HC Deb 12 June 1991 vol 192 cc912-1002 3.43 pm
Mr. David Blunkett (Sheffield, Brightside)

I beg to move amendment No. 23, in page 2, line 34, leave out 'a' and insert 'an individual'.

The Second Deputy Chairman of Ways and Means (Miss Betty Boothroyd)

With this it will be convenient to discuss also the following amendments: No. 27, in page 2, line 48, leave out 'of all the domestic properties' and insert 'comprising the values of each domestic property'. No. 28, in page 2, line 49, leave out from 'area' to end.

New clause 12—Valuation'There shall be maintained for each levying authority area in Scotland a valuation list showing the value of each property. This list shall be prepared and from time to time updated in accordance with arrangements to be prescribed.'.

Mr. Blunkett

In moving the amendment it is appropriate for me to ask a number of questions. First, who, in June 1979, referring to the scrapping of the then valuation system, said, "Tear them up"? Who was it who started the shambles which has culminated in the proposed introduction of the council tax? Who, by delaying that valuation, ensured that the rating system became difficult to operate? Who cut the grants to local authorities in the early 1980s who ensured that that happened?

The Parliamentary Under-Secretary of State for Wales (Mr. Nicholas Bennett)

The right hon. Member for Bethnal Green and Stepney (Mr. Shore).

Mr. Blunkett

No, it was not my right hon. Friend who made that remark; it was the right hon. Member for Henley (Mr. Heseltine), now the Secretary of State for the Environment. He said "Tear them up" and the tearing-up process resulted in the infliction of the poll tax on the British people because it helped to discredit the rating system and, with the cuts in grant, made it very difficult for councils to operate in the environment in which the Secretary of State for the Environment had placed local authorities. The Bill is therefore the direct result of the first set of actions taken by the present Secretary of State.

It must also be said that Conservative Members, and especially Conservative Back Benchers, are in great danger of being conned. Today decisions will be taken by the House on the nature of the valuation system and on the commitment to a banding process. As the media may not be aware of it any more than are many Back Benchers, it behoves us to state that, once this allegedly small Bill is on the statute book, many of the decisions about what the council tax will entail will have been decided.

What stands between the Back Benchers and a second round of public wrath and acrimony similar to that caused by the poll tax is a statutory instrument or negative order which is unamendable, unchangeable and eminently whippable. In other words, after tonight Conservative Members will have been conned. They will not be able to say that they did not know because this afternoon we are giving them the opportunity to change their minds. They might feel that it is a good idea to start the valuation system now, from the passage of the Bill, because that will give them a breathing space in which to tell people that the system is under way. However, they will not realise that they will get the banding system whether or not they like it, as my hon. Friend the Member for Dagenham (Mr. Gould) will outline later. They will be denied a return to the rates and art immediate abolition of the poll tax, which again my hon. Friend will shortly spell out.

Conservative Members will be faced with the delay that the Audit Commission rightly mentioned in its submission today for the consultation exercise that finishes this Friday. It said that the cost—a minimum of £800 million a year—will have to be borne by the British people. We estimate that it will be considerably more than that. That money could be spent on saving essential services. It would clearly prevent any arguments in favour of capping; it would ensure that teachers had the books and equipment to do their job; it would mean that social services throughout the country would have the cash to ensure that home helps could be provided; and it would also ensure the maintenance of leisure facilities, libraries, the environment in general and decent transport, all of which are currently under threat. Such provisions could be continued with that money which, instead, will be used to continue the poll tax.

It is even worse that today's debate is taking place just two days before the consultation period is due to finish. In other words, it is a farce that bodies such as the Audit Commission, the Institute of Revenues, Rating and Valuation, the Royal Institution of Chartered Surveyors, local authority associations and many others are submitting their evidence as part of the so-called consultation, which is to be completed by Friday, only to find that the horse has bolted before the stable door has even been opened. That adds insult to injury for all those who took seriously the Secretary of State's words earlier this year when he said that he believed in consultation.

As my hon. Friends will remember, the Secretary of State chided us and said, "Come and see us. Consultation is a serious matter." He had the Liberals come to see him and told them that he would take them seriously. They presented their evidence for an alternative that would have abolished valuation, but what did the Secretary of State do? He added up their figures, and then used them against them. It did not do the Conservatives much good in local elections.

The valuation process starts today, and it must involve an assessment of what sample properties mean. It is no good the Secretary of State saying, "We have a valuation system called banding." We need a system for assessing the actual value of the property. That value will then determine the bands into which similar properties will be placed. We need to know on what basis that will be done. Will it be capital value rating?

The Institute of Revenues, Rating and Valuation has rightly raised clear questions about what the system will entail. It submitted evidence under the consultation process, and the Secretary of State should be made aware of it because time is running out. Proceedings on this Bill will be finished late tonight, so further consultation will be irrelevant. In its evidence, the institute said: There is no precedent, as far as the Institute is aware, for the grouping of properties into different tax bands for the purpose of a property tax. It is generally assumed, particularly in a capital value based system, that an exact valuation can be arrived at and defended in relation to other neighbouring values through an appeals system. That is important to the way in which people will perceive what they are charged, and also to their rights as individuals to challenge the valuation, and therefore the placing of their properties in particular bands. It will materially affect what they will pay, and on the margin that could be quite substantial. It could be 20 per cent. under the proposed banding system.

The institute continued: It is hard to imagine that properties can be placed in bands without the valuer going through at least the mental exercise of determining an exact or 'spot ' valuation. The system cannot operate unless there is an exercise such as that referred to by the institute. My hon. Friend the Member for Dagenham will later spell out the mental exercise carried out earlier this year when the Government invented the banding system. To move forward today, there must be some guess about the valuation system. What will it be?

Mr. Dick Douglas (Dunfermline, West)

The House should be clear that the hon. Gentleman is referring to an entirely English practice. There is a new clause grouped with the amendment that refers to Scotland, although I do not propose to speak to it. I must make it clear that the Scottish Assessors Association has distinctly different views from those being expressed by the hon. Gentleman.

Mr. Blunkett

We are discussing a clause that relates only to England and Wales, and I had presumed that the House would understand that. Our amendment relates to the valuation system in England. Other amendments will be discussed later that refer specifically to Scotland. We are talking about the way in which we want individual valuations to be undertaken.

The problem is that nobody really knows what the system will be or what the professionals will be expected to do. The general secretary of the Royal Institution of Chartered Surveyors, Mr. Michael Pattison, is quoted in today's Evening Standard as describing the system as likely to be a shambles. He said: banding allocations will become unrealistic and unfair. This is the fast route to a discredited tax. It will be the fast route to the demise of Tory Members. Unless they take seriously what is being said, they will run into exactly the same problems that they experienced with the poll tax. A quick solution with easy answers ended up as one of the most complicated and difficult fiascos in the history of British politics.

The Confederation of British Industry's rating and property manager, Mr. Sharman, who chairs its valuation committee, said: From a professional point of view I don't like the banding system, it seems to go against the principles of valuation. It cannot do anything else, unless this afternoon we hear spelt out what that sampling or mental exercise system will be based on. From today, valuers will be asked to go out and do the job—to sample properties and select beacon properties which show how properties will fit into whatever number of bands we eventually end up with.

We have been asking whether there will be regular revaluations and Ministers have been responding. We understand not. On 24 May, in an interview with the Municipal Journal, the Minister of State said: Once a property has gone into a band, we think it will stay in that band virtually in perpetuity. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) pointed out at the end of the Second Reading debate, one cannot get more determined than "in perpetuity". That means that a property will stay where it is "virtually" for ever. Without constant revaluation and with the Secretary of State's words of June 1979, "Tear them up", ringing in everybody's ears, we shall run into exactly the same problems as we have had in recent years.

People must be told of their rights of appeal. They must be given those rights. Again, I should be grateful for the Minister's clarification. I understand from the conclusion of the Second Reading debate that rights of appeal will exist. Will he confirm that they will exist not simply in Scotland, which was being referred to at the time, but in England and Wales? If rights of appeal do not exist, the British people had better know from today.

People can make a judgment when the surveyor, estate agent or estate agent's agent, son or daughter has been sent round to do a spot check on their street. We have no guarantees of the professionalism of those doing that job. People will demand the right to know, first, what it is that their property is being valued on, and, secondly, whether they have a right to challenge the valuation. Unless there are individual valuations, the right of appeal will inevitably lead to mayhem. People will demand to know on what basis their property is assessed and how they can judge whether it is fair. The difficulty of dealing with appeals will become a nightmare.

There are 23,000 outstanding valuations under the national business rate in west Yorkshire alone. As 1,000 valuations are made a year, they will be just about completed by the year 2015. It is an absolute farce. At least with individual valuations, one stands a chance of making a judgment, but without them, what is being argued about? It must be whether one has the same sort of house in the same street or same neighbourhood and what factors affect its value.

One must be absolutely clear that the valuation must be on sale price, and sale price relates to capital values. That is what was described, when the Scottish Labour party first mooted it, as the roof tax. That is what Tory Members called it. The then chairman of the Conservative party and present Home Secretary described it in glowing terms as the hammer of capital value rates". He said that it would hit tenants as well as home owners. Instead of people benefiting from an increase in the value of their properties, they would be heavily penalised. My source for this information is the well known and reliable newspaper, the Daily Mail, in its edition of 19 September 1989—[Interruption.] The hon. Member for Sheffield, Hallam (Mr. Patnick) says that he will buy the paper—

Mr. Irvine Patnick (Sheffield, Hallam)

I merely said that I was back.

4 pm

Mr. Blunkett

The hon. Gentleman always lets me know when he is back. I should like him to buy the newspaper: when it gets off its propaganda, its articles are quite informative and extremely well written. I do not fall into the trap into which the Secretary of State for Education and Science falls. He attacks any newspaper that does not agree with his point of view.

Be that as it may, Ministers appear to have changed their minds and to have decided that capital values—or sale price—are acceptable for the sampling process. After all, the Minister of State, a well-known opponent of property valuation and of a property tax, said as much himself: property values are no proxy for wealth or income and any system based on property will repeat the injustice of the domestic rates."—[Official Report, 22 May 1990; Vol. 173. c. 186.] So it is on record that the Conservatives do not believe in property valuation or in capital values—sale price—but they intend to have a system which will in the end result in properties being placed in bands.

Consultation exercise No. 2.21 says that straightforward rental and capital values both have substantial disadvantages as a basis for local taxation". By way of an excuse for that, consultation exercise No. 2.22 states: The Government believe that these problems can be overcome by a new approach: by adopting a banded system". A system of banding merely places properties relative to each other once a valuation has taken place, but the valuation has to take place first before the allocation to a band can happen. That is why we tabled this important amendment, and, in the months to come, many Conservative Members will greatly regret not voting for it.

On the day when the Secretary of State made his announcement in the House, 23 April, I described this as the chip shop factor. Unfortunately, he misunderstood what I meant. He thought that I was having a go at chip shop owners, and he predicted that they would come down in force to put their point of view as part of the consultation process which ends this Friday. I did not mean what he thought. I meant that a person who lives next door to a chip shop and next door to a disco on the other side—[Interruption.]

It has been suggested that some hon. Members do not understand what happens in Sheffield. Those who live in large houses worth £800,000 in Westminster and who will pay only £227 under the proposed council tax, and those who live in mansions in Oxfordshire, do not live next door to chip shops—and I am pleased for them. I do not want people to have to live next door to chip shops. It is bad for their cholesterol levels apart from anything else. It is also bad for the price of their house—and not because chip shops are bad or because their owners are malevolent. It is just that they bring down the price of a property, so people in similar property, with a garden of the same size, just down the road expect to pay more than the property next door to the chip shop.

That was the rough and ready justice of the old rating system. The person whose house overlooks the local park at the end of the street, and has a wonderful environment in which to enjoy his garden and the quiet pleasure of his home, is in a completely different position from the person who lives next door to a small workshop where someone drills cars all day. Not to understand that is to misunderstand the wrath of thousands of people who will be put into the wrong band because the sampling process has placed their houses together with properties of the same type, but with higher sale value.

The system will be damned unfair and everyone knows it. As we shall spell out later, it will be unfair between families and individuals, and between different parts of the country and different parts of the same street. It will be no good expecting to keep it quiet, because people will talk to each other. They will all understand which band their property is in, and the circumstances in which they live.

What method will be used? If the sale price is used, it will be capital values. If not, we need to know what the basis will be. Ministers may spill the beans this afternoon. They may like to withdraw the Bill, even at this late stage, think again and talk to their Back Benchers about how to proceed. It may help Ministers if they do not have to stand on their heads and wave their legs in the air for the second time in 12 months. The Minister for Local Government and Inner Cities—who is a very able politician—may even be able to hold down his job with some integrity if he does not have to contradict himself so regularly. Who knows, between now and the general election, there may be a change of Prime Minister and a different system may again be introduced. If so, the Minister will probably come back and say the opposite. I hope that he will tell us how he feels about that prospect.

One thing is absolutely clear: the professionals do not think that the council tax is a good idea. The Audit Commission has considerable doubts about it. The public know that the delay that they are incurring is at their expense, and that the mess that we are in is of the Government's making. Perhaps the best way of getting the message across to the public is to ask them a little conundrum: when is a value not a value? When it is the value of someone else's property just down the road. That is what we are faced with. However, it will not happen.

Valuations will be carried out during the summer. Expenditure will be incurred. If the general election is delayed until next spring, £250 million of our money will be spent on this system. Night after night throughout the winter, we will discuss the council tax in the unhealthy environment of the Committee Rooms; no one will be listening and no one will be watching. It will all catch up on the Government in the end, just as the poll tax did. In Committee, people laughed and sneered until 2 am. Some hon. Members joked when the Church of England Synod announced that it was against the poll tax. The poll tax and its aftermath will deal the Government a severe and irrevocable political blow.

The council tax, like the poll tax, is ill thought out and is being introduced far too rapidly. We will replace it by amending whatever is on the statute book to make it fairer, more understandable and more acceptable to the British people.

Sir Rhodes Boyson (Brent, North)

I must come to the defence of chip shop owners. As a Lancastrian—I lived there for 35 years before I came to London—I mention every night in my prayers an aunt who had a chip shop. She remembered me in her will and I remember her in my prayers. I do not know what occupation she has in the afterlife, but no doubt it will be done as efficiently as her Lancashire chip shop.

I would not necessarily wish to live next to a Lancashire chip shop, or certainly not in London because the gap between us must be very wide. However, there is no doubt that the chip shop is part of the culture of Lancashire. There is no doubt that in the first and second world wars the Lancashire Fusiliers were part of the strength of our country, with a basis of those potato chips, which were mostly grown in Lancashire, and of the ordinary working-class life there.

However, I do not speak in defence of Lancashire now but on behalf of London, which I represent. The banding system is better than individual rating. If one returns to a system in which everyone's house is looked at every year there will be more valuers and bureaucrats than people living in this country—certainly more than the number of chip shops. There will be valuers everywhere. When one puts in central heating the charge will go up, and we do riot want to return to that system.

I welcome the Government's original idea of three bands, a band for Scotland—it is not my job to look after Scotland—and a brass band for England. Despite having a wife from Wales I am not very well up on that—

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

A pipe band for Scotland.

Sir Rhodes Boyson

Yes, we agree. I am glad that I am taking the Committee with me; a pipe band for Scotland, a brass band, from "Bess's in the Barn" or elsewhere, for England and for Wales—

Mr. Nicholas Bennett

A male voice choir.

Sir Rhodes Boyson

I am assisted by the Minister, and I am grateful for his shrewd intervention. I agree—a male voice choir for Wales.

However, I must disagree to a certain extent as we need a fourth band. After all, there are four points to the compass and I think that things must be in fours if they are to work properly. One can factorise fours, although one cannot factorise threes. Therefore, if there is going to be a banding system, we need a separate band for London and the south-east, because property prices here are so different from those in the rest of the country.

Presumably the three bands were set up because of the differences between prices in Scotland and Wales, so that the same would be charged for a three-bedroomed semi whether in Scotland with the pipe band, in Wales with the male voice choir or in Lancashire with the brass band. We have to do something like "The Lambeth Walk" for London. We have to do something for London, because prices are so much higher here than elsewhere.

That is important because the amount of Government money coming in will obviously be related to the amount raised locally. My people in Brent, North and people in numerous other seats in London will look at this system and say, "Hang on, we weren't happy about the previous system and we wanted to be fair to the Ribble Valley, but the last thing we want is a reverse Ribble Valley factor whereby we lose out in the south of England."

It is evident from studying the figures that 47 per cent. of houses in Barnet are in the top band of the seven. In my constituency, an overwhelming number are similarly in the top bands. However, only 1 per cent. are in the top band in the north-west of England, so they are not comparable. Presumably, the idea behind the bands was that people in a three-bedroomed semi would pay the same in Wales, Scotland and England and also in London, which is in England.

Mr. William O'Brien (Normanton)

If the right hon. Gentleman reads amendment No. 29, which stands in the name of my hon. Friends and myself, he will realise that we are referring to regional banding, which is the very case that he is making now. When he refers to banding, would he not merely consider an appropriate band for the south-east? We should consider the position throughout the country on a regional basis.

Sir Rhodes Boyson

I take the hon. Gentleman's point. I am concerned to get a fair deal for my constituents, and I am sure that that wish is shared by all hon. Members.

The Minister for Local Government and Inner Cities (Mr. Michael Portillo)

Will my right hon. Friend give way?

Sir Rhodes Boyson

The Minister is seeking to intervene; he will solve all our problems.

Mr. Portillo

I am afraid that my right hon. Friend might be in danger of being too fair to the hon. Member for Normanton (Mr. O'Brien). He will be perfectly aware that the Labour party's policy is not to have regional bands, but to go back to the rating system. Under the rating system, the unfairness of those in more expensive properties paying much more—almost unlimited amounts more—than those living in less valuable properties would be manifest. There would be no improvement on the system that we abolished two years ago. I am sure that my right hon. Friend would not wish the hon. Member for Normanton to get away with his comments.

Sir Rhodes Boyson

I welcome my hon. Friend's intervention. I have no doubt that his oratory will be such in his reply that the Labour party's proposal for a rating system will die some time between his speech and the Division.

4.15 pm
Mr. O'Brien

I appreciate the opportunity to repeat my point. I did not say that amendment No. 29 represents Labour party policy, but that it amends the Bill. It states that there are inequalities among the regions. I want to ensure that the record is correct because I am positive that the right hon. Member for Brent, North (Sir R. Boyson) will support the amendment when we come to it.

The Second Deputy Chairman

Order. The hon. Member is quite correct. We have not come to that amendment yet, so let us leave it for the moment.

Sir Rhodes Boyson

I wait with interest to see whether my views influence the Minister's reply. I believe in the salvation of all men and the salvation of souls on the way. If that means that there may be two or three other bands elsewhere in the country that will satisfy people and lead to dancing in the streets this evening, I would not say no to that.

Mr. Bob Cryer (Bradford, South)

Is the right hon. Gentleman thinking of Rawtenstall?

Sir Rhodes Boyson

Rawtenstall is near where I was born. It is nice of the hon. Member for Bradford, South (Mr. Cryer) to guess the place of my birth from my accent.

I have obtained figures from the London Boroughs Association, which is by no means a Labour but a Conservative organisation, on the seven bands in the three areas. Of the 33 Greater London boroughs, 18 will be worse off—most of them are Conservative-controlled—than under the community charge system. The residents will not like that, which is putting it gently. Most people look to a new system to make them at least the same, if not better off than before.

The last thing I want—I have already referred to it—is a reverse Ribble Valley factor. To an extent, the system was changed because of what happened at the Ribble Valley by-election. I do not want the policy to go the other way because we would then have to r edeem the situation again by introducing an alternative policy.

The people of London and the south-east have as much concern for paying their bills as people elsewhere. I do not think that one part of our society is any better or worse than another. They are the same. Because of the high price of mortgages in London, people are already paying a high price for living there. Most of them were born in that city and they want to continue to live there. They know that city and it is where their friends are. In contrast to the previous recession, this one is hitting the London area and people in London are seriously concerned. The proposal for a band to cover London to ensure that we are not depleted financially or treated unfairly is, to my mind, an important one for my constituents and those in the rest of London.

The London Boroughs Association was right to work out an alternative system so that a three-bedroomed house in London should be charged the same, as far as possible, as those elsewhere in the country. That is how the decision should be made.

Mr. Douglas

Much as I love and adore the right hon. Gentleman and his speeches, will he clarify how it would be possible to treat three-bedroomed houses the same throughout the country if capital valuation is based on arm's-length deals? Presumably the right hon. Gentleman believes in the free market—I know he does—so how can one use arm's-length deals to arrive at the capital value?

Sir Rhodes Boyson

I recognise the force of that intervention, but this is a fallen world, even in Scotland. There is no perfect system. All that we can achieve is a reasonable system. The hon. Gentleman will see that I am in one of my most reasonable moods. We should move nearer the kindgom of heaven if we had four bands instead of three. We should hear the hallelujah chorus not only in Rawtenstall but in London if the Minister were to announce that there is to be a fourth band.

I should have preferred the community charge to remain in place, but that is now history. My concern is that the new system will sadly disadvantage one area of the country, in just the same way as the community charge led to low-rated properties in the north being disadvantaged. Unless there is a fourth band for London, it will become a disadvantaged area. We are not prepared to accept that. Unless banding is fair, the people of London will wreak their vengeance in the ballot boxes.

The amendment relates to banding and that is what we are really discussing. I have the greatest respect for the Minister, but I must tell him that between how and the introduction of banding he should provide at least four bands. If not, there will be a Ribble Valley backlash in the south of England if it finds that it is put at a disadvantage compared with the north. A fourth band would ensure that chip shops in London did not have to pay more than chip shops in the north. People in the south would then be able to pay the same for their chips as people in the north.

Mr. David Alton (Liverpool, Mossley Hill)

The right hon. Member for Brent, North (Sir R. Boyson) has made an interesting case for another bank for both chip shops and Brent, North. The amendment moved by the hon. Member for Sheffield, Brightside (Mr. Blunkett) would provide for the valuation of each domestic property, chip shops or otherwise. Ultimately, the bands that apply to each individual householder must be seen to be fair, otherwise people will compare what they have to pay with what is paid by other people in the neighbourhood. If they do not like the comparison, they will be very dissatisfied.

We have put forward various proposals since 1980. At that time I saw the then Secretary of State for the Environment, who is now back in that job, and put to him proposals for a local form of income tax, based on ability to pay. It is not a regressive form of taxation. It is fair and is based on individual banding. One day, the House will have to return to that question.

Amendments Nos. 27 and 28 deal specifically with the compiling of a register of the values of all domestic property. If they accept the amendment the Government would be able to take action about empty housing. When revaluation takes place they would have the opportunity, in line with Shelter's proposals, to draw up a national register of empty properties. The Government argue against requiring every local authority in the country to draw up a list of all empty properties in the area. They say that it would be a cumbersome, bureaucratic and costly exercise.

With 700,000 vacant properties, an exercise along those lines is long overdue, but the Government have set their face against it and say that they do not have the resources and that they do not wish to impose that responsibility on local government. The amendments and new clause would give us the chance, as we carry out a detailed valuation and at no extra cost, to establish the number and location of empty properties in the country today. I notified the Minister's office earlier today that I intended to raise this issue.

Mr. Rupert Allason (Torbay)

Many people regard local authorities as the worst offenders in keeping properties empty for unnecessarily long periods. Does the hon. Gentleman agree that it would be a helpful start in establishing the register that he suggests if local authority figures were published, as the information is immediately available to all local authorities?

Mr. Alton

That is a seductive argument, but unfortunately the facts do not bear out the hon. Gentleman's view. In my own city, for example, 5,289 properties owned by the local authority—8.8 per cent. of the housing stock—are vacant. That is scandalous when many people are without a home, but 6 per cent. of private properties in Liverpool—7,064—are vacant too, as are 931—4 per cent.—of those owned by housing associations.

The situation is indeed horrifying. It is true that local authorities have empty properties—92,000 in all throughout the United Kingdom—which represent 2.5 per cent. of the entire housing stock. Housing associations have 19,700 3.5 per cent. of total housing stock. In the other part of the public sector—the Government's own properties— some 31,000 properties are empty. But in the private sector there are a staggering 586,000 empty properties. That comes to a total of more than 700,000.

There is a clear case for drawing up a register of such properties when the valuation is undertaken. Local authorities would then not have to make it a separate exercise, and we could see the scale of the problem and start to match that major asset of more than 700,000 empty properties with the 2 million people that Shelter estimates are in need of housing.

Mr. David Clelland (Tyne Bridge)

I follow the logic of the argument about registering empty properties, but does the hon. Gentleman agree that it is also necessary to outline why the properties are empty? Would it not be a cruel deception to tell the homeless, as Conservative Members often do, that properties are standing empty waiting for someone to move in? We know that the majority of empty properties, especially those in local authority hands, are empty for good reasons. They are being refurbished or repaired, or perhaps waiting to be re-let. There are reasons why property stands empty, and it is not always available for people simply to move into.

Mr. Alton

That is true, but one answer could be provided by the sweat equity schemes, whereby people put their own efforts and resources into renovating and doing up property currently out of the market. I would like all property which has lain empty for six months, whether it be in the public or private sector, to be submitted to the district valuer for a valuation, placed on the market and made available for families.

I agree that properties are often vacant because resources have not been made available to do them up. Rather than wait for ever for the necessary resources, it would be a better recognition of reality simply to make the properties available for families to get on with the job of improving them.

The situation is pretty grim in a number of cities. In Newcastle, as the hon. Member for Tyne Bridge (Mr. Clelland) will know, there are 6,790 empty properties; in Sheffield there are 8,810, in Birmingham 10,900 and in Manchester 10,760.

Mr. Blunkett

I advise the hon. Gentleman to use such statistics cautiously. Statistics are often produced using figures incorporating houses under improvement, houses that have just been demolished and houses that are being held for other purposes. In Sheffield, for example, properties are being held for the world student games.

Mr. Alton

I know that, and it is fair enough to put it on the record, but I know of properties in my own constituency which have now been earmarked by the local authority for demolition when during the previous two years they have been massively improved, at great expense.

In March, Liverpool city council admitted that its outstanding debt on property demolished in the previous year was £1,255,000, and that was purely on the repayment of loan charges. For a city whose current debt is a staggering £800 million, that is a crazy way to proceed.

4.30 pm

We should not spend all our time simply attacking local authorities or the private sector. I recently wrote to a private landlord in Birmingham and in his reply he admitted that he did not know that he owned a property that had been vacant for some years. Having had this pointed out to him, he has now agreed to take out a restoration and improvement grant for the property. We should not entirely blame the Government either, although, as I have said, there are more than 30,000 Government-owned empty properties.

A general valuation will enable us to prepare a public register that will cost nothing because it will be done as part of the valuation already taking place. I hope that the Government will seriously consider my plea to carry out such a survey and to publish the figures.

Empty houses not only represent a loss of a resource, but are often tinder boxes and a breeding ground for vermin. Like a cancer, decay spreads throughout a terrace or a neighbourhood. Hon. Members are well aware of the curse that an empty property can become. Many families would like to make use of such properties and could turn them into homes.

As part of the same valuation there should be an assessment of properties, such as those mentioned by the hon. Member for Brightside, which are listed as likely to be demolished. In the Bull Ring in St. Andrew's gardens in my constituency, several hundred properties are empty, and many of them would make prefectly good homes. I do not accept the logic of demolition for such properties. Close to that tenement is a similar one which used to be called Myrtle gardens but is now known as Minster court. It was taken over and improved by a private company, Barratts, and every flat was sold. There are creative ways to proceed, and we should not resort to demolition.

There are other ways in which the register could be positively used. For instance, when arriving at valuations for individual householders, we should bear in mind the services that they receive. That is another reason for supporting the amendment. When I look at the museum of horrifying examples, in my city and at the failure to provide services, I can think of good reasons for people to receive substantial rebates and a reduced assessment.

For 13 weeks, some of my constituents have not had their bins emptied. Those areas are festering and piled high with rubbish. I wrote to a junior Minister, who suggested that I should contact the Keep Britain Tidy group asking it to run a local campaign. Many parts of Liverpool are now a public health hazard. There are rats as big as cats; a stench from noxious refuse; and even children's playgrounds piled high with rubbish. I am sure that the Minister will agree that people are entitled to better than that.

The Environmental Protection Act 1990 contains powers enabling the Government to bring contractors into areas in which people are not receiving services. If Horse Guards parade, the streets around Buckingham palace or even Marsham street itself were piled high with refuse, those powers would undoubtedly be used to remove it. Ministers should think seriously about intervening and not leave community charge payers to stew in their own juice.

The valuation should take account of demography and social structure. Whole communities should not be penalised because of the attitudes of a minority. I hope that this time next year my constituents will not be sent bills for £70.99 in lieu of charges that should have been levied against people who did not pay last year. That is contrary to every principle of natural justice. People who paid their full bill last year should not have to find almost £71 this year to pay for other people's services. If the local gas board arrived at my home and asked me to pay for gas that I had not consumed and threatened to cut me off if I did not pay, I would feel extremely aggrieved.

Labour's non-payment campaign has led to a great deal of hardship for many ordinary honest people in the city of Liverpool. They have been caught up like world war one soldiers in the trenches, while the generals fire across their heads. No doubt this is also true of many other cities. That is why I am anxious that, before we proceed any further with the Bill, the Minister gives us a categorical undertaking that there will be a right of redress for citizens. In future, residents should not be forced to pay double bills to make up for those who refused to pay in the previous year. That includes Members of Parliament, who have not paid but are perfectly able to meet their bills. I am not talking about people who are unable to pay but about those who, for political reasons, refused to pay and who have left a legacy of accumulated debts that have to be made good by those who have paid.

A valuation that does not take those factors into account will be as worthless as the unfair system that it will replace. The amendment now before the Committee would require information on the estimated value of each property. The unamended clause would only give us a list of all properties, with minimal details of the band in which they appear. That would not be enough information. The rating system advocated by the hon. Member for Brightside is not one that I would advocate, but his amendment comes closer to what I should like to see happen than would the unamended clause. Therefore, I commend it to the Committee.

