Previous Section Back to Table of Contents Lords Hansard Home Page

Baroness Hanham: I would be grateful if the Minister would withdraw that comment. It was my council which got Hoogstraaten and he was not a joke. He was a very, very serious crook. The noble Lord,

17 Jun 2003 : Column GC235

Lord Bassam, may recognise that he is not someone to be even moderately joked about in terms of council tax. He was against all his tenants, not the council. The Minister's comment was ill-advised.

4.15 p.m.

Lord Rooker: If I have upset the noble Baroness, I withdraw my comments without equivocation. I am thinking of the photographs of the vast mansion that is being constructed. It is a huge project and will be worth heaven-knows-what when it is finished. The idea that it would be in the upper band and the owner pay only three times what would in some respects be a modern hovel—a badly looked-after dwelling in whatever band—worth perhaps 20,000 and much less than 40,000, belies common sense. That is not set out. I agree that the figures are set out—I would argue that not everyone reads them—but they are artificially constrained because of the 3:1 ratio.

I want to make it clear that we have not yet decided whether there will be changes in the ratio, but it does not make sense to limit our powers in this area, especially as we know that the existing ratio does not reflect the relative spread of values.

I remember the debates when the measure was introduced and the reason for the 3:1 ratio was naked. It was so that the big mansions—houses worth millions 10 years ago—did not pay a fairer share. I accept that the fairer share depends on where one is standing, but it was so that such people did not pay a run-away amount of money. The amount was artificially constrained and there were big rows about the 3:1 ratio when it was introduced. I do not believe that Michael Heseltine—now the noble Lord, Lord Heseltine—was modest and contrite about the reasons why he fixed it that way. In bringing in a new tax based on property values, he had to be careful for those at the top. There was a concern about that and it was a quick-fix to replace the poll tax. Therefore, it is a crude ratio because it bears no relation to the spread of values.

We have no plans for changing the ratio but Amendment No. 172 would unnecessarily restrict any future attempt to do so. Any changes in the ratios, like the changes in the bands, that are wholly unreasonable and not properly explained would reap the whirlwind of the ballot box. There is no question of that. I know that the council tax can be unpopular but it is not quite so unpopular as the rates. As regards the rates, unlike the council tax, no one understood how a rateable value was fixed. With more than 50 per cent owner occupation, it made no sense to talk about notional rental values with figures from history. No one understood it. I accept that there is a greater degree of understanding of the council tax because it was based on a valuation, however crude, as a ready-reckoner value. But we all know that every house was not visited.

Amendment No. 174 would also restrict the ability of the Secretary of State to exercise the powers to change the number of valuation bands. It would mean that no dwelling could be placed in a valuation band higher than it would have been if the bands had simply

17 Jun 2003 : Column GC236

been uprated in line with movement in an index of house prices. That means that the Government could not make any significant reforms to the banding scheme. It would limit how we could uprate the bands and prevent the creation of new bands at the top end. For that matter, it would probably prevent the creation of new bands at the bottom end. I have been in northern towns where the housing market has collapsed with values of 10,000 and less. There are serious issues.

My memory is good, but I have discovered that it gets worse as you get older. I was convinced that the previous government changed the number of bands. I was adamant to officials about that. I remember an issue about the number of bands but I could not remember the context. It is interesting to note that when the council tax was first invented and brought forward by the then Michael Heseltine, there were only seven bands in the paving Bill. The top band was 160,000. However, when the Bill came forward setting up the council tax there were eight bands, the top one at 320,000. I knew that there had been a change from the original plan. In that respect, there was movement between the draft plan and the Bill. The Government did not therefore change the scheme once it was introduced with eight bands. The eight bands existed when the legislation was introduced but that was not part of the original plan. Even then there was an attempt to say, "Hang on, we have been a bit unfair and we need to do something about it. Have an extra band at the top level". There was an acceptance even then that something needed to be done.

I understand Members' concern about the exercise of the power, but they are needlessly trying to constrain its exercise. I can assure them that any attempt to try to change the bands and the ratio will be subject to affirmative procedure and could not be slipped in by the backdoor. Everyone would know about it because it would be a major change. We believe that the appropriate parliamentary scrutiny of the exercise of power exists if ever a government wanted to make a change.

I repeat that we have no plans for changing the current system. I suspect that until there has been a national revaluation to examine the distribution curves of valuation changes between 2005 and 2007 as compared with 1990–91 one cannot even begin to debate the issue. There are not facts on which to do so and one would not want a debate on the basis of a hunch or prejudice. We have no plans for changing the system. I suspect that the matter will return to us but I hope that the noble Lord will feel able to withdraw his amendment.

Lord Hanningfield: I thank the Minister for that response. We have had an interesting debate. Obviously, the world in the South East is greatly different from the world described by the noble Lord opposite. In the South East values have changed dramatically.

In most of the counties around London, probably everyone living in houses worth more than 400,000 votes new Labour and everyone living in houses worth

17 Jun 2003 : Column GC237

less than that votes Conservative or Liberal Democrat. If the Government were to introduce the new bands, they might be losing their seats in the South East on which they depend for their large majority. We might then return to more traditional voting patterns.

Joking apart, we will return to the matter at a later stage and in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees: Before calling Amendment No. 173, I should inform Members of the Committee that the Chairman of Committees has said that if they wish to take their jackets off they may do so.

Lord Hanningfield moved Amendment No. 173:

    Page 41, line 32, at end insert—

"( ) Any order made under this section may apply to a billing authority or any number of billing authorities.""

The noble Lord said: The amendment needs to be considered in the context of caveats incorporated in other amendments on the council tax band structure. Its purpose is to enable the Secretary of State to exercise greater flexibility when changing the banding structure to reflect local diversity.

The amendment would allow the Secretary of State to take account of local variations in the housing market—we have referred to them a great deal—by enabling him to apply measures under this clause to particular billing authorities, or to groups of billing authority in a particular area.

We all know that the housing market in different parts of the country may operate in different ways—we have not had a house valued at 40,000 in Essex for many years. A power to reflect that in the banding structure would introduce a measure of flexibility into the system that could more accurately take into account this local diversity.

We welcome provisions within this Bill to enable local authorities to respond to the needs of the local community and we would like to see this extended to the valuation bands on the property. Any assurance that the Minister can give that local needs will not be neglected in the formation of a new system of council tax band would be most welcome. I beg to move.

Lord Rooker: We resist the amendment not because we oppose it but because it is unnecessary. The powers already exist. The powers to change council tax bands or the proportions between them are covered in an order under Section 5 of the Local Government Finance Act 1992. Section 113(1) of that Act makes it clear that powers to make orders under provisions of that Act, including Section 5,

    "may be so exercised as to make different provision for different cases or different descriptions of cases, including different provision for different areas or for different authorities".

17 Jun 2003 : Column GC238

In short, translated into English, that covers the point that the noble Lord has raised. The capacity already exists but I am informed that the power has never been used. I believe that that answers the noble Lord's point.

Lord Hanningfield: That is an interesting answer and we shall study it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 174 not moved.]

On Question, Whether Clause 79 shall be agreed to?

Lord Hanningfield: I shall not go into the long and interesting debate we had on the power of the Secretary of State. I am sure that we shall repeat it on the Floor of the House several times during later stages of the Bill. At this stage, I put on record my objection to Clause 79 standing part of the Bill.

Next Section Back to Table of Contents Lords Hansard Home Page