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: The logic of the hon. Gentleman's position seems to be that as people become more asset rich, the Government should say, "We want some of your assets." We have not heard Labour Front Benchers, Labour Back Benchers or Liberal Democrat Members discussing efficiency in public services and people having more through better spending. All we
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have heard is that the Government want to tax people more, if people's property increases in value. People pay enough tax as it is, including increasing sums of inheritance tax as property prices increase.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Probably one of the reasons why we have not heard that argument is that it forms no part of the Bill. I hope that the hon. Member for Southampton, Test (Dr. Whitehead) will not go down that line.
The Conservative party wants to keep the council tax in its original, unformed, half-baked, semi-organised form, which resulted from the panic in 1992 following the poll tax. The hon. Member for The Wrekin (Mark Pritchard) appears to be adding another string to the bow of that crude and unformed tax by saying that he is pleased that it does not seek to reflect the value of property. When the Conservative party introduced the council tax, however, it introduced bands to reflect the difference in property values.
Incidentally, the 1992 council tax legislation did not include a revaluation provision because it was widely believed at the time in Government circles that placing the bands on the statute book and maintaining council tax within them would remove the need for valuation, because property price movements would be absorbed by movements within the bands. Over time, that thinking has proved to be hopelessly and ridiculously off target.
The hon. Member for The Wrekin appears to be saying that revaluations should not take place within the council tax system. As properties rise in value, however, so council tax should levy a tax on a fair and equitable basis across the bands, reflecting property price increases. It is not a question of taking more money from particular houses; it is a question of taking the right amount of money from particular houses.
I shall illustrate the problem of the way bands work in different parts of the country by briefly considering two boroughs, one of which is in the south of England and is not ridiculously rich, and the other of which is in the north of England and is not especially deprived. An examination of which houses are in which bands illustrates my point.
The London borough of Merton has 8,391 properties in bands A and B and nearly 10,000 properties in the top three bands. The borough of Wakefield, which is 80 per cent. larger in terms of total number of properties, has 1,882 properties in the top three bandsa fraction of the number in a much smaller borough in Londonand 97,000 properties in bands A and B.
The geographical differences in banding around the country are already enormous. Given that property prices are drifting upwards, if there was no revaluation that differential would remain in place and continue to widen. In the case of boroughs with a larger number of properties in the top bands, the number of properties that would jump into the top bands would be considerable, thereby creating a flat tax effect. As my right hon. Friend the Member for Greenwich and
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Woolwich (Mr. Raynsford) said, those in the lower bands would not gain any credit from that, because it is not possible to go below the lowest band. The flat tax effect works at the other end as well.
Mr. Binley: I am becoming rather confused. Does the hon. Gentleman want the Government to proceed with revaluation earlier than they intend, or does he think that they should do it after the next election?
Dr. Whitehead: The hon. Gentleman will have to wait to hear my full exposition. To put him out of his misery temporarily, I am happy to say that there is a case for bringing a wider review of Government functions into a process of revaluation. We could therefore postpone revaluation for a limited period, but not do away with it completely. That is the contrast that I was seeking to make between the position of hon. Gentleman's party and that of my own, which I will of course support in the Lobby.
Sir Paul Beresford: There is a slight flaw in the hon. Gentleman's argument. The fact that the council tax banding system relies on valuations has an effect within a local area, the other effect being on the distribution of grant. If one changed the ability-to-pay aspect of the grant assessment, the argument of my hon. Friends on the Front Bench would stand.
Dr. Whitehead: The hon. Gentleman made some interesting and thoughtful remarks about maintaining the position of council tax as a prime tax for local governmentthere are many reasons why that should be sowithout some of the toxic side effects that continue to be associated with it. However, his views contrast significantly with the official position of his Front Benchers, which is to do nothing whatsoever and keep council tax exactly as it is.
Interestingly, the Liberal Democrats propose to vote with the Government. I am delighted about that, but they are doing so from an entirely different perspective. In a debate that took place a little while ago, I suggested that the policy set out by the hon. Member for Brent, East (Sarah Teather) could be compared to Chairman Mao's great leap forward. In 1918, Lenin said that he supported the then Labour leader, Arthur Henderson, like a rope supports a hanging man. It seems that the Liberal Democrats plan to support the Government tonight because they do not want a revaluation in 2007, or ever. They want something entirely differenta local income tax.
We do not want a long discussion about local income tax because that is not what we are here for. However, it is widely recognised that it would be impossible for 434 billing authorities to attempt to collect a local income tax that is levied at a different rate from the national rate of income tax. Some people would be
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resident within the geographical area from which the tax is being levied, some would not be resident, and some would be sometimes resident and sometimes not.
Dr. Whitehead: Thank you, Mr. Deputy Speaker. I shall have to see my Liberal Democrat colleagues outside to finish that discussion. The hon. Member for Brent, East said that she wished for a restitution of local control to local government. A system for revaluing the council tax or any form of tax that would have to be collected nationally does not appear to be in line with restoring a great deal of local interest to local government.
Several hon. Members made thoughtful and interesting contributions on the central issue of what to do about local council tax in terms of revaluation and whether the tax works as a way of collecting moneys from local residents in order to pay for local services.
One of the conundrums that has bedevilled local government is that the tax demand thuds on the carpet in April in the form of a notification to pay. Many people perceive that it comes their way after they have paid all their other taxes. The hon. Member for Basingstoke (Mrs. Miller) reflected some of that feeling when she said that people believe that they have paid all their taxes when another demand appears. If, instead of collecting VAT from the general population as they made their purchases
Mr. Deputy Speaker: Order. I sense that the hon. Gentleman is going astray again. The measure is about the postponement of revaluation in England and the hon. Gentleman must keep within the terms of what isGod knowsa short Bill.
People's perception of council tax is important to deciding what we do about revaluation and banding. As Labour Front Benchers have said, deferring a decision about revaluation perhaps affords an opportunity to provide a wider context in a review of council tax revaluation and a wider debate about the purpose of local government.
The right hon. Member for Skipton and Ripon (Mr. Curry), who is unfortunately not in his place, made a thoughtful contribution. Although he would not put it in the same words, he suggested that there are methods of making council tax work relatively well. He also said, in contradistinction to Conservative Front-Bench Members, that that would entail revaluation. He said that several other things could be done to make council tax revaluation part of the process rather than, as several hon. Members have described it, an apparent obstacle to it.
Governments throughout history have been concerned with the effect on the winners and the losers of revaluation and have thought long and hard about the subject. The right hon. Member for Skipton and Ripon asked whether other things could be done to place the workings of council tax generally in the context of revaluation. Several ideas
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could be considered and I hope that, if the Bill is passed, my hon. Friends on the Front Bench will examine them in the context of the extended Lyons review, alongside revaluation.
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