My hon. Friend is absolutely right. We have all had heartfelt letters from elderly folk in particular who are worried sick about the prospect. As I say, the perverse impact would be that they would be driven out of their homes and those homes would be more likely to end up in the hands of the very oligarchs that the mansion tax is supposed to prevent from monopolising the London property market.
Many of my correspondents recognise that the current structure of council tax requires urgent updating and would be receptive to the imposition of additional bands to recognise differential property values—something that would, again, disproportionately penalise London. Currently, all banding ratios are set down in statute, but the Government could allow local authorities to set their own for band H and above, with bands A to G remaining at their existing statutory ratios. A ceiling could be set so that council tax would always be limited to, for example, a band J of three times the existing band H charge, to ensure that it would not become a mansion tax by the back door.
The City of Westminster might not be the most typical of local authorities, but obviously it is close to my heart. In that central London borough, a band H property is now likely to be worth more than £2 million; there are just under 15,000 of such homes. However, there is a vast difference between a £2 million flat in Pimlico and a home valued at £60 million in One Hyde Park in Knightsbridge.
Local authorities could be empowered to impose additional bands—for example, a band H for prime properties worth between £2 million and £5 million, a band I for intermediate prime properties worth between £5 million and £15 million and a band J for super-prime properties worth more than £15 million. Crucially, the Government ought to ensure that all additional council tax or prime property tax income over and above the existing band structure is retained by the local authority on the proviso that it is earmarked exclusively for affordable housing in the area. That positive and highly localised proposal could be a far more eye-catching and exciting way of countering the envy-driven mansion tax and tackling perceived housing inequality. It would also chime perfectly with the spirit of the age. As I mentioned earlier, the Government have moved towards a system that gives local authorities discretion over empty property taxes, so we are already empowering local authorities to apply local circumstances to the levying elements of council tax.
Strong currents are pushing us towards a further devolution of central powers. London, in particular, would surely be able to make a compelling case for localised revenue raising—particularly if Scotland becomes ever more autonomous. Meanwhile, the enormous and growing pressure on London’s housing supply will lead
to an ever stronger case being made for the money raised in the capital from its prime housing stock to be retained in the city for the provision of affordable housing.
Politically, there is a compelling case to make. Residents in prime central houses are paying about a third of what they were paying in rates, compared with even the 1980s, while the burden for those further down the scale has increased proportionally. Reformers should take up this opportunity with relish. However, the proposal will work only if the additional ring-fenced income is disregarded by central Government when determining a local authority’s funding stream, to prevent councils from being financially disadvantaged by the use of the proposed new bands. That could be achieved through a relatively minor revision to the Government’s annual tax base return—CTB1—to show that each local authority’s tax base calculation for bands H, I and J are along the lines I have proposed and are based on the existing 18/9 band H ratio. That would ensure that the local authority funding streams calculated using the CTB1 tax base data remain unaffected. It would be a relatively straightforward change, as far as the Minister’s Department is concerned.
Although my proposal avoids the complexity of a fully fledged revaluation, it should nevertheless be noted that such complexity is fast reducing with the rise of online property sites, which are able to provide pretty accurate historical and current market assessments. Would it really be that difficult to establish a system of self-assessment, such as the one in France, where there is a wealth tax whereby the worth of the equity of a property is submitted on an annual basis and can be challenged by the town hall if it is thought not to be an accurate assessment of market value?
My party must never give in to the politics of envy and to class war rhetoric, but the wide support for a mansion tax among some fair-minded people is, in part, a reflection of a collective failure to grasp the nettle by comprehensively reviewing property taxes. However, the mansion tax, as proposed by the other two main political parties in England, must not go ahead. It is mooted as fair—whatever that really means—but the real, practical concerns of people in my constituency are simply disregarded as the bleating of the cosseted rich, despite its threatening to ruin many. That applies to Wimbledon as much as it does to the Cities of London and Westminster. My hon. Friend the Member for Wimbledon (Stephen Hammond) and I are used to heartfelt pleas from elderly constituents, many of whom are sickened with worry about this matter.
The time is ripe to tackle the outdated system of council tax in a way that is fairer and allows for genuine local discretion. Incremental targeting of the highest-value properties could be accompanied by a new localised council tax support scheme that would allow specific instances of individual hardship to be addressed.
It is widely reported that our capital city may just have equalled its peak population, and it is anticipated that 100,000 people per year will be added to this great metropolis. The capital urgently needs more housing of all types, but particularly more affordable housing. If the money from London’s additional council tax bands were to be reinvested directly into the communities from whence it came, we could begin to provide the homes that the next generation of Londoners desperately
needs. I implore the Minister to look in detail at these issues so the electorate can be presented with a real choice on these matters on 7 May.
4.45 pm