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Mr. Woolas: I commend my hon. Friend for his research. He referred in passing to the decision in 1955. We know from the revelation in Harold Macmillan's diaries that, at the first Cabinet meeting under Eden's premiership, it was decided to set the election date before the forthcoming revaluation. Perhaps that explains why revaluation goes to the heart of the Conservative's party difficulties, given that history repeated itself in the late 1980s.
Rob Marris: I am shocked that any Government would play around with revaluation for party political purposes. However, that is the sort of history that the Conservative party has. I referred to 1956, not 1955, but I believe that the Government managed to string matters out until April 1963. Revaluations can get delayed for too long. I understand why, for the reasons that my hon. Friend the Member for Colne Valley (Kali Mountford) outlined so eloquently, there should be some deferral, but I urge my hon. Friend the Minister for Local Government to heed history and not delay revaluation for too long.
Dr. Whitehead: Does my hon. Friend accept that, on the occasions that he mentioned, the trajectory of the index of house price increases was substantially lower than in recent years? The possibility of putting off a revaluation for some time did not therefore have the distorting effect of more recent years. Does he believe that that was a factor in previous revaluation deferments?
Rob Marris:
I agree. My hon. Friend anticipates one of the points that was at the top of my list. We are in the current position partly because of the way in which house prices have increased and our prosperous economy under the Government. I shall not give all the economic statistics—I am sure that you would not allow that, Madam Deputy Speaker—but when we discuss banding and revaluation, we need to bear it in mind that one of the reasons for public disquiet about that and the beginning of a public debate—I hope that the deferral for which the measure provides will encourage that debate—is prosperity and rising house prices.
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Mr. Borrow: Does my hon. Friend agree that some lessons can be learned from the success of the revaluations of business rates? Since 1990, they have stuck to a five-yearly sequence. The Government should aim for the same success with council tax and the regularity of its revaluation.
Rob Marris: I certainly agree that we can learn from what has happened with business rates, and the House needs to discuss business rates as part of this overall package. We could also learn from what happened in Scotland. The Opposition's amendment tonight decries the fact that the revaluation applies only to England. In Scotland, revaluations have taken place fairly frequently: in 1961, 1966, 1971, 1978 and 1985. They did not take place after 1985, because the poll tax was then introduced, initially in Scotland, without great success either there or in England and Wales. So, yes, we should defer the revaluation in England, but we should certainly not cancel it.
I disagree with the Opposition's amendment. They dislike the Bill because it applies only to England, but I think that it is absolutely right that we should defer the revaluation in England. Scotland and Wales have their own Parliament and National Assembly respectively, and they should be able to do this at a different pace. In Wales, part of the problem was that the revaluation was carried out following a 129 per cent. increase in house prices since the previous one, which brings us back to the point made by my hon. Friend the Member for Southampton, Test (Dr. Whitehead) about house prices putting pressure on us, in terms of the public debate on this issue.
This debate is being held at the same time as Sir Michael Lyons' review. Being a west midlander like me, you, Madam Deputy Speaker, might almost remember Mike Lyons when he was in short trousers. His first major job, as I am sure all right hon. and hon. Members know, was chief executive of Wolverhampton metropolitan borough council, as it was then called. Of course, it is now Wolverhampton city council. Sir Michael Lyons—as I must now learn to call him—is a man with a great track record. I can quite understand why a deferral of the revaluation would be important while the Government are having that investigation carried out, and why such a deferral—as set out in the Bill, and as decried by the Opposition—would be a good thing. I am sure that Sir Michael's review will be very thorough, and very illuminating for us.
We need a public debate on this issue. My hon. Friend the Member for Colne Valley spoke eloquently about the need for public information. There are an awful lot of people, including some in this Chamber, who do not understand the concept of a measure being revenue neutral. A re-banding exercise can be a problem, but if it is set against a series of revenue neutral measures—which is what I hope would happen in England, although it did not happen in Wales—it can even out the discrepancies that have built up due to differential house price rises. Prices in some areas will go up more than others. For example, prices in Stourbridge might go up more than those in Wolverhampton, causing things to get out of kilter. A revenue neutral revaluation would therefore be absolutely right. However, it takes a while to explain the concept of revenue neutrality to
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people, many of whom, because of many years of underinvestment in education by the Conservatives, are fairly innumerate. We need to have that kind of public debate.
Mr. Hoyle : My hon. Friend has rightly identified the issue, which is the fear factor among the public. One of the biggest worries that people have is about their council tax. After what has happened under previous Governments, there is a real fear that a revaluation would simply mean an increase, but it could be revenue neutral. Does my hon. Friend agree?
Rob Marris: I certainly do. Such fear is often a fear of the unknown. It is sometimes whipped up by the Opposition parties, and sometimes by the situation being mis-explained by the media, although sometimes it is properly explained by the media. With that fear comes a fear of revaluation per se. The Bill would defer, but not, I hope, cancel the revaluation. I think that it would eventually happen by means of a statutory instrument; my hon. Friend the Minister will correct me if I have misread the process outlined in this very lengthy Bill. I think that an order would be brought before the House and dealt with under the affirmative resolution procedure. The issues would, therefore, come back before the House, and I hope that they will do so, fairly speedily after the conclusion of the Lyons review. As I have said, I want a deferral, not a cancellation.
