LIABILITY FOR AND CALCULATION OF STANDARD COMMUNITY CHARGE (Hansard, 4 March 1987)

§ Mr. Lang
I beg to move amendment No. 52, in page 10, leave out lines 5 to 10 and insert— '(4) The person liable to pay the standard community charge in respect of any premises shall be—
(a) subject to paragraph (b) and (c) below, the owner of the premises;
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(b) subject to paragraph (c) below, if the premises have been let for a continuous period of 12 months or more, the tenant; or

(c) if the premises have been sub-let for such a period, the sub-tenant,
and that liability shall, in the case of a tenant or sub-tenant be in respect of the period of his tenancy or, as the case may be, sub-tenancy.'

Mr. Deputy Speaker
With this, it will be convenient to take Government amendment No. 56.

§ Mr. Lang
The amendments seek to clarify and improve the position on liability for the standard and collective community charges, which will apply respectively to second homes and other domestic property where there is no sole or main resident, and to premises designated by the registration officer whose residents are very transient.
The Bill as drafted provided for joint and several liability between the owner of such premises and any lessee or sub-lessee whose lease or sub-lease was for a continuous period of 12 months or more. This was to meet the case where the owner might be difficult to trace or have relatively little direct connection with the property. On consideration, however, we have reached the view that a provision for joint and several liability in these circumstances could lead to some confusion in that, although the owner and lessee would be equally liable for the charges, the local authority might be in some doubt as to which person to approach for payment.
The amendments therefore propose a slightly different way of approaching the question, by setting out the circumstances in which the owner, tenant or sub-tenant will be liable. If there is a sub-lessee with a lease for a continuous period of 12 months or more, he will he liable for the charge. If there is a lessee, but no sub-lessee, with such a lease, he will be liable. If there is no such lessee or sub-lessee, the owner will be liable. Thus it would always be clear in any particular set of circumstances who is liable to pay the standard and collective community charge. I commend the amendments to the House.

§ Mr. Maxton
The amendments make the standard charge more of a property tax. It is a tax on the use of the property and is basically a return to rates. It may be a fixed rate, but it is a rate on the property. It is a clear breach of the principle behind the idea of a personal community charge. Conservative Members should be aware of the fact—although they really do not care—that, whereas the rates on a holiday house are paid according to its size and, therefore, the number of people who might be using it at any one time, now the charge for all holiday houses will be exactly the same. Whether the holiday home is Balmoral or a tiny flat somewhere in Newport, basically, the rate will be the same. Someone in Newport will pay a higher standard charge on his little property than the Queen will pay at Balmoral. It clearly is a property tax.

§ Mr. Lang
The hon. Member for Glasgow, Cathcart (Mr. Maxton) is wrong, but after 125 hours in Committee I doubt whether I shall change his mind now. It is not a property tax, but a charge for the services to which properties have access.
Amendment agreed to.

§ Mr. Allan Stewart
I beg to move amendment No. 53, in page 10, line 19, leave out from 'be' to end of line 27 and insert 'the personal community charge'.
As the hon. Member for Glasgow, Cathcart (Mr. Maxton) said, the clause concerns second home owners, 991 particularly holiday home owners. It has always been recognised that there is a need for special provisions to deal with them. No arrangements are made for second homes. There is clearly a loss of income to local authorities from previously rated properties, despite the fact that, as my hon. Friend the Minister said, the owners of second homes use local services. They typically do not use all local services such as education or social work, but they rely on police and fire services. On the whole, second home owners make a little use of local authority services for limited times of the year. A few years ago, the estimated number of second homes in Scotland was about 17,300, the owners of about 65 per cent. of which were usually resident in Scotland.
I accept that the Government have listened to the arguments about the issue. The Green Paper proposed the standard charge, which would be two units off the personal charge. Clause 12 now proposes that the standard charge should be between one and two times the personal charge, subject to the discretion of local authorities. That proposal allows authorities a multiplier of between one and two in the case of small second homes or when the encouragement of seasonal visitors is important for the local economy. The effect of amendment No. 53 is that the standard charge will be equal to the single personal charge. Therefore, it pushes one step further in the direction in which the Government have already moved.
I accept that there is a balance of argument. There is something to be said for giving local authorities discretion. However, it inevitably leads to a complicated system. It means that from year to year local authorities could, for whatever reason, change their position on one personal community charge and two personal community charges for second homes. That would mean an extra burden. Given that the second home is typically small, that it is typically used only on a seasonal basis, and that its users do not put a burden on many local authority services, notably education, which is the biggest single expenditure item in local authority budgets, it would be simpler if my hon. Friend the Minister were able to accept that the standard charge should be the same as the single personal charge.
This issue is important to many areas of the country, notably Dumfries, Galloway, Upper Nithsdale, Argyll, Angus, East, Tayside, Fife, Moray and other areas. Indeed, as has been pointed out, it is of importance to the constituency of my hon. Friend the Member for Cunninghame, North (Mr. Corrie).
This is an issue on which my hon. Friend, if he is in a generous mood tonight, could make a gesture which would be important to rural economies. It would be a little extra boost for tourism and would encourage construction in certain areas. I hope that my hon. Friend is able to accept at least the principle of amendment No. 53.

