Lord Marlesford
Main Page: Lord Marlesford (Conservative - Life peer)Council Tax Valuation Bands Bill [HL]
Lord Marlesford Excerpts
The Lord Speaker (Baroness D'Souza)
My Lords, if this amendment is agreed to, I cannot call Amendments 2, 3 and 4 by reason of pre-emption.
Lord Marlesford (Con)
My Lords, my noble friend has made it clear that he does not like the Bill and would not wish it to make progress. It is difficult not to make a very brief Second Reading point on why we have the Bill at all. It is because the existing system is totally out of date. It is totally irrelevant. One has only to note the public complaints that there have been about the fact that the difference between the council tax paid by the humblest dwelling and the most expensive, luxurious penthouse in London is only 3:1.
My noble friend spoke about fixing on particular dates. Indeed, it is fixed on the date of the original legislation in the early 1990s. That is not something I seek to perpetuate. I seek very simply to say that we need a change that will be administratively easy, relatively. The argument always used against change has been the need for revaluation. That is precisely the need that I seek to avoid by using the actual prices paid as recorded in the Land Registry and in any subsequent transition, including, of course, in the case of inheritance, where a valuation is made for that purpose for probate, and, indeed, in the case of gift for other tax purposes. There is a rather limited number of valuations. The number of properties that transfer in ownership between inheritance and gift is probably a relatively small proportion of the total transfers. They need evaluation. All the other transfers are recorded, when they are made, in the Land Registry. It is the Land Registry that I seek to use.
Frankly, my noble friend does not think it worth proceeding with this change, which is well overdue. It is the outrage, in a sense, at the present system that caused the invention of the so-called mansion tax, which was not a great success and has far more difficulties. I do not think that it is particularly on anybody’s agenda.
I take the points about the detail. I am not trying for one moment to prescribe the bands, nor am I trying to prescribe the proportional increases. I have illustrated them in the Bill, but as my noble friend said, the committee in your Lordships’ House that scrutinises the legislation said—I read its report—that this would be a matter to be done by statutory instrument, as an order. There will be a long time before it is decided exactly what bands are appropriate, but I certainly suggest something much closer to the bands that I propose. At present, as your Lordships know, band A is up to a value of £40,000 and band H up to £320,000. In the illustrative tables I produced there is no difference between the council tax to be charged for band A and not very much difference for band B. Instead of being 17% more, it will be 33% more. The difference, of course, is that band A will cover anything up to £250,000 and band B, in my suggestion, everything up to £500,000. As for houses worth £1 million or more, again, it is only a relatively small increase, because we are talking about a council tax which, give or take £100 or £200—it varies, of course, throughout the country—is £1,000 for band A and only about £3,000 for band B. Those are the actual figures that people pay, as noble Lords will know. Therefore, in the illustrative tables I have put in the Explanatory Notes, based on what is in the Bill, there is no enormous difference for the lower rates.
Lord True
My noble friend raises a very important point. He says there will not be a lot of complications. Is he not saying that, once his new post-2000 system comes in, each time the house is sold thereafter there will not be an alteration? That seemed to be the implication of what he said. If this system is to have the logic that I think it might well have, clearly at each point of sale—not, as he said, interestingly, of inheritance or gift—the system must, surely, generate a new council tax, whereas he seemed to be saying the opposite.
Lord Marlesford
Of course it does: it is the actual price paid. If somebody buys a house, they will know the band in which it will be according to what they are paying. Of course it is the case. At present, if there are major alterations made to a house, there will be an assessment made by local government of whether it should move into a different band.
Lord Marlesford
I want to say a word on the retrospection point. Recently, the Chancellor of the Exchequer reduced the rate of capital gains tax from 28% to 20%. That new rate will apply to gains which are realised after, I think, 5 April this year on gains which have already been made which, if the sale of the asset subject to capital gains tax had been made earlier, would have been at 28%. So changes in tax rates do have an element of retrospection.
I do not believe, frankly, that we are going to have a lot of widows who bought a house since the year 2000 finding that they are paying enormous new sums, as my noble friend mentioned. The big increases have probably been in the last five years and it is very unlikely that widows have paid millions of pounds for houses in the last five years or so and therefore suddenly find that they are put on to a new rate. I think it would be perfectly reasonable that they should be put on to a new rate if that were the case.
Lord McKenzie of Luton (Lab)
I was not planning to intervene in this debate and I very much support the position taken by the noble Lord, Lord True, but how does the noble Lord cater for those cases where very expensive houses are held by offshore companies and it is not the transfer of the asset within the UK which causes ownership to change but the ownership of the shares of the offshore company? It seems to me that that cannot be readily catered for within the system. Fundamentally, also, how does the noble Lord address the very telling point, made by the noble Lord, Lord True, that we are going to end up with two schedules of valuation? Properties next to one another, otherwise identical, will, under the noble Lord’s system, be paying completely different council tax. That cannot be sensible.
Lord Marlesford
Of course there are two schedules: it is the whole purpose that properties migrate, when they change hands, on to the new schedule. People who are currently occupying a property, if it was acquired before 2000, will be on the old schedule and there will be no change at all. Even in my illustrative table, for most people there will be no change anyway, because although the bands will be different and there will be some losers and some gainers, they will not be very big ones.
