Previous Section Back to Table of Contents Lords Hansard Home Page


Baroness Hanham: My Lords, I shall return briefly to the survey. I know that the Minister has not seen it, but it is extremely important. One issue that it addresses is the impact of the introduction of more bands. It has been suggested in the debate that if there were higher bands that would be more helpful to those in lower bands. However, it has now been pointed out that that would not be helpful at all and would not soften the blow for anybody. In London the average council tax bill would go up and the potential loss of grant would be very substantial indeed. It is estimated that London could lose more than 400 million to the North and the North West and that the impact of the increase in council tax could be very serious. There needs to be a careful review of the number of bands and the ratio between them. One of the points that we have made is that the ratio should remain at the same level as it is now.

Lord Rooker: My Lords, it is like an all-us-southerners-stick-together day. It is an unfair way to introduce the Government's response to the amendment, but, first, I am not here to speak for London and, secondly, I know nothing about the survey. I have not seen any of its results. I am here to speak for fairness for council tax payers. The present system is not completely fair, as we all know. I agree with very much of what the noble Lord, Lord Hanningfield, said.

It would seem simple merely to change the ratio, but if that is predicated on the assumption that people who live in big houses have big incomes, that is wrong and it would blow up in one's face. The noble Lord is absolutely right. There is no correlation between disposable income and the size and value of one's property, for the very reason that he gave; namely, that elderly people have invested their life savings and income in property, knowing that they would live on a lower income. Making the changes can appear seductive, but one makes them at one's peril if one ignores those kind of circumstances.

However, the amendment would remove the powers to change the three-to-one ratio. Most council tax payers do not have a clue what we are on about. They may know what band they are in; they may see six or seven bands on their council tax bill and they may know they are in the lower band. However, by and large, they do not see anyone else's council tax bill and, in general, most of their neighbours will be paying the same kind of figure. Houses do vary in a street, but, by and large, the same kind of figure is being paid. It will never cross their minds that the person who is living in a property that is worth 300,000 will not ever pay more than three times the council tax that the person in the lowest property band—up to 40,000—is paying.

17 Jul 2003 : Column 984

They will say, "Hang on a minute. There is a big difference between 300,000 and 40,000. It's rather more than three to one, for a start". The ratio is artificial.

It reminds me of the metaphorical ghost of the noble Lord, Lord Heseltine. He was quite unabashed when he introduced the council tax. It was the great fix, at the end of the poll tax under the noble Baroness, Lady Thatcher. He was charged with coming up with a solution to the poll tax. He came in waving his papers like "peace in our time". He was quite unabashed about the reason for the three-to-one ratio, and that was that he did not want the rich to pay too much. I paraphrase what he said, but he was quite open about the reason for the capping. It is not a capping to help poor people; it is a capping to help, by and large, those in bigger houses, notwithstanding the point that there is no direct correlation with disposable income.

We discussed the matter in Committee and I do not want to go into further details. However, there would be a problem if we were to accept the amendment. We would not be able to change the ratio to reflect more closely the relative values of bands and we will not know what they will be until a revaluation takes place.

We have not yet decided whether we will change 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. Obviously, when a revaluation takes place, the differential changes that have occurred in the country will result in different figures.

Amendments Nos. 72 and 74 would mean that the Government could not make significant reforms to the banding scheme. They would limit the way in which we could operate the bands to prevent the creation of new bands at the top end. I understand that noble Lords are concerned about the exercise of these powers, but constraining them in this way is not a sensible way to proceed.

Any change to the banding schemes, whether this be in revaluing the bands, adding new bands or changing the ratio to the bands, must be made by an order that is subject to the affirmative resolution in the House of Commons. That will provide the proper parliamentary scrutiny for a change in the local taxation system.

Amendment No. 73 seeks to give the Secretary of State the power to introduce sub-national differences in council tax bands. As we have said on a number of occasions in this House and in another place, we already have sufficient powers in the existing Local Government Finance Act 1992 to introduce regional banding if we choose. The powers to change council tax bands, or the proportions between them, are exercised by an order under Section 5 of that Act.

Section 113(1) of that Act makes it clear that powers to make orders under the provisions of that Act, including Section 5, may be so exercised as to make different provision for different cases, or different descriptions of case, including different provisions to different areas or for different authorities. Therefore, potentially massive change could take place under the

17 Jul 2003 : Column 985

legislation and I presume that the provisions in the 1992 Act were originally made in that Act and have not arrived as a result of later amendments.

The facility to make changes was therefore built into that Act, but the changes were not made because it was early days. I fully accept that the council tax was new. It was a quick-fix solution for disposing of the poll tax without returning to the rating system. There would be considerable difficulties and restrictions if we were to accept the amendments, but we have no plans to change the ratio of 3:1 and any such changes would be contemplated only after examining the relative changes following revaluation and the necessary research. In that I include social research, economic research and, I suspect, political research.

Lord Hanningfield: My Lords, I thank the Minister for that reply. His final comment about political research was a wise one. I remember as a young councillor going to a meeting addressed by Margaret Thatcher and attended by about 1,000 people. People were virtually screaming against the rates because they had become such an unpopular tax. We talk now about the unpopularity of the poll tax/community charge, but we forget that the rates were extremely unpopular with a great bulk of the population. That is why the Government came up with that idea.

I believe that we are coming to the end of the council tax. There is a growing group of retired people—it is called "Support the Retired"—which is spreading like wildfire across the South and the East. I have been summoned to a large meeting in eastern England in two or three weeks' time to defend the outrageous levels of council tax. Perhaps the noble Lord, Lord Rooker, might like to come with me.

We are moving this series of amendments because careful thought must be given to an alternative to the council tax. Nick Raynsford, the Minister for local government, has instituted work on the different systems of revenue for councils, but that is not for today. We shall return to the subject on Third Reading, but I beg leave to withdraw the amendment today.

Amendment, by leave, withdrawn.

[Amendments Nos. 73 to 75 not moved.]

12.15 p.m.

Baroness Hanham moved Amendment No. 76:


    After Clause 80, insert the following new clause—


"COUNCIL TAX APPEALS
(1) Schedule 11 of the Local Government Finance Act 1988 (c. 41) (tribunals) is amended as follows.
(2) After paragraph 11(1)(a) there is inserted—
"(aa) an appeal which includes an issue of valuation arising out of a decision or order which is given or made by a tribunal on an appeal under section 23 above, shall be referred to the Lands Tribunal;"."

The noble Baroness said: My Lords, in Committee, my noble friend Lord Caithness tabled a probing amendment which sought to correct an unfair

17 Jul 2003 : Column 986

anomaly that exists to frustrate any council tax payer from appealing against council tax assessment on anything other than a point of law.

Currently, once an appeal has been made to the valuation tribunal, a council tax payer is prevented by Schedule 11 to the Local Government Finance Act 1988 from appealing against a decision of the tribunal on anything other than a point of law to the High Court. Valuation tribunals are not "expert" tribunals. They are composed mainly of lay members and do not have valuation experts. Although the lay members perform the same role as do magistrates in that they are experts on their own, it means that a council tax payer cannot put his case to someone who is a professional in council tax.

It is proposed that instead the council tax payer should have the opportunity to appeal to the Lands Tribunal on valuation grounds. I beg to move.


Next Section Back to Table of Contents Lords Hansard Home Page