§ Mr. Ancram
I listened to my hon. Friend the Member for Eastwood (Mr. Stewart) very carefully. I know that he is very concerned about this matter. It might help if I were to explain to the House again the basic purpose of the standard community charge. It is to be payable by owners or long-term tenants of domestic property in which there is no sole or main resident. In that kind of case the abolition of domestic rates would mean that local authorities would inevitably lose revenue, despite the fact 992 that local authority services are provided for the owners or tenants of homes in this category. The standard community charge is not, therefore, a property tax but a contribution towards the cost of local authority services that are enjoyed by the owners of second homes, particularly those services that relate to property.
11.30 pm
The hon. Member for Glasgow, Cathcart (Mr. Maxton) keeps telling me that he does not have a second home because he does not rent the house to which he goes in Arran for long enough for it to count.
My hon. Friend the Member for Eastwood was quite right when he said that the Green Paper suggested as a basis of consultation that the standard charge should be set at a level equivalent to two units of the personal community charge in the area of the second home. The intention of the Green Paper was to ensure that over the country as a whole the charge would give broadly the same yield as the domestic rates paid at present by the owner. However, we recognised that local authorities may wish to set the standard charge at a level lower than two units, should they take the view that, in local circumstances, that level would be too high. That is why a range for the multiplier is provided of between one and two.
In a sense, my hon. Friend's amendment recognises a possibility that is already in the Bill, as drafted. A local authority could have regard to the needs of a rural area and to the general economic situation within its area and it could opt for a standard charge that was the equivalent of one personal community charge, as the amendment suggests. However, the amendment would remove a local authority's discretion in an area where a variety of different circumstances could apply and would therefore make the Bill's provisions much more rigid than they are.
I have taken note of what my hon. Friend said and I appreciate his concern, but on balance local authorities' scope for variation of the standard community charge should remain as it is set out in the legislation. On the basis of the explanation that I have given, I hope that, although my hon. Friend may be a little disappointed that I have been unable to be as generous as he had hoped, he will be prepared to seek to withdraw his amendment.

§ Mr. Maxton
I am delighted to hear that the Minister is not accepting the amendment of his hon. Friend the Member for Eastwood (Mr. Stewart). It would have made the position regarding second homes even worse than it is now. The disparity between people's income, the size of their properties and what they would have been asked for bears no relation to their ability to pay. Balmoral would have been classified as a holiday home. If the hon. Gentleman's amendment had been accepted by the Minister, the Queen would have paid the very princely sum of £160 a year for that property. [Interruption.] The hon. Member for Dumfries (Sir H. Monro) keeps muttering that that is ridiculous, but it happens to be a fact that at present the local authority receives from the royal family £3,300 a year in rates. If the hon. Gentleman had had his way, it would have received only £160 a year.

§ Sir Hector Monro
Will the hon. Gentleman give way?

§ Mr. Maxton
No, I shall not give way to the hon. Gentleman. That figure of £160 would also have been paid by somebody who owns a very small holiday cottage in the same area. That would have been a quite ludicrous 993 differential, and it would have been true of the hon. Member for Dumfries and his flat in Edinburgh. I presume that he has only one second home; perhaps he has more than one. At present he pays large sums of money in rates. I presume that under this amendment he would have paid a very much smaller amount of money in rates.

