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Lord Chan: My Lords, in the matter of the long-term solution, surely we need to ensure that our medical students are being trained in sufficient numbers. Will the Minister give us information about that, and tell us whether in any way the changes will mean that we still have to recruit people from developing countries?

Lord Warner: I assure the noble Lord that we have made significant investments in training postgraduate doctors. By 2005–06, we will be spending 1.4 billion on postgraduate medical and dental training. That is a 22 per cent increase over three years.

Lord Colwyn: My Lords—

Lord Williams of Mostyn: My Lords, I am afraid that we have run out of time.

Business of the House: Standing Order 41

11.35 a.m.

Lord Williams of Mostyn: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That Standing Order 41 (Arrangement of the Order Paper) be dispensed with on Tuesday 9th September to allow the Motion in the name of the Baroness Symons of Vernham Dean to be taken before the Motion standing in the name of the Lord Grenfell.—(Lord Williams of Mostyn.)

On Question, Motion agreed to.

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Local Government Bill

11.36 a.m.

The Minister of State, Office of the Deputy Prime Minister (Lord Rooker): My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Rooker.)

On Question, Motion agreed to.

Clause 78 [Statutory revaluation cycle]:

Lord Hanningfield moved Amendment No. 71:

    Leave out Clause 78.

The noble Lord said: My Lords, the purpose of this amendment is to remove the requirement for a statutory revaluation cycle from the Bill. We have two objections to a statutory revaluation cycle. First, we question why revaluation is necessary at all. Secondly, we question why it should be undertaken on the basis of a statutory cycle rather than in accordance with perceived need.

We had a long debate about revaluation in the Grand Committee. We queried why the Government had opted for a 10-year cycle. There is, it turns out, no particular magic about a 10-year cycle—it is simply what appears to be a convenient administrative period.

Statutory revaluations will take council tax further towards being solely a property tax, which is not what it was intended to be. Council tax was originally devised as a tax which was part property based and part service based. As the Minister is aware, wholly property-based taxation has proved unpopular in the past. Moving back towards the rates is not the way to go. Given that council tax is part property tax and part service tax, logically we might argue that there should also be a statutory valuation cycle for the costs of providing public services in each local authority area. Inflation in the costs of providing services has also risen differentially over the past 10 years across the country and had a huge impact on local authorities, especially those around London.

If the Government suggest that that is taken into consideration through the operation of the financial formulas, then we could point to the way in which grant was distributed last year, which clearly demonstrates that the Government can load the council tax burden differentially on different parts of the country in accordance with their own policy dictates. That is, in fact, precisely the effect of revaluation. It is clear that house prices have risen much faster in London and other parts of the South of the country than they have elsewhere. Since 1991, house prices in some parts of London have gone up by 175 per cent, compared to an average rise across the country of 90 per cent. The effect of that will be that council tax payers in these parts of the country will see their council tax bills rise dramatically as their houses move up one or even two council tax bands.

Let us remember that there is very little correlation between the differential rise in property value and the rise in average incomes—a fact recognised by the Government in their White Paper. So ability to pay

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becomes a significant issue. Then there is of course the double whammy effect. Not only will council tax payers have to pay more because they have moved up a band or two but, precisely because of that movement, large amounts of grant will be shifted away from London, the South West, the South East and the East of the country to the Midlands and the North. That is likely to create further upward pressure on council tax bills.

The net effect of the measure is that people in the parts of the country that the Government do not favour will pay much more council tax than those elsewhere. For example, the New Policy Institute calculates that following a revaluation, 75 per cent of people living in London will pay more council tax than 90 per cent of people in the North of the country. It is simply not the case that 75 per cent of Londoners are better off than 90 per cent of people living in the North. That is unfair and the effects will lead to a great deal of dissatisfaction around the country.

Let me now turn to the question of a fixed revaluation cycle. As my noble friend Lord Caithness explained in Committee, the original decision to set property bands was an attempt to avoid the expense and time-consuming process of revaluation. Revaluation is undoubtedly an expensive and time-consuming operation. We certainly would not wish to see a revaluation carried out unnecessarily.

What, then, is the purpose of a fixed time period? No one says, "It has been a few years since we last had a valuation; let us have another one". The purpose of a revaluation is to correct grossly disproportionate movements in the housing market. It may be that over a 10-year period those movements are negligible, as they were for much of the 1950s and 1960s, and that going through the expense of a revaluation cycle is unnecessary. However, it may be that house prices are so volatile that it would make sense, so far as this Government are concerned, to have revaluations much more frequently than that. Why, then, do the Government not move away from the concept of a fixed time period for revaluations and instead consider fixing revaluation to the actual movement of house prices in the market?

If that is, indeed, what the Government are seeking to address, why do they not fix in statute that once the divergence in house prices across the regions has reached a certain level, a revaluation has to take place within the next two years? It seems to me that the Government's approach lacks imagination, is old-fashioned and is unfair, particularly to people in the East, the South East and London. I beg to move.

Baroness Hamwee: My Lords, the noble Lord identifies the problem but the solution is entirely wrong. Let us scrap council tax. That is all I need to say.

11.45 a.m.

Lord Bassam of Brighton: My Lords, I wish it were that simple. In essence property taxes ought to be simple to administer and collect. They certainly were

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when we had rates. We are trying to reach the happy position of transparency and clarity in the way in which the tax works.

Clause 78 inserts a new Section 22B into the Local Government Finance Act 1992 creating a statutory cycle for council tax revaluation in England and Wales. We think that is a wise course of action. We think that it is necessary and that is why we have the clauses in the Bill and why we intend to press ahead and seek parliamentary approval for the clauses.

We have not done this without giving the matter thought. Neither have we done it without talking to people. We have consulted extensively on the issue of revaluation. We have had a Green Paper, a White Paper and finally last summer a draft Bill and then a Bill brought before your Lordships' House after going through another place. Perhaps it would make sense if I quoted some of the reactions to the draft Bill to help focus minds.

The Society of County Treasurers said that it,

    "generally welcomes the proposed changes to council tax, including the revaluation of property values every 10 years".

The Local Government Association, in which the noble Lord, Lord Hanningfield, is a major participant,

    "welcomed the proposed changes to the council tax"

and went on to say that,

    "we support the intention to hold a revaluation in 2005 . . . and regular revaluations at least every ten years thereafter".

The LGA has repeated its support for revaluation in its briefing on the Bill dated 4th July.

There were also responses from both the Conservative and Liberal Democrat Groups at the LGA. The Liberal Democrats, to their credit, said,

    "fixed cycles for revaluation are helpful",

while the Conservative Group leader, Councillor Gordon Keymer, wrote in June 2002 that:

    "We support the intention to hold a new revaluation in 2005 and regular revaluations thereafter".

I wonder which Conservative Party I am talking to. Is it the one of which the noble Lord, Lord Hanningfield, is a member, or is it that of Councillor Gordon Keymer, a leading Conservative LGA spokesman so far as I can recall?

The Government have a clear position on statutory revaluation. Judging from the kind of reactions we have had from experts in local government, I find it rather surprising that noble Lords opposite want to remove the clause creating a statutory revaluation cycle. There will be some difficulties with it and no doubt there will have to be some very careful thought given to the way in which it works but it is clear and transparent and people understand the process. Property values shift over time and as we are in the business of having a property tax, there are swings and roundabouts in that process. However, we believe that this is the right course of action and that it is right to make it plain within the Bill. Having said all of that, I hope that the noble Lord will withdraw his amendment.

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