Mr. Richard Tracey (Surbiton)

Like my right hon. Friend the Member for Brent, North (Sir R. Boyson) I speak primarily with London in mind. He has quite rightly drawn the attention of the Committee to the wide disparities that may occur if one simple valuation is conducted across the whole of England, particularly when Scotland and Wales are to be treated differently. I speak for my right hon. Friend as well in paying tribute to the London Boroughs Association for the hard work that it has done in pointing out the many questions that need to be answered by my hon. Friend the Minister and his colleagues in the Department of the Environment before this goes ahead. I hope that my hon. Friend the Minister will give the House a number of detailed answers.

The hon. Member for Sheffield, Brightside (Mr. Blunkett) has already covered a lot of ground in a tour d'horizon. He quoted a number of the briefs that he has been sent not only by local government associations but by the likes of the Confederation of British Industry. Clearly, valuation and how it is to be conducted are at the core of the policy for local government finance that the Government are proposing.

When this alternative to the community charge was suggested by the Government, I felt that a valuation that would work, and would even out many of the regional differentials, would be one based on rebuild costs. One of the big problems in London, which causes disparity in values, is high land value. The properties do not cost that much more to build or rebuild. We all know that insurance companies are happy that valuation for properties is done by the occupiers. We are sent a chart of costs carefully worked out by expert surveyors and valuers from which we calculate, according to the number of rooms, or the size of the rooms, how much it would cost to rebuild our homes. Last time that I renewed my house insurance, my insurance company asked me to employ that method.

If we followed that form of valuation, it would be possible for the public to be much involved in the process. They would feel, given the questions that they were asked, that they were producing a fair valuation. If necessary, the valuers appointed by the commissioners would be able to check specific valuations to ascertain whether people were giving incorrect information. Perhaps my hon. Friend the Minister for Local Government and Inner Cities will be able to hint whether that is an avenue down which we might be going.

I ask my hon. Friend to tell the Committee what the thinking is within the Department of the Environment about the current prospect of regional disparities. The London Boroughs Association has produced charts—I know that copies have been sent to the Department in the consultation process—that show that in greater London 0.9 per cent. of properties would be in band A, whereas 15.7 per cent. would be in Band G. There is no especially good and acceptable distribution across the bands. As has been said by the association and reported to the Committee by my right hon. Friend the Member for Brent, North, in the north 46.6 per cent. of properties would be in band A and only 1.8 per cent. in band G. The most stark example of the extraordinary banding in London is provided by the borough of Barnet, where 47 per cent. of houses would fall into band G. That cannot be acceptable to London Members for various reasons which I shall spell out.

The only region where there is an acceptable spread across the bands which does not change under the calculations made by the LBA is the south-west. In band A there would be 8.9 per cent. of properties. There would be 16.1 per cent. in band B, 24.4 per cent. in band C, 20.8 per cent. in band D, 15.2 per cent. in band E, 7.9 per cent. in band F and 6.7 per cent. in band G. The south-west is the LBA's model because in its new plan for regional banding the percentages remain the same.

The result of the LBA's new plan is that 6.8 per cent. of properties in greater London would be in band A. There would be a spread of properties across the bands, with 7.8 per cent. coming into band G. With regional banding, it is possible to come close to having 7 per cent. of properties in band G and 7 to 8 per cent. in band F without the enormous disparity that currently occurs when we come to band A.

It is important to those of us who represent London constituencies and who speak for the London boroughs to ask my hon. Friend the Minister to tell us at least that the Government are not ruling out the possibility of regional banding. There should not be only one English band. There should not be a London band and then a band for the rest, as I think my right hon. Friend the Member for Brent, North was suggesting. There is an argument for perhaps five or six bands for the English regions.

The amount of Government grant that local authorities will receive under the new finance system that is introduced by the council tax will depend on the moneys that they are able to raise locally. In areas such as London, where house prices are high, more money will be raised through the new tax under the suggested banding system, and I assume that the boroughs will receive less in grant. As a result, London taxpayers will be subsidising the services that are enjoyed by their counterparts further north.

4.45 pm

The LBA's argument should be accepted by the hon. Member for Dagenham (Mr. Gould). The borough within his constituency is one of the sensible Labour-controlled authorities. Barking and Dagenham are still fully participating members of the LBA, as are the boroughs that are controlled by the Liberal Democrats in London.

The suggestions that have been made by the L BA during the consultation process should be taken seriously by the Government, who should respond to them. I look forward to my hon. Friend the Minister shedding more light on the direction in which the Government will be heading to correct what are clearly possible disparities.

Mr. James Hill (Southampton, Test)

My hon. Friend the Minister for Local Government and Inner Cities will be visiting Southampton on Friday and I wish to suggest one or two points that could be made when, I hope, he radiates to the public. The hon. Member for Liverpool, Mossley Hill (Mr. Alton) talked about the extra charges that are the result of non-payment of the community charge. In Southampton, that charge is £50.95 per person. Part of that sum reflects the interest charges on the moneys that had to be borrowed to enable the authority to make its budget. My hon. Friend can make great play of that.

It is clear that amendment No. 27 is a wrecking amendment. If every individual house and outbuilding and every individual piece of land has to be valued, the task will not be completed before it is necessary to start again. Simplicity will be the answer. I even think that a seven-band system will have one band too many. In a city such as Southampton there could be duplication of styles, so that entire council estates could be valued simply by obtaining plans from the local authority and making a valuation on that basis instead of setting out with tape and measure. If valuations are not carried out on that basis, we shall be faced with overwhelming costs and we shall not be ready for 1993.

Mr. Portillo

In reply to my hon. Friend the Member for Southampton, Test (Mr. Hill), I am astonished when he tells me that the Southampton local authority has had to levy a £50 non-collection charge. I understood that that authority liked to posture as a model of modern Labour Kinnockite government. For that local authority to be so inefficient and inept at collecting the community charge says much about its administration.

If I were a citizen of Southampton I should be angry at having to pay £50 to compensate for the fact that other people had not paid, which must be largely attributable to the failure of the city council.

Mr. Bryan Gould (Dagenham)

Does the Minister of State recall the Prime Minister describing the poll tax as uncollectable? Is not the fault implicit in the poll tax and nothing to do with efficient, hard-working local authorities struggling with an unworkable system?

Mr. Portillo

No, it is not implicit in the community charge. The collection figures for last year have already reached 86 per cent. and will rise further. Some local authorities, including inner-city and even Labour-controlled authorities, have managed to make a fair fist of collecting the community charge, while others, including Southampton, have failed dismally to collect it.

Mr. Martin M. Brandon-Bravo (Nottingham, South)

My hon. Friend the Minister of State was recently in the city of Nottingham. To illustrate the point made by my hon. Friend the Member for Southampton, Test (Mr. Hill), may I point out that the city of Nottingham is charging every resident £44.70 because of the iniquitous slip-up of not collecting last year, whereas the Conservative-controlled neighbouring authority of Gedling is charging only £3.40? Neighbouring Rushcliffe council was to charge £9 as a result of non-collection and other financial clauses, but made savings of £9, so that the residents of Rushcliffe have not a penny more to pay. That is the difference between Labour-controlled Nottingham city council and two neighbouring Tory-controlled councils.

The Second Deputy Chairman

Order. Perhaps we can now return to the amendments before us.

Mr. Portillo

The comments of my hon. Friend the Member for Nottingham, South are, none the less, revealing. The most remarkable example is Lambeth, where the charge for non-collection is £140, compared with Wandsworth, where the total charge is £36.

Mr. Allen McKay (Barnsley, West and Penistone)

Before the Minister leaves that point, he should think more carefully about what he is saying about local government. The Secretary of State quoted my local authority as one of the best collectors of the community charge. It is charging £19.77 for non-collection, of which £14.80 is interest charges for money that it had to borrow simply because the community charge was so much more difficult to collect than the rates.

It is apparent from local authorities throughout the country that the charge is being made not because people have not paid—they have paid—but because they have paid at the end of the year, whereas they used to pay rates every month. That is the main cause of the problem. People have been taken off the register because they have died or left the district and the local authority's calculations have been unable to take that into account. The fault lies not with the local authority or the collectors, but with the silly system under which they have had to work.

Mr. Portillo

I am most grateful to the hon. Gentleman, because he makes my point for me. In Southampton, the full year—

The Second Deputy Chairman

Order. I have been very tolerant, but I shall not allow a debate that does not relate to the amendments before us.

Mr. Portillo

In that case, Madam Deputy Chairman, the point will have to remain for another day.

Although the hon. Member for Sheffield, Brightside (Mr. Blunkett), who opened this debate, made a clever speech, by his own high standards it was not outstandingly honest. He made a series of claims which, on reflection, he might regret. For example, he said that, as from today, valuers would value property on the basis of the Bill. He knows that that is not true and that the Bill must make progress to another place and receive royal assent, which will all take time. He also knows that valuers will not be able to make valuations before they know many of the important details to which he referred.

The hon. Gentleman tried to make the House believe that there was some inconsistency between the Bill's introduction and a consultation period on the exact details of the council tax. There is no inconsistency between those two points. We have always said that we want to introduce the council tax by 1 April 1993. To make that possible, we need Parliament's authority to spend money to start the valuation process. Clearly, all the details of that valuation have not yet been worked out.

I say that perfectly straightforwardly—moreover. I make a virtue of it, because we are in a consultation period. We have made firm proposals for the outlines of the tax, but have never claimed that all the details of the tax were already in place or should be in place, because we have always recognised that the tax will be run by local authorities to collect their own revenue. We must have the opinions of local authorities and experts.

The hon. Member for Brightside seemed to imply that the Audit Commission opposed the council tax. In an interview on the "Today" programme this morning, Mr. Peter Hobday asked Mr. Howard Davies whether he was suggesting that the tax was unworkable, and he said that he was not. Mr. Howard Davies has now written to The Times and said: You reported that the Audit Commission believes 'the Government's new council tax is unworkable in its proposed form'. This is not so. That could not be a clearer denial of the points that the hon. Gentleman sought to attribute to the Audit Commission.

Mr. Blunkett

I, too, heard Howard Davies on the "Today" programme. He said that the system proposed by the Government could not be worse than the poll tax.

Mr. Portillo

The way in which I quoted Howard Davies was perfectly accurate.

The hon. Member for Brightside then seemed to imply that the Royal Institution of Chartered Surveyors was against the new tax. I had a private lunch with members of the RICS yesterday and am not at liberty to divulge exactly what was said. They have not yet put in their representation but will do so by the end of this week. Without betraying a confidence, I can reveal that they were supportive of the council tax, in particular the principle of a tax that allocates properties to bands, as they could see the immense administrative advantages in such a system. As professionals in that area, they had no difficulty with the concept that large swathes of property could be readily allocated to bands, which appealed to them as administratively simple and straightforward. Naturally, they will have detailed comments to make on the council tax and I shall welcome those. 1 am anxious that my officials should develop a close working relationship with professional bodies like the RICS, because I am determined that we should get the details of the Bill right.

The speech of the hon. Member for Brightside was not outstandingly honest because he tabled an amendment that sought to bring about a return to the rating system and then chose not to speak to it. He made a great speech about the council tax, but his amendment was about returning to the rating system. I am not surprised that he chose not to talk about that. If he intends to do so under the next amendment, I shall give my riposte then—or one of my hon. Friends will do so if they have the good fortune to wield the mallet.

Perhaps I should explain to the hon. Member for Liverpool, Mossley Hill (Mr. Alton) that the council tax will be based on a banding system of values. For that reason, it will not be susceptible to the treatment that he should like to give it. It will not necessitate detailed knowledge of every property but will be much more broad-brush that the old rating system. Many properties will not have to be inspected because they will clearly fall into one band or another. Therefore, the hon. Gentleman's idea of having a register of empty properties, although ingenious with merits in its own right, does not flow well from the Bill.

As the hon. Gentleman comes from Liverpool, I understand that he should want to raise that important issue. One is outraged not only by the non-payment—to which I shall not allude further—that has occurred in Liverpool but by the empty properties there. Although my hon. Friend the Member for Teignbridge (Mr. Nicholls) said that there may be reasons for empty properties, there are tremendous disparities between local authorities. Liverpool's performance on empty properties has been lamentable.

Some of the ideas of a citizens' charter which the Conservative party is developing seemed to run through the hon. Gentleman's speech. Yes, people have a right to better service from local authorities and the indicator of empty properties is important. It is a scandal that local authorities are keeping properties empty when there are people in temporary accommodation. We shall want to pursue directly some of those issues in our proposals for a citizens' charter. I rather doubt whether the Government would be in favour of a national register of such properties, but I shall refer that to my right hon. Friend the Secretary of State for his consideration. However, we need to look carefully at requiring local authorities to deliver decent standards of service against objective criteria.

5 pm

Mr. Alton

I am grateful to the Minister for agreeing to refer that matter to the Secretary of State, and I hope that he makes progress on it. He will recall that I also asked him about the right of redress where there are discrepancies in services provided in different banded authorities, so that, for instance, in areas where bins have not been emptied for 13 weeks citizens would have the right of redress. Will the Minister ensure that something is done to put some teeth into the legislation and that it is enforced? I referred to the Environmental Protection Act 1990, which has not been enforced with regard to councils in Liverpool.

Mr. Portillo

The Environmental Protection Act gives the citizen the right to take action against a local authority. Citizens may not yet have availed themselves of those rights, perhaps because they are not aware of them, but the rights are there. The citizen is already enfranchised, but we may wish to look further at other ways in which to enfranchise the citizen.

Where I might to some extent part company with the hon. Gentleman is that I would put more emphasis than he would on the desirability of arming the citizen with choice and competition, whereas he might put more emphasis on—if I might describe them as such—bureaucratic solutions to such problems. However, we are on the same ground in saying that the citizen needs to be enfranchised, needs to have defence and needs to have redress against local authorities which fail to deliver the services to which people are entitled.

I come with pleasure to the points made by my right hon. Friend the Member for Brent, North (Sir R. Boyson). He and my hon. Friend the Member for Surbiton (Mr. Tracey) raised difficult issues to which the Government have given serious thought. My right hon. Friend was right to describe this as a fallen world and cautioned us against looking for perfection in these matters.

One is faced with two possibilities. If we went for regional bands, someone in the north-east of England might ask why he, living in a £50,000 house, should pay as much in council tax, which has a property element within it, as someone living in the south-east in a £150,000 house. I think that my right hon. Friend would agree that that question would cause considerable difficulty. My right hon. Friend raised the other point, which is why a person in the south-east living in a three-bedroomed house should pay more than someone living in a similar house in the north-east.

We have given considerable thought to those matters. We have put forward the firm proposal that we should base our council tax on a national banding system and, furthermore, that there should be seven bands, and we have suggested what the values of those bands should be. We are in a consultation period and we have made a firm proposal. I anticipate that the Government will continue to find that attractive. But it would be absurd to go through a consultation period without listening carefully to all the representations made, not least from someone who speaks with the authority and experience of my right hon. Friend. Therefore, we shall have to consider carefully what he said. But I am bound to say that we gave much thought to the matter before introducing the proposals.

Sir Rhodes Boyson


Mr. Portillo

After I have given way to my right hon. Friend, I will put some other points to him that I should like him to consider.

Sir Rhodes Boyson

I am grateful to hear that the Minister is still in the consultation period, and I shall be interested to see how much today's debate influences the outcome. I remind my hon. Friend that my hon. Friend the Member for Surbiton (Mr. Tracey) said that, if we adopted rebuilding values rather than capital values, the great discrepancies which the price of land gives rise to in London compared with elsewhere would be largely minimised.

Mr. Portillo

My right hon. Friend is right in that respect, but then another problem arises. My right hon. Friend should remember how, under the rating system, one of the great problems was the obscurity of the rateable value. People could not relate to a rateable value. They would never be in the business of renting their properties, on which the rateable value was based. There was scarcely any market in rented housing, so people were left with entirely synthetic spurious values. The same problem arises with rebuilding costs or anything like that. Those are synthetic, spurious values which the average person would not recognise. Under the council tax that we propose, they will be able to see clearly the relationship between the value on which they are paying the tax and the value of the house as they recognise it—as, for example, it might appear in an estate agent's window.

Mr. David Bellotti (Eastbourne)

In the light of the comments that the Minister has just made, I remind him of some comments that he made on 19 October last year, the day after my election to the House. I am informed that he said: Taxes on people's homes are unfair. Property values bear little relation to people's ability to pay. Have you done a U-turn, are you standing on your head or do you have some other information to give us?

Mr. Portillo

I am sure that you, Miss Boothroyd, to whom those questions were addressed, are doing none of those things, and it is extraordinary that the hon. Gentleman should suggest it.

I have frequently expressed my disappointment that we were unable to convince people of the fairness of the community charge. However, I am deeply satisfied that we are now proposing a council tax which has two elements—a property and a personal element. What makes me unhappy about the Labour party's proposal is that it still makes no distinction between households with one person and those with a larger number of people. One of the strengths of the council tax is that different rates of tax will be applied depending on the number of people in the household and that rate will vary according to what the local authority is spending.

Mr. Tracey

Let me bring my hon. Friend back to the question of valuation based on capital values as opposed to rebuilding costs. I cannot accept that a rebuild cost valuation is spurious in the way that the old rateable value based on some theoretical rent was. He is right to say that nobody could recognise that theoretical rent, but people could certainly recognise the rebuild cost. The insurance companies recognise those rebuild costs and if an owner is unfortunate enough to have his house burnt out or severely damaged, the insurance company rebuilds it on those values. Therefore, it is relevant and recognisable by the people.

Mr. Portillo

My hon. Friend and I may not entirely agree on that point. I think that there is a real problem in telling people that they will be taxed on a value which is not the value that they think of as the value of their house—the value for which they can sell it if they so choose. Rebuilding costs have many problems. For example, pre-1920 houses have different rebuilding costs from houses built after that date. One just introduces another area of dispute when one goes for something such as rebuilding costs. One then ends up with the problem that within, for example, the borough of Westminster, the rebuilding cost of a small penthouse in the most salubrious part of Kensington is rather low because it is only a small property, whereas the rebuilding cost of a five-bedroomed dilapidated house in north Kensington, perhaps under the flyover, is much higher. It would be difficult to convince people that that was a fair system.

I return to the defence of my right hon. Friend the Member for Brent, North, who said that it was difficult to achieve perfection in these areas, but I am concerned to protect the taxpayers in my right hon. Friend's constituency and in my own. Let us face it, that is why we have done a number of important things. For example, we have suggested that, within the council tax, the maximum variation in the tax that households of equal size should pay would be that those at the top end should pay about two thirds more than the average and those in the least valuable properties should pay about two thirds of the average. That provides protection, and it is a great improvement on the rating system.

We have taken £140 off the community charge and put it on value added tax. In doing so, we have massively altered the balance between what is raised locally and what is raised nationally. The proportion of nationally and locally raised taxation will continue under the new system, which will provide a great deal of protection for my right hon. Friend's constituents. I should not be surprised—indeed, I would lay odds on it—if many of his constituents were not better off under the council tax than they were last year under the community charge or under the rating system the previous year.

Although people will compare the difference between what they were paying in the last year of the community charge and the first year of the council tax, it is a robust defence to say that we have made an important change in what we seek to take from local people. That will be continued under the new council tax, and we shall seek to raise from people sums of money that we believe are sustainable and fair.

For all those reasons, the Committee would be right to give Parliament the authority outlined in the clause to provide the funds so that we can begin the valuation process. As the Audit Commission said, it would he desirable to introduce the new tax by 1 April 1993. The Labour party has claimed that it would like the community charge to go as fast as possible, but it now seems unwilling to co-operate in ensuring the means to replace it by 1993.

The consultation period on the council tax has not ended. We shall take seriously the points made by my right hon. Friends, by the professional bodies and by local authorities. The fact that we are today seeking authority to begin the process of financing the valuation process in no way touches the consultation period, nor does it seek to prejudge it. I am sure that my right hon. and hon. Friends will agree that it is right that we should settle the details as quickly as possible and be able to start the valuation process. Despite the important doubts that my right hon. and hon. Friends have expressed today, I hope that they will accept the clause and reject the amendments.

Mr. Blunkett

I should like to make it clear to the hon. Member for Liverpool, Mossley Hill (Mr. Alton) that those of us who have worked hard and long to establish the idea of a citizens' charter, of quality and of the individual's right to redress are committed to ensuring that people's bins are emptied regularly and that houses are let so that people on the housing waiting list or who are homeless have a roof over their heads. We are also committed to ensuring that that is done in a participatory way which enhances the working of local democracy. It is certain that no citizens' charter from any political party will prevent in an industrial dispute problems such as those that have arisen in Liverpool. A financial penalty on a local authority would mean merely that it would be in the authority's interests to settle at whatever rate was demanded by those taking action against it, whatever the circumstances and whatever the long-term cost to the community. That would be farcical and untenable.

Mr. Alton

Surely the hon. Gentleman would be the first to agree that, in a city where every local authority employee's redundancy notice from the political masters was delivered in a fleet of private hire cars on one occasion, and in a city which is currently awash with refuse and rubbish because of the local authority's failure, there must be not merely a right of redress but direct intervention—if necessary by the use of private companies—to remove the refuse. That would ensure that people did not become the victims, which is what is happening in Liverpool at the moment.

Mr. Blunkett

Some of us are in the business of trying to settle rather than exacerbate disputes, and of finding solutions for the people of Liverpool rather than scoring petty political points. We shall continue to try to do that. I put it on record that everyone in the country expects local Government to ensure that houses are let and that people on the waiting list who are in desperate need of decent accommodation get it. We shall do our best to ensure that that happens through the quality commission.

I shall deal briefly with the comments made by the right hon. Member for Brent, North (Sir R. Boyson) and by the hon. Member for Surbiton (Mr. Tracey). Although they dealt with the wrong amendments, we share their worries and feelings. I shall encourage them to vote with us on this and a later amendment.

With reference to the comments made by the hon. Member for Southampton, Test (Mr. Hill), one cart hardly blame a local authority that is taking people to court because of the cost of interest rates incurred last year. Those interest rates were occasioned by the Government. Local authorities have had to recoup last year's losses, to predict this year's and face another two years of continuing losses because of the poll tax. Everyone has accepted that, not least the Audit Commission, as my hon. Friend the Member for Dagenham (Mr. Gould) will no doubt state in a moment.

I was entertained by the idea that people would be happy with a system that took a couple of sample properties and applied its findings to the whole of a housing estate. I do not think that people would be too pleased about that if it were carried out in practice. They may have one or two things to say about it in the run-up to the general election.

5.15 pm
Mr. Hill

First, several well-known Labour supporters still have not paid their community charge in Southampton. Secondly, I did not suggest that there would be two valuations for the whole of the city. I said that seven bands were sufficient and that for many properties—certainly those used for council accommodation—blueprints in the civic centre could be used for valuation without even a site visit. That is common practice in an overall valuation, which is not detailed.

Mr. Blunkett

I respect the fact that estate agents—I know that the hon. Gentleman knows all about this—will be able to make a spot guess at a sale price in a given area. I ask the hon. Gentleman and other hon. Members to ponder whether individuals who are charged on that basis will be happy that someone is sitting behind a desk taking a spot guess at the market price of a property. That is no way either to value a property or to impose a tax which will be based on the value of the property in a particular band.

I am grateful for the Minister's compliments, and I shall meet head on his charge of dishonesty. I accept that valuers will not go out next week—they went out last week and in April. They were instructed to make valuations from the desk top from 22 February to I March, and they were then asked to do a quick spot check in April but without letting anyone know. It was only when we revealed that fact that the system changed—following our revelation on 26 April, the valuation process that had just begun was stopped. The valuers were working and will work as soon as the House of Lords has given its approval—presumably next week—and as soon as the royal assent has been gained. I accept that the dishonesty will not take place tomorrow, but in a fortnight's time. The difference is so spurious that it shows how the Minister has had to scrape the barrel to accuse me of dishonesty.

On 26 April and again on 29 April, the Secretary of State vehemently denied that there would be a move away from the seven bands. In fact, he repeated 10 days later that there was no question, whatever the consultation produced, of moving away from them. Therefore, for the Minister to tell his Back Benchers tonight that the consultation between now and Friday is serious is extremely misleading and, to use his word and that of my hon. Friend the Member for Dagenham, dishonest. The Royal Institution of Chartered Surveyors can speak for itself, but if that is dishonest, it will be surprised to hear what the Minister said, because placing properties in bands for a rolling continuing valuation is different from using bands as a method of valuation in the first place.

The Minister's other charge of dishonesty was that I should have been arguing for a return to the rates. I rest my case by saying that the next group of amendments deal precisely with that issue. The case that we have made this afternoon is unanswerable, and if Conservative Members do not vote for the amendment, they will live to regret it.

Question put, That the amendment be made:—

The Committee divided: Ayes 191, Noes 278.

