Government 'climbdown' over council tax

Critics had predicted that the revaluation of millions of homes across England would mean major rises in tax bills. But any decision is likely to be postponed until Sir Michael Lyons completes an inquiry into local government funding at the end of the year. Senior ministers are expected to discuss the delay at a forthcoming Cabinet meeting.

Tory spokeswoman Caroline Spelman said: "This is a massive Government climbdown in the face of Conservative opposition to council tax revaluation. The first stage of the battle has been won - but not until the Lyons review is heard will we know if the war is over.

"The Government has shown great weakness to cave in ahead of their review, and are clearly in total disarray over the issue."

Sir Sandy Bruce-Lockhart, chairman of the Local Government Association (LGA), said the point was not whether the review should be delayed.

"The council tax system is flawed," he said. "It can't be sensible to base a property tax on house prices in 1991, but we don't believe people should be penalised because they have seen their homes increase in value during the past decade."

The long-planned revaluation had been due to be completed by 2007.

Those whose homes have risen most in value since the last valuation in 1991 would face higher council tax bills. At present, council tax is calculated on the basis of eight bands, with owners in a top-rate band H property paying twice as much as people on band D.

All 22 million English homes were due to be rebanded, based on their value on 1 April this year, with new designations being revealed next September and the changes taking effect in 2007.

Sir Michael Lyons may recommend the addition of new bands to take account of widely varying house prices across the country when he reports in the coming months.

Sir Jeremy Beecham, Labour vice-chair of the LGA, last night warned ministers not to kick the issue into the long grass. "I don't quite know what the Government is contemplating," he told BBC Radio 4's PM programme.

"But I can see a logic in deferring the valuation until the Lyons review - the major review that is going on into local government finance - is completed. Then you have one set of changes instead of two."