Local Government Finance Bill

Lord Shipley Excerpts

Tuesday 24th July 2012 Grand Committee

This is done all the time, so it would not be very laborious to visit the much smaller number of band H properties in addition to see whether they should be placed in the higher band I. The total number of band H properties is pretty much the same as the yearly fluctuations now in the valuation loads that valuation officers have to respond to. Spread over, say, three years the workload would be relatively modest. Having talked to several valuers, I am assured that it would be perfectly straightforward to do this, given the current fluctuations in the workload. It would allow at the very least a reduction in the relative levy for the lower band properties within any billing and precepting authority. If it were significant in some London boroughs, as I think it would be, it could generate resources for redistribution elsewhere in London to the poorer boroughs or beyond. Of course I would much prefer a full revaluation, but, until that happy day, discussion about a new higher-based band I would produce income and increase the fairness of what has become a regressive banding system. I beg to move.

[Lord Shipley]

My Lords, I can give some support to the amendment moved by the noble Baroness, Lady Hollis. Like her, I am not a supporter of local income tax. I prefer council tax, which is essentially a property tax but indirectly related to income. A local income tax would primarily be a tax on work, and the case for asset taxation at a local level is strong. If we accept that, however, it follows that the real spread of asset values needs to be reflected in the council tax banding. On the question of a possible band I, the test for me is whether there would have been a band I had we known in 1991 that property values would change as they have. Had we known that in 1991, I think that we would have had a band I. For that reason and all those identified by the noble Baroness, I am in favour of a consultation to try to secure a further band.

[Lord Smith of Leigh]

My Lords, the Committee may recall that on Second Reading I mentioned revaluation of council tax, which is something that I have raised with Governments of all persuasions. Perhaps we should be buying a cake as it is the 21st anniversary of the current valuations—which, as my noble friend said, are totally out of date.

I agree with the noble Lord, Lord Shipley, that the council tax system is a property tax. Although I support it in principle, one of the problems with it is that it was introduced in a rush. It was brought in because there was such a panic about the poll tax and the need to get rid of it—so anything was better than the poll tax. Because of the rush the valuations were not done properly and a national scale was used. Some of the problems that my noble friend mentioned about the difference in values between areas of the country in 1991 were therefore reflecting the fact that, yes, in my authority the vast majority of properties are in band A and B. Band H is pretty irrelevant to us, and a band I would probably not be of much help either. That use of a national scale for valuing is the problem.

When my noble friend cited the areas from which substantial benefits would come with this measure it just illustrated to me the further geographical bias there has been in the housing market over the past 21 years. The fact is that the areas she quoted are all in the south and the south-east and have had economic prosperity during that period, which has pushed up house prices. In other parts of the country economic prosperity has not been on the same level. House prices have gone up for some of that period but in the past two or three years those prices have been going down in many parts of the country, including my own.

I would clearly therefore be interested in some kind of revaluation. What is missing from my noble friend’s amendment, if I may say so, is that it would have such a huge geographical bias in its outcome that we would have to have a different form of equalisation. Those areas in the north, the Midlands and so on, which would not benefit from this, would be in a much worse situation if all we did was to put the amendment through without following it up with some equalisation.