"As the dust settles on the Lyons review, it is clear that a council tax revaluation in England is underway by stealth. Despite Ministers’ claims that it is a matter for the next Parliament, the computer infrastructure development and data gathering exercise has been given explicit Ministerial authorisation to continue.
Step by step, Gordon Brown’s council tax inspectors – the Valuation Office Agency – are putting in place the largest ‘Computer Assisted Mass Appraisal’ property database in the world, using technology bought in at great expense from the American firm, Cole Layer Trumble.
A systematic campaign of Parliamentary Questions and Freedom of Information Act requests by the Conservative frontbench has forced the existence of these plans into the public domain – despite confidentiality agreements with the contractors and Ministerial obstruction.
The database will allow a precise capital value of every home in England to be calculated (and then taxed) at the touch of a button, based on a series of property attributes about the home and neighbourhood – from the number of parking spaces, bathrooms and bedrooms, to whether the home has a scenic view, a Georgian façade or a large patio.
The Agency has signed a legal agreement with the Land Registry to tap into their property register for revaluation purposes. Estate agents, Rightmove, are being paid to hand over details on the characteristics of every property sold. Computer systems are being put in place to allow an electronic transfer of building control and planning information from local authorities. The Agency even tried to get access to the Government’s new electronic register of Home Information Packs.
Covert photograph of homes is already under way. In the last year, the number of photographs of homes stored on the Agency’s new database has soared from half a million to over two million and the inspectors have spent almost half a million pounds on purchasing 2,126 digital cameras. Research is even being conducted in Northern Ireland, by its sister body, the Valuation & Lands Agency, into the use of aerial photography for valuing homes, and is using also cutting-edge geo-spatial and geo-demographic analysis to identify ‘nice’ neighbourhoods.
Contrary to Ministerial claims, the scope of these projects goes beyond merely ‘digitising’ paper records. The Labour Government has lost the trust of the public, not just on issues like Iraq, but also over its addiction to stealth taxation.
Based on their record, we simply cannot believe that they say on council tax. When Nick Raynsford legislated for the revaluation in England and Wales in 2003, he promised Parliament, “revaluation will not lead to increases in the council tax yield”. Yet in the Welsh revaluation, conducted by the Valuation Office Agency in conjunction with Labour Ministers in Cardiff and Whitehall, four times as many homes moved up bands as moved down. In the first year of revaluation, average bills in Wales rose by 9.1 per cent - compared to a rise in average band D of 3.8 per cent. Further rises have followed as transitional relief is phased out for those moving up two or more bands. Extrapolated to England, this would be the equivalent of a £2 billion tax hike according to the RICS.
The Welsh revaluation and rebanding did not make council tax “fairer”. Although a new higher Band I was introduced, this was paid by just 6,000 homes. By contrast, the largest net change was from 230,000 homes in Band A, B and C moving up one or more bands. In other words, revaluation hit the less well-off the hardest.
Yet there is no fundamental need for a council tax revaluation. At the time council tax was introduced, one of its selling points – in contrast to a ratings system - was that the bandings scheme removed the need for regular or frequent revaluations.
The fact that current valuations are based on 1991 house prices is not a problem – the issueinflation nor whether there is a north-south divide. The purpose of a revaluation is to correct grossly disproportionate movements in comparative house prices compared to the 1990s snapshot. In England, relative regional property price disparities have actually narrowed in recent years – undermining the need for an expensive, disruptive revaluation. Indeed, before it was delayed, the estimated bill for the English revaluation was up to £178 million – and rising by the day. The revaluation will not come cheap.
Vested interests amongst the inspection ‘industry’ may want regular revaluations, but this is completely out of touch with public opinion. Indeed, unmetered water bills in England are based on 1970s rental values, but my postbag as a MP does not contain letters from constituents begging for a water rates revaluation.
Under the current council tax system, rolling ‘retro-valuations’ already take place when a property is sold, meaning material changes to individual properties are taken into account, without taxing residents for changes they make whilst their live in their home..
Council tax was intentionally structured so as not to dissuade home owners from improving their property. But the Lyons’ recommendations for regular council tax revaluations would punish families who have saved and invested in their home, and turn council tax into a home improvement tax.
It is likely that Labour’s revaluations plans will also be more intrusive. The 1992 valuations that established council tax placed each home into one of eight statutory valuation bands based on 1991 house prices. Valuers knew the banding structure when conducting out their assessments. They did not need to calculate a precise capital valuation of each house – they merely had to place them into a band.
According to the National Audit Office, the valuation exercise was conducted efficiently and swiftly – either through ‘drive by’ or ‘at desk’ assessments by a mix of public and private surveyors, without the need for internal inspections. Yet when the Valuation Office Agency commenced work on the English revaluation in 2005, it did so without knowing what the banding structure would be. As a result, the Agency decided it would henceforth calculate a ‘discrete’ capital value for every home.
Far more individual pieces of information are required to produce a discrete valuation rather than placing a home in a broad band. This is reflected by the 100 new ‘dwellinghouse’ and ‘value significant’ codes that are at the core of the revaluation database, and which will invariably mean the need for internal inspections to gather the data. In Northern Ireland, a domestic revaluation with discrete valuations has recently taken place under Direct Rule – no doubt, as a testing ground for England, just as Scotland faced the poll tax first. Labour Ministers introduced - for the first time - not just a right of entry, but an explicit duty on householders to ‘assist’ tax inspectors, with the threat of £1,000 fines.
Labour Ministers and former Ministers like Nick Raynsford, are rattled by the effectiveness of the ongoing Conservative campaign to expose these plans. As Her Majesty’s Opposition, we make no apologies. Whatever the current Government’s plans to bury or implement the Lyons review, it is clear that council tax revaluation is an issue that is not going to go away."