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Baroness Hanham: My Lords, before the Minister sits down, and with the leave of the House, I wish to draw his attention again to the survey that my noble friend Lord Hanningfield mentioned, which has been carried out for the Association of London Government. I declare an interest as a member of a London authority.
It is abundantly clear from the survey that what is important is how a revaluation is conducted—the amendment we are discussing ensures that we debate this matter—and what its effect is. The survey's findings are absolute dynamite with regard to London. Property values will inevitably go up substantially but the shift of resources in terms of the revenue support grant between London and the South East—
Lord Evans of Temple Guiting: My Lords, perhaps I may ask the noble Baroness whether this is an intervention or a speech and remind her that this is Report stage?
Baroness Hanham: My Lords, I am making a short intervention which I shall now finish. Does the Minister appreciate that there would be a vast shift of resources between the South East and the North West if the revaluation was carried out?
Lord Bassam of Brighton: My Lords, I am grateful to the noble Baroness for that brief intervention which sounded more like a speech to me. Perhaps it was a brief intervention.
I believe that only this week we received the ALG survey. We recognise it simply as a useful contribution to the debate. Knowing the veracity with which the ALG approaches these matters, and knowing its chief official very well, as does the noble Baroness, I am sure that this is its opening shot in a campaign. One respects it for that. We shall obviously study the survey closely and reflect upon it. As I say, it is a useful contribution to the debate but it does not undermine the case for having revaluation and revaluation cycles.
Lord Hanningfield: My Lords, I thank the Minister for those comments. Before I was a member of this House—I am wearing my LGA hat—I remember meeting the then Minister of State for local government, Hilary Armstrong, and talking about revaluation. I agree that the LGA as a body has talked about revaluation. Hilary Armstrong said that no way would the Labour Government make the same mistake as the Conservative government and have a revaluation as that led to the community charge/poll tax as a result of the tremendous variation and changes after revaluation.
I also remember the noble Lord, Lord Rooker, saying in Grand Committee that he did not want to make the same mistakes as the Conservative government. Here the government are falling into the biggest trap of all with revaluation. Having begun to assess what a revaluation means, having seen Sir Robin Wales, the leader of the ALG, this week, and having done more work ourselves on the effects of revaluation on great chunks of the country, we feel
that much more thought needs to go into this before we agree to a blanket revaluation. Therefore, we feel that we should test the opinion of the House.11.50 a.m.
On Question, Whether the said amendment (No. 71) shall be agreed to?
Their Lordships divided: Contents, 68; Not-Contents, 126.
Aberdare, L.
Alton of Liverpool, L.
Anelay of St Johns, B.
Astor of Hever, L.
Attlee, E.
Biffen, L.
Blatch, B.
Bowness, L.
Brougham and Vaux, L.
Burnham, L.
Byford, B.
Carlisle of Bucklow, L.
Coe, L.
Colwyn, L.
Cope of Berkeley, L. [Teller]
Craigavon, V.
Crathorne, L.
Crickhowell, L.
Dixon-Smith, L.
Elton, L.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Freeman, L.
Gardner of Parkes, B.
Geddes, L.
Glentoran, L.
Greenway, L.
Hanham, B.
Hanningfield, L.
Hayhoe, L.
Henley, L.
Higgins, L.
Howe of Aberavon, L.
James of Holland Park, B.
Kimball, L.
King of Bridgwater, L.
Kingsland, L.
Luke, L.
McColl of Dulwich, L.
Macfarlane of Bearsden, L.
Marlesford, L.
Marsh, L.
Mayhew of Twysden, L.
Miller of Hendon, B.
Montrose, D.
Moore of Wolvercote, L.
Moynihan, L.
Noakes, B.
Northesk, E.
O'Cathain, B.
Palmer, L.
Perry of Southwark, B.
Rees, L.
Renton, L.
Roberts of Conwy, L.
Saltoun of Abernethy, Ly.
Seccombe, B. [Teller]
Selsdon, L.
Sharples, B.
Shaw of Northstead, L.
Shrewsbury, E.
Skelmersdale, L.
Swinfen, L.
Trumpington, B.
Vivian, L.
Waddington, L.
Wilcox, B.
Acton, L.
Addington, L.
Ahmed, L.
Alderdice, L.
Allenby of Megiddo, V.
Amos, B.
Andrews, B.
Ashton of Upholland, B.
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Berkeley, L.
Bernstein of Craigweil, L.
Blackstone, B.
Blood, B.
Borrie, L.
Brett, L.
Brookman, L.
Burlison, L.
Campbell-Savours, L.
Carter, L.
Chester, Bp.
Clarke of Hampstead, L.
Clement-Jones, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Colville of Culross, V.
Corbett of Castle Vale, L.
Craig of Radley, L.
Crawley, B.
David, B.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Dholakia, L.
Dixon, L.
Dubs, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Ezra, L.
