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Mr. Raynsford: My hon. Friend is absolutely correct. He identifies one of the glaring inconsistencies in the Opposition's position.
If a carefully thought through Government policy that had been the subject of detailed consultation and legislation—and which, incidentally, had been defended robustly against opportunistic Opposition attacks—was now to be reversed, one might think that there would be either compelling evidence to justify the volte face or specific alternative arrangements for conducting the revaluation that the Government accept must happen at some stage. As we can see from the Bill, however, nothing has been put in the place of the current requirement for a revaluation in 2007 and subsequently on a 10-yearly cycle.
I know that my right hon. Friend the Minister of Communities and Local Government has acknowledged—and, indeed, rather celebrated—the fact that he has accomplished a U-turn on this issue. I have no problem with U-turns if they replace a poor policy with a better one, but I do have a problem with a U-turn that replaces a sensible policy with a void, a vacuum, an empty space in which a revaluation might happen at an unspecified future date, but only if the Secretary of State decides to hold one.
I have a serious problem with that strategy because, as we all know, politicians are traditionally wary of revaluations because they fear electoral unpopularity. That sentiment is not the preserve of any one party; over the years, all Governments have been reluctant to proceed with revaluations because of the possible backlash from the electorate, who are likely to be unhappy about them. It is fundamental that there should be a regular cycle of revaluations in statute, so that that process—which everyone recognises must take place in order to support a credible system of taxation based on property values—will not be postponed simply because of short-term political fears.
David Howarth (Cambridge) (LD): I agree about the need for revaluations in property-based tax systems, and about the fact that politicians are deeply unwilling for such revaluations to be carried out. Surely that argument supports the objection to having such a tax as the main local government tax.
Mr. Raynsford:
No, it does not. If the hon. Gentleman had been listening carefully to me, he would understand that it provides a reason for ensuring that we have a regular cycle for revaluation, so that such temptations to delay can be resisted. The argument in favour of a council tax is that it is relatively simple to collect and difficult to evade, and that it meets with a high level of acceptance. There are huge problems with his party's preferred alternative of a local income tax, which is neither predictable nor easily collectable. It would also be very easy to evade, and it would be open to huge administrative costs. It would also place burdens on business and result in arbitrary consequences for households with two or more earners, who would find that they were clobbered. The hon. Gentleman will realise, when he gives a little more thought to the issue,
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that the electorate roundly condemn his party's proposals as unworkable, as indeed are so many of the Liberal Democrats' proposals.
Mr. David Clelland (Tyne Bridge) (Lab): I am interested in the direction that this conversation is taking. Is my right hon. Friend aware that the Minister recently said that property-based taxes were introduced at a time when services—such as water, electricity and sewerage—were based on property, while services today, including education and social services, are based on people? Do the Minister's comments suggest that the reason for the delayed revaluation might be that, in the minds of Ministers, there might not be any need for a property tax in future?
Mr. Raynsford: I have listened carefully to the comments made by my ministerial Friends, and they have made it clear that they do not intend to move beyond the remit of the Lyons review, which is to consider changes to and reform of the council tax, but not a replacement for it. That was the remit given to Sir Michael Lyons, and that is the premise on which we are proceeding. If, in future, alternative plans are put forward, hon. Members will obviously wish to consider them very carefully, and with considerable scepticism. The experiences of previous attempts to change from a property-based tax to a person-based tax are not happy. The poll tax was one of the most unhappy experiences in the entire history of local government finance, and very few people would want to go back in that direction.
Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): Will the right hon. Gentleman give way?
Mr. Raynsford: I would like to make some progress. I have just given way, and I do not want to take up too much more time. I hope that the hon. Gentleman will bear with me.
What are the consequences of the Bill? We know that the basis of the council tax—the 1991 values—will become increasingly remote from reality as we get further away from the current valuation date. Having to calculate notional 1991 values for every new property built is nonsense. As I mentioned in our previous debate on the subject, some areas of my constituency were entirely void industrial wastelands 15 years ago, and anything built there would have had no value at all, so, now, it is slightly odd to create notional 1991 values for properties built as a result of that area's regeneration. That pattern is replicated all over the country. In addition, as the former Minister responsible for local government, the right hon. Member for Skipton and Ripon (Mr. Curry), rightly highlighted, there are already provisions for revaluation of some properties where those properties change hands and there has been a material change in value. The anomalies will therefore get worse.
The overwhelming majority of properties, of course, have increased significantly in value since 1991—by some 216 per cent. on average, according to the Royal Institution of Chartered Surveyors. That is part of the problem. Many people who are not familiar with the arcane nature of the council tax process can easily be
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frightened into believing that because their property's value has increased dramatically over the past 14 years, they will be clobbered by revaluation. That is fuelled by unscrupulous Opposition scaremongering, of which we saw a great deal in the run-up to the general election, and of which we have heard a great deal more today. That does not help to foster a serious and rational debate about the proper system of finance for local government.
As the Government have made repeatedly clear from 2001 onwards, however, the purpose of revaluation is not to increase the council tax yield but simply to bring values up to date, so that the tax is based on modern values rather than values that are increasingly remote from reality. Were the bands to be increased in line with house price inflation since 1991, most households would find themselves in the same band as before, with no increased liability for council tax. I have seen no recent Government estimates for the numbers of households whose banding would either increase or decrease under a revaluation. My right hon. Friend the Minister of Communities and Local Government has assured me that no new Government estimates have been prepared for Ministers since the election. The only official figures are those prepared previously—before the April 2005 valuation date. I am a little surprised that new estimates have not been prepared to inform Ministers' decision to postpone the revaluation, but in the absence of up-to-date official figures, we can only go on the evidence produced by well-informed commentators such as the RICS and the Halifax building society. Both indicate that the majority of households would have remained in the same band as a result of revaluation, and also suggest that more households would have gained than would have lost.
Mr. Pickles: I want to ask the right hon. Gentleman a very straightforward question: if what he says is correct, what went so terribly wrong in Wales?
Mr. Raynsford: As we have debated frequently in the past, the situation in Wales was very different because there was an increase in yield there. The Government have always made it clear that there would be no increase in yield in England. In Wales, the yield has increased by some 8 or 9 per cent.—
Mr. Raynsford: I am trying to bring my remarks to an end, and the hon. Member for Brentwood and Ongar has led me into territory that has immediately provoked some of his hon. Friends. I will give way to the hon. Gentleman who was first to rise.
Madam Deputy Speaker: Order. May I remind Members that the Bill currently before the House has no reference to Wales? I can allow some reference to what happened, but I am mindful that this Bill is for England.
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