According to their reasoned amendment, the Conservatives want a cancellation, almost for ever. That seems very strange. I was talking about the history of these revaluations, and I am open to being corrected at any point, but I do not think that there has been a revaluation in Ireland since about 1834.
Mr. Borrow: My hon. Friend has mentioned the Conservative party's amendment and the fact that it calls for a cancellation. Is he aware that if we decided to vote for the Conservative amendment, we would ensure a 2007 revaluation of council tax?
Rob Marris: I am aware of that, because of the intervention made earlier by my hon. Friend the Minister. I do not know whether that was clear to the Opposition when they introduced the amendment, or whether they got it round the neck—to use the vernacular—as they often do, but no doubt we will be told in the wind-ups.
Dr. Whitehead: My hon. Friend was making an interesting point about the possibility of revenue neutrality of revaluation in principle. Does he accept that the introduction of the council tax in 1992, with the bands and proportion of total revenue that it raised, instituted the gearing effect about which we have heard this evening? Is he aware of methods by which the gearing effect could be neutralised, in terms of the order in which council tax is determined as a result of the council's budget-setting process. Will he urge the Lyons inquiry to consider that, along with the question of revaluation?
Madam Deputy Speaker: Order. That is very lengthy for an intervention.
Rob Marris:
And if I were to stray too far into what the Lyons inquiry ought to do, Madam Deputy
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Speaker, you would say that I was going too wide of the point. As ever, my hon. Friend makes a valid point, as he did in his lengthy and interesting contribution to the debate earlier. He is much more numerically adept than I am. We might have to encounter gearing as a problem.
Under the Bill, revaluation would be deferred but not done away with. While I want a deferral, I do not want it to be deferred into the mists of time. A revaluation will address the question of differential house price rises. When house prices rise in different adjacent parts of a constituency, city or rural area, those who have seen an above-average increase in the value of their houses pay lower council tax than they would if a revaluation had taken place. Correspondingly, those whose houses have risen in value by less than the average, assuming a revenue-neutral system, would pay more council tax than they should. That happens to some extent in the current system, but the longer a deferral continues, the more pronounced that unfair trend becomes. Of course, it favours those who have done best out of rising house prices in the booming economy under this Labour Government. The discrepancies and unfairness therefore get worse the longer a revaluation is deferred. Consequently, as I said to my hon. Friend the Minister, while I support a deferral of the revaluation pending the outcome of the Lyons inquiry, I do not want it deferred too long.
I think that council tax is a good tax. There are problems with it, and I am glad that the review is going on. My hon. Friend the Member for South Ribble (Mr. Borrow), in an intervention on my hon. Friend the Member for Colne Valley, said that there is no perfect tax. Arguably, death duties are a perfect tax, because one pays them only when one is dead. Council tax is quite useful because it is on a house that one cannot move—I do not know the collection rate in your area, Madam Deputy Speaker, but in mine it is about 97 per cent., so it is important to bear that in mind in terms of revaluation. We need to consider what revenues might be brought in, but we also need a sound system that by and large works well, even though there are difficulties.
I want to stress again the need for better information to accompany the deferred valuation, as mentioned by my hon. Friends the Members for Colne Valley and for South Ribble, so that people can understand the system as fully as possible and that we can have a properly informed debate.
The Liberal Democrats went into the last general election saying that they would replace council tax with a local income tax. That is an entirely honourable and understandable position, although they may now have resiled from it, but we need to debate it properly if we are to consider revaluation in the context of an alternative to council tax.
"removal of the need for revaluation of domestic properties offers taxpayers no protection against the imposition of new higher council tax bands."
That shows that the Opposition have a different view of what a revenue-neutral revaluation might constitute. It suggests that the six Members who tabled the amendment do not understand the system that we have, let alone what it might be turned into. No doubt the Opposition Member who winds up the debate will explain that I have misunderstood, and that those who
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tabled the amendment understand the mathematics and simply take a different political view, but the wording suggests otherwise, which is deeply worrying.
I am sure that the Liberal Democrats understand how the system works and take a different view—if they have a view at the moment. I would not talk about that now even if I were allowed to. It seems, however, that Her Majesty's loyal Opposition do not understand the system that we have, but have nevertheless tabled an amendment suggesting that we decline to give a Second Reading to a Bill deferring revaluation because of all the nasty things that they think would happen in the event of such a revaluation. Let us leave aside the point made by my hon. Friend the Member for South Ribble, who echoed my hon. Friend the Minister in saying that the Opposition did not appear to realise that if the Bill were not give a Second Reading, revaluation would go ahead. The Opposition seem to be telling us that the Government have got it all wrong, but it is they who have got it all wrong, because they do not understand the present system.
9.22 pm
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