§ The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt)
I beg to move,
That the draft Council Tax Benefit (General) Regulations 1992, which were laid before this House on 18th June, be approved.
Madam Speaker—I beg your pardon, Mr. Deputy Speaker. That just goes to show what having a hard day can do.
These regulations, which I commend to the House, introduce a comprehensive system to help people on low incomes meet their council tax liability. The scheme is comprehensive in two senses. First, the new benefit will provide rebates of up to 100 per cent. of council tax liability. I am sure that the House will welcome this and the fact that under the council tax there will be no minimum contribution. Further, as my right hon. Friend the former Secretary of State for Social Security announced last November, the additional amounts included in the income-related benefits to help towards the 20 per cent. minimum contribution towards the community charge will not be clawed back on the introduction of the new tax. That will be very good news for about 8 million people and it is evidence of the Government's commitment to protect, and indeed improve, the position of those on the lowest incomes. By April next year, income-related benefits will be nearly £700 million more than would have been required to compensate for inflation since 1989.
The benefit scheme will be comprehensive in another sense. The regulations have been designed to mirror the liability and discount arrangements of the council tax itself. They will therefore ensure that rebates reflect precisely changes in liability to the new tax. The council tax benefit scheme will be operated by billing and levying authorities, and benefit will usually be awarded by rebating the liable person's council tax bill. We expect that the new scheme will help around 5 million people.
The regulations provide for two distinct types of benefit. First. main council tax benefit will help liable persons on low incomes to pay the council tax. Secondly, the alternative benefit, or second adult rebates, will provide help to a liable person where others living in his home on a non-commercial basis are on a low income.
Before I go through the regulations in greater detail, I should explain that the Government's objective has been to maintain alignment with the other income-related benefits wherever practicable. The benefit scheme therefore builds on the reformed system of income-related benefits which the Government introduced in 1988. In particular, it retains the same procedures for assessing capital, net weekly income and applicable amounts, and for determining claims and reviews.
There is general agreement that the aligned rules have several advantages. They make it easier to understand and to claim benefit. They are also helpful to local authorities which administer housing benefit and will administer council tax benefit, since they ensure that changes to the rebate system can be kept to the absolute minimum. Main council tax benefit therefore follows closely the structure of the existing community charge and housing benefit schemes, and the rate of benefit will be calculated in a similar way.
780 First, the capital resources of those claiming will be considered. We believe that, if people have access to significant amounts of capital, they should be expected to use some of it reasonably in meeting their necessary expenses before claiming income-related benefits. In line with the current arrangements under community charge benefit and housing benefit, the upper capital limit will be £16,000 and the first £3,000 of a person's capital will be disregarded completely.
Next, the net weekly income will be calculated. The assessment of income under council tax benefit will follow the normal rules in income-related benefits, and will include tariff income on any capital between £3,000 and £16,000.
I recognise that many hon. Members of all parties are concerned abut the tariff income rule which ensures that the income-related benefits take capital into account. It may be helpful if I say something about it, as I receive and sign many letters about it. The system was devised only after a comprehensive consultation exercise before the reformed system of social security was introduced in 1988. The system has several advantages. It ensures that help is focused on those who need it most while not denying benefit to those with modest amounts of capital.
The arrangements are more straightforward operationally and avoid the difficulties that can arise where actual income from capital is taken into account. They include, for example, the need to assess interest, which is often paid twice-yearly, on a weekly basis. Also, some might maximise their benefit unfairly by placing their savings in an account which pays no interest. Tariff income therefore does not imply any particular rate of interest but is merely a way of tapering off benefit to take account of higher levels of savings. Having considered the matter seriously since I have been in this post, I believe that the system we have is the best that can be devised.
A person's personal circumstances will be taken into account, using the same applicable amounts, made up of personal allowances and premiums, as are now used in housing benefit and community charge benefit. Main council tax benefit will again follow housing benefit in applying non-dependant deductions from maximum benefit. The Government believe that it is reasonable to assume that non-dependants sharing a household on a non-commercial basis with someone in receipt of benefit should make some contribution to the council tax. The benefit scheme therefore assumes that contributions are made and provides that these deductions will be nothing for those in receipt of income support, £1 a week for those not in full-time work or with an income less than prescribed amount, and just £2 a week for others. The deductions are relatively modest; the £2 deduction will be broadly equivalent to 25 per cent. of the average weekly council tax bill.
In calculating non-dependant deductions, any income from disability living allowance and attendance allowance will be completely disregarded, and I repeat that no non-dependant deductions will be made in respect of non-dependants who are in receipt of income support. Those with income at or below income support levels will be able to get help with up to 100 per cent. of their council tax bill, and for those with higher incomes, benefit will be withdrawn on the basis of a 20 per cent. taper.
The decision to have a 20 per cent. taper for council tax benefit strikes the right balance between ensuring that those with incomes just above income support levels 781 receive substantial help, while those with higher incomes receive slightly less. That is consistent with the Government's policy of directing benefit help to those people on the lowest incomes.
