HC Deb 16 December 1991 vol 201 cc22-30

'.—(1) After paragraph 5 of Schedule 1 to the 1988 Act (personal community charge: exemption) there shall be inserted the following paragraph—

"School leavers.

5A. A person is an exempt individual on a particular day if—

  1. (a) he is aged under 20 on the day,
  2. (b) the day falls within the period of 6 months beginning with 1 May 1992,
  3. (c) immediately before that date he was undertaking a qualifying course of education, and
  4. (d) the course was not undertaken in consequence of an office or employment held by him."

(2) After sub-paragraph (1) of paragraph 6A of Schedule 1A to the 1987 Act (personal community charge: exemption) there shall be inserted the following sub-paragraph—

"(1A) If such a person as is mentioned in sub-paragraph (1) above ceases to undertake such a course of education on or after 30th April 1992, he shall continue to be exempt until the start of the earlier of the following days—

  1. (a) 1st November 1992,
  2. (b) his twentieth birthday.".'.—[Mr. Portillo.]

Brought up, and read the First time.

3.33 pm
The Minister for Local Government and Inner Cities (Mr. Michael Portillo)

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this it will be convenient to take the following: New clause 17—Abolition of 20 per cent. community charge contribution and extension of community charge rebates to students from April 1992

'.—(1) In subsection (3) of section 131 of the Social Security Contributions and Benefits Act 1992 (community charge benefits) in paragraph (a) the words "and is not there shown as undertaking a full-time course of education on the day" shall be deleted;

(2) In subsection (5) of that section after "concerned" there shall be inserted:— up to 100 per cent. of his liability for personal community charge contributions";

(3) Sections 1 and 2 above shall have effect from April 1992.'.

Government amendments Nos. 127 and 128.

Mr. Portillo

Although the Bill is principally about the council tax, the new clause relates to the community charge and what is known as the student gap. At present, exemptions from the personal community charge exist for 18-year-old school pupils in respect of whom child benefit is paid, and 18 and 19-year-olds who are on qualifying courses of further education. But about half of the 200,000 people who fall into either of those categories go on to full-time education and become entitled to student relief of the community charge.

At present, however, there is a student gap, which may last for a few weeks or a few months, separating the exemptions from the day on which a person enrols on a full-time course of education. Although it is possible for such a person to claim community charge benefit during that time, thus reducing his or her liability by up to 80 per cent., we accept that the administrative burden imposed on both the individual and the charging authorities is unnecessarily heavy. We therefore propose to relieve local authorities and school leavers of that burden by exempting, until 31 October 1992, 18 and 19-year-olds who are undertaking a qualifying course of education on 1 May 1992.

Mr. Bryan Gould (Dagenham)

I suspect that new clause 33 is the forerunner of numerous similar Government-inspired changes to a Bill which the Government assured us, when they dragooned it though its Committee stage, was in pristine and perfect condition and would need no amendment. This is, I suspect, the beginning of a process that will lead to much the same outcome as was brought about by the hundreds of Government amendments—sometimes running into four figures—that have been tabled to similar Bills. If such an outcome does indeed result, it will show just how damaging the guillotine and the resulting truncation of Committee debate have been.

We none the less welcome this particular representative of the genus. If all the others deal with small issues in a way that improves the Bill, we shall have less ground for complaint. The new clause is undoubtedly good news for the group of students who will benefit from the closing of what the Minister described as the student gap—I believe that the Government's estimate is 200,000. This is, of course, part of the slow, gradual, painful process whereby Ministers are forsaking, step by step, all the policies and principles that underpinned the poll tax. One by one, the arguments that were said to justify it are being abandoned.

New clause 33 does not go far enough. Typically, the Government have had the courage to concede by implication that they have lost confidence in what they legislated for so confidently just a short time ago. What they lack is the courage and confidence to pursue their conclusions to their logical outcome. As a consequence, students are still not entitled to rebates, and the 20 per cent. contribution rule remains, along with all the damage that it does—especially to local authorities that are struggling to collect the poll tax.

