007 revaluation.