§ Sir Hector Monro
Has the hon. Gentleman added up the number of permanent residents at Balmoral? If he had he would realise that rates would be at least a four figure sum, perhaps more.

§ Mr. Maxton
The difference is that at present the Queen and the royal household are responsible for paying the rates and the people who live as permanent residents are not. Under this system, the Queen would pay £160 and every individual who lives there would pay his own personal community charge. The fact is that there is no differential in the standard community charge. Like the personal community charge, there is no differentiation in terms of people's ability to pay, the size of their property or whatever. Along with the rest of this tawdry Bill, it is something that is — [Interruption.] The Minister says that I am admitting that I am wrong. I am not admitting that I am wrong. What I am saying is absolutely right. Balmoral is a holiday home and so is the tiniest flat in Millport.
The amendment would reduce further people's contribution towards local authorities in terms of second homes — [Interruption.] The hon. Member for Strathkelvin and Bearsden (Mr. Hirst) can describe anybody as a fool, or whatever else it was that he might have said, but I would rather be a fool than the unctuous creep that he is.

§ Mr. Allan Stewart
With the leave of the House, I am tempted to respond to several of the points made by the hon. Member for Glasgow, Cathcart (Mr. Maxton). I am amazed that he took four minutes for something that could have been said in 20 seconds. It was a trivial contribution to the debate. I am grateful to my hon. Friend the Minister for what he said, although, as he suggested, I am slightly disappointed that he has take the line that he has. However, in the circumstances I beg to ask leave to withdraw amendment No. 53.

§ Mr. Lang
I beg to move amendment No. 54, in page 10, line 43, at end insert— (12) The person liable to pay the standard community charge in respect of any premises in respect of a financial year shall be entitled to recover from any person to whom he lets or sub-lets the premises or whom he permits to occupy them an amount equal to the portion of that standard community charge which, calculated by apportionment on a daily basis, accords to the number of days in that year for which the premises are let, sub-let or occupied by that other person (and such an amount is referred to in this section as a "standard community charge contribution").
(a) shall be in addition to any obligation of his to make other payments (whether by way of rent or otherwise) in respect of the premises in respect of which that contribution is made;

(b) is not affected by any enactment relating to the control or restriction of any such other payment, and shall not, for the purposes of any such enactment, be regarded as such a payment or part thereof.'.
This amendment will improve the provision to be proposed in the standard community charge to be payable in respect of second homes and similar property where 994 there is no sole or main resident by putting it beyond doubt that the person liable for the standard community charge may recover contributions towards that charge from tenants and others, such as holiday visitors, whom he permits to occupy the premises for short periods.
Where the tenancy or any sub-tenancy runs for a continuous period of more than 12 months, the tenant or sub-tenant will become liable for the standard community charge on the assumption that the property remains a second home and has not become his own sole or main residence.
The provision of the amendment will allow tenants with shorter tenancies or informal occupation arrangements to be required to make some contribution towards the standard community charge for which the owner, or long-term tenant of the premises is liable. It is right that there should be some provision to that effect since people who occupy premises of that sort for short holiday lets and similar arrangements will be making use of local authority services during the period of their residence.
The amendment makes it clear that, like the collective community charge provided for under clause 13, payments should be in addition to and not part of any rent or similar payments made by tenants or occupiers and they will not come within the control of the Rent Acts. However, the amount payable will be restricted to the proportionate amount of the standard community charge relating to the period for which the premises are let.