Our new clause 17 would extend to students the right to claim community charge and, in due course, council tax rebates. Students are undoubtedly a section of the population who have suffered substantial hardship as a result of Government-inspired measures. I have a student daughter myself, and I know from her accounts—and from her constant recourse to the parental purse—that life is indeed very difficult for students. Their grant has been frozen in real terms at much below the level at which they could expect to survive on it; they have been denied entitlement to income support, housing benefits and rebates; there are no jobs with which they can supplement their incomes during vacations; and those who find themselves desperately hard up discover, when they turn to the hardship fund, that it has already been exhausted.

For all those reasons, I think that students are particularly deserving of help. The Government's proposal is welcome, but it only scratches the surface of the problem. Our new clause 17 would establish their entitlement to rebates, which would benefit them greatly.

We expect to have an important debate tomorrow afternoon on the 20 per cent. contribution rule, which the Government insist on retaining until 1 April 1993; but our new clause 17 would also have the effect of abolishing, as from 1 April 1992, this 20 per cent. contribution rule. If it were abolished, that would have the blessing, as far as I am aware, of every local authority association, the Institute of Revenues, Ratings and Valuation, and the Child Poverty Action Group, the very strong blessing of the citizens advice bureaux—and the enormously authorititative support of the Audit Commission, which, in its report, had this to say on the subject: Local authorities say that large numbers of income support recipients are in arrears with community charge payments for 1990/91. These chargepayers make up a very small amount of the total value of outstanding community charge. Pursuing these defaulters for such small amounts is not a good use of scarce recovery resources when there are much larger debts outstanding. The Government have already accepted that there will be no minimum contribution to the council tax. Abolition of the minimum 20 per cent. community charge contribution for income support recipients would ease the administrative burden on local authorities very considerably. I do not intend to rehearse at length—the opportunity for that will come tomorrow—the powerful arguments, financial and practical, which would support the abolition of this rule at the earliest possible date. Today I shall content myself with quoting what I hope by now is a familiar argument for the Minister, advanced by the Audit Commission. It is that the attempt to collect the 20 per cent. contribution from those on income support costs 15 for every £6 net revenue raised. Even on grounds of simple housekeeping and accounting, that ought to conclude the argument.

It is not even as though the Government have adhered to their own reasons for refusing to act on this in the past. They have conceded, by abolishing the 20 per cent. contribution rule for the council tax, that there is no ground in principle for maintaining it. We all recall that in the heyday of the poll tax the one principle that Ministers and Conservative Members were most reluctant to abandon was that everyone should pay something. That principle has now been abandoned; the Government no longer advance or maintain that position. They abandoned the principle for the council tax, so no argument in principle remains.

The Government then resorted to the argument of practicality. They said that it was impossible to abandon the 20 per cent. contribution rule because income support rules had been constructed on the basis that a 20 per cent. contribution had to be paid. They said therefore that if the rule was changed there would have to be a consequential change for the social security rules. That argument no longer applies because no consequential change is now required. The Government have abandoned any pretence that income support payments include an element that would cover the 20 per cent. contribution, so they can do away with the 20 per cent. contribution rule at the earliest practical opportunity, with no difficult practical consequences for income support.

We are left with a slightly opaque, not to say metaphysical, argument from the Minister of State. He maintained that the rule was an essential concomitant of the poll tax because it was a personal tax, yet we a:re told that in respect of the council tax, which is also, at least as to 50 per cent., a personal tax, there is no difficulty in doing away with the 20 per cent. contribution rule. If it can be abandoned in the case of the personal element of the council tax, it is hard to see why it cannot be abandoned immediately for the poll tax. If it were abandoned, the burden on local authorities of trying to collect what the Prime Minister described as a virtually uncollectable tax would be substantially lightened, and that would be of great benefit.

Ministers are fond of criticising local government because many local authorities are less than 100 per cent. successful in collecting the poll tax. If they were serious about helping local government with that difficulty, they would abolish the 20 per cent. contribution rule. That is what our new clause 17 would do. I commend it to Ministers, but, bearing in mind our debates in Committee, I confess that I do not do so with any great hope that they will see sense for once and will accept this sensible recommendation.

