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Adjournment (Whitsun)

It would be difficult for a centrally determined level of business rates to take account of the varying conditions throughout the country with which locally elected councils deal. If we want councils to play a strong role in our civic society, there must be some scope for variation because they otherwise lack the power to do what we want them to. I am not in favour of a nationally applied rate because it leads to the situation in which we demonstrably find ourselves, with the burden unfairly carried. Re-localising the business rate would not be an automatic solution to the problems of the council tax. There would have to be understanding and support from the business community. I also think that a measure of protection would be needed because although residents have a vote, businesses do not, so they could reasonably argue that such protection would be needed because there would be no immediate electoral kick-back from a council’s decisions to increase the local business rate, as there would be from a council tax increase. We would certainly need to retain a national equalisation mechanism to redistribute business rate yields because they might be high for some councils and low for others. None the less, on balance there is much to commend in the re-localisation of the business rate. If property tax is to remain as the source—or indeed a source—of locally raised revenue, which is likely even if we consider the possibility of adding a local sales tax or indeed a local income tax to the armoury as a result of the Lyons review, it is crucial that it is based on accurate information about the value of property. Such information must then be fed into a robust system that can be regularly updated so that revaluation exercises are sensible and effective. The Government have made it clear that the revaluation exercise for England that is about to begin will be revenue-neutral. The value of the council tax bands will be uprated to reflect house price inflation, but that should result in the overwhelming majority of properties remaining in the same band. However, achieving that will pose difficulties due to not only strong regional variations in house prices, but large variations within regions. I understand why people in England express fears about the possible effects of revaluation because the experience in Wales was that 40 per cent. of properties ended up at least one band higher. We must make it clear that revaluation is not about raising revenue, learn from what happened in Wales and approach the process in a more measured way than was the case there. We have time to get the system right before the new bills hit the doormats in April 2007. I am delighted that the Lyons review is on the case and that it will advise Ministers on this crucial matter. I ask the Government to be open-minded about options for funding local council services. I hope that they will be prepared to consider changing the number of bands and the possibility of introducing regional variations for both the number of bands and the payment proportions among them. Although it will be controversial, I hope that the Government will be open minded about the re-localisation of the business rate, for the reasons that I mentioned. We also need to ensure that we learn from the Welsh experience and deliver an English revaluation that is revenue-neutral. Finally, we all need to be clear about the overall purpose of the reform of local council funding. It should be about underpinning and strengthening local government to create a framework in which local government and local democracy flourish and should make a difference to our towns and communities throughout the land. Councillors should be able to respond to the wishes of residents and to have freedoms and responsibilities. That will make the job of being a councillor worth while and, therefore, more likely to attract new people who want to serve their communities in that way, as well as perhaps achieving a higher turnout at local elections. To achieve all that, the way in which councils are funded must be fair, easily understood and easy to collect. Surely, if we are to retain a property tax, the aim should be that householders with comparable incomes pay roughly the same local council tax if they live in broadly similar house types anywhere in the country, and that there should be a reasonable span of bands nearly everywhere, with band A, for example, applying to houses that are cheap by local rather than national standards. If we do not do that, we will end up keeping and reinforcing the current situation in which 60, 70 or 80-plus per cent. of properties in many northern towns and cities are in band A. Those are important issues for the Government and Parliament. They are certainly important to my constituents, whose message to me is clear: the current situation cannot be sustained and council tax must be reformed.