Division No. 167] [5.20 pm
Abbott, Ms Diane Caborn, Richard
Adams, Mrs Irene (Paisley, N.) Callaghan, Jim
Allen, Graham Campbell, Menzies (Fife NE)
Alton, David Campbell, Ron (Blyth Valley)
Archer, Rt Hon Peter Canavan, Dennis
Armstrong, Hilary Carlile, Alex (Mont'g)
Ashdown, Rt Hon Paddy Carr, Michael
Ashley, Rt Hon Jack Cartwright, John
Ashton, Joe Clark, Dr David (S Shields)
Banks, Tony (Newham NW) Clarke, Tom (Monklands W)
Barnes, Harry (Derbyshire NE) Clelland, David
Barnes, Mrs Rosie (Greenwich) Cook, Robin (Livingston)
Barron, Kevin Cryer, Bob
Battle, John Cummings, John
Beckett, Margaret Cunliffe, Lawrence
Beith, A. J. Cunningham, Dr John
Bell, Stuart Darling, Alistair
Bellotti, David Davies, Ron (Caerphilly)
Bennett, A. F. (D'nt'n & R'dish) Davis, Terry (B'ham Hodge H'I)
Bermingham, Gerald Dewar, Donald
Blair, Tony Dixon, Don
Blunkett, David Dobson, Frank
Boyes, Roland Douglas, Dick
Bradley, Keith Duffy, A. E. P.
Bray, Dr Jeremy Dunnachie, Jimmy
Brown, Nicholas (Newcastle E) Dunwoody, Hon Mrs Gwyneth
Brown, Ron (Edinburgh Leith) Eastham, Ken
Edwards, Huw Martin, Michael J. (Springburn)
Ewing, Mrs Margaret (Moray) Martlew, Eric
Fatchett, Derek Meale, Alan
Faulds, Andrew Michael, Alun
Fearn, Ronald Michie, Bill (Sheffield Heeley)
Field, Frank (Birkenhead) Michie, Mrs Ray (Arg'l & Bute)
Fields, Terry (L'pool B G'n) Mitchell, Austin (G't Grimsby)
Flynn, Paul Moonie, Dr Lewis
Foot, Rt Hon Michael Morgan, Rhodri
Foster, Derek Morley, Elliot
Foulkes, George Morris, Rt Hon J. (Aberavon)
Fraser, John Mowlam, Marjorie
Fyfe, Mrs Maria Mullin, Chris
Galbraith, Sam Murphy, Paul
Garrett, John (Norwich South) Nellist, Dave
Godman, Dr Norman A. O'Brien, William
Golding, Mrs Llin O'Hara, Edward
Gordon, Mildred Orme, Rt Hon Stanley
Gould, Bryan Parry, Robert
Graham, Thomas Patchett, Terry
Griffiths, Nigel (Edinburgh S) Pike, Peter L.
Griffiths, Win (Bridgend) Powell, Ray (Ogmore)
Hain, Peter Prescott, John
Hardy, Peter Primarolo, Dawn
Harman, Ms Harriet Quin, Ms Joyce
Haynes, Frank Radice, Giles
Heal, Mrs Sylvia Randall, Stuart
Henderson, Doug Redmond, Martin
Hinchliffe, David Reid, Dr John
Hoey, Ms Kate (Vauxhall) Richardson, Jo
Hogg, N. (C'nauld & Kilsyth) Robinson, Peter (Belfast E)
Home Robertson, John Rooney, Terence
Howells, Geraint Ross, Ernie (Dundee W)
Howells, Dr. Kim (Pontypridd) Ruddock, Joan
Hughes, John (Coventry NE) Salmond, Alex
Hughes, Robert (Aberdeen N) Sedgemore, Brian
Hughes, Roy (Newport E) Sheerman, Barry
Hughes, Simon (Southwark) Sheldon, Rt Hon Robert
Illsley, Eric Short, Clare
Ingram, Adam Skinner, Dennis
Janner, Greville Smith, Andrew (Oxford E)
Johnston, Sir Russell Smith, C. (Isl'ton & F'bury)
Jones, Barry (Alyn & Deeside) Smith, Rt Hon J. (Monk'ds E)
Jones, Martyn (Clwyd S W) Smith, J. P. (Vale of Glam)
Kaufman, Rt Hon Gerald Soley, Clive
Kinnock, Rt Hon Neil Spearing, Nigel
Kirkwood, Archy Steel, Rt Hon Sir David
Lambie, David Steinberg, Gerry
Lamond, James Strang, Gavin
Leadbitter, Ted Taylor, Mrs Ann (Dewsbury)
Leighton, Ron Taylor, Matthew (Truro)
Lestor, Joan (Eccles) Thomas, Dr Dafydd Elis
Lewis, Terry Thompson, Jack (Wansbeck)
Litherland, Robert Turner, Dennis
Livingstone, Ken Wallace, James
Livsey, Richard Warden, Gareth (Gower)
Lloyd, Tony (Stretford) Watson, Mike (Glasgow, C)
Loyden, Eddie Welsh, Andrew (Angus E)
McAllion, John Welsh, Michael (Doncaster N)
McAvoy, Thomas Wigley, Dafydd
Macdonald, Calum A. Williams, Rt Hon Alan
McFall, John Williams, Alan W. (Carm'then)
McKelvey, William Winnick, David
McLeish, Henry Wise, Mrs Audrey
McMaster, Gordon Worthington, Tony
McNamara, Kevin Young, David (Bolton SE)
McWilliam, John
Madden, Max Tellers for the Ayes:
Mahon, Mrs Alice Mr. Allen McKay and
Marek, Dr John Mr. Robert Wareing.
Marshall, David (Shettleston)
Adley, Robert Arnold, Sir Thomas
Aitken, Jonathan Ashby, David
Alison, Rt Hon Michael Aspinwall, Jack
Allason, Rupert Atkinson, David
Amess, David Baker, Nicholas (Dorset N)
Amos, Alan Batiste, Spencer
Arbuthnot, James Beggs, Roy
Bellingham, Henry Gorman, Mrs Teresa
Bendall, Vivian Grant, Sir Anthony (CambsSW)
Bennett, Nicholas (Pembroke) Greenway, Harry (Ealing N)
Benyon, W. Greenway, John (Ryedale)
Biffen, Rt Hon John Gregory, Conal
Blackburn, Dr John G. Griffiths, Peter (Portsmouth N)
Blaker, Rt Hon Sir Peter Grist, Ian
Body, Sir Richard Ground, Patrick
Bonsor, Sir Nicholas Grylls, Michael
Boscawen, Hon Robert Hague, William
Boswell, Tim Hamilton, Hon Archie (Epsom)
Bottomley, Peter Hamilton, Neil (Tatton)
Bowden, A. (Brighton K'pto'n) Hannam, John
Bowden, Gerald (Dulwich) Hargreaves, Ken (Hyndburn)
Bowis, John Harris, David
Boyson, Rt Hon Dr Sir Rhodes Hayes, Jerry
Braine, Rt Hon Sir Bernard Hayward, Robert
Brandon-Bravo, Martin Heseltine, Rt Hon Michael
Brazier, Julian Hicks, Mrs Maureen (Wolv' NE)
Bright, Graham Hicks, Robert (Cornwall SE)
Brooke, Rt Hon Peter Higgins, Rt Hon Terence L.
Brown, Michael (Brigg & Cl't's) Hill, James
Bruce, Ian (Dorset South) Hind, Kenneth
Buchanan-Smith, Rt Hon Alick Holt, Richard
Buck, Sir Antony Hordern, Sir Peter
Burt, Alistair Howard, Rt Hon Michael
Butcher, John Howarth, G. (Cannock & B'wd)
Butler, Chris Hughes, Robert G. (Harrow W)
Butterfill, John Hunt, Sir John (Ravensbourne)
Carrington, Matthew Hunter, Andrew
Carttiss, Michael Hurd, Rt Hon Douglas
Cash, William Irvine, Michael
Channon, Rt Hon Paul Irving, Sir Charles
Chapman, Sydney Jack, Michael
Chope, Christopher Jackson, Robert
Churchill, Mr Janman, Tim
Clark, Rt Hon Alan (Plymouth) Jessel, Toby
Clark, Dr Michael (Rochford) Johnson Smith, Sir Geoffrey
Clark, Rt Hon Sir William Jones, Robert B (Herts W)
Clarke, Rt Hon K. (Rushcliffe) Jopling, Rt Hon Michael
Colvin, Michael Kellett-Bowman, Dame Elaine
Coombs, Anthony (Wyre F'rest) Key, Robert
Coombs, Simon (Swindon) Kilfedder, James
Cope, Rt Hon John King, Rt Hon Tom (Bridgwater)
Couchman, James Kirkhope, Timothy
Cran, James Knight, Greg (Derby North)
Davies, Q. (Stamf'd & Spald'g) Knowles, Michael
Davis, David (Boothferry) Knox, David
Day, Stephen Lang, Rt Hon Ian
Devlin, Tim Latham, Michael
Dickens, Geoffrey Lawrence, Ivan
Dicks, Terry Lee, John (Pendle)
Dorrell, Stephen Leigh, Edward (Gainsbor'gh)
Douglas-Hamilton, Lord James Lennox-Boyd, Hon Mark
Dover, Den Lester, Jim (Broxtowe)
Dunn, Bob Lilley, Rt Hon Peter
Dykes, Hugh Lloyd, Sir Ian (Havant)
Eggar, Tim Lloyd, Peter (Fareham)
Evans, David (Welwyn Hatf'd) Lord, Michael
Fairbairn, Sir Nicholas Luce, Rt Hon Sir Richard
Fallon, Michael Lyell, Rt Hon Sir Nicholas
Favell, Tony McCrindle, Sir Robert
Fenner, Dame Peggy Macfarlane, Sir Neil
Field, Barry (Isle of Wight) MacGregor, Rt Hon John
Finsberg, Sir Geoffrey MacKay, Andrew (E Berkshire)
Fookes, Dame Janet Maclean, David
Forman, Nigel McLoughlin, Patrick
Forsyth, Michael (Stirling) McNair-Wilson, Sir Michael
Fowler, Rt Hon Sir Norman McNair-Wilson, Sir Patrick
Fox, Sir Marcus Madel, David
Franks, Cecil Malins, Humfrey
French, Douglas Maples, John
Fry, Peter Marland, Paul
Gale, Roger Marlow, Tony
Gardiner, Sir George Marshall, John (Hendon S)
Gill, Christopher Marshall, Sir Michael (Arundel)
Gilmour, Rt Hon Sir Ian Martin, David (Portsmouth S)
Glyn, Dr Sir Alan Mates, Michael
Goodlad, Alastair Maude, Hon Francis
Goodson-Wickes, Dr Charles Mayhew, Rt Hon Sir Patrick
Mellor, Rt Hon David Smith, Tim (Beaconsfield)
Meyer, Sir Anthony Soames, Hon Nicholas
Miller, Sir Hal Spicer, Sir Jim (Dorset W)
Mills, Iain Spicer, Michael (S Worcs)
Miscampbell, Norman Squire, Robin
Mitchell, Andrew (Gedling) Stanbrook, Ivor
Mitchell, Sir David Stanley, Rt Hon Sir John
Moate, Roger Stevens, Lewis
Monro, Sir Hector Stewart, Allan (Eastwood)
Montgomery, Sir Fergus Stewart, Andy (Sherwood)
Moore, Rt Hon John Stewart, Rt Hon Ian (Herts N)
Morris, M (N'hampton S) Sumberg, David
Morrison, Sir Charles Summerson, Hugo
Morrison, Rt Hon Sir Peter Tapsell, Sir Peter
Moss, Malcolm Taylor, Ian (Esher)
Mudd, David Taylor, Rt Hon J. D. (S'ford)
Neale, Sir Gerrard Taylor, Teddy (S'end E)
Nelson, Anthony Tebbit, Rt Hon Norman
Neubert, Sir Michael Temple-Morris, Peter
Newton, Rt Hon Tony Thompson, D. (Calder Valley)
Nicholson, David (Taunton) Thompson, Patrick (Norwich N)
Nicholson, Emma (Devon West) Thorne, Neil
Onslow, Rt Hon Cranley Thornton, Malcolm
Oppenheim, Phillip Thurnham, Peter
Page, Richard Townsend, Cyril D. (B'heath)
Paice, James Tracey, Richard
Patnick, Irvine Tredinnick, David
Pattie, Rt Hon Sir Geoffrey Trippier, David
Pawsey, James Trotter, Neville
Peacock, Mrs Elizabeth Twinn, Dr Ian
Porter, David (Waveney) Vaughan, Sir Gerard
Portillo, Michael Viggers, Peter
Powell, William (Corby) Waldegrave, Rt Hon William
Price, Sir David Walden, George
Raison, Rt Hon Sir Timothy Walters, Sir Dennis
Rathbone, Tim Ward, John
Riddick, Graham Wardle, Charles (Bexhill)
Roe, Mrs Marion Watts, John
Ross, William (Londonderry E) Wheeler, Sir John
Rossi, Sir Hugh Whitney, Ray
Rost, Peter Wiggin, Jerry
Rowe, Andrew Wilkinson, John
Rumbold, Rt Hon Mrs Angela Wilshire, David
Sackville, Hon Tom Winterton, Mrs Ann
Sayeed, Jonathan Winterton, Nicholas
Scott, Rt Hon Nicholas Wolfson, Mark
Shaw, David (Dover) Wood, Timothy
Shaw, Sir Michael (Scarb') Woodcock, Dr. Mike
Shelton, Sir William Yeo, Tim
Shephard, Mrs G. (Norfolk SW) Young, Sir George (Acton)
Shepherd, Richard (Aldridge)
Shersby, Michael Tellers for the Noes:
Sims, Roger Mr.David Lightbown and
Skeet, Sir Trevor Mr. John M. Taylor.

Question accordingly negatived.

Mr. Gould

I beg to move amendment No. 24, in page 2, line 35, leave out 'all' and insert 'new'.

The Second Deputy Chairman

With this, it will be convenient to discuss also amendment No. 26: page 2, line 47, leave out from 'of' to end of line 49 and insert—

  1. (a) in the case of England and Wales, updating the valuation list in respect of domestic hereditaments on 31st March 1990 by adding to that list existing domestic hereditaments not included in the list; and
  2. (b) in the case of Scotland, updating the valuations roll in respect of domestic subjects on 31st March 1989 by adding to that roll existing domestic subjects not included in the roll'.

Mr. Gould

The amendment is designed to offer the Government a means of getting off a hook of their own creation. The hook arises because of the Government's insistence on introducing, as a condition of getting rid of the poll tax, a whole new system of valuation. That in turn gives rise to a large number of uncertainties, which gives rise to further delays and problems and calls into question the Government's ability to implement a council tax by their stated target date of 1 April 1993.

I offer this amendment as a means of helping the Government, although I have little expectation that they will accept it. The amendment is a gesture to reinforce an offer we made some time ago that we would co-operate on a short Bill which would get rid of the poll tax within a year by means of returning to the existing 1973 valuation list. That would enable us to implement something like our fair rates scheme by 1 April 1992 and then concentrate on a sensible revaluation to bring the list up to date.

Although I renew my offer of help through the amendment, I have little expectation that the Government will be any more welcoming to it than they were on the previous occasion. Nevertheless, I advance the amendment because it gives me an opportunity to vent some of the concerns which have been expressed by a wide range of people about the achievability of the Government's timetable and because it gives the Under-Secretary of State a chance to allay some of those fears.

As the Under-Secretary of State will know, ever since the proposals and the timetable were advanced, genuine doubts have been expressed—not just on our side of the House, although we have certainly expressed them—by a range of experts and people who are directly affected, about whether the timetable can be met. I cite only the local authority associations and the professional associations of valuers who have been sceptical about the Government's chance of hitting that target.

This morning I listened to Radio 4, as I am sure many hon. Members did, and I heard the treasurer of Huntingdon—the Prime Minister's constituency—express great scepticism. He said, fairly and directly, that he doubted whether the timetable could be adhered to unless it could be established as a condition that everything that needed to be done was done at least a year before the target date. That compression of the timetable is a point well taken and shows that there are genuine doubts about the Government's timetable.

The body most recently to express anxiety about the timetable was the Audit Commission, in an excellent response to the Government's consultation paper which it published today. The report is pleasant reading to us because it deals in detail with some points that we have been arguing in recent months. It confirms each one in turn, so we welcome the report on that ground alone.

The Audit Commission is, rightly, more circumspect about the timetable. It does not say that the timetable is unachievable. It recognises, as we do, that given the tremendous political will behind the proposal, if everything goes well and we are prepared to take tremendous risks with the viability of the scheme, we might just about hit the target. It is unlikely, great risks are involved and all sorts of assumptions favourable to the Government must be made, but it would be a foolish person who said that the timetable could not be met.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key)

Will the hon. Gentleman give way?

Mr. Gould

I shall complete this point, then I shall certainly give way.

However—this may help the Under-Secretary of State with his intervention—any fair reading of the Audit Commission's response recognises that, having conceded that theoretical point, the Commission is full of scepticism about the chances of meeting the timetable.

Mr. Key

The hon. Gentleman gently slid sideways from his interpretation of what the Audit Commission is alleged to say to his view. This morning he will have heard the controller of the Audit Commission say on the "Today" programme: So we're saying that councils must try to introduce by April 1993. Many of them say it can't be done, we think it can be done and furthermore, it must be done.

Mr. Gould

The Under-Secretary of State has only confirmed what I said. He also gave the authentic flavour of Mr. Howard Davies's remarks: it was imperative to meet that date and would be extremely dangerous—that is the whole thrust of the paper—if it were not met, because of all the unfortunate consequences, which he goes on to explain and which I shall detail to the House. Naturally, he is obliged to say, "Yes, we must hit the target date because the consequences of failing are so appalling." That is precisely his message.

Anyone who reads the Audit Commission's response objectively will recognise its great doubts on that score and the important, difficult conditions which it sets if that target date is to be met. The Audit Commission, local authority associations, valuers and the treasurer for Huntingdon all say that the following must be in place if that target is to be met.

First—let us bear in mind that, if we accept the arguments of the Huntingdon treasurer, this is all a year in advance—the legislation must be completed and on the statute book. I have not yet heard the legislative timetable from Ministers, but it would be pushing things a bit to complete the legislation by 1 April next year. We shall have to see, but it will be a major Bill. It would be extremely unwise to rush these matters, given the unfortunate experience of the Government's earlier essays in this field. If the Government are saying that they expect to have the Bill by I April, that shows how cavalier they are prepared to be about dismissing the warnings offered to them by the experts.

There will not just have to be a Bill; there will also have to be regulations. They will determine the sort of software that will have to be obtained. One aspect that made the introduction of the poll tax so difficult was the unreliability and unpreparedness of the software to which local authorities were forced to turn to deal with these great problems. The software cannot be obtained without the regulations or without detailing the valuation. A valuation list will have to be in place; so will details about how the personal discounts are to work. There will need to be details about how the rebate system is to work. All that has to be achieved well in advance of 1 April next year so that the local authorities can order and obtain the necessary software and so that they will have a fair run at meeting the Government's timetable.

One does not need to be a genius to recognise that in all this there is a great deal of uncertainty and to understand, therefore, why the prevailing tone of the Audit Commission's response is one of continuing and marked scepticism.

Mr. Douglas

I assume that the hon. Gentleman is talking about the interim period in England. We are in an intense pre-general election period. Assuming that there will not be an election until the spring of 1992, what would the Labour party do between then and April 1993? I understand the quick fix proposed in the amendments, but they are not necessarily in Labour's electoral gift. How would the Labour party bridge the gap between the demise of the poll tax and the introduction of "fair rates"?

Mr. Gould

In one sense the matter is within our gift, in that we have made the Government an offer that they have turned down. When we return to power, as most people now accept is likely—

Mr. Key

I do not.

Mr. Gould

The hon. Gentleman has a notably bad record on a number of these issues—including his support until recently for the principle of the poll tax.

To answer the point made by the hon. Member for Dunfermline, West (Mr. Douglas), we shall have to look at the position that we inherit, but we have the great comfort of knowing that since last year we have had a fair rates proposal which can be implemented within a year of our taking office. We shall have to see where the Government have got us by the time they finally face the electorate.

As the Audit Commission and others have pointed out, only two years are allowed to elapse between the Government's publication of their consultation paper and their target date for implementing the new tax—based on the totally new valuation—which no one has ever tried before. So, within two years of the consultation paper, the Government claim blithely, everything will be in place and working satisfactorily. As the Commission points out, four years were allowed for the poll tax and they proved inadequate. We can only conclude that two years is a stupidly over-ambitious target. That is why we believe that the Government are foolish to turn down our offer of help to get themselves off the hook.

These delays—the delay of two years is bad enough, but if the Audit Commission and others are right, at least a further year's delay is involved—matter considerably. They matter to the poll tax payers who, having been led to believe that the poll tax has somehow been brought to an end will be disconcerted, to say the least, to discover that the poll tax, with all its unfairness and unworkability, is still hanging around. The bills will keep on coming. They will become fairly alarmed and they will also be aware that for as long as the poll tax survives they will be paying bills that are unnecessarily high. Our calculation, which has not been seriously challenged, is that bills for the average household will unnecessarily be £140 higher than they should have been under a fair rates scheme—

Mr. Hind

Not so.

Mr. Gould

It is certainly so.

It is not just the poll tax payers who will be in difficulties. The Audit Commission is rightly concerned about the viability of local government having to administer for another two or perhaps three years a system which no longer has a single friend to support it.

5.45 pm
Mr. Nicholas Bennett

The hon. Gentleman spoke a few minutes ago about Labour's scheme being in place within a year. Will that involve merely going back to the old rating system, or will it be the new "fair rates" system? If the latter, how can he criticise the Government for taking two years to move to the council tax?

Mr. Gould

As I have said on previous occasions, it is always astonishing that Conservative Members—in this case, a Minister—should come into the Chamber to intervene in debates with points that reveal their abysmal ignorance of what they are supposed to be talking about. If the hon. Gentleman had bothered for a moment—I understand why he did not; he chose to avert his gaze from things that displease him—to read our fair rates proposals which we published nearly a year ago, he would see that they describe in great detail exactly what I am talking about—a phased means of replacing the poll tax, first by returning immediately for the sake of speed and simplicity to the rates and then by concentrating on improving the rebate scheme and on bringing in a new valuation register and linking it to ability to pay. All that is set out in the document and I am surprised by the Minister's unfamiliarity with it.

I was making the point that we can get rid of the poll tax by 1 April 1992. That offer remains open to the Government.

As I said earlier, these matters are of great concern not only to poll tax payers but to local government. The Audit Commission is worried that the survival of the poll tax will threaten what remains of the viability of local government finance. We know that the problems of collecting the poll tax in the remaining period are serious and that they will get worse. Those problems are already well documented by the Audit Commission. They have accounted for more than £1 billion-worth of poll tax not yet being collected. We have the example of Scotland to show us that the problems will only get worse year by year and there are exacerbating factors which mean that many people have been persuaded by irresponsible Government propaganda that the poll tax has gone and that they need no longer bother about it—the idea being that, if the Government have lost confidence in it and have agreed that it is unfair and unworkable, surely people will not be required to pay it. The problems are being stoked up, and they are horrific to contemplate.

The Audit Commission rightly points, as the Prime Minister has on occasion pointed, to the difficulties of collecting the poll tax. The Prime Minister's remark was a good deal less measured than that of the Audit Commission. The Commission simply states that the poll tax is difficult to collect; the Prime Minister said that it was uncollectable. Whatever phrase one chooses, the truth is that the poll tax, as we always warned, was deficient because it was so easily avoided and because people innocently moved round the country to a much greater degree than we had ever suspected when the notion of an individual register was first contemplated.

The poll tax is also difficult to collect because it is widely regarded as unfair. People feel no obligation to comply with the law in this respect—unfortunately. That is regrettable, but it is an unavoidable consequence of a tax that is unfair and widely resisted.

For all those reasons, the Audit Commission rightly devoted a substantial part of its report to the problems of collecting the poll tax. It identified more than £1 billion of revenue that has not been collected for the past financial year. I invite anyone who doubts the seriousness of the problem to read paragraphs 6 to 10 of the Audit Commission's report. Those who seek to turn this difficult issue to party advantage by complaining, as did the hon. Member for Southampton, Test (Mr. Hill), that the local authority in the city was obliged to charge its poll tax payers this year up to £50 because of the non-collection rate for last year, are adding insult to injury. That is typical of the Government. They smear local government instead of acknowledging the deficiencies of the tax which have created difficulties for local authorities. That is the truth of the matter.

Mr. Nicholas Bennett

What about Lambeth?

Mr. Gould

Of course, the pattern differs from one authority to another, but the Audit Commission is clear that the problems faced responsibly and rigorously by local authorities are, nevertheless, in danger of overwhelming them.

As Conservative Members are unwilling to accept that point, I shall give the flavour of the Audit Commission's report. Paragraph 7 says: The Commission has drawn attention in previous papers to collection problems compounding as authorities pursue two years recovery action in 1991–92. Almost 4.5 million summonses were issued up to March 31 1991"— so much for the inactivity of local government— resulting in 3.2 million liability orders. The courts have issued more than four times as many summonses than in any of the last five years of the former rates system. This is a considerable achievement, but many authorities still have a substantial backlog of original summonses to be brought. In addition only 210 means enquiries (the first stage in committal proceedings) had been held by March 31 1991; individual committal hearings for non-payment in 1990–91 will probably take up a large part of available court time in the current year. Ministers are doing local government and the House no service by pretending that the problems are the fault of lazy or inefficient local authorities.

The Audit Commission estimates that, for every year in which the poll tax survives, the local authorities will lose £800 million. To put that figure in perspective, it concludes that they will lose £900 million per year in non-collection—they budgeted for a lower non-collection rate of 4 per cent.—and that the additional administrative costs of the poll tax will be £525 million. It deducted the comparable costs of administering the council tax, and that is how it came up with a figure of £800 million.

The Labour party thinks that that is an interesting and alarming figure and a considerable underestimate of the real cost of the additional years of the poll tax. We prefer the analysis of the Association of Metropolitan Authorities. It calculates that, for the forthcoming financial year, the non-collection rate will be 15 per cent., not 10 per cent. as estimated by the Audit Commission. That will account for a loss of £1,450 million. The additional administrative costs will be £600 million, making a total loss of £2,050 million. The AMA deducts from that figure the administrative costs and the lower collection levels appropriate to the rates—£390 million. That means a net loss of £1,660 million for the next financial year, during which the poll tax will survive.

I shall not weary the House with the further calculation which shows that, if the poll tax survived for a further year—which seems all too likely—the loss would be even greater. The AMA estimates that, if the poll tax survives for another two years, the total loss will be £3.77 billion. That will make life almost impossible for local authorities, but they must contemplate that nightmare, because the Government show no sign of taking the point seriously. They have been so preoccupied with the short-term political exercise of distancing themselves from the poll tax that they have not given a thought to the problems that they are creating for local government. I regret that and hope that this short debate will at least enable the Government to face up to some of those problems.

Let me say in passing that the Audit Commission endorses a further point that we believe to be of great importance. It says that, in order to reduce losses, it would be sensible to abandon and abolish the 20 per cent. contribution rule, which raises only £6 per person in revenue and costs £15 per person to administer. I hope that the Government will take that point, because if they do not they will be showing that they are not only dogmatic and short-sighted, but stupid. Given the history of the poll tax, we should not be surprised at that harsh judgment.

The amendment allows the Minister to face up to the doubts and difficulties and to assure us that the Government are not about to reproduce and repeat the unhappy poll tax exercise in which they pushed through an idea that had been hastily cobbled together, with lavish assurances to their supporters that it would be all right on the night. If the Government implement the new tax in that way, they will again create all sorts of problems for individual payers and for local government.

Mr. Douglas

I do not intend to speak at length. The hon. Member for Dagenham (Mr. Gould) dealt specifically with the situation in England. The poll tax was introduced in Scotland a year earlier, so the problems are much more severe—especially in the Strathclyde region, where half the population of Scotland lives, and in Lothian. In those two regions and in the rest of Scotland, the rates of non-collection because of non-payment are high and increasing.

We can all suggest reasons for that. Some people say that it is because nasty people have persuaded others in certain regions not to pay. That is false. No one needed to persuade those in Scotland who could not afford to pay to participate in the non-payment compaign. They did not pay because they did not have the income. Massive surveys, especially in Strathclyde, have shown that. However, that is in the past.

As the hon. Member for Dagenham said, the Government have given the impression that the poll tax is dead. When we discuss other amendments, I shall suggest how the council tax can be speedily introduced in Scotland. However, that is another matter; what we are now discussing is which quick fix to adopt. The hon. Member for Dagenham suggested that England and Wales should return to the rating system, using the information available. Amendment No. 26 proposes that the latest information on the rating system is used in Scotland. That is a possibility, but that information would have to be uprated to take account of inflation, and legislation would be required. We would have to discuss whether there should be an appeals procedure.

I am not unhappy to contemplate a quick fix. The Scottish National party has suggested the quick fix of having local government finance funded from general taxation.

In the short run, that could be related to the general level of income tax. In the short term, the payments could be related to income tax levels. The Government have themselves contemplated the use of such a quick fix, but favoured a connection with indirect rather than direct taxation. What worries me is that, in the interim, Scottish local authorities are in severe difficulties because of the level of non-payment, the impossibility of collecting the tax and the impression given by the Government that the poll tax no longer exists.

Mr. Key

The Government have not given that impression.

6 pm

Mr. Douglas

The Minister is too insular to know what is happening in Scotland. The Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), who is sitting next to him, may or may not agree, but I am sure that he is aware of the level of non-payment and non-collection in Scotland. I am reasonably sure—although I cannot be certain of anything—that that level will rise rather than fall.

I remember, a long time ago, sitting in the miners' club with an old miner. Looking at the bottom line of figures on his pay slip, he would say, "That more and more is making me take home less and less." The continued imposition of the poll tax will make collection levels become lower and lower, placing heavier burdens on local authorities.

The Government do not recognise that, but I am equally concerned about the Opposition's failure to recognise it. They seem to believe that they can introduce their own quick fix by returning to the 1989 rating position in Scotland, or to the 1987 position in England and Wales. Such action, would not bridge the gap effectively: we require legislation. I do not know what an incoming Labour Government would do, but it is highly unlikely that they would get any legislation into gear in six months. It would take another year.

Mr. Gould

The hon. Gentleman may or may not know—there is no particular reason why he should know, but Ministers do—that we drafted a short Bill that would have achieved all that was necessary, and, given the necessary co-operation, could have completed its passage in a single day.

Mr. Douglas

I do not understand the position in England and Wales; but, if we returned to the rating system in Scotland, we would bring back the whole paraphernalia of appeals. That will arise in connection with this Bill. People have made improvements to their properties. Whatever may be said about the way in which the banding system would relate to such improvements, it cannot be denied that they must be taken into account.

I do not want to take up too much time, and I would be called to order if I embarked on a detailed examination of the way in which Scottish rates were assessed. Let me say simply that they had to bear some relation to the rent that could be charged in a market that was in equilibrium—and markets, of course, are not always in equilibrium. It would not be acceptable to argue about prices on the basis of the 1989 position, updated to take account of inflation. It would also take some time.

Let me assure the hon. Member for Dagenham that I am not playing games. If the Government started immediately, they might just manage to introduce the new system by 1 April 1992, although they would be lucky to do so. If my party's suggestion were adopted and they embarked immediately on the introduction of a local income tax, the process could be completed very quickly. All the necessary information is there, and the computerisation of centre 1 in East Kilbride would make it much easier.

I hope that I have conveyed some of my feelings to the Minister.

Mr. Hind

Let me begin where the hon. Member for Dunfermline, West (Mr. Douglas) left off. I remember serving on the Standing Committee on the Transport Bill in 1985: my hon. Friend the Member for Stirling (Mr. Forsyth), now Minister of State, Scottish Office, sat signing hundreds of letters to irate Scottish constituents who had rightly protested about the high rates that had followed the revaluations. I do not believe that the Scottish people will now wish to take up the offer extended by the hon. Member for Dagenham (Mr. Gould) and return to the rating system.

My own constituents cheered when we got rid of the rates, which they regarded as an inequitable system with very little merit—an antiquated system that should be scrapped. Certainly a return to it would not be greeted with resounding cheers in my part of Lancashire. The rating system involves no accountability, and reflects neither the income of the ratepayer not the number of people living in a household. Let us forget such nonsense, which is unacceptable to the electorate and is consequently unlikely to be adopted by the House of Commons.

I am sorry that the council tax cannot be introduced before April 1992 and that we must wait another 12 months. If, however, extra time is needed for proper planning and consultation so that we can get it right and avoid the mistakes that we made with the community charge, I shall be more than happy to allow that extra time. The hon. Member for Dagenham shakes his head, but I assure him that no quick fix is available. The hon. Member for Dunfermline, West made that very clear, on behalf of English, Welsh and Scottish electors.

The hon. Member for Dagenham has talked a lot of nonsense today. He wants to introduce a new system within a year, and has criticised the Government for taking two years. He cannot have his cake and eat it, although that is clearly what he is trying to do. The nonsense about the £140 saving on his "fair rates" scheme sounds all very well and good, but people can say anything when they have published no figures and no one has any idea of the cost base of their proposals. All that can be assumed from an analysis of the hon. Gentleman's figures is that he intends to collect £6.3 billion from the electorate by way of rates. We shall be collecting £6.8 billion. He will have to collect the £500 million difference from the electorate by way of direct taxation, which will mean higher income tax.

I view Labour's suggestion very sceptically. Let us take time to get the system right. I urge the House to reject the amendment.

Mr. Key

My hon. Friend the Member for Lancashire, West (Mr. Hind) is entirely right to regard Labour's prospectus as false. The hon. Member for Dagenham (Mr. Gould), with his customery silver tongue, spoke of the uncertainties, the questions, the delays and the target dates. He made the Government a wonderful offer: he offered to go back to 1973 valuations and abolish the poll tax. That would be so nice, but it is what we do next that matters, rather than the simple act of producing a Bill to abolish the poll tax—a fatuous political gimmick if ever there was one. I am the first to acknowledge that the hon. Member for Dagenham has a silver tongue, although. I do not know whether it bears a hallmark. Today, however, he has made a silver hook for it.

Mr. Nicholas Bennett

A forked silver tongue.

Mr. Key

I would never go that far.

The hon. Gentleman has again pretended that the so-called "fair rates" could be in place by 1992, only 10 months from now. I have searched his document "Fair Rates" in vain for any of the certainties that he alleges to lie within its few pages. There are no certainties. The document does not explain any of the questions about Labour's timetable that the hon. Gentleman so frequently claims that it does answer. He has failed to realise that such a proposal would come up against many of the same difficulties which he has claimed would delay the council tax. New legislation and new regulations would be needed, as would a new grant system and, for most local authorities, new software. Most local authorities have introduced new computers for the community charge system, and he is wrong to suggest that local authorities could simply return to the rates for next year. That is not an option.

Calling a rates system a fair rates system does not make it so. The hon. Member for Dagenham's system fails to recognise the problem of single people. It is a system under which unlimited amounts could be charged and it suggests that two changes rather than one would have to be made: returning to the 1973 figures, and then introducing another system. There would be multiple valuations on different bases and, above all, there would be no restraint—no capping: of that we are quite sure.

The hon. Member for Dunfermline, West (Mr. Douglas) could not conceal his frustration with his former colleague, and I can understand that because he is right: the hon. Member for Dagenham did not answer his question on timing.

