John Hemming (Birmingham, Yardley) (LD): As an ex-leader of Cambridge city council, my hon. Friend will be aware that the political cost of the council tax has been substantial over time. Part of that has been caused by the continuation of the Conservative Government's policy of increasing council tax by more than inflation. At standard spending, in 199394 council tax was £492.66, and in 200203 it increased to £769.16. It then changed to the assumed national council tax, putatively £1,000.83, which has increased to £1,101.96. That is a 71.9 per cent. increase in council tax, while inflation has been 34 per cent.
David Howarth: Thank you, Mr. Deputy Speaker, for saving me from having to reply to my hon. Friend's intervention. I, too, found it difficult to see its relevance to the Bill, although he made a good point.
As I was saying, the problem with revaluation is that its technical merit is almost always outweighed by its political cost. As the hon. Member for Southampton, Test said, that does not bother those of us who are in favour of scrapping the entire system and replacing it with a completely different local government taxation system. In fact, it makes our case better. As the lack of revaluation makes council tax increasingly anomalous and unfair, more and more people will come to see the good sense of our alternative proposals. I suppose that one could say that we were following the rule of worse is better.
Tom Levitt (High Peak) (Lab): Does the hon. Gentleman recall that, in the last general election, the Liberals had a website into which people could tap numbers to find out whether they would be better or worse off under their local income tax? I have not met anyone who found that they would be worse off. The reason for that is not the goodness of the system but the crazy way in which the website worked. The website did not ask what band
As I was saying, the problem with revaluation should bother the two parties in the House that are in favour of a property tax. The need for revaluation cannot be
7 Nov 2005 : Column 83
denied by those who favour that sort of tax. It never has been denied from the Conservative Benches until recently. My problem with the Bill is that the proposed mechanism allows the Secretary of State a bare discretion to refuse to revalue in any particular year or for ever, so the political reasons for failing to revalue always outweigh the technical reasons. That lacks fundamental transparency.
I ask the Government to consider an amendment to the Bill that would do the following things. First, the Secretary of State should have a duty from time to time to consider whether he should use the power that the Bill grants him. Secondly, when considering whether to use the power, he should be under an obligation to give reasons as to why that power was not exercised in any particular year. Thirdly, those reasons should include an assessment of the variation in property values that has taken place since the previous revaluation. That would allow us all to see whether the Government's decision not to go for a revaluation on any particular occasion was justified technically or was merely following a political imperative. I would be interested to hear the Minister's response to that.
For the Liberal Democrats, the Bill is neither here nor there. We would never use the power that it grantsthe power to revaluebecause we would scrap the council tax system at the earliest possible opportunity. I support the Bill, but only because we would do away with the possibility of revaluation completely as part of a radical reform of local government taxation. The Bill forms one tiny part of what we will do if and when we come to power.
Mr. David Burrowes (Enfield, Southgate) (Con): We have heard many opinions today, but there is one incontrovertible fact: people like living in my constituency. They live there until and after they retire; they live in the same houses from generation to generation. In the meantime, the value of their houses naturally increases, often at a rate that far exceeds any income that might enable them to buy their houses.
We often talk about value, and it is the subject of today's debate, but to many such people it is an abstract concept, becoming relevant only when they sell. We must be cautious about references to value and revaluation, which should be linked to ability to pay. Houses in my constituency are worth hundreds of thousands of pounds, but those values are not always linked to householders' ability to meet an increase in council tax. Many an ordinary family in my constituency with a high-value property is scrimping and saving to pay the mortgage, and may have a lower standard of living than those with less valuable houses. Similarly, hard-working constituents in council or social housing may live in high-value properties that are already affected by a high council tax valuation, and would be more affected by a revaluation. Those who will not profit from a sale will not benefit from an appreciating asset.
People on fixed incomes, such as those who lobbied me on behalf of the National Pensioners Convention, are particularly affected by council tax increases. As
7 Nov 2005 : Column 84
their life expectancy increases, there is the prospect of a fall in their standard of living over 30 years or more, primarily as a result of local taxation. That cannot be right, and the Bill cannot help them or alleviate their concern.
The main problem is that, under the Bill, revaluation would be at the behest, or the whim, of the Secretary of State. As the hon. Member for Cambridge (David Howarth) pointed out, there is a danger that it would be politically motivated rather than being related to equity. The primary concerns would be how taxes could be raised, and how votes could be gained. The Bill suggests a move into the political arena rather than an interest in what is best for my constituentsa proper, equitable tax.
Kali Mountford (Colne Valley) (Lab): The hon. Gentleman seems to be arguing against council tax in principle, rather than merely opposing the revaluation. With what would he replace it if there were to be no revaluation at any time? Does he favour a completely different system, such as that recommended by the Liberal Democrats? What would he tell those involved in the Lyons review about how he would reconcile his concern about ability to pay with the need for councils to pay for services?
Mr. Burrowes: I shall stick to the essence of the debate, which is not about my proposals but about the Government's proposal to put revaluation into the hands of the Secretary of State. However, at the end of my speech I shall mention some of the principles that I think should feature in the Lyons review.
The Government have form in relation to politically motivated acts relating to council tax. As a criminal solicitor, I am worried about the possibility that previous convictions will be admissible as evidence in trials, but that is not precluded in this case. The Government certainly have form in connection with the way in which they hand out grants under the distribution formula. In my constituency and elsewhere, we have seen the diversion of funds from London to the northern regions.
Tom Levitt: The hon. Gentleman may not know that I represent a Derbyshire seat. For 18 years, under a Conservative Government, we had the lowest grants in the country because the system was biased against us. I put it to the hon. Gentleman that the Government have merely corrected the balance and introduced a fair system. It has indeed caused funds to move from the south to the north, but that is because the grants were not going there under the Conservatives.
Mr. Burrowes: I am grateful to you, Mr. Deputy Speaker. I am also grateful for the concession that funds have moved. The hon. Gentleman made my point for me: the Government have diverted funds, and have had political motives for the way in which they have dealt with tax.
We fear that a revaluation process in the hands of the Secretary of State will prevent proper parliamentary scrutiny. We fear that the Bill would allow statutory
7 Nov 2005 : Column 85
revaluation. Council tax would become a property tax rather than, as was originally intended, a combined property tax and service charge. That leads me to my concern about the principles of any future system of local taxation. The 73-year-old who ended up in prison because she was not willing to pay £53 in council tax said, quite properlyperhaps this should be adopted by many of us as a slogan"People pay taxes. Bricks and mortar don't pay taxes."
The proposed revaluation process will take us towards a property tax. Our legislation should be based on accountability to people rather than property. We should support the amendment, which would prevent revaluation according to political whim.