Council Tax: Banding Appeals (Hansard, 28 April 1994)

§ The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley)
My Lords, 21.3 million dwelling-houses have been placed in bands for council tax purposes in England and Wales. Some 780,000 of these were placed in band G and 123,000 in band H. Some 614,000 appeals about banding decisions were outstanding at the end of March.

§ Lord Boyd-Carpenter
My Lords, is not my noble friend concerned at the very large number of appeals still outstanding, and is it not a fact that many of these were submitted many months ago and have not been dealt with, while the tax is being demanded in full at the rate in advance of appeals being decided?

§ Lord Henley
My Lords., I start by saying that some 96 per cent. of householders have accepted their bandings, which is a pretty good percentage when one considers how unobjective some people can be about the valuation of their property. As to the number of appeals, I can assure my noble friend that almost 33 per cent. were cleared by the end of March, which was well within our target, 80 per cent. will be cleared by the end of the year and the remainder will be cleared in the early part of next year.

§ Lord Eatwell
My Lords, is it not clear that the entire procedure of appeals is in a shambles and that many people are paying large sums of money which are then being held in local authority accounts, to those authorities' benefit, for substantial periods of time? Could the Government at least show some good faith in this matter, admit their liability and agree to pay interest on sums awarded in the case of successful appeals?

§ Lord Henley
My Lords, the noble Lord is talking about relatively small amounts of money, and to pay interest on those relatively small amounts when someone has merely shifted from one band down to another would not be within the realms of practicality. As I said, we set ourselves pretty demanding targets and we have met those targets, as I made clear. Almost a third were cleared by the end of March; we hope to have 80 per cent. cleared by the end of the year and the remainder in the early part of next year.

§ Lord Orr-Ewing
My Lords, can my noble friend say whether if you have paid too much you get the money back, and get it back promptly?

§ Lord Henley
My Lords, I can give my noble friend that assurance. If you pay too much you get your money back.

§ Lord Swinfen
My Lords, if banks and building societies with computers can work out rates of interest on very small sums of money, can my noble friend say why that cannot be done by local authorities as well? It does not need a quill and ink and lots of paper.

§ Lord Henley
My Lords, I quite accept my noble friend's point. It does not need a quill and other such old-fashioned means. But what I am saying is that the cost of doing so would be more than it is worth. It would add to the length of time taken to process these matters and to the total cost of administering the appeals.

§ Lord Eatwell
My Lords, is it not clear that what may be a small sum of money to the noble Lord may be very significant in the budget of many householders? Is it not also clear that the cost of doing this should be borne by the Government, who are holding large sums of money from various householders over significant periods of time? If the Inland Revenue can charge interest on small sums of taxation which are paid late, why in the case of successful appeals against the council tax cannot interest be remitted to householders who have overpaid?

§ Lord Henley
My Lords, the noble Lord knows perfectly well that the Inland Revenue does not start charging interest until one gets up to a certain figure. When we are talking about interest on the difference between one band and another, which is a relatively small amount when there are eight bands, I do not think that it is in the realms of practicality to start charging interest on such amounts. I believe that the noble Lord will find that that would be well within the limits which the Inland Revenue itself sets in terms of charging interest on its own debts.

§ Lord Boyd-Carpenter
My Lords, is my noble friend not concerned at the enormous figure which he gave of 614,000 appeals outstanding, some apparently not to be dealt with until next year? Are the Government doing anything to expedite the matter, or are they content that quite a lot of money has been paid which will be found not to have been due but which people have been deprived of for some considerable time? Are the Government not being a little complacent about this?

§ Lord Henley
My Lords, I do not accept my noble friend's accusations of complacency. As I said, we set certain fairly demanding targets and we have met those. We have made available a certain amount of extra money—about £2.5 million—in terms of additional resources for this task. But simply providing yet more money or yet more officers to deal with the appeals process would not necessarily speed it up. New staff would obviously have to be trained by the existing staff, and taking the existing staff off their duties would slow down the process.

§ Lord Stoddart of Swindon
My Lords, is the noble Lord aware that in Reading whole streets of houses were put in the wrong band? Does not that show that the whole business of valuation was a shambles? Will not the situation be even further exacerbated when people find that when a house similar to theirs is sold in their area their house may suddenly go up one or perhaps even two bands without them even knowing?

§ Lord Henley
My Lords, I am afraid that the noble Lord is wrong on that last point. If a house is sold now, that might possibly lead the valuation officer to look at the figure. But we are talking about the valuation not as of now but on 1st April 1991.
As regards the allegation that far too many houses were in the wrong band, as I said, 96 per cent. of householders have accepted the bands that they have been put into. I should like to refer to the NAO report, but I shall do so only briefly because it has not yet been in front of the Public Accounts Committee. It suggested that only something of the order of 4 per cent. could possibly be too high and 5 per cent. could possibly be too low but 91 per cent. were banded correctly. It praised the level of accuracy, which met acceptable professional standards.

§ Lord Kenyon
My Lords, will my noble friend explain why, when 100 per cent. of the country was banded within a matter of a few months, it is going to take more than two years for a mere 4 per cent. to be rebanded?

§ Lord Henley
Because, my Lords, the actual process of banding was very simple, but any appeals process dealing with individual arguments will take longer because every individual case has to be dealt with separately. When we introduced the council tax we did so on the basis of having eight bands, that the whole process would be simple and easy to operate and that one would be able to bring in those eight bands relatively quickly.

§ Lord McIntosh of Haringey
My Lords, does the noble Lord's last answer not confirm that when the legislation was introduced our assertion that the banding was not being done properly was in fact right? Were we not also right to say that the very fact of having wide bands with large differences between them would encourage a large number of appeals, another claim which has been proved right and which was blandly denied by the Government at the time?

§ Lord Henley
My Lords, the noble Lord will not be surprised that I totally and utterly reject his allegation. I made it quite clear earlier on that some 96 per cent. of households have accepted their bandings. When one considers the rather odd views that many people have about the value of their homes, I think that that figure is pretty good.