As regards Scotland, the grants for local authorities have been advanced to help cash flow, and I am sure that the hon. Member for Dunfermline, West will acknowledge that. The situation will not be as bad as he suggests. I recognise that the mood of the Committee is that we should progress, but the fact is that these amendments are designed to restrict the valuation process to new property and to updating the old valuation list. They seek to return to the discredited rating system and are very undesirable.

Memories are not that short. People throughout the country will remember the unfairness of the old rating system. Anyone living in a flat or a newer house will recall the feeling that they suffered from higher rates than their neighbours. They will recall the irritation of finding that every time that they improved their homes, built a garage or made an extension they were faced with someone checking up on what they had done—Big Brother corning to extract his dues. A higher bill would be a punishment for seeking to improve one's property. Labour wants us to return to all that.

But that is not all. As I said, memories are not that short. People will remember the incomprehensibility of how the system worked—a system based on notional rental values. However ingenious the valuers might be, to base an entire system of local government finance on private sector rental values when only 2 or 3 per cent. of the housing stock is in the private rented sector is sheer lunacy. [Laughter.] Opposition Members find this laughable, but I find it laughable that they should suggest that we should reintroduce notional rental values. In Scotland, the position is even worse because we updated values to the 1985 base there, and we can remember the pain and anguish that that caused. The amendment seeks to turn the clock back and to use that valuation. I have some good advice for Opposition Members: the people of Scotland will not wear it. Their memories are no shorter than those south of the border.

Mr. Donald Dewar: (Glasgow, Garscadden)

I do not wish to prolong the debate, but has the Minister bothered to consider any of the public opinion polls on this subject in Scotland? They have all suggested that the Scots would prefer this solution. Has he taken into account the views of the assessors? Perhaps there should be a respectful silence while the Parliamentary Under-Secretary produces a cover story. Has the Minister noted that the assessor for Lothian, for example—who is going to be entrusted, thanks to the Government's about-turn, with the valuation process in connection with the new tax, and who took the view that the Labour party scheme was practical—commended it as it would cut a year off the Government's present timetable?

Mr. Key

I am delighted to welcome the hon. Gentleman to the debate—even though he has been here for only one minute and 30 seconds. I assure him that I keep close tabs on what is happening in Scotland because I have a Scottish wife, I was employed in Scotland, and I am well aware that the people of Scotland have strong views about the many different possible rating systems that the Labour party has suggested.

Even though the hon. Member for Dagenham may delude himself into believing that his hon. Friends think that his proposals are good, I suspect that the hon. Member for Dunfermline, West and his hon. Friends would strongly disagree. This amendment is even more misguided than I have suggested. I have listened carefully to what Opposition Members have said. I believe that they envisage a system where not only are people living in properties that were subject to the old rating system condemned to a return to those old unlamented rateable values, but also people living in new properties. Those in new properties will be subject to valuers coming round, no doubt scratching their heads and sticking their fingers in the air first for inspiration, to try to decide how much the rental value—entirely hypothetically of course—of a new house might have been in 1973, had it been built.

It is nonsense, Opposition Members know it is nonsense, but in their desperation they have nothing better to put forward. I call upon the Committee to reject a return to the rates, which is what these amendments seek.

6.15 pm
Mr. Gould

I found the Minister's reply a rather depressing experience in that he failed to tackle the serious purpose of the debate and the serious matters that we raised.

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) is quite right. It is true not only in Scotland but throughout the country that whenever polling evidence on people's preferences for funding local government through local revenue raising is taken, polls show that our fair rates proposals—or proposals described in those terms and similar to our proposals—are three times more popular than any other proposal.

Not surprisingly, the poll tax always languishes at the bottom, but I am sorry to say that even a local income tax finds it difficult to feature.

Mr. Key

What about the roof tax?

Mr. Gould

The roof tax may have been lower for a brief period, but in the country as a whole fair rates scored very well indeed.

The hon. Member for Lancashire, West (Mr. Hind) sat through the debate, if my eyes did not deceive me, yet seems to have completely failed to understand the matters that were being discussed. I think that he was attempting to encourage his hon. Friends to ignore the possibility of replacing the poll tax by 1 April 1992, because they ought to take all the time in the world to consult, make leisurely preparations and so forth, so that they can do that job by 1 April 1993. He seems to have completely ignored the case that I, the Audit Commission and many other people have been arguing for quite some time—that it is the date of 1 April 1993 which is the difficulty, if one insists on introducing a totally new scheme. That is the quick fix. That is what is taking risks with local government finance. That is the great gamble that the Government have once more recklessly embarked upon.

If we really want to take time, it would be in the interests of local government and everyone else for the Government to say now that they propose to take at least until 1 April 1994, if they persist with this proposal.

The Minister failed to deal with any of the arguments about the likelihood of delay or the adverse consequences of delay. That fact made the debate such a disappointment and made his reply so depressing. However, as I have by now become a little cynical about these matters, and as I despair of the Government approaching them with true seriousness of purpose, I see little point in urging at any greater length Minister to face the facts and the truth. I suspect that salvation will arrive by a quite different course fairly shortly. For those reasons, and as I do not believe that this proposal will ever be implemented, I do not wish to press the matter. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Dewar

I beg to move amendment No. 50, in page 2, line 40, leave out 'acting under the direction of those Commissioners;'.

The First Deputy Chairman of Ways and Means (Sir Paul Dean)

With this it will be convenient to take the following amendments: No. 6, in page 2, line 40, leave out 'direction' and insert 'guidance'.

No. 7, in clause 5, page 5, leave out lines 4 and 5 and insert— '(3) The Commissioners of Inland Revenue may, after consultation with the local assessor, issue guidances in relation to the valuation to be undertaken, having regard to established Scottish usage.' No. 8, in clause 5, page 5, leave out lines 4 and 5.

Mr. Dewar

The amendment is comparatively simple and seeks further information. I intend to dispose of it fairly briefly in the expectation—perhaps I should not be so confident—in the hope that there will be a brief stand part part debate on clause 3. I am glad that the Minister is nodding his agreement. That will allow us to raise conveniently one or two questions about the valuation system in Scotland and may, on balance, shorten the time that the Committee has to sit. However, I want to ask the Minister one or two questions.

I am sorry that the Under-Secretary of State, who chastised me for being in the House only occasionally, has already departed. I was looking forward to discussing with him the role of the Minister's wife. She is not an archetypal or representative figure in Scottish society, wherever she may have been born. She is a well-known character in children's games, and there was an interesting theme to be developed.

I shall confine my remarks to the proper matter for the debate, which is the role of the Commissioners of Inland Revenue in the valuation system in Scotland. I am considerably interested in that, and I took the trouble this morning—I will not say that I did a great deal of research—to discover who the commissioners are [Interruption.] I am glad to see that the Minister's wife's husband has returned. The commissioners are the individual members of the board of Inland Revenue, and the Committee may be delighted to know that the chief valuer, who will no doubt become an important figure in Scottish local government, is Mr. R. R. B. Shutter—which seems entirely appropriate.

I wish to ask the Minister about the role of the commissioners. I recognise that it was dealt with on Second Reading, and I challenged the Secretary of State for the Environment on the matter during his opening speech. He said: That is an important point". I accept that: otherwise I would not have intervened. He added: there should be parity of valuation in Scotland, England and Wales. It is our intention for the Inland Revenue to mastermind the valuation exercise … and give appropriate directives so that the Scottish valuations are in line with those in England and Wales."—[Official Report, 3 June 1991; Vol. 192, c. 61.] That is an obtrusive role. It is not necessarily a bad one, but it is one that we should know more about.

From my earlier inquiries, I got the impression that it would occur very occasionally and that day-to-day operations would remain with the assessors in Scotland and only if there were some dispute, for example, if there were a nice argument about the contractors principle—a vexed question which took up many hours of my time a few years ago when there was a shortage of comparative rental evidence and other methods had to be resorted to. The commissioners would be brought in only if a matter of principle arose.

I do not want to make too much of a textual point. If we are to consider the masterminding of the valuation exercise, and if directives will bring Scottish valuations into line with those in England, we need more explanation.

I do not intend to discuss forcefully the merits and demerits of the contractors principle—I have forgotten them—but I think that the merits are outweighed by the demerits. There are still differences in valuation law between Scotland and England. I approve of the Minister's talk of an attempt to harmonise valuation law. That talk was in connection with the business and commercial rating sectors, but I presume it has become relevant to the Government's unexpected, but sensible, decision to go for a property-based rating system and that harmonisation will take place in the domestic sector as well.

If harmonisation of valuation law is to be masterminded by the commissioners, the Minister should explain exactly what the phrase means. It does not mean that rateable values will be the same. They will not be the same in England where there are wide discrepancies, and presumably they will not be the same in Scotland.

Is the Minister saying that Armour on "Rating and Valuation" can be burned, that Scottish valuation law will come to an end on a phased basis and that, ultimately, valuation law in England and Scotland will be exactly the same and the law interpreted by Scottish courts will be the same as that interpreted by English courts? Is that the intention, and is that the remit of the commissioners of Inland Revenue?

Let us take a popular current example. I notice from the public prints that the Minister has written to my hon. Friend the Member for Falkirk, West (Mr. Canavan) on the vexed question of the rating of football clubs. It has been suggested that something will be done that is totally unknown in Scottish law. Valuation law will move to a system which depends on revenue of the football clubs, and it will not be based on their grounds or the number who attend the premises. That will not be glad news for Rangers football club, but it will be extremely good for Cowdenbeath.

A revenue-based system is a departure in Scottish law. Recently, as reported in The Glasgow Herald, the Minister said: I should explain that should we decide to adopt such an approach, which would severely limit clubs' rights of appeal, we would regard this as an interim measure". I am curious to know why it would severely restrict the clubs' rights of appeal. I invite the Minister to say a word in passing about that and the Government's intentions because of the interest in the subject and because it is important as an example of what the role of the Commissioners of Inland Revenue will be.

It will be a difficult relationship. I have said before that I welcome the Government's U-turn on the matter. The Secretary of State heavily briefed the press that the valuation office of the Inland Revenue will take over valuation procedures in Scotland, and the decision to reinstate the assessors strikes me as a sensible one. It is the essence of the assessors' role that although they are funded and have the wherewithal to operate through the regional councils, they are totally independent. If there is a dispute over valuation law, the answer in the courts will be that they are not controlled by anybody else. Now we are being asked to contemplate the possibility that, to some extent, they will be controlled by the Commissioners of Inland Revenue.

I hope that the Minister will give us a fuller explanation than was possible on Second Reading. I have no complaint about the answer then, because obviously it was a point for the Committee stage. As we have reached that stage, it would be helpful if the Minister gave a full explanation of the Government's intentions. We will then be able to judge whether we want to live with them.

Mr. Douglas

I understand that we shall have an extensive clause stand part debate, so I shall be brief. I am in the unaccustomed position of supporting the hon. Member for Glasgow, Gardscadden (Mr. Dewar). I shall also say something on behalf of local assessors and in view of the role that they play on the poll tax, that is an engaging anomaly.

I shall consider the relationship of the Commissioners of Inland Revenue to the assessors; this arose on Second Reading. I agree with the amendment tabled by the hon. Member for Garscadden and I have tabled an amendment to this subsection to clarify the relationship. The hon. Member was right to say that we should congratulate the Government somewhat for their about-turn. In paragraph 2.29 of the consultative document, the Government said that the valuation office of the Inland Revenue would be almost in complete charge. It would almost totally operate the system.

I know that representations were made by the Scottish Assessors Association and the Government rightly conceded that the expertise of Scottish assessors should be used on the new council tax. I am concerned by what is embedded in the Bill—that the Commissioners of Inland Revenue will have effective legal control. I find that disturbing in the Scottish context.

I am not an expert—I am not a lawyer—and I have no great experience from direct discussions with assessors, but I understand that the Commissioners of Inland Revenue have no experience of valuing domestic property in Scotland.

Mr. Allan Stewart

indicated dissent.

Mr. Douglas

The Minister may disagree, but I call in evidence Mr. Jack Woods, the president of the Scottish Assessors Association. If I am wrong I hope that the Minister will correct me.

6.30 pm

The commissioners have not embarked upon such an undertaking in Scotland. In certain areas of Scotland, there is no local office of Inland Revenue commissioners. It strikes me as strange that those with the authority and the expertise should be subordinate, in legal terms, to the Commissioners of Inland Revenue who lack that very experience and expertise.

I have tried to soften the effects of clause 3(2) by suggesting that, if the Government are intent on achieving harmony, the relationship between the commissioners and the assessors should, at the very most, be based on "guidance", not direction. It is important to decide who calls the shots and to recognise who has the expertise and experience to operate the proposed system in Scotland.

I am not in love with that system, but if the Government want to get it in place by 1 April 1993, they should be sensible. They should use the expertise of the assessors to the greatest extent and those assessors should not be impeded by being subject to the overlordship of the commissioners.

My argument may be subject to dispute, but given the practical experience of the assessors they should not be dominated by the commissioners. I appreciate that the Government see certain merits in fettering the assessors' role—that would not necessarily be to Scotland's advantage—and in trying to achieve harmony. Nevertheless, the assessors should not be dominated by directions issued by the commissioners.

Mr. Allan Stewart

As the hon. Member for Dunfermline, West (Mr. Douglas) said, there is an unusual degree of unanimity between the hon. Member for Glasgow, Garscadden (Mr. Dewar) and the prospective Scottish National party candidate for Garscadden.

This has been a genuinely useful debate and I hope that I can reassure the hon. Members for Garscadden and for Dunfermline, West. The hon. Member for Garscadden alleged that my right hon. Friend the Secretary of State had made a U-turn. The hon. Gentleman is a fair man and I am sure that he will recall that during questions on the original statement my right hon. Friend said to him: We are still considering the possible role of Scottish assessors in the system"—[Official Report, 23 April 1991; Vol. 189, c. 931.] I fear that watching me on television is not a high priority for the hon. Member for Garscadden.

Mr. Dewar

It is always very instructive.

Mr. Stewart

I am grateful to the hon. Gentleman. I recall that, on the evening following that statement, I appeared on television in "Scottish Questions". I made it clear that the assessors have the considerable expertise to which the hon. Members for Garscadden and for Dunfermline, west have referred. I stressed that we were seriously considering their role in the proposed system. I know that my right hon. Friend the Secretary of State expressed the same view in interviews that he gave.

It is important to put on record the precise nature of the relationship between the assessors and the commissioners—it is the essence of the debate. The primary responsibility for carrying out valuations in Scotland rests with the assessors. They will act in accordance with directions given by the commissioners.

The hon. Member for Dunfermline, West spoke about the Inland Revenue valuation office's experience of domestic valuation in Scotland. The commissioners have had experience of valuing local authority houses for sale to sitting tenants and of valuing individual properties for taxation purposes. However, Mr. Woods was right to say that the commissioners do not have the same experience as the assessors when it comes to the general valuation procedure.

Mr. Douglas

So that I do not mislead the House I should like to quote what Mr. Woods said. I do not wish to misinterpret him. On page 321 of the submission to the Scottish office of May 1991, Mr. Woods said: The Valuation Office in Scotland has never in modern times been responsible for valuation for domestic rating as contrasted with the position in England and Wales Perhaps I misled the House with my extempore remarks, but it is important to quote the basis of my argument.

Mr. Stewart

I have that document with me, and I believe that Mr. Woods was right to say that the valuation office has never been involved in the general valuation procedure in Scotland. However, it has experience of valuing individual properties.

The Government are already on record as saying that we do not anticipate any need for the widespread use of the power to give directions set out in the Bill. We expect that power to be used initially to start the process going, but any further directions, should they be necessary, will simply be given in order to achieve consistency of approach.

We expect that the Inland Revenue commissioners would find it necessary to give a direction only as a last resort to achieve consistency in the way in which properties are banded in Scotland and consistency between Scotland and England and Wales, where that consistency would not otherwise be achieved in agreement with the local assessors.

There might not be any need to issue directions because the assessors and the Inland Revenue commissioners already have excellent working relationships. They should be able to deal with the problems of harmonisation in the non-domestic sector to which hon. Members have referred.

Mr. Douglas

They have not agreed on some issues for years.

Mr. Stewart

They have reached a measure of agreement in some areas. The hon. Member for Garscadden referred to sports grounds, and I accept that they have not reached total agreement on that issue, which is a matter of concern to hon. Members on both sides of the House. Even if the law is the same, professionals may disagree on how it should be applied in particular circumstances. That does not imply any criticism of their relative professionalism, expertise or dedication. We must ensure that we avoid such disagreement when we set up the council tax.

I hope that I can reassure the hon. Members for Garscadden and for Dunfermline, West by saying that the president of the Scottish Assessors Association has gone on record as saying that he feels comfortable about the role of the commissioners at the United Kingdom level. The proposals do not cause any problems to the professionals—those who will carry out the valuations.

I recognise that the amendments are probing and I assure the hon. Members for Garscadden and for Dunfermline, West that the power to give direction is simply one of last resort. I hope that it will not be necessary to use it once the process is up and running. I am sure that they would agree that it is crucial to give an assurance and perception of uniformity north and south of the border.

If any problems arise as a result of the Government's approach, I should be happy to discuss them with the hon. Members. We hope that that will not happen because the professionals are content with what has been suggested. I welcome the opportunity to put that on the record and I hope that I have been reasonably reassuring to the hon. Members for Garscadden and for Dunfermline, West.

Mr. Dewar

The Minister has been more reassuring than he sometimes is: I can be no more enthusiastic than that. In return, I can give him the assurance that I do not esxpect to spend many hours discussing valuation law with him. That would be a considerable test for both of us and I suspect that it would not produce much light.

I hear what the Minister says. It is significant that there have not been many protests from any of my contacts, so we shall have to see how it goes. I do not intend to force a Division. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. David Bellotti (Eastbourne)

I beg to move amendment No. 52, in page 2, line 44, at end insert— '(4A) The Commissioners of Inland Revenue in England and Wales and in Scotland, the local assessors acting under the direction of those commissioners, shall

  1. (a) before commencing the work of valuation, and
  2. (b) after completion of the work of valuation,
publish the expected and final cost of the valuation and compare it with the estimated cost of assessing individuals' tax status for the purpose of introducing a local income tax to fund local government.'. The explanatory and financial memorandum refers to an estimated cost of £250 million for the valuation provisions. There are 21.5 million houses and flats in the country. A quick calculation shows that the Government expect the average valuation cost to be £12 per hereditament. That is an interesting figure. I should very much like the name and address of the estate agent that the Government intend to use if properties can be valued at £12 each. Perhaps nearer to the truth is what the hon. Member for Southampton, Test (Mr. Hill) said earlier in the debate. He said that he could sit in the centre of Southampton with a map of Southampton in his hands and identify upon it the bands of properties there. That would be socially divisive and would almost certainly lead to major protests and many appeals. It would also cost a great deal.

The purpose of the amendment is to seek answers from the Government about what their valuation proposals will mean and to try to identify the equivalent costs of introducing a local income tax. Either the Government must provide the full costs of valuation or they must give more information. The public needs to know how much money is to be wasted on introducing the new tax. I remind the Government that between £10 billion and £14 billion has already been wasted on the poll tax.

According to all the opinion polls, support for a local income tax is growing throughout the country. The costs of introducing a local income tax deserve to be considered. A local income tax would be simple to administer. It would certainly be fairer in terms of the burden placed on people. It would be very much related to ability to pay. Almost certainly it could be in place by April 1992—a very important date, since for 12 months after that date the Government propose to waste an additional £800 million, as the Audit Commission pointed out, on prolonging the agonies of the poll tax.

The reason why it would be simple to administer and could be in place so quickly is that the information that is needed is already on the Inland Revenue computers, which give the address, including the postal code, of everyone who would be required to pay the local income tax. That information, together with the correct software programme, means that it would be cheap to administer and that it would be in place within the right time scale. A local income tax has another attraction—accountability. An end-of-year adjustment, just before local elections, means that a local income tax would be seen by the electorate to be linked to the decision that they were about to take at the ballot box.

For those reasons, we believe that a local income tax is worthy of support. It was its unfairness in principle that was at the heart of the poll tax opposition. We are beginning to see, as the Government provide us with more details, how unfair their council tax proposals will be. The council tax will do nothing to help the student in a bed-sit, often living, traditionally, in the centre of our large cities and towns.

For example, a student in Edinburgh, even with a 25 per cent. discount, will still have to pay more under the council tax than he did under the poll tax. In central London, there is low-cost housing, provided by housing associations and others, next door to very expensive housing. The houses look the same from the outside. On the open market, those properties would fetch the same. However, the people living in the low-cost housing may be on very low incomes. The Government's council tax proposals do nothing to help students.

6.45 pm

A local income tax, related to ability to pay, means that the majority of students on low incomes would not contribute towards local taxation. Moreover, the council tax would do nothing for the widow in a terraced house, bought by the family 30 years ago in Southwark; the house may be valued at £90,000, but her income is about £8,000. Even after the single discount, that person would have to pay £372 a year. Under a local income tax system, she would be very much better off. The only important figure would be her £8,000 income. [AN HON. MEMBER: "What would she pay?"] The figure in Southwark will be well under £372. I do not have the exact figure, but I can make it available. The Government know full well that over a month ago the Liberal Democrats published and sent to the Government details of what the local income tax would be in every local authority in the country. As I say, I do not have the figure in front of me, but it is on public record. The Government have the figure, but I can make it available to them again, if they so wish. I am giving examples that the Government need to take on board if they intend to introduce a council tax, and I am certainly pressing for the introduction of the local income tax alternative.

A local income tax has many advantages. Not only is it fair, but it is directly linked to the ability of people to pay. They will pay what they can afford to pay. That is the important criterion when considering any form of local taxation. Our proposals also mean that no new registers and no new valuations would be required. It would be much cheaper to introduce, and it could be introduced very much more quickly than a council tax.

For those reasons, and also because I believe that the British people should have before them a comparison of the costs of the alternative ways in which local government could be funded, I must press the advantages of a local income tax. The valuation costs that appear in the explanatory and financial memorandum are not clear. Insufficient detail is provided for the people of this country to reach a decision. That detail should be given by Ministers. If they do not do so, I believe that a comparison should be placed before the people of this country.

Sir Geoffrey Finsberg (Hampstead and Highgate)

I doubt whether we need spend much time on that weird flight of fancy. My question arises out of the failure of the Department of the Environment to reply to a letter that I wrote to it, which is relevant to this debate.

I, too, looked at the figure that is given in the explanatory and financial memorandum. Departments, under all Governments, respond much too slowly to queries. My question, arising out of the cost, is this: could it be that the low cost—which, on the face of it, looks like £12 per hereditament—is due to the Government's intention, perhaps under regulations, to make it possible for people who know that their properties are in the top band to respond to a letter by saying, "Yes, we are in the top band," thus doing away with the need to provide a valuation? No one will say that he or she is in the top band if that is not so. It would not be in anyone's interest to do that. That would provide the opportunity for considerable savings to be made. That may explain why one cannot make a naive division of the number of hereditaments into the total sum on the face of the Bill, as the hon. Member for Eastbourne (Mr. Bellotti) has just tried to do.

Mr. Nicholas Bennett

The amendment provides for comparisons to be made between the cost of valuation and the cost of introducing a local income tax, and for figures to be published of the costs of valuation, both estimated—before it starts—and actual, after it has been completed. The amendment is unnecessary. Were the amendment simply what it appears to be, I should have been disappointed at the lack of knowledge that it displays about the way in which the Government treat public expenditure. However, its purpose is different. It has nothing to do with the merits of the Bill. It is intended to provide a platform for discussion of a local income tax.

I am disappointed, therefore, that the hon. Member for Eastbourne (Mr. Bellotti) was unable to give us details of what the Liberal Democrats propose. When he was challenged from a sedentary position as to what his friend in Southwark would be paying under the local income tax system, he said that the Liberal Democrats had published those figures but that they were not available to him to give to the Committee today.

The Chairman of Ways and Means (Mr. Harold Walker)

Order. I must tell the Minister that if the hon. Member for Eastbourne (Mr. Bellotti) had sought to do as he suggests I might have been tempted to rule him out of order. The Minister should stick to what is in the amendment.

Mr. Bennett

I was drawing attention to the inconsistencies in the speech by the hon. Member for Eastbourne, Mr. Walker.

There are a number of reasons why a local income tax would be unsuitable for financing local government. Those reasons reflect matters of principle, practicality, and good administration.

It was interesting to listen to the hon. Member for Eastbourne, whose theory belongs in cloud cuckoo land; indeed, my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) talked about a flight of fancy. The hon. Member for Eastbourne cannot seriously believe that a local income tax could be in place by next year, that the software would be available and that the system would be simple. That is nonsense. None of it could be put into place by 1992 even if we believed in it in principle.

The hon. Gentleman asked about the average cost—

Mr. Alex Salmond (Banff and Buchan)

Will the Minister give way?

Mr. Bennett

Not now. I am answering the hon. Member for Eastbourne, who asked about the average cost.

It may not be necessary for the valuer to value every home. Often a valuer will go to a street and find a whole street of identical properties. He will then be able to make the assumption that the value of such properties will be the same. The £12 that the hon. Member for Eastbourne calculates as the cost per property of valuation does not take account of the fact that, in some areas, valuers will be able to make assessments on the basis of having seen rows of similar houses. The charge will be higher for properties requiring more detailed valuation. It is dangerous to make assumptions based on average figures.

There are important reasons of principle why we should not adopt a local income tax. I do not believe that a highly redistributive tax is a suitable basis for financing local government. Income tax is suitable only as a national tax, and it forms an important element in the Government's economic policy. To give local government the ability to levy income tax would reduce the Chancellor's room for manoeuvre in economic management. It would also reverse the reduction in the burden of taxation on incomes, which has been the Government's policy for 12 years, and would have a damaging effect on incentives. I cannot believe that the people of Britain would want there to be more than 500 chancellors of the exchequer, all dipping their hands into the public's pocket after the national Chancellor of the Exchequer had already done so.

Mr. Salmond

Will the hon. Gentleman give way?

Mr. Bennett

Let me finish my argument first.

I do not believe that it is right to give local government the right to redistribute income, and the unfettered discretion to take from local taxpayers sums of money in excess of what would be prudent. We have only to look at the effects of local government in London—at Lambeth, Haringey, Camden and other boroughs—to see what would happen to taxpayers in those areas if their local authorities had the right to dip into their pockets and impose a local income tax.

Mr. Salmond

I should like to come to the assistance of the hon. Member for Eastbourne (Mr. Bellotti). The Government have been humiliated over the poll tax and are now embarking on a flight into the unknown with the new council tax. Does the Minister seriously intend to stand there and attempt to rubbish a system that works satisfactorily in so many other European countries?

Mr. Bennett

I am interested to hear from the representative of the Scottish National party that that party's policy is to have a local income tax. I do not believe that it would be right to have two forms of chancellor of the exchequer in this country—one in central Government, able to make decisions on the redistribution of income, and a mini-chancellor in every local authority, able to make his own decisions, which might be contrary to those made by central Government, about the distribution of wealth in the country.

I should not like a chancellor of the exchequer in Camden town hall to be able to levy as much as 25p on the local people, in addition to the 25 per cent. income tax already taken by central Government. I do not believe that most people want to see that, either. To go down that road would pose a serious danger to the Government's economic strategy. It would be irresponsible of the Government to allow fiscal policy to be under the influence of local authorities, with all the macro-economic consequences that could flow from such a state.

Income tax is not practical at local government level, for several reasons. The yield of income tax for small local authorities could vary considerably according to economic circumstances, and deny local government the steady and predictable source of income that they need. That lack of predictability, and the consequent potential instability, would be made worse by what experts call fiscal migration. That means that people with the highest incomes would move to low-tax authority areas and those with low incomes would move to high-tax areas.

Let us ponder the vicious spiral that that would cause—the instability in areas such as south London, where Lambeth and Wandsworth exist side by side. As every telling reminder of the difference between Labour and Conservative local government shows, at the moment Labour costs more; for example, it costs £450 more to live in Lambeth. If there were a local income tax, Labour would drive people out, and tax rates would become higher and higher as fewer people were left to pay the local income tax. Such a system of local taxation would not be common sense.

Another practical objection is that income tax rates are changed only in steps of 1p or, at a pinch, 0.5p. That would represent a large proportional increase in the tax rate and would greatly restrict local authorities' flexibility in making budget decisions. The smallest increase or decrease in income that they could consider might represent 10 or 20 per cent. of their total revenue. That does not seem likely to offer adequate accountability, and the buoyancy of the local income tax would reduce the restraints on local authority spending.

The Chairman

Order. The Minister is contrasting the cost of administering one system with the cost of administering another. His remarks do not seem to have much to do with the amendment. He should direct his remarks to the amendment.

Mr. Bennett

I thought that it was in order to point out what the effects of the amendment would be, Mr. Walker. It would produce a system of local income tax, and the disadvantages of that—

The Chairman

Order. I beg the Minister to read the amendment and then address his remarks to what I can read in it. I am not prepared to allow the debate on which the Minister is now embarking about the intrinsic merits of a local income tax scheme. The amendment is not about that, and nor is the debate.

Mr. Bennett

I think that I have already given enough evidence, Mr. Walker, to show the impracticality of the Liberal amendment, and the fact that it is wrong in principle. I therefore ask the Committee to vote against it.

Mr. Bellotti

I am grateful to you, Mr. Walker. I was beginning to struggle as I listened to the Minister's response. This is the first time that I have listened to a response from a Minister that I simply could not fathom. I hope that my reply will keep to the point.

First, there is the question of what the Government's valuation proposals will cost. The Minister's response has at least revealed that the Government will expect people undertaking valuations to stand at the end of a street and look down it to see whether all the houses look the same. If they do the houses will all he valued the same. That reveals a naivety beyond belief, even for the House.

Everyone realises that there has to be some element of fairness, and the Government's approach to valuation is ridiculous, as well as unfair.

Mr. Hugo Summerson (Walthamstow)

Speaking as a chartered surveyor, I can tell the hon. Gentleman that the procedure that he describes would be perfectly easy to carry out.

Mr. Bellotti

I am grateful for that advice, but in all the towns—and indeed, in all the roads—in which I have lived, there has been a vast variety of property values. There are differences in value of almost 100 per cent. between houses one end of the street where I live and houses at the other. A naivety about property valuation is being revealed among Conservative Members which I find surprising, especially in any one professionally involved with valuation. But at least we are getting some more information in the debate.