I now turn to an important innovation in the council tax benefit scheme—the alternative maximum council tax benefit or second adult rebates. As hon. Members will be aware, the council tax includes a system of discounts which help people living alone—for example, widowed mothers with children. The system will also help certain other groups, such as those who are severely mentally impaired, who were previously exempt from the community charge. The alternative maximum council tax benefit will ensure that persons who would otherwise have qualified for a discount will not be unduly penalised by the presence in their household of a person on low income.
A maximum 25 per cent. rebate will be awarded in respect of a second adult or second adults on income support. Lower levels of rebate will apply in respect of second adults with incomes above prescribed levels.
I will offer a brief example for clarification. Let us take the case of a liable person who has been living alone, but is then joined in her household by a person in receipt of income support who will be living there on a non-commercial basis. Until the arrival of this second person, the liable person would have qualified for a 25 per cent. personal discount. However, the arrival of the second adult in the household will have the effect of increasing council tax liability from 75 per cent. to 100 per cent. Given that the new arrival is on income support, he cannot be expected to contribute to the liable person's council tax bill. Therefore, a second adult rebate may be awarded to compensate for the increase in the bill. In our example, the second adult, being on income support, will attract the maximum second adult rebate of 25 per cent., thus restoring the position to what it was before the arrival.
I now turn to the regulations themselves. In explaining them to the House, I do not intend to impose on right hon. and hon. Members a blow-by-blow account of each and every paragraph of the regulations, although I know that that is a disappointment to those present. For the purpose of brevity, the regulations may be viewed as falling into two sections. The first section included parts I and V, which set out the general rules governing the treatment of income and capital under the council tax benefit scheme. Those parts also detail the rules applying to specific groups of people, such as self-employed earners and students. I should also include here parts VII and XII of the regulations, which set out the general provisions for implementing the scheme, including the rules on determining claims to benefit. All regulations closely follow the provisions currently applying to the housing benefit and community charge benefit schemes.
The second broad section comprises part VI of the regulations, which covers those aspects which provide specifically for the particular structure of the council tax system. It is in part VI that we find for example, as the hon. Member for Nottingham, North (Mr. Allen) knows well, regulation 51, which provides for benefit to be awarded up to 100 per cent. of council tax liability, and the regulations that provide for non-dependant deductions. Also in part VI are the regulations that introduce the alternative maximum council tax benefit or second adult rebate, with 782 regulation 54 and schedule 2 setting out the rules which ensure that a liable person who shares his accommodation with people on low incomes can receive help towards his council tax bill.
In commending the regulations to the House, I should like to make it clear that they were subject to formal consultations with the local authority associations. During our consultations, many helpful comments and suggestions were made by the associations, for which the Government are extremely grateful, and a number of those are reflected in the final regulations before the House. For example, amendments on the processing of claims to benefit and the treatment of students during the long summer vacation were suggested by the associations and have been included in the regulations.
I stress that we do not underestimate the need to ensure that those currently receiving community charge benefit move readily from it to council tax benefit, or the need to help local authorities in their task of implementing the new scheme. To that end, we will introduce a number of special arrangements to facilitate the introduction of the scheme. They will be prescribed in the Council Tax Benefit (Transitional) Order 1992, which we intend should be made and laid before the House as soon as the benefit regulations are approved. The arrangements have already been discussed with local authority associations and have met with their broad approval. The provisions will allow for important easements during the transition to council tax.
An important feature of the transitional order is that it will protect the position of people who, although liable on 1 April 1993, do not immediately claim council tax benefit. That will be achieved by providing that claims that are made within 56 days of 1 April or within 56 days of the person receiving his first council tax bill will be treated as if they had been made on 1 April.
The transitional arrangements will also enable local authorities to waive claims for council tax benefit from people already in receipt of housing benefit or community charge benefit. That will remove the necessity for people to submit new claims for the new benefit and will substantially reduce work loads for authorities during the changeover.
I am sure that the House will welcome the regulations as offering a comprehensive system of support to those who may face difficulties in discharging their council tax liability. The regulations will offer particular help to those on income support who will gain not only from the introduction of the maximum 100 per cent. benefit, but from our decision not to claw back the amount previously included in income support rates to meet the minimum contribution to the community charge.
Help will also be extended to those who, although not on low income themselves, share their households with others of limited means. I am also certain that, by aligning the new benefit scheme as far as possible with the existing income-related benefit administered by local authorities, the implementation of the council tax will be eased. On that basis, I commend the regulations to the House.
§ 8.4 pm
§ Mr. Graham Allen (Nottingham, North)
I am pleased to appear for the first time in the House with the Under-Secretary of State for Social Security. The previous occasion on which I appeared with him was at Wembley 783 when we were raising money for charity in a football game. On that occasion, as the Minister broke through with the ball, I emerged from the goal and, diving bravely at his feet, managed to save the honour of my team. I hope that that is the last time I shall be at the Minister's feet, but who knows with talent such as his?