On the noble Lord’s very important point about overseas people, I have always believed that one way of dealing with the abuse of the overseas purchase of property should be that British law should be so administered that ownership is not recognised unless the property has been properly registered by the Land Registry in the name of a person. If that happened, people would be very hesitant to acquire expensive property without getting a proper Land Registry entry, because that is the proof of ownership—if you are going to buy something, you want to be absolutely certain who you are buying it from. The noble Lords raises a perfectly valid point which should be dealt with, although it is not dealt with in this Bill.
I think that this is an idea worth pursuing. It may be that we will want to make further amendments on Report—if there is time to do it before the new Session, which is probably rather unlikely—but I think that the Bill is an advance worth making and I therefore ask my noble friend to withdraw his amendment.
Lord Mackay of Clashfern (Con)
My Lords, this subject of property valuation has proved rather difficult over the years. I spent my early years at the Bar in Scotland on a considerable number of these valuation cases. Then, of course, my noble friend the Minister’s father, as Secretary of State—and a distinguished Secretary of State he was—agreed to have a revaluation in Scotland. When that revaluation came, it was discovered that domestic properties were going to pay a rather higher amount of the local taxation than they had previously. Many people who were interested in politics were owners or occupiers of residential property and the result was an urgent desire to do something to deal with the injustice which this seemed to throw up, and we all know what the effects of that ultimately were. I am not sure that anybody has discovered a really good method of dealing with local taxation. When I made visits abroad when I was Lord Chancellor, I used to ask about these matters. It was pretty clear that nobody in any of the countries that I visited had developed a satisfactory system.
The present system is certainly by no means perfect, but it could be improved by extending the bands. As has been pointed out, the Secretary of State has the power to do that. There are, of course, difficulties with that. As my noble friend Lord True pointed out, it is difficult to know on what basis the new bands would be applied. It is argued that a revaluation would be necessary. I believe that it might be possible to have a fair system which extended the bands using the previous valuations. That would still produce a change in favour of fairness, although perhaps not such a substantial change as that proposed in my noble friend’s Bill. As has been said again and again, one of the difficulties with this kind of tax is that, through succession or something, people may find themselves in properties which are highly valued, but they may be very short of cash with which to pay the local taxation. That problem is not likely to be solved, albeit that the market conditions may force people to change the properties in which they live.
It is certainly very worth while considering whether to extend the bands without doing too much more. If that happened, it might to some extent deal with the situation better than it is dealt with at present, although it would not by any means be a perfect solution. The detailed difficulties that my noble friend Lord True pointed out could be modified considerably if something of that kind was done. I am keen for the Secretary of State to consider this issue extremely carefully, although I know, of course, about the political risks inherent in doing anything at all in this area. However, courage is required if you are to be fair.
Lord Marlesford
I do not think that any of us envisage a system in which each time people think the value of their house has gone down they can apply to be put into a new band. That does not apply at the moment and it would not apply under the new system in my Bill. With great respect, that argument is pretty irrelevant.
Lord True
No, but the noble Lord is replacing a system which is based on a consistent set of valuations with individual snapshot valuations, so he is creating potential new anomalies and concerns.
I do not wish to detain the Committee. This has been an extraordinarily interesting debate. I have esteemed my noble friend for decades, not just in recent times. He has one of the most innovative and illuminating minds we have seen, both as a commentator and as a parliamentarian. My respect for him is absolutely enormous. However, I do not think that this is a practical or sensible way to proceed. I have tried to deal with this extremely kindly. I have not troubled the Committee with some of the range of anomalies, although some of them have come up in the debate. We are not debating the issue of higher bands—although we could on another occasion—or the property thing. We are debating the Bill which is before us. My noble friend dismissed the idea that there might be administrative costs and anomalies. He was not too worried about that, but I have to be and I stand by it. Many local authorities are making massive savings in personnel. We have taken £35 million out of a budget of under £200 million. We are taking another £25 million out of it. This is what is expected of us by the country. With respect to my noble friend and my friends on the Front Bench, one must be careful about adding new burdens to local authorities, particularly when they come up with these kinds of anomalies.
I will study Hansard very carefully, but, with respect, I do not think that my noble friend properly addressed the points put by the noble Lord, Lord McKenzie, about parallel registers, the two bands, the issues of inheritance, gift inter vivos, disguised nominee ownership and IT requirements. Retrospectivity was perfectly skewered by the noble Lord, Lord Butler. There is a tremendous amount here which needs to be clarified.
There is also a fundamental point, which I know that many people may not agree with or have forgotten. Council tax is supposed to be a tax levied to pay for council services. It was not created to be a tax on wealth or property. We can have one of those if we want. We have inheritance tax and graded stamp duty. There have been proposals for a mansion tax. Others have proposed a wealth tax. At one time, Mr Healey was going to build an office with staff to do that. Council tax is intended to be a tax which raises—
Lord Marlesford
My Lords, the fact is that the council tax as originally devised is a progressive tax. There is no way that the band in which people happen to live necessarily reflects the additional or lower quantity of government services that they require or consume. The principle of progression was accepted and implemented in the original council tax—quite rightly so, in my view.
Lord Marlesford
Lord Marlesford
This amendment is merely technical. It was a mistake in the drafting of the Bill to apply it to Scotland and Wales, where of course the devolved powers mean that it would not be appropriate to apply it. So I beg to move that this amendment be incorporated because it is purely technical.
The Deputy Chairman of Committees (Baroness Stedman- Scott) (Con)
My Lords, if Amendment 10 is agreed to, I cannot call Amendment 11 by reason of pre-emption.