David Taylor (North-West Leicestershire) (Lab/Co-op): My hon. Friend was a distinguished leader of one of the largest authorities in England before his election to the House. Is he satisfied about the direction of our local government policy? Local education authorities are being neutered. Social services are standing ready for absorption by the health service. Housing departments are being coerced into stock transfers. Are we living up to the ideal, which we espouse at election times, that we believe in local government? It seems difficult to judge, does it not?
Graham Stringer: Thank you for that guidance, Madam Deputy Speaker. I shall try, with your guidance in mind, to answer the question by relating it to the revaluation and the Lyons review of local government functions and finance. The reason for the delay is that if we want to comply with those principlesI share some of my hon. Friend's fearsthe council tax, which was set up in response to the crisis of a Conservative Government, simply will not bear the weight of democracy.
We should also remember in considering the revaluation that although our constituents get very excited about the council tax going upI understand
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why and there is some unfairness in the systemI suspect that the Labour party's communications and propaganda do not make enough of the fact that we are still paying 2.5 percentage points of our VAT more than we were paying before 1993 to pay for the mess of the poll tax previously. I use that figure to illustrate the difficulties in using council tax, with its imperfections, as a basic tax to sustain local democracy. People in the streets are not angry that we are paying 17.5 per cent. VAT, rather than 15 per cent., but they are genuinely concerned about council tax because it increases year on year and a bill drops through the door. When Lyons looks at that, people's perceptions must be taken into account.
Mr. David Jones (Clwyd, West) (Con): Does the hon. Gentleman accept, however, that the people of Wales are extremely angry that they are being singled out to pay higher rates of council tax than those of equivalent property owners in England?
Graham Stringer: I do not know whether the hon. Gentleman was in his place previously, but if he had listened to what my right hon. Friend the Member for Greenwich and Woolwich said in reply to a similar point, he would have heard him explain that the decision on council tax was taken on a different basis in Wales to raise extra money. That is not the Government's position. There is a difference, and we are not allowed to talk about that anyway, are we, Madam Deputy Speaker?
The other issue that we should consider in deferring the revaluation of council tax is its efficiency. People have been very careful and accurate to describe the council tax as a property-based tax. Of course, it is a property-based tax, but it also has an element, which is left over from some of the thoughts on the poll tax, that is related to the number of people in the household. People are entitled to a 25 per cent. discount if they live on their own. Although this might not be completely fair, I have collated two sets of statistics on the matter, which indicate that there is a problem with the council tax and its revaluation.
Some 3.5 million people are not on the electoral register. It is my contentionI have some evidence for thisthat a large percentage of the people in my constituency who are not on the electoral register are avoiding paying council tax. When we consider the revaluation of council tax, it is important to know how many people pay it and how many others are ever likely to pay it. I have checked the situation regarding the houses in one of my inner-city wards. It turns out that there is a ratio of two women to one man, but if one walks around the streets of that polling district, one realises that the ratio is 50:50. The conclusion is fairly obvious: a certain degree of council tax evasion is going on, which the Electoral Commission has picked up through its study of how many people have not registered on the electoral register. If we are considering deferring the revaluation, we must look at the basic efficiency of the council tax. It is considerably more efficient than the poll tax, but not as efficient as the domestic rates were.
I know that you will not allow me to stray on to the functions of local government, Madam Deputy Speaker, but local government has shrunk. Parts of it
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have been pushed into quangos such as learning and skills councils and regional development agenciesConservative Members probably have a list of them. The Conservatives were responsible for some such quangos and this Government have been responsible for others. We must consider not only the weight of democracy that the council tax can support, which is not that much, but the democracy that it should support. Given the two contradictory problems of the inefficiency of the council tax and the fact that little of it is determined locally, and what I would like to see coming back to local government, I am happy to support a deferral of the revaluation of council tax because it will be no friend to that property-based tax. I hope that Lyons will understand such things and look at the problem thoroughly, instead of just taking instructions to say that we should strip so much out of local government and destroy more local democracy because that is all that council tax will bear.
The hon. Member for Brentwood and Ongar (Mr. Pickles) did some knockabout stuff at the beginning of the debate, which was understandable in a Second Reading debatesome of it was quite witty and funny. However, the Conservatives changed their policies on local democracy, which were disastrous in the late 1980s and 1990s, so all of us should try to reach a consensus on finance and function in local democracy. I say in all sincerity to Conservative Members that we should treat the deferral of the revaluation of council tax as a serious opportunity.
Sir Paul Beresford (Mole Valley) (Con): We have heard several thoughtful speechesthe last two were good examples. It must be accepted that there is no outcry, with the possible exception of two Labour Members, in support of a national revaluation. However, my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) pointed out that there are local cries for revaluation, which I accept, so I thought that I would try some lateral thinking about that. My right hon. Friend and I used to take that approach in a little office down the road when we discussed such matters previously. Today, however, I want to use the reasoned amendment as a way to look for a slightly different approach.
Although the council tax is a property-based tax, we must remember that it is not actually based on property values in the same way as business rates or the domestic rates. The slightly different approach behind the council tax has two effects. Valuation is used to put properties into bands through which the tax is distributed locally. Importantly, especially for people in the south-east, such information is used by the Government in their assessment of ability to pay when grant is distributed, which has led to a dramatic shift of grant from the south-east to northern urban areas since the new system was introduced.
We should be able to think about a slightly different approach. It would be sensible enough to accept the Government's proposal to delayperhaps completelya national revaluation. However, we should also set the situation legally so that the Secretary of State could allow regional authoritiesif we end up with regional
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authorities, heaven forbidor at least the taxing authorities to reflect any dramatic changes that might occur in their areas. We could thus go for localised revaluation. I cite that specifically in response to the point made by my right hon. Friend the Member for Skipton and Ripon that there are areasthe Thames Gateway will probably be a classic examplein which huge amounts of building will occur, so revaluation due to the sale of such properties would obviously be appropriate, and perhaps necessary. That might mean that the value of the bands in such areas would shift.
The major effect of the council tax that we must consider is the fact that the Government mistakenly base ability to pay on the value of properties. That is why a national revaluation could have a dramatic effect on the south-east and London, while being positive for council tax payers in the north-east and the north in general. Using slightly lateral thinking to find a different approach, albeit perhaps from a rusty base, I think that we should be considering a different way of judging ability to pay.
An obvious approach would be for the Treasury to produce each year a borough-by-borough estimate of individuals' income throughout the country. That assessment could be a substitute for the valuation bands with which we currently judge ability to pay and grant distribution. Such an assessment should be complemented by a system to assess people's cost of living. Part of the cost of living, especially in London and the south-east, is dependent on the value of properties because of the size of their mortgages. That factor should be reflected when the grant from central Government is calculated, but it is not.
I support the Government in one aspect because the delay will create the opportunity for more radical thinking than Sir Michael Lyons would have been likely to achieve without the Bill. I support the reasoned amendment because we must move away from a national revaluation of properties that are not business properties because of the reasons that I have outlined. I especially support my Front Bench colleagues because I have deep concern, contrary to the view of my right hon. Friend the Member for Skipton and Ripon, about the proposal to create extra bands instead of changing the valuation of the existing bands, because that would shift dramatically the proportion of grant allocated throughout the country, which could cause damage.
So, I half welcome what the Government are saying but more particularly I welcome the approach taken in the amendment, because it gives us a chanceI suspect that the Government will not accept itto come back with the product of a slightly deeper re-think than what my right hon. Friend the Member for Skipton and Ripon has described as a grubby little Bill.