HL Deb 23 January 1992 vol 534 cc975-1013

4.55 p.m.

House again in Committee on Clause 5.

Baroness Hamweemoved Amendment No. 43: Page 3, leave out line 20 and insert ("6: 7: 9: 11: 15: 18: 24: 30: 36: 42: 48: 54").

The noble Baroness said

In moving the amendment I shall speak also to Amendments Nos. 48 and 49. We are still dealing with the question of whether the range of banding proposed in the Bill is appropriate. We have debated the question of whether there should be any banding at all. In tabling this amendment I suggest to the Committee that if we are to have banding there should be a broader spread which would allow a fairer solution.

We know that the proposed banding is designed to protect the better off in largish houses who were hit by the rates. I do not use that term as pejoratively as it may sound but a statement has been made more or less in those terms. In fixing the proportion that people in each band will pay, one aim is to avoid Left-wing councils charging a high rate for top value properties. I believe that the Government have gone too far to protect those at the top of the range and that there are not enough bands. The fixed proportion, the increase of three between the lowest and the highest, is too small.

Amendment No. 43 would increase the number of bands from nine to 12. It would do so by adding a greater number of top value bands. As the Bill is written, the burden of the tax falls too heavily on those in average-priced properties. In expensive property areas the highest band, as currently proposed, will trap too many people. Increasing the number of bands would ensure that millionaires in mansions paid a fairer contribution. In the context of this Bill we talk about millionaires almost as often as we talk about widows. I do not believe that there can be many people living in a property valued in excess of £500,000 who cannot afford to pay a significantly higher proportion of the tax than most others.

If we are to have a property tax, the logic should be to look at the effect on the people who live in high value properties as against those who live in low value properties. I feel even more strongly that we should be looking at those in the lower middle bands paying less than those in the high bands rather than penalising those in high value properties.

Amendments Nos. 48 and 49 are to complement the increase in the number of bands and increase the proportion between the bands. At the moment the proportion is three times. Our amendments would increase the proportion to nine times across the 12 bands. That is to protect those on lower and average incomes and to ensure that those who can afford very expensive properties make a fair contribution to local taxes.

We are conscious of the effect of the property boom in the 1980s and that many people in different parts of the country are living in property that they bought or acquired many years ago, and that they occupy property that they could not afford to buy now on the open market. Under the current proposals in many cases those people would have to pay the same as millionaires, or at least the very wealthy, living in homes that cost very large sums of money. Those in starter homes, the first time properties, where prices have gone rocketing up over the past few years, will be paying one-third. Our amendments are to attempt to ensure that the burden of local taxation will fall more fairly than it does as currently proposed. I beg to move.

5 p.m.

Baroness Hollis of Heigham

We on this side support the amendment. Obviously we would prefer individual valuations, but if we are not going to get that then anything that either stretches the range of bands or alters the relativities between bands, or alternatively goes for regional banding, would have our support. To that extent the amendment moved by the noble Baroness makes the unfair and overcompressed banding system somewhat fairer, and to that extent we should like to be associated with it.

The Earl of Balfour

I feel on this occasion that if this amendment were to be accepted the banding stretches far too wide. To jump from a range of three all the way up to a range of nine is not on. Even in my own part of the world I was sad to learn that three of my friends, because they lost their jobs, had also lost their homes. Many people have taken on mortgages and are really struggling. Although there is a lot of talk about millionaires, they can usually leave the country if they want to.

I feel that in limiting the range we are being much fairer to the cross section of the community. Those on the lowest incomes can have support through social security legislation, but there are those in the middle band who have to buy their houses and I feel that a person purchasing a house, with or without a mortgage, is probably buying the most expensive thing ever in his life. There are few other occasions in one's private life where one would ever write out a cheque for five or more figures. The next most expensive purchase in the ordinary course of a person's life is buying a car from time to time, which we all have to do.

These people have all their capital tied up in a house. It does not earn them s single penny. Usually the larger the house the greater the upkeep, the greater the responsibility, and the greater the expenditure involved. That has been my practical experience. Equally, it is sometimes wrong, as has happened in the past, where rents are kept so low that the landlord, be he a private person or a local authority, is in the position where he simply cannot find the money to repair his properties. I support the present range proposed by the Government within this legislation. They have got it about right.

Baroness Blatch

These amendments deal with the council tax valuation bands and with the relationship between bills for dwellings of different values. They are, therefore, about the balance of the proposals for the council tax. I must tell the noble Baroness and the Committee that they have this wrong.

Let me deal first with the principle of adding additional bands to the council tax. I have explained to this Committee the advantages of a banded system of property valuation. One of these advantages is that it solves at a stroke the problems involved in undertaking a detailed valuation of each and every dwelling. If banding is to be truly effective, however, it is imperative to avoid the detailed valuation issues, which were the bane of the rating system.

The eight broad bands we have chosen will minimise administration and keep the number of appeals to a minimum, while ensuring that the council tax is related to the value of the property. We believe that the eight broad bands we have chosen for the council tax in England, Wales and Scotland fairly reflect the range of property values across Great Britain.

Amendment No. 43 reveals the real reason why the noble Baroness is so anxious to introduce additional council tax bands. A family in a property in the noble Baroness's proposed top council tax band would pay almost five times as much as they would if their home was in band D, and nine times as much as in a band A property. The amendments therefore do no more than widen the difference between the highest and lowest bills. They would take us back to the unfairness of the rating system when a disproportionate burden fell on a minority of local taxpayers. I must say that I find it hard to accept that noble Lords would wish to lead local taxpayers back to such a punitive and unfair system.

As noble Lords will know, we propose a system where a couple in the highest band would pay twice the amount they would pay in band D and three times the amount in the lowest band. This will avoid disproportionately high bills in high-priced areas and will mean low bills for low-priced properties across the country. If these amendments were accepted many people would be paying far more than their fair share. The Government, however, recognise that property values are not a perfect guide to ability to pay. That is why we will limit the bills for the highest value properties to three times the lowest. Attempts to make people in high-value properties pay even more are no more than the politics of envy.

The Committee will recognise that those who can afford to pay most towards the cost of local government will do so. Fifteen per cent. of the cost will be met by the council tax, the remaining 85 per cent. having been raised from national taxation and the uniform business rate. I cannot help feeling from the discussions that we have had both on the first day in Committee and today that noble Lords opposite on both Labour and Social Democratic Benches cannot wait to get their hands on the incomes of those on middle and high incomes. It is the politics of envy.

The noble Baroness professes a sympathy with those who live in large houses but who have little cash flow. However, here we have an amendment on the Marshalled List that will penalise those very people. Unless noble Lords opposite, again on both Benches, advocate a much more generous rebate system then I cannot help feeling that those people will be seriously disadvantaged by this and other amendments.

I hope that I have made clear the importance that the Government attach to finding the right balance between the number of valuation bands and the relationship between bills actually sent out to dwellings in each band. We believe that our proposals strike the right balance and I urge the Committee to reject the amendment.

Baroness Hamwee

The invitation to propose a more generous rebate system is welcome; we shall come to it later in our debates. The Minister says that the compressed banding is to avoid the detail of valuation. Again, what is the balance between dealing with the administration of it and arriving at the right answer? The Minister says that widening the difference between the highest and lowest bills would be punitive. I explained—and meant it—that I was not trying to impose a penalty on those who had the highest value houses. I was seeking a means of supporting those at the low to middle part of the range.

I resent the amendment being described as the "politics of envy." We on these Benches and I am sure Members on the Labour Benches are attempting to make the Bill fairer. The Minister may shake her head but I know my own motives. They are the politics of fairness. On that basis I should like to test the opinion of the Committee.

5.11 p.m.

On Question, Whether the said amendment (No. 43) shall be agreed to?

Their Lordships divided: Contents, 65; Not-Contents, 115.

Division No. 2
Addington, L. Hanworth, V.
Airedale, L. Harris of Greenwich, L.
Aylestone, L. Hollis of Heigham, B.
Beaumont of Whitley, L. Hooson, L.
Birk, B. Hughes, L.
Blackstone, B. Hunt, L.
Boston of Faversham, L. Jeger, L.
Bruce of Donington, L. Jenkins of Putney, L.
Callaghan of Cardiff, L. Judd, L.
Carmichael of Kelvingrove, L. Kagan, L.
Carver, L. Kilbracken, L.
Cledwyn of Penrhos, L. Kirkwood, L.
Cocks of Hartcliffe, L. Listowel, E.
David, B. Lovell-Davis, L.
Dean of Beswick, L. McIntosh of Haringey, L.
Donaldson of Kingsbridge, L. Mackie of Benshie, L.
Donoughue, L. Mayhew, L.
Dormand of Easington, L. Meston, L.
Ennals, L. Monkswell, L.
Ewart-Biggs, B. Morris of Castle Morris, L.
Falkland, V. Mulley, L.
Fitt, L. Phillips, B.
Gallacher, L. Rea, L.
Graham of Edmonton, L. Redesdale, L.
[Teller.] Richard, L.
Greene of Harrow Weald, L. Seear, B.
Grimond, L. Serota, B.
Hamwee, B. [Teller.] Shackleton, L.
Stoddart of Swindon, L. Wallace of Coslany, L.
Strabolgi, L. White, B.
Tordoff, L. Williams of Elvel, L.
Turner of Camden, B. Wilson of Langside, L.
Underhill, L. Winchilsea and Nottingham, E.
Abinger, L. Killearn, L.
Acton, L. Kimball, L.
Aldington, L. Kinnoull, E.
Allenby of Megiddo, V. Knollys, V.
Ampthill, L. Lane of Horsell, L.
Arran, E. Lauderdale, E.
Astor, V. Long, V.
Auckland, L. Lucas of Chilworth, L.
Balfour, E. Lyell, L.
Belhaven and Stenton, L. Mackay of Clashfern, L.
Belstead, L. Manchester, D.
Bessborough, E. Mancroft, L.
Blatch, B. Marlesford, L.
Boardman, L. Merrivale, L.
Boyd-Carpenter, L. Mersey, V.
Brabazon of Tara, L. Montagu of Beaulieu, L.
Brougham and Vaux, L. Morris, L.
Byron, L. Mottistone, L.
Caithness, E. Mountgarret, V.
Caldecote, V. Mowbray and Stourton, L.
Campbell of Alloway, L. Munster, E.
Carnegy of Lour, B. Nelson, E.
Carnock, L. Norfolk, D.
Cavendish of Furness, L. Norrie, L.
Clitheroe, L. Northbourne, L.
Coleraine, L. Orkney, E.
Colnbrook, L. Orr-Ewing, L.
Constantine of Stanmore, L. Oxfuird, V.
Cork and Orrery, E. Pearson of Rannoch, L.
Craigavon, V. Pender, L.
Cross, V. Peyton of Yeovil, L.
Denham, L. Quinton, L.
Denton of Wakefield, B. Reay, L.
Elibank, L. Renfrew of Kaimsthorn, L.
Ellenborough, L. Renton, L.
Elles, B. Renwick, L.
Elliot of Harwood, B. Sandford, L.
Elliott of Morpeth, L. Savile, L.
Elton, L. Selsdon, L.
Faithfull, B. Shannon, E.
Ferrers, E. Skelmersdale, L.
Flather, B. Soulsby of Swaffham Prior, L.
Fraser of Carmyllie, L. Stanley of Alderley, L.
Gainsborough, E. Strathclyde, L.
Gardner of Parkes, B. Strathcona and Mount Royal,
Geddes, L. L.
Glenarthur, L. Strathmore and Kinghorne, E.
Hailsham of Saint Marylebone, [Teller.]
L. Swinfen, L.
Henley, L. Teviot, L.
Hertford, M. Thomas of Gwydir, L.
Hesketh, L. [Teller.] Thurlow, L.
Hives, L. Trumpington, B.
Holderness, L. Tryon, L.
HolmPatrick, L. Ullswater, V.
Hooper, B. Waddington, L.
Howe, E. Wedgwood, L.
Jeffreys, L. Wharton, B.
Joseph, L. Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.19 p.m.

