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Sir Paul Beresford: The trick with the Government's claim that revaluation will be revenue neutral is that nationally, it probably will be revenue neutral, but it will be to the disadvantage of my hon. Friend's constituents and to the advantage of those in the north because of the way in which the ability to pay assessment uses the shift within the banding. She is right. It is another case of the Government hiding the effects and leaving local government to take the blame.
 
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Mrs. Miller: My hon. Friend makes an excellent point. In areas such as my constituency in north Hampshire, where we have seen house prices increase by 13 per cent. more than the regional average, we will be waiting for tax hikes of around £300 per household, taking the average council bill to well over £1,500, which many of my constituents cannot afford.

Mr. Brian Binley (Northampton, South) (Con): On the total tax take, as opposed to the vehicle for collecting tax, does my hon. Friend agree that the Government have deliberately forced up the total council tax take? Had they not done so, we would not have had anything like the recent problems with the collection system.

Mrs. Miller: My hon. Friend makes an excellent point. With council tax increases of over 70 per cent., it is not surprising that people are uncomfortable with the current situation.

If more evidence were needed—not that I think it is—that revenue neutral arguments can be less than honest, perhaps we should consider the business rate revaluation. The Government said that that was aimed not at changing the amount of money collected nationally, but at ensuring that individual rateable values reflected the changes that have taken place in property markets since the last revaluation in 2000—very much the arguments that have been rehearsed today.

However, the business revaluation hiked taxes on local firms by more than £1 billion a year across the country, pushing up average firms' bills by three times the rate of inflation. In Basingstoke, which is one of the most important hubs of business and enterprise in the   south of England, the average bill paid by local firms has risen by 6 per cent. to over £16,000 a year, despite the Government's claims that the business rate revaluation would be revenue neutral. Almost 2 million businesses across England were sent revised business rates in April. That money will not be kept by local government, but will be snatched back by central Government. Higher taxes on local firms will damage the economy and increase the prices in our shops. Our experience to date is that re-banding is no revenue-neutral balancing exercise, as suggested by the Government today.

There are more deeply rooted reasons for the Government's climbdown on revaluation, which some of my hon. Friends have touched on. It is a symptom of a growing realisation of the crisis in local government finance. We have noted the fact that we are paying over 70 per cent. more in council tax under the Government, analogous to 3 per cent. on income tax. But those accountable to the voters at local government level have little control over council tax levels for which they are judged at the ballot box, despite what the Minister said in an Opposition day debate only a few weeks ago. The Government have in essence broken the link between taxation and representation, with 75 per cent. of local government spending coming from central Government and only 25 per cent. from local council tax payments.

For many councils, the cost of providing additional statutory services outstrips the funding that they receive from central Government. My constituency is in the county of Hampshire, designated excellent by the
 
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Government for its levels of efficiency. I agree with that. Hampshire has achieved great savings over a number of years in response to the pressure under which it finds itself, but this year the sums simply do not add up. In 2006–07 the projections are that, after the Government have ring-fenced the revenue support grant into the new dedicated schools grant and removed the one-off grant support designed to keep council tax figures low in a general election year, Hampshire will see a 1.7 per cent. increase in Government grant, yet it needs an increase of 5.4 per cent. to finance the Government's local spending plans and maintain current levels of service. This means that my constituents are facing a further 8.4 per cent increase in council tax, on top of the vast rises in recent years under the Labour Government.

If the council is not allowed to put such an increase in place, the result will be cuts in services to the tune of £8 million, according to current projections. That would mean 130 fewer residential care places for elderly residents; 200 fewer day centre places for adults with physical, learning or mental health disabilities; 150 fewer children in full-time foster placements; and   further backlogs in road maintenance, despite continued pressure from the South East England regional assembly to increase house building.

We are at the tipping point. The people of Hampshire, along with many thousands of other residents throughout the country, are paying more and getting less. Revaluation, whenever it came, would make the situation even worse. We heard earlier that the situation is particularly perilous for pensioners. In my constituency a third of their basic state pension is taken up by higher council tax payments, which is unacceptable.

We do not need the revaluation at any time. We need tangible support for pensioners, as I have mentioned before. I will continue to campaign for the 50 per cent. discount that I highlighted in the general election campaign, and for the reinstatement of the link between local taxation and local accountability. We must call a halt to the Government's war on home owners by stopping once and for all the measure being debated today.

6.38 pm

Dr. Alan Whitehead (Southampton, Test) (Lab): We have a rather bizarre debate. On the one hand, the Government are introducing a Bill to postpone revaluation, while stating that they want revaluation to take place. I hope that revaluation is postponed, rather than cancelled or kicked into the far-distant long grass, because it is an important part of continuing with a property-based tax. The Government are changing the 2003 Act in order to retain revaluation. The Opposition, on the other hand, have tabled a reasoned amendment opposing Second Reading, which would simply cause the revaluation to go ahead.

If Conservative Members vote for the Opposition amendment tonight, they will vote for revaluation. There is no point in their shaking their heads: if Labour Members decide to go home rather than vote in the Chamber tonight and the Conservatives by some mischance win the vote, the relevant section of the Local Government Finance Act 1992, as amended by the Local Government Act 2003, will stay in place and revaluation will go ahead. Furthermore, no one can stop revaluation going ahead in those circumstances because the provision is on the statute book.
 
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Conservative Members must be careful. My party does not do this kind of thing, but if a "Focus" leaflet were produced stating, "Local Conservatives vote for revaluation", it would be perfectly fair. "Focus" leaflets are not always fair, but the example I have described would be. Conservative Members, who are looking rather glum, would be well advised to get their own statement out explaining the true reason why they voted for a revaluation that they do not want.

The Conservative party does not want revaluation—not now, not ever—and it has boxed itself in by stating that it will cancel it. The hon. Member for Brentwood and Ongar (Mr. Pickles) made an extremely strange comment to the effect that he does not mean "not ever", but, because property prices have converged, there is not a circumstance under which revaluation is necessary. If property prices were to deconverge, the Conservative party would presumably review its policy, but let us take its position on cancelling council tax revaluation as being fairly firm.

In its local government manifesto in spring 2004, the Conservative party said that it will not introduce any new or higher bandings, so it is boxed in on revaluation and the present bandings. It has said that banding would be the only way in which local government could raise money under a Conservative Government, because it will block taxes other than council tax from entering the   local government arena. It also made it clear in its local government manifesto 2004 that it is against local income tax and any other form of transfer tax, so it favours one unchanged, unre-banded tax based on 1992 property values, which is a strange policy.

One of the problems with the Conservative policy of not re-banding is that, as other hon. Members have said, a council tax base that is not revalued will drift further and further away from actual property values over a period of time. The Conservative Opposition want to enter government with a tax that progressively bears less and less relation to the actual value of property. If one were cynical—as I have said, that is not my position—one would say that that policy would serve some people rather well, because, assuming that house prices continue to inflate, as taxes drift further and further away from real property values, so a larger and larger number of people will be in a band in which no one pays any more council tax, regardless of increases in property values. Perhaps the thinking is driven by the political party that people in those bands tend to support.

As a method of securing a flat tax that is unrelated to real value—we have heard about flat taxes in recent European elections—the Conservative proposition may be interesting, but in reality the situation is more complicated than that. Over a period of time, high property prices will mean not only that the highest band fails to differentiate between properties in certain parts of the country, but that different sets of flat taxes apply in different parts of the country, because property values will continue to rise at different rates.

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