HC Deb 03 July 2001 vol 371 cc128-30
3. Shona McIsaac (Cleethorpes)

What plans there are to review council tax banding. [653]

The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Dr. Alan Whitehead)

A number of respondents to our Green Paper on local government finance, which we published last September, proposed that changes should be made to the structure of the council tax bands. We are considering what they had to say in the context of preparing a White Paper, which we intend to publish later this year.

Shona McIsaac

I thank my hon. Friend for that reply and welcome him to the Front Bench. I am sure that he will be hearing an awful lot from hon. Members about council tax banding. Will he acknowledge that the flawed system that was introduced by the previous Tory Government penalises parts of the country, such as Grimsby and Cleethorpes, where the majority of properties are in band A? In particular, will he consider introducing a new lower band to acknowledge the fact that some people live in cheaper properties, such as mobile homes, bedsits or on residential parks, which are common in seaside resorts?

Dr. Whitehead

I thank my hon. Friend for her kind remarks, and I anticipate hearing from her and other hon. Members on this subject and many other council tax matters in the not-too-distant future.

We are aware of the concerns that occupiers of low-value properties have about their council tax banding. A revaluation would be necessary to split a council tax banding, and we have no plans for such a revaluation at present. In the Green Paper, however, we invited views on whether there should be a fixed cycle for council tax revaluations and whether that would make the system fairer. Revaluations for business rates are carried out on a statutory five-year cycle, but at the moment there is no fixed cycle for council tax revaluation.

Mr. David Cameron (Witney)

When looking at council tax banding, will the Minister address the concerns of residents in west Oxfordshire about the review of the area cost adjustment? That could add £100 to my constituents' council tax bills. The review is under way; when does he expect it to be completed? Will he guarantee that local authorities in the south-east, which have problems with teacher shortages, will be no worse off?

Dr. Whitehead

The Government are aware of the concerns of many people about area cost adjustment, and representations on the subject have been made by several hon. Members. The issue will be considered for the White Paper, which will be published later this year.

Lynne Jones (Birmingham, Selly Oak)

Will my hon. Friend consider making the council tax system more progressive by increasing the multiplier on the top band?

Dr. Whitehead

The Government are also aware of the opposite view, which is that council tax band H could be split, or the ratio between the lowest band and the highest band could be altered to make the system fairer. All those considerations were included in the Green Paper. Responses have been received, and the Government are considering how best to respond to them in the White Paper later this year.

Mr. Nigel Waterson (Eastbourne)

May I, too, welcome the Minister to his new position? Did he, early in his time at the Department, find in the bottom of one of his red boxes the infamous leaked memo from No. 10, reported recently in The Sunday Times, which said: there are some very tough decisions to take here and we will need to move very swiftly after the election to implement them, especially if we are talking about a large shift of resources from London to the north"? Does the Minister accept that whether or not he fiddles with the formulae, if council tax continues to rise at the rate that it has over the past four years, by 2005 it will be over £1,200 at band D? Does he accept also that if Labour were to introduce new council tax bands on higher value properties, including a new banding between bands G and H and a corresponding increase, that could mean a 40 per cent. increase in council tax for some people? That could also mean, with band D increasing at the same rate as it has so far under Labour, that people in houses in the highest bands could be paying an extra £1,600 a year by the end of this Parliament. Will he comment on those figures?

Dr. Whitehead

As the hon. Gentleman knows, whatever change one makes, either in the banding or the ratios between bands, the eventual council tax yield will remain the same, because any revaluation or rebanding results in other adjustments. The question to be asked of any revaluation or rebanding is whether it makes the distribution of council tax fairer. If a change is made, there will, of course, be winners and losers. That is an important consideration when one is deciding how best to deploy banding or valuation to ensure that council tax is as fair as possible.

Mr. Dennis Skinner (Bolsover)

Is it not time that we took a serious look at what the banding would be of a big tent? First, Labour introduced a big tent; now they tell me that there is a Portillo big tent, a Clarke big tent and a couple of others—there is some money to be made here.

Dr. Whitehead

The Government have received representations about mobile homes—perhaps my hon. Friend has in mind a tent on wheels. The Opposition's tent currently appears to be on wheels because of the voyage of discovery that some Opposition Members are apparently taking.