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Dr. Whitehead : In a previous debate, the hon. Lady said that under her proposal for a local income tax there would be a substantial element of equalisation of central Government grant, and referred to the total amount that local income tax would raise. By simple arithmetic, the figure she gave would mean that the amount of equalisation grant that remained to be distributed would be roughly the same as it is at present. How, then, would the hon. Lady's vision of local government completely free from any grants from central Government come about?
Sarah Teather: First, we have always envisaged a two-stage process. We would need to scrap council tax and implement a local income tax. We want a shift between national income tax and local income tax, cutting national income tax and raising proportionately more locally. We would leave that to local discretion, but we would also localise business rates, which
As I said, we have a huge black hole and we will go through the usual saga: posturing by the Government, visions by councils of their spending and concomitant headlines about cuts in social services. There will then be marches against council tax rises and finally a last-minute panic
Sarah Teather: I was trying to make a point about what the Bill omitted, but clearly we shall have to have that detailed debate elsewhere. My point is that this is a ridiculous waste of time and energy and that going through this saga is holding local government back from making decisions itself, which is vital. I am disappointed that the Bill does not include those matters because it is vital for improving public services that we have that kind of provision. We are easily distracted by revaluation, which we all know would only fuel the sense of outrage in its losers, who already hate the tax anyway.
The political implications of rocketing bills are easy to grasp. Certain Government members probably even revel in having made a barefaced U-turn on revaluation because it means that they can boast about their honesty in admitting a mistake. The Minister of Communities and Local Government, the right hon. Member for South Shields (Mr. Miliband), said at the time that the
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Government were still moving forwardjust in a completely different direction. Clearly, he is a great wit, but his position is of no help to those in local government who need to know what the Government are planning.
The bizarre argument that the Government are postponing Lyons and revaluation to allow Sir Michael Lyons to look at the issue in a more holistic way does not hold water. The date for revaluation has been set in stone since the last Local Government Act. Why did it take the Government two years to realise that voters live in houses?
Revaluation is basically a political sideshow. Postponing it does nothing to help pensioners lining up to go to prison because they cannot pay. Nor does it do anything to tackle the injustice of families on half the national average household income paying over £1,000 in council tax.
This has been a relatively short speech, but then this is a short Bill that aims low and achieves less. Frankly, there is not that much to say about it. If it is passed with no further reforms, we shall have the absurd situation of having a tax based on a poor guess at a home's value 15 years ago. But rejecting it, as the Conservatives are trying to do today, would be just as pointless, because revaluation would do nothing to make council tax fairer either. It would just make it slightly different. Frankly, neither option is appealing.
This is rather like asking a vegetarian whether they would prefer steak or bacon. The Bill should be withdrawn and replaced with something sensible that tackles the system of local government finance. The Government will not do that, but we will when we win in 2009. So while we wait for the power to introduce something different, we see no point in having a revaluation. It would be a costly waste of money; as we have heard, £60 million has been wasted on it already. It would be a total waste of time, given that we intend, when we are in government, to scrap the tax anyway and replace it with local income tax.
I shall not go though all of the arguments again, because we have heard how much better a local income tax would be. We have heard also that we would localise business rates and make sure that local government has a proper system of finance. Even if hon. Members disagree with me about local income tax, they should agree that this whole revaluation fiasco is merely an excuse to defer once again the crucial question of a decent financial settlement for local government. Transforming local finance is key to transforming public services. We should not waste our energy fighting over revaluation just because it is an easy political game. We should invest our energies in solving the real problems: that the council tax is unfair, and that local government is held to ransom by the current funding system.
Mr. David S. Borrow (South Ribble) (Lab): In getting back to the subject of this Second Reading debate, I should begin by pointing out that, as a member of the Institute of Revenues Rating and Valuation, and of the Society of Clerks of Valuation Tribunals, I have some professional involvement in this area. I have certain predetermined views on local government finance.
I should also make it clear that I see some merit in the Government's argument for ensuring that revaluation is tied to a review of, and re-jigging of, local government finance; my real concern is the length of that delay. The history of any property tax shows that the longer revaluation is delayed, the more that tax is fundamentally undermined. There was a revaluation in the years immediately after the war, when the Inland Revenue was responsible for valuing the rates. There was another revaluation in 1956, and further revaluations in 1963 and 1973. By the end of the 1980s, after various Ministers delayed a further revaluation and following the experience in Scotland, it was impossible for the then Tory Government to have another one. We ended up with the poll tax.
Sir Paul Beresford: I am listening to the hon. Gentleman's opening shots with interest. He is comparing rates with council tax, but the situation is different. At the moment, valuation for council tax purposes is used for the distribution of grant and of the tax itself. So many of the arguments used earlier by the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) actually support the positions of both the Government and of Conservative Front Benchers, so long as the proportions do not change dramatically.
Mr. Borrow: I shall deal with that point now. Let us contrast such revaluations with the revaluation of business rates. Since business rates were nationalised in 1990, we have stuck to five-yearly revaluations, which have been supported by all those affected. Their argument is not that because no big changes have occurred in a given five-year period, there should be no revaluation. Rather, the argument is that if comparatively small changes in relative values occur under a system of regular revaluations, the impact of each revaluation is not so massive, be it on businesses or those occupying domestic property. If we argue that we do not need a revaluation becauseallegedlythere has not been a big change in relative property prices in the past 14 or 15 years, and if we have revaluations only when there is a massive change in the relative prices of property, the danger is that the impact will be huge, with a lot of winners and a lot of losers. Under such a system, it will become virtually impossible for a Government of any colour to proceed with that revaluation.
Mr. David Heath (Somerton and Frome) (LD):
The hon. Gentleman is talking a great deal of sense. But I am concerned about the sanguine view that, because the majority of properties will stay in the same bandthe point made by the right hon. Member for Greenwich and Woolwich (Mr. Raynsford)which is inevitable, given that we are talking about an average, that is somehow all right, and that the winners and losers will somehow balance out. Is it not true that the
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winners will be concentrated in certain geographical areas and the losers in others? My part of the world, the west country, has experienced rapidly increasing property pricesa point that applies whether one is on a high or a low income. That is the basic unfairness.
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