Council Tax Banding

Debate between Jonathan Lord and Brandon Lewis

Tuesday 25th February 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

It is a pleasure to serve under your chairmanship, Mr Walker. I thank my hon. Friend the Member for Sherwood (Mr Spencer) for securing the debate, as it provides an opportunity to discuss the council tax banding system and the processes of the Valuation Office Agency. My hon. Friend has, as always, fought hard in his speech to ensure that he gets the best result for the residents of Sherwood. I know that he does that on a daily basis across the House, lobbying myself and other Ministers. He is right to do so.

I want to be clear: I am keen that the council tax banding process is seen to be open, fair and transparent, and that council tax payers are clearly able to see and know their rights if they want to challenge those bands. It goes without saying that a person’s council tax bill should be based on the correct council tax band for their property. None of us could possibly want to argue against that.

I want to reiterate the Government’s position that we do not plan at the moment to make any changes to the banding system; I appreciate that that is not the point my hon. Friend was making. We are looking to do nothing of the sort, either by adding more bands or splitting them, but I appreciate that there has been a lot of talk about that. We are aware of media reports calling for extra bands to cover higher-value properties. Just a couple of weeks ago in the Chamber, Labour refused to rule out adding more bands and increasing council tax.

We have no plans to introduce anything such as a mansion tax or anything else, and we have made it abundantly clear that there will be no general revaluation during the lifetime of this Parliament, because that would be costly and increase council tax bills. We have seen how that worked in Wales in 2005, when four times as many people moved up the bands as down. Wholesale revaluation is simply not the answer; it just causes more problems.

[Jonathan Lord (Woking) (Con)]

Like the Minister, I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I am delighted that the Minister is ruling out any further council tax bands. Our hard-pressed council tax payers are paying quite enough as it is.

This debate is timely; in my constituency of Woking, we have a number of new developments—by the way, I thank the Minister for ensuring that some of the new homes bonus money is going to local authorities rather than to local enterprise partnerships. The debate is timely and important. Thousands of houses are coming on stream in Woking and there must be an absolutely transparent process that works, so that people are allocated to the right band and those bands are of equivalence to the other properties in my constituency.

[Brandon Lewis]

My hon. Friend makes a valid and fair point, particularly regarding transparency. It would be useful for me to set out how the system works, how bands are assigned—which will help deal with the direct point raised by my hon. Friend the Member for Sherwood—and what the taxpayer can do to challenge their banding.

In England, the main role of the Valuation Office Agency—or the VOA, as we all know it—is to provide the valuations and property advice required to support taxation and benefits. There are eight bands—A to H—and every single one of the 23 million properties in England that are subject to council tax is assigned one of those bands by the VOA. They are based on the open market value as of 1 April 1991, as my hon. Friend mentioned.

Each band has a range of values. For example, band D is for properties valued between £68,001 and £88,000 in 1991. That highlights that a property could have its value changed and still not change bands. It could be valued at £87,999 and be in band D, then it could be reassessed and revalued, and considered to be worth £70,000—more than a 10% change—but still stay in the same council tax band. That could be one reason why residents can see no change in band despite a review on value, but I shall come back to that.

The common valuation date of 1991 means that all properties, including newly built properties, are valued on a fair and consistent basis. That applies equally to all homes, regardless of general fluctuations in the property market since then. The banding system provides a link between the value of a dwelling and the level of council tax. Homes will vary according to a range of factors; some are obvious and some not so. If we think about the value of a property that any one of us may own, its age and size will all have an effect on the value, as might the level of modernisation and improvement. That can again lead to a variation in valuation between two properties that, at first glance, may look very similar— or, indeed, the same.

The VOA looks at the property details for a property, and then looks at sales that took place on or around the valuation date of 1991. Sales from around that time on comparable properties are the strongest indicator of value. As the bands cover a range of values, many different types and styles of property can fall in the same band. Equally, fairly similar properties can fall into different bands, depending on their value in 1991. For example, if the band level is £68,001, the property could be in a different band for the sake of being £10 or £15 apart in value, in theory.

When council tax was introduced in 1993, the Government of the day did not want to discourage people from improving their properties for fear of incurring additional council tax liability. Council tax is not, and should not be, a tax on home improvement or extensions, but such changes are taken into account when a property is sold. That is intentional and there are no plans to change it.