David Walker writes: Tory mendacity over council tax revaluation is exceeded only by the government's failure to impart even basic information to the public — who in turn revel in the most profound ignorance about how finance for local government works.
The Tories are sensitive because it was revaluation of property for rates in the late 1980s which prompted Margaret Thatcher to launch the poll tax, which undid her premiership. But if they were in power now they would have to do it. The simple truth is that any tax based on property has at some point to take account of rising values. We're using values derived in 1991 and 14 years is a long time in house price inflation.
What Labour is doing — for 22m households in England — is reassessing their value. (The exercise has already been carried out in Wales.) The actual sums are being done by experts in the Valuation Office Agency, a branch of the Inland Revenue.
The plan is that the new values form the basis for council tax to be levied from April 2007 onwards. The Tories – and many of the journalists reporting them this morning — say revaluation is bound to lead to higher council tax bills, which is why they will abandon the exercise.
This is just not true.
There is nothing in the revaluation exercise in itself that will push up the total of council tax. It will, of course, affect the relative amounts paid by different households. The plan is to revalue households, then at some point prior to spring 2007 adjust the bands to reflect the higher values. The total levied will be decided, as now, by what individual councils charge so it is likely all bills will rise, as they have in recent years, but not by spectacular amounts. Some of the figures bandied around today are the fantastic products of electorally-fevered imaginations.
If in a given area all property values have risen, the bands will be adjusted to reflect this, so on average no one is going to be paying much more. Individual households, however, might face fairly steep rises – because one property may have become more valuable relative to another. Because of this possibility Labour has contingency plans to mitigate council tax rises resulting from revaluation, by putting in buffers over a three-year introductory period.
Of course it's not simple. Nothing to do with council finance is – and the big review Labour commissioned from Sir Michael Lyons, the former chief executive of Birmingham council, is not magically going to produce a system that is easy to understand. In fact he's likely to recommend continuing with the present system with one or two modifications. Council tax produces some £17.5bn a year; it's too valuable a tax to be discarded lightly.
David Walker is editor of Public.