Baroness Hollis of Heighammoved Amendment No. 44: Page 3, line 22, at end insert: ("( ) Regulations shall make provision for a formula to determine the amount of council tax payable in respect of a dwelling in valuation band A where the listing officer has determined that there has been a material reduction in the value of the dwelling caused by the presence of facilities or adaptions suitable for the use of a disabled person as defined under section 24.").

The noble Baroness said: Amendment No. 44 refers to the situation of a disabled person's property. Under the Rating (Disabled Persons) Act 1978 the value of facilities needed by a disabled person can be deducted when calculating the rateable value of the property. That reduction would automatically lead to a reduction in the size of the rates bill.

We fear that the Government's proposals for disabled tax relief are much more restrictive in this Bill than under the provisions of the rating Act for two reasons. First—and this is a matter to which we shall return in a later amendment—the range of facilities which will qualify for a material reduction is much more limited under this Bill than under the old rates. I hope that we shall receive support throughout the Committee for the more generous interpretation in a later amendment. Secondly, the banding scheme means that where a material reduction has taken place it leads to a reduction in the bill of the property by one band. Originally there was no such concession, but during the passage of the Bill in the other place the Minister, Mr. Portillo, conceded that special provision should be introduced to ensure that a property moved down a band where a material reduction in its facilities was the result of the occupant being disabled.

At that stage he said that the decision follows discussions with RADAR and other groups and that it will provide fair treatment for people with disabilities who often need more space or special facilities in their homes. It would be wrong for such people to have to pay more council tax because those special features had increased the value of their homes. Therefore, the scheme would restore the relief that people with disabilities enjoyed under the old rates scheme. In 1989–90, the final year, rates relief was granted to about 160,000 properties.

That very welcome and entirely honourable concession or move forward by the Minister was widely accepted. But it leaves a problem. Given that we are dealing with bands, although a property in band D can come down to band C where there are special facilities for a disabled person, or from band C down to band B or from band B to band A, properties which are in band A cannot drop any lower. Therefore, the occupants would have to pay the same irrespective of whether the property had had changes made to it as a result of the occupier's disability whereas people in more expensive properties enjoy and experience a reduction. It is that anomaly, the result of banding, that this amendment seeks to address.

The situation is made worse because of two problems which, I am sure, are familiar to Members of the Committee. As a result of the banding inequalities, to which we shall be returning time and again, in many parts of the country, particularly in the North, very large proportions of properties are in band A—for example, 48 per cent. of the properties in Wolverhampton; 55 per cent. of those in Chester-le-Street; 56 per cent. in Gateshead; 59 per cent. in Sunderland; and 63 per cent. in Tameside. Yet in those areas people who are disabled, very many of whom, proportionately, will be living in those properties, cannot enjoy the relief. That is made sharper because not only are those properties in band A, but the disabled people living in them have both lower incomes and higher costs. Approximately seven out of 10 of all disabled adults are receiving state benefit. Not only do they have lower incomes; they also have a higher cost of living because of the increased costs of diet, heating and laundry, estimated by the Disablement Income Group at about another £60 a week.

We are dealing therefore with a group of people on lower incomes and facing higher costs who will be disproportionately in band A properties. They will experience no discount in their bills by virtue of the fact that they are in the bottom band. I am sure that Members of the Committee opposite and the Minister recognise the problem. Since the principle has been accepted for all other categories except those who are the poorest, I hope that the Minister will feel able to make some movement on the matter.

The amendment does not suggest a precise figure. A reasonable approach might be that properties in band A, which have a material reduction because someone is disabled, have a reduction of between 12 per cent. and 12.5 per cent. That figure represents the same gearing down as exists between band B and band A or between band C and band B. It is a suggestion: there may be other ways of dealing with the matter through regulations. There is a problem that the disabled disproportionately occupy band A properties and that they have lower incomes and higher costs, although they can experience no rating relief such as they enjoyed previously. It is clearly an anomaly. We hope that the Minister accepts that. We hope too that the Government will work with disability groups to seek to overcome that anomaly. I beg to move.

Baroness Faithfull

The noble Baroness puts forward a very good case, but I cannot agree with it. I wonder whether the proposal is based on the recommendations of disablement groups or is that of her own party. My understanding from RADAR, BLESMA and other disablement groups, is that they are very happy with the situation as it stands. They feel that they have had many concessions from the Government. They have been in close touch with the Government. Therefore, I oppose the amendment on the ground that the disablement groups are happy with the situation as it is.

Baroness Hollis of Heigham

I am grateful to the noble Baroness for giving way. The amendment is based on a RADAR paper. In other words, I have complete confidence in the statement that RADAR, MENCAP, the Disablement Income Group and the Association of Disabled Professionals support the amendment.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

The noble Baroness sees this matter as a problem and suggests that it is an anomaly. I do not accept that. I wish to stress that RADAR is happy with the discussions it has had with the Government and the responses it has received as a result of those discussions. I shall be able to quote from a letter which RADAR sent to my honourable friend Mr. Portillo some time ago on the matter. I shall also be able to quote from a letter sent to me by the chairman of BLESMA on exactly the same point. Comment was made on the very constructive approach of the Government in this matter.

The important point that we must try to remember is that disabled people should not be in the position where they pay more than others simply because they have to live in specially adapted property or in some cases, because an individual is in a wheelchair, in a larger property. They should be in the same position as able-bodied people and special concessions should not be made. Consideration should be given for alterations made to their homes. As the noble Baroness said, we shall be able to get on to the detail of that in connection with a later amendment.

Perhaps I may stick to this particular amendment which seeks to deliver a reduction for the bottom band, the band A dwelling, where the value has been reduced because it has been adapted for a disabled person. We have already provided in regulations made under the Local Government Finance and Valuation Act that in allocating properties to bands, valuers will take into account any special fixtures provided for a physically disabled person which reduce the value of a property; for example, a lift for a wheelchair user. But where such fixtures have increased the value of a property, valuers will ignore them, and they will not affect the banding of a property. It is the only fair way—and the noble Baroness accepts it—to treat such properties.

Once valuation lists have been compiled, regulations under Clause 24 will allow lists to be altered if certain changes bring about a reduction in value which result in the property falling into a lower band. If adaptations are made for a disabled person which have the effect of reducing its value, then the listing officer may alter the list if the reduction in value is large enough to place the property in a lower band. In the case of a band A property, a reduction in value cannot result in the property falling into a lower band because there is no lower band. But the taxpayer is already paying the smallest amount of tax possible for his area. It is entirely irrelevant what percentage of properties in that area are in that lower band. It would not be fair if he were allowed to pay less than others in the same band.

I point out to the noble Baroness that as regards the less well-off disabled people—the noble Baroness quite rightly stressed the success of the benefits policies pursued by the Government—a large number of them are in receipt of various allowances for their disabilities. Those people, particularly if they are on income support, will be assisted. The scheme of disability premiums in income support means that they will be entitled, or are likely to be entitled, to some rebate at a much higher level of income than other, able-bodied people.

I stress that we discussed these arrangements with RADAR and other bodies. Their main concern was very much that a disabled person should not have to pay more tax because of his need for special fixtures or extra space. Perhaps I may quote from a letter from RADAR to my honourable friend Mr. Portillo—

Baroness Hollis of Heigham

May we have the date of that letter?

5.30 p.m.

Lord Henley

The date of the letter is 26th November 1991. In writing to my honourable friend RADAR stated: I would like to thank you for the proposals you announced on 25 November concerning recognition of the extra space requirements which disabled people have. I am delighted that the Government was able to act so positively. Your officials conducted discussions with open minds and a co-operative attitude". Similarly, with my interests at the Department of Social Security in war pensioners, I wrote to Mr. Holland, the General Secretary of BLESMA. On 2nd December I received a response which read: This was one area which has worried us as we believe that unless an individual was on the margin of a band the concession which had applied under the old rating system would be lost in the majority of cases. The new amendment"— that is, the concessions that were announced then— certainly resolves this and will be warmly welcomed by our membership in particular and by the disabled in general. Perhaps on some suitable occasion you can convey our very grateful thanks to Mr. Portillo and his colleagues".

I hope, therefore, that the noble Baroness will feel that we have gone far enough in this matter. As I have stressed, those on low incomes are at an advantage in that their premiums in income support allow them to receive a higher income and still get full benefit from the rebates. In view of the welcome received from many of the disability organisations I hope that the noble Baroness will be prepared to welcome our proposals in this Bill and feel able to withdraw her amendment.

Baroness Hamwee

I support the amendment. I am sure that the noble Baroness, Lady Hollis, will deal with the question of who does or does not support the proposals that are before us today. However, it has been accepted by the Government that there is an anomaly for disabled people who live in properties which are in band A.

Lord Henley

The noble Baroness should take care to listen to what I said. I said that the noble Baroness, Lady Hollis, said there was an anomaly, but that I did not accept there was. If the noble Baroness cares to read Hansard tomorrow she will find that that is what I said.

Baroness Hamwee

I apologise. I thought that I had heard, and wrote it down at that point, that there was an anomaly. The point is that there is an anomaly whether or not the Minister accepts it. There clearly is. Common sense tells us that that is so. The provision in the Bill applies to all bands except band A. What puzzles me is that this proposal would require very little extra work on valuations and would lead to very little loss of tax raised but would make a very great difference to the, perhaps small, number of individuals who are affected. I find it quite puzzling that having accepted that there is a point in looking at how the homes of this group of people are affected by the proposals, one group within that group is not to obtain the benefit. I support the amendment.

Baroness Gardner of Parkes

I find this a most interesting amendment and I understand the logic that there is nothing below band A. But I do not understand the noble Baroness, Lady Hollis, when she says that the majority of disabled peopled live in homes in band A.

Baroness Hollis of Heigham

Perhaps I may correct any misunderstanding. I said a disproportionate number; in other words, disabled people were not scattered across bands. A disproportionate number would be in band A by virtue of their poverty and high costs.