§ Mr. Allen
We are now considering the benefit side of son of poll tax—the council tax—which was introduced to save the Government's bacon after the demise of the former right hon. Member for Finchley. Should I say right hon. Lady? I must get my terms right. I do not know whether I should change the term I use, because I believe that the right hon. Lady is in the other place from today—[HON. MEMBERS: "The noble Lady."] The noble Lady. However she is now titled, it is true to say that she was well and truly trussed up and cooked by the present Prime Minister and his colleagues. One thing that he did to resurrect the hopes of the Conservative party was to do away with—or attempt to do away with as well as he could—the poll tax. The council tax has taken its place and in many ways the regulations are the attempt to mitigate the worse effects of the council tax on those on low incomes.
What I find most objectionable is that the provisions are brought before the House in this form. My understanding is that when the Local Government Finance Bill was in Committee there was little discussion about the benefits side. That may have been due to some problems in Committee or to the farcical nature of the Committee stage to which we all adhere. However. there was no excuse for not having serious consideration of what are often technical matters, but nevertheless matters that affect millions of people, as the Minister pointed out.
There were failings in Committee and it is also a failing that the matter has not been reported to the Social Security Advisory Committee. I am well aware of the technical caveat that six months must elapse after the passage of the legislation before a matter can be referred to the committee, but I should have thought that on this occasion, if no other, a series of regulations of such complexity and importance would have benefited from the committee's expert eye.
I readily concede to the Minister that local authority associations have been involved and that other bodies. have made representations. Hon. Members have also made representations. However, not being able to go to the Social Security Advisory Committee underlines the fact that the way in which governmental processes work—especially, in my experience, in this area—is not a great credit to our democracy. The regulations are one item before the House for a debate of one and a half hours, although they are jam-packed with stuff—no doubt excellent stuff. Our democracy is not served by items of such width and importance being put to the House for a one-and-a-half-hour debate.
We need to get on with the reality, so we need to make a few points on the regulations because of their effect from 1 April 1993 on people on low incomes. I was immediately struck by the complicated nature of the council tax benefit system. No doubt, part of the reason for its complexity is that it is trying to be a poll tax and a property tax at the same time. However, there is evidence of additional and unnecessary complications in the regulations. In that regard, local authorities will have to send out net bills that 784 are calculated in advance. That will involve extensive procedures, registration—the use of registers, or whatever we want to call them—canvassing households and assessments. There will effectively be a record of everyone in a household and possibly details of their incomes as well.
After many years of sloganising about simplifying the social security system, the Government have had an opportunity to act with the regulations, but they missed that chance. The poll tax benefit system is already so cumbersome and detailed that up to 20 per cent. of assessments may be inaccurate. Some 20 per cent. of claims may result in over-payment or under-payment. We should improve on that record. I hope that the Minister, in his new capacity, will keep an eye on that. I hope that, through internal monitoring in his Department, he will try to ensure that that failure rate improves. That may require not just his eagle eye but resources directed to the right places in local authorities.
The Opposition welcome the 100 per cent. rebates. However, the rebates raise several questions. It is possible that councils will continue not to be reimbursed fully when they pay the rebates. I understand that the current level is about 97 per cent., although no doubt eminent local government practitioners will correct that figure if I am wrong.
It would be useful if the Minister were at some point to clarify whether the 97 per cent. reimbursement from Government to councils through the council tax will be maintained. Some of my more cynical colleagues are suspicious that that 97 per cent. figure will be reduced, particularly when expenditure pressure is brought to bear on the Department of Social Security. No doubt the Secretary of State will vigorously resist that pressure.
With regard to the rebates, we must also consider the element to assist payment of the poll tax which is currently contained in income support. I understand that that element will be preserved and I welcome that. However, as I am perhaps unduly suspicious, the Minister might reassure us that the element in income support will continue to be paid in future and that it will not be frozen as a way of recouping money to the Exchequer. I hope that it will not be reduced in the next uprating or in any uprating in future. [Interruption.] I am pleased that the Minister agrees that that is unlikely to happen. Even though I have great faith in him, I hope that he will carry that message to those people who are even more eminent than he is.
The possible cost saving if that element is removed is £680 million. Even if the Minister stands very firm, he and his colleagues may find that sum far too tempting a prospect and they may try to reduce the expenditure that is devoted to that scheme at the moment. It sounds like a large global scheme, but it breaks down to £1.40 for a single person on income support and £2.80 for a couple. That may not sound very much in the House, but for people on income support it is often the difference between having a square meal and not having one.
As a result of experience and practice over the years, the Minister may wish to consider whether there should be changes to the regulations in respect of the taper. He is aware that, as income increases, council tax benefit will be withdrawn at 20p in the pound, as opposed to 15p in the pound under the poll tax benefit. That would account for a saving of £60 million. I intend to show how that relatively small amount could be reallocated to the taper 785 so that the taper is more generous and people are not hit so hard as they try to get back to work and their marginal rates of taxation are kept as low as possible.
Withdrawal rates are a major contribution to the poverty trap. They combine with extra taxation and national insurance to create effective marginal tax rates of some 97 per cent. I hope that no hon. Member believes that that is acceptable.
Some people will receive less in council tax benefits than they have received under poll tax benefits or rate rebates. Many of those people are not on the absolute minimum levels of income. They may have small amounts of income from occupational pension funds or they may be in very low-paid work. I hope that the Government will consider those people over the next few years as they re-examine the way in which the scheme is working, with an eye to looking once again at the taper. That might be extremely important, not least to help people in hardship and difficult times, but also with the aim, which I hope all hon. Members share, of getting people back to work without penalising them unduly as their incomes increase.