Having seen how ridiculous the Government's idea of the cost of valuation is, I want to emphasise how easy and cheap in comparison our alternative proposals would be. I invite the Minister to visit his local Inland Revenue office and ask the manager to press a button on the computer. Immediately, details of the names and addresses, including postcodes, of all the people in that area will flash before him on the screen. That is the basic information that we need to start with for the introduction of a local income tax. Given that the information already exists, the costs of levying a local income tax would be minimal.

7 pm

The Government's true feelings towards local authorities have been revealed at the Dispatch Box tonight. The measures in the Bill are all about controlling local authorities from the centre. If the Government want to make local authorities accountable, there are other measures open to them, one of which is the introduction of a fair voting system. But the Government want total control, and they are so naive as to believe that the valuation proposal can give it to them.

On the basis of the debate, I have no hesitation in pressing the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 26, Noes 274.

Division No. 168] [7 pm
Alton, David Livingstone, Ken
Ashdown, Rt Hon Paddy Maclennan, Robert
Barnes, Mrs Rosie (Greenwich) Michie, Mrs Ray (Arg'l & Bute)
Beith, A. J. Owen, Rt Hon Dr David
Bellotti, David Robinson, Peter (Belfast E)
Campbell, Menzies (Fife NE) Salmond, Alex
Carlile, Alex (Mont'g) Steel, Rt Hon Sir David
Carr, Michael Taylor, Matthew (Truro)
Cartwright, John Thomas, Dr Dafydd Elis
Douglas, Dick Welsh, Andrew (Angus E)
Ewing, Mrs Margaret (Moray) Wigley, Dafydd
Fearn, Ronald
Godman, Dr Norman A. Tellers for the Ayes:
Howells, Geraint Mr. James Wallace and
Hughes, Simon (Southwark) Mr. Archy Kirkwood.
Adley, Robert Aspinwall, Jack
Aitken, Jonathan Atkinson, David
Alexander, Richard Baker, Nicholas (Dorset N)
Alison, Rt Hon Michael Batiste, Spencer
Allason, Rupert Beggs, Roy
Amess, David Bellingham, Henry
Amos, Alan Bendall, Vivian
Arbuthnot, James Bennett, Nicholas (Pembroke)
Arnold, Sir Thomas Blackburn, Dr John G.
Ashby, David Blaker, Rt Hon Sir Peter
Ashton, Joe Body, Sir Richard
Bonsor, Sir Nicholas Hanley, Jeremy
Boscawen, Hon Robert Hannam, John
Boswell, Tim Hardy, Peter
Bottomley, Peter Hargreaves, Ken (Hyndburn)
Bowden, A. (Brighton K'pto'n) Harris, David
Bowis, John Hawkins, Christopher
Boyson, Rt Hon Dr Sir Rhodes Hayes, Jerry
Braine, Rt Hon Sir Bernard Hayward, Robert
Brandon-Bravo, Martin Heathcoat-Amory, David
Brazier, Julian Hicks, Mrs Maureen (Wolv' NE)
Bright, Graham Hicks, Robert (Cornwall SE)
Brooke, Rt Hon Peter Higgins, Rt Hon Terence L.
Brown, Michael (Brigg & Cl't's) Hill, James
Bruce, Ian (Dorset South) Hind, Kenneth
Buck, Sir Antony Holt, Richard
Butcher, John Hordern, Sir Peter
Butler, Chris Howard, Rt Hon Michael
Butterfill, John Howarth, Alan (Strat'd-on-A)
Caborn, Richard Howarth, G. (Cannock & B'wd)
Carlisle, John, (Luton N) Howell, Rt Hon David (G'dford)
Carlisle, Kenneth (Lincoln) Hughes, Robert G. (Harrow W)
Carrington, Matthew Hunt, Sir John (Ravensbourne)
Carttiss, Michael Illsley, Eric
Cash, William Irvine, Michael
Chapman, Sydney Irving, Sir Charles
Churchill, Mr Jack, Michael
Clark, Rt Hon Alan (Plymouth) Jackson, Robert
Clark, Dr Michael (Rochford) Janman, Tim
Clark, Rt Hon Sir William Jones, Robert B (Herts W)
Clarke, Rt Hon K. (Rushcliffe) Jopling, Rt Hon Michael
Colvin, Michael Kellett-Bowman, Dame Elaine
Coombs, Anthony (Wyre F'rest) Key, Robert
Coombs, Simon (Swindon) Kilfedder, James
Cope, Rt Hon John Kirkhope, Timothy
Couchman, James Knapman, Roger
Cran, James Knight, Greg (Derby North)
Cunliffe, Lawrence Knowles, Michael
Davies, Q. (Stamf'd & Spald'g) Knox, David
Day, Stephen Lang, Rt Hon Ian
Devlin, Tim Latham, Michael
Dicks, Terry Lawrence, Ivan
Dixon, Don Lee, John (Pendle)
Dorrell, Stephen Leigh, Edward (Gainsbor'gh)
Douglas-Hamilton, Lord James Lennox-Boyd, Hon Mark
Dover, Den Lester, Jim (Broxtowe)
Dunn, Bob Lewis, Terry
Dykes, Hugh Lightbown, David
Eggar, Tim Lilley, Rt Hon Peter
Evans, David (Welwyn Hatf'd) Lloyd, Sir Ian (Havant)
Favell, Tony Lord, Michael
Fenner, Dame Peggy Luce, Rt Hon Sir Richard
Field, Barry (Isle of Wight) Lyell, Rt Hon Sir Nicholas
Finsberg, Sir Geoffrey McCrindle, Sir Robert
Fishburn, John Dudley Macfarlane, Sir Neil
Flynn, Paul MacGregor, Rt Hon John
Fookes, Dame Janet MacKay, Andrew (E Berkshire)
Forman, Nigel McLoughlin, Patrick
Forth, Eric McNair-Wilson, Sir Michael
Fowler, Rt Hon Sir Norman McNair-Wilson, Sir Patrick
Franks, Cecil Madel, David
French, Douglas Malins, Humfrey
Fry, Peter Marland, Paul
Gale, Roger Marlow, Tony
Gardiner, Sir George Marshall, John (Hendon S)
Gill, Christopher Marshall, Sir Michael (Arundel)
Gilmour, Rt Hon Sir Ian Martin, David (Portsmouth S)
Glyn, Dr Sir Alan Martlew, Eric
Goodlad, Alastair Maude, Hon Francis
Gorman, Mrs Teresa Mawhinney, Dr Brian
Grant, Sir Anthony (CambsSW) Mayhew, Rt Hon Sir Patrick
Greenway, Harry (Ealing N) Meale, Alan
Greenway, John (Ryedale) Michael, Alun
Gregory, Conal Miller, Sir Hal
Griffiths, Peter (Portsmouth N) Mills, Iain
Grist, Ian Miscampbell, Norman
Ground, Patrick Mitchell, Andrew (Gedling)
Grylls, Michael Mitchell, Sir David
Hague, William Moate, Roger
Hamilton, Hon Archie (Epsom) Monro, Sir Hector
Hamilton, Neil (Tatton) Montgomery, Sir Fergus
Morley, Elliot Stanbrook, Ivor
Morris, M (N'hampton S) Stanley, Rt Hon Sir John
Moss, Malcolm Steen, Anthony
Neale, Sir Gerrard Stevens, Lewis
Nelson, Anthony Stewart, Allan (Eastwood)
Neubert, Sir Michael Stewart, Andy (Sherwood)
Newton, Rt Hon Tony Stewart, Rt Hon Ian (Herts N)
Nicholls, Patrick Summerson, Hugo
Nicholson, David (Taunton) Tapsell, Sir Peter
Nicholson, Emma (Devon West) Taylor, Rt Hon J. D. (S'ford)
Onslow, Rt Hon Cranley Taylor, Teddy (S'end E)
Oppenheim, Phillip Tebbit, Rt Hon Norman
Page, Richard Temple-Morris, Peter
Paice, James Thompson, D. (Calder Valley)
Patnick, Irvine Thompson, Patrick (Norwich N)
Pattie, Rt Hon Sir Geoffrey Thorne, Neil
Pawsey, James Thurnham, Peter
Peacock, Mrs Elizabeth Townsend, Cyril D. (B'heath)
Pendry, Tom Tracey, Richard
Porter, David (Waveney) Tredinnick, David
Portillo, Michael Trippier, David
Powell, William (Corby) Trotter, Neville
Price, Sir David Twinn, Dr Ian
Raison, Rt Hon Sir Timothy Vaughan, Sir Gerard
Redwood, John Viggers, Peter
Riddick, Graham Wakeham, Rt Hon John
Rifkind, Rt Hon Malcolm Waldegrave, Rt Hon William
Roe, Mrs Marion Walden, George
Ross, William (Londonderry E) Walker, A. Cecil (Belfast N)
Rossi, Sir Hugh Ward, John
Rost, Peter Wardle, Charles (Bexhill)
Rowe, Andrew Wareing, Robert N.
Rumbold, Rt Hon Mrs Angela Watts, John
Ryder, Rt Hon Richard Wheeler, Sir John
Sackville, Hon Tom Wiggin, Jerry
Sayeed, Jonathan Wilkinson, John
Shaw, David (Dover) Wilshire, David
Shaw, Sir Michael (Scarb') Winterton, Mrs Ann
Shelton, Sir William Winterton, Nicholas
Shephard, Mrs G. (Norfolk SW) Wolfson, Mark
Shepherd, Richard (Aldridge) Wood, Timothy
Shersby, Michael Woodcock, Dr. Mike
Sims, Roger Yeo, Tim
Skeet, Sir Trevor Young, Sir George (Acton)
Skinner, Dennis
Smith, Tim (Beaconsfield) Tellers for the Ayes:
Soames, Hon Nicholas Mr. John M. Taylor and
Spicer, Sir Jim (Dorset W) Mr. David Davis.

Question accordingly negatived.

Mr. Gould

I beg to move amendment No. 54, in page 2, line 49, leave out 'prescribed' and insert 'fourteen'.

The Chairman: With this it will be convenient to consider the following amendments: No. 55, in page 2, line 49, at end insert 'Draft regulations under this section shall be laid before the House before 1st July 1991'.'. No. 56, in page 2, line 49, at end insert 'and the top band shall contain only all houses with a value over £500,000 in England and Wales and all houses with a value over £330,000 in Scotland'.

Mr. Gould

The Bill and clause 3 are remarkably uninformative about the basis on which valuation is to be conducted. We know little about what will be measured. The Minister of State said that it was to be capital values—the sale price of one's house. On other occasions he has told a radio audience that other factors will also be taken into account. We are not clear about those factors and about how they impinge on the basic proposition that the valuation base should be capital values.

7.15 pm

Clause 3 tells us nothing about the number of bands, their disposition, size or relationship to each other. We are not told the top rate band. The only information vouchsafed to us is that the valuation will be based on prescribed bands. That basic proposition raises the issues that I have mentioned about the number of bands, their size and the top limit. It also raises the question of how the bands are to be calculated. Should they be calculated nationally or regionally or even more locally? Those matters will be raised in the debate on amendment No. 29. Conservative Members have voiced understandable concern about the difficulties that will arise if the bands apply nationally rather than regionally.

Another matter raised in the debate and outside is the likelihood of people appealing against a decision to put their properties in a particular band. Earlier, the Minister was asked to comment on the perception by the Royal Institution of Chartered Surveyors that no appeals will be permitted. That must be a misapprehension. The Minister nods assent, confirming that it is. It would be extraordinary if no appeals were permitted.

We were told at the start of the whole operation that the shape and detail of the new council tax would be decided after consultation with local government and the wider public. The Government have published a consultation paper about which views are being expressed and submissions made. Understandably and rightly, the Government claim that consultation is valuable and say that they should be commended for inviting public opinion. They say that they should not simply impose solutions but should listen to the views of those who will be affected.

The mystery is that in this atmosphere of general bonhomie and a willingness to listen to other opinions, the issue of the bands, their number, their relationship to each other and the top limit have been arbitrarily withdrawn from the consultation process. One of the small services that the Minister could perform in replying to the debate is to confirm that that unhappy news is accurate. Perhaps he will explain why, on this most delicate of issues, the consultation of which the Government boast is not taking place.

Although the Bill is uninformative, the Government say that they have flatly and finally made up their minds that there will be seven bands and that the top one will consist of properties valued at £160,000 or above.

The Government have not been driven into this somewhat remarkable situation by any desire to achieve a sensible and practicable outcome. They have been driven by the hurried timetable that we debated earlier and the need, against all expectations, to convince people that somehow they can meet the schedule to replace the poll tax on 1 April 1993. That is why the Government have had to truncate the consultation process on this essential and central issue, and they have made up their minds quickly so that they can make rapid progress in what, I suspect, will be a vain attempt to stick to their timetable.

The Government are also driven by a motive that is even less reputable. Their desire is not just to fulfil a tight timetable, but to deflect criticism that they have been dithering, indecisive and unable to make up their mind. As soon as they came under pressure because they were thought to be consulting and looking at different options, they closed the whole issue and proclaimed that they had made up their mind and nothing would change it.

The Government felt desperately, their former Secretary of State and current chairman having been gobsmacked by our figures, that they had to produce figures of their own which at least gave the appearance of being as specific and reliable as ours. Therefore, it is worth recounting, as I have on previous occasions, the history of this short and somewhat shameful episode. The Secretary of State, who is again absent from our deliberations, had begun the process. Once he had made up his mind and persuaded colleagues to go for a property tax, against all earlier protestations from Ministers, he set about the business of trying to work out how it would operate.

First, the Secretary of State sent out a circular, in the last three or four days of February, asking district valuers to conduct an exercise in which they allocated all local property to one of 14 bands, with a top band for properties worth £250,000 or above. He did not ask them to conduct any valuations, because there was not enough time. No work was done on the ground. They were asked only to make guesses as to how many of the properties in their areas would go to one or other band. Armed with this rather scanty information, the Secretary of State took the figures to the Cabinet. It is significant that our amendment proposes the 14 bands that the Secretary of State's exercise had stipulated.

When the Secretary of State got to the Cabinet, by this time rather late in the day, he ran into a small difficulty called the Prime Minister. The Prime Minister, having looked at the figures, said, "We cannot do this. We cannot threaten our supporters living in high value properties, particularly in the south of England, with an obligation to pay a substantial share of the new council tax. We have to limit that or we will be crucified electorally." To his credit, I think that the Secretary of State did not like that very much. He understood more clearly than the Prime Minister and his colleagues what the consequences would be, but he lost. He suffered another of his many significant defeats in trying to bring forward an acceptable replacement for the poll tax. I suspect that that is why the Secretary of State has found it difficult to appear in the Committee to support some of the proposals. He knows that the Bill represents a compendium of his defeats in Cabinet.

The Cabinet and the Prime Minister insisted that, instead of 14, there should be seven bands. In the meantime—here I cannot give as accurate an account as I would like as I am not privy to these matters—for reasons about which I can only speculate, the Secretary of State had decided that as 14 bands were not acceptable, he should go for a compromise of nine. Therefore, he instituted a further exercise. He issued another circular to the district valuers asking them to conduct a more comprehensive and serious exercise in which they allocated —on the basis, one assumes, of proper valuations—all properties to one of nine bands.

Rather unfortunately for the Secretary of State, the circular was leaked, and we discovered first that the nine band exercise was under way and subsequently that an earlier 14-band exercise had been carried out. Within a day of that leak, the nine-band exercise was aborted. We were then told that all bets were off and that there were to be seven bands because nothing else would do. That raises two questions: what was the purpose of the original 14-band exercise and why was the nine-band exercise begun and then aborted within a couple of days?

The answer is that by this stage the Government were so wounded by charges that they were dithering about replacing the poll tax and were so sensitive about charges that they could not make up their mind that, at the very suggestion that they were looking at a range of options, they felt obliged to kill the exercise. In the mistaken belief that panic represented decisiveness, they decided to go for seven bands and that was the end of the consultation process.

The peculiarity is that, because of the gobsmacking of the chairman of the Tory party, the Government were obliged to produce some figures. They could not produce the 14-band figures, which were in any case an estimate about which they wanted to forget. Nor could they produce the nine-band figures, which presumably at some stage they must have thought would be informative and useful but which they had been forced to abandon. Having nailed their colours to the seven-band mast, they had to produce figures for that. Unfortunately, no one had ever done any work on seven bands. Not to be deterred, they took the guesses that had formed the basis of the 14-band exercise, lopped off the top six bands, and rejuggled the remaining eight bands to create seven bands, none of which bore any accurate correlation to the original exercise. They then allocated guesses to each of the seven bands. On that basis, they had the gall to produce figures which they seriously said represented what bills would be for this year if their proposals were in operation. They are now using that ludicrous guess—worse, an invention based on a guess—to hold local authorities to levels of bills and expenditure for future years. That is a shameful and disreputable exercise.

The curious thing about this is that, when my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) wrote to the Secretary of State for Scotland to inquire what the basis of those figures might have been, he was told airily that it would not serve any purpose to reveal the statistical basis of the calculations. I can understand that, as we now know how insubstantial was the basis on which the figures were produced. I hope that the few hon. Members who are here in this relatively ill-attended debate and the, unfortunately, few who are recording it, will attempt to get across to the wider public that no reliance is to be placed on the Government's figures. The figures for bills to be paid under the council tax are inventions.

On an earlier occasion, when asked what had gone wrong with the poll tax, which no one defends, not even the Minister or the Under-Secretary—perhaps the right hon. Members for Cirencester and Tewkesbury (Mr. Ridley) and for Finchley (Mrs. Thatcher) do—the Prime Minister said, "We were bounced." I wonder about a Prime Minister who can excuse one terrible mistake on that basis but is now proposing to bounce not just the Cabinet, his party or the House of Commons but the whole country into a council tax based on such a ludicrous invention. Has not the Prime Minister learnt the lesson of his analysis? We are storing up huge problems as a consequence of this insubstantial and shaky measure.

The Government cannot say that they were not warned. It is not just the Labour party which has said that the exercise looks unreliable and that banding is not to be supported without a good deal more work. Through its secretary general, the Royal Institution of Chartered Surveyors has expressed itself in today's newspapers as follows: unless the Government do a great deal more work and are not in too much of a rush to scrap the poll tax without addressing some of the practical difficulties, the council tax will itself, like the poll tax, be a "discredited tax." The Minister gave us a vignette of his relations with the RICS and, according to him, he met its representatives yesterday. He assures us that at that meeting they told him that the council tax was a wonderful concept. It is remarkable that after an hour or two in the presence of the Minister the secretary general of the RICS should say that the council tax threatens to be a "discredited tax". The Minister should think more carefully about the conversations that he has over lunch if that is an example of the impact that he has on his audiences.

Mr. Portillo

The hon. Gentleman does not strengthen a weak case, which he has deployed repetitively, by misquoting what I said a few hours ago, which will appear clearly in Hansard.

Mr. Gould

I reported the Minister, as in turn reporting the RICS, as saying that the institution thought that the council tax would be a perfectly workable and acceptable tax. Is that the case?

Mr. Portillo

It will be workable and acceptable.

7.30 pm
Mr. Gould

I shall rephrase what I understood the RICS told us was the institution's view of the poll tax. It seems that the council tax is considered to be a workable and acceptable tax. However, even that is somewhat different from Mr. Pattison's reported remarks in the Evening Standard. It seems that he thinks that the council tax may become a "discredited tax". I take no responsibility for the reporting of his words, but it has been reported that he has said: banding allocations will become unrealistic and unfair. It seems that he also said: This is the fast route to a discredited tax. That is rather different from whatever words the Minister chooses to describe his interpretation of the RICS's views about the council tax.

The RICS has raised a number of practical problems with banding and I hope that the Minister will be able to respond to some of them. The Minister is on record as saying that, once properties are allocated to particular bands, they will remain in them in perpetuity. That has been contradicted by the RICS, which has said that efforts will have to be made periodically to ensure that the location of properties within certain bands is reviewed. One can understand that. I am glad that the Minister has confirmed that provision will be made for appeals.

The seven-band structure and the £160,000 cut-off point are unfair and arbitrary. The system has been designed for one reason and one only, and that is to protect the wealthy who are living in valuable properties so that they do not have to pay their fair share. That reproduces the fundamental unfairness and the rotten principle of the poll tax: that those best able to pay should not pay their fair contribution. The system distorts the progressiveness which, in other circumstances, the Government claim for council tenants. It seems that everyone will have to pay his fair share except for the wealthy who are in the most valuable properties.

However the liability is distributed for paying a fixed sum, the arithmetical mean must be the same. If one person paid the total liability of £9 billion, or whatever, the mean would be whatever it would be. The mean is distributed among all those who are liable. Ministers seem unable to grasp that if the Government protect those who are at the top end of the scale by saying that they need not pay their fair share, others have to pay that from which those at the top end of the scale have been absolved. While the arithmetical mean will always be the same, the bill for the average person, family or household—if the scale is compressed—must necessarily be higher.

I know that Ministers are not geniuses or even especially competent in arithmetic, but I am advancing a fairly basic proposition which I hope they will be able to grasp. I am saying that even under the council tax the bills of the majority will be higher than they need be because the range of bands is skewed to produce that result. Those who do not pay what they should place a loading on the rest of the community. That, to put it simply, is why the bills for the majority will be higher than they need be.

Incidentally, the compression of the bands and the imposition of the £160,000 limit lead to the concern that has been expressed by the right hon. Member for Brent, North (Sir R. Boyson). He is rightly concerned about the impact of the compression on areas such as London and the south-east, where property values are so much higher than elsewhere. With proper banding the problem would have been eased.

Mr. Portillo


Mr. Gould

Oh yes; oh yes; oh yes. The London Boroughs Association, the right hon. Member for Brent, North and the hon. Member for Surbiton (Mr. Tracey) have argued that a proper range of valuation would have reduced the deleterious effect of high property values in London and the south-east.

Mr. Tracey

The hon. Gentleman has slightly misunderstood what my right hon. Friend the Member for Brent, North (Sir R. Boyson) and I said. We argued that in many London boroughs there are no properties with a value of £60,000 or £80,000. We agree with the sevenband structure but we say that it needs to be set out differently according to the region. The London Boroughs Association has advanced the same argument.

Mr. Gould

The hon. Gentleman makes a fair point, and I agree with it. He may be caused embarrassment when I say that we are in entire agreement and on all fours in this instance. I agree that a separate argument can be advanced about the number of bands in the structure. I understand him to say that as the range of property values in London is rather different from that in the rest of the country, it is inappropriate to have an already compressed range of bands applying to London. I say that, if we had the 14 bands that the Secretary of State originally contemplated, with a limit of £500,000, the London boroughs, depending on their individual circumstances, could have applied the appropriate bands to their range of properties. I think that the hon. Gentleman understands my argument.

Mr. Portillo

I genuinely wonder whether the hon. Gentleman does not understand or whether he expresses himself poorly. Whatever the reason, his argument about compressed bands is 100 per cent. wrong. It is rather reminiscent of the point about parishes that arose yesterday. He understood that there was a point, but he had it entirely wrong. If a property is worth £160,000 in London, under our proposal it will pay two-and-a-half times as much as, for example, a £30,000 property. If we did not have compression, the property worth £160,000 would pay five times as much as the other property, or rather more. Clearly compression is helpful to the higher-value properties in the south-east, not unhelpful.

Mr. Gould

The Minister fails to understand the effect of his own scheme. As many properties in London are valued at about £160,000, and as that is the top rate, they all pay the top rate. The result is that there are few to pay anything less. Those who live in houses that are worth £500,000 pay no more. In other words, those who are bunched in the middle of the valuation range pay the top rate under the Minister's scheme. That is why the right hon. Member for Brent, North and the hon. Member for Surbiton are objecting. They say that an inappropriate range of property values is being applied. I am surprised that the Minister cannot understand that. Again, we have an insight into why mistakes are made.

The Chairman

I hesitate to interrupt the hon. Member in the middle of his speech, but I must remind him and the Minister that we are trespassing into an area that will be covered during the next debate, which will focus on regionalisation.

Mr. Gould

You are right, Mr. Walker. We have had debates, however, about regional banding under even less appropriate amendments.

I am about to draw my remarks to a close and I shall conclude by saying that however the Minister may wish to interpret the RICS's warnings, there are many outside this place who understand very well that what is being proposed by way of banding is a fast route, as the RICS has said, to a "discredited tax".

The amendment offers the Government a means of making honest men of themselves. The only exercise that they have carried out is a 14-band exercise, as stipulated in the amendment. The Government can now use the only information that they have to instruct district valuers and others on how to make progress. However, unless they are prepared to do that, they must stand convicted of putting forward proposals and figures to the public for which they have absolutely no basis. As long as they adhere to their current position, which is that consultation is at an end and an unfair and unworkable banding system is to be imposed, we are on the way to that discredited tax.

Mr. Roger Sims (Chislehurst)

I hope that when my hon. Friend the Minister of State responds to the debate, he will explain the present state of play with regard to banding and will say whether the paper before us is a consultation paper. Following my letter to him, he will know that I share the concern expressed by the hon. Member for Dagenham (Mr. Gould) about the top band. Many properties in my constituency and throughout suburban and inner London, including my hon. Friend's constituency, are valued by local estate agents at £160,000 or more. Many are ordinary, semi-detached properties and my constituents who live in those properties feel strongly that they will be put into exactly the same band as owners of property worth the £0.5 million mentioned in the amendment, and even more. There may be a relatively small number of higher-priced properties and, even if there were another band, it might not make much difference. Nevertheless, there is an understandable sense of unfairness.

I have put the point in writing and verbally to my hon. Friend. Although I do not expect him to commit himself this evening, the matter could be dealt with in various ways, such as by having eight, nine or 14 bands, a regional banding system or simply altering the figures covered by the proposed seven bands. I merely ask for an assurance that the bands proposed by the Government are not cast in concrete and that the representations that have been made to my hon. Friend—the end of the consultation is in a couple of days' time—will be taken into account. Will my hon. Friend assure me that, by passing clause 3, we shall not commit ourselves irrevocably to the seven bands and the figures that have been given?

I have been in the House long enough to know the interaction between legislation. We shall eventually have legislation that contains detailed proposals of the council tax. I do not want to be told then that there will be seven bands at those values because I supported them in the earlier legislation. Therefore, I hope that my hon. Friend will assure me that no final decision has been made on the number of bands or the figures within them.

Mr. Portillo

If my hon. Friend the Member for Chislehurst (Mr. Sims) votes in favour of the clause, he will be voting to authorise Parliament to make money available for a valuation process, which would put properties into bands. But he would not be voting for a particular number of bands or series of values to be ascribed to bands. The banding concept is implicit within the Bill but no number of bands is stipulated.

I have told my hon. Friend the Member for Chislehurst in private, and I do so equally in public, that we entered the consultation process with a firm recommendation from the Government that there should be seven bands, and we indicated the valuation that we had in mind having thought about the matter carefully. I do not wish to deceive my hon. Friend in that respect, because the proposal for seven bands is firm. However, this is a genuine consultation period and we fully recognise that we shall hear a range of comments and opinions. We shall wish to weigh all the points made to us during that period. I thank my hon. Friend for being so assiduous in writing and speaking to me and raising the matter during the Committee proceedings.

7.45 pm

One of our reasons for considering that a cut-off point at, say, £160,000 may be appropriate is that, in my constituency and that of my hon. Friend the Member for Chislehurst some people live in even more expensive houses. It does not mean that they have the readily disposable income to make a much greater contribution. They may simply have lived in such a house for some time and now find that it is worth a great deal of money because of where it is. One of the great mistakes made during the rating system was the assumption that, if one lived in a more valuable property, one should contribute limitless extra amounts to local government.

We have sought, first, to constrain the amount that anyone contributes by changing the balance of what is raised nationally and what is raised locally. Secondly, we have sought to ensure that, although the tax will be related to property prices, that relationship should be kept within bounds, so that those who live in more expensive properties should contribute only about two thirds more than those in average value properties, while those in the least valuable properties should contribute only two thirds of the average.

That is why it is extraordinary that the hon. Member for Dagenham (Mr. Gould) should so clearly misunderstand the point as it applies to London and the south-east. When he appeared to sympathise with my hon. Friend the Member for Surbiton (Mr. Tracey) who spoke about the difficulties of operating within a national banding system, it was the merest cant. The Labour party's proposal would exacerbate those difficulties manyfold. Opposition Members want a system in which there are no restraints. They assume that an elderly couple who live in a house that now happens to be worth £250,000 are, ipso facto, five times more able to pay tax than people living in houses worth £50,000 in other parts of the country. Although the Government believe that the council tax should relate partly to property prices, we do not believe that there should be the crude relationship that existed under the rating system, to which the Labour party wish to return.

Mr. Gould

I suspect that we shall have an opportunity to debate our proposals for fair rates when there is a Labour Government after the next general election. I am sure that the Minister is aware that we are currently debating an amendment on a rather different proposition, which is that there should be 14 bands with a £0.5 million top band rather than the Government's current proposal. Will the Minister deal with that distinction?

Mr. Portillo

Yes, and I can be brief because the hon. Gentleman's speech has been delivered before. Indeed, we have heard every word of it before. His fictitious account of how the Government moved from 14 bands to some other number of bands—

Mr. Gould

As the Minister accuses me of returning to the theme more than once, perhaps we can now deal with it. What valuation exercises have been carried out and on the basis of how many bands? Am I right to say that a 14-band exercise was carried out, a nine-band exercise was aborted and a seven-band exercise has not yet been completed?

Mr. Portillo

I fell foul of the "lady Whip" earlier by going on too long and I do not intend to be drawn into all that. But for the avoidance of doubt I can tell the hon. Gentleman that at no time did Ministers consider a 14-band option, and the reason for that is apparent. The great advantage of banding—

Mr. Blunkett

I will take responsibility for keeping the debate going. What was circular 53 all about then?

Mr. Portillo

It was not about the series of options that Ministers were to consider. That is the important point.

The obvious merit of banding is that it simplifies the process of valuing property and it also simplifies the question of what happens over time. Clearly, the fewer the number of bands, the fewer difficulties there are over time. The fewer appeals there are in the first place because there are fewer boundaries between bands the less likelihood there is that over time a property will move from one band to another. It would have been absurd for Ministers to consider a 14-band option and that is why it is absurd that it should have been proposed in the amendment. If there is to be an effective banding system, the pressure is to have a small number of bands rather than a large number of bands.