Baroness Gardner of Parkes

Indeed, I accept that is exactly what the noble Baroness said—a disproportionate number. I really wonder what the noble Baroness meant by that. Can she quantify it? I cannot support the amendment today because I would need to see some sort of substantiation of figures.

The Minister has been very understanding in terms of disability in agreeing that each one should move down a layer. If it was really proven that there really is a disproportionate number of people he might well be persuaded to look at it again. However, I am not satisfied that the evidence that we have had produced here today has clearly established that point. I should like to have more factual information.

I ask the Minister to investigate and ascertain the proportion of disabled people who would not benefit from the rebate system. If it is to be so fully rebated that they will not have to pay anyhow, then there may be no point at all in creating some sort of complicated formula that will only establish something that will be met in another form of need. Therefore, I cannot support the amendment as it stands.

Lord Henley

Obviously I cannot go as far as my noble friend asks. I cannot, off the top of my head, give her the proportion of people with disabilities who are in receipt of one benefit or another, or the proportion of people who would be entitled to a full rebate. The important thing to remember is that, whether or not they are entitled to a rebate, those people with disabilities in band A are paying the lowest possible rate of council tax. Therefore, they cannot possibly be paying more because of their disability; they are in the lowest rate. There is not, therefore, any anomaly as the noble Baroness, Lady Hollis, suggested. I hope that she will recognise that that in no way lessens the undertaking given by my honourable friend.

Baroness Gardner of Parkes

Perhaps I may come back to the Minister on one point. It was made clear that the properties in band A would mostly be in certain areas in the north. For example, in London I believe there is hardly a property in that category. Do the pensions and disability benefits that are paid to people vary according to different areas? Or will those people who are living in those lower banded properties in the North be getting a disproportionately higher benefit?

Lord Henley

In the main all benefits are the same, irrespective of whatever part of the country the individual claimant happens to live. My noble friend will know that there are certain variations in some of the premiums available in income support in relation to residents in nursing homes and residential homes but in the main all benefits are the same in all parts of the country.

Baroness Hollis of Heigham

I have deliberately tried not to be party political or provocative about this matter. I genuinely believe that there is a real issue here that reflects some of the anxieties expressed.

I am entirely appreciative of what the Minister and his colleagues have done in terms of the other bands. Given that the Government have a structured banding system—and the response of reducing properties by one band for the disabled is an entirely honourable and proper way forward for which I am very happy to give credit—it was interesting that when pressed the Minister told us that the letter he received expressing appreciation came the day after his honourable friend's announcement: one day after. Quite rightly they were delighted that a substantial part of the problem had been addressed. It was only subsequently, when the judgment of RADAR, DIG, and disability groups had had time to reflect on the Minister's statement, that they realised that the properties in band A could not, by definition, be covered by the Minister's response. That is why I have a letter from MENCAP saying that it supports this amendment, which is designed to ensure that disabled people living in a house in band A will be able to get a reduction in the amount of council tax that they are liable to pay where the house fits the Government's own criteria for a reduction in bills related to disability. That is why I have received similar support from RADAR, from DIG and from the Association of Disabled Professionals; because the anomaly came to light notwithstanding the appreciation of the moves made by the Government.

Perhaps I may respond to the helpful comments made by the noble Baroness, Lady Gardner of Parkes. She asked whether the numbers were disproportionate. I wish that we could give that information, but clearly no one can do so until the valuation exercise has taken place. We shall then see. I have to say that if the numbers in band A are large then there is clearly an injustice. If the numbers in band A are small, then clearly the expense and the problem of overcoming it is relatively trivial. Either way, I should have hoped that we could get some support for this amendment. At the core of the issue lies the fact that in large parts of the country between 50 per cent. and 65 per cent. of property will be in band A. In other words, in poorer parts of the country, in the north, large sections of property will be in band A and there will be virtually a flat rate tax.

That means that it is regressive. It means that the disabled, with lower incomes and higher costs, are not protected against that regressiveness. I am not confident about the right way to address the problem. It might be that we simply gear down by 12.5 per cent., as you would for a person with a similar income in a different part of the country, with higher property values, whose house, as a result, went into band B. That seems to me a sensible and administratively simple and convenient way forward. The amendment does not do that. It asks the Committee to recognise that there is an anomaly. If the Committee were minded to accept the amendment we could then hope that Ministers would come back at Report stage with a remedy for it. I should like to take the opinion of the Committee.

The Earl of Balfour

Before the noble Baroness sits down, I cannot see what Clause 24 has to do with the amendment. I may be wrong but I do not see the connection.

Baroness Hollis of Heigham

We shall come to Clause 24 at a later stage. It deals with the description of what counts as a material reduction with regard to facilities within the house. With this amendment we are saying that on the presumption that we agree on what "material reduction" is, property in band A should then enjoy the same kind of proportionate reduction as the property of other disabled people.

5.40 p.m.

On Question, Whether the said amendment (No. 44) shall be agreed to?

Their Lordships divided: Contents, 57; Not-Contents, 110.

Division No. 3
Addington, L. Hughes, L.
Airedale, L. Hunt, L.
Aylestone, L. Jeger, B.
Beaumont of Whitley, L. Jenkins of Hillhead, L.
Birk, B. Jenkins of Putney, L.
Boston of Faversham, L. Judd, L.
Carmichael of Kelvingrove, L. Kagan, L.
Carter, L. [Teller.] Listowel, E.
Cledwyn of Penrhos, L. Lovell-Davies, L.
Cocks of Hartcliffe, L. McIntosh of Haringey, L.
Dainton, L. Mackie of Benshie, L.
David, B. Meston, L.
Dean of Beswick, L. Monkswell, L.
Donoughue, L. Morris of Castle Morris, L.
Dormand of Easington, L. [Teller.]
Ennals, L. Perry of Walton, L.
Ewart-Biggs, B. Rea, L.
Falkland, V. Redesdale, L.
Fitt, L. Richard, L.
Gallacher, L. Seear, B.
Graham of Edmonton, L. Serota, B.
Greene of Harrow Weald, L. Stoddart of Swindon, L.
Grimond, L. Strabolgi, L.
Hamwee, B. Turner of Camden, B.
Hanworth, V. Underhill, L.
Harris of Greenwich, L. White, B.
Hollis of Heigham, B. Williams of Elevel, L.
Hooson, L. Wilson of Langside, L.
Houghton of Sowerby, L. Winchilsea and Nottingham, E.
Abinger, L. Arran, E.
Acton, L. Ashbourne, L.
Aldington, L. Astor, V.
Allenby of Megiddo, V. Auckland, L.
Ampthill, L. Balfour, E.
Belhaven and Stenton, L. Kitchener, E.
Belstead, L. Knollys, V.
Bessborough, E. Lane of Horsell, L.
Blatch, B. Lauderdale, E.
Boardman, L. Long, V.
Boyd-Carpenter, L. Lucas of Chilworth, L.
Brabazon of Tara, L. Lyell, L.
Brougham and Vaux, L. Mackay of Clashfern, L.
Byron, L. Mancroft, L.
Caithness, E. Merrivale, L.
Campbell of Alloway, L. Mersey, V.
Carnegy of Lour, B. Morris, L.
Carnock, L. Mottistone, L.
Cavendish of Furness, L. Mountgarret, V.
Coleraine, L. Mowbray and Stourton, L.
Constantine of Stanmore, L. Munster, E.
Cork and Orrery, E. Nelson, E.
Craigavon, V. Norfolk, D.
Cross, V. Norrie, L.
Denham, L. Northbourne, L.
Denton of Wakefield, B. Orkney, E.
Dilhorne, V. Orr-Ewing, L.
Elibank, L. Oxfuird, V.
Ellenborough, L. Pearson of Rannoch, L.
Elles, B. Peyton of Yeovil, L.
Elliot of Harwood, B. Platt of Writtle, B.
Elliott of Morpeth, L. Quinton, L.
Elton, L. Reay, L.
Erroll, E. Renfrew of Kaimsthorn, L.
Faithfull, B. Renwick, L.
Ferrers, E. Sandford, L.
Flather, B. Savile, L.
Fraser of Carmyllie, L. Seccombe, B.
Gainsborough, E. Seldson, L.
Gardner of Parkes, B. Skelmersdale, L.
Geddes, L. Soulsby of Swaffham Prior, L.
Glenarthur, L. Stanley of Alderley, L.
Hailsham of Saint Marylebone, Strathclyde, L.
L. Strathcona and Mount Royal,
Halsbury, E. L.
Henley, L. Strathmore and Kinghorne, E.
Hertford, M. [Teller.]
Hesketh, L. [Teller.] Thomas of Gwydir, L.
Hives, L. Trefgarne, L.
HolmePatrick, L. Trumpington, B.
Hooper, B. Tryon, L.
Howe, E. Ullswater, V.
Hylton-Foster, B. Waddington, L.
Jeffreys, L. Wedgwood, L.
Joseph, L. Wharton, B.
Killearn, L. Wise, L.
Kimball, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.48 p.m.

The Deputy Chairman of Committees (Lord Aylestone)

I call Amendment No. 45. If this amendment is agreed to, I cannot call Amendments Nos. 46 to 48.

[Amendment No. 45 not moved.]

Lord McIntosh of Haringeymoved Amendment No. 46: Page 3, line 23, leave out from ("dwellings") to end of line 40 and insert ("in each region of England shall be determined as follows—

  1. (a) the range of values for band A shall be no more than is sufficient to include 18 per cent. of all dwellings in the region;
  2. (b) the range of values for band B shall be above the range for band A and no more than is sufficient to include 18 per cent. of all dwellings in the region;
  3. (c) the range of values for band C shall be above the range for band B and no more than is sufficient to include 18 per cent. of all dwellings in the region;
  4. 988
  5. (d) the range of values for band D shall be above the range for band C and no more than is sufficient to include 18 per cent. of all dwellings in the region;
  6. (e) the range of values for band E shall be above the range for band D and no more than is sufficient to include 13 per cent. of all dwellings in the region;
  7. (f) the range of values for band F shall be above the range for band E and no more than is sufficient to include 8 per cent. of all dwellings in the region;
  8. (g) the range of values for band G shall be above the range for band F and no more than is sufficient to include 5 per cent. of all dwellings in the region;
  9. (h) the range of values for band H shall be above the range for band G.
(2A) For the purposes of subsection (2) above—
  1. (a) region shall have the meaning of the standard economic region, except that Greater London and the rest of the South East shall be treated as separate regions;
  2. (b) the percentage of properties falling into each band shall be determined with reference to the number of properties and their values on the list the listing officers propose to compile at the date specified in section 22(5) below or as that date may be modified by section 25(3) (b) below.".).