3.45 pm
Dame Elaine Kellett-Bowman (Lancaster)

I welcome the Secretary of State's intention to fill in the student gap, but I am bound to say that I can see no logical reason for attempting to collect the 20 per cent. from students now that the Government have conceded in the new council tax that students will not pay it. My council and students would very much like the 20 per cent. contribution to be abolished for the final year of the tax.

Mr. Dick Douglas (Dunfermline, West)

I am a bit bemused about the definition of a student and should like to have it clarified for England, Wales and Scotland. The Government have moved away from their view that everybody should pay the poll tax and are making some amends. However, the plight of students is well known to every hon. Member and it is absurd, especially in Scotland, that local authorities are trying to collect the 20 per cent. from students for 1989–90.

Earlier in the debate a Scottish Office Minister was present, but he has departed. Do the Government have figures for Scotland about the number of students involved and the cost to local authorities of trying to collect this tax? The Government have abandoned in the so-called council tax not only the rule that everybody has to pay but a key element of the poll tax—accountability. There is no strict relationship between local authority finances arid the accountability of councils to the electorate who may or may not be paying.

Although the Government proposal is welcome, it flies in the face of all logic. They are redressing a gap but not accepting the other enormous gap of students in Scotland being asked to pay 20 per cent. of the poll tax from 1989 onwards. Local authorities are chasing up and down the land trying to collect taxes from people who may have moved three, four or five times. That is nonsense. The cost is exorbitant and the Government should take this opportunity to tell that to local authorities, especially in relation to students, although there are other categories to which we may refer in other clauses and amendments. The Government are getting into an absurd position and they should recognise that.

Mr. John Bowis (Battersea)

I do not question the fact that in some parts of the country students are finding it difficult to make ends meet. Like the hon. Member for Dagenham (Mr. Gould), I also declare the reverse of a pecuniary interest because we are paying out to our student sons and daughters. Some students have been placed in difficulties by local authorities that have set a community charge that is so far beyond the reach of people that even the 20 per cent. required from students makes life difficult. Students in my borough of Wandsworth and in other, mostly Conservative, boroughs whose community charge was below target have no problem, because an element of the student grant meets 20 per cent. of the reasonable charge. The difficulties arise in Labour boroughs where authorities have rashly and ineffectually overspent.

I welcome new clause 33, which deals with the student gap. It takes up the issues that I raised with Ministers in Committee. They said that they would consider the problems that I drew to their attention and would produce a solution on Report. I think that the hon. Member for Dagenham could have been a little warmer in his support of the Government's proposal. As the hon. Gentleman said, the new clause deals with a comparatively small problem in terms of the number of students who are affected by it, but to them it is a real problem.

We know that until the end of December the family of the school leaver is still eligible for child benefit. There would, therefore, be exemption until then. However, after the end of September there is no longer that eligibility. It would be nonsensical if a young person who was waiting to go to college was required to pay. It is surely to be welcomed that students will not find themselves in that position. I use this opportunity to say that local education authorities throughout the country have, in the context of the debate, reached only the end of October. All too often, student grant decisions are being taken at such a slow pace that even at that stage a student's place in higher education may not have been confirmed. There is a message to local education authorities to be quick about getting student grants to students.

That must be in addition to the helpful remedy that my hon. Friend the Minister of State has adopted to eradicate the anomaly that was built into the system.

Mr. David Bellotti (Eastbourne)

The proposed changes are welcome. They will offer a little help in moving towards meeting what can be described only as a considerable task.

Students have had a hard time in recent years. New clause 17, which would abolish the 20 per cent. requirement, receives our warm support. It would provide enormous help. Surely the Government could accept it on the ground of cost. The Audit Commission and the Society of Local Authority Chief Executives have told the Government that the cost of collection of the 20 per cent. requirement is two and a half times the sum that is collected. If the Government wish to act in addition to their desire to help people, there is the argument that removal of the 20 per cent. obligation would be extremely cost effective.