Perhaps the most serious concern for the Opposition is the single person discount. The discount does not seem to fit easily into the structure of benefits. Single people will qualify for a 25 per cent. discount on bills. As the Minister explained, the second adult in a home will, if on low income, also entitle the liable person to a 25 per cent. rebate.
That benefit has all the makings of a real administrative nightmare. The liable person will have to provide highly detailed information so that a decision can be taken between a personal rebate and one for the second adult. We must consider whether everyone in that situation will be equipped to provide the details. Some very confused forms could be returned to local council offices by people who are not literate or who do not understand how the system works.
A liable person will have to ask detailed questions about the personal income of the second adult. The second adult may be unwilling to provide that information and may even refuse to give it. Administrative tinkering might produce some benefits, not least for the individual, but also for the Department and, above all, for councils which may need to implement the policies.
The council tax benefit in that area is user-hostile. It may also lead to serious problems with take-up. Individuals may feel that the whole process is just too much for them. The form-filling exercise and the details requested about their personal circumstances and those of second adults may be too much to go through. Heaven only knows what the form looks like. I do not know whether there are draft forms available, but I hope that the consultations about that form will be as wide as those held for the disability living and working allowance form. I am sure that the form would benefit from some filleting so that the required information is given and ascertaining that information is made as easy as possible. In that way, the form could be processed easily.
The Minister could also do the House and the public a great service by letting us know what publicity and advice will be available when the council tax benefit scheme is to be implemented. I hope that he will make a few remarks about that in his reply.
786 It is equally important that the individuals who have to fill out the forms, the people who process them at council level and people in the Department are all properly equipped so that the difficulties which are bound to arise can be handled speedily and sensitively.
Expensive revisions will be necessary whenever the income of a liable person or the people living with that person changes. That is another administrative problem. The scope for re-billing and recalculating rebates will be immense. The leeway for under-payment and overpayment, to which I referred in the context of the poll tax, will be massive. The consequent hardship for those on benefit could be great. I hope that the Government will examine the matter carefully.
The proposed scheme is in danger of drowning in a morass of detail, not least that of the daily liability scheme under which it operates. I hope that the Government will consider carefully how the scheme moves forward. I am leaving aside the huge increase in the workload which local authorities will have to undertake. That has been the subject of letters from the Association of Metropolitan Authorities and the Association of London Authorities which the Minister will undoubtedly have seen.
Local authority council tax benefit services could be forced to work out the best deal for each and every case. Cases may not slot neatly into the computerised programs. That would lead to incredible amounts of additional work which would need to be funded one way or another by the local authority. That is a matter of great anxiety. In many ways, the additional workload is avoidable. The 25 per cent. single person discount is a throwback to the poll tax. Unlike rate rebates, it is not related to ability to pay.
The very costs of the single person discount distort the rebate system and could lead to the rebate system being underfunded. If the discount system costs £780 million, that is £780 million which will not go to produce a more sensible and planned rebate system such as we should like to see.
Joint and several liability is greatly extended by the regulations. It simply means that someone living at home but not named on the council tax bill can be liable for arrears. Thus, any individual who appears in the hierarchy of liability can become liable for the whole council tax bill but may be in receipt of only part of a rebate. The position is far worse than under the poll tax, when liability extended only to the husband or wife. Of course, under the rates, only the householder was liable.
The Minister referred to non-dependant deductions. Under the council tax benefit system, it will be assumed that contributions to the council tax will be met by grown-up children, elderly relatives and others who are referred to as non-dependants. But we all know that in many cases that just does not happen. That assumption could discourage the sharing of accommodation. Again, the Minister may wish to consider talking to his colleagues at the Department of Health and elsewhere about how the system ties in with the Government's approach to community care. We may place an obstacle in the way of people who might otherwise share accommodation. Even for the sake of a few pounds, households could be broken up. That will place more stress and pressure on caring services in the community.
The regulations are an effort to reconcile a property-based on rates-based tax with a person-based poll tax as well as the two benefits systems that flow from them. They may be irreconcilable. One system may have to 787 come out on top. I hope that we do not remain the prisoner of the internal battle which led to the creation of the halfway house of the council tax. I welcome the Minister's tenure at the Department of Social Security. I hope that before he moves on to even higher things he will be able to move the system one step forward to where I want it to be—to a rebate system. i hope that the property-based system will come out on top. That will happen at some time. I hope that the Minister's legacy will be to have returned us to a sensible rates-based system.
§ Sir Paul Beresford (Croydon, Central)
I thank you, Mr. Deputy Speaker, for the opportunity to address the House briefly on a complicated but, despite what we have just heard, non-controversial set of regulations. When I was assembling my thoughts for this, my maiden speech, I chanced to hear that my predecessor had quietly asked at the back door for a copy of my utterances in Hansard. That gave me the opportunity to do the same for him and I collected a copy of his maiden speech. It was intriguing, because a large portion of his opening remarks were spent on congratulating our current Madam Speaker, who had recently assumed a different role. Chivalry, which is something that my accent usually finds difficult, suggests that I should not mention any times or dates—and chivalry was certainly a characteristic which stood out in John Moore.
