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Adam Afriyie (Windsor) (Con): It seems to me that in the Local Government Act 2003, the Government were clear about their commitment to the principle of revaluation in England. If that revaluation were to be revenue neutral, what possible reason can the hon. Gentleman provide for the Government's U-turn on the issue, as they now want to postpone an early revaluation?

Sir Peter Soulsby: I would give the same reason that Ministers have already given—that we have a unique opportunity to review the role and functions of local government, not just the method of financing it. I   greatly welcome that opportunity. As I said earlier, I have spent a large proportion of my adult life engaged in local government and over that time I have seen how local government has become thoroughly demoralised by the apparent diminution of its ability to influence what happens on the ground in our local communities and by the increase in central Government control over the same period. That is why I welcome the opportunity provided by the Lyons inquiry of having a thorough, root-and-branch review of what local government does and how it is financed and funded. I thoroughly
 
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welcome the fact that the Government have taken a turn in policy on that matter and now support a thorough review.

I have suggested that I have some mixed feelings, but, on balance, I greatly favour the Bill that is before us today. I shall certainly vote in favour of postponing revaluation and I look forward to a renewal of local government and local democracy, which is promised as part of the review. I ask the Minister, however, to give an assurance that, in the intervening period, he and his colleagues will continue to try to find some solutions to the inequities in the current formula that underpins Government funding.

8.17 pm

Tom Levitt (High Peak) (Lab): I, too, rise to support the Bill and I hope that it will not spend too long in Committee. As a two-clause Bill, I suspect that there is little chance of that; nevertheless, I believe that the Bill is sensible, timely and appropriate. I say that as one who, before coming to this place, has had experience as a parish councillor, a district councillor and a county councillor.

The reasons for the delay in the revaluation are, as I   say, sensible. They are not about avoiding a meltdown in the council tax system, because I do not believe that that was imminent, but about providing an opportunity to review the entire local government structure. Speaking as one who trained in physiology for my   degree many years ago, I fully understand the relationship between structure and function. In fact, as far as local government is concerned, we cannot separate the two any more than we could in biological mechanisms in my earlier physiological study.

It is also necessary to avoid too many changes. That might sound odd in view of the record over recent years, but if we were to have a revaluation followed by a change in the council tax system—either to another property-based system or to a local income tax system, perish the thought, or to some new as yet unthought-of imaginative system for relating the delivery of local services to the ability of local communities to afford them—that change would be big enough in itself for local authorities, the central Government and the House to cope with. To have a revaluation going on at the same time as we are preparing for that would not be the most sensible use of our time and would militate against the measures proposed in the Bill.

My hon. Friend the Member for Leicester, South (Sir   Peter Soulsby) was in danger of underselling himself as a respected leader of his council. He certainly made some good appointments in his time, not least one of my relatives—although I hasten to add that that was long before I knew him. However, I agree with him that the decision to widen the remit of the Lyons review is at the heart of the reason for the delay in revaluation.

I was not able to be here for the earlier part of the debate, but I have been fascinated by what I have heard. For example, I would like to know why the hon. Member for Cambridge (David Howarth), who is unfortunately not in his place, thinks that we should prejudge the outcome of a review of the whole function and structure of local government by saying that a local
 
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income tax is the only solution to all of local government's problems. I do not agree, and any solution has to be seen in the context of the new role for local government and the new functions that we anticipate it will take on.

Mark Pritchard : The hon. Gentleman mentioned pre-emption. I suggest that he should not pre-empt the Lyons inquiry by ruling out a local income tax.

Tom Levitt: Well, we must wait and see what the Lyons inquiry says. In the highly unlikely situation that it decides that a local income tax would be sensible, we would have to consider it properly. However, the problem with the local income tax is that the areas with the greatest need are also those where incomes are lowest. Therefore, a local income tax would raise the least money in those areas and be less able to meet the   needs of that community.

Mr. Borrow: Does my hon. Friend agree that when reputable bodies have recommended that a local income tax would be viable—the Layfield commission in the 1970s is a classic example—it has always been alongside a property-based tax, not as a substitute for it?

Tom Levitt: The issue has been looked at many times over the years. Ever since the rating system was introduced, we have had a property-based tax and no one yet has put forward a serious proposition—I am clearly ruling out the Liberal Democrats—for local income tax to replace completely the property-based tax.

Ms Barlow : Does my hon. Friend agree that keeping a link between local providers and local income is an essential part of maintaining the link between stakeholders and local government?

Tom Levitt: I am coming to that point. It is true that we need such a link and I would not favour a situation in which 100 per cent. of local government services were funded by central Government. At the moment, the link is a little tenuous, because only £1 in every £5 that local authorities spend is raised locally. Although I shall not develop the point, I refer to the discussion that almost took place in the contribution by my hon. Friend the Member for Leicester, South about the future of business rates and their redemocratisation, which we should certainly consider.

Several Conservative Members have said that they oppose all revaluation, but it was only in April—at the   height of a general election campaign—that the temporary, soon to be ex-Leader of the Opposition said that the delay in revaluation would be for "the first Parliament". That is what he told Sky television, and that implies a delay, not a cancellation.

Mr. Woolas: My hon. Friend is making an intelligent and considered speech. Does he agree that the effect of the Opposition's amendment, were it to be carried, would not be to cancel revaluation, but to ensure that the Local Government Act 2003 took effect and that revaluation took place in 2007?
 
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Tom Levitt: I do not like having to try to explain, let alone defend, Opposition policies, and I am sure that the cleverest minds in the ODPM have advised my hon. Friend that that is the case. I am happy to take his word for it.

It is not so long since Conservative party policy was to have a revaluation every five years, which would have meant constant change. People would not only have waited for their council tax bill to fall through their letter box every spring, but for their quinquennial revaluation, and that would have been very disturbing for those who have to pay their council tax out of a fixed income—who were mentioned, almost tearfully, by Conservative Back Benchers. Those people are largely pensioners, who were reduced to poverty in record numbers by the last Conservative Government and who would have borne the brunt of the £2.5 billion cut in local authority services that the Conservatives proposed at the last general election. So I do not need the crocodile tears of Conservative Back Benchers to plead the case for people on fixed incomes.

Mr. Woolas: I hope that my hon. Friend will accept my assurance that if pensioners are unable to pay their tax, they do not face imprisonment as punishment. It is only those who are unwilling to pay who face such a punitive measure, and there have been only two examples in the past 12 months.

Tom Levitt: I am grateful to my hon. Friend for that intervention. When he winds up, I may raise with him the issue that I raised with the hon. Member for Braintree (Mr. Newmark) about the holding of council tax debts against the asset value of a property.

We have to look at the structure and function of local government together, which is why the Lyons review is important and must be given proper consideration. We need a big melting pot, with all sorts of ideas thrown in. Whatever comes out, we need to take time to consider the recommendations.

Local authorities are changing their function, partly as a matter of evolution and partly because their relationship with central Government has changed. What I call silo services, such as housing, planning, social services and education—the vertical arrangement of services—belong to the local authorities of the past. I   am looking much more to local authorities taking a horizontal or co-ordinating role in those services, not only alongside providers from the local authority family but, through local strategic partnerships and local area agreements, bringing in other service providers.

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