Cities and Local Government Devolution Bill [HL] — House of Lords, 2015-07-15
Topic: Housing
Mark Schreiber (Conservative, Centre-right): My Lords, the noble Baroness, Lady Hollis, has identified a problem that many of us would recognise. The extremely good system of council tax needs updating. She proposes in her amendment that the Secretary of State commissions an inquiry and produces some proposals. I have to some extent anticipated this because I have produced a scheme for dealing with this problem. The problem is—as the noble Baroness described—that it is not acceptable in today’s world that the most expensive property pays only three times the amount of the humblest and cheapest property. The very fact that there is a differential between band A and band H shows that the principle of taxing according to value is accepted. I say that because I know the views of my noble friend Lord True on property taxes. I am not particularly keen on any taxes but council tax was a very elegant and successful successor to the poll tax, which was a political disaster. I believe that we need to update it in a way that is not unduly retrospective and most of all that does not require the great bureaucracy of a revaluation. Since the old days of the rates people have always worried about the huge task that a revaluation would involve. That is why my proposals are somewhat different I start with the table as it is, which is bands A to H. Band A starts at up to £40,000, as was done in the original April 1991 proposals. The highest band H starts at £320,000, which is today a meaningless figure in terms of property values after inflation. I am suggesting that there should be new bands. They would still be called A to H and there would be a greater rate of progression than one to three. I have set this out in my Bill. My Private Member’s Bill has been lucky enough—I came seventh in the ballot out of 42 or 43 Private Members’ Bills—to get a Second Reading date, which is Friday 11 September this year. I hope that some of your Lordships may be kind enough to come to that occasion and to speak on it Basically I am proposing that there be a considerably greater rate of progression between band A and band H. Equally, I have set bands that are much more in accordance with today’s values. Band A will go up to £250,000 instead of £40,000, band B will be £250,000 to £500,000, band C £500,000 to £1 million, band D £1 million to £2 million, band E £2 million to £5 million, band F £5 million to £10 million, band G £10 million to £20 million and band H will be more than £20 million. These valuations are relevant to today’s prices Originally the Government put a rate of six for band A. They did this for arithmetical reasons so as not to have fractions. They made band H 18—three times band A. I also start band A at six and therefore under my scheme there will be no change in the tax paid from the present time up to the value of £250,000. Thereafter I go up to eight instead of seven. That is a 33% increase for properties between £250,000 and £500,000 as opposed to a 17% increase. In other words, taking it nationally, band A—give or take £100 —is £1,000 a year. So band A is currently £1,000 and band H is currently £3,000, give or take a differential for different local authorities So I would be having about £1,300 as opposed to about £1,200 for my band B. But when it gets up to the higher figures and the top level—say band G, where it is £10 million—there would be a considerably greater progression. Instead of being only 2.5 times, it would be 16.7 times. And when it gets to the astronomical figures, even by today’s values, of £20 million, band H would be 42 times as much as band A. So band A would still pay £1,000 and band B would be paying £1,300; it would then go up progressively, but more rapidly as it gets higher. For example, for band F, which is £5 million to £10 million, it would be eight times—and then it goes up to 16 times followed by 42 times. So there is a considerable progression at the top The great thing about my idea is that, instead of having a valuation, you take the values or the actual prices paid for the properties. All the properties are on the land registry, which came into full operation on 1 April 2000. It will apply to half of all the dwellings in England, using the actual values paid—and I should amend the Bill so that it applies only to England and not to Scotland and Wales. The other properties will migrate to the new system as and when they change hands. So there would be two bands operating side by side; there will be the present bands A to H, which go up three times, and the new bands A to H, which go up 42 times Nobody will be on the new bands unless that is the known price that they have paid. Even if it is a very expensive house, it is very unlikely that back in 2000 it would have been anything like as expensive, so there is a natural evening out so that it does not appear vigorous and savage when first introduced. The other properties will migrate as and when they change hands, whether that is by sale, gift, inheritance or anything else It is a neat system, because it would require no valuations at all. I think that it would come into force in a way that people would find fair and acceptable. We have to do something, and this is my suggestion for something.