The noble Lord said: Amendment No. 46 seeks to provide an objective way of securing what some Conservative Back-Benchers in another place want to provide in a non-objective way. We have already had a full discussion of the way in which the single banding system and the single valuation system in different parts of the country will have different effects. In some local authorities the number of effective bands will be drastically reduced. I could read out a long list of authorities where, as far as we know, the percentage of properties falling into each band is heavily skewed to the top, to the bottom or to the middle. But I shall spare the Committee a full list. In Barrow-in-Furness 61 per cent. of properties are in band A and not a single property is expected to be in bands E, F or G, while in Stratford-upon-Avon only 1 per cent. of properties are in band A, 5 per cent. are in band B and 53 per cent. are in bands F, G and H. In Islington no properties are expected to be in bands A and B but 49 per cent. are expected to be in bands F, G and H. It will be obvious that for an individual local authority and for clusters of local authorities in regions there will be a tax with in effect only three or four bands rather than the eight bands proposed in the legislation.

The number of effective bands in a local authority area does not in itself determine the expenditure needs of a local authority—for example, Barrow-in-Furness needs to spend money on local services, as does Stratford-on-Avon, Islington and the county councils concerned outside of London. Neither does it reflect the ability to pay of the people in those areas. Of course there are people who are better off in Barrow-in-Furness and in Islington; but the vast majority of people in Barrow-in-Furness who find themselves in band A will be paying very much the same as the rest of the people who are in bands B and C. There will very nearly be a flat rate tax. Because of the expenditure needs of the local authority in Barrow-in-Furness, the charge in band A will be very much higher than it will be in some other areas.

Perhaps I may put the relationship between income and the banding system as graphically as I can. In London, we know from the Family Expenditure Survey that there are 16 per cent. of people in the lowest income band but that only 1 per cent. of properties are expected to be in the lowest council tax band. However, in East Anglia where nearly 16 per cent. of the people are in the lowest income band, 24 per cent. of properties will be in the lowest council tax band.

I have been giving examples of individual authorities, but if one takes the northern region as a whole, 46 per cent. of properties are likely to be in band A. What we have is very nearly a flat rate tax. That matter causes concern not only in Barrow-in-Furness and in Islington but also in some of the leafier suburbs and exurbs around London. People like Sir Rhodes Boyson are breathing fire about it and seeking to table amendments.

It is important that we should establish the basis upon which the proposed amendments should be conceived and that we should establish so far as is possible an objective basis which could apply in any region to secure an adequate range of bands. What we have in effect is a sleight of hand: we have the pretence from the presence on the face of the Bill of an eight-band process with a 3:1 taper, whereas, in practice, for individual local authorities—and, after all, individual local authorities will raise the council tax—we have far fewer bands and a far flatter tax. We think that the objective way to deal with the situation is to secure, as Amendment No. 46 would do, that there should be a maximum percentage of dwellings in any one region which falls into any one band.

Of course, what we are proposing here is nothing like as good as replacing the council tax by a proper system of local government finance; we are accepting that there is to be a banding system because that is what the Bill says and we are seeking to amend it. We are trying to make it less unfair than it will be in practice and we are trying to expose the fact that the banding system which is on the face of the Bill is not in fact as fair as Ministers claim. Without being a dramatic change, we believe that what we have proposed is certainly a change which will be widely welcomed and will increase the fairness and therefore the acceptability of the council tax. I beg to move.

The Earl of Balfour

The amendment before the Committee would have the effect of making a false valuation of the dwellings in England. That cannot be right. I certainly admire the hard work that is done by noble Lords and noble Baronesses on the other side of the Committee. I know from past experience on other legislation how often I have received appeals from worthy bodies asking me to support amendments that they have drafted. Yet when I have studied the legislation I have realised that such amendments would have a most unfortunate result. I am certain that that is the reason for the present amendment appearing on the Marshalled List.

In the first place, the amendment talks about regions, which applies only in Scotland. Secondly, it would force the valuation officers to place all the dwellings in every billing authority's area into bands based on a percentage ranging from 18 per cent. for bands A, B and C down to 2 per cent. for band H. That is the result of a complete misunderstanding of the proposals in the legislation. I know that England and Scotland are rather different, with the English setting of the council tax commencing in Clause 30 of Chapter III and going on to Clause 36, where it states that, D is the number … applicable to dwellings listed in valuation band D".

Perhaps Members of the Committee will turn to Clause 93 on page 63 which refers to the setting of the council tax. I should like to read the clause as if it applied to England. It says that a billing authority shall in respect of each financial year,

  1. "(a) set an amount of … council tax, as appropriate, to be paid in respect of a chargeable dwelling in their area listed in valuation band D (whether or not there is such a dwelling in their area) as specified in [Clause 5(2)];
  2. (b) determine the amount of council tax to be paid in respect of a chargeable dwelling in each of the other valuation bands specified in [Clause 5] in accordance with the proportion mentioned in [Clause 5(1)]".
In other words, a range from six to 18. I ask my noble friends to insert into Clause 36 between now and Report stage those very important words in brackets, whether or not there is such a dwelling in their area", for the sake of clarification.

As I understand the legislation—this is the result of my own research—under Clause 21 the Government have wisely chosen the valuation of dwellings to be assumed as at 1st April 1991 when the market was at its lowest. The same date (1st April 1991) is in Clause 86 for Scotland. I should have thought that the average house value in England in April 1991 would have fallen into the band D range of between £68,000 and £88,000. I cannot speak for Wales, but the equivalent range of band D for Scotland under Clause 74 is between £45,000 and £58,000, and that is about right.

If the majority of houses—assuming roughly the same number of houses—in a district council's area were below band D, which would result in the council tax for "D" houses being relatively high, that authority should—I hope my noble friend the Minister will confirm this point—receive a greater—for want of better phrase—rate support grant than an authority which had most of its houses in, let us say, band F, where the council tax for band D would be lower to raise the same amount of money for the same number of houses.

Under the old rating system, an authority that had a high proportion of low value properties received more in rate support grant than an authority with high value properties. That is the point that I wish to put forward. If I am wrong, my noble friends on the Front Bench would have every right to shoot me down in flames; but I am sure that I am about 98 per cent. correct.

6 p.m.

Lord Renfrew of Kaimsthorn

I was going to speak more immediately to the wording of the amendment and observe that there will clearly be some dissatisfaction in Barrow-in-Furness when, under the proposed arrangement, a number of houses which would formerly have been in band A find themselves in band C or D. That is an inescapable consequence of the additional complexity introduced by the amendment. The great merit of the Bill had always seemed to me that it was of considerable simplicity. That can of course bring injustice. Members on the other side may well hold that view, but there are also injustices in introducing more arbitrary elements. That is what will happen if the amendment is accepted.

Members on the other side of the Committee made great play about how arbitrary it is if one falls on one side or the other of a band valuation in monetary terms. How much more arbitrary it will be if one is on one side or the other of a boundary in regional terms so that the same house—if one is talking about houses built to a model—on one or other side of the boundary will artificially fall in different bands. I concede that they will no doubt be in adjacent bands; but they will be in different bands. That is an inevitable consequence of adding to the arbitrary divisions in this way. It is surely undesirable.

I am not altogether sure that Members opposite have their logic right. On Second Reading, the noble Lord, Lord Desai, gave a clear indication of the logic underlying the fair rates philosophy advocated by Members opposite. His point was that when we are talking about a property element, or a property tax —here we are talking about a property element —a tax should be related directly to value and paid in proportion to value, on the grounds that residents enjoy an amenity, to be calculated in relation to the notional rental value which is directly related to the property value. That principle is clearly not being followed if we monkey about with the banding in the way suggested.

The proposal contained in the amendment is arbitrary in two ways. If we are to depart from the Bill's simplicity—I agree that we can be over simple—the proposal should have merits which overcome the additional arbitrary elements. I for one am not persuaded that the amendment has such merits.

Lord Stoddart of Swindon

I am surprised that the noble Lord should take the view that he has just taken. He is accusing Members on this side of the Chamber of trying to introduce arbitrary proposals; but I thought that my noble friend had made it clear from the start that he was trying to be helpful to those Conservative Members of Parliament who had expressed anxiety about how the banding as proposed in the Bill would affect certain parts of the country.

The amendment is a serious attempt, as I see it, to try to meet those anxieties, and they are very real. Undoubtedly there is a suspicion, in London plainly and many parts of the South East, that they will be clobbered both ways. There will be more properties within the higher bands, so they will receive a lower grant than they would if there were a better distribution of property values throughout. That is one of the worries. The other worry that Conservative Members of Parliament have expressed is that their constituents, who already bear higher mortgage charges than in the North, will in addition bear higher rate charges. My noble friend was trying to deal with those problems. The amendment is an attempt to be helpful. I hope that the noble Lord will withdraw his allegation that we are trying to be unhelpful.

Lord Renfrew of Kaimsthorn

I very much welcome the helpfulness of the noble Lord, but I should be interested to hear him reconcile the position he has taken with advocacy of a straight property tax, which is the position of Members opposite. It is most charming that the noble Lord is being so helpful, but I cannot understand how he can be so while simultaneously advocating a straight property tax about whose principles he was so eloquent only a couple of days ago.

Lord Stoddart of Swindon

If we were discussing a property tax, we should be discussing a different Bill; but we are not now discussing a property tax. We may be discussing it later this year. We may be discussing a Labour Bill later this year but, with respect, we are not discussing it now. I should very much like to be discussing it now but we are not; we are discussing the Bill brought forward by the Government. To attempt to put down an amendment which would put forward Labour Party proposals would be out of order because it would be considered to be a wrecking amendment; and the noble Lord would be the first on his feet to accuse us of trying to be party political.

We are trying to improve the Bill. That is the job of the Opposition in this place, and that is what we are trying to do. I hope that the Minister will take our proposals seriously and give a serious answer as to why they are not relevant and helpful.

Baroness Blatch

The Committee can be assured that I shall take all the amendments seriously; but have to say that my noble friends Lord Balfour and Lord Renfrew have most elegantly demolished all the arguments. I cannot better what they have done. My noble friend Lord Renfrew was saying to the noble Lord, Lord Stoddart of Swindon, that there was an inconsistency—my noble friend was not comparing what we advocate on these Benches and what is advocated on the Opposition Benches—in what is being advocated by the Benches opposite about the systems and the amendment. That is the inconsistency that was referred to.

Perhaps I may deal with the questions posed by my noble friend Lord Balfour. He asked us to include the words "whether or not" in Clause 36. The words that he quoted are from Clause 93(1) (a) which related to the setting of taxes in Scotland. For England, the same point is dealt with in Clauses 30(5) and 40(4), so we do not believe that it is necessary to deal with it again in Clause 36. My noble friend is most diligent in these matters and I am sure that he will read what I have had to say and will certainly come back if I have not satisfied him on that point.

The linkage set out by my noble friend Lord Balfour between rate support grant and the banding system as he understood it is absolutely right. However, I also point out that if we were to accept an amendment later on the Marshalled List which prohibits the Secretary of State from making any link between the banding system and the rate support grant, there would be a serious vacuum in how the Secretary of State would distribute grants.

The Government believe that regional banding would not only be unfair but that it would also give rise to unacceptable regional distortions. Distortions arise because at the boundaries of regions there would be a sudden change in the band, and therefore the council tax bill, of otherwise identical properties. That would be a problem and the point was well made by my noble friend Lord Renfrew.

