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Sarah Teather (Brent, East) (LD): As the Minister of Communities and Local Government suggested, it is a great pleasure, in my debut on the Front Bench, to be defending our party's most popular policy from Conservative attack—[Laughter.] The Conservatives laugh; let them laugh.

We have had an interesting debate so far, although it has turned up some of the worst and most anodyne of soundbites—goodness knows what "splat the rat" relates to. However, it has also shown clear philosophical differences between the parties, as well as a gaping hole in Conservative party policy. The Conservatives have nothing to say about the balance of funding crisis or the need to reform council tax, but of course the truth is that they do not want to do that. They have flip-flopped all over the place on revaluation. Their claim appears to be that house prices are converging across the country. What land are they living in? I assure them that house prices in my constituency have gone up a good deal faster than they have in neighbouring areas.

Mr. Pickles: The hon. Lady is wrong on two material facts. First, there is not a question of convergence. However, the relationship between north and south is roughly what it was.
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David Howarth indicated dissent.

Mr. Pickles: Yes, it is; the relationship is exactly what it was when the council tax was introduced 10 years ago. Secondly, we have voted against revaluation on every single occasion, but on every single occasion, the Liberal Democrats voted for it.

Sarah Teather: I understood that the Conservative party was advocating five-yearly rather than 10-yearly revaluations, so the hon. Gentleman is perhaps misleading us.

Dr. John Pugh (Southport) (LD): I have a Hansard quote from the hon. Member for Brentwood and Ongar (Mr. Pickles), who just said that we are wrong. On 7 January 2003, he said:

Sarah Teather: The Conservatives really do not know what they are doing, do they?

Mr. Andrew Turner : On a point of order, Mr. Speaker. Am I correct in thinking that the hon. Lady said that my hon. Friend was misleading us?

Mr. Speaker: I think that the hon. Lady meant to say "inadvertently misleading".

Sarah Teather: I absolutely meant that the hon. Gentleman was inadvertently misleading us Mr. Speaker.

Now that the Conservatives oppose revaluation, it is clear that they are not attached to the council tax because they believe in the philosophy of a property tax. They have said that they oppose a wealth tax and want a local service tax. The hon. Member for Meriden (Mrs. Spelman) said that it costs the same amount to every person to empty the bins in every area. That shows her view of the role of local government. The nonsense that the Conservatives talk about wanting localism is underlined by that statement. It is the kind of thinking that spawned the poll tax, so the party has not moved on intellectually.

There is real tension in the Conservative party because although some say that they want localism—some of the brighter Back Benchers advocate the return to localism and getting rid of the centralist state—the hon. Lady continues to argue for a local services tax and against giving any powers back to councils. She argues for a regressive tax system.

Mrs. Spelman: I am grateful for the opportunity to reply to the hon. Lady's point, which is definitely misleading, and not inadvertently. I make it perfectly clear to her that in the balance of funding review—

Mr. Speaker: Order. We had best stop here. No hon. Member would be misleading in the House and certainly not the hon. Member for Brent, East. I hope that the hon. Member for Meriden (Mrs. Spelman) will withdraw that remark.

Mrs. Spelman: Of course I withdraw any remarks that might cause offence. A proper reading of Hansard tomorrow will reveal the words that I actually said in my speech, not the words that are being put in my mouth.
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Sarah Teather: I am no clearer, I am afraid.

At least the Tories are honest enough to acknowledge that the council tax is a poor proxy for a wealth tax, whereas the Government claim to be interested in progressive taxation, but fail to tackle the main problem with council tax by grasping the nettle that it is fundamentally unfair. I will be interested to find out whether they finally grasp that nettle when the Lyons review reports, or whether they will institute yet another review.

We have been arguing for the abolition of the council tax and its replacement with a local income tax since the Conservatives introduced it.

Mr. Graham Stuart (Beverley and Holderness) (Con): In light of the Liberal Democrats' opposition to the council tax, will the hon. Lady explain why members of her party voted again and again for a revaluation that will hit people hard and make them pay more. Why did they support the Government in doing that?

Sarah Teather: We did not. End of story.

We have argued for the local income tax because it is fair—

David T.C. Davies : Surely the hon. Lady is aware that the Liberal Democrats in Wales most certainly voted not only for revaluation, but for the change in formula that took money from rural areas and put it into the south Wales valleys, where Labour authorities had been unable to keep their books in order for many years.

Sarah Teather: A revaluation is irrelevant if we have a local income tax. If we scrap the council tax, there is no need for any revaluation. It is nonsense to suggest that we are in favour of revaluation. We are in favour of getting rid of the council tax.

David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con): Will the hon. Lady give way?

Sarah Teather: In a minute.

We have argued for a local income tax because it is fair and simple and has been proven to work in many other countries and here. Fundamentally, it will allow us to shift the balance of tax raising from national income back to local income. That is what localism is about. If we are serious about localism, we must give councils the power and freedom to raise money and spend money.

Mr. Kevan Jones (North Durham) (Lab): I am listening to what the hon. Lady says about local income tax. Does she stand by what she said in the Evening Standard on 29 June:

How could it not leave three nurses who live together in a house in the city of Durham impoverished if they have to pay more council tax?
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Sarah Teather: A student bursary is not taxable.

Mr. Adrian Sanders (Torbay) (LD): One fundamental problem with any system of local government that is dependent on a central Government formula is that it will relate to the local tax base. A council tax system will always be unfair to an area of above average house prices and below average incomes. Our policy tries to address that.

Sarah Teather: My hon. Friend makes an excellent point, and the situation would be made worse following revaluation.

Mr. Pickles: I give the hon. Lady the opportunity to withdraw her remarks. Is Hansard in 2003 at columns 126, 976 and 339 wrong when it shows Liberal Democrat MPs voting for revaluation?

Sarah Teather: That relates to a vote on Third Reading. We did not vote for revaluation. [Interruption.] Those are endless numbers and I cannot answer the detail.

The point of introducing a local income tax is that it allows us to shift the burden so that we move from raising all the money through national income tax to raising it through local income tax. We cannot do that with a property tax alone. We certainly cannot do it with an unfair council tax.

Several hon. Members rose—

Sarah Teather: I need to make progress. I have been talking for some time—

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