Taxation: Council Tax

11:30:00

Baroness Seccombe
asked Her Majesty’s Government:

What plans they have to change the current council tax to local taxation based on localities or to an annual bill levied on a percentage of the value of each property.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews)
My Lords, the Government have no such plans. We will consider any changes to the council tax system only in the light of the recommendations of Sir Michael Lyons’s independent inquiry into the functions, role and funding of local government, which is due to report to the Chancellor of the Exchequer and the Secretary of State for Communities and Local Government at the end of the year.

Baroness Seccombe
My Lords, I thank the Minister for that Answer. Are the Government working with Sir Michael Lyons on his proposals for changes to the local taxation system, despite him or in anticipation of what he is going to say?

Baroness Andrews
My Lords, as we have worked through our own plans for local government reform we have been informed by Sir Michael’s interim report. But his report on funding local government is an independent report and we will take full account of it when it is published.

Baroness Gardner of Parkes
My Lords, is the Minister aware that any dramatic change in council tax, whether or not through banding, could adversely affect people—particularly older people—who have lived in a property for many years? The property may have gone up 100 times in value, yet is still a house to live in and is not worth any more to them. It could have a devastating effect on whole communities if such elderly people were forced to sell up and move in order to meet the charges.

Baroness Andrews
My Lords, the point of the council tax system is that it is fair and is seen to be fair. Sir Michael Lyons is addressing the task of how to make it fairer in changed circumstances, and all those kinds of considerations will be taken into account.

Baroness Scott of Needham Market
My Lords, in view of that answer, can the Minister say a little more about why the Government have developed something called intelligent proximity analysis, which allows valuation officials to differentiate between thousands of neighbourhoods and adjust bills accordingly? Given the Government’s intention, announced last week in the White Paper, to clarify and make local government more transparent, does she agree that a system which takes into account 287 different variables would not do very much to assist local council tax payers in understanding their bills?

Baroness Andrews
My Lords, I am glad of the opportunity to say how much I deplore the kind of mischief that is being made by campaigns which suggest that somehow the basis of council tax assessment is changing. The source of information to which I think the noble Baroness is referring is probably the one-off study used in anticipation of the revaluation which we postponed. As she will know, normally the valuation officer conducts the full valuation assessment. Evidence was taken from data sets which were found not to be useful in relation to the expertise of the valuation officer. That exercise has led to some newspapers speculating that somehow valuation will be based on the number of people wearing soft contact lenses in the area in which you live, which is complete rubbish. The valuation system has not changed since it was set up in 1993 by the Conservative Government. It aims to be fair. The only change is that we are using new technology and digitalisation to make it fairer and more accessible.

Lord Trimble
My Lords, if the Government have no intention of introducing local government tax based on capital values in England and Wales, why then are they forcing through next Tuesday provisions for local government taxation based on capital values in Northern Ireland? I think I am right in saying that the proposals are opposed by every party in Northern Ireland, with the possible exception of Sinn Fein, and come in advance of any possible decision by the Northern Ireland Assembly, which the Government are trying to revive later this month.

Baroness Andrews
My Lords, it is absolutely true that the local taxation system in Northern Ireland is different. All the questions raised by the noble Lord will be ably dealt with by my noble friend when he opens the debate on Tuesday.

Lord Berkeley
My Lords, when a new transport link gets built—such as Crossrail, which is in proximity to the site for the Olympics—and people who live in the vicinity find the values of their house doubling or trebling, as has already happened around Stratford, would it not be reasonable for the community to get some of that benefit rather than the windfall all falling on the lucky owner?

Baroness Andrews
My Lords, as I said, council tax is based and always has been on the value of your home, which depends on where you live. That is hardly new. My noble friend makes a good point.

Baroness Hanham
My Lords, does the Minister not agree that all the pointers that are now coming forward are that there will be a great shift in the taxation burden on to local taxation? Following a point made by my noble friend Lady Gardner, how will that shift in taxation be reflected in people’s income and ability to pay when the council tax is so much increased, as it looks as if it will be?

Baroness Andrews
My Lords, I cannot possibly anticipate what Sir Michael Lyons is going to recommend. We have made it clear that the council tax should be retained; we are not in favour of local taxation, and I am not entirely sure who is these days. It is another case of having to wait and see what Sir Michael Lyons comes up with.

Lord Brooke of Sutton Mandeville
My Lords, given the present uncertainties, are the Government treating the entire nation as a focus group?

Baroness Andrews
No, my Lords. In fact, I take the opportunity to say that valuation officers look only at properties that are new to the market or come forward at the point of sale. The idea that there is an army of valuation officers snooping away, taking photographs of people’s bedrooms and counting the number of rabbit hutches or gnomes in their gardens is absolutely absurd. I really wish that we could communicate this information more persuasively—and we look to the party opposite to help us to do that.