To take a specific example, taxpayers in Enfield would be delighted to find that their homes had been allocated to a lower band than similar properties of the same value just over the border in Hertfordshire. The house in Enfield would be in a lower band because, on average, house prices are higher in London than in the rest of the South East. This is despite the fact that house prices just outside London are often higher than in the capital itself. Such anomalies should be avoided.

Noble Lords should be clear what regional banding would mean. It will result in higher bills in low price regions. A typical property in the North would pay the same as a typical property in the South East, regardless of the fact that earnings and average property prices are lower in the North. That also would not be fair.

The Government recognise that there are areas with high property prices. Under the council tax, in any street, the most valuable homes will attract the largest bills. Similarly, in any town the most valuable homes will attract the largest bills. The same rationale applies not only to larger homes, but also to homes in more expensive parts of a town.

A three-bedroom house overlooking the park will be more expensive than an otherwise identical property with a less scenic view. It is fair that council tax bills should reflect this. The same logic applies across a county, a region or the whole country. I hope that the amendment will either be withdrawn or rejected.

Lord McIntosh of Haringey

I did not understand a word of what the noble Earl, Lord Balfour, said. I shall read it carefully and attempt to understand it with the gloss put on it by the Minister.

The noble Lord, Lord Renfrew, struck me as sticking his neck out in a quite extraordinary way. He accuses us of being arbitrary, but he speaks from a position—if it is physically possible—at the top of both the twin peaks of arbitrariness which are the fundamental basis of the Bill. The council tax is arbitrary first because it is based on one peak of arbitrariness by having a totally arbitrary banding system. There is nothing logical or rational about the banding system put forward in the Bill. Secondly, there is a completely arbitrary relationship in the council tax which is to be charged between one band and another. The more arbitrary the tax is, the cruder it is. The more one tries to reduce the differences and the crudeness, giving more bands or finding a more rational basis for the differences in the tax to be paid between the bands, the less arbitrary it is.

I do not claim that we have produced something free from arbitrariness; far from it. The points made about the differences at the margins of regions are perfectly valid; but they are not as bad as what is proposed in the Bill. That is certainly the case.

For many years I have had great difficulty with people who do not understand one of the fundamental principles of property taxation in local government finance. They do not understand the difference between rateable value and rate poundage. It is an understandable error which occurs all the time. It led the Conservative Party to panic in Scotland and introduce the poll tax. The Conservatives did not understand that the fact that rateable values increase does not mean that more money is being collected from the rates.

Noble Lords


Lord McIntosh of Haringey

It does not mean that. It means that individual properties are either paying more or paying less, but there is a zero sum gain.

I expected to hear that from public platforms, and read it in letters and in the less well informed press; but to hear this afternoon that misunderstanding from the Government Front Bench between rate poundage and rateable value took me aback.

6.15 p.m.

Baroness Blatch

Does the noble Lord agree that if the valuation of the house increases, the multiplier increases with it?

Lord McIntosh of Haringey

I do not understand what is meant by "the multiplier".

Baroness Blatch

Whatever one pays in the pound, if there are more pounds in rateable value, one would pay more times that amount.

Lord McIntosh of Haringey

If a council raises £1 million from a rate base of £1 million, the rate poundage is £1 in the pound. If a revaluation takes place which increases the rateable value from £1 million to £2 million, the council may levy a rate of 50 pence in the pound.

Lord Henley

Not Labour councils.

Lord McIntosh of Haringey

The amount levied has nothing to do with the revaluation. A council needing the same money levies a rate at 50 pence in the pound. If there are differences in the increase, in other words if some properties increase in value more than others, then they pay more. If some properties increase less than others then they pay less. But it is a zero sum gain.

Baroness Carnegy of Lour

I know that the noble Lord, Lord McIntosh, lived a long way from Scotland where the trouble began, but perhaps I may quote an example to him. In the Tayside region at that time, the total rateable value was virtually identical to what it had been before. The problem was that there had been such variations within the regions that some values had halved and others had doubled or trebled. So when the value was fixed, what some people had to pay increased enormously and what others paid decreased. The rateable values stayed exactly the same. That was what was wrong with the system. Had the revaluation taken place in England, 13 years later instead of seven years later, as in Scotland, the whole problem would have been greatly exacerbated. The noble Lord must understand that.

I believe that the argument should end there because it only partly relates to banding. In his amendment, the noble Lord, Lord McIntosh, is trying to move away from the rating system, not towards it. That is where the illogicality exists.

Baroness Gardner of Parkes

I wish to take up the same point. Members of the Committee opposite may wish to prevent me doing so, but I gave way to the noble Baroness, Lady Carnegy, and I should now like to comment on the same point, if the noble Lord will allow me. We are all perfectly clear on the poundage. Where the noble Lord is mistaken is that after revaluation councils have always tended to increase the poundage; it creeps up and up. If it is a Labour controlled council it does not creep up, it rushes up.

Baroness Blatch

Perhaps I may complete the interventions and then the noble Lord can reply to all of us. We understand that the poundage is adjusted in order to make sure that the yield does not change and the noble Lord is quite right in his description. However, he has not covered the situation where the occupier of a property with a rateable value of £200 pays a certain amount in rates. If the size of the property is considerably increased and there is a revaluation, the property may be revalued at £300. There is no adjustment of poundage on that. The property has a higher multiplier; more rates will have to be paid on it because it has a higher rateable value.

Baroness Hollis of Heigham

It has a higher value.

Baroness Blatch

That is the only point I am making to the noble Baroness. When one revalues a property to a higher value, the owner will have to pay more in rates to the local authority.

Lord McIntosh of Haringey

I think we must go back to primary school. This situation is difficult to believe. The noble Baroness, Lady Carnegy of Lour, understands precisely the difference between rateable value and rate poundage. I believe the noble Baroness, Lady Gardner, also understands that difference. However, I am certainly not sure the Government Front Bench understand that difference or they would not have panicked in the way they did as regards Scotland and they would not be panicking as they are now.

The Minister referred to subsequent revaluation and made a valid point. This amendment does not address that point but we shall deal with it on later amendments. We have tabled amendments which will tackle the problem which the Government are creating for themselves by providing that the values which will be assigned now will apply in perpetuity unless a property changes hands or some exceptional circumstances arise as determined by the Secretary of State. All the fears about revaluation will come back in the form of a multiplier—I hope I may use the Minister's words—if this legislation is adopted without amendment.

This amendment is concerned with a very different matter. The unfairness of the banding system comprises two elements, its crudity and its flatness. In attempting to amend it on an incremental basis, as it were, rather than rejecting it as a whole, the only thing we can do is to attack the flatness—we have already done that in existing amendments—and the crudity. That is the purpose of this amendment. I shall not divide the Committee, although in the light of the answers given from the Government Front Bench I am sorely tempted to do so. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (The Viscount of Oxfuird)

Before I call Amendment No. 47 I must advise the Committee that, if this amendment is agreed to, I shall not be able to call Amendment No. 48 due to pre-emption. I now call Amendment No. 47.

Baroness Hamweemoved Amendment No. 47: Page 3, leave out lines 25 to 40 and insert:

("Greater London
Range of Values Valuation band
Values not exceeding £52,000 A
Values exceeding £52,000 but not exceeding £68,000 B
Values exceeding £68,000 but not exceeding £88,000 C
Values exceeding £88,000 but not exceeding £120,000 D
Values exceeding £120,000 but not exceeding £160,000 E
Values exceeding £160,000 but not exceeding £210,000 F
Values exceeding £210,000 but not exceeding £420,000 G
Values exceeding £420,000 H

The noble Baroness said: In the matter of regional banding we return to something of the same issue we have already discussed. No one would argue, and no one has attempted to argue, that property prices are consistent across the country. In addition, property prices fluctuate differently across the country. For example, prices have fallen recently in the South-East but risen a little in the North, although there are, of course, still big differentials. In London average property prices are now about 136 per cent. higher than in 1983, whereas the national average is 123 per cent. higher. I mention that to deal with an administrative point first. Fluctuations in prices are different in the different regions. Therefore if we adopt a regional banding system, there will be less of a need for revaluations because prices will tend to move in proportion within the different regions. However, that is only one aspect of this problem.

Once a week the London Evening Standard has an article which shows readers what they might purchase outside London if they were to sell their properties in London. The newspaper has attractive photographs of mansions set in rolling acres which cost approximately the same price as a small, modest property in London. I do not know whether—I adopt the terminology used earlier today—that is the journalism of envy. However, it is certainly something that must catch people's attention a good deal.

High property prices are evident in London and the South-East. The London Research Centre has revealed, using figures provided by the Halifax Building Society, that London's house prices are something of the order of 45 per cent. above the national average. House prices in the rest of the South-East are 35 per cent. above the national average. In the North house prices are 25 per cent. below the national average. Data of the Halifax Building Society for the whole of 1990 show that the average house in London and the South-East would come under band E; that is, has a value between £88,000 and £120,000. However, the average house in the North or the North-West would come under band C; that is, has a value between £52,000 and £68,000. I am referring to figures that were published in November.

A league table of London boroughs reveals the problems that exist in certain boroughs. The average house in Westminster, Kensington and Chelsea comes under band G; that is, has a value between £160,000 and £320,000. In five other boroughs houses fall into band F. Those figures confirm the fears that have been expressed so vividly and loudly in another place and even more strongly outside the precincts of the Palace of Westminster. The figures confirm the fears that London and the South-East will lose out as a result of this legislation.

The proposal for regional banding is designed to allow high and low values to be taken more fully into account. Why is this important? As the noble Baroness, Lady Gardner of Parkes, mentioned earlier today, this is not just a question of the compression of the bands; it is also a matter of the grant arrangements. As under the former rates, where property values are low, the rate base is low. The grant, in effect, is like an extra ratepayer. One is looking to grants to make up what the tax is not raising. Where values are low, the grant will be higher and, conversely, where values are high the grant will be low. Taxpayers will be expected to find a higher proportion of the total costs.

The noble Baroness, Lady Gardner, has already mentioned a figure of £300 million of grant that would have been lost in London if the council tax were introduced in the year 1992–93. I believe that for 1993–94 the figures are even higher because of the area protection grant which currently applies to some London boroughs. That would add another £100 million to that figure. In other words, we are talking about £400 million of grant likely to be lost to London on the basis of this tax. The adverse effect of the loss of area protection grant does not affect simply a small number of what Members on the Benches opposite might regard as rather dubious boroughs but will also affect the flagship borough of Wandsworth.

CIPFA informs us that gaining regions are those with relatively low property values where the number of equivalent band D properties is low in relation to the actual number of homes, or where there is a relatively high number of relevant adults per equivalent band D property. Losing areas are those where the converse applies.

