Local Government Bill

HL Deb 16 June 2003 vol 649 cc179-222GC

(Fifth Day)

Monday, 16th June 2003.

The Committee met at ten minutes before

five of the clock.

[The Deputy Chairman of Committees (Lord Haskel) in the Chair.]

The Deputy Chairman of Committees (Lord Haskel)

Perhaps I should explain to the Committee that there is no need to touch the microphones. The engineer will do all of that. As we are not expecting any votes in the main Chamber, we will not need to know the regulations regarding that.

Clause 68 [Exemptions for agricultural buildings]:

Baroness Hanham moved Amendment No. 141: Page 33, line 39, at end insert— For paragraph 2(1)(a) (which defines agricultural land) there is substituted—"(a) land used only or mainly as arable, meadow or pasture ground,".

In moving Amendment No. 141, I shall speak briefly to Amendments Nos. 142 and 143.

I start with Amendment No. 141. At present, land used exclusively for agriculture is exempt from non-domestic rates. Agricultural land is defined as land used only as arable, meadow or pasture ground. There is a de minimis exemption permitting land to be used to a limited extent for other purposes and still to qualify for the exemption. The valuation officer takes that as being activities that do not last for more than one day at a time, without an intervening period of agricultural use. For example, one day's point-to-point with horses will not prevent the exemption from applying, although three days might.

That may have been satisfactory when a farmer was only a farmer and did not need to use his land for anything else. However, it does not reflect present realities. Few farmers can expect to make a living purely from the land. As the Government have recognised, farmers must diversify into other activities, if they are to survive. That was in the rural White Paper of 2002. It is unfortunate that many farmers are inhibited from diversifying by the rating system. At present, if a farmer chooses to do something on his land even occasionally with a view to raising extra income, he runs the risk that, by doing so, he will lose his exemption from rating and, so, the incentive to diversify.

We are not asking for farmers to be permitted to do anything and still qualify. The requirement will still be that land is used "only or mainly" for agriculture. We are asking that they might be allowed to do slightly more than the one day—at times—diversification, as at present.

Amendment No. 142 brings us to the matter of other common agricultural uses, including poultry farming, which are included in the definition of agriculture for the purposes of the exemption from non-domestic rating. Amendment No. 142 would, in the interests of consistency, bring game farming within the exemption. In accordance with the Government's insistence that farmers and landowners diversify from their traditional methods of earning money, it is increasingly common for them to move into game farming. However, game farming does not come within the definition of agriculture. There is no obvious reason for that: we assume that it is just a reflection of common agricultural practices, when the General Rate Act was introduced in 1967. If so, it is out of date.

Moreover, the Government increasingly treat game farming as if it were akin to conventional poultry farming. For example, the recent Diseases of Poultry (England) Order 2003 extended the definition of poultry in the Animal Health Act 1981 to most species of game bird. It is appropriate that both activities be treated the same for rating purposes.

The final amendment is Amendment No. 143. In addition to the exemption for agricultural land, there is an exemption for agricultural buildings used with that land. The amendment would apply the principle relating to agricultural land, as expressed in the first amendment, to agricultural buildings. Again, there is an exemption that permits a level of non-agricultural use, but that is not entirely satisfactory.

Paragraph 8(3) of Schedule 5 states that, 'when deciding whether a building is used "solely", no account is taken of any time during which it is used in another way, if that time does not amount to a substantial part of the time". That applies only to time; it does not apply to extent. For example, exemption would apply if a barn were occasionally given over entirely to use as a shop. It would not apply if a small area of that farm were used permanently as a shop. It is hard to see the justification for the distinction. I beg to move.

Earl Peel

I apologise for intervening at such a late stage in Committee, but, as somebody with rural interests, I thought that it might be appropriate for me to say a few words in support of my noble friend's amendments.

As my noble friend said, in general terms it is clear that the traditional role of the farmer is changing rapidly. All the encouragement from government and from the various agencies is designed to help farmers to diversify as much as possible to overcome the great difficulties that they face if they are engaged in traditional agricultural systems. Any help that we can give to farmers in that direction will, I am sure, be supported by the Minister. Amendments Nos. 141 and 143 would deal specifically with those points.

My noble friend raised another point—the other side of the argument, which is equally important. If a farmer chooses to do something on his land—or, presumably, in his buildings, which are de-rated—even occasionally, he runs the risk of jeopardising the de-rating concessions that he has. We must consider both issues carefully, and I support the principle behind the amendments.

I shall deal more specifically with Amendment No. 142, which is concerned with what I regard as the anomaly that game farmers are subjected to rates when those producing poultry are not. Most observers generally believe that, when the Local Government Act was passed in 1986, there was no intention to discriminate against game farmers. Poultry farming was included in the definition of agriculture, but game farming was not specifically excluded. It was a genuine mistake. The game farmers are losing out simply by default, rather than by any prescribed or determined intention of the government of the time.

The two activities are broadly comparable. There are those who produce game in the spring and summer, and poultry—turkeys, for example—for the winter. They pay rates on one activity but not on the other. That is something of an anomaly. Interestingly enough. fish farmers are exempt. I am sure that the Minister will be aware of that. That is another example showing why game farmers have been treated unfairly.

There is another point that, as, I am sure, the Committee will appreciate, creates a great deal of ill-feeling. French game farmers are exempt. They export a lot of game to this country, and our game farmers reckon that they are being badly treated on that front, as the Minister will, no doubt, appreciate. That situation seriously disadvantages our game farmers, when the Government are striving wholeheartedly to get an even playing field in trade with European countries.

My noble friend mentioned another important point. Game farmers, as well as poultry farmers, are subjected to all the new regulations on nitrate vulnerable zones, control of diseases, feedstuffs and animal by-products and waste. Game farmers are now covered by all the directives in the same way as poultry farmers. Some equality is required in the rating system.

I hope that the Minister can accept that the arguments for not providing rate relief for game farmers are spurious. If justice is to be upheld, the Minister will accept my noble friend's amendments.

5 p.m.

Baroness Maddock

I support the sentiments behind the amendments and concur with much of what was said in support of them. I am a member of Sub-Committee D of the Select Committee on the European Union, which deals with agriculture. In recent months, I have become well acquainted with many of the issues facing farmers, particularly the way in which they are regulated. In trying to deal, in particular, with environmental legislation, we are considering the whole-farm approach. The amendments tackle part of that issue.

Flexibility is important for its own sake. If we are too rigid in saying what can be agricultural land and what cannot for the purposes of the Bill, that would not be helpful to developments in agriculture, particularly sustainability and reform of the common agricultural policy.

If the farm shop were only part of something, I would have a certain sympathy with Amendment No. 143. However, I have one question. Many butcher's shops and greengrocer's shops have disappeared from our town centres. I can see people asking, "Why is that farmer getting rate relief on his shop, when I am finding it so difficult to keep going in the town centre?". In my town, one of the local farmers has taken over the butcher's shop on one street. Perhaps that is the answer. I do not know whether the Government have considered that issue or whether those who tabled the amendment have any views on it. We hear about ordinary shopkeepers worrying about charities getting relief on rates, and I can see that there could be a little conflict there. Otherwise. I support the sentiments behind the amendments.

Lord Monro of Langholm

I also support the amendments. Noble Lords who attended the debate last Wednesday on the countryside will have realised how concerned Members were to encourage the rural economy and keep employment in the countryside. Bearing in mind the huge overall outlay of rateable values, this is a tiny aspect that could be very valuable to a few people dotted about the countryside who wish to rear game.

There are many jargon words in agriculture, and a lot of them were floating about last Wednesday. "Diversification" has been a common one for years, and everyone is trying to think up ways of using agricultural land and buildings to provide income and keep employment in the countryside. Sometimes, it does not work. My neighbour started making goat's milk cheese, but, as soon as he put in a little plant, it immediately became industrially rated. That seemed a bit harsh. It ended a good scheme before it really got started.

We have an opportunity to help people start rearing game birds in small units throughout the countryside and to help those that are already in being—they are very important—by giving them a concession on rates. After all, we accept set-aside—using fields for no purpose—which seems like a strange thing to a farmer. The departments of agriculture in England, Scotland and, I am sure, Wales are happy to leave fairly large strips of land on either side of hedges to give birds a chance to nest naturally. Here, we have an opportunity to put a small part of the average farm or estate to good use in rearing birds for country sports.

The noble Baroness, Lady Maddock, rightly used the word "flexible". I hope that we will be prepared to be flexible and give some people a little hope of a substantial return without any great loss of rates to the local authority. Given the Minister's conciliatory attitude at the end of the previous sitting, I am sure that he will continue the good work.

The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)

Like the noble Baroness, Lady Maddock, I am sympathetic to the spirit of most of the amendments, even though I have to resist them.

The noble Earl, Lord Peel, is quite right about the regulations that affect people these days, particularly in respect of meat hygiene. I have to say that when I am in my own car, I sometimes give a cheer—and not a silent cheer—when I drive past a butcher's shop in the country and see all the game and everything else hanging outside, and not stuck inside in the fridge. I think, "Ah, the environmental health officers haven't caught up with them yet". The point is that if the meat matures nicely—as it has done for 100 years—and is looked after properly, it will be perfectly safe. I am well aware that that is how the game works. On the other hand, we should not have a problem in respect of competition with French farmers.

I realised how ignorant I was when I looked at the rest of the definitions in the schedule to which Members of the Committee have referred. I thought that guinea fowl, pigeons and quails might be game, but they are classified as poultry. We are talking only about pheasant, partridge, grouse and black game—and about something that I am not sure how to pronounce, although I have no doubt that all the country people opposite will tell me how to do so. My noble friend and I have never eaten, let alone seen, one. It is spelt p-t-a-r-m-i-g-a-n. I presume that the "t" is silent. Well, someone knows what it is.

No one involved in game production for food will pay rates, so they should win hands down over French farmers. They do not have a problem—they will be rate-free. If they are supplying local shops and local people with game and that is the purpose of their production, they will not pay rates. However, we are discussing a slightly different issue.

The amendments would extend the rating exemption for agricultural land and buildings. However, the intention in Clause 68 is to amend the rating system to reflect modern farming practices and ensure that the exemption from rates is targeted in relation to the ancillary activities, such as food processing and packaging operations, where occupiers of related agricultural land control the company.

Under the provisions of the Local Government Finance Act 1988, agricultural land and building used for the production of food and the rearing of livestock for food are exempt from non-domestic rates. Agricultural land or buildings used for other purposes —for example, the rearing of animals intended to be used for leisure or sporting activities, farm shops or food storage —are not exempt and are liable for rates. I fully accept that the by-products of sport may be game for sale, but it is still a by-product. If the farm is a game farm and its production is for food purposes, farmers will not pay rates.

The decision as to whether a game farm should be rated rests with the local valuation officer, who has statutory responsibility for maintaining the rating list. I suspect that that varies throughout the country, however. I talked to someone yesterday who is well into retirement but who used to be a farm secretary—I will not say where, but at three large farms. The farms were basically arable, but one of them was involved in game production. The ex-secretary said that, because of the nature of the job, no rates were paid. I said, "So, there was no sport", and he said, "Well, there was quite a good income from shooting as well".

The situation depends on the local rating officer. If the overwhelming purpose of the production was the production of food, and sport was ancillary to it, as opposed to the other way round, any reasonable person would argue that they should be exempt from rates. However, that is a matter for the local valuation officer. There are appeal mechanisms, but I am not aware of any examples—at least, none has been drawn to my attention in which there has been a perverse decision.

Amendment No. 141 seeks to extend the rating exemption for agricultural land, and Amendment No. 142 seeks to extend the exemption for agricultural land to include the rearing of game birds. Amendment No. 143 broadens the provisions. For the reasons stated before, we cannot accept any extension to the agricultural exemption. Amendments Nos. 141 and 143 would potentially open up the rating exemption to activities not solely connected with farming. That would give those property occupiers an unfair competitive advantage over other businesses that could not seek exemption.

I think that that was the thrust behind what was said by the noble Baroness, Lady Maddock, although the idea of the farmer taking over the butcher's shop in the local town is in reverse. Getting more control down towards the end of the chain is the way in which producers on the continent have done things for years with co-operatives. I know that what I am going to say is very broad-brush, but basically our farmers have been very reluctant to get involved in genuine co-operatives so that they can control more of the supply chain. That is the only way in which they will ever take on the nasty reaction that some people see as the cause of supermarkets controlling too much of the chain from the other direction and, of course, taking too much of the profit. There is no question about that, whatever Select Committees might say. Supermarkets clean out the profits.

I am going back to my MAFF days now, and I should not do. I feel strongly about the subject because in some ways the farmers can help themselves in this country, but they have been naturally reluctant to talk to their neighbours and co-operate financially and economically in a way that French, Italian and German farmers do. Those farmers control more of the supply chain, and therefore more of the income and profit. In some ways. the farmers in this country are their own worst enemies. I know that they do not like being told that by a Brummie, but my view has not changed since I left MAFF. The problem is worrying.

I found out the difference between proper turkeys and mass-produced turkeys when I was in MAFF. I shall not go into that either, but there is a big difference. I have not eaten turkey since, by the way. When I saw how proper turkeys were produced, I would go only for proper turkeys. They are 10 times the price of supermarket turkeys and the scale of production is very small. That is a very seasonal problem, and people come up against regulations and rates for buildings that might be used for something else at another time of year, so I realise that there are difficulties.

I shall get on to my notes; I have nearly finished. The general thrust is that farmers can take action themselves and that, if they are involved in production for food, they do not have a problem. That may require a slight tweaking to the establishment and to business plans, so that it can be clear that food production is put first. The rearing of game birds can have a part to play for farmers wishing to diversify. We introduced a rate relief scheme on 15th August 2001, designed to help farmers to diversify into nonagricultural activities by partly offsetting their rate bills for an initial period of up to five years. The assistance given to farmers means that they are now able to diversify into a whole range of activities, some of which are in competition with existing business while others are in totally new markets.

Farmers wishing to diversify into small-scale game farms and hatcheries, for example, may be able to qualify for mandatory relief under the farm diversification scheme. The relief is available to new enterprises on farms and is aimed at small-scale enterprises. As such, it gives properties 50 per cent rate relief provided that the rateable value is £6,000 or less and that the premises were in agricultural use for at least 183 days in the year prior to 15th August 2001. Local authorities have the power to top that up to 100 per cent if they think that it is in theinterests of their council tax payers to do so. The relief is time limited and available until 14th August 2006, although there are provisions to extend that if necessary.

In the light of what I have said, I hope that the amendment will be withdrawn. I am certainly not saying that there is no problem but on the other hand we are talking about farmers involved with game birds and fish farms for the purpose of producing food. I did not do fishing when I was at MAFF, thank heavens—Elliot did it, bless him. However, no one would argue that fish farms are essentially a sport. They are genuinely food-production activities, as opposed to anything else.

5.15 p.m.

Earl Peel

I am no great expert on fish either, but fish farms produce for two purposes: directly to the market and to reservoirs and so on for sport fishing. With the greatest respect to the noble Lord, I think that he is wrong.

Lord Rooker

It depends. What is the prime purpose of a fish farm? It is certainly not fish production for stock in reservoirs. The economies of scale would not allow that. The prime purpose of fish farms in the main must be food production. I do not know whether catching fish from a fish farm will be classed as sport. But if the prime purpose of a farm is food production, which is what farming is about—this is diversification of food production as it involves game farming for non-game farmers—they can gain full rate relief. Diversification into sporting activities would not be covered by the exemptions. There is no rate relief for other sports activities, and we want as level a playing field as possible.

Although the amendments are seductive in that respect, I regret that they must be resisted. I would resist them even if I wanted to accept them, as they would greatly confuse the legislation. This is not the appropriate Bill to deal with