There are good reasons to help students, whose grants have decreased in value in real terms. The pressure on parental contributions is making life extremely difficult during the recession. This is at a time when the Government are trying to encourage more young people to go into education. The requirement that we are discussing is running counter to other Government policies that are designed to help young people to move into further education. The Government are well aware of the few in the 16 to 19-year-old range who are in education in this country compared with the numbers in other European countries and in other countries throughout the world. That comparison relates to both further education and training.

We welcome the improvements that are to be made, but there is much more that could be done. Students are always willing to make a contribution if they have sufficient money to do so. At present, they just do not have enough money. One of the reasons why they receive moneys late through local education authorities—I take up the comments of the hon. Member for Battersea (Mr. Bowis)—is that LEAs do not have staff available to them to process the many applications that are made in July and August because of the Government's power to cap local authorities. Even in Conservative-controlled authorities that have always been held up as being cost effective, and certainly not profligate, it is difficult to bring in extra staff for two months of the year to process grant applications. There are many more applications than there were, because there are, in many instances, no real jobs for young people. As a result, they are being forced into education, but, at the same time, they are not receiving the grants that they deserve.

By supporting new clause 17, we would be supporting also several parts of the Government's policy. I hope that the Government will find it possible at this stage to make concessions and to help the students.

Mr. William McKelvey (Kilmarnock and Loudoun)

I wish to make a plea on behalf of Scottish students who, after all, had the poll tax imposed on them one year before it came south of the border. There are bound to be many more students in Scotland than elsewhere who will be pursued for arrears, and that point has been made adequately. It is ludicrous to pursue people for their debts when the cost of collection is two and half times the amount of the debts. Given the poverty in which those students find themselves, will the Minister consider having an amnesty for those students? The 20 per cent. payment will be seen by people, particularly students in Scotland, as a sign of the Secretary of State pursuing political dogma over economic sense.

Mr. Portillo

The hon. Member for Dagenham (Mr. Gould) got off to a pretty poor start when he talked about the Government coming forward with hundreds of amendments. We have tabled one new clause, which covers ground not covered by amendments in Committee, and five sets of amendments, all of them arising from the Committee proceedings. The hon. Gentleman is really expressing his profound disappointment that the Bill was so well drafted that it was not necessary to have rafts of amendments. So flimsy was the Labour party's attack on our proposals in Committee that we did not discover any chinks or openings in our policies. The spirit of Committee means that, when one finds measures that can be improved, one proposes amendments, but the Labour party did not unearth aspects of which we were unaware. The Committee gave us two or three matters to think about, and we are happy to introduce measures to deal with them.

It was clearly anomalous that students should leave school expecting to receive an 80 per cent. discount on their personal community charge when they become students in higher education but in the brief intervening period be subject to a full community charge, less any income support to which they are entitled. It is right that we should end that anomaly.

I am surprised that the hon. Member for Dagenham, who has a student daughter, is keen to take students back into the benefits system. Our taking students out of the benefit system is a major step forward. To have available to people who have withdrawn voluntarily from the labour market to pursue their studies the benefits which have been provided by Parliament to those without resources or income because of circumstances beyond their control is to give entirely the wrong message to students. The fact that we have amended income support and housing benefit to take students out of that benefit system has been a great step forward.

Mr. Gould

The Minister has clearly demonstrated why he proved so impervious to the powerful arguments which we put to him on so many issues in Committee—he is totally out of touch with the real world.

Mr. Portillo

Many parents believe that it would be, and was, wrong to have their student sons and daughters brought into the benefit system. That system was not intended for students. The fact that students are not provided for in that way is a great improvement.

Mr. John Battle (Leeds, West)

Surely the Minister accepts that the student grant was geared to take students through the long summer vacation, when they got no money. The Government removed their access to benefit, leaving them with a 16-week period during the summer without benefit. How is that gap bridged?