That is the point that I was trying to make when I talked about revaluation. A terraced house is a terraced is a terraced house. It never ceases to be that, and it never changes its location. If the bands are broad enough, even over a period of time it is unlikely that its value, or even its relative value, will move to such an extent that it will change bands. I do not exclude the possibility, but that is the point that I was trying to make about the advantage of banding. The Labour party's rates proposal would mean that each property would have to be revalued periodically and their values would all have to change.

There is one other point that I want to pick up because the hon. Member for Dagenham has raised it so often—what I said on the radio about other factors. I can give a simple example. Factors other than capital value could be taken into account. For example, improvements to a property for the benefit of a disabled person were disregarded for the purposes of rateable value, and rightly so, and under the council tax they should also be disregarded. That is the sort of other factor that I have in mind and I was trying to be fairly exact about that. It is an important point and the Secretary of State has never denied it.

Mr. O'Brien

What happens to the disabled person whose property is in the lowest band? Will there be any concession for that individual?

Mr. Portillo

If the hon. Gentleman would like to write to me with some proposals, I shall weigh them in the consultation process.

Mr. O'Brien

The answer is no.

Mr. Portillo

No, that is precisely the sort of thing that we want to talk about during the consultation process. We will be considering how to treat the properties of disabled people.

Mr. O'Brien

There will be no concession.

Mr. Portillo

Please, I ask the hon. Gentleman to listen. I am saying that the Government will want to listen carefully to what is said about such matters during the consultation. I believe that the council tax should disregard improvements to, for instance, the properties of disabled people.

The hon. Member for Dagenham is apparently also puzzled about how the valuation office has data about the value of properties. When properties in Britain are sold, stamp duty may have to be paid and that is a matter for the Inland Revenue. The Inland Revenue has a great deal of information about current house prices because people selling them have to declare the prices at which they sell them and they have to pay tax.

The hon. Gentleman also mentioned the Royal Institute for Chartered Surveyors. He does himself no good by misquoting. The Evening Standard says that the Royal Institution of Chartered Surveyors' secretary general, Mr. Michael Pattison, said: there should be periodic checks on whether properties are still in the right band. Otherwise…over several years 'banding allocations will become unrealistic and unfair. That is the fast route to a discredited tax'. The hon. Gentleman implied that the RICS has said that banding was the way to an unworkable and discredited tax and that is not true. The RICS is making the point that it wants to see revaluations and appeals. We have always made it clear that we think that there should be an appeal mechanism and I believe that that is implied in paragraph 2.23 of our consultation document.

The Opposition have no doubt amused themselves by putting down an amendment proposing 14 bands, but it makes no sense and it never would have made any sense. It was never considered by the Government, and there is no reason to revisit that terrain. I therefore call upon the Committee to reject the amendment.

Mr. Gould

Just as the Minister claims not to have been surprised at me moving the amendment, I am unfortunately not surprised at his response to my speech and to the amendment. He notably failed to provide any evidence that the Government had any basis for their calculations. He notably failed to satisfy the proper inquiries from his own hon. Friends and he will notably have failed to have saved his colleagues, should they ever be members of the Government who implement the tax, from the sort of embarrassment which scarred them so deeply over the poll tax. For all those reasons, we wish to press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 186, Noes 260.

Division No. 169] [7.55 pm
Adams, Mrs Irene (Paisley, N.) Davies, Ron (Caerphilly)
Allen, Graham Davis, Terry (B'ham Hodge H'I)
Alton, David Dewar, Donald
Archer, Rt Hon Peter Dixon, Don
Armstrong, Hilary Dobson, Frank
Ashley, Rt Hon Jack Douglas, Dick
Ashton, Joe Duffy, A. E. P.
Banks, Tony (Newham NW) Dunnachie, Jimmy
Barnes, Harry (Derbyshire NE) Dunwoody, Hon Mrs Gwyneth
Barnes, Mrs Rosie (Greenwich) Eastham, Ken
Barron, Kevin Edwards, Huw
Battle, John Ewing, Mrs Margaret (Moray)
Beckett, Margaret Fatchett, Derek
Beggs, Roy Faulds, Andrew
Beith, A. J. Fearn, Ronald
Bell, Stuart Field, Frank (Birkenhead)
Bellotti, David Fields, Terry (L'pool B G'n)
Bennett, A. F. (D'nt'n & R'dish) Flynn, Paul
Bermingham, Gerald Foot, Rt Hon Michael
Blair, Tony Foster, Derek
Blunkett, David Foulkes, George
Boateng, Paul Fraser, John
Boyes, Roland Fyfe, Maria
Bradley, Keith Galbraith, Sam
Brown, Nicholas (Newcastle E) Garrett, John (Norwich South)
Callaghan, Jim Garrett, Ted (Wallsend)
Campbell, Menzies (Fife NE) Godman, Dr Norman A.
Campbell, Ron (Blyth Valley) Gordon, Mildred
Canavan, Dennis Gould, Bryan
Carlile, Alex (Mont'g) Graham, Thomas
Carr, Michael Grant, Bernie (Tottenham)
Cartwright, John Griffiths, Nigel (Edinburgh S)
Clark, Dr David (S Shields) Griffiths, Win (Bridgend)
Clarke, Tom (Monklands W) Hain, Peter
Clelland, David Hardy, Peter
Cohen, Harry Haynes, Frank
Cryer, Bob Heal, Mrs Sylvia
Cummings, John Hinchliffe, David
Cunliffe, Lawrence Hoey, Ms Kate (Vauxhall)
Darling, Alistair Hogg, N. (C'nauld & Kilsyth)
Home Robertson, John O'Brien, William
Howells, Geraint O'Hara, Edward
Howells, Dr. Kim (Pontypridd) Orme, Rt Hon Stanley
Hughes, John (Coventry NE) Owen, Rt Hon Dr David
Hughes, Robert (Aberdeen N) Parry, Robert
Hughes, Roy (Newport E) Pendry, Tom
Hughes, Simon (Southwark) Pike, Peter L.
Illsley, Eric Powell, Ray (Ogmore)
Ingram, Adam Prescott, John
Janner, Greville Primarolo, Dawn
Johnston, Sir Russell Quin, Ms Joyce
Jones, Barry (Alyn & Deeside) Radice, Giles
Jones, Martyn (Clwyd S W) Redmond, Martin
Kaufman, Rt Hon Gerald Reid, Dr John
Kinnock, Rt Hon Neil Richardson, Jo
Kirkwood, Archy Robinson, Geoffrey
Lambie, David Robinson, Peter (Belfast E)
Lamond, James Ross, Ernie (Dundee W)
Leadbitter, Ted Ross, William (Londonderry E)
Leighton, Ron Rowlands, Ted
Lestor, Joan (Eccles) Salmond, Alex
Lewis, Terry Sedgemore, Brian
Litherland, Robert Sheerman, Barry
Livingstone, Ken Sheldon, Rt Hon Robert
Livsey, Richard Short, Clare
Lloyd, Tony (Stretford) Skinner, Dennis
Loyden, Eddie Smith, Andrew (Oxford E)
McAllion, John Smith, C. (Isl'ton & F'bury)
McAvoy, Thomas Smith, J. P. (Vale of Glam)
Macdonald, Calum A. Snape, Peter
McFall, John Soley, Clive
McKay, Allen (Barnsley West) Spearing, Nigel
McKelvey, William Steel, Rt Hon Sir David
Maclennan, Robert Steinberg, Gerry
McMaster, Gordon Strang, Gavin
McNamara, Kevin Taylor, Rt Hon J. D. (S'ford)
McWilliam, John Taylor, Matthew (Truro)
Madden, Max Thomas, Dr Dafydd Elis
Mahon, Mrs Alice Thompson, Jack (Wansbeck)
Marek, Dr John Turner, Dennis
Marshall, David (Shettleston) Walker, A. Cecil (Belfast N)
Martin, Michael J. (Springburn) Wallace, James
Martlew, Eric Wardell, Gareth (Gower)
Meale, Alan Welsh, Andrew (Angus E)
Michael, Alun Welsh, Michael (Doncaster N)
Michie, Mrs Ray (Arg'l & Bute) Wigley, Dafydd
Mitchell, Austin (G't Grimsby) Williams, Rt Hon Alan
Moonie, Dr Lewis Winnick, David
Morgan, Rhodri Wise, Mrs Audrey
Morley, Elliot Worthington, Tony
Morris, Rt Hon J. (Aberavon) Young, David (Bolton SE)
Mowlam, Marjorie
Murphy, Paul Tellers for the Ayes:
Nellist, Dave Mrs. Llin Golding and
Oakes, Rt Hon Gordon Mr. Robert N. Wareing.
Adley, Robert Boswell, Tim
Aitken, Jonathan Bottomley, Peter
Alexander, Richard Bowden, A. (Brighton K'pto'n)
Alison, Rt Hon Michael Bowden, Gerald (Dulwich)
Allason, Rupert Bowis, John
Amess, David Boyson, Rt Hon Dr Sir Rhodes
Amos, Alan Braine, Rt Hon Sir Bernard
Arbuthnot, James Brandon-Bravo, Martin
Ashby, David Brazier, Julian
Aspinwall, Jack Bright, Graham
Atkins, Robert Brooke, Rt Hon Peter
Atkinson, David Brown, Michael (Brigg & Cl't's)
Baker, Nicholas (Dorset N) Bruce, Ian (Dorset South)
Batiste, Spencer Buchanan-Smith, Rt Hon Alick
Bellingham, Henry Buck, Sir Antony
Bendall, Vivian Butcher, John
Bennett, Nicholas (Pembroke) Butler, Chris
Biffen, Rt Hon John Butterfill, John
Blackburn, Dr John G. Carlisle, John, (Luton N)
Blaker, Rt Hon Sir Peter Carlisle, Kenneth (Lincoln)
Body, Sir Richard Carrington, Matthew
Bonsor, Sir Nicholas Carttiss, Michael
Boscawen, Hon Robert Cash, William
Channon, Rt Hon Paul Irvine, Michael
Chapman, Sydney Irving, Sir Charles
Churchill, Mr Jack, Michael
Clark, Rt Hon Alan (Plymouth) Janman, Tim
Clark, Dr Michael (Rochtord) Johnson Smith, Sir Geoffrey
Clark, Rt Hon Sir William Jones, Gwilym (Cardiff N)
Clarke, Rt Hon K. (Rushcliffe) Jones, Robert B (Herts W)
Colvin, Michael Jopling, Rt Hon Michael
Coombs, Anthony (Wyre F'rest) Kellett-Bowman, Dame Elaine
Coombs, Simon (Swindon) Key, Robert
Cope, Rt Hon John Kilfedder, James
Couchman, James King, Rt Hon Tom (Bridgwater)
Cran, James Knapman, Roger
Davies, Q. (Stamf'd & Spald'g) Knight, Greg (Derby North)
Davis, David (Boothferry) Knowles, Michael
Day, Stephen Knox, David
Dicks, Terry Lang, Rt Hon Ian
Dorrell, Stephen Latham, Michael
Douglas-Hamilton, Lord James Lawrence, Ivan
Dover, Den Lee, John (Pendle)
Dunn, Bob Leigh, Edward (Gainsbor'gh)
Eggar, Tim Lennox-Boyd, Hon Mark
Evans, David (Welwyn Hatf'd) Lester, Jim (Broxtowe)
Fallon, Michael Lightbown, David
Favell, Tony Lilley, Rt Hon Peter
Fenner, Dame Peggy Lloyd, Sir Ian (Havant)
Field, Barry (Isle of Wight) Lord, Michael
Finsberg, Sir Geoffrey Luce, Rt Hon Sir Richard
Fishburn, John Dudley McCrindle, Sir Robert
Fookes, Dame Janet Macfarlane, Sir Neil
Forman, Nigel MacGregor, Rt Hon John
Forsyth, Michael (Stirling) MacKay, Andrew (E Berkshire)
Forth, Eric Maclean, David
Fox, Sir Marcus McLoughlin, Patrick
Franks, Cecil McNair-Wilson, Sir Michael
Freeman, Roger McNair-Wilson, Sir Patrick
French, Douglas Madel, David
Fry, Peter Malins, Humfrey
Gale, Roger Marland, Paul
Gardiner, Sir George Marlow, Tony
Gill, Christopher Marshall, John (Hendon S)
Gilmour, Rt Hon Sir Ian Marshall, Sir Michael (Arundel)
Glyn, Dr Sir Alan Martin, David (Portsmouth S)
Goodhart, Sir Philip Mates, Michael
Goodlad, Alastair Maude, Hon Francis
Goodson-Wickes, Dr Charles Mawhinney, Dr Brian
Gorman, Mrs Teresa Mayhew, Rt Hon Sir Patrick
Grant, Sir Anthony (CambsSW) Miller, Sir Hal
Greenway, Harry (Eating N) Mills, Iain
Greenway, John (Ryedale) Miscampbell, Norman
Gregory, Conal Mitchell, Andrew (Gedling)
Griffiths, Peter (Portsmouth N) Mitchell, Sir David
Grist, Ian Moate, Roger
Ground, Patrick Monro, Sir Hector
Grylls, Michael Montgomery, Sir Fergus
Hague, William Moore, Rt Hon John
Hamilton, Hon Archie (Epsom) Morris, M (N'hampton S)
Hamilton, Neil (Tatton) Moss, Malcolm
Hanley, Jeremy Neale, Sir Gerrard
Hannam, John Needham, Richard
Hargreaves, Ken (Hyndburn) Nelson, Anthony
Harris, David Neubert, Sir Michael
Hawkins, Christopher Newton, Rt Hon Tony
Hayes, Jerry Nicholls, Patrick
Hayward, Robert Nicholson, David (Taunton)
Heathcoat-Amory, David Nicholson, Emma (Devon West)
Hicks, Mrs Maureen (Wolv' NE) Onslow, Rt Hon Cranley
Hicks, Robert (Cornwall SE) Oppenheim, Phillip
Higgins, Rt Hon Terence L. Page, Richard
Hill, James Paice, James
Hind, Kenneth Patnick, Irvine
Holt, Richard Pattie, Rt Hon Sir Geoffrey
Hordern, Sir Peter Pawsey, James
Howard, Rt Hon Michael Peacock, Mrs Elizabeth
Howarth, Alan (Strat'd-on-A) Porter, David (Waveney)
Howarth, G. (Cannock & B'wd) Portillo, Michael
Howell, Rt Hon David (G'dford) Powell, William (Corby)
Hughes, Robert G. (Harrow W) Price, Sir David
Hunt, Sir John (Ravensbourne) Raison, Rt Hon Sir Timothy
Hunter, Andrew Redwood, John
Riddick, Graham Taylor, Teddy (S'end E)
Rifkind, Rt Hon Malcolm Tebbit, Rt Hon Norman
Roberts, Sir Wyn (Conwy) Temple-Morris, Peter
Roe, Mrs Marion Thompson, D. (Calder Valley)
Rost, Peter Thompson, Patrick (Norwich N)
Rowe, Andrew Thurnham, Peter
Rumbold, Rt Hon Mrs Angela Townsend, Cyril D. (B'heath)
Sayeed, Jonathan Tracey, Richard
Scott, Rt Hon Nicholas Trotter, Neville
Shaw, David (Dover) Twinn, Dr Ian
Shaw, Sir Michael (Scarb') Vaughan, Sir Gerard
Shelton, Sir William Viggers, Peter
Shephard, Mrs G. (Norfolk SW) Walden, George
Shepherd, Richard (Aldridge) Walters, Sir Dennis
Shersby, Michael Ward, John
Sims, Roger Wardle, Charles (Bexhill)
Skeet, Sir Trevor Watts, John
Smith, Tim (Beaconsfield) Wheeler, Sir John
Soames, Hon Nicholas Whitney, Ray
Spicer, Sir Jim (Dorset W) Wiggin, Jerry
Stanbrook, Ivor Wilkinson, John
Stanley, Rt Hon Sir John Wilshire, David
Stevens, Lewis Winterton, Mrs Ann
Stewart, Allan (Eastwood) Wood, Timothy
Stewart, Andy (Sherwood) Woodcock, Dr. Mike
Stewart, Rt Hon Ian (Herts N)
Sumberg, David Tellers for the Noes:
Summerson, Hugo Mr. John M. Taylor and
Tapsell, Sir Peter Mr. Tom Sackville.

Question accordingly negatived.

Mr. O'Brien

I beg to move amendment No. 29, in page 2, line 49, at end insert 'and (in the case of England and Wales) according to regions, in respect of each of which the Secretary of State shall prescribe a band of values'. The amendment permits a debate on the regional variations of capital values and their effects on the system proposed for the new council tax.

During the debate on the first set of amendments, the right hon. Member for Brent, North (Sir R. Boyson) mentioned the great concern of many people in London and the south about the way in which the proposed banding system will apply in their areas. He told the Minister that, if some provision could be made to accommodate the suggestions made by the London Boroughs Association, and if some amendments were made to the system, he envisaged people dancing in the streets and voices in heaven blessing the Minister, because problems are expected with the banding system in its present form.

During the debate on the previous set of amendments, my hon. Friend the Member for Dagenham (Mr. Gould) dwelt at some length on the banding issue. This amendment refers to the specific problem of how the various bands will apply in certain areas and reflects the fact that proposals have been made for some regional banding. We have tabled the amendment against that background in the hope that the Government will reconsider the present principle of banding and will try to accommodate some of the worries expressed by the LBA and by Conservative Members about the problems facing ratepayers in southern England.

The Bill is an enabling measure; it provides the power to allocate domestic properties to bands for rating purposes. It is a power to prescribe principles for banding in the form of regulations. Regulations will also be made to provide access to the necessary information to ensure that such allocations are made on a sound basis. That is the background to the problems mentioned by London and southern Members of Parliament.

The Bill is a Government U-turn on the poll tax, which has been discredited and is to be scrapped. Our fear is that, if the proposed new banding system is not amended, the new council tax will also be discredited. It is not only Labour Members who are saying that. The Conservative-controlled London Boroughs Association has been putting pressure on some 200 Members of Parliament, mostly Conservative, to urge the Government to base the new council tax on regional bands that take account of the higher property values in the south. My hon. Friend the Member for Dagenham mentioned the original proposal for 14 bands, which would have met some of the anxieties expressed by the LBA.

The LBA has made overtures to Members of Parliament because householders in regions with high property values, such as the south-east and the south-west, would benefit from an amendment to the banding proposals. The LBA suggests that there should be nine regions, with the system being based on the average house price in each region. Those nine regions would be the north, the north-west, Mersey and Humberside, the west midlands, the east midlands, East Anglia, the south-west, the south-east, and Greater London. The Government should carefully consider that proposal as it would mean a fairer and more equal system for the banding of properties. Although I do not wholly support the LBA's proposals, I support the proposal for a regional emphasis.

Mr. Peter L. Pike (Burnley)

My hon. Friend's point is reinforced by the position in my constituency, where well over half of the properties would come within the bottom range of the proposed bands. However, if those properties were in high-value areas such as London and the south-east, they would come within the top range. That shows the wide regional variations.

Mr. O'Brien

My hon. Friend has ably explained the problem. Without some sort of regional banding, the proposed system will be discredited, as was the poll tax. That is why we take the matter very seriously.

8.15 pm
Ms. Mildred Gordon (Bow and Poplar)

I have listened carefully to my hon. Friend, and I can tell him that the people of Tower Hamlets are very concerned. In docklands, small luxury apartments sell for about £250,000, yet most people in that borough have modest incomes and live in modest dwellings. Some people are very poor and they live in overcrowded accommodation. They do not want to pay a high council tax for the privilege of living in an area where luxury apartments are bought by companies and given to their executives as pied-a-terres.

Mr. O'Brien

The problem explained by my hon. Friend is common to many London boroughs and to the south-east and south-west. I am sure that many Members of Parliament could cite similar cases. For example, it is absurd that 70 per cent. of the homes in Hackney, which is one of London's most deprived boroughs, will come within the top three tax bands. The poor people of Hackney will be paying a high council tax because under the Government's grant system their area is deemed to be wealthy. Those poor people often live in homes that they rent from the council or from a housing association; they cannot afford to buy homes in such a high-cost area. The proposed council tax has many anomalies, and if the Government do not deal with them there will be another uprising.

Clause 3(3) provides: The valuation shall be carried out on such assumptions and in accordance with such principles and by reference to such date as may be prescribed". In many cases, that will be at the discretion of the Secretary of State. The Bill gives him the power to carry out such prescription. The clause also refers to "each prescribed area". The Government must deal with such prescribed areas because the Members of Parliament representing them place great importance on how the council tax will be applied to them.

At first glance clause 3(3) appears to cover all the issues of concern and matters of principle raised by hon. Members on both sides, but in different parts of the country each prescribed area could be different. Therefore, it is important that the Government note the proposals in our amendment for regional variations in the capital values of domestic properties.

Hon. Members will be aware that a few years ago, when we received the report on the revaluation of commercial properties, we realised the significance of the regional variations of property values. That could cause an uproar and create problems. One can readily see that the same problems will recur with this proposed banding of properties. Those are warnings to the Government that something must be done if the council tax is to be fair. Our amendment attempts to rectify the problems and any anomalies which may arise from this ill-thought-out legislation.

The Secretary of State for the Environment told us that the new council tax would be based solely on capital values, but the Minister of State said that many other factors would be considered when assessing capital values, and he referred to the disabled. If disability is the only other factor, the Minister was misleading the listeners who tuned in to the "Today" programme. We should have a further explanation of the Government's proposals.

When the Secretary of State was challenged in the House about those conflicting views, he said that both he and the Minister were correct. That cannot be the case. As their comments conflicted, they cannot both be correct in their views on how the council tax will be applied. The Bill does nothing to clarify that. I hope that tonight the Minister will clarify the issue.

The consultation paper on local government finance confuses the uses of values. My hon. Friend the Member for Dagenham explained in detail the confusion caused by the various values applied to the bands. The proposals use values for the distribution of the local tax burden within each prescribed area and valuations to determine in part the resources equalisation function grant. The proposals for banding influence the grant that the Government will pay on resources equalisation. Therefore, if the valuations system and banding are not thought through properly, they will create difficulties and unfairness in the financing of local authority areas. In addition to demanding payment from people on low incomes, they will influence the amount of grant paid to local authorities under the rate support element.

The prescribed area and the valuation base should be examined because of the high capital values and the high incidence of rented accommodation. If that is not done, there should be an examination of regional banding.

I referred to the payment of grant support. On Second Reading, in reply to an intervention by the hon. Member for Ludlow (Mr. Gill) on the complete abolition of grants, the Secretary of State said: My hon. Friend makes an interesting suggestion. However, if one were to examine the resources of some of the more hard-pressed authorities and their undeniable needs, it would be difficult to see how to square 100 per cent. of expenditure with 100 per cent. of local revenue. The Government take the view that there is a balance to be struck. We have changed the incidence of the balance very much for the better through my right hon. Friend the Chancellor's Budget, but it is very much the Government's view that it is appropriate that local authorities should have some revenue-raising capacity of their own."—[Official Report, 3 June 1991; Vol. 192, c. 56.] In other words, if local authority revenue is to be raised fairly, it is important that the Government consider regional handing, as outlined in the amendment. In areas such as Hackney, the measure of real taxable resources, such as taxable incomes, should be taken as the formula for considering the resources equalisation function of the grant system rather than the artificially high prices of properties.

We can appreciate the reintroduction of the resources equalisation grant procedure—that is a step in the right direction—but if it is to apply fairly across the board, the measure of taxable capacity should be incomes. That is to say, it should apply to people and not to houses because people pay taxes and houses do not. The principle applied in the banding procedure is wholly unfair.

If the new council tax is to apply fairly across the board, a more accurate view must be taken of standard spending assessments. They influence all the budget proposals of local authorities. In many instances the SSA will determine the grant to be paid to an authority and how much taxpayers will pay. We already realise that the SSA is the criterion for capping. Therefore, there must be a radical review of SSAs before the new council tax is introduced.

I warn the Government that, if this banding exercise is their flagship for financing local authority expenditure, and if it is to be applied fairly, at present its application is not in the best interests of local government. I ask the Minister to consider our amendment carefully. If there are difficulties with it, perhaps he will explain what the Government are prepared to accept to deal with the anxieties expressed in this debate. If there is no alternative to the system of banding, we shall have to divide the House on this issue.

8.30 pm
Mr. Rupert Allason (Torbay)

I urge the Government to reject this amendment. It might appear slightly attractive superficially; certainly the principle of regional variations has already been granted, in the sense that there will be a different banding base for Wales, Scotland and England. This is a mischief-making amendment, however. The Opposition have not described what they have in mind as an alternative. When they were given the opportunity to participate in the construction of an alternative to the community charge, they declined it. The Liberals, on the other hand, at least had the good grace to make a contribution and to suggest a scheme which, on examination, has been rejected in the past and which is likely to be rejected again—as it is wholly impractical.

Mr. O'Brien

I must correct the hon. Gentleman. The Labour party did not decline to participate. We asked the Secretary of State to abolish the poll tax immediately, whereupon we would enter into meaningful consultations.

Mr. Allason

There can be no consultations if prior conditions are imposed.

The real tragedy of all this is to be found in what the Opposition say about the best interests of local government. Those best interests are that both sides should be able to sit down and thrash out a system that can be worked by both parties. Different parties are in power across the country and they will have to implement and administer the system. Here we can see the mischief making at work in the amendment. The Opposition are trying to tie the Government's hands. As I read clause 3(3), the Government have wide powers of discretion to decide how the bands will work, yet the Opposition are attempting to introduce a system based on regional variations.

In my constituency there are many variations. We have houses of high value and a large number of small terraced houses which used to have low rateable values. My interest in this topic stemmed from the fact that Torbay had the dubious honour of having to impose the highest community charge in the south-west. My support for the community charge fell away between the moment when the original scheme looked as if it were going to benefit Torbay and the moment when the new SSA system, introduced in November 1989, severely disadvantaged my constituency.

I hope that the new system will at least be fair and that it will take account of some element of regional variation. But to try to tie the Government's hands in an enabling Bill is sheer mischief making. I hope that, in the months before the election, the electorate will remember how the Opposition behaved on this important issue.

The system of raising revenue for local authorities will have to be administered by all parties. There is a Liberal administration in my constituency, so it is essential for local government and for those who have to pay the council tax that there be an element of agreement. Accordingly, I urge the Committee to reject the amendment.

Mr. Key

I shall do my best not to inflame any hon. Member on this issue, in the interests of brevity. I shall, course, respond seriously to the points that have been made.

I thank my hon. Friend the Member for Torbay (Mr. Allason) for his wise words. He has put his finger on two of the problems: mischief-making and the genuine regional problem. I listened with care to the hon. Members for Burnley (Mr. Pike) and for Bow and Poplar (Ms. Gordon). It was significant that they put arguments from the point of view of different ends of the country. They put their fingers on the central problem in all this. It is the practical problem of regional boundaries—similar houses with similar values on either side of a regional boundary could attract very different council tax bills.

In my constituency, for instance, a house might fall into band E or F, while over the boundary in the next village in Hampshire, a similar house might fall into band C because it is in the south-east region. Why should two similar houses of the same value and so close together have such different bills? That is one of the biggest problems associated with regional banding.

I shall take away the thesis of the hon. Member for Normanton (Mr. O'Brien) and consider it carefully. He need not divide the House on this issue, however, because the amendment is unnecessary.

This is an enabling power which does not specify how bands should be set. Indeed, it would be possible to have regional bands under the Bill. The Government have no proposals to have such regional bands but the amendment is redundant and merely designed to limit the room for manoeuvre, not to increase the possibilities.

Mr. Eric Illsley (Barnsley, Central)

The Minister talked about how, with regional banding, a property in his constituency could pay more council tax than one across the boundary in a neighbouring constituency. Does not the same problem occur between the high values of properties in the south compared with the values of properties in the north? Semi-detached houses in my constituency would be far cheaper than their counterparts in the south.

Mr. Key

I was coming to that, but it happens to be untrue. A valuation carried out differentially according to regions would mean that low-value properties in the north of England would face bills similar to those of much higher-valued properties in the south. The effect of the amendment would be to raise council tax bills for most people living outside the south-east of England. That would not be right. On our proposals, bills would be set on the same basis throughout England. Properties with values of about £80,000 would be charged on the same basis in London and Lancashire, in Newcastle and in Nuneaton. This simple and readily understood principle would disappear if separate bands were set for each region.

I know that some of my hon. Friends have said that our approach would give rise to unduly high bills in the south-east. We have designed our proposals to ensure as far as we can that that does not happen. Our approach to banding properties means that the largest bill is only two and a half times the lowest, for spending at the standard level. That will avoid disproportionate bills for high-priced areas and will mean that low hills for low-priced properties are sent out throughout the country. The amendment seeks to undermine that approach and I call on the Committee to reject it.

Mr. O'Brien

The Minister has missed an important point. He says that people in the highest band will pay two and a half times the tax of people in the lowest. But it is the number of people in the higher bands that gives rise to our anxiety. We are worried about the numbers who will be paying excessive levels of the tax.

The Minister said that the Government had no intention of introducing any form of regional banding. I did not suggest that a regional banding procedure should be set in concrete. The amendment requires the Government to establish a form of regional banding to ensure fairness throughout the country in the levying of taxes on people in low value properties.

As the Minister can give us no guidance and no assurance has been given that a fair system will be applied, we have no alternative but to divide the Committee.

Question put, That the amendment be made:—

The Committee divided: Ayes 184, Noes 259.

