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Dr. Alan Whitehead (Southampton, Test) (Lab): Does the hon. Lady accept that, when the Conservative Government introduced the council tax, revaluation in general was part of the principle? Why has she decided to depart from her Government's revaluation policy and invent a spurious new version of revaluation, which appears to have no possibility of working in the real world?

Mrs. Spelman: The hon. Gentleman may want to discuss extensively the history of my party's introduction of the council tax. However, if he gets the chance to make that speech, he should deal with the fact that the revaluation measure was not part of the council tax when the Conservatives introduced it. The Labour Government's legislation introduced the revaluation.

On the basis of the Welsh experience, council tax payers in England have every reason to fear revaluation. Even worse, it transpires that, unlike in Wales, the Government will not fund transitional relief when homes in England are revalued. I wonder who will end
 
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up footing the bill for transitional relief. I received a parliamentary answer last week, and yet again it transpires that council tax payers will foot the bill—the same council tax payers who will have an army of clipboard inspectors descending on their homes and listing any improvements so that they can be taxed on them. Perhaps there is scope for a new generation of home makeover shows, in which Carol Smillie and workmen dismantle home improvements to help people reduce their council tax. It could be the window tax of the 21st century. We could end up explaining to our grandchildren why extra bedrooms and bathrooms had to be mothballed to avoid tax.

As if revaluation were not bad enough, the Government are keen to introduce new, higher tax bands. The inevitable consequence is higher council tax bills.

It so happens that I was in Cheadle this morning. That is precisely the kind of prosperous area that will be hit be the revaluation. If the Welsh experience is repeated there, the average home will go up by two council tax bands, adding more than £500 to the average bill. There is also every sign that the imposition of cost burdens from the centre will continue to rain down on local authorities, forcing up costs and driving up council tax bills. There is no better example of that than the case of identity cards. On 8 June, the Minister of Communities and Local Government stood at the Dispatch Box and refused to rule out local authorities having to pick up the bill for administering that invidious scheme.

Mr. Andrew Turner (Isle of Wight) (Con): My hon. Friend mentioned her visit to Cheadle this morning. Would it be in order for me to ask her whether she knows which way the Liberal Democrats voted on council tax rebanding and revaluation?

Mrs. Spelman: My hon. Friend will not be surprised to learn that I can provide the answer to that question in glorious detail. On 10 March, 17 July and 10 September 2003, the Liberal Democrats voted with the Government to introduce rebanding and revaluation.

Sarah Teather (Brent, East) (LD): Will the hon. Lady give way?

Mrs. Spelman: The hon. Lady will have her chance to speak. At the moment, I am addressing my remarks to the Government.

In tandem with what the Government are doing, they are also stripping away services that were previously centrally funded. Community and neighbourhood wardens are a case in point. In the light of that, I must return to one central question: why are the Government determined to drive up the council tax? Why are they manipulating the funding formulas and pushing ahead with the ugly twin sisters of revaluation and rebanding? Is it because the cost of providing local services has gone up disproportionately? Is it because people are using a lot more locally provided services? Is it because town halls across the country need to amass funds? No, it is because the Government are systematically turning council tax into a proxy for central taxation in order to fill the Chancellor's economic black hole.
 
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David T.C. Davies (Monmouth) (Con): Has my hon. Friend noticed that there is not one single Labour Member of Parliament in the Chamber today? Does she agree that that might be because they are thoroughly ashamed of the way in which the Labour Administration in the Welsh Assembly told people that there would be winners and losers under this system, when in fact one in three people have seen their council tax go up while money has been squandered by the Labour-run Welsh Assembly?

Mr. Graham Allen (Nottingham, North) (Lab): On a point of order, Mr. Speaker. In order to be courteous to the hon. Gentleman, would it be in order for me to pass my spectacles over to him, so that he can see the Labour Members who are present today?

Mrs. Spelman: My hon. Friend the Member for Monmouth (David T.C. Davies) has excellent eyesight, Mr. Speaker, and he has made the very astute observation that there are no Welsh Labour Members in the Chamber today. I wonder why that might be—[Interruption.] I see that the hon. Member for Cardiff, West (Kevin Brennan) has taken his place—just in time!

Some Labour Members might welcome council tax inflation as a means of wealth redistribution. The last time we debated this matter, I detected a real enthusiasm among them for new upper council tax bands. But council tax is not a wealth tax; it is a local services tax that is partly based on property to reflect the fact that larger properties typically make slightly greater use of public services. The swingeing increases that we are now seeing have hurt some of the poorest people, and that is what is so unjust. People on fixed incomes, notably pensioners, suffer more than others as a result of the Government's abuse of the council tax.

Michael Jabez Foster (Hastings and Rye) (Lab): The hon. Lady is quite right: the system is tough on those on fixed incomes. But how would that be helped by the policy proposed by the Conservatives—at least at the last election—to freeze Government support to local government, which would push council taxes up even further?

Mrs. Spelman: The hon. Gentleman fundamentally misunderstood our policy at the last election, and I cannot believe that he is suffering either shortness of sight or deafness. We campaigned at the last election on giving a 50 per cent. discount on council tax to over-65s, which was fully funded and costed.

The Government will counter that with talk of council tax discounts, but the truth is that take-up of those discounts is abysmally low. There are several reasons for that: the length and complexity of the paperwork is daunting; the questions are demeaning, particularly for pensioners; and let us face it, the present scandal surrounding the tax credit system could hardly be a greater deterrent to would-be claimants. Soaring council tax bills not only present problems for people in terms of meeting the cost; a series of contingent problems arise from the way in which the system has been abused. It is a perverse system, which penalises efficient councils by giving them a relatively small central Government grant, forcing them to put up council tax. Council tax duly goes up, and the
 
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Government hit that authority with a capping order. That is a crazy way to proceed—it is the fiscal equivalent of splat the rat.

Mr. Brian Binley (Northampton, South) (Con): Is my hon. Friend aware that the rumour in local government circles, emanating from the Local Government Association, I think, is that this year an increase of 1.7 per cent. in the revenue support grant is being planned, with the exception of education, for which it is said that an increase of 4 per cent. is being planned? Does she consider that that will extend the concept of stealth tax?

Mrs. Spelman: My hon. Friend is right to point to a pattern that we have seen before. After the general election of 2001, the pattern was of council tax rising steeply as the Government recovered their financial position. Once again, after the 2005 election, we fear the worst. Not only is the process flawed and costly but it puts local authorities in the position of having to cut services on which local people often rely. Typically, those tend to be the sorts of services used by some of the most vulnerable in our society.

As the situation stands, everyone except the Chancellor loses out. I sincerely hope that he had a pang of guilt when he offered a one-off £200 payment to pensioners for this election year only. The Conservative party proposed a 50 per cent. discount for over-65s, year on year, properly costed and fully funded.

Sarah Teather: The hon. Lady has made several elusive suggestions that she might reform council tax, but has not provided any options for its reform. In fact, she seems very much in favour of keeping it exactly as it is, and probably making it a good deal worse. Would she like to explain?

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