John Moore had a successful career in the House and in Government. He was a Minister at the Department of Energy, at the Treasury, at the Department of Transport and at the Department of Health, where his own health let him down. As his name was mentioned on a recent list, he faces the prospect of making his maiden speech in another place fairly soon.
Having spent almost a year knocking on doors in the constituency of Croydon, Central, I have learnt two things: first, my predecessor was an excellent, well liked, popular, hard-working constituency Member of Parliament; secondly, Croydon, Central is a delightful area in which to live. Most people see Croydon as a mini-Manhattan. It has concrete tower blocks and concrete arcades but there is much more to it. Although Croydon recently failed in its bid to become a city, it has been a town of independent standing for about 1,000 years.
Croydon is much more than a mini-Manhattan. Croydon, Central has leafy glades and a delightful urban dormitory area which predominantly serves London. It finishes with a picturesque council estate largely set among farm land. As an early citizen of Croydon, John Ruskin, said:Things modest, humble and pure in peace under the low red roofs of Croydon".Croydon, Central is one of the four constituencies served by an excellent, well known and successful Conservative council. Since the demise of the Greater London council, it has been a unitary authority or, as some of the old hands of Croydon would say, a county borough. The council is one of relatively few London councils, all Conservative, which follow value for money.
The council is less paternalistic and traditional nowadays. It recognises the need for value for money and quality services. I raise that point because it has been long forgotten that the greatest benefit to the poorest among us is not so much the level of benefits available as the low level 788 of the full charge for quality services. Some of us have a little experience of that. One London Conservative council, which has almost the lowest level of external support per head of population in inner London, has produced some of the best-quality services, and for two years has had a zero poll tax. That really brings benefit to the poor.
Croydon, with its lower needs, has obviously received lower grant. Nevertheless, it has a long history of low rates and low community charge, but quality and value-formoney services. I anticipate the same from Croydon, under Conservative control, with the council tax.
A small proportion of Croydon's population will need help—hence the regulations, which are bewilderingly complex and wide-ranging. I am surprised that some of the papers have not noted that the regulations cover haemophilia, which has exercised minds in magazines recently, and also polygamous marriages.
We must congratulate the Government because they have taken the benefits of the two previous systems—the rates and the community charge—and have learnt from some of their mistakes. One simple example is that students are now exempt. I felt that it was non-productive and bureaucratic to charge them under the community charge system. It was pointless for local councils to chase them, but they had to, due to pressure from the auditors.
Congratulations are also in order for the "second adult" rebate. Because of the complexities, local authorities have commented on that aspect, but I hope and anticipate that that system will continue as it is important for family health and for community care.
I want further progress in two other areas. I should not have thought that it was beyond the wit of man, although it seems to be beyond the wit of most councils, to collect information for council tax benefits in such a way that council tax discount cases will automatically be flagged up. Because of my doubts about local authorities, I hope that the two Ministers—in the Department of Health and the Department of Social Security—could more easily organise that than the councils could perceive the possibilities. The benefit for the councils would be immense.
As a past practitioner, I know that local authorities should be using publicity. It is for their ultimate benefit in keeping down arrears, and for the ultimate benefit of the public whom they are supposed to be there to serve, and so often they fail.
Secondly, I hope that central Government will continue to press councils, perhaps using the citizens charter—if need be, even to force them—to produce better services for less cost. The result would be of more value to British citizens than books of regulations and millions of pounds of taxpayers' money spent on benefits.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I hope that you will excuse my discourtesy, Mr. Deputy Speaker. I was checking up on the details of the hon. Member for Croydon, Central (Sir P. Beresford), whose speech I have listened to with great interest. It suddenly dawned on me that it was a maiden speech, and I was anxious to check on his constituency details so that I could welcome him in the customary fashion.
§ Mr. Kirkwood
Yes. That is the second time in my parliamentary career that that has happened to me. The first time was in 1983 when, a week after my maiden speech, I followed the former Member for York, Mr. Conal Gregory. I received my first note from the Speaker on that occasion—which caused me great angst—advising me that he was about to call me after Mr. Gregory and asking me to do the niceties and to observe the usual decencies, which I did in some haste and confusion.
I find myself in exactly the same position again. Notwithstanding that, I welcome the hon. Member for Croydon, Central, to the House. I am not an expert on local government, but I know enough to know that he is a great expert in his field. I am sure that he will bring great wisdom and knowledge to the House and we look forward to his contributions, although I hope that they will receive more recognition than my efforts in these few rushed comments. I listened to his speech with interest.
Obviously, the House will welcome elements of the regulations, not least the fact that the Government have recognised that a 100 per cent. rebate on the council tax is necessary, to avoid some of the worst financial impact, especially that suffered by families in hardship under the community charge system, when there was a ceiling on the rebate. I welcome that change unreservedly. It marks considerable progress, it will deal with many of the administrative difficulties and take much of that hardship out of the council tax rebate system.
