Tories accused of fiddling bank's house price figures

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The Halifax Bank last night accused the Tories of fiddling their house price figures to support an election pledge to scrap the revaluation of the council tax.

The Halifax Bank last night accused the Tories of fiddling their house price figures to support an election pledge to scrap the revaluation of the council tax.

The claim by a bank that its figures were misused by the Tories threatens to tear up a Conservative election trump card which yesterday forced Labour on the defensive over soaring council tax bills. It could also overshadow the expected launch of the Tories' remaining £1bn tax give-away.

This is the third time that Tories have been caught out on their election claims, and follows disputes over MRSA statistics, and a row with chief constables over crime figures. In a spectacular U-turn, Michael Howard, the Tory leader, announced they would not go ahead with the revaluation of houses in 2007 which threatens to add to rocketing council tax bills.

He said the revaluation by the Government was no longer justified partly because figures issued days ago by the Halifax showed disparities in house prices between London and the regions had reduced.

"You only need a revaluation where there are disparities that have emerged in property prices," he said. "The latest information ... available in the past seven days is from the Halifax which shows the regional disparities are becoming much less significant."

But a spokesman for the bank said the Tories had "selectively used" their figures to make it appear the disparities between London and regional house prices were less than they were.

"There is still a big difference," the spokesman said. "In terms of actual house prices, there is still a huge gap between London and the regions." Asked whether the Tories had fiddled the figures, he added: "I think your description is not inaccurate of what they have done with the figures."

The Halifax said the Tories used index figures "incorrectly" instead of the average prices between regions to reduce the disparities. For example, said the Halifax, the Tories merged Newcastle, an area of low house prices, with East Anglia, where house prices were rising faster than in most parts of England, in one eastern region. This flattened the difference in house prices in the Eastern area and London.

"If you want to use ratios as the Tories did with house prices in London, it is still almost twice as expensive in London as it is in Newcastle," the spokesman said. "We don't know why the Tories have done this."

The spectacular volte face by the Tories, which could benefit seven million householders, dominated the election for 24 hours and succeeded in steadying the Conservatives after an election wobble caused by an increased Labour lead in the opinion polls.

Former Tory leader Iain Duncan Smith hailed the revaluation decision. "It's going to turn out to be one of the best decisions we have made," he said.

Labour protested that the Tories were being opportunist. Alan Milburn, Labour's campaign co-ordinator, said: "Last week on BBC radio Mr Howard said, 'We will make sure any revaluation is fair'. When they launched in February their council tax discount Mr Howard said we will have a revaluation. What has changed is their poll numbers. This is policy driven by desperation."

The Tories voted against the plans for the revaluation four times in Parliament but after it went through, they accepted it. Caroline Spelman, the shadow environment secretary said in March: "Of course we understand property-based tax has to take account of changes in the value of property."

A Conservative spokes-man said last night: "We changed our position but it is better to change our position and do the right thing."

The Halifax figures show there is still a wide disparity between house prices in London and the regions. Northern region: From £53,617 to £130,053, up 143 per cent between 1991 and 2005. Yorkshire: £55,6888 to £122,948, a rise of 121 per cent. North-west: £60,787 to £129,533, up 113 per cent. East Midlands: £60,001 to £148,375, up 147 per cent. West Midlands: £68,279 to £158,354, up 132 per cent. East Anglia: £68,322 to £161,741, up 148 per cent. South-west: £70,385 to £181,826, up 158 per cent.

South-east: £86,594 to £218,102,up 152 per cent. The average price of a house in London is estimated by the Halifax at £240,000.

How the parties stand on council tax

LABOUR: Promise review by Sir Michael Lyons, due in the autumn, so that council tax is more linked to ability to pay. Gordon Brown gave £200 discount to pensioners in last Budget. Will keep cap to stop excessive rises. Not ruling out some local income tax element. Planning to go ahead with revaluation of properties in 2007 which will lead to big rises, particularly in London but Government say overall it will be "tax neutral".

CONSERVATIVES: Would halt revaluation of council tax in 2007 which they claim could contribute to a rise in average band D houses to more than £2,000 a year by the end of a third Labour term. Reject local income tax and offer discounts of up to £500 for pensioner households for those 65 or over. Tories claim revaluation will increase number of bands to include a "superband'' for most expensive houses.

LIBERAL DEMOCRATS: Would replace council tax with local income tax. This would raise £2bn less than the council tax, and would be subsidised by a new national 50p income tax band for those earning more than £100,000 a year. Most households with joint income above £38,000 would pay more local income tax, depending on their council tax bill. Would scrap the 2007 revaluation of property for council tax.