Council Tax Banding

HC Deb 11 January 1994 vol 235 cc151-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert G. Hughes.]

12.14 am

Sir Anthony Durant (Reading, West)

I am grateful to have an opportunity to raise the question of council tax banding from two points of view: first, for those in mobile homes; and, secondly, with regard to valuation appeals.

My interest in the position of those in mobile homes began when I received a petition signed by 140 residents of Garston park in my constituency. A similar approach has been made by the residents of Crookham caravan park in Newbury, who heard that I had this Adjournment debate and wrote to me asking for my support. I sent the petition to the Ministry and received a reply from the Minister of State, who laid out the current position. I was already aware of that, but at least the position was looked into.

My constituents in Garston park were keen on the community charge. They thought that it was a good tax and are upset that it has now been changed to a council tax, as they suffer under that proposal. Their petition pointed out that their properties were of a lower value than the bottom band of £40,000 and that they should therefore have special consideration. mr. Cox, a gentleman from the estate, commented: At the moment we are in Band A, £40,000. This is far too high for these tin boxes. We now pay council tax, the same as someone living in a 2–3 bedroom house. I have looked at their case. I do not question whether that is fair, but agree that they should have either a lower band or special dispensation.

Mobile homes differ from bricks and mortar homes in four ways: the average price is lower; they depreciate in value quickly; their occupants do not get full services because the homes are usually on estates; and, although they form a cross-section of society, the residents are slightly unusual.

Those in Garston park say that their properties are worth, on average, some £20,000. A survey of mobile homes showed that the average price for 1980–90 in the country as a whole was £34,000 for a new mobile home and £19,400 for a second-hand mobile home, giving an average of £24,000 for all mobile homes. That shows that the average price of many mobile homes is roughly £20,000.

Residents therefore feel that their properties should be given special consideration. The value of a mobile home drops nearly 50 per cent. when it becomes second-hand and occupants do not get full services. They must pay, through their rent to the owner of the site, for street lighting and road maintenance. Although they have rubbish collections, education and other local government facilities, they do not receive all the facilities available to bricks-and-mortar homes.

Residents are not a cross-section of the population but predominantly small households of one or two people, often elderly and retired. They are on low incomes and, although many have sold their bricks and mortar and moved from a house to a mobile home, they have done so to give them a bit of capital for their old age.

On introducing the consultative proposals to the House, the then Secretary of State for the Environment, my right hon. Friend the Member for Henley (Mr. Heseltine), said that the new tax would be simple and cheap to collect, would not impose excessive demands on any household, and would be seen to be fair. However, those people do not think that that has come about. He introduced another band —band H—at the top after a number of pressures, but nothing has been done at the lower end.

It is estimated that there are some 75,000 to 80,000 mobile homes in England. A special discount for them would probably benefit their occupants to the tune of some £90, on average, for each mobile home. I hope that the Government will have another look at the matter in any review of the council tax that they undertake.

On council tax valuations, the most recent national figure issued by the Minister of State in answer to the right hon. Member for Derby, South (Mrs. Beckett) was that a total of 770,467 people had appealed against their valuations, and that the number of valuations outstanding was 597,931. The most recent figure for Reading is 4,611, and for Newbury it is 3,325. The figures were supplied by Reading's valuation officer. That suggests that the total is close to the original Government estimate of 1 million claims.

One of the matters that concerns me about the speed of dealing with valuations is that people have to pay the tax that is settled by the original valuation and then have to have a refund. Over the years, the refund accumulates and that presents a difficulty for the local authority which has to repay it. Therefore, it would be better if the business of the valuation was dealt with much quicker than at present.

My hon. Friend the Under-Secretary of State for the Environment, who is replying to the debate, said in a written answer on 26 November that 560,000 cases would be settled by the end of 1994 and that the rest would be settled as soon as possible. I hope that we can get quicker valuations and have the matter settled. The tribunals need more support and perhaps more resources. In a speech to the National Committee of Valuation Tribunals conference, the Minister said: We must not underestimate the danger that public attitudes to the new council tax will be soured by the perception that appeals are taking too long to settle. In Reading, there is a unique situation. Twelve people successfully appealed out of the 120 people in Amity road, and the valuation officer reviewed the whole street and lowered the banding for everybody, which delighted the residents. The difficulty is that some 800 houses in other streets are similar to those that had their banding lowered. The local council got excited about that and made a national appeal in The Guardian and in all the local papers urging everybody in Reading to appeal. As a result, the number of appeals increased by more than 2,500, which meant more work for the valuation officer and the valuation department.

