As I was saying, an area in my constituency that was an industrial wasteland with no properties is being regenerated very effectively as a result of Government policies, and there are many new properties there. To every new home that is being built, however, a notional 1991 value must be applied for council tax purposes. I think that most people would accept that that is unrealistic.
: We have talked about property taxes. Is the right hon. Gentleman aware of any calculation of the extra revenue generated from stamp duty relating to the increased house prices, as against the revenue generated in council tax take without revaluation? Surely the one offsets the other in some respects.
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Mr. Raynsford: If the hon. Gentleman bears with me, he will understand that although stamp duty is an interesting subject for a debate in which we could engage on another occasion, it is not relevant to this debate.
I return to a point on which I challenged the hon. Member for Brentwood and Ongar. When a property changes hands, it is revalued. People who live in a property whose value has risen or fallen significantly in relation to the average since 1991 will experience the consequences when they sell it, but someone living next door whose house has not been sold will not be affected in the same way. There will be increasing anomalies and inconsistencies between properties, which is another sound reason why we cannot have a valuation system without periodic revaluations. The anomalies become worse. The longer the situation continues, the more problematic it becomes, and the more difficult changing it becomes. That is why it is essential that there be arrangements for revaluation.
The Government's case for postponement of revaluation is related to the Lyons review, and I welcome the wider remit for that inquiry. My hon. Friend the Minister for Local Government rightly highlighted the benefit of a wider look at this issue, but I fail to see why revaluation should be postponed. If council tax is to continue as an important and not necessarily the only element in a framework for local government finance, it will not provide a fair basis for funding unless it is subject to revaluation.
Sir Michael has made clear his view that a one-year postponement would have been acceptableI understand, however, that he did not recommend itbut he has also clearly expressed reservations about the indefinite postponement proposed by the Government. Although such a postponement might be acceptable, pending the completion of the Lyons inquiry and the Government's assessment of it, I see no basis whatever for removing the obligation in the legislation for a review thereafter, within a minimum of 10 years. Regular, periodic reviews are essential in order to keep council tax valuations up to date, and to avoid excessive turbulence if the revaluation is delayed unreasonablya point made forcefully by the RICS in its submission.
Mr. Hands : I am intrigued by the right hon. Gentleman's support for revaluation. He referred to a report on the issue, and I wonder whether he has read the report from the New Policy Institute on the effect of revaluation of London properties. They will be by far the worst affectedat least, that is, until the recent falls in property prices. I have in my hand a photograph of a property reckoned to be one of the worst affected. The right hon. Gentleman will know it wella band D council flat in Sulivan Court, in Fulhambecause he used to be the Member of Parliament responsible for it. It will suffer the largest increase of any property in the country under the revaluation that he supports.
That rather rambling and incoherent contribution indicates the hon. Gentleman's lack of understanding. The New Policy Institute gave detailed evidence to the balance of funding review that I chaired, making it clear that as part of the revaluation exercise it is important that changes be made, such as the introduction of new bands or regional banding perhaps, in order to avoid precisely the anomalies and injustices that the hon. Gentleman has conjured up. I am afraid
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that he is seizing opportunistically on a piece of evidence without understanding the implications of the NPI's position. That is rather characteristic of his party.
There has been much focus in this debatethe hon. Member for Brentwood and Ongar gave an exampleon the scope for losses resulting from revaluation. [Interruption.] Members should bear with me, because there is an important lesson to be learned. Wales was much quoted, and in Wales 33 per cent. of council tax payers were losers and only 8 per cent. were gainers. That reflected the decision taken under the devolved framework
The decision taken in Wales was that there should be an increase in yield. It is perfectly proper for such a decision to be taken within a devolved framework, but it is not a decision to be taken in England. Indeed, the Government have been absolutely consistent in saying that there should be no increase in yield in England as a result of revaluationa point also endorsed by the RICS.
So in England, it is likely not that there would be a large number of losers and very few gainers, but that there would be broad parity between losers and gainers as a result of a revaluation, with no increase in yield. That of course meansI ask Opposition Members to listen to this pointthat many people will continue to pay more council tax than they should post-2007, because they will remain in bands that are higher than they should be in terms of current values. If we are talking about justice and fairness, it is important not to be opportunistic in picking out single examples; rather, we must look seriously at the pattern across the country of current liabilities for council tax, and consider how that would be changed by any particular form of revaluation. Value judgments are made in the course of a revaluation, and how it is done is clearly important to the outcome.
So I put it to my hon. Friend the Minister for Local Government that the House and I would find it helpful to have the benefit of the evidence that Ministers examined concerning the gains and losses that are likely to apply to individual households under different revaluation scenarios. The hon. Member for Brent, East quoted my hon. Friend as saying in a meeting with SIGOMA that there were just over 2 million losers. The Halifax, however, estimates that there might be more gainers than losers under revaluation. That certainly implies that there must be at least 2.2 million peopleperhaps morewho would have gained from revaluation, had it taken place.
The House is owed a detailed statement setting out the full implications of postponement. I therefore hope that my hon. Friend the Minister for Local Government will be willing to publish the evidence that he and my right hon. Friend the Minister of Communities and Local Government saw before they decided to postpone revaluation. As my hon. Friend acknowledged, the change of policy that he outlined will require new
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legislation. We deserve to have full information on the impact and implications of the changes when this House considers that legislation.
Local government provides a range of absolutely vital services, and it is important that it has a finance system that underpins its work and enables it to get on with its job effectively. The Lyons inquiry is rightly looking at a long term, more sustainable basis for local government finance, and we should give that inquiry full support. We should encourage Sir Michael to come forward with practical and, where appropriate, radical proposals, and I hope that the House will have a good opportunity to debate them in the reasonably near future. It is in all our interests to have a more sound, more sustainable basis for the long-term future of local government funding.
Bill Wiggin (Leominster) (Con): I want to take this opportunity to share with the House the impact that council tax revaluation has already had on Wales. That impact unquestionably serves as a warning to the people of England of what will occur if council tax revaluation goes ahead here. Wales was ripped off, tucked up and had over. That will happen here and we will face the same hardships as our Welsh brethren if we are not very careful. For the benefit of those in the House who are unfamiliar with this tale of Labour greed and incompetence, I will explain why the council tax revaluation has failed in Wales and consequently left hundreds of thousands of hard-working home owners greatly out of pocket.
During the past eight years and even before taking into account the impact of revaluation in this financial year, council tax has risen by an average of £426 per householda whopping 86 per cent. Areas such as Blaenau Gwent have faced increases of £546, which is 12 times the rate of inflation. Monmouthshire has suffered council tax rises of £514, which equates to a 128 per cent. increase since 1997, or 13 times the rate of inflation. In Swansea, council tax has increased by 84 per cent.; in Cardiff it is up by 80 per cent. Pembrokeshire has experienced the lowest increasejust 57 per cent.but that is little consolation to Pembrokeshire home owners, who still have to find an extra £256.
The move towards revaluation began in September 2000, when the National Assembly for Wales began its consultation on possible changes to local government finance in Wales. That consultation was superseded by the introduction of the Local Government Act 2003. As the House is aware, the outcome was that all homes in Wales were assessed with a view to being rebanded. At the time, the Opposition opposed the measure, and we continue to believe that this mistake has left Welsh home owners with the burden of more taxation than is either appropriate or necessary.