Secondly, the Government could have argued with some logic that, as other benefits were increased because people were expected to pay a 20 per cent. contribution towards the community charge, the increase should have been clawed back, but they have not done so. That amounts to a considerable sum, and as claimants no longer have to make a 20 per cent. contribution, the Government could argue that they needed it back
Those two changes are welcome. However, the hon. Member for Nottingham, North (Mr. Allen) said that we must balance that against the high level at which the taper has been set. Although, the Government should be congratulated on not clawing back the 20 per cent. benefit increase. the taper is steep. There has been discussion about that and I know that the Government have considered it carefully. I want an assurance from the Minister that he will monitor that carefully during the introduction of the regulations, to satisfy himself that it does not cause undue hardship as it would be a shame if that where to occur.
People on my side of the political argument feel that it is difficult to set any property-based tax equipped with a sensitive rebate scheme. By definition, a property-based tax cannot be equated with ability to pay. In passing, I cannot resist saying that if the system were based on a local income tax, which was then used as a basis for generating local government finance, a rebate system and the monumental complexities that it embraces, as shown in the regulations, would be rendered unnecessary. There are better ways to do this. Having said that, the regulations introduce some improvements. For instance, I welcome rationalisation of the assessment systems which will make it easier for the council tax to be administered.
I did not hear the Minister refer to the fact that the Social Security Advisory Committee would have been asked to consider the regulations. I wonder whether the 790 Committee raised any significant points about them. If so, perhaps the Minister will mention it in his winding-up speech.
I have several detailed questions. If the Minister cannot deal with them immediately, I should be pleased to receive written confirmation. There have been discussions, especially in the House of Lords, about the so-called "better-off" problem which could arise from the provisions under the regulations relating to joint and several liability. A bill could be levied against someone with joint and several liability who is not a spouse or part of another type of couple but one of several people living together. That person's name might not be on the bill, but he or she might qualify for a higher rebate than other partners in the household. I know that the Government have considered that problem, but it does not appear to have been resolved in the regulations. I know that it is a small technical point, but it would be helpful to learn the fruits of the Government's consideration.
Another better-off problem is that posed by the second-adult rebate. A complex problem could arise if a person was entitled to benefit under both routes, as set out in the regulations. I am not entirely sure whether that problem has been resolved. It would be helpful if the Minister could give me an answer.
On the wider political perspective, it would be helpful if the Minister could say what effect the regulations will have on those under 25—the regulations do not make that crystal clear. Greater consideration should be given to those in that age group. I know that this matter was discussed at length in the House of Lords and I wonder whether the Government have had any thoughts about how to mitigate the effects of the regulations on that age group, who will receive less council tax benefit than others. We should have a discussion about the social security provisions in general for that age group.
I am not clear how students can claim benefits under the regulations and I should be grateful for clarification about that.
I am interested in the interaction between the discount system and the rebate system. Council tax benefit will be awarded net of discounts. If that is true, there may be some difficulty for those on income support who receive 100 per cent. benefit, because discounts will make no difference to entitlement. Therefore, any discounts under the council tax will make no difference to them, but it will make a difference to those who administer the system. Problems and delays may occur if the discount is not automatically awarded before the bill is sent out. There will be problems if the local authority does not have some of the relevant information. Complications may occur for those on fluctuating incomes or whose circumstances change, which may affect their eligibility for discounts. Perhaps the Minister can tell us how the Government are thinking of rectifying those problems,
Although the new benefit system is welcomed, local government is concerned because it needs assistance and time to get the system up and running efficiently. What costs will be borne by the local authorities which supervise and implement the system? I understand that in some cases local authorities will have to use their own money to try to meet the costs of administering the benefit system that the regulations set up.
The Government will uprate the benefit and rebate levels each year. I am sure that the Minister's postbag, in common with those of many other hon. Members, is full 791 of letters expressing concern at the fact that water charges are now a tremendous problem for some people in some parts of the country. I know that the Government have to have regard to associated housing costs in the round when they consider the uprating provisions each year. Is there any way in which water charges could be added to the housing costs that the Government consider when deciding the upratings for the benefit and rebate systems? That could give some relief to those suffering significant increases in their water charges.
I welcome the regulations because they are a marked improvement on the original system. The Government have been generous in not seeking to claw back the 20 per cent. income support level increases. If the Minister is unable to answer the detailed points that I and other hon. Members have raised, we should be grateful for a written reply.
§ Mr. Burt
My first task is to welcome warmly the maiden speech by my hon. Friend the Member for Croydon, Central (Sir P. Beresford). He has come to the House after pursuing a distinguished career in local government, which we all recognise. I was fortunate to visit Croydon the other day in connection with some of the social services provided there, and I formed a very favourable opinion of it.
The House will be grateful to my hon. Friend for his remarks about his predecessor, who was once involved with the Department of Social Security. He was a likeable man, with many friends. We are all pleased at his ennoblement, and we look forward to hearing from him many times in another place. My hon. Friend referred to Croydon as the Manhattan of southern England. With hyperbole like that, he will go a long way, and fit in easily with Government publications and speeches about Government policy. Long may he continue to spread the news of the benefits of his borough, which he has represented so well in many different ways in the past, and which he will undoubtedly represent well in the House. We wish him well.
