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Amendment, by leave, withdrawn.
4.30 pm

David Howarth: I beg to move amendment No. 4, in clause 1, page 1, line 8, at end insert—

'(1B)   The Secretary of State shall decide at least once in each calendar year whether to exercise the power granted by subsection (1A), and shall give reasons for his decision.

(1C)   The reasons referred to in subsection (1B) shall include, but shall not be restricted to, the Secretary of State's assessment of the degree of divergence in relevant property values since the original valuations made under this Act or since any subsequent revaluation.'.

The amendment is about giving reasons, and its origins lie in the different reasons that various people have for being in favour of the Bill. Our reasons are simple. Since we will replace council tax with a different tax system altogether—local income tax—we have no need of any revaluations, and therefore believe that any expenditure on revaluation would be wasted.

There is more dispute about the Government's reasons for introducing the Bill. Their stated reasons are to do with the expansion of the remit of the Lyons review, but even Sir Michael Lyons said that a delay of only one year would be justified by the extension of his remit to function rather than just finance. In any case, there is no obvious connection between Lyons and revaluation, since Lyons has been told that council tax
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is Government policy—the Minister repeated that in Committee—so I see no reason to stop work on a revaluation as council tax will continue, under the Government's policy, to be the central tax for local government purposes after the review.

The addition of structural change to the remit of Lyons and the announcement of a White Paper that includes structural change make no difference, as far as I can see. I welcome the announcement of a White Paper, which will increase the amount of policy direction given to the Lyons review. Since council tax is Government policy and will continue to be Government policy throughout the White Paper stage and the Lyons review stage, there is no reason for them to abandon revaluation.

The second possible reason for the Government's move is the accusation that there are political reasons that explain the Bill. Throughout its consideration hon. Members in all parts of the House have pointed out that the problem with revaluation is that the political costs almost always outweigh the technical merits of conducting one. That is true even of this revaluation. The New Policy Institute estimated that under the revaluation as proposed for 2007, the winners would outweigh the losers by 5.5 million to 3 million. The trouble with that is that in such exercises the winners tend not to be very grateful, as they think they have been overpaying for many years, whereas the losers are furious, so the political cost is always very great.

There is a rather less cynical reason contained in the New Policy Institute's analysis of the possible reasons for a revaluation, and that is a reason of fairness—the revaluation would tend to benefit better-off people in some areas of the country at the expense of worse-off people in other areas. That is not a simple north-south divide, as some people think, but a geographical change and a change in the distribution of wealth and income that would be adverse. The problem of the unpopularity and the unfairness of revaluations is confirmed by the history of revaluations that the right hon. Member for East Yorkshire (Mr. Knight) partially recounted in his remarks on the previous amendment. He did not get to the last example, when the threat of revaluation caused the poll tax, which is perhaps the most impressive error ever committed in the history of local government finance.

A third possible reason to support the Bill is that property values have not diverged significantly. Until about 2001, property values diverged throughout the country, which was followed by a convergence, but in itself that is not enough to explain calling off revaluation, because the subsequent convergence has not yet outweighed the previous divergence. If we take property values in 1991 as a base and count that as an index of 100, London was at 557 in 2004, whereas the north-west was at 466.5. Although there has been convergence in property values since about 2001, it is not yet sufficient to outweigh the previous divergence.

As the Minister said several times in previous debates, in particular areas of the country convergence and divergence do not follow the regional pattern. Is that the reason why the Government have introduced the Bill? The problem is that the Government refuse to take that point. Before the Bill was introduced in the autumn,
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they had not commissioned a study of divergence or convergence in property values. There is a lack of clarity on why the Bill was introduced.

The amendment's purpose is not to decide the debate about what has happened in the past or to explain why the Government have introduced the Bill, but to put any future debate on the same issue on to a more rational and informed basis. The amendment states that the Government must give reasons for not only going ahead with a revaluation—if they decided to go ahead with a revaluation, one imagines that they would be keen to give the reasons why—but a decision to decline to go ahead with a revaluation. We believe that that would help Parliament and the public distinguish between technical reasons and other reasons for a decision not to go ahead with a revaluation.

The amendment also states that the reasons that the Government give must include a statement on divergence in property values, but it would not require them to state only their view on divergence in property values. The point is to obtain the Government's view of what the divergence has been and of what level of divergence would be intolerable, given the other possible factors.

We moved a similar, although not identical, amendment in Committee, where a number of reasons were given for opposing it. The Minister said that the amendment appeared to require an objective view on when divergence in property values is enough for a revaluation, but that was not its purpose. It was designed to seek not an objective view whether divergence has become too much, but the Government's view of when divergence has become too much.

Mr. Forth: Does the hon. Gentleman have any worries about the cost of that part of his amendment? If we are to have an annual statement by the Secretary of State giving reasons, and if, by implication, there will be an annual assessment of the degree of divergence, the exercise could be very costly.

David Howarth: I was about to come to that point.

The second objection mentioned in Committee was that the amendment implied that divergence is the only reason why a revaluation might or might not proceed, but that is not what we are saying. We are saying that divergence is one reason that must be dealt with in the debate, whether or not the Government think that it is their central reason.

The third point concerned cost, which the right hon. Member for Bromley and Chislehurst (Mr. Forth) mentioned. It was said in Committee that there would be a cost in officials' time. However, the figures are generally available from the Land Registry and from the series maintained by the Halifax building society and by the Royal Institution of Chartered Surveyors. There would be no great cost in compiling the figures, but it would involve a good deal of effort from Ministers in constructing their reasons based on the information available to them. That is not an unreasonable burden for the political heads of Government Departments to bear in the interests of greater openness.

I do not want to detain the House any further. The amendment is a proposed addition to the Bill from a party that is generally friendly to it. It would increase
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transparency and allow us to have a better debate, were these questions to arise again, than we have had on this occasion.

Angela Watkinson (Upminster) (Con): The Liberal Democrats' amendment would require an annual decision to be made, with reasons, on whether a revaluation exercise should be undertaken, with an assessment of the divergence in property values. Such an undertaking would involve enormous cost and administrative time. Conservative Members oppose the amendment.

Mr. Woolas: As the hon. Member for Cambridge (David Howarth) said, the amendment is similar, although not identical, to the one that we debated in Committee. The Government's position remains the same. Let me emphasise that the Bill obliges the Secretary of State to come before the House at the time of a revaluation date and subject the order to debate and, no doubt, a vote. I assure the House that that will give it the opportunity to consider and challenge his reasons.

The amendment has been slightly reworded to make it clear that the duty on the Secretary of State to consider at least once each year whether to set a date for revaluation and to give reasons should include, but not be restricted to, an assessment of the degree of divergence in property values. Not least because it still refers to an assessment of the degree of divergence, I ask the House to oppose it if the hon. Gentleman wishes to press it to a vote.

Although we readily accept the argument for a revaluation of council tax to maintain a fair alignment between house prices and council tax bands, we can see no case for the regular publication of statements. When we debated the similar amendment in Committee, it received no support from the official Opposition. Indeed, the hon. Member for Poole (Mr. Syms) said that he was not sure that it would be terribly helpful and that it was probably unnecessary. I would go slightly further than that. The mere fact that there would have to be a statement at least once a year would undoubtedly stir up excitement and controversy among hon. Members, particularly Opposition Members, the press and the general public, and that would in turn lead to considerable uncertainty and anxiety for council tax payers.

Even more of a problem is the specific requirement for an assessment of the degree of divergence in property values. Whatever the hon. Gentleman may say, that would simply encourage the view that there must be some sort of objective "golden rule" that would lead, or even require, the Secretary of State—or anyone else—to determine whether a particular level of divergence justified a revaluation.

4.45 pm

I appreciate that the hon. Member for Cambridge said in Committee that the similar amendment that we considered there did not assume the existence of any such golden number. He also said that he and his party were not trying to get an objective view of the conditions for revaluation. However, publication of the sort of    assessment that he envisages would inevitably
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encourage people to think that if, for example, X per cent. of houses in band Y had increased in price by more than Z per cent., there would be a case for revaluation more or less automatically. Furthermore, they would   infer that, if the Government then decided for whatever reason not to proceed with revaluation, notwithstanding that evidence, they would somehow be flunking the issue. Conversely, it would be inferred that, if a specific level of divergence had not been established, an insufficient case would have been made for revaluation.

The Government reject the notions that a specific level of property price movement necessarily justifies revaluation and that divergence that falls short of that level of property price movement precludes any case for it.

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