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Kali Mountford : The hon. Gentleman is making a cogent argument in favour of not going ahead with the revaluation now and to go ahead with the Lyons review. In looking at poverty indices, he should remember that there was a time when poverty was measured by the number of outside toilets in a constituency, which was not at all fair. Does he accept that looking at the number of people on benefit is at least a vast move forward from that point?

David T.C. Davies: That is a perfectly fair comment. I   agree that it is an improvement, but we have the ability to look at average household incomes rather than the number of people on benefits. Perhaps an hon. Member could correct me if I am wrong, but I believe that the number of white goods in a household is one of the measures being looked at. That, too, is a fairly random way of trying to define deprivation.

It is not just in terms of deprivation where the formula is deeply flawed. Rurality is another important part of any formula. The more rural areas have higher costs; it costs more to do anything in rural areas. It costs more to collect the bins, and to send a lorry up and down the lanes of a rural area is more expensive than sending it past a few terraced houses. It costs more to maintain roads in rural areas, yet the formula in use at the moment reduces the emphasis given to rurality, which has had a deeply detrimental effect on those areas.

My final point on the formula—there are many discrepancies about which we could talk—is that information relating to the age profile of the population has been removed. Clearly, an increasing part of any local authority budget is the part spent on providing nursing and residential care. It is vital that any formula that we have takes full account of the numbers of people aged between 65 and 70 and the incremental increases right the way up to people in their nineties. Otherwise, areas with large elderly populations are also going to lose out.

I make two simple suggestions. The first is that we   abandon the revaluation and, instead, set up a committee or a tsar, as the Government are fond of
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doing, to look into the way in which the formula is applied to different areas. The second is to ensure that extra costs on local authorities are fully funded by central Government. If we did that, we would still have a tax that was not perfect. I am slightly off-message with my political party on this issue; it is unusual for me to say that. I am not in favour of scrapping council tax. I   do not think there was an issue with council tax until three or four years ago. Certainly, in 1999, when I   fought an election for the Welsh Assembly, council tax did not feature anywhere in anyone's election literature.

It is not that I think the principle of council tax is unfair. It is the level at which it has been set. But I agree that, several years on, council tax has been manipulated to such an extent in England and Wales that I am not sure if we can continue with it. We may need to look at an alternative.

We have an opportunity today to do something positive. We cannot come up with a new system overnight, but we can ensure that the system that we have is fairer. The alternative is to go ahead with re-banding at some point and to end up with more homelessness, more debt, more bankruptcies and more people going to prison.

I urge Ministers and the Government to take responsibility for their policy and for council tax rises that are a direct result of their own policies. If they are not prepared to take responsibility, they will bear the responsibility at the next general election.

7.55 pm

Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): This has been an interesting debate. Having heard Madam Deputy Speaker's clear and helpful guidance earlier, I intend to keep my remarks short and not stray too much into Welsh territory.

I wish to respond directly to some of the comments of Labour Members, but first I should point out that the Welsh experience is relevant. The decision to postpone council tax revaluation in England was described by a   Minister as a huge, vaulting, 180° U-turn, and that full-on U-turn is embodied in the Bill. I accept that one of the motivations for that U-turn might be to have a much wider-ranging inquiry led by Sir Michael Lyons.

I believe also that the Government are conscious of the political difficulties that could be caused and, with one eye on the experience in Wales, they will know of the resentment and anger that was caused by a botched council tax revaluation. The Government clearly want to avoid such political difficulties.

The right hon. Member for Greenwich and Woolwich (Mr. Raynsford), unfortunately, is not in his place but I   enjoyed his speech. I learned a lot, although I did not agree with everything he said. He referred to the Welsh experience of revaluation and explained why he will not be voting alongside his colleagues this evening. He made a strong defence of the principle of revaluation and gave assurances that the English and Welsh contexts were different.

The right hon. Gentleman tried to make the point that, in Wales, the purpose of revaluation was almost to raise money, but that flies very much in the face of explicit assurances given at the time by Labour
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Ministers in the Welsh Assembly—the right hon. Gentleman's colleagues—who promised that it would be revenue-neutral and was not aimed at increasing the overall yield.

Likewise, the right hon. Gentleman referred to the number of winners and losers in the revaluation process and his figures were correct. The proportion of losers in Wales was 33 per cent. of households, with 8 per cent. being winners. Again, contrary to what he seemed to be suggesting, that is at odds with the assurances given by Labour Assembly Ministers at the time, who promised that there would be as many winners as losers. They talked about roughly 50 per cent. of households staying within the same band, with 25 per cent. of bills going up and 25 per cent. going down. I caution hon. Members who hear assurances that revaluation can be revenue neutral; the experience in Wales suggests that perhaps it will not be.

Tom Levitt: Why does the hon. Gentleman think that the number of people whose property valuation went up or down equates to whether the proposal was revenue neutral? Surely if 10 per cent. were big winners and 30 per cent. small losers it could still be revenue neutral. He has not given us the figures.

Mr. Crabb: Ministers in the Assembly have now conceded that the overall tax take has increased and rather than there being a 4 per cent increase in council tax take in 2005–06, the increase was actually nearer 10 per cent.

Mr. Roger Williams (Brecon and Radnorshire) (LD): The hon. Gentleman is making an interesting point and he is correct in terms of the numbers of winners and losers in Wales. However, there has been confusion between revaluation and re-banding, which is what happened in Wales. Re-banding did not take into account the bigger increases resulting from the revaluation and, as a result, there were rather more losers than winners.

Mr. Crabb: The hon. Gentleman makes a good point. The Royal Institution of Chartered Surveyors pointed out that had re-banding in Wales been undertaken in accordance with house price inflation, there would have been a much fairer outcome.

The right hon. Member for Greenwich and Woolwich spoke about public acceptance of council tax and reiterated his faith in the high level of public acceptance of it. The acceptance of council tax in Wales has taken a serious knock as a result of the revaluation and Members on both sides should be aware that if such a revaluation went ahead in England, along anything like the lines of Wales, public confidence in council tax will be damaged.

7.59 pm

Mr. David Jones (Clwyd, West) (Con): This has been an interesting and lengthy debate and I do not propose to detain Members longer than is necessary, but it is important to point out what has happened in Wales. Although I appreciate that, given the terms of this Bill, I am not entitled to stray too much into Welsh territory,
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I should nevertheless make it clear that the revaluation process in Wales indicates what might happen in England, should it take place there.

It has been suggested by Labour Members that the difference between the revaluation envisaged for England and that which took place in Wales is that the former would be revenue-neutral. As my hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb) pointed out, however, assurances were given by Welsh Assembly Ministers that the Welsh revaluation would also be revenue-neutral. In fact, the Assembly's Finance Minister said:

Well, the experience in Wales is that there was an increase in council tax, and as my hon. Friend pointed out, the tax take increased by more than 9 per cent. post-valuation.

As the hon. Member for Brecon and Radnorshire (Mr. Williams) pointed out, the Welsh experience was   exacerbated by re-banding, but the outcome of the re-banding-revaluation exercise in Wales is that for many people on fixed incomes, particularly retired people, the annual council tax demand has become an   object of dread. In one ward in my constituency, for   example, some 40 per cent. of homes have been re-banded upwards. The proposal that we are discussing today is based on the Welsh experience. The Welsh have undoubtedly been used as guinea pigs, and the hard fact is that the Government have seen what has happened in Wales and do not like the consequences. They fear the political consequences in England.

The hon. Member for Manchester, Blackley (Graham Stringer) pointed out that people have not been manning the barricades. They certainly have not been doing so in Colwyn bay—

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