Press Release from DTLR

Published 20 July 2001

Colleagues will welcome the announcement that DTLR are to move to a cycle of ten yearly revaluations for council tax. In a press release issued today (full text below) DTLR have announced plans for a council tax revaluation to commence in 2005 and take effect in 2007. Further details will be announced shortly.

A council tax revaluation in Wales is still under active consideration by the National Assembly.

Department for Transport,
Local Government and the Regions

News

Making local government finance fairer - timetable announced

• when changes will be made to the way grant is distributed to local authorities;
• the timing of revaluation of domestic properties.

The Government, in consultation with local government, is developing a system of grant distribution that is fairer, simpler and more stable. This will be introduced in 2003-04, allowing the changes to come in one year rather than spread over two years. The new system will then run unchanged for a further two years.

In response to Parliamentary Questions from Adrian Bailey (MP for West Bromwich West) and Candy Atherton (MP for Falmouth and Camborne), Nick Raynsford said:

"The Government's objective is to create a local government finance system that distributes grant fairly and effectively and gives councils greater financial autonomy to help them better meet the needs of their local communities.

"We know that there remain disparities in the education funding formula which are not justified by the education needs of children. We have been working with local government and other education interests on the best way to resolve these issues but there is not yet agreement on the way forward.

"We will work up proposals in partnership with local government for a reformed grant formula which we will introduce in 2003-04.

"Today's announcement will give local authorities some welcome financial stability and will allow them to plan ahead. Meanwhile we will enhance that stability and predictability by developing the floors and ceilings protection which we introduced for some authorities in 2001-02 so that all authorities get a reasonable increase in grant and no authority gets an unduly large increase.

"We intend to extend floors and ceilings to cover police and fire authorities for 2002-03 and to discuss how best to enhance grant stability in 2002-03 for shire district councils, who do not have education and social service responsibilities."

In addition Mr Raynsford announced that there should be a ten-yearly fixed statutory cycle of council tax revaluations in England. Work on the first revaluation should start in 2005, with council tax bills based on updated property values issuing in 2007. Revaluation would not lead to any increase or decrease in the overall revenue raised from council tax.

The Minister said:

"Respondents to last year's Green Paper were overwhelmingly supportive of the proposal to establish a fixed cycle for council tax revaluations. Setting out a timetable now gives local authorities a clear framework within which to make their plans."

Notes to editors

The full text of Mr Raynsford's Parliamentary written answers are attached.

In its green paper published last September, Modernising Local Government Finance: A Green Paper, the Government consulted on options for reform of the revenue and capital finance regimes and some local taxation matters. An electronic version of the green paper is available on the DTLR website at: http://www.local.dtlr.gov.uk/greenpap/index.htm. There were over 16,000 responses to the green paper. An analysis of these is also available at: http://www.local.dtlr.gov.uk/greenpap/analysis/index.htm

The Government will publish a wide-ranging White Paper on local government later in the year.

Mr Adrian Bailey (West Bromwich West)

31 To ask the Secretary of State for Transport, Local Government and the Regions, what his plans are for distributing revenue grant to local authorities in 2002-03; and if he will make a statement. [6529]

Mr Raynsford

The Government's objective is to create a local government finance system that distributes grant fairly and effectively and gives councils greater financial autonomy to help them better meet the needs of their local communities.

In our Green Paper on local government finance, published last September, we consulted on whether to extend the moratorium on changes to the formula used to distribute revenue grant to local authorities by a further year, to include 2002-03. After considering the consultation responses, we have concluded that while reforming the revenue grant distribution system is an important priority, we must ensure that there is adequate time for preparation and consultation.

We know that there remain disparities in the education funding formula which are not justified by the education needs of children. We have been working with local government and other education interests on the best way to resolve these issues but there is not yet agreement on the way forward.

We have therefore decided to keep the existing grant formula stable for 2002-03. Over the coming year, we will work up proposals in partnership with local government for a reformed grant formula which we will introduce in 2003-04. The Government will work to the same timetable with local government and the wider education community on revising the education funding formula to focus on children's needs. I then expect to see the moratorium on formula changes re-introduced for 2004-5 and 2005-6.

Today's announcement will give local authorities some welcome financial stability and will allow them to plan ahead. Meanwhile we will enhance that financial stability and predictability by developing the floors and ceilings protection which we introduced for some authorities in 2001/02 so that all authorities get a reasonable increase in grant and no authority gets an unduly large increase. We intend to extend floors and ceilings to cover police and fire authorities for 2002/03; and to discuss how best to enhance grant stability in 2002/03 for shire district councils, who do not have education and social service responsibilities.

Ms Candy Atherton (Falmouth & Camborne)

30 To ask the Secretary of State for Transport, Local Government and the Regions, what plans he has to revalue domestic properties in England for council tax purposes; and if he will make a statement. [6528]

Mr Raynsford

I propose that there should be a ten-yearly fixed statutory cycle of council tax revaluations. Work on the first revaluation should start in 2005, with council tax bills based on updated property values issuing in 2007. Revaluations will not, of course, lead to any overall increase or decrease in the council tax yield.

Regular revaluations will ensure that the council tax burden is distributed fairly on the basis of more up-to-date property values. Respondents to last year's Green Paper on local government finance were overwhelmingly supportive of the proposal to establish a fixed cycle for council tax revaluations. Setting out a timetable for revaluations gives local authorities a clear timetable and framework within which to make their financial plans.

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