Mr. Portillo

The financing of students should be by a combination of grant, loan and moneys which they may be able to earn and not by bringing them into income support or housing benefit, which would be absolutely wrong.

The hon. Member for Dagenham made a point in which he was erroneously joined by the hon. Members for Kilmarnock and Loudoun (Mr. McKelvey) and for Eastbourne (Mr. Bellotti). He quoted the Audit Commission's figure which purports to show that collecting from students and the other 20 per cent. payers costs more than is collected from them. As I explained in Committee, that is a wholly erroneous figure. The £6 that the commission quoted purports to be the difference between what is made available through income support to those who pay 20 per cent. and what they were paying back in addition in community charge. That is a completely false comparison. What matters is that, as the Government have made moneys available to those on income support so that they can pay their 20 per cent. contribution to the community charge, those moneys should be collected. The amount at stake is £440 million and the average cost of collection now stands at £12.50. If the Opposition want to make a comparison, the fact is that the average 20 per cent. payment is about £50 and the average cost of collection is about £1250, so £37.50 stands to be collected over and above the collection fee.

Mr. Bellotti


4 pm

Mr. Portillo

The comparison quoted by the hon. Member for Eastbourne (Mr. Bellotti) and others is false, because, taking account of the fact that the Government are paying large sums in benefit to help people to make the 20 per cent. payments, it implies that that would have to be withdrawn. That would involve a heavy cost which the Government are not prepared to undertake. I think that the British public also believe firmly that, as money has been voted from taxpayers to income support recipients so that they can meet their 20 per cent. contribution, that money should be used for the purpose for which it was intended, especially since the headline figure of the community charge was reduced by £140. That means that the average now being made available as an addition to income support more than covers the average 20 per cent. being sought.

I shall quote some figures which show that the additions now stand at £1.31 a week for single people and £2.62 a week for couples, but as the estimated net average community charge level for Great Britain this year is £2.10, that would imply that the average 20 per cent. contribution was 80p a week for single people and £1.60 a week for a couple. Therefore, the amounts that we are providing in income support are much higher than the average that those people are being asked to pay.

Mr. Bellotti

The figures that the Minister has just given and the ones that he gave in Committee are not in dispute. However, does he know of any other tax under which the Government would put money into a system and give it to people while expecting to get it back, then not get it back and pay extra money in order not to get it back? That is the situation in this case. Have the Government any similar ideas for such taxation schemes, because if one took that scenario further, the country would be bankrupt in a very short time?

Mr. Portillo

I am sure that the hon. Gentleman does not intend to give any encouragement to the people who are not paying, but there is no question of an amnesty, as suggested by the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey). Moneys have been made available to people on benefit in order that they may pay their contribution to the community charge and we have every right—as do the taxpayers—to expect that those moneys are paid to local authorities for the purpose for which they were intended. Therefore, there will be no amnesty and local authorities will continue to enforce the payment of the 20 per cent. contributions.

Mr. Douglas


Mr. Portillo

I shall give way to the hon. Gentleman, but I was about to answer the point that he made. He wanted to know what was the definition of a student. New clause 33 and the two amendments would close the student gap, so we are talking about 18-year-olds who are at school and whose parents receive child benefit for them and 18 and 19-year-olds, whose parents do not receive child benefit, who are on a qualifying course. Such a course could be described as further education as opposed to higher education. The regulations state that the person must be on a relevant course and that the relevant hours of that course must exceed 12 hours in a week. A relevant course is one that lasts for more than three months, is not higher education, not a correspondence course and must usually be followed during the day, not at night school. We are trying to ensure that those who are at school or at college—doing A-levels, for example—and who then cease to be in that position but who are going on to higher education do not have to pay community charge in the short gap between leaving one part of their education and moving to the other.

Despite the Opposition's rather testy and ungenerous reception, I am sure that the provision will be welcome. I endorse what my hon. Friend the Member for Battersea (Mr. Bowis) said. It will be of great help to all if local education authorities are able to make quick determinations. I commend the new clause and the associated amendments to the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.