Division No. 170] [8.40 pm
Abbott, Ms Diane Hardy, Peter
Adams, Mrs Irene (Paisley, N.) Heal, Mrs Sylvia
Allen, Graham Hinchliffe, David
Alton, David Hoey, Ms Kate (Vauxhall)
Archer, Rt Hon Peter Hogg, N. (C'nauld & Kilsyth)
Armstrong, Hilary Home Robertson, John
Ashley, Rt Hon Jack Howells, Geraint
Ashton, Joe Howells, Dr. Kim (Pontypridd)
Banks, Tony (Newham NW) Hughes, John (Coventry NE)
Barnes, Harry (Derbyshire NE) Hughes, Robert (Aberdeen N)
Barnes, Mrs Rosie (Greenwich) Hughes, Roy (Newport E)
Barron, Kevin Hughes, Simon (Southwark)
Battle, John Ingram, Adam
Beckett, Margaret Johnston, Sir Russell
Beith, A. J. Jones, Barry (Alyn & Deeside)
Bell, Stuart Jones, Martyn (Clwyd S W)
Bellotti, David Kaufman, Rt Hon Gerald
Bennett, A. F. (D'nfn & Ft'dish) Kinnock, Rt Hon Neil
Bermingham, Gerald Kirkwood, Archy
Blair, Tony Lambie, David
Blunkett, David Lamond, James
Boateng, Paul Leadbitter, Ted
Boyes, Roland Leighton, Ron
Bradley, Keith Lestor, Joan (Eccles)
Brown, Nicholas (Newcastle E) Lewis, Terry
Caborn, Richard Litherland, Robert
Callaghan, Jim Livingstone, Ken
Campbell, Menzies (Fife NE) Livsey, Richard
Campbell, Ron (Blyth Valley) Lloyd, Tony (Stretford)
Canavan, Dennis Loyden, Eddie
Carlile, Alex (Mont'g) McAllion, John
Carr, Michael McAvoy, Thomas
Cartwright, John Macdonald, Calum A.
Clark, Dr David (S Shields) McFall, John
Clarke, Tom (Monklands W) McKay, Allen (Barnsley West)
Clelland, David McKelvey, William
Cohen, Harry McMaster, Gordon
Cryer, Bob McNamara, Kevin
Cummings, John McWilliam, John
Cunliffe, Lawrence Madden, Max
Dalyell, Tarn Mahon, Mrs Alice
Darling, Alistair Marek, Dr John
Davies, Ron (Caerphilly) Marshall, David (Shettleston)
Davis, Terry (B'ham Hodge H'I) Martin, Michael J. (Springburn)
Dewar, Donald Martlew, Eric
Dixon, Don Meale, Alan
Dobson, Frank Michael, Alun
Douglas, Dick Michie, Bill (Sheffield Heeley)
Duffy, A. E. P. Michie, Mrs Ray (Arg'l & Bute)
Dunnachie, Jimmy Moonie, Dr Lewis
Dunwoody, Hon Mrs Gwyneth Morgan, Rhodri
Eastham, Ken Morley, Elliot
Edwards, Huw Morris, Rt Hon J. (Aberavon)
Ewing, Mrs Margaret (Moray) Mowlam, Marjorie
Fatchett, Derek Murphy, Paul
Faulds, Andrew Nellist, Dave
Fearn, Ronald Oakes, Rt Hon Gordon
Field, Frank (Birkenhead) O'Brien, William
Fields, Terry (L'pool B G'n) O'Hara, Edward
Flynn, Paul Orme, Rt Hon Stanley
Foot, Rt Hon Michael Parry, Robert
Foster, Derek Pendry, Tom
Foulkes, George Pike, Peter L.
Fyfe, Maria Powell, Ray (Ogmore)
Galbraith, Sam Prescott, John
Garrett, John (Norwich South) Quin, Ms Joyce
Garrett, Ted (Wallsend) Radice, Giles
Godman, Dr Norman A. Redmond, Martin
Golding, Mrs Llin Reid, Dr John
Gordon, Mildred Richardson, Jo
Gould, Bryan Robinson, Geoffrey
Graham, Thomas Robinson, Peter (Belfast E)
Grant, Bernie (Tottenham) Ross, Ernie (Dundee W)
Griffiths, Nigel (Edinburgh S) Rowlands, Ted
Griffiths, Win (Bridgend) Ruddock, Joan
Hain, Peter Salmond, Alex
Sedgemore, Brian Turner, Dennis
Sheerman, Barry Wallace, James
Sheldon, Rt Hon Robert Wardell, Gareth (Gower)
Shore, Rt Hon Peter Wareing, Robert N.
Short, Clare Watson, Mike (Glasgow, C)
Skinner, Dennis Welsh, Andrew (Angus E)
Smith, Andrew (Oxford E) Welsh, Michael (Doncaster N)
Smith, C. (IsI'ton & F'bury) Wigley, Dafydd
Smith, J. P. (Vale of Glam) Williams, Rt Hon Alan
Snape, Peter Williams, Alan W. (Carm'then)
Soley, Clive Winnick, David
Spearing, Nigel Wise, Mrs Audrey
Steel, Rt Hon Sir David Worthington, Tony
Steinberg, Gerry Young, David (Bolton SE)
Strang, Gavin
Taylor, Matthew (Truro) Tellers for the Ayes:
Thomas, Dr Dafydd Elis Mr. Frank Haynes and
Thompson, Jack (Wansbeck) Mr. Eric Illsley.
Adley, Robert Cran, James
Aitken, Jonathan Davies, Q. (Stamf'd & Spald'g)
Alexander, Richard Davis, David (Boothferry)
Alison, Rt Hon Michael Day, Stephen
Allason, Rupert Dickens, Geoffrey
Amess, David Dicks, Terry
Amos, Alan Dorrell, Stephen
Arbuthnot, James Douglas-Hamilton, Lord James
Arnold, Sir Thomas Dover, Den
Ashby, David Dunn, Bob
Aspinwall, Jack Eggar, Tim
Atkins, Robert Evans, David (Welwyn Hatf'd)
Atkinson, David Fairbairn, Sir Nicholas
Baker, Nicholas (Dorset N) Fallon, Michael
Batiste, Spencer Favell, Tony
Beaumont-Dark, Anthony Fenner, Dame Peggy
Beggs, Roy Field, Barry (Isle of Wight)
Bellingham, Henry Finsberg, Sir Geoffrey
Bendall, Vivian Fishburn, John Dudley
Bennett, Nicholas (Pembroke) Fookes, Dame Janet
Bitten, Rt Hon John Forman, Nigel
Blackburn, Dr John G. Forth, Eric
Blaker, Rt Hon Sir Peter Fowler, Rt Hon Sir Norman
Body, Sir Richard Fox, Sir Marcus
Bonsor, Sir Nicholas Franks, Cecil
Boscawen, Hon Robert Freeman, Roger
Bottomley, Peter French, Douglas
Bowden, A. (Brighton K'pto'n) Fry, Peter
Bowden, Gerald (Dulwich) Gale, Roger
Bowis, John Gardiner, Sir George
Boyson, Rt Hon Dr Sir Rhodes Gill, Christopher
Braine, Rt Hon Sir Bernard Gilmour, Rt Hon Sir Ian
Brandon-Bravo, Martin Glyn, Dr Sir Alan
Brazier, Julian Goodhart, Sir Philip
Bright, Graham Goodlad, Alastair
Brooke, Rt Hon Peter Goodson-Wickes, Dr Charles
Brown, Michael (Brigg & Cl't's) Gorman, Mrs Teresa
Bruce, Ian (Dorset South) Grant, Sir Anthony (CambsSW)
Buchanan-Smith, Rt Hon Alick Greenway, Harry (Ealing N)
Buck, Sir Antony Greenway, John (Ryedale)
Butcher, John Gregory, Conal
Butler, Chris Griffiths, Peter (Portsmouth N)
Butterfill, John Grist, Ian
Carlisle, John, (Luton N) Ground, Patrick
Carlisle, Kenneth (Lincoln) Hague, William
Carrington, Matthew Hamilton, Hon Archie (Epsom)
Carttiss, Michael Hamilton, Neil (Tatton)
Cash, William Hannam, John
Channon, Rt Hon Paul Hargreaves, Ken (Hyndburn)
Chapman, Sydney Harris, David
Churchill, Mr Hawkins, Christopher
Clark, Rt Hon Alan (Plymouth) Hayes, Jerry
Clark, Dr Michael (Rochford) Hayward, Robert
Clark, Rt Hon Sir William Heathcoat-Amory, David
Clarke, Rt Hon K. (Rushcliffe) Hicks, Mrs Maureen (Wolv' NE)
Colvin, Michael Hicks, Robert (Cornwall SE)
Coombs, Anthony (Wyre F'rest) Higgins, Rt Hon Terence L.
Coombs, Simon (Swindon) Hill, James
Cope, Rt Hon John Hind, Kenneth
Couchman, James Holt, Richard
Hordern, Sir Peter Onslow, Rt Hon Cranley
Howard, Rt Hon Michael Oppenheim, Phillip
Howarth, Alan (Strat'd-on-A) Page, Richard
Howell, Rt Hon David (G'dtord) Paice, James
Hughes, Robert G. (Harrow W) Patnick, Irvine
Hunt, Sir John (Ravensbourne) Pattie, Rt Hon Sir Geoffrey
Hunter, Andrew Pawsey, James
Irvine, Michael Peacock, Mrs Elizabeth
Irving, Sir Charles Porter, David (Waveney)
Jack, Michael Portillo, Michael
Janman, Tim Powell, William (Corby)
Johnson Smith, Sir Geoffrey Price, Sir David
Jones, Gwilym (Cardiff N) Raison, Rt Hon Sir Timothy
Jones, Robert B (Herts W) Redwood, John
Jopling, Rt Hon Michael Riddick, Graham
Kellett-Bowman, Dame Elaine Rifkind, Rt Hon Malcolm
Key, Robert Roberts, Sir Wyn (Conwy)
Kilfedder, James Roe, Mrs Marion
King, Rt Hon Tom (Bridgwater) Ross, William (Londonderry E)
Knapman, Roger Rost, Peter
Knight, Greg (Derby North) Rumbold, Rt Hon Mrs Angela
Knowles, Michael Sayeed, Jonathan
Knox, David Shaw, David (Dover)
Lang, Rt Hon Ian Shaw, Sir Michael (Scarb')
Latham, Michael Shelton, Sir William
Lawrence, Ivan Shephard, Mrs G. (Norfolk SW)
Lee, John (Pendle) Shepherd, Richard (Aldridge)
Leigh, Edward (Gainsbor'gh) Shersby, Michael
Lennox-Boyd, Hon Mark Skeet, Sir Trevor
Lester, Jim (Broxtowe) Smith, Tim (Beaconsfield)
Lightbown, David Soames, Hon Nicholas
Lilley, Rt Hon Peter Spicer, Sir Jim (Dorset W)
Lloyd, Sir Ian (Havant) Stanbrook, Ivor
Lord, Michael Stanley, Rt Hon Sir John
Luce, Rt Hon Sir Richard Stevens, Lewis
McCrindle, Sir Robert Stewart, Allan (Eastwood)
Macfarlane, Sir Neil Stewart, Andy (Sherwood)
MacGregor, Rt Hon John Stewart, Rt Hon Ian (Herts N)
MacKay, Andrew (E Berkshire) Sumberg, David
Maclean, David Summerson, Hugo
McLoughlin, Patrick Tapsell, Sir Peter
McNair-Wilson, Sir Michael Taylor, John M (Solihull)
McNair-Wilson, Sir Patrick Taylor, Teddy (S'end E)
Madel, David Temple-Morris, Peter
Malins, Humfrey Thompson, D. (Calder Valley)
Marland, Paul Thompson, Patrick (Norwich N)
Marlow, Tony Thornton, Malcolm
Marshall, John (Hendon S) Thurnham, Peter
Marshall, Sir Michael (Arundel) Townsend, Cyril D. (B'heath)
Martin, David (Portsmouth S) Trotter, Neville
Mates, Michael Twinn, Dr Ian
Mawhinney, Dr Brian Vaughan, Sir Gerard
Mayhew, Rt Hon Sir Patrick Viggers, Peter
Meyer, Sir Anthony Walker, A. Cecil (Belfast N)
Miller, Sir Hal Walters, Sir Dennis
Mills, Iain Ward, John
Miscampbell, Norman Wardle, Charles (Bexhill)
Mitchell, Andrew (Gedling) Watts, John
Mitchell, Sir David Wheeler, Sir John
Moate, Roger Whitney, Ray
Monro, Sir Hector Wiggin, Jerry
Montgomery, Sir Fergus Wilkinson, John
Morris, M (N'hampton S) Wilshire, David
Moss, Malcolm Winterton, Mrs Ann
Neale, Sir Gerrard Wolfson, Mark
Needham, Richard Woodcock, Dr. Mike
Nelson, Anthony Yeo, Tim
Neubert, Sir Michael
Newton, Rt Hon Tony Tellers for the Noes:
Nicholls, Patrick Mr. Tom Sackville and
Nicholson, David (Taunton) Mr. Tim Boswell.
Nicholson, Emma (Devon West)

Question accordingly negatived.

Mr. Paul Murphy (Torfaen)

I beg to move amendment No. 30, in page 3, leave out lines 1 to 14.

The First Deputy Chairman of Ways and Means (Sir Paul Dean)

With this it will be convenient to take amendment No. 31, in page 3, line 2, leave out 'persons' and insert 'members of the Royal Institute of Chartered Surveyors or members of the Institute of Revenues, Rating and Valuation'.

Mr. Murphy

Amendment No. 30 concerns keeping valuation exercises in the hands of the valuation sector of the Inland Revenue and amendment No. 31, having properly qualified valuers if privatisation of that service takes place.

Opposition Members have nothing against estate agents, either in particular or in general. In some respects, we are rather sorry for them. Because of the high interest rates that the Government have imposed recently they are disappearing at a fairly rapid pace. Nevertheless, I suspect that they will be the most significant beneficiaries of the council tax during the next couple of years because, according to the Bill, the Government intend to put a considerable amount of work their way to speed up the valuation of domestic properties in England and Wales and thus ensure that the council tax is introduced as quickly as the Government suggest—that is, in 1993.

I mentioned yesterday and I think that it is worth repeating that in Wales—I am sure that this also applies to England and Scotland—the district councils are saying that, as regards administering the implementation of the new tax, 1994 is a more realistic date for its introduction. Whether it is 1993 or 1994, if we give estate agents and private surveyors the job of evaluating property, many people will express a number of fears.

In the first instance, it could be argued that estate agents and surveyors have a vested interest in pushing up prices and valuations of properties. When houses are sold, it is on the basis of a commission and obviously estate agents will benefit if houses are more expensive when they are sold. It has been argued that the associations which represent estate agents and surveyors could impose voluntary restraints. However, only a year or so ago hon. Members on both sides of the Committee realised, when we were considering the difficult problem of gazumping in England and Wales, that voluntary restraints on estate agents simply were not good enough. There is an opportunity for unscrupulous estate agents and surveyors to puff up the price of properties in their areas for their own advantage.

The other problem is that private sector valuers could deal with both the initial valuation of a property and the appeal on valuation, in their area. Clearly that goes against natural justice, and it would not be a good case for the Government to argue.

However, that is not the biggest problem, which is one of confidence. For many years I was a member of the ratings and valuation courts in south Wales. We had to deal with members of the general public, who had appealed to the panels against the valuation of their property. Very often the people who were appealing were heartily fed up with the activities of the Inland Revenue and its valuation sector. However, that did not happen often. In general, Inland Revenue valuation officers did a good job, but, clearly, if valuation is to be put into the hands of estate agents people's confidence in the assessments made by them of properties will be considerably less than if the Inland Revenue made the valuations.

Mr. Allason

Bearing in mind the fact that the Labour party's policy is for four, five or even six valuations of properties for its property tax, will the hon. Gentleman give a commitment on behalf of the Labour party that only Inland Revenue valuation officers and members of the Royal Institution of Chartered Surveyors will be employed to undertake that work?

Mr. Murphy

It is not for me to give such a commitment in a debate that relates to a small section of the Bill. However, the Inland Revenue would be the appropriate body to deal with valuations as they affect rates. It has always done a good job and I see no reason why it should not continue to do its job after a Labour Government are elected and revaluation takes place two or three years after the introduction of a fair rates system.

Mr. Allason

The hon. Gentleman is missing the point. The heart of the Labour party's policy is that it is not one of revaluation across the whole country, but a series of valuations based on different criteria for each property. The policy will keep valuation officers and members of the Royal Institution of Chartered Surveyors in business for the next two decades.

Mr. Murphy

That is not the case. Members of the Inland Revenue valuation sector are extremely competent, capable and highly qualified and are more than adequately suited to deal with all the different methods by which property would be valued. In fact, the Institute of Revenues, Rating and Valuation has said that its members could quite adequately and properly deal with the matter. I have not the slightest doubt that the professional competence of the people who would be involved in valuation could cope with the new methods, as it coped with those in the past. If they could cope with notional rental valuations, they could certainly cope with the simpler ones on capital value that we shall introduce. I have no doubts about that.

9 pm

The confidence that the general public will have in the people valuing their properties will be greater if the people doing that are those from the Inland Revenue who used to do it rather than estates agents. I am told that estate agents are held in the same regard as Members of Parliament and we must read into that what we will.

The Government need to have a close examination of the cost of the exercise. Some have suggested that it could cost about £250 million. Most significantly, we would have to compare that with the costs of using the local valuation officers of the Inland Revenue. Amendment No. 31 deals with the case, if the Government do not see fit to accept amendment No. 30. If the Government insist on using estate agents and surveyors, they should consider whether they have the necessary qualifications; they should be members of either the Royal Institution of Chartered Surveyors or of the Institute of Revenues, Rating and Valuation.

The essence of the debate is that there is no need for the proposals in the first place. The Government are panicking because they want to get the legislation through as quickly as possible to ensure that the council tax is in operation by 1993. That is, of course, a fiction because by then there will be a Labour Government.

In any event, our view is that the 1973 valuations are sufficient in the first instance to introduce a fair rating system. A couple of years after its introduction, it will be operated on a rolling basis. It is important that there should be time for proper valuation with high public confidence in the valuers. We believe that estate agents and surveyors, whatever their qualities, are not in the same league as the Inland Revenue and that valuation should be the subject of a Government Department and not private individuals or firms.

Mr. Nicholas Bennett

The amendments have two aims. The first is to prevent the commissioners of the Inland Revenue from appointing persons who are not in the service of the Crown to assist them in the valuation. Secondly, they insist that anybody who can help with the valuation is a member of the Royal Institution of Chartered Surveyors or of the Institute of Revenues, Rating and Valuation.

I found it difficult to understand the argument of the hon. Member for Torfaen (Mr. Murphy). Throughout the debate, we have heard the Labour Members complaining about the speed with which the Bill will go through the House and the time that it will take to put it into practice. We have been told that the Labour party is worried that the proposals will not be in place by 1 April 1993, but that it will be 1 April 1994. The Labour party has urged that we should return to the old rating system, a system which the right hon. Member for Manchester, Gorton (Mr. Kaufman) said was an irrational, inefficient, highly resented form of taxation". It is strange that the Labour party should take that view and complain about speed—[Interruption.] Does the hon. Member for Glasgow, Garscadden (Mr. Dewar) wish to intervene?

Mr. Dewar

No, I do not.

Mr. Bennett

Perhaps the hon. Gentleman will keep quiet if he does not wish to contribute to the debate.

The advantage of using the private sector as well as the Inland Revenue is, I should have thought, quite clear. First, it gives diversity and choice and ensures that there is not just one sector giving valuations. The complaint of the hon. Member for Torfaen that our proposal would mean estate agents bidding up the value of properties is false on two counts. First, comparisons will be made with the valuations made by other bodies. That is the advantage of involving both the public and the private sector. Secondly, there will be the public perception. I cannot believe for one moment that if an estate agent were to bid up the value of the properties in his area the people who lived in them would not complain, if they thought that they would have to pay more council tax than would otherwise have been the case. The hon. Gentleman put forward a spurious and weak argument. Therefore, we cannot accept the amendments.

My right hon. Friend the Secretary of State for the Environment told the House on Second Reading that the Government intend to use the best professional expertise to undertake the work involved in allocating properties to bands. We shall use the private sector when it can use its skills to do a speedy and cost-effective job.

The second of the two amendments contradicts the first. It says that the private sector can be used but that we must ensure that the only people who do the work are members of the Royal Institute of Chartered Surveyors or the Institute of Revenues, Rating and Valuation. We are determined to use the best professional expertise that is available to allocate properties to bands in the most cost-effective way and in a way that will deliver the introduction of the council tax in April 1993. Naturally we shall consider the role of members of both the Royal Institute of Chartered Surveyors and the Institute of Revenues, Rating and Valuation. It cannot, however, be right for us blindly to rule out people who are not members of those bodies when we consider who can assist us in this task. What I can do, however, is rule out people who do not have the appropriate expertise to undertake a sound and cost-effective job.

There is a variety of jobs to be done. We shall consider all offers of assistance and will decide on the most cost-effective use of all the resources available to us. I cannot, therefore, recommend the Committee to accept the two amendments of the hon. Member for Torfaen.

Mr. Murphy

The Minister misunderstood what I said about the second amendment. I said clearly that if the first amendment was not accepted by the Committee, the second could be considered in a separate context. All of us are concerned about the cost-effectiveness of how property is valued, but that cannot be the main criterion when we are considering a brand new tax.

The problem with the poll tax was that it never gained the confidence of the public. If the Government want the new council tax to gain the confidence of the public but the valuation of properties and the setting up of the bands is flawed—because the work has not been done properly, due to the fact that those who carry out the valuations do not enjoy the confidence of the people of Britain—it is doomed from the very beginning. That is why the amendments have been tabled. We want to ensure that people do not (10 what they used to do when I sat on those bodies—come to us because of their lack of confidence in the valuation of their properties.

The amendments are important. I hope that the Government will reconsider the position of those people who do not possess the relevant qualifications, for which we press in amendment No. 31. Both the Minister and his colleagues must say clearly to local authorities and the people of this country who will value those 53 million properties. If the general public do not have confidence In those people, the council tax will be flawed from the beginning.

When the Bill is considered in the other place, or when the Secretary of State makes regulations later, I hope that a much firmer approach will be adopted regarding the people who will carry out the valuations. I say that for the sake of the people of this country, who are looking for any alternative—although I believe that ours is the best—to the poll tax. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Douglas

I beg to move amendment No. 10, in page 3, line 14, at end insert— `(5A) Where any survey report for the purpose of rating contains details of numbers in a local authority area in receipt of income support and those engaged in full-time education, special regard should be had to the effects of these categories in determining the values placed on property in the area.'. Subsection (5), which I seek to amend, says: (5) For the purposes of the valuation the Commissioners of Inland Revenue may disclose to a person appointed under subsection (4) above—

  1. (a) any survey report obtained for any purpose of rating, including non-domestic rating;".
The object of the Bill is to introduce a new tax using banding based on capital values. No doubt when we debate clause stand part we shall have the opportunity to discuss that aspect further.

If capital values are to be used, I assume that the valuation will be carried out on an arm's-length basis, and that there will be neither coercion nor favouritism. If that is the case—it is a reasonable assumption—the supply and demand for property in any one area will have some influence. The prices paid for property will be related to the buoyancy of incomes in the area. That is why I ask that special regard should be given to two categories.

The Government, in their wisdom, sought to consider the position of people on low incomes. Chapter 3 of their consultative document says: The Government intend to make arrangements to ensure that people on low incomes are not called on to make a disproportionate contribution to local taxation". It has bemused everyone that the Government feel capable of making substantial changes and of bringing in a new form of tax that they hope will be in operation by 1993 and will be much fairer than the poll tax—it is difficult to see how a new tax could be less fair than the poll tax—yet simultaneously persist in asking the poorest sections of the population to pay at least 20 per cent. of the poll tax. I see that the Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), is not in his place as he is taking part in some necessary consultations, but he knows that local authorities in Scotland have made repeated representations to the Scottish Office asking for the encumbrance to be removed.

I do not know what the current estimates are for the cost of exempting students and people on income support, but I was told that it might be about £40 million a year. If that were set against the cost of collecting taxes from those poorer sections of the population, it would be a deal to which the Scottish Office should give urgent consideration.

The amendment was intended to draw attention to the fact that, if large numbers of people in an area are students, or are on income support, that affects the values of property, which in turn affects the so-called buoyancy of the tax. If the Government acknowledge that fact in relation to the future tax, why will they not acknowledge it now in relation to the poll tax?

The Minister should answer those questions. I had hoped that a Scottish Office Minister would reply to the debate, but I suspect that I shall be disappointed—or I may be pleasantly surprised by receiving a more positive response than usual. The situation in Scotland is desperate. It is absurd, for instance, that the Shetland isles may have to pursue students to pay a proportion of the poll tax at a cost far in excess of any tax revenue that could possibly be collected. That is farcical, and brings the tax into disrepute.

If the Minister says that the amendment is poorly drafted, I must plead guilty but it provides an opportunity for the Government to remove such categories from the current tax, in the way that they intend to remove them from the tax that they propose to introduce in April 1993.

9.15 pm
Mr. Key

It is a pleasure to reply to the debate initiated by the hon. Member for Dunfermline, West (Mr. Douglas). Most of the issues that he raised were not specifically Scottish, so I hope that he will accept the spirit of my reply.

The hon. Gentleman was right to say that we intend to introduce the council tax by 1993 and he found a clever way to introduce the 20 per cent. argument. As he knows, we are carefully considering this and shall continue to do so. Local taxation has been subject to rapid flux and another change would not be broadly welcomed.

The most important answer to the hon. Gentleman's thesis is that we have made resources available to ensure that the poorest in society will be able to pay the tax themselves or, if they are allowed 100 per cent. on benefits, we have ensured that their benefits reflect that. There is no reason for anybody to think that he would benefit if the system were changed in a bureaucratic and unnecessary way.

I shall certainly not taunt the hon. Gentleman with allegations of poor drafting. It is tedious of Ministers to say such things and for a long time when I was a Back Bencher I had to listen to such taunts. The survey reports prepared for rating have never needed to contain the kind of statistics to which the hon. Gentleman refers. At best, they are tangential to the job in hand. While the characteristics of an area affect the market for property and hence its value, I cannot understand why special regard should be paid to those two indicators in determining the value of a property.

The amendment mentions people on income support. The number of such people in a given area will affect the extent to which people in that area will benefit from the 100 per cent. benefits proposed for the council tax. However, of itself that has no bearing on the value of property. We are consulting on these proposals and rebates for those on income support will be an integral part of the council tax. In the main, these are matters for the legislation that we intend to introduce in the autumn, at which time hon. Members will have ample opportunity to consider them.

The amendment mentions numbers in a local authority area…and those engaged in full-time education,". Taken at face value, that must include all schoolchildren, but I do not think that is what the amendment seeks. Even if it relates only to those who are potentially liable for the council tax, that does not in any way affect the allocation, based on the value of an individual property, to a specific band. Therefore the amendment does not have a place in the Bill.

We propose that, if the first or second adult in a property is a student, each will receive a full personal discount. We propose similar treatment for student nurses, apprentices and youth training trainees. If there are no other adults in a household of students, that household will receive two discounts. As I have said, we are consulting on these proposals, and discount for students is a matter for the main legislation to be introduced in the autumn.

Mr. Douglas

I am relying on memory, but I understood in relation to the 20 per cent. for students that the Secretary of State for Scotland said that the matter would be constantly considered by him and COSLA. Has there been a change in that?

Mr. Key

I shall invite the Under-Secretary of Slate for Scotland, my hon. Friend the Member for Eastwood (Mr. Stewart), to give the Scottish perspective on that. My understanding is that we have made proposals for students but have said that details have still to be worked out. For instance, we must deal with the treatment of students in halls of residence. What would be the situation if students were in accommodation owned by one of them? What would be the position of business rating were students to be living in a commercial property?

The hon. Gentleman is right—there is still a consultation process to come, and we shall listen to what is said, but our intention is clear. Where the first or second adult in a property is a student, each will receive the full personal discount. The House will have ample opportunity to consider all these matters when we debate the main Bill. Therefore, although I suspect that the hon. Gentleman will not agree with me in this, I hope that he will accept my invitation to take part in the debates on that, which will happen later in the year and beyond. I hope that he will not press his amendment.

Mr. Douglas

I am a bit disappointed by the Minister's reply. Perhaps the hon. Member for Eastwood (Mr. Stewart) will clarify it by means of a letter to me. That would be temporarily acceptable. I understand that the House wishes to move on, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

The First Deputy Chairman

Before I call the hon. Member for Glasgow, Garscadden (Mr. Dewar) to open the debate, I remind the Committee that we have had a good run in debates on amendments to clause 3. Therefore, it would not be appropriate to cover ground that has already been covered in those debates.

Mr. Dewar

I am grateful to you, Sir Paul, for allowing a clause stand part debate. In debates on a Great Britain Bill, amendments often are dealt with largely on an English basis and Scottish Members, and, to be fair, the Scottish Minister, stay out of debates because of an understanding that there will be an opportunity to raise one or two Scottish points at a stage such as this. I have heard your ruling, Sir Paul, but I have one or two Scottish points to raise.

There is a constant fascination in these exchanges about the casual way in which Ministers slip in, as though they were Conservative initiatives, policies and concessions that have been wrung out of them by the anger of public opinion and the persistence of the Opposition. With some style and a ring of conviction, the Under-Secretary said in a previous debate that the Government were introducing a policy of 100 per cent. rebates, as though it were an act of spontaneous generosity that the Conservatives had long been contemplating and had only now been able to introduce. We know that, instead, they have been fighting doggedly against this for months. That is true of many other changes.

The right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) used to tell us that returning to a property tax of any sort would be a "hammer blow" to the people of Edinburgh that could not be contemplated. It was anathema and heresy. Now, even the doughtiest defender of the poll tax, the hon. Member for Eastwood (Mr. Stewart) is telling us that a rating system is an absolutely splendid thing as long as one does not admit that it is a rating system. It is all a matter of terminology.

My points are concerned with the valuation system. We have here another interesting novelty. The hon. Member for Eastwood is no doubt about to sing, in dulcet tones, the virtues of capital valuation. I will not bore the House with quotations from the many stirring speeches that he made about how unacceptable and unfair capital valuation was, and how, in the tree-lined suburbs of Newton Mearns and Pollokshields, the bourgeoisie would be rising in wrath against any Government wicked enough to introduce such a thing. If that happens, I promise him that we shall be cheering on the bourgeoisie, so long as they confine their attentions to the ballot box.

