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David T.C. Davies:
I am grateful to you, Madam Deputy Speaker, for your advice. I merely wish to point out that Welsh Assembly Members supported revaluation on the basis of being told at the time that
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there would be no increase in yield. I warn Members of what I call the mother of Parliaments, here in London, that they could be making the same mistake.
Mr. Raynsford: There is no such intention in England. The commitment was to ensure a revaluation based on the current yield, with no increase in yield. In Wales, a number of changes were made: an additional band was added, which must had some impact on that process. It was therefore a very different scenario, and we should not assume that because there was an increase in Wales, there would be a similar increase in England. If the hon. Gentleman examines the figures, he will see the difference. As I said, the estimates produced by both the Halifax and the RICS show that a larger number of households are likely to gain from revaluation than to lose. I do not remember the precise figures, but about 33 per cent. of households in Wales lost and only about 8 per cent. gained. That is a very different scenario from the one that we envisage for England.
Mr. Hurd : Will the right hon. Gentleman give way?
Mr. Raynsford: I will give way once more, but it will be the last time. I really must make progress.
Mr. Hurd: I am puzzled by the right hon. Gentleman's suggestion that there may be more winners than losers. If that is the case, why are the Government running away from their decision?
Mr. Raynsford: I merely said that, in the absence of official figures, evidence from the RICS and the Halifax implied if a revaluation were conducted with no increase in yield—if house price values were simply uprated in line with average house price inflation since 1991—the overall impact would be neutral, but the number of households that would gain would be larger than the number of losers. As the figures show, that is because there would be rather more gainers in the lower house price bands, and a disproportionate number of losers in the higher bands.
That brings me to my final point. If those figures are valid, it appears that the Bill will be regressive. It will result in more households on lower incomes paying more than they should because of a failure to revalue, while those in higher income bands and occupying more highly priced properties, who would possibly have paid more because the value of their properties has risen, will be spared. I cannot support a measure which seems to me to have no logic and no principle behind it, and which will have a regressive impact. It saddens me to say this, but I will not be able to support the Government tonight.
5.21 pm
Sarah Teather (Brent, East) (LD):
Remarkably, this is the only Bill to emerge from the Office of the Deputy Prime Minister in more than a year. We must assume that the Department has been very busy with other matters. If this is the total production of 9,000 staff and two Cabinet Ministers, we need to ask some serious questions about the use of resources. Let us face it: there is not much to the Bill. It proposes postponing revaluation for the present because the Government think that it might be politically unpopular. The tragedy
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is that, to cover that giant U-turn, they have also postponed Sir Michael Lyons's review of local government finance.
Is it not embarrassing for Ministers to present the Bill as the sole outcome of nearly three years of reviews of local government finance? The first review, back in 2003, recommended a review of a review. As far as I remember, the review of a review was supposed to evaluate revaluation. Now the Government have reviewed the review of the review evaluating revaluation until such time as they can review the review of the review's review to revalue.
I cannot help thinking that when the review of the review finally gets around to reviewing the review on revaluation, the Government's response will be to set up yet another review. I know that it is dangerous to rush into decisions, but this must be the most reviewed act of dithering that we have ever known.
Debates on issues such as this tend to attract quite a small crowd, and we usually see the same few faces. That means that those in the Chamber should understand better than anyone else that local government matters, and that local government finance matters. Yet today we shall spend hours arguing about the essentially technical issue of the date on which property values should be fixed for council tax purposes, rather than asking any of the more difficult questions. We should be asking how much tax should be raised locally, what taxes local government should have power to levy, and how much freedom local government should have to spend its own money. We shall discuss none of those issues in detail, however; we shall have the same fatuous debate that we have had before. We shall rehearse arguments that have already taken place.
I find the Conservatives' position bizarre. We have discussed many times before whether they want to cancel or postpone revaluation. In the course of a single speech, I heard two separate views. They have said that they want to postpone revaluation, but oppose the Bill in their amendment because it does not cancel revaluation. We will hear the same arguments again and again. The Government will try to make a virtue out of a U-turn, and will not commit themselves to anything in particular. That strikes me as a terribly wasted opportunity.
Mr. Borrow : Would the hon. Lady prefer the council tax revaluation to be postponed until the review of local authority funding is published, or would she prefer it to go ahead and then have the review of local government finance?
Sarah Teather: I shall answer that question during my speech. If the hon. Gentleman listens carefully, he will hear the answer.
What is there to say about this long-awaited Bill? Not a lot, actually. It does exactly what it says on the tin. It gives the Secretary of State the power to have a revaluation whenever he fancies it, instead of according to a fixed cycle. Hon. Members who want a revaluation, including the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), are disappointed by that. The idea of a statutory cycle was, as the hon. Gentleman said, to remove the choice because, as everyone knows, if one gives politicians the decision there will be no
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revaluation. Keith Parry's marvellous Library note for today's debate includes an historical note on postponements of rate revaluations going back to 1925, all with similarly dubious excuses. That point has been well made.
Originally, the Government set revaluation to occur after the 2005 general election because they did not want the fallout to affect their chances. Now there will not be a revaluation until after the next general election—because they do not want the fallout to affect their chances. Will there ever be a revaluation? Will the timing ever be right? Probably not, so we shall continue to have a tax that not only is inherently unfair but becomes increasingly arbitrary, based on property values that are 15, 20 or 25 years old.
Revaluation, as we have debated so many times here, leads to winners and losers. As we have seen in Wales, its effects are often unpleasant, unfair and untidy. No doubt we shall hear from Welsh Members about the impact on their constituents. The hardship felt by many who have gone up multiple bands is the reason that my Welsh colleagues have been leading calls to extend the transitional relief in Wales, so that the situation gets no worse. The problem with council tax is that the tax itself is fundamentally unfair and bears little relation to one's ability to pay, so the arbitrary nature of band shifts following revaluation is felt all the more keenly.
Sarah Teather: I mentioned the key word "Wales", so I must give way.
David T.C. Davies: The hon. Lady may be pleased to know that I am not going to talk about Wales. She said that the council tax is unfair in itself. Is not it the case that that simply was not an election issue, certainly not in 1999? It was not the council tax itself that was upsetting people, but the level of tax that they were paying.
Sarah Teather: I do not accept that. I was about to do what I do every time I debate this issue here and remind hon. Members how unfair council tax is. I could spell out again exactly how much better a local income tax would be but, as I said, it is always the same people in these debates and they have heard it all before.
I would like, therefore, to focus on the Bill's greatest sin: omission. The Bill does nothing to solve any of the problems that councils and council tax payers face. Local government is in charge of raising only about 25 per cent. of its money and, thanks to capping, it is not even fully in control of raising that 25 per cent. Hon. Members will remember with incredulity our debate in July, when, in a place that used to legislate for half the world, we were reduced to telling Aylesbury Vale district council what it could do with 4p per resident per week.
Because local government funds come in the form of handouts from central Government, the money comes with a host of qualifications, criteria, rules, regulations and restrictions. It is that relationship that damages accountability. It reduces local flexibility, undermines local responsibility, hinders longer-term planning and
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creates huge unfairness. It often leads to accusations, which are frequently unfair, that Ministers are using the power of the grant to favour their political heartlands. That mixture of central grant dependence, passporting, ring-fencing, targets and capping leads to the annual crisis in council tax rates, which began again just last week when the Local Government Association predicted a £2.2 billion black hole.
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