I thank the hon. Member for Nottingham, North (Mr. Allen) for his kind remarks at the beginning of his speech. I look forward to working opposite him for some time to come. It was kind of him to remind the House of a previous occasion when we, together with the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), were on the same football pitch at Wembley stadium, when the Members of Parliament representing the north of the country as a whole inflicted a considerable defeat on those representing the south. I can remember with tears in my eyes that moment when I slotted the ball home to score at Wembley. I do not think that I shall ever forget it.
There are times when tears come into my eyes when I look at Government policy, but that is the only connection between the two incidents. For the benefit of the Whips, I should add that that used to happen, but now I just shed tears of joy when I consider Government policy.
The hon. Member for Nottingham, North and the hon. Member for Roxburgh and Berwickshire raised a number of points, and I shall endeavour to cover most of them—if I cannot, I shall write to hon. Members. The hon. Member for Nottingham, North is right to say that we are not required to consult the Social Security Advisory Committee, which is the normal practice on regulations 792 made within a fixed period of royal assent to a Bill. The hon. Gentleman was also right to say that we have consulted extensively with local authorities. However, a copy of the draft regulations was sent to the SSAC for information at the same time as those regulations were sent to the local authority associations for comment. No comments have been received from the SSAC.
Questions have been asked about the administration of the council tax benefit. We hope that, by aligning the benefit as closely as we can with housing benefit and community charge benefit, we have done our best to meet some of the concerns that were fairly expressed by local authority associations. We are all aware of the complexities that the previous scheme caused. We lived through them, and the local authorities worked through them. We felt that it was helpful to try to do what we could on alignment. We feel that we have done the best we could, but we shall watch the administration of the benefit carefully.
The hon. Member for Nottingham, North asked about the 97 per cent. reimbursement—I should correct him: it is 95 per cent. reimbursement—that comes from the Government to local authorities. I understand that the remainder is found through the revenue support grant. The subsidy arrangements for the council tax benefit have yet to be finally determined, but I envisage that they will closely follow the current arrangements.
§ Mr. Burt
We monitor matters carefully from figures provided by local authorities. That monitoring will continue.
The hon. Member for Nottingham, North went on to refer to the clawback and the suggestion that we might at some stage take back the money that has been put into income support. The same point was made by the hon. Member for Roxburgh and Berwickshire. I assure them that I regard that money as having been put into income support for the future. That is Government policy, and it will now form an integral part of the benefit levels. We can all agree that that is good news.
Reference was made to the 20 per cent. taper. In all income-related benefits, the Government aim to target help to those who need it most. Under the council tax benefit, help will extend to people who have incomes above the income support level. It is widely agreed that it would be wrong for benefit to stop abruptly when income rises above income support levels. The taper means that, rather than facing the sudden cut-off of benefit, people with incomes above income support levels will see their benefit reduced on a sliding scale.
Those arrangements ensure that people with incomes just above income support levels can continue to receive substantial help with their council tax, while those on higher incomes receive proportionately less. That is consistent with Government policy of directing help to those on the lowest incomes who need it most.
It is of course true that the regulations set the council tax benefit taper at 20 per cent. compared with the 15 per cent. taper that currently applies under the community charge benefit. The taper is applied to income in excesss of 793 the customer's income support level. For example, excess income of £10 per week will reduce benefit by £2 per week. Hon. Members who have been concerned about that should remember that the higher taper must be considered not in isolation, but in the context of the other considerable changes to the benefit system that the Government have announced.
The first 100 per cent. of maximum rebate will benefit all customers, including those with incomes above income support levels. In addition, all who are on benefit will gain from the Government's decision not to claw back any of the amounts included in income support levels to help with the 20 per cent. contribution under the community charge. Those amounts, as the House will recall, were added previously.
Taken overall, benefit entitlement under the new tax will extend to claimants with broadly the same levels of income as those helped by community charge benefit. That is why I say that the taper should not be taken in isolation. It is obviously a cost on the extra money that we have put into the benefit system to protect people, and it is not always possible to even things out as well as we would like; but I am convinced that the overall complex of the taper and the other benefits that have been put in—100 per cent. rebates and no clawback—is a good deal for those looking for assistance from council tax benefit.
§ Mr. Allen
Without wishing to go over old ground, I remind the Minister that the amount put aside for the single person's discount scheme is £580 million. When the council tax benefit begins to settle—as no doubt it will in the next year or so—there will undoubtedly be internal reviews on how money can be saved and reallocated. I am simply putting on the record the possibility that, when a review can take place, the Minister should look on the taper as one of the first items for review. As I pointed out, from a 20p in the pound taper to a 15p one costs £60 million. Considering that the Leader of the House is sitting immediately beside him—recalling that the right hon. Gentleman was renowned for his ability to shuffle the pack and, using the same cards, come up with a slightly better deal for those in need—the Minister, bearing that lesson in mind, may be able to reallocate the money towards a more helpful taper for those on low incomes.
§ Mr. Burt
I hear what the hon. Gentleman says, but I can add little to what I said about the way in which extra support has been put into benefit. There are many places where a small amount comparatively would appear to do a great deal of good, but add those apparently small sums around the system as a whole and one discovers just how much is involved. The hon. Gentleman pointed out what £580 million put into the system meant in terms of pounds per week. Imagine sitting on the Treasury Bench having to make such decisions all the time, right through the benefit system. The hon. Gentleman should appreciate what a bonus it has been to have had significant amounts put into income support and to have kept them there, so helping those for whom we are all extremely concerned.
The hon. Members for Nottingham, North and for Roxbrough and Berwickshire referred to the double tax consideration and asked whether people might be better 794 off with the main council tax benefit or the alternative council tax benefit, the so-called "better buy" option. Which would be the best, they wondered.
Under the council tax benefit, a person cannot receive, at the same time, both the main benefit based on his own income and personal circumstances and the second adult rebate. Authorities must award whichever is the greater of the two amounts of benefit. The Government believe that the system of second adult rebates, which follows closely the arrangements for non-dependant deductions, will be relatively simple to operate.
The information that authorities will need to assess entitlement to either main benefit or second adult rebate will be collected on the benefit claim form. It will be the responsibility of the liable person to report changes in circumstances about second adult income. It will also be relatively easy to programme computers to compare the two amounts of benefit and award whichever is the greater.
The administrative cost of the better buy should not be exaggerated; nor should the number of cases. We estimate that a relatively small number, about 10,000 taxpayers in Great Britain, might be affected out of an estimated benefits caseload of five million. So the administrative implications of that aspect of the benefit system must be seen in that context.
It has been argued that there should be no non-dependant deductions in council tax benefit. Non-dependant deductions have been part of the benefit scheme for a long time. They reflect the assumption that adult non-dependants sharing a liable persons dwelling are contributing to the council tax. Similar rules apply to other income-related benefits, including housing benefit, and did apply in the rate rebate schemes. There are no deductions for non-dependants in the community charge benefit scheme, since the charge is a personal liability.
The level of non-dependant deductions in council tax benefit will I believe, be modest. It is reasonable to expect a contribution of £1 a week from non-dependants with incomes up to £100 a week, in current terms, and of £2 a week from non-dependants with higher incomes. The lower rate reduction of £1 a week will apply in respect of non-dependants who are not in full-time work. No non-dependant deductions are made in respect of people on income support or people such as full time students. No deduction will he made, for example, for pensioner non-dependants who are on income support, and a lower rate of deduction of £1 a week will apply to pensioner non-dependants not on income support. Seen in the round, it does not seem quite so unreasonable as has been suggested.
Claim forms will generally be a matter for local authorities, but we shall be producing a claim form which will be open for consultation.
My hon. Friend the Member for Croydon, Central made a good point about publicity. It is extremely important that local authorities work hard to get out the information about the proposals to ensure that the majority of people benefit. It is the wish of my Department and all concerned to ensure that the rebates are properly taken up and are used for the purpose that we want to achieve.
I am delighted to have had the opportunity to move forward these regulations. The matters that I have not been able to pick up will have been noted, and hon. Members can expect replies from me. These regulations provide a good system of rebate and benefit for those on 795 the lowest possible income, and below, who will have to deal with the new council tax. They have been thought through very carefully with local authority associations.
I am grateful for the helpful comments that have been made by hon. Members on both sides of the House, which see the regulations launched in as reasonable and fair-minded a way as possible. I am quite sure that those in local authorities up and down the land administering them will apply their usual determination and common sense to the work that they do on behalf of all of us, and I hope that the regulations will be the basis for a useful and successful scheme for the future.
§ Question put and agreed to.
That the draft Council Tax Benefit (General) Regulations 1992, which were laid before this House on 18th June, be approved.
|That Standing Order No. 130 (Select committees related to government departments) be amended:|
|In the Table:|
|by leaving out the words—|
|5||'3. Education, Science and Arts||Department of Education and Science; Office of Arts and Libraries||13||3'|
|and inserting the words—|
|'3. Education||Department for Education||11||3'|
|10||by leaving out the words—'5. Energy||Department of Energy||11||3'|
|by inserting the words—'. National Heritage||Department of National Heritage||11||3'|
|15||by inserting the words—, '.Science and Technology||Office of Science and Technology||11||3"|
|in the third and fourth columns of the entry relating to Scottish Affairs, by leaving out'13 5'and inserting'11 3'|
|20||by leaving out the words—'14. Treasury and Civil Service||Treasury, Office of the Minister for the Civil Service (but excluding the drafting of bills by the Parliamentary Counsel Office), Board of Inland Revenue, Board of Customs and Excise||11||3'|
|25||and inserting the words—|
|30||'. Treasury and Civil Service||Treasury, Office of Public Service and Science (but excluding the Office of Science and Technology and the drafting of bills by the Parliamentary Counsel Office), Board of Inland Revenue, Board of Customs and Excise||11||3'|
|35||In paragraph (3): by leaving out lines 14 to 17.|
§ The House will perhaps understand if I approach this speech with a certain sense of nostalgia after many years during which I have made speeches such as the one that has just been delivered. I have operated in various capacities over the years, and I suppose that I am one of the relatively few people in the House who, even now, feel easy with terms like "non-dependant deductions" and