I am concerned that many of the people who got excited over the press release by the Labour-controlled council will not have their appeals upheld and will be disappointed and angry that they were misled into appealing unnecessarily. About 800 or 900 house will probably benefit as a result of the Amity road appeals, but there are now so many people appealing in Reading that the valuation officer is overwhelmed by work. I would not say that he is annoyed, because civil servants are not allowed to become annoyed. It must be unusual for a local council to tell everybody to appeal against valuations that obviously benefit the council.

While the council tax is basically fair and in many ways fairer than the poll tax, there is no doubt that a minority of council tenants and those with mobile homes feel aggrieved about the tax. I hope that the Minister will look at the matter. It is almost a year since the tax was introduced, and perhaps it is time to review its workings. Will he also look at mobile homes valuations to try to improve the situation which particularly affects my constituency?

12.24 am

Mr. Nick Hawkins (Blackpool, South)

rose—

Madam Deputy Speaker (Dame Janet Fookes)

Order. Does the hon. Member have the permission of the hon. Member for Reading, West (Sir A. Durant) and the Minister to speak?

Mr. Hawkins

Yes, Madam Deputy Speaker. I am grateful to my hon. Friend the Member for Reading, West (Sir A. Durant) and to the Minister for allowing me to intervene.

I shall be brief. I wish to speak about mobile homes and park homes. As the Minister is aware, my constituency has a large number of park home estates, and people there approached me in the way that the constituents of my hon. Friend the Member for Reading, West was approached by his constituents. I have written on their behalf to the Minister and have had factual replies both from him and from miss Modupe Kuponyi, a civil servant at the Department.

My constituents emphasise that the values of the properties in which they live are much lower than the £40,000 figure that defines the bottom council tax band. My hon. Friend the Member for Reading, West (Sir A. Durant) was right to say that such dwellings also suffer much greater depreciation than other forms of property, and that those constituents do not receive the full range of services.

Many of my constituents have deliberately chosen to buy park homes rather than become a burden on the state and add to the already overcrowded council housing list —in order to release a little capital, as my hon. Friend said, so as to have some savings to alleviate the problems of their old age. I strongly support my hon. Friend in urging the Minister to review the tax and to introduce an extra bottom band—I suggest that it should be called the AX band—to ensure that the special needs of park home owners are recognised.

12.26 am

The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry)

I am grateful to my hon. Friend the Member for Reading, West (Sir A. Durant) for raising the subject of the council tax. I do not believe that there will ever be such a thing as a popular tax, and any new tax is even more likely to attract public criticism, especially in an area that has been the subject of prolonged controversy. The degree of acceptance that the council tax has already won, only nine months into its life, is therefore outstanding. As the Financial Times said just before last year's local elections: Predictions of renewed political storm over the introduction of the council tax have not been borne out … Voters are cen:ainly not ecstatic about the new property-based tax, but they regard it as a substantial improvement on the poll tax". One would not expect ecstasy, but one does find acceptance, and a recognition that the council tax is the fairest possible way of paying for local government services.

Although he supports the principle of the council tax, my hon. Friend raised three specific concerns. The first was the length of time taken to process council tax appeals; the second was the council tax treatment of mobile homes; the third was what appears to be a disproportionate number of appeals in the Reading area. I shall deal with those matters in detail in that order.

With regard to the timetable for appeals, the Valuation Office Agency—the VOA—had received about 860,000 appeal proposals for England by the end of the council tax appeal period on 30 November. To put that figure in context, that means that 96 per cent. of householders in England have accepted the banding assigned to their home. Only 4 per cent. have lodged appeals.