I have some fundamental questions for the Minister. I am sure that he will have no difficulty in answering them, but I have found them obscure. I listened to the Under-Secretary of State for Wales describing, with the somewhat arrogant and abrasive style that he has made his own, small groups of intrepid valuers with different degrees of professionalism in England and Wales setting out to do the business for the Inland Revenue and the Government. The implication, presumably was that in England and Wales there would be an independent valuation for every property initially.

Mr. Nicholas Bennett


Mr. Dewar

It is interesting that the Minister has explained that that is not the position.

Mr. Bennett


Mr. Dewar

I do not want to hear from the hon. Gentleman. I am using him as a paving device to ask some questions of Scottish Office Ministers.

I ask the Under-Secretary of State for Scotland to explain the Government's intentions in respect of the initial valuation, which will come into effect on I April 1993 if he has his way. Is it expected that every property in Scotland will be valued individually? That is what has been recommended by the assessors. As I understand it, that is what they want. The Minister seems puzzled, but perhaps the answer is simple. Everyone will know what his band is. I believe that that is common ground. I want to know whether every householder will know the individual valuation that led to him being placed in a certain band.

If the Minister says no in answer to my question, that will raise several interesting implications. Perhaps, for example, he will say something about the appeals procedure. If there is not to be individual valuation and no knowledge of the basis on which the valuation was determined, it will make the appeals procedure especially difficult. If the bands are broad, questions will be raised about the basis on which properties have been assigned to particular bands. Will valuations be made on the basis on which the Inland Revenue's valuation office arrived at the figures that the Secretary of State for Scotland announced recently to reassure the public that they would not be disadvantaged by the new system?

The Minister will remember the letter which was signed by the Secretary of State for Scotland on 8 May, which was sent to me. I shall not quote it extensively, but I shall use fragments of the phraseology. The right hon. Gentleman wrote that it was essentially an in-house exercise. He told me that it was "essentially statistical" and claimed that it was not fair to ask him to go into the details. I can understand the certain diffidence that ensued.

It would seem that the Inland Revenue's valuation officers' establishment undertook its exercise on the basis of existing knowledge. It would seem also that the officers did not inspect individual properties. I presume that, for the valuation roll of 1993, when the new tax comes into operation, work will be done on the ground. Is it intended that every house will be inspected? I understand that the answer is no. That is fine; I understand that.

When he replies, perhaps the Minister will explain briefly what will happen. Will there be a system of beacons? Will there be beacon properties? Will there be valuation that is based on a random scatter in an area? It may be that in a spec-built estate every house will be exactly the same, they all having been built five or six years ago. The valuation of one such house may lead to the valuer having a good idea of the value of each house on the estate. However, in the sort of street in which the Minister lives or in which I live—

Mr. Allan Stewart

I do not live in the street.

Mr. Dewar

I realise that the hon. Gentleman is the sort of man who would live in a circus. On this occasion, however, I am not referring to St. Andrew's house under present management. I am being serious because this is a serious matter.

In the sort of street in which the hon. Gentleman lives, or in which I live, there will be substantially different valuations. The houses in the street where I live will range from £70,000 or £80,000 well into the top band of £160,000. The value of individual houses will not be known unless each one is visited and valued. If that is not done and it is assumed that each house in the street will be in the top band, I can say with confidence that there will be a rash of appeals. It is probable that everyone in the street will appeal.

If, on the other hand, it is assumed that each house is of such value that it does not enter the top band, the tax spread will become unbalanced in a way that I am sure Ministers would not wish to defend. I urge the Minister to explain exactly what will happen between now and 1 April 1993. It is no good him simply saying that every house will not be valued. He must tell us much more about what he has in mind.

9.30 pm

The Minister for Local Government and Inner Cities believes that, once someone is in a band, he will be in it in perpetuity. In the Municipal Journal he said, in terms, that, once in a band, the situation would never change. The banding system will be a selection of the sheep from the goats because once one is in it one will stay there. There will be no effective revaluation, no matter what one does.

The Royal Institution of Chartered Surveyors in Scotland has today commented on the Government's proposals, some of which will be of consolation to the Minister, because it supports some aspects of the new system. However, as professional valuers, they say that the idea that everyone can be put in a band in perpetuity is nonsense. Perhaps they are being ambitious, but they believe that a revaluation every three years is desirable and necessary. They think that it is a wretched pretence—they used the word "pretence"—to imagine that there can be a once-and-for-all placement of properties and that the valuation base is somehow ever young and ever green and never needs revision. With the passing of time, it becomes hopelessly out of date. It then inevitably becomes a mockery and a source of discontent.

The Minister will be familiar with the survey that was carried out by Paisley college on the unit for land values. I have no reason to believe that it was not done by skilled and impartial people. They found that 25 per cent. of the properties surveyed were within 5 per cent. of the end of the bands proposed by the Government. They therefore concluded that there would probably be more appeals under that system than under the previous rating system, which the Government criticised so heavily.

The Minister has much explaining to do. Naturally, there are problems of extensions and improvements, but, more fundamentally, there is the problem of the state of repair of a house. The Minister told my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), in a letter dated 5 June: Some assumptions will have to be made for valuation purposes about the state of repair of the property. In keeping with the suggestion made in the consultation paper, the bandings used for the illustrative bills presume that properties are maintained in a reasonable state of repair, whether this was by the occupier or by the landlord. For illustrative purposes, that is a proper assumption to make. One says that, although the state of repair affects the outcome, for this academic exercise—this in-house statistical exercise, as the Secretary of State called it—the Government assume that every house is in good repair and equal and can therefore exclude that highly relevant factor for that purpose.

However, in real life, things are not equal. Some houses are in a good state of repair and are well maintained and improved while others are not. It affects the value considerably. I presume that, in those circumstances, a fair picture could be obtained only by the individual inspection of the property, which the Minister specifically told us, by a shake of the head during our brief exchanges, will not take place.

The Minister's letter to my hon. Friend the Member for Cathcart admitted clearly that assumptions must be made for the purpose of this exercise. However, assumptions cannot be made in reality. Rather we must find out what that reality is. How will that be done before 1993 if the Minister does not provide for individual valuations? I hope that he will deal with that matter.

I realise that some of my hon. Friends wish to speak, but I want to raise a couple more points. I shall keep some specific questions about the use of private sector valuers for an amendment on a later clause. The Minister will know, so I do not need to underline the point too heavily, that we have considerable doubts about how the valuation system is being banded under this scheme. We also know that an extremely wealthy bachelor living in an expensive property cannot pay more than twice that paid by a couple living in a difficult-to-let council house. The range has been dramatically squeezed.

In the best of senses, the Government are in a protection racket. To be fair, the Secretary of State has not tried to hide that. The people who are being protected are those at the top of the range. Those at the bottom, the modest range of the scale, will be paying more than they need to pay in order to give that protection to those in expensive properties. That is part of the essence of the scheme.

I raise that in passing because it is a bitter pill to swallow. I remember, as I am sure the Minister does, the highly coloured speeches bordering on the dishonest which were made by Scottish Office Ministers in the days when they were attacking the Opposition's property-based system. Because it was based on capital values—

The Secretary of State for Scotland (Mr. Ian Lang)

They are both rating systems.

Mr. Dewar

The Secretary of State is right, but ours is a fair rating system and the Government have drafted in a measure of unfairness. However, he is right: by any definition they are both rating systems. But the Government attacked our rating system because it was capital value based, which they said was particularly unfair on council house tenants who bought and on people at the bottom of the owner-occupying range who would be penalised by capital valuation. That point was repeatedly made by the right hon. and learned Member for Pentlands, backed up by his junior Ministers, his satraps and acolytes of one sort or another.

Therefore, I find it rather hard that, when we are faced with a Conservative capital valuation, which presumably has all the same disadvantages for those council house tenants who have bought their homes under the right-to-buy legislation, we have the added twist which certainly was not in the Labour party's scheme that those at the bottom will pay more than they need to because the Government have foreshortened the liability at the top of the range. That shows the hypocrisy, crocodile tears and synthetic anger which marked the attacks made upon our proposals only a few months ago.

In the letter to my hon. Friend the Member for Cathcart the Minister deals with that problem in a lordly way. He says that the seven bands are broad and of course there is no need for people who live at the bottom end of the scale, people who buy their council houses, to worry because they will be concentrated in the lower bands. That is the end of the argument. That was not his attitude a few short months ago, but we did not rig the field to hit the people on whose behalf he was protesting.

The Government have many questions to answer. There has been reference to the report of the Audit Commission for England and Wales, and it would be interesting to have a similar report from the Scottish equivalent before too long. Some of the matters dealt with cannot be canvassed at length in this debate, but the Minister will know, for example, that the Audit Commission has taken the view that the 20 per cent. rule should go now. It pointed out that the net gain to the Exchequer is far outweighed by the costs of collection which, in England and Wales, are two and a half times the net yield to the Exchequer of the payments made by those who are responsible for only 20 per cent. of their tax.

The Minister will also have noticed the remarkable point made by the Audit Commission: The low proportion of expenditure now to be raised by local taxation, combined with the very high gearing on tax rises, may make the system unsustainable in the long term without either extensive capping or a reduction in the functions of local government. Neither would be supported by the commission. That is the truth. The system has been rigged in a way that has made it unsustainable and ramshackle. It is, as the Audit Commission clearly implies, by definition a danger to the fabric of local democracy as we have known it.

But there is another point in the Audit Commission's report which is highly relevant to the clause. Much doubt has been expressed in the professional journals by the professionals and, to be fair, by many politicians, including the Secretary of State for the Environment, about whether the Government would be able to make their target of 1 April 1993 in England and Wales. That criticism—let us be fair and call it, rather, a worry or a nagging doubt—about whether it will be possible runs through the Audit Commission's report. The best that it has to say is that the timetable may be achievable, but it goes on to say that there are many reasons to believe that it may not be achievable. It warns the Government that they should be ready to abandon the timetable if it cannot be kept.

What I have to say is of great importance and interest to Scotland. If the Minister considers, for example, the current issue of the local government publication he will see many reasons advanced why it will not be possible to put the system in place in England by April 1993, but none of those reasons applies in Scotland. If, as some of us are beginning to suspect, it will be possible to kill the poll tax on 1 April 1993 in Scotland but not in England and Wales, it would be a monstrous insult to the people of Scotland if the killing of the poll tax were delayed for another year north of the border merely to save the blushes of the Department of the Environment south of the border.

It would be wholly unacceptable if the Secretary of State for Scotland kept in step with the Secretary of State for the Environment merely because that would make for good relations in the Cabinet room. I should like an assurance and a guarantee for the Under-Secretary of State that if he can end the poll tax on 1 April 1993 he will do so. We believe that he could do it more quickly but, even if we accept his scheme, we believe that that timetable could be kept. Will he give an undertaking to do that, even if it means that we end the poll tax—as, in all justice, we have a right to do—a year before the rest of the country? That is the categorical guarantee that we seek from the Minister tonight.

Mr. Alistair Darling (Edinburgh, Central)

I have always considered that the announcement made about the council tax by the Secretaries of State for Scotland and for the Environment was merely to provide a lull in the storm in which the Government find themselves with regard to local government finance.

The more one considers the fine print of the Government's proposals, the clearer it becomes that there are far more difficulties in the local council tax than the Government care to admit. Some of those difficulties were referred to by my hon. Friend the Member for East Lothian (Mr. Home Robertson) a few moments ago.

I had always thought that each house in Scotland, England and Wales would be valued individually. That seems to be the common sense way to proceed because no two houses are the same. However, the Minister's grunt revealed that each house will not be valued individually, but that there will instead be a block valuation. I want to show the Minister by reference to houses in my constituency what a ludicrous result that is likely to produce.

As the Minister knows, Edinburgh is composed of tenements. In one tenement stairway there can be a tremendous variation in the value of property. A main door flat can be worth four or five times the basement or top flat. In any one street there can be a variation in house prices ranging from £30,000 to £1 million. Indeed, that is the case in one street in my constituency, a street which is known not only to Scottish Ministers but, I suspect, to most hon. Members—the Royal Mile. It is common to find that small houses can be bought for £20,000 or £30,000 and that large houses are sold for more than £500,000. Is the Minister seriously suggesting that they should be put in the same band because they are in the same area?

The Minister cannot even compare like houses with like houses. One main door flat might be completely different from a main door flat four or five doors further up the street. Edinburgh, like many other cities, comprises streets built at different times. For example, in the street in which I live there are grade A listed buildings and other buildings which are not listed. Because they were built at different times there is a tremendous variation in value. In addition, some houses have been improved, but others have not.

I assure the Minister that members of the public will feel a great sense of injustice if houses are lumped into the same valuation band merely because the Minister did not feel that the expense of valuing each house was justified. It seems ludicrous not to value each house individually, especially in a city such as Edinburgh where there are not enough broadly similar large housing schemes to attempt to value houses on such a broad base. Under the Scottish Office guidelines, although in one street some houses could fall within band C and others within band G, it appears that they will all be lumped together, possibly in the bottom band, possibly in the top band, or possibly somewhere else.

9.45 pm

I hope that the Minister will tell us why he does not propose to value each and every house. Does he accept that each street and each house is different? If he does not, many people throughout the country will appeal against the valuations of their houses. What guidelines will be issued for the valuation? What will the valuers have to take into account? My hon. Friend the member for Glasgow, Garscadden (Mr. Dewar) recalled that the Minister had said that for England and Wales, it would be a once-and-for-all valuation. That does not make sense. Prices change quite dramatically, sometimes because of market forces and sometimes for other reasons.

In a street near to where I live there is a Georgian house which, until a few years ago, was renowned across Scotland, if not across the United Kingdom, as a house of ill repute. There were queues outside its door every time the US navy put into port. A few years ago, its owner died and it was closed—[Interruption.] I shall not name the house because I am going to a party there on Saturday. It has new owners, of course, who use it for rather different purposes.

Ten or 15 years ago, a Georgian mansion could be picked up for £15,000. The same house would now be worth more than £1 million. Had the proposed council tax been in force 10 or 15 years ago, that house would have been valued on a once-and-for-all basis, as would have been the house of ill repute. That cannot be right.

What appeal mechanism will there be? Many people may feel aggrieved if their houses are so valued that, by just £1, they find themselves in a higher band. Valuation is a hit-and-miss affair—[Interruption.] The Minister should not grunt from a sedentary position. Why does he not intervene?

Mr. Allan Stewart

I answered the very same question as that asked by the hon. Gentleman on Second Reading. It is obvious that he did not attend that debate.

Mr. Darling

I did not attend, but I am aware of what the Minister said on that occasion. There is still a great deal of uncertainty about the Government's intentions. The council tax is being rushed through in a blind panic, and as people realise the implications on their pockets many more questions will be asked.

The Minister has a duty to tell us how the valuations will be carried out. He must reassure people that, if they feel aggrieved because their houses have been lumped into an inappropriate band, they can do something about it. Otherwise, there will be just as much protest and fuss about the council tax as there has been about the poll tax, which the Government have been forced to abandon in a blind panic and in a desperate attempt to save their skins.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Clause 3 would fundamentally change the valuation process that is embodied in law in Scotland. It has been developed, tried and tested over many years, and it has been the backbone of the Scottish system. I understand that the Bill is only a paving measure, and that the future body of the law that will govern the valuation process will be made under secondary legislation and statutory instrument.

I am aware that another Bill will follow this Bill, but I cannot anticipate what it will contain. Perhaps the Minister can tell us. My primary concern is that, under this Bill, the burden of the new valuation system will be met entirely by regulations. I understand, too, that there is a more limited purpose to the valuation because we are trying to put properties into bands. The Minister may say that that is a much more restricted purpose than the whole panoply of the valuation laws that previously obtained. Before we pass clause 3, we must be sure that we understand exactly what it sets out to replace.

If secondary legislation is to be the main focus of the detail of the new tax, what will be the role of the courts? I can foresee all sorts of difficulties of interpretation. The system will be much more complicated than the Government perhaps anticipate. Much of the secondary legislation will have to go before the courts for clarification and interpretation, just as social security law causes all sorts of problems. I can foresee the difficulties of interpretation leading to precedents. We must give a great deal of consideration to the change in the balance before we agree to the clause.

The only figure in the Bill for the costs of administration is the round figure of £250 million which embraces England and Wales as well as Scotland. Can the Minister provide us with any further figures? What percentage of the £250 million will apply to Scotland? Although the problem may not be as big north of the border as south of it, what is his estimate of the manpower increases? The explanatory memorandum states that it is difficult to make a firm, long-term prediction about that for England and Wales. Because we in Scotland have a system of assessors, the problem may be less, but if any figures are available for increased manpower in Scotland as a consequence of clause 3, I should be happy to know of them.

What is the Minister's view of the comments of the Opposition Front Bench about the Bill's timetable? It is absolutely crucial. Many people are making their own dispositions, and will continue to do so over the next couple of years, on the basis that the substantive legislation will be enacted in 1993. If there is any difficulty about that whatever—it may be less of a difficulty north of the border than south of it—it is important that the Goverment make the position clear in relation to Scotland now. Tonight they must undertake to keep the House updated. If it appears to the Secretary of State from the information that comes across his desk from his officials that there will be a significant slippage in the enforcement in 1993, I hope that he will pass that information on to the House at the earliest opportunity so that we can share the problems, if problems there are.

There are two difficulties which I shall not labour as they have been raised in the House. First, it is impossible to get properties into perpetual bands. That point has already been argued cogently and concisely, and I join those who have expressed concern under that heading. Secondly, I want to add my voice to those who are anxious about improvements. It is not possible in a banding system to ignore improvements. Yet, if I understand the Bill correctly, that is what the Government propose. If I am wrong about that, I hope that the Minister will be kind enough to put me right.

Will there be any constraints on appeals? Is it possible for someone to appeal no matter how different his estimate may be from the valuation placed on his property? Will there be a percentage of difference beyond which people may not appeal; or will it be wholly at the discretion of the individual who is given what he considers an erroneous valuation? In short, will there be any restraints on the process?

How many outstanding appeals are there already in Scotland? Information available to me suggests that there are about 600,000 outstanding business appeals in England and Wales and 38,000 old rating appeals. That is a backlog of several years before we even start considering new appeals.

As for rural areas, we have heard one sensible speech from a Glasgow direction and one from an Edinburgh direction. I well understand the points made about the Royal Mile and other parts of the central belt. In villages in rural areas it is difficult, especially in places such as the Borders, which has villages with castles at one end of a street and small houses at the other, to allocate valuations. Castles are being built in my village at the moment. There are also modest buts and bens in which local Members of Parliament live. No matter how skilled the valuer, how can he possibly walk along a village street applying bands left right and centre with any prospect of getting them right?

If we do not have any answers to these questions, we should think carefully before allowing the clause to be made law. We need a great deal more information than we have been given to date.

Mr. Douglas

This has been an interesting debate. As usual, I am a little bemused by the position of the Opposition. The hon. Member for Glasgow, Garscadden (Mr. Dewar) told the Government to hurry up and get the new system in place by 1993, but the hon. Member for Edinburgh, Central (Mr. Darling) offered cogent reasons why that could not be done. If that does not represent compression of bands, I do not know what does.

I know enough about the hon. Member for Garscadden to know that he is good at asking questions but not so good at answering them. I want to know, if there were a Labour Government in 1992, whether all this paraphernalia would be swept away and the Labour party would introduce their fair rates proposals seemingly overnight, thereby wiping out the continuing problems of the poll tax. In the absence of an answer to that question I shall leave the matter on one side.

The Government attempt to persuade us that banding produces simplification and speed. Those are the two elements that the Government adduce in favour of their approach. Simplification and speed might advantage those engaged in valuing property, especially in Scotland—that far I concede the argument of the hon. Member for Garscadden. We still have the 1989 valuation for Scotland —it is reasonably up to date. We also have a highly computerised system containing a great deal of information, and we have expertise in the form of the Scottish assessors.

Those are the advantages that the Government can pray in aid of their proposals—and they may favour those who administer the scheme. But they do not necessarily persuade those who will have the scheme administered for them. I expect a great deal of difficulty in the context of properties previously owned by local authorities and now passing into owner-occupation. The market value of such property has not been tested. That will present a considerable problem for the valuer, and also for those who receive the valuation.

That leads me to the type and nature of appeals. The valuation appeals committee in Scotland has been reasonably cheap and effective.

It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

Ordered, That, at this day's sitting, the Local Government Finance and Valuation Bill may be proceeded with, though opposed, until any hour.—[Mr. Greg Knight.] Again considered in Committee.

Question again proposed, That the clause stand part of the Bill.

Mr. Douglas

I was referring to the valuation appeals committee. It is a reasonably cheap and effective way for individuals to plead their case before a tribunal. Will that procedure be continued? That would be a valuable piece of information.

In previous debates, I alluded to the method and approach to be adopted for capital valuations. I hope that I took the whole Committee with me when I argued that the deal must be freely arranged. It could not relate to a property that had been bequeathed by a mother or father to a son or daughter, or to a property that had been valued in a highly congested market. It must be made plain that the valuation should be carried out at arm's length.

The date at which a property is valued is also of supreme importance. There is no point in using information that was obtained in 1989; the time of the valuation must be stipulated. I suggest that it would be detrimental if the valuation was carried out more than a year ago. The hon. Member for Garscadden and others have examined the state of the property market, and hon. Members on both sides of the Committee have suggested improvements.

It would be farcical to apply a valuation in perpetuity to a but and ben in the highlands with an acre of land attached to it if it were possible to build a four, five or six-bedroomed house on the land and still call it a but and ben. That would be possible if we were stuck with properties in valuation bands in perpetuity. The Minister should clarify that problem.

Above all, the Minister has an obligation to tell us whether the resources are available to introduce the tax in 1993. I shall not go over the views of the Scottish National party about the possibility of a local income tax; we shall deal with that again in debates in another place.

The Minister must give us an absolute assurance that resources are available to put the tax into practice at the proposed date. The assessors say that they can do it, and they are confident that they can do it in Scotland, as the hon. Member for Garscadden pointed out. It would be farcical if Scotland were held up because resources and expertise are not available south of the border.

Finally, there are different types of banding north and south of the border. We have not referred to the possibility of upsetting arrangements in border areas. However, it has been conceded that there can be different types of banding in different parts of the United Kingdom. Perhaps the Minister could give me his views on why it is impossible to have different types of banding within Scotland. I can understand the advantage of an all-Scottish banding system, but there might be an advantage in having different arrangements for the central belt and in the Highlands and Islands. I cannot see the logic of trying to pressurise the whole of Scotland into the same banding structure, but perhaps the Minister could give us his views.

I am extremely suspicious about the trust of this Bill and of the Government's attitude towards local government finance. I must put the same strictures before the Opposition spokesmen. Both those parties are moving towards a costly, complicated system which, in one form or another, is a move back to the rates. That is costly and complicated and it will not last. It is my view and that of my party that it is a form of taxation which denies local authorities the accountability that they deserve and denies them a buoyant source of finance. The only argument that we have heard from the Dispatch Box against a local income tax has been that the United Kingdom Treasury will not wear it. I suspect that the argument that we have heard from a Tory Government at the Dispatch Box would be similarly deployed by a Labour Government.

Scotland deserves a local income tax, it could work in Scotland and the Scottish National party will be putting that argument to the Scottish people in the weeks and months ahead.

Mr. Allan Stewart

In an earlier debate, I commented that the Committee was in the unusual position of the hon. Member for Glasgow, Garscadden (Mr. Dewar) and the prospective Scottish National party candidate for Garscadden agreeing with each other. I am glad that normal service has been resumed in this debate.

The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) rightly and properly pointed out that this is a paving Bill and a paving clause. Of course, I shall try to answer as many as possible of the questions put during the debate, but hon. Members will recognise that the main Bill is yet to come.

I am aware that it would not be proper for me to go over ground that has already been covered in the course of the many debates on clause 3. However, I must briefly tell the hon. Member for Garscadden that we are not introducing a rating system. The council tax is a combined property and personal tax and there are innumerable differences between it and the rating system which I shall take other opportunities to remind the hon. Member of.

Considering the stirring defence of the roof tax by the hon. Member for Garscadden, I am surprised that he appears to have abandoned it for a different system.

I shall start with the serious and more technical matters mentioned by hon. Members. First, I shall respond to what the hon. Member for Garscadden said about banding. It is of interest to the Committee that the assessors' view—the hon. Member for Dunfermline, West (Mr. Douglas) has referred to their views on a number of occasions—is quite clear. They say that a banding system finds favour with the Scottish Assessors Association in that such a system should lend itself to a less detailed valuation of every property and should ensure that the change to the new basis can be introduced within the proposed timetable—a number of hon. Members referred to the timetable.

I believe that I can reassure the hon. Members for Edinburgh, Central (Mr. Darling) and for Roxburgh and Berwickshire by drawing attention to the considerable amount of data already held by the assessors. They have computerised data which is supplemented by plans and survey details of every domestic subject in their regions up to 1989. That data covers every aspect that could be deemed relevant to capital value.

The assessors have informed the Scottish Office—hon. Members have the same information—that that data could be readily adapted to achieve capital value banding. That data has been supplemented by recording all house sales information up to 1988 when sale prices were used as secondary evidence under the old system. Since then, sales evidence and sale prices have been readily available in all regional offices. The update of the existing computerised data would be a task undemanding of professional staff or resources.

Mr. Kirkwood

That information is helpful, but does it cover individual properties? Under the Data Protection Act 1988, can I pay my 25p and find out what my property is valued at in Ettrickbridge?

Mr. Stewart

I did not anticipate being asked about the Data Protection Act and I shall write to the hon. Gentleman about that.

I assure the House that updating the system to incorporate new and/or altered properties since 1988 could be readily achieved. I can tell the hon. Member for Edinburgh, Central that the data on the Royal Mile is already available in considerable detail. For a street of new owner-occupied housing which is more or less identical, it is not necessary to do an individual valuation.

Mr. Darling

Let us suppose that the Minister is right —I have no reason to believe that he is not—and that the assessor has a valuation of all the properties on the Royal Mile ranging from a rather old castle at the top to a highly desirable palace at the bottom, with houses of various sizes and shapes in between. Is the Minister saying that it will be possible to attach an individual value to each one of those properties and that they will be banded accordingly? Or will there be some attempt to band the whole street, part of the street or types of housing in the street? The Minister must appreciate that there are tremendous variations in value between different houses in the street even though they may be classified as the same sort of thing be it basement flat, tenement, castle or palace.

Mr. Stewart

Each individual house will have an individual band attached to it and the individual occupier will be aware of that. It is likely that multi-storey council flats will be in the same band. The Royal Mile is at the other end of the spectrum.

Mr. Dewar

Earlier the Minister said that the Scottish Assessors Association saw advantages in banding. I am prepared to concede that, because I have had the advantage of seeing its draft recommendations and comments on the Government's consultative document. He will be aware, however, that the association also strongly urged that, before placing a property in a band, it should be individually valued, as was done under the previous system. I understand from the Minister that the Government have ruled that out.

Mr. Stewart


Mr. Dewar

But the Minister said firmly that there would not be individual valuations.

Mr. Stewart

I may have been misunderstood. Every individual property is allocated to a particular band. Precisely how that is done is a matter for the professional judgment of assessors. Many properties in many streets will fall into the same band, but that is not true of the Royal Mile. The assessors maintain that, by the modification and use of existing computerised data and facilities, a capital value could be produced for each property within the narrowest of margins, and certainly to a degree more accurate than simply ascribing the property to one of the proposed bands. By so doing, the assessors believe that that would minimise and reduce the work load arising from appeals, a matter to which I shall return.

10.15 pm

The hon. Members for Roxburgh and Berwickshire and for Dunfermline, West asked me about costs. I do not have a figure to give to the Committee, but the assessors believe that the work can be achieved within or with only marginal adjustments to existing budgets. The Government have made it clear that they will compensate local authorities for any reasonable additional costs that they incur as a result of the exercise.

The hon. Member for Edinburgh, Central asked about relative changes. We shall return to that point in the context of the Bill after the consultation period has ended. The phrase used by the hon. Member for Glasgow, Garscadden about protection rackets may find its way into the public domain in surprising areas. [Interruption.] I was thinking of Newton Mearns as a random example.

The hon. Members for Dunfermline, West, for Edinburgh, Central and for Roxburgh and Berwickshire referred to appeals. I can confirm that there will be an appeals procedure. Like the hon. Member for Dunfermline, West, one is attracted to the idea of a valuation appeals committee, but we are making no definite plans until the consultation period has ended. The hon. Member for Roxburgh and Berwickshire asked me about outstanding appeals. I shall deal with that point in the second half of the letter that I will write to him after the debate.

Hon. Members in general asked about the timing of the introduction of the council tax. The Government's commitment to introducing the tax both north and south of the border is absolutely clear—April 1993. In relation to Scotland I can confirm that the assessors have told us that they believe that there will be—

Mr. Dewar

There is a growing feeling, which may not be justified in the event, that it may be possible—because of the more up-to-date valuation roll and the experience of the assessors, due to the fact that their software is in place—to meet the April 1993 target in Scotland but that it may be more difficult to meet it south of the border. If that happens, will the Minister give a guarantee that he will go ahead in Scotland and kill off the poll tax earlier than in England and Wales?

Mr. Stewart

I do not know whether the Minister of State's comment was heard by the hon. Member for Garscadden. I can confirm that the Government's commitment is absolutely clear. I end by saying in relation to Scotland that, for their part, the assessors in Scotland have made it clear that they do not regard it as a matter of great difficulty to meet the timetable.

I have not talked in general about the clause, since other matters relating to it were considered in earlier debates. I hope that the Committee will agree that clause 3 should stand part of the Bill.

Mr. Dewar

I hope and expect that the Minister will be on the Opposition Benches before these decisions arise, but it is being widely canvassed in all the professional journals that the timetable is very tight and that it may not be possible to keep to it. I do not intend to divide the Committee on the clause. If we carried the day, we should be in the illogical position of having stopped all work on preparing for the earliest possible demise of the poll tax. I do not believe that that is what people want. We shall continue to press the Minister on the details. I am impressed neither by the comprehensive nature of his argument nor by the strength of his position. He may feel that there is cheering in the streets of Newton Mearns, but over a wider range of Scottish opinion I think that my scepticism is fully shared.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

Clause 4 ordered to stand part of the Bill.

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