The banding that is proposed in this amendment is more realistic than the provisions contained in the Bill. By concentrating on London I am not ignoring the problems in other parts of the country. However, it is in London that the problems are starkest. We know of the difficulties of finding housing in London that is affordable in the widest sense. That is not so bad once one is on the property ladder, but getting started is an appalling prospect. The cost of mortgages for high priced London properties can literally bankrupt a person.

We will all be aware of the publicity that has been given to the doctor leading a research team who is moving to the United States with his team. There was an article about that doctor in the Observer last weekend which spelt out vividly how his problems arose from the cost of housing. The article stated the doctor's monthly take home pay was just under £1,500 but he was paying £913 for a mortgage and £175 for a mortgage protection policy. That came to a total of over £1,000; in other words, two-thirds of his monthly income. In other words, the cost of housing is not a true reflection of wealth. It was no surprise that in that article people from outside London were quoted as being somewhat puzzled by that case because they do not experience the same difficulties.

The Government argue that a regional banding system will create anomalies on the boundaries. I suggest to the Committee that no more anomalies will be created than between, say, Carlisle and Kelso or between Ludlow and Llangollen because the principle of regional banding is accepted and is reflected in different banding in the Bill for England, Scotland and Wales. The anomalies arise because this is a property tax and not from regional banding. The anomalies result from the fact that a tax based on property does not reflect ability to pay.

The greatest anomaly will occur on the England-Wales border. I assume that in their examples of anomalies the Government have pointed to some of the worst cases that they could find. The worst under their own banding proposals are on the Welsh border where on the English side the average household in an average detached house will pay £490 whereas on the Welsh side of the border the amount will be £199. If the Government are serious in arguing that an anomaly of £90 or £100 is unacceptable I am not sure how an anomaly of almost £300 could be considered acceptable.

It was put to me yesterday by an academic who understands the finer esoteric points of local government finance that a question had been put to him which illustrates the interdependence of property values for the purposes of this tax and central government grant and the unfairness of the Bill. Someone approached him saying, "I have a house in London worth £80,000 and I pay an enormous mortgage on it. Am I, through tax to central government, going to be supporting someone in the North who has a house which is also worth £80,000 but on which he has a small mortgage?" The answer is yes. I beg to move.

6.30 p.m.

Baroness Blatch

I must tell the Committee that I find it very strange that, Members of the Committee having railed against the perceived iniquities of national valuation bands for so long, we now have before us an amendment that proposes not eight regional bands but six. The amendment amalgamates five of the standard regions into two super regions before going on to split another into two sub-regions. The net result is only six regions and six sets of bands.

The Committee has already listened to our arguments against regional banding and I do not propose to repeat them after such a short interval. Let me instead remind the Committee of the distortions which regional bands would cause. House prices in Milton Keynes and neighbouring Northampton are similar. With the bands we propose, a £65,000 three bed semi-detached home would be in the same band whether in Milton Keynes or Northampton. With regional banding the property in Northampton would be in a higher band than the one in Milton Keynes and hence face a higher bill for the same level of services simply because the average property price is higher in the South East than in the East Midlands.

The effect of regional banding is clear—lower council tax bills in regions with high average property values such as the South East and London at the expense of higher council tax bills in low average value regions. That may be defensible if house prices did not vary throughout each region. However, as I have already said, property prices vary greatly within a town, let alone a region, and also in a village. While there is no doubt that properties in much of the South East are more expensive than in much of the North, the difference is not as great, nor as uniform, as many people believe.

I believe that the amendment moved by the noble Baroness would create many more anomalies. She cited Scotland, England and Wales. They are already different, unless the Labour Party in returning to the old rating system intends to revalue on a constant basis all properties in England, Scotland and Wales. People in Scotland and Wales would be interested to hear that. There would be many more anomalies as a result of the amendment. We support what is proposed in the Bill. I hope that the amendment will be withdrawn.

Baroness Hamwee

I am sorry that no other Member of the Committee feels moved to take part in the debate. I do not profess to understand the relevance of variations within a village. Of course there are variations within a village under any system.

I had hoped that we might have heard a little more from the Minister about what might be done to deal with the London problem. The noble Lord, Lord McIntosh, referred to an article which appeared in a newspaper the other day. The Times recently reported that there would be some sweeteners for London. The noble Lord was accused of reading too many newspapers. I do not think that The Times is what it was but even so I do not disbelieve it on this issue. The Minister said two days ago that these were not the final words on the matter of London. Perhaps the Minister wishes to speak; she looked as if she was about to stand up. I am happy to give way.

Baroness Blatch

Perhaps I may respond to the noble Baroness regarding the relative differences in affluence in London as compared with the North, which she made much of. She drew particular attention to the size of mortgage repayments in London. It is true that on average people in London borrow three-quarters as much again to purchase houses as people in the North. We have looked at the family expenditure survey to establish disposable incomes after deduction of housing payments—which include mortgage and rent—as well as income tax and national insurance. The highest weekly disposable income is in London and the lowest in the northern region. People in London have more left to spend after deducting their housing costs than people in other parts of the country. There is no reason to believe that someone with a house worth £80,000 in London will necessarily have a larger mortgage than someone with a similarly priced house in the North.

Baroness Hamwee

I should be interested to see the detail of those figures. The Minister has told the Committee that the Bill was introduced not because the poll tax was unfair but because it was perceived to be unfair. One of my reasons for proposing the amendment is the perception of unfairness as well as the reality. I do not believe that we shall be able to take the matter further tonight. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 48 to 50 not moved.]

Lord McIntosh of Haringeymoved Amendment No. 50A: Page 4, line 19, after ("order") insert ("in the third year following the coming into force of this section and not less frequently than in every third year thereafter").

The noble Lord said: In rising to move Amendment No. 50A I should like to speak also to Amendment No. 74, which is the Scottish version of the amendment. There have been scattered references in previous discussion to the issue of revaluation. Some have been historical references made with great passion. The passion has usually been reserved for the injustices and hardships caused by belated revaluation rather than by revaluation itself.

It has been noticeable that the interventions from the Government Benches have always concerned the cowardice of Labour governments in failing to have revaluations. It is therefore all the more curious that we should find ourselves with a Bill which proposes a crude valuation system which is not proposed to be subject to revaluation on a regular basis. I suppose one could justify values which were frozen and never changed.

I remember doing market research in the Republic of Ireland in the late 1960s and sampling households on the basis of the valuation roles applicable in the Republic of Ireland at that time. The valuation rolls had not been subject to revaluation since 1856. They appeared to work to some extent. You could justify that position; say "Leave them alone" and never touch them.

The Government do not do that in this Bill. They say, first of all, that the Secretary of State has exceptional powers to order revaluation; but, secondly, they say that there should be revaluations on change of status—in other words, revaluation when a property is sold. An extraordinary state of affairs can then arise with two identical properties; one of them may be sold when prices are very different and thus come into a different band from the identical property next door.

A lot of passion has been expended on the injustice of charging people more if they improve their properties. The noble Baroness, Lady Elles, was very eloquent on that point earlier. If the property is improved, under the provisions of the Bill one escapes if the property does not change hands but if it changes hands anything that has been done to it is taken into account. One could not conceive of a more arbitrary way to deal with valuation.

The idea of perpetual valuation with such changes seems to us to achieve the worst of all possible worlds. Basically these amendments propose a three yearly revaluation. It need not be a complicated process. For reasons of which we do not entirely approve, the valuation will be carried out very economically. The Government are proud of that fact. They cannot accuse us of wasting vast amounts of public money by demanding a three-yearly revaluation on their terms but the amendment seems to us to be a protection against injustice.

Baroness Gardner of Parkes

Surely the Bill as set out will do a great deal to protect people from the injustice which has occurred, in particular where people have bought a house at a low figure in relation to their income and what they could afford and that house has increased greatly in value. So long as the individual remains in the house, which is the situation of many people whose means have declined over the years, there will be no increase to face. On the other hand, if the property deteriorates or suffers in any way, those people will be able to apply for an immediate revaluation downwards. That would do a great deal to protect them. On the other hand, if the property is sold and money realised, it crystallises the improvements that have been carried out and it is only fair that at that point the person buying the property should buy on the new basis.

I believe that that arrangement is one of the most marvellously fair provisions in the new tax. For that reason I oppose the amendment.

Baroness Carnegy of Lour

I notice that there is no Scottish based peer on the Front Bench opposite or behind the noble Lord. I appreciate that it is Thursday and his colleagues may have had to return to Scotland (for which I do not blame them at all). However, as they are not there, I wonder whether he could tell us whether CoSLA (the Convention of Scottish Local Authorities) is happy with the Scottish amendment to which he spoke.

Lord McIntosh of Haringey

Perhaps I may deal with that point now and get it out of the way. Amendment No. 74 does not come from CoSLA but from the Law Society of Scotland.

Baroness Carnegy of Lour

So the Convention of Scottish Local Authorities has not been consulted, or those who would do the valuation and so on. This is simply a Law Society amendment. I thank the noble Lord for that information.

6.45 p.m.

The Parliamentary Under-Secretary of State, Scottish Offie (Lord Strathclyde)

I appreciate the reasons why these amendments have been brought forward. However, I am not sure that the noble Lord fully understands our proposals. The amendments introduce statutory revaluations into the council tax arrangements at a maximum of three-yearly intervals. Three-yearly revaluations will simply not be necessary under the council tax. It was an undoubted fact that revaluations under the rates were very unpopular. That is why there was no revaluation in England or Wales from 1973 until they were abolished in 1990. It is also why there was such a clamour after revaluation in Scotland in 1985 and at that stage there was a push to get rid of the rates.

It is no good for the noble Lord to say that the same amount of money was raised. If that had been true, people would have been quite happy with their revaluations. The fact is that they were not happy.

The reason for the unpopularity is that, while in themselves revaluations are fiscally neutral, providing simply for redistribution of the overall tax, they inevitably produce winners and losers. Added to that is the fact that the disturbance caused by a revaluation provided excellent cover for local authorities to increase their spending and blame it on the revaluation. One can understand why we were concerned so far as possible to reduce the need for revaluations with the new system.

We recognise that that will not necessarily remove the need altogether for revaluations. That is why we included Clauses 5(4) and 74(3) in the Bill. At this stage it would be impossible to predict how frequently such a revaluation might be required. However, I think it would be simply wasteful to require a revaluation, with all the associated expense and turmoil, every three years or more frequently if there were no need for one at such intervals. It is much better to have a power which allows a revaluation to be ordered when it is needed, as in the Bill at present.

The noble Lord offered the example of two houses which were next-door to each other. He said that if one were sold after a period of years it would change bands. It would not change bands except when it had been substantially altered and improved. As my noble friend Lady Gardner said, that would be quite right. I hope that I have explained the situation in the Bill and in the light of my explanation the noble Lord will feel able to withdraw his amendment.