Clearly, the people who have appealed will want their appeals to be dealt with as quickly as possible. To date, 175,000 appeals have been cleared up. I am also glad to be able to tell my hon. Friend and the House that the Department has agreed to allocate about £2.5 million more of its resources to the task of clearing up appeals, and as a result we expect the VOA and the valuation tribunals to have dealt with four out of every five appeals by the end of 1994.

That means that 700,000 taxpayers should see their appeals settled in just over 12 months after the end of the appeal period, which I think will be a sound achievement. Any remaining appeals will be settled as quickly as possible in 1995—a rather better target than that of which I was able to advise my hon. Friend the Member for Reading, West shortly before Christmas.

We hope that the vast majority of cases can be resolved through discussions between the taxpayer and the Valuation Office Agency. That depends on the great majority of appellants being willing to settle their cases through such negotiation without recourse to a valuation tribunal hearing. Clearly, mutual agreement will not be possible in all cases, and there will be many appeals in respect of which the tribunals will need to adjudicate. We shall of course be monitoring progress closely, and stand ready, if necessary, to review our plans in the light of experience in handling appeals.

I fully understand the concerns of the taxpayers who are aggrieved at having to pay tax at a higher level than they believe is right and at having to do so until their appeal is settled. But if we had said that anyone who appealed would immediately have his tax bill reduced, it would have led to a large number of speculative appeals made with a view to achieving short-term tax reductions, and could also have led to serious collection problems. Under the present system, we can be sure that those people who have challenged their banding have done so on genuine grounds and not to gain short-term financial advantage or for any other spurious reason.

It is also important to keep matters in proportion. The vast majority of cases in which there is an appeal involve a change of only one band—over the course of a year, that amounts typically to around £60—and taxpayers who face real difficulties can ask to have their cases prioritised. Moreover, those receiving council tax benefit will have that benefit calculated against their actual bill: they will receive that benefit against the bill for the band at which they are paying. I do not think that we are likely to see cases of serious hardship merely because an appeal has not yet been resolved.

The valuation office has set itself tough targets. Where the initial banding is clearly wrong, it is offering to reband the property within 60 days of the date on which the appeal is first received. If, on the other hand, it believes that banding to be correct, it will inform the taxpayer of that within 90 days. In all other cases—those where careful and considered discussion will be needed—it will establish contact within 120 days.

Those are challenging deadlines, which serve to emphasise our very real determination to crack on switfly with the job of getting the appeals settled to everyone's satisfaction. It is obviously in the interests of everyone who wishes council tax to succeed that appeals should be resolved as speedily as possible.

Understandably, my hon. Friend the Member for Reading, West focused on the situation in Reading. By and large, I suspect that the situation in Reading is similar to that elsewhere, but there appear to be one or two specific difficulties, some of which have been clearly exacerbated by comments made by the local authority.

As my hon. Friend said, one of those difficulties centred on some 120 houses in Amity road, Reading, which were put in band C in the original valuation exercise. That banding was based on evidence from sales on or around the April 1991 reference date which showed the typical market price to be around £52,000, which is at the lower margin of band C. Some residents of the road disagreed with that valuation—as is their right—and in respose to their appeals, the listing officer, having conducted some further research on prices in the vicinity, concluded that on balance the evidence pointed to a value just below, rather than just above, the banding level.

Those properties were very much on the cusp of the values between two bands. The houses concerned were therefore rebanded to band B, which is clearly good news for the residents concerned. That shows that the appeal system works. The listing officer now has in hand the alteration of the bands of a number of other similar houses in the locality.

The council tax bill for a house in Reading with two residents in band C is £540. The bill for one in band B is £67 less. The monthly council tax payments of residents of Amity road will therefore have been reduced by about £7 as a result of the rebanding. That is further good news for the residents of Amity road, as that will have been the second reduction in local tax bills experienced by many in less than a year. Even the band C council tax for Reading was more than £100 less than the community charge payable for two adults. Reading is required to refund any over-payment to the taxpayer's account, so no resident in Amity road has lost. Indeed, they have all gained, which is good news for Amity road residents.

