Council tax revaluation shelved

Homeowners will not have their homes revalued for council tax purposes in the next two years, the government said today.

It has postponed the revaluation process, started earlier this year, at least until 2007 and probably until 2010.

Instead, revaluation, which could have lead to higher council tax bills, will now form part of a larger inquiry into the way local government is funded.

Local government minister David Miliband said it was necessary to get "a clear and complete picture of what we want local government to do before we tackle how it will be funded".

Council tax revaluation, which involves revaluing properties and the council tax bands in which they are in, started in April this year and would have affected council tax bills from April 2007.

The last valuation in England was carried out in 1991, since which house prices have risen by an average of 186 per cent, according to Halifax.

Critics of the government believe its decision stems from fears of a backlash over further increases in council tax that could hinder its prospects of being re-elected for a fourth term.

In the recent revaluation carried out in Wales, one in three homes moved up at least one council tax band, leading to higher bills.

The Conservative party, which pledged during the general election to shelve revaluation, had warned that should the same happen in England, the typical household would see their bill increased by £270 a year.

But the government said it was postponing the revaluation so it could be incorporated into a review of the way local government was funded, currently being undertaken by Sir Michael Lyons.

Mr Miliband said: "We have decided to postpone revaluation from 2007 so that revaluation can take full account of Sir Michael Lyons' further work. We do not believe that revaluation will take place this parliament."

Shadow local government minister Caroline Spelman accused Labour's plans of being in "complete disarray".

"The announcement is only a postponement, not a cancellation, and we are still yet to find out what nasty surprises the Lyons review will bring," she said.

"Labour's third-term tax hikes are still to come, and all they have done today is reset the clock on this ticking tax timebomb."

The Liberal Democrats have pledged to scrap council tax altogether and replace it with a local income tax.