Lord McIntosh of Haringey

The Minister has no difficulty in identifying that I am not an expert on this subject. If my examples were inadequate, I shall try to improve on them. There is expert advice on the subject available to the Government. That advice entirely supports our case. I quote from the response by the Royal Institution of Chartered Surveyors to the consultation document on the subject. The RICS notes that paragraph 2.30 of the consultation paper states that: There would be no need for regular or frequent revaluations of properties under a system of banding". Indeed that is what is proposed in the Bill before us. The consultation paper goes on to suggest that: There might be a reserve power for a general revaluation in a particular area which could he used if there had been significant differential movements in the values of different sorts of properties". That is a half hearted attempt to do what the noble Baroness, Lady Hamwee, and I suggested in Amendments No.s 46 and 47, although we were severely criticised for bringing them forward.

The RICS reminded the Government that: If the new Council Tax is to be accepted by the public, it must be seen to be fair. We believe that a method of updating the value of the property base will have to be introduced if the Council Tax is to be both equitable and understandable … We believe that the only way that the Council Tax will be assured of a successful future will be if Council Tax payers see a clear, distinct and continuous relationship between the value of their house, the band it is placed in, and the Council Tax bill they receive".

Lord Strathclyde

Because we have this reserve power, if people want a revaluation it will be possible to do it. Under the system which the noble Lord, Lord McIntosh, wishes to introduce, a revaluation will have to be done every three years whether or not people like it.

Lord McIntosh of Haringey

The Minister has revived my worst suspicions about the Government's intentions. As the noble Baroness, Lady Hamwee, reminded us, when we said that there was a secret agenda, that there were sweeteners being planned and that the Government were planning to make things easier for Conservative voters by subsequent changes to the Bill which they were not willing to put on the face of the Bill itself, we were told that that was nonsense and that they had no such ulterior motive. We were not told in so many words that the Bill is the last word on the subject. Ministers were too cautious for that. However, we were certainly told in essence that it was the basis on which the council tax would be introduced. We are now told directly by the Minister that it will be done in another way and that the reserve power will be used for exactly the purpose that we consider a regular valuation should be used.

If I were given the choice of having a reserve power by the Secretary of State to introduce a revaluation when he, a Conservative Secretary of State, thinks it politically convenient, or having on the face of the Bill a provision that there should be a regular revaluation, I know which I prefer. I know which the public prefer. They will want the Government to come into the open and state their intentions rather than hiding behind reserve powers. I am convinced that it is a matter to which, in one form or another, we shall return at a later stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hamweemoved Amendment No. 51:

Page 4, line 24, at end insert: ("( ) The Secretary of State shall establish an additional band to those set out in subsection (2) above that shall be for dwellings provided and occupied solely in respect of a person's employment.").

The noble Baroness said: The amendment is grouped with a number of amendments tabled by other noble Lords. It is designed to protect those occupying tied property and other property by reason of the individual's work. It establishes a separate band for such properties.

One of the difficulties of a property tax is that the property which people occupy because they are in an occupation which requires them to live in a particular property bears no relation to their income. Since such occupation ceases with the job they have no long-term material benefit from the property either.

Agricultural workers are an obvious example. On the commercial market the type of houses in which they live might well fetch much larger sums than they can possibly afford from their own incomes because of the age, size or location of the property. There are many other such examples. The amendment provides a simple way of ensuring that people in that situation will be protected from unrealistic bills. It would be the simplest and easiest way to administer such protection.

The provision would not be perfect because, as we have said and will go on saying, the property tax is not a perfect tax. No doubt some people may be let off bills that they could afford. However, we have to find the balance. I suggest that it is sensible to place such properties in a separate band. The first band would probably best reflect the likely income of those involved but that would be a matter for the Secretary of State under the amendment. I beg to move.

Lord McIntosh of Haringey

Before we continue, will the noble Baroness indicate whether she expects the amendment to be debated with the others in the grouping?

Baroness Hamwee

Yes. Perhaps I should have stated on the record that the amendment is grouped with Amendments No. 53, 68A, 75, 76A, 90, 103 and 127. I understand that that grouping was agreed with the proposers of those amendments.

Viscount Mountgarret

The noble Baroness's amendment is grouped with Amendments Nos. 53 and 75 in the names of the noble Lady, Lady Saltoun, and myself. I do not believe that Amendment No. 68A is relevant to this discussion. In principle I strongly support Amendment No. 51. I recognise that it relates to people who live in tied cottages. Amendments Nos. 53 and 75 relate purely to agricultural workers. Nonetheless Amendment No. 51 provides for others who, under the requirements of their duties, live in houses appertaining to their employment.

Under the rating system a property occupied for agricultural purposes by someone employed or engaged in agricultural or related activities was valued by the valuation officer at the agricultural rate. That was less than the normal domestic rate. Amendment No. 53 suggests that such a property, if accepted as being occupied for agricultural and related purposes, shall be valued at half its value. Some might feel that that provision is too generous. But we are discussing a principle.

My noble friend Lady Blatch was good enough to write to me on 17th January. I wish to quote from the letter because I believe that the thinking is misguided. She said: It would not be fair if we were to make special arrangements for people whose homes were tied to their jobs, or for properties which are in agricultural use, if that meant that someone else in an otherwise identical house (perhaps a pensioner with an even lower income) were placed in a higher band and so paid more council tax". With respect to my noble friend, that argument is flawed. There is provision in the Bill for rebates and reduction in the amount of tax payable by those on a lower income, pensioners and so on. Therefore I put the argument the other way. An agricultural worker may live in a very good house on an estate or farm. Employers try to give their employees the best possible accommodation. It is likely to be in excess of what the employees would be able to afford if they had to buy or rent their own property. By giving the best possible accommodation one has the best chance of retaining one's valued and skilled staff. It does not seem fair for those employees to be charged a higher rate of tax than would be payable by a domestic resident.

I do not wish to plead the cause of poverty for farmers. The noble Baroness is right. The amendment relates to tied cottages. However, farm incomes have fallen by an average of 17 per cent. this year. The industry is not in a healthy position to take on extra, rather onerous charges. I hope that when the Minister replies he will bear that factor in mind. The state of agricultural wages is, and always has been, geared to the fact that employees occupy a house rent and rates free. If the occupants have to pay the council tax, or the employer has to pay it for them—we shall discuss that at a later stage—it does not seem entirely fair that the rate at which they pay the tax should be the same as the domestic rate.

The argument may be that it is up to the agricultural industry—the agricultural wages board, the NFU and so on—to gear the wages of employees so that they take account of their outgoings. I sincerely agree with that argument. When we discussed the poll tax, I hoped that the wages of agricultural workers would be increased fairly substantially to take account of the fact that they had a personal charge to pay which they did not have to pay previously. Unfortunately, that has not happened and, so far as I can see, it will not happen. Unless and until it does the amendments ought to be considered and taken on board by the Government.

7 p.m.

Lord Stanley of Alderley

Amendment No. 103 tabled in my name is grouped with this amendment. Therefore, it might help the Committee if I tried to explain it. The amendment addresses much the same problem but is somewhat different and tackles a wider set of problems.

The classic example of the problem that my amendment addresses is that of a period farmhouse in a highly sought-after area. If the property were offered on the open market it would fetch a very high price and therefore the listing officer would be forced to put it in a high band. As in this case the house must be occupied as part of the farmer's job—indeed it might be a vicarage in which the parson has to live—that would be plainly unfair as has already been mentioned. The high band would not reflect the income and wellbeing of those individuals. Indeed, Ministers have written to say that: this will mean that in areas where there is a demand for farmhouses by people who are not farmers any increase in the value of a farmhouse over what a farmer might expect to pay in the context of his ownership of the entire farm will be ignored".

Although I should not have been capable of such lucid phraseology it implies that the Government are prepared to accept that such properties should be placed in a lower band. However, there is nothing in the Bill to provide for that. For instance, does the assurance apply only to farmhouses? What about the clergy?

In order to clarify the position my amendment would, first, ensure that those living in houses tied to their work have their council tax fairly valued, be they farm employees, clergy or policemen and not only farmers. Secondly, my amendment would ensure that those living in tied houses which do not have an agricultural restriction on them are charged council tax at the same rate as a similar property not so restricted. Perhaps the property was built before the restrictions came into force. In both cases the property is tied to the job.

Assurances were given on 20th November 1991 by my honourable friend Mr. Portillo to my honourable friend Emma Nicholson in the Standing Committee of another place and appear at cols. 217 to 219. However, my honourable friend's assurances, which of course I welcome, were not spelt out. Therefore, the Committee will note that the amendment puts meat on the bones of my honourable friend's assurances that such properties will be devalued by the listing officer, by stating that the listing officer must assign the property to a lower band.

Being of a suspicious nature it occurred to me that it would be possible for my honourable friend's assurance to mean nothing if the listing officer merely devalued the property from the top of the band to the bottom of the same band. I am sure that was not the intention of my honourable friend. Therefore, I hope that my noble friend will be able to accept this necessary clarification.

The Earl of Balfour

If a property is let to a tenant who has security of tenure it is bound to be valued less than if it were available on the open market because it would not be able to be sold in the ordinary way. Under the groupings of the old rating system the owner-occupier was rated highest. Then came the private tenant, then the local authority tenant and finally and lowest the tied house. There have always been a number of extremely important tied houses in the public sector; for instance, those of hospital caretakers, janitors in schools and so forth. Such a house should not be valued as though it were a privately-owned house in its own right. I have no doubt that the provision may be made by regulations. However, it needs to be at least introduced within legislation in order to satisfy everyone who must deal with the Bill, be it a local authority or an individual.

Lord McIntosh of Haringey

The noble Earl has raised an important point. We are concerned not only with agricultural tied cottages but with all tied accommodation. The Government must explain how the reduction in the value of the property due to the fact that it is connected with employment, whether as that of a janitor or agricultural labourer, is reflected in the valuation. I suspect that they will say that the matter must be taken to appeal because I do not see in the Bill any provision under which such a restriction can be taken into account on the valuation that is proposed, and certainly not on the crude and makeshift valuations which are occurring at the moment.

That is the answer that must be given and not that there should be special treatment for tied accommodation. I hope that the Government will resist any amendment which encourages farmers or anyone else to pay too little because they are providing tied accommodation. Such a provision would encourage tied accommodation itself. We must make a distinction between the value of the property, which would have to be dealt with in the valuation or by appeal on the valuation, and the income of the person concerned, which would have to be dealt with by rebate. I do not believe that on the face of it we can give our support to these amendments.

Lord Monson

It is a pity that so many amendments have been grouped together because they are not all the same. It would have been better to take separately, for instance, the amendment tabled by the noble Lord, Lord Stanley. Of the various amendments his is better in most respects, although I have a qualification to make. While I consider that paragraph (a) is totally worthwhile and meritorious I am not sure about paragraphs (b) and (c), for the reasons mentioned by the noble Lord, Lord McIntosh. When people are obliged to live in accommodation by virtue of their employment—for instance, caretakers, janitors, lighthouse keepers, some foresters, some full-time chauffeurs and some farm workers —there is a case for accepting the type of proposal that has been made. However, in cases where the accommodation is provided as a perk, has all the amenities and is not isolated nor convenient in any way, there is no particular case for giving favourable treatment. As was said by the noble Viscount, Lord Mountgarret, it would be better to pay people more money and allow the employees to stand on their own feet—a good Thatcherite principle—and pay their own tax.