However, as my hon. Friend the Member for Reading, West made clear, the situation in Amity road made the local press. It was even seized upon by some national journalists who were desperate to grab any possible bad news council tax story. However, the facts in relation to Amity road are good news for local residents and show that the system clearly works, whatever irresponsible local Labour councillors and others might seek to suggest.

If Amity road is the worst case that the Labour party can find to try to rubbish the council tax, that proves the robust fairness of the council tax. The fact that the valuation of one group of houses is on the cusp between two bands does not mean that all the bandings in Reading or in the rest of the country are in doubt, because there are clearly particular circumstances in Amity road.

It would be common sense and reasonable to conclude that there are not going to be that many instances when the value of properties are so close to the borderline between two specific council tax bandings. Such circumstances are unlikely to apply generally elsewhere—or, indeed, in many other circumstances in Reading. Obviously, every case must be treated on its merits.

My hon. Friend the Member for Reading, West wanted to know whether it will be possible to provide additional funding for the valuation office in Reading. The allocation and distribution of resources on individual offices is a matter for my hon. Friend the Economic Secretary to the Treasury and for the Valuation Office Agency. However, the House will recognise that it would be wrong to focus our efforts and resources on specific areas to the detriment of others.

We all share the important objective of ensuring that all appeals are progressed at the same rate in all parts of the country. I have already made it clear that the extra resources that we have provided will enable that to be achieved quickly and effectively. I hope that, in due course in Reading, where there seems to have been a disproportionate number of appeals, many householders who have investigated the matter with the valuation office will be able amicably to settle their valuation banding and that they will not have been misled into making unnecessary appeals by some rather rash comments by the local authority.

My hon. Friends the Member for Reading, West and for Blackpool, South (Mr. Hawkins) referred to mobile homes. It was suggested that an additional valuation band should be created to accommodate mobile homes and, presumably, other properties worth considerably less than £40,000, which is the upper limit of band A. Such representations have, of course, been made on several occasions. Indeed, the House carefully considered the matter when the legislation was originally before it.

However, we believe that one of the significant advantages of the banded system that we have adopted is that it limits the variation between the highest and lowest bills in an area. There is unlikely to be much difference in ability to pay between mobile home dwellers and residents of low-value bricks-and-mortar homes. I appreciate that, if one is on a low income, a mobile home may be an economically attractive choice of home, but most low-income families live in conventional dwellings. We target help on such families through the council tax benefit system. Those whose incomes are at or below the income support level normally pay nothing at all in council tax, and that is the case whether they live in mobile homes or houses.

It is argued that we should make a special case for residents of mobile homes on the ground that they receive a number of their services from site owners rather than from the local authority. It is true that some services such as street lighting and road maintenance on mobile home sites are often privately provided, but local people living in mobile homes benefit from nearly all local authority services—for example, their children go to local schools, and they have the support of local social services, the local fire brigade, local police, and so on. Of course, when those living in mobile homes go out on to public roads, they benefit from the local authority's construction, maintenance and lighting.

We are not convinced, and Parliament has not been convinced, of the benefits of creating another valuation band. However, the Government are not wholly unsympathetic to the special circumstances which mobile home residents might face. The organisations representing mobile home owners and occupiers have put to us representations about the council tax treatment of unoccupied homes.

At present, the regime for unoccupied mobile homes is exactly the same as that for unoccupied bricks-and-mortar dwellings, which are exempt for up to six months while they are unoccupied and substantially unfurnished. Having listened to the case put to us, we have accepted that caravans are rarely left unfurnished, either because the furniture is sold along with the home or because the furniture is actually physically fixed to the caravan. We therefore propose that, from April, all unoccupied caravans should be exempt from the council tax, whether or not they are furnished. I hope that that proposal, which is presently the subject of consultation, will be welcomed by mobile home residents and their representatives.

I close by quoting a particularly candid comment in The Daily Telegraph this year, when it admitted: Journalists comb the country for tales of erroneous house valuations and vastly increased bills. In reality, the reform looks like being a modest success. When journalistic seekers of doom and despondency admit that a new tax is a success—even a modest one—the House can be confident that the council tax is a success.

Question put and agreed to.

Adjourned accordingly at seventeen minutes to One o'clock.