§ Mr. Maxton
I find this a rather interesting amendment and one in which I have to declare a personal interest as someone who, for six weeks of the year, rents a cottage on the island of Arran. As I understand it, the owners of that or any other cottage in similar circumstances, certainly on islands off the west coast of Scotland and elsewhere. where the owner normally lives in the cottage for eight months of the year and lets it for the other four months, will be liable to a charge for those four months. They have a personal community charge based on that being their sole and main residence. Along with everybody else, they pay that personal community charge and nothing but that charge.
We are not considering a second home here—at least I do not think that we are, although I do not understand the exact position. It is not a second home, and a personal community charge is payable on that house. However, the owners move out for four months of the year and are entitled to charge me or any one else who uses the house for part of the community charge for the period during which we use the services of the local authority. The owners will be able to offset some of their own personal community charge. This is a very difficult position. Is it not a second home when the owners are living somewhere else?
Many of these owners have a but-and-ben at the back of the house into which they move. Which property is the owner paying the charge on? I do not think that the Minister has clarified how the charge is paid. The more appropriate way to deal with the matter would be to consider that property for the four months of the year in question as a non-domestic property and it could be charged accordingly.

§ Mr. Lang
The amendment is to clause 12 which relates to the: Liability for and calculation of standard community charge. 995 I made clear in introducing the amendment that it adds new provisions to allow for the recovery by persons liable for the standard community charge. It does not relate to the personal community charge.

§ Mr. Maxton
I still think that the Minister has not completely cleared up the whole position of—

§ Mr. Ancram
The hon. Gentleman does not understand.

§ Mr. Maxton
Yes, I understand exactly what the Minister said. The hon. Member for Edinburgh, South (Mr. Ancram) is trying to be his usual shallow clever self.
Ministers still have not cleared up the position with regard to holiday homes which are first homes which are then sub-let. It is not at all clear where that fits in. When I go to Arran now I am not sure whether I will get a bill separately itemised to cover the time that I used local services. Do I pay nothing towards those services? If I rented on a commercial basis from someone letting a second home, I would be paying something towards the local services. However, if I take a house from someone for whom that house is the normal first home, I will contribute nothing. This is a very confusing position. I do not believe that the Minister is clear about it.

§ Mr. Bill Walker
The hon. Gentleman is making heavy weather of this. Does he realise that in the circumstances that he has described the probability is that the individual letting his permanent home for the period as a holiday home is probably not declaring that income for income tax purposes?

§ Mr. Maxton
That is a completely separate matter. The hon. Gentleman is saying that not only will they receive their personal community charge rebated by charging that person for letting the house, but will also not pay income tax. Obviously, that is a matter for the courts to test, but I do not believe that that happens, and it is a smear on the people from whom I rent the house as they are my friends.
Under the proposals, will someone who owns a cottage or a house as a second home and allows friends to use that house have to charge his friends? I suppose he will not have to. However, the Government have got themselves into a mess on the whole question of the standard community charge and second homes. They do not know what they are doing. They have not worked it out. If they had wanted to introduce a personal community charge they would have done better to leave second properties within the non-domestic sector and charged rates upon them. That would have been a better way of handling the position. However, because of the Government's dogma in terms of introducing a community charge, they have failed to do that.

§ Mr. Henderson
Fife regional council has made a small administrative point, which may more appropriately be raised in relation to the next group of amendments, but which relates to clause 12(8) as well as to clause 13(8). That is the determination of the multiplier. Fife regional council asks that the multiplier should be restricted to two decimal points. I put this hesitantly, because I think that it is within the power of the local authority to determine the multiplier, but I should be grateful for my hon. Friend's reassurance on the matter.

§ Mr. Lang
I am not sure how my hon. Friend's inquiry relates to this amendment. I should be happy to discuss with him the operation of the standard community charge multiplier, but it does not apply in the context of this amendment, and I might be ruled out of order if I developed that theme. However, I shall discuss it with him later.
11.45 pm
The hon. Member for Glasgow, Cathcart (Mr. Maxton) is debating the wrong problem in the wrong circumstances, because what he is worried about is not what we are debating or what the amendment provides. In answer to his question about the owner of a holiday home having to charge friends to use it, I should say that there is no obligation to charge friends in this context, but if the holiday home is subject to the standard community charge, the provision would enable the owner to recover that part of the charge that was quantifiable in proportion to the number of days for which the property was let. But if he was lending the house to someone, it is unlikely that he would do that.
It would be inappropriate for me to discuss the hon. Gentleman's personal circumstances and the arrangements into which he enters in Arran. Suffice it to say that, if the property that he occupies is owned by a person who is liable to pay the standard community charge on it, the provisions of the amendment would apply, but not otherwise.