Lord Monkswell

I rise again tonight to speak about fairness. The amendment that we are discussing raises two problems. First, it gives power to the Secretary of State and, secondly, it introduces the concept of taxing people differently depending on their employment. We should reject the amendment for those two reasons. It will be seen to be unfair, and it will be unfair, to tax people at different rates just because of their employment. Further, it gives power to the Secretary of State to do this.

I hope that the Government will resist this amendment. I am sure that they would not wish their Secretary of State, or far less our Secretary of State when we come into office, to have to face the criticism that a decision of his or hers is going to result in unfair taxation. Effectively some people will be taxed more than others because of their employment, and that surely is wrong.

Viscount Mountgarret

I must make one point on what the noble Lord has just said, and that was that it would be unfair to treat people differently by nature of their employment. The Government have already taken on board the fact that clergy will not pay a council tax if it is deemed that the church itself is in occupation of the vicarage. The church or diocese, or whatever the appropriate fund is, will pay. They will be liable for this tax and not the incumbent.

We have already got an anomaly, if indeed it is an anomaly. People have to occupy their properties for the betterment of the performance of their duties, and their pay is structured to relate to the fact that they occupy those premises, in the old fashioned term, rates and rent free. It seems unfair for those people to suddenly find—well, it was unfair that they should have to pay their poll tax—that the council tax should be based on the value of that property when their occupation of it is necessary for the carrying out of duties to which that property is related.

Lord Stoddart of Swindon

I have no sympathy with these amendments at all. If we are talking about a property tax we must try to protect the integrity of the property base. If you suddenly introduce special properties which shall go outside the normal valuation process, then you interfere with that integrity. The noble Viscount, Lord Mountgarret, instanced the farm worker who might live in an attractive farmhouse. Because that is so does not reduce the value of the farmhouse as a desirable property. There is no reason why the value should be reduced because a particular person lives in it; but that is what he seems to be seeking to do by his amendments.

There are better ways of dealing with the property rather than undermining what I believe to be the integrity of the taxable base. First of all, if the income of the person occupying the desirable property is of a given level, he will be able to claim from the state. If the income of a person is above the state benefit level, then it is up to the employer to ensure that his employee should pay any additional council tax by virtue of the fact that he occupies that property because it is essential for him to do so for his job. That is the answer that the Government ought to give. I hope that that is the answer that the Government are going to give. If they do I shall find pleasure in, for once, supporting them.

Lord Monk Bretton

I feel that there is every justification for particularly the amendment of my noble friend Lord Stanley. This is really the position that always existed. I cannot believe that it was wrong that in the old days the tied cottage was given certain reliefs under the old rating laws. That situation should be preserved, and it is well justified. The properties that I am talking about are in fact worth less because they are tied to land than they would be if they were not tied to land.

If we are to be able to look after land and to continue agriculture there is need for a certain amount of this kind of accommodation. It will not be possible to look after the land without this type of accommodation. I hope I make that point clear. But the question to which I and my noble friend want an answer is, what is the lister going to do under the valuation proposals in this Bill?

7.15 p.m.

Lord Strathclyde

This has been one of the most interesting debates so far on this Bill. No doubt it is a prelude to many more that we will have on this subject. I am grateful to the noble Baroness, Lady Hamwee, for raising it, and to my noble friends Lord Mountgarret and Lord Stanley of Alderley. I fully understand the difficulties that my noble friends have with the current state of agriculture. As an agriculture Minister I know the problems that that industry is going through at the moment, but I am not at all convinced that creating another special case for agriculture is the way to deal with that problem.

My noble friend Lord Mountgarret talked about the principle involved, and that is what we must discuss now. I was slightly confused by the speech of the noble Lord, Lord McIntosh. I was not sure whether he was for or against the principle of allowing people in certain occupations to have reductions in the council tax.

Lord McIntosh of Haringey

I am sorry that I did not make myself clear. I agree with my noble friend Lord Stoddart that the integrity of the tax base has to be preserved. If there are special needs that are reflected in the value of the house, then that fact should be reflected in the valuation. If they are in an individual's income then they should be reflected in rebates. But there should not be special treatment for any one group.

Lord Strathclyde

I am grateful for that clarification. One thing that noble Lords opposite have failed to understand is that one of the reasons why tied cottages have been so important in recent years is that the socialist legislation governing the Rent Acts has meant that people had to have tied cottages, otherwise employees would have security of tenure often for many generations, and that has been one of the difficulties in housing in the rural areas. Amendments Nos. 53 and 75 propose that such homes should be registered with the local authorities.

Lord McIntosh of Haringey

Would the Minister allow me to intervene? He should not reject our support when we are giving it to him, by misrepresenting history. After all it was a Labour Government who freed up tied cottages by providing a requirement that those concerned could be rehoused in local authority houses. It was the Labour Party that in fact attempted to deal with this problem. Conservative Governments have never attempted to do so.

Lord Strathclyde

The point is that if you had an entirely free market in the private rented sector you would not need tied cottages. That is true. If there was freedom for people to come and go in private rented accommodation, then the position could change.

Amendments Nos. 53 and 75 propose that such homes should be registered with the local authority, and their value for council tax purposes should be halved. Amendments Nos. 90 and 127 provide for the removal of registration. This entirely overlooks the nature of the exercise, which is one of placing properties in bands and not ascribing an exact value to them.

Amendment No. 103, tabled by my noble friend Lord Stanley, proposes that properties occupied in connection with agriculture should be assigned to an unspecified lower valuation band than would otherwise be the case. Amendment No. 51 would oblige the Secretary of State to establish an additional band for properties where residency is tied to the occupier's employment.

My noble friend Lord Stanley talked of the agricultural restriction. The point is quite plain. Where an agricultural restriction exists it will have a material effect on the value of the property. Depending on what the valuation is, it may not affect the banding in which it is placed but it will have an effect on the overall market value. Where an agricultural worker lives in a house with no agricultural restriction, then it is right that that market value is the one that is most appropriate to fit into the banding. If a farmer is willing to put his agricultural worker in a splendid house, in the best possible accommodation, as my noble friend Lord Mountgarret said, then it should surely be for that farmer to pay for the increased expenditure of his worker. That would be the right way to deal with the problem.

My noble friend Lord Mountgarret made a comparison with the Church. My noble friend Lord Howe will later deal with amendments relating to the clergy. The essential difference between that and what we are dealing with here is that the Government have reached an agreement with a central authority, the Church, that the Church will be paying the council tax of all its vicarages in one go. Nobody is being excused the payment of the council tax. That approach is not possible when one is dealing with thousands of individual farmers.

The amendments seek also to provide that payments made by an employer in that way should not count for income tax. Income tax is a matter for my right honourable friend the Chancellor of the Exchequer and not a matter for this Bill. Nonetheless, I know that he is already giving careful consideration to the income tax implications of the council tax but, as noble Lords will be aware, in the context of changes which are not due to take place until the 1993–94 fiscal year.

As I said, I feel that the biggest problem with the amendments is that the principle is wrong. The problems arise from the difficulties currently affecting the agricultural industry. It is through those structures that we need to find solutions to the problem and not by these provisions.

In the light of that explanation I hope that the amendment will be withdrawn. I suspect that it is a matter to which we shall return on Report. I look forward to that occasion.

Lord Stanley of Alderley

Before the noble Baroness replies perhaps I can make one or two points that may be helpful. As I understand it, my noble friend says that there is no need for a special arrangement for a tied house in a lower band because the listing officer will already have taken account of the matter when valuing the property. I hope that I understood him correctly. If my noble friend is saying that it will apply to the farm house—certainly letters from Ministers have said that—does it apply also to the rectory and the tied cottage? As I understand it, if it is a tied house, the listing officer will put a different value on it than if it were free.

If that is what my noble friend is saying, I may not be so hopelessly, dreadfully sad. I am not sure that he is saying that. That is, however, what I am seeking to persuade him to say. I am not sticking to my amendment as such. We await what my noble friend will say when we come to my Amendment No. 110. I hope that the noble Lord, Lord McIntosh, will look at that amendment carefully. It brings out the point that he raised concerning appeals. It ties in, and I am sure that we can reach some agreement.

A point which I did not understand and which no one else raised is the question of the two farm workers living in identical accommodation one of whom has an agricultural restriction on his cottage and the other does not. My noble friend tells me clearly that the one with the agricultural restriction on it could well have a lower price than the one without. Therefore, one farm worker—it is easier to deal with farm workers—living in a restricted cottage will be in a lower band than the man next door receiving the same wage whose cottage is not restricted. That may not be too bad, but perhaps I can remind my noble friend that many cottages were built before the agricultural restrictions came in. I am therefore not happy about that and I hope we shall return to it on Amendment No. 68A.

My amendment has not yet been called and I have a right to have it debated again on Monday and indeed on Report. I do not know whether my noble friend wants to reply to my first point regarding how the valuation will take account of a tied house.

Lord Strathclyde

Let me clear up the two points. First, with regard to tied cottages, my noble friend did misunderstand me and I apologise if I did not make myself completely clear.

There is no reduction in market value simply because a house is tied. A tied cottage can become vacant within a short time. Therefore, it is valued on the basis of its market value. Where there is an agricultural restriction or another legal restriction which affects the full vacant possession market value, then clearly the value is reduced.

That brings me to the second point of my noble friend. There is a possibility that two identical cottages may exist side by side, one with an agricultural restriction and one without. The agriculturally restricted cottage could be in a different band. My noble friend makes a good point. Some of the cottages may have been built before there was an agricultural restriction. I am happy to look at that. But I would not want to give my noble friend any hope that we will be willing to change our policy.

Viscount Mountgarret

Before my noble friend sits down perhaps I may make a point. He referred to the possibility that a lower value house could suddenly become that much more valuable if it were no longer used for agricultural purposes. In that respect perhaps I can refer to Amendment No. 127—I did not speak to it earlier because I did not want to prolong the debate —which provides for the eventuality of that happening. If it were to happen, then the house would revert to the normal banding. I hope that my noble friend will bear that point in mind.

Baroness Hamwee

It has been an interesting and wide-ranging debate. I understand the point that the Minister made regarding the distinction between a tied property and a property which has a specific restriction on it. I hoped that we would have more help with regard to valuations as a means of alleviating the problem we identified yet again—that of ability to pay.

Amendment No. 51 does not simply deal with agricultural workers. There are many other examples of jobs such as caretaking and, perhaps school teachers and park keepers. The list is no doubt longer. The Minister said that it was a matter to which we may return. I hope that we shall return to it on Report, not only at the instigation of those on these Benches and Back-Benchers on the Government side. The issues raised are clearly worrying and it does not appear to me that the questions asked have been satisfactorily answered. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe

I beg to move that the House do now resume. In moving the Motion I suggest that the Committee stage on the Bill be resumed at 8.30 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.