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Baroness Maddock: I have a certain amount of sympathy with the noble Lord particularly given our debate yesterday and the fact that, without any fixed time for revaluing, whether a long time or a short time, one ends up with huge problems. It is never the right time to do it. This morning I was interested to read in the newspaper yet again what has happened to house prices. The newspapers seem able to say one week that house prices are falling, and the next that the situation has stabilised and the market is on trackas the reports told us this morning. If we can be given that information each week in the newspaper, there is some evidence to back up the noble Earl's proposal that we should revalue more regularly.
My only point, which I suspect the Minister will address in his reply, is on the problem with people appealing against valuations. When I first entered another place the first council tax valuations were being done. My caseload in surgeries was very heavy with people appealing against which band their house was going into. Perhaps we could deal with the problem more effectively by means of modern
Lord Bassam of Brighton: I am grateful to noble Lords for stimulating this discussion about the revaluation periods. We set out our policy in the White Paper. In that we said that there should be a 10-yearly cycle of revaluations with the first one taking effect in 2007. The Local Government Finance Act 1992 made some provision for changing the valuation bands and the ratios between them, but there was no provision for replacement of the valuation list or a statutory cycle of revaluation. Presumably for their own reasons the government of the time thought that that was not a wise thing to do. We think that it is necessary. That is why we have the clauses before us and why we seek approval for them.
Amendments Nos. 169, 170 and 171 look at the issue of frequency. Amendment No. 169 would require the valuation list to be updated annually from 1st April 2007, based on an index of housing prices for the local authority area. Amendment No. 170 would require the tax revaluation to be at least every five years, compared with the current Clause 78 which requires them to be every 10 years. Amendment No. 171 seeks to overlay Clause 78 with a requirement to have an annual revision of the valuation list by the billing authority.
We have carefully considered the frequency issue. It is not necessary for a council tax revaluation to be as frequent as every yearalthough I recognise the point that house prices constantly varybecause council tax is based on a broad valuation principle. So revaluation is to be used effectively but sparingly at the right time. It is worth reminding ourselves how large the volume of revaluations would besome 20 million domestic properties. That is a massive exercise. It might be good for those carrying out the valuations, but not necessarily so good in terms of keeping data in place, up to date and timely.
The proposal for a 10-year cycle means that council tax revaluation will follow two years after every second business rate revaluation, so the work would be staggered. We think that that strikes the right balance and does not put an unacceptable burden on the Valuation Office Agency which is to undertake both revaluations.
We accept that with greater use of computer-aided valuation techniques it may be possible to undertake valuations at a much lower cost. So it is possible that a future government might wish to have a shorter cycle of revaluation. That is why Clause 78 has been drafted to allow the period between revaluations to be less than 10 years.
We believe that the amendments, which require annual reassessments, would be unduly inflexible, especially as our clause allows for the possibility of revaluations more often than every 10 years. Given the position of the Government on the 10-year cycle and
I understand that a revaluation is expensive and involves many people. However, I have checked with my treasurer, who feels that a fairly junior officer could put a simple multiplier on house valuations in a couple of days each year, in about September. That could be embraced within the new council tax valuations which we normally announce in December. So it is not such a problem in terms of administration.
I recognise that the Government want a fundamental revaluation. The Minister said that they would look at a more regular revaluation to avoid some of the political difficulties that governments have got into in the past. Even the noble Earl, Lord Caithness, said that the previous government brought in the poll tax as a way of re-evaluating the old rate system. So we can see what kind of political difficulties governments can get into over revaluation. Having said that, I will not press my amendment.
The Earl of Caithness: I agree with the noble Lord, Lord Smith of Leigh, that the Government will get themselves into a right tangle on this. To delay revaluation to every tenth year will involve a load of agony. By the time 2007 comes along my noble friend Lord Hanningfield will be the Minister in charge and taking the flak in regard to revaluation.
I was interested in what the noble Baroness, Lady Maddock, said. I should caution her, in the best way that I can, not to believe what she reads in the press about house prices. I could never correlate what the press was saying with what was happening in our estate agency. I did not understand from where the press got its figures. Yes, you can get some quite accurate figures from certain mortgage companies and the RICS, but they reflect general trends. As she will know, house prices can vary significantly from one end of a street to the other and to a greater degree within a larger area.
As regards my Amendment No. 170, the Minister did not give any good justification for having a 10-year revision cycle. He briefly mentioned the question of costs, on which I thought he would concentrate, but he then said that there would be computer-assisted mass appraisal techniques and that costs could come down rapidly. With the enhancement of computer technology, that is something that could be done and could reduce the costs.
I hope that the Minister will give further consideration to this matter between now and another stage. The 10-year revaluation will be problematical for local authorities and individual owners. Would the Minister like to add to what he said? It would appear that he does not.
Lord Hanningfield: We had a long discussion about this last night. When we started the debate, I questioned the need for a revaluation at all. When the council tax was introduced, the idea was that it would not need revaluations. We have heard various arguments in favour of revaluations because of the change in property values.
The reason for introducing the community charge was because the rates became unacceptable and there had been revaluations. I remember it quite wellit was in my early days in local government. There were a lot of horror stories about the original revaluation in Scotland, leading to the introduction of the community charge which, because it was unpopular, eventually led to the council tax. Perhaps the Government wish to go down the road of unpopularity. As I said, governments tend not to win elections immediately after a revaluation, although perhaps it might be good to have one in that it would provide good ammunition for Conservatives in future general elections.
The Minister of State, Office of the Deputy Prime Minister (Lord Rooker): I will respond briefly because we can come back to this at another stage if a vote is required. Many Conservative councillors in some of the northern towns and cities, where they won a lot of seats recently, will greatly benefit from revaluation for their communities simply on the grounds that the ratios have become wrong over a period of time because house prices do not rise at the same level across the country. It is quite a selfish approach to say that the level that has been set should take no account of the changes in values.
We have a property tax system. If we had a local income tax system, the effect would be the same. We need a regulator. This is like the old rating system in that it is fixed, but the idea that nothing should change is barmy. As my noble friend says, we will handle the new system with great care. It will be handled with discretion, transparency, fairness and inclusivity to make sure it appeals to this one nation. I think there are some one nation Tories still about.
This property tax is implicit in the system introduced by the previous Conservative administration but we must take account of changes in property values. I realise that this could lead to a significant political battle. We have done it before and, being a responsible government, we will not flinch at taking on the forces of unfairness and those who seek an advantage for the few rather than the many. All the tried-and-tested slogans will be brought out; we have done it twice and will do it a third time.
It is very unfair simply to argue that there should not be a revaluation to take account of changes. You could not make the same argument for non-domestic rates in terms of changes in rent for office buildings. I do not know much about that area but there are massive variations across the country due to location and region. This is taken into account in the commercial sector. In this case, it is very important, in terms of fairness for local authorities, to have a system that takes account of change.
I know the argument which asks: why 10 years, why not eight or 15? Ten years has been agreedthis is nothing new, as I said yesterday. There has been a Green Paper, a White Paper and a draft Bill. This is no surprise to anybody.
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