Falkland, V.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Finlay of Llandaff, B.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Golding, B.
Goldsmith, L.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Greengross, B.
Grocott, L. [Teller]
Hamwee, B.
Hardy of Wath, L.
Harris of Richmond, B.
Harrison, L.
Haskel, L.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Hooson, L.
Howells of St. Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L.
Jones, L.
Judd, L.
Kennedy of The Shaws, B.
King of West Bromwich, L.
Lea of Crondall, L.
Lipsey, L.
Livsey of Talgarth, L.
Lofthouse of Pontefract, L.
Macdonald of Tradeston, L.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McNally, L.
Mar and Kellie, E.
Massey of Darwen, B.
Merlyn-Rees, L.
Morgan, L.
Morris of Manchester, L.
Murray of Epping Forest, L.
Nicol, B.
Orme, L.
Paul, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Ramsay of Cartvale, B.
Randall of St. Budeaux, L.
Rennard, L.
Richard, L.
Rodgers of Quarry Bank, L.
Rooker, L.
Roper, L.
Sandberg, L.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Sheldon, L.
Simon, V.
Smith of Clifton, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Taverne, L.
Thomas of Gresford, L.
Thomas of Walliswood, B.
Thomson of Monifieth, L.
Thornton, B.
Tordoff, L.
Turnberg, L.
Walmsley, B.
Warner, L.
Watson of Invergowrie, L.
Whitaker, B.
Whitty, L.
Wigoder, L.
Williams of Elvel, L.
Williams of Mostyn, L. (Lord President of the Council)
Williamson of Horton, L.
Woolmer of Leeds, L.
Resolved in the negative, and amendment disagreed to accordingly.
Clause 79 [Power to change number of valuation bands]:
Lord Hanningfield moved Amendment No. 72:
- Page 42, line 27, at end insert ", provided that such change does not alter the ratio between the top and bottom band.
The noble Lord said: My Lords, in moving Amendment No. 72, I shall speak also to Amendments Nos. 73 and 74. The amendment would ensure a measure of protection to homeowners from steep increases in council tax, along the lines discussed in the previous amendment. For the first time, council tax levels have now breached an average of £1,000. We have reached a situation in which steep, year-on-year rises in council tax are becoming unacceptable.
I sincerely believe that, on top of the steep rises we have seen this year, there is a danger that the whole system could be brought into disrepute by changing the structure of the council tax substantially. I appreciate that the amendments would move beyond
As I pointed out in our discussion on the previous amendment, when it was established, council tax was part property tax, part tax on services. There was a great deal of debate about that in Committee, but council tax was introduced on that basis, and the structure of discounts built into the system indicates the tax's double aspect.
It would therefore not be right, or in conformity with the principles under which council tax was established, simply to replicate in the council tax ratios the difference in banded house prices. The fact that the council tax pays, in part, for services must act as a drag on the growth of bands or on the increase in ratios between them. That is only logical and I think we can all sign up to it.
We all know that council tax is regressive. Its impact on people on a low income is greater than its impact on people on a high income. I accept that as a fact. What I dispute, and it is an extremely dangerous assumption, is the supposition that those people living in more expensive properties are necessarily those with the highest levels of disposable income.
In many parts of my own county, and I am sure in other places across the country, it is the elderly, who have worked hard all their lives to buy a nice house, who occupy some of the largest properties. However, they are also the group with the lowest levels of disposable income in the county.
We have to be careful, therefore, about assuming that the unfair, regressive nature of the tax can be remedied by increasing the amount paid by people living in large properties. It was also suggested in Grand Committee that people in the South East were benefiting unfairly from the current council tax structure. Let us not forget that although we have a common structure of council tax bands, the amount that people pay in each band varies across the country.
Across the South East last year, there were huge council tax rises—17 per cent in Essex; 18 per cent in Surrey; 18.3 per cent in Suffolk; 19 per cent in Hertfordshire and over 20 per cent in East Sussex. As we know, even higher rises were seen in parts of London. The Government have already made clear their intention to shift the tax burden on to homeowners in the South East through their adjustments to the grant distribution mechanism. Our amendment would achieve some measure of protection to prevent the further penalisation of those homeowners.
We should also bear in mind that we live in an age when mortgage companies seem to be prepared to lend more and more money against smaller incomes. It may be that people living in large houses are actually carrying relatively high levels of debt. The value of property seems, from a number of angles, to be an unsafe proxy for the ability to pay and we should therefore be cautious about changing the structure of the tax system.
As I have said on previous occasions, I am not fully wedded to the existing ratio. However, it would be helpful if the Government were to introduce a ceiling ratio mechanism. At the same time, when there is already so much unrest about the levels of council tax, it would be helpful if the Minister could reassure people that there will be no move to increase the existing band ratios. I beg to move.
( ) The power under subsection (4A) shall not be used to alter the ratio between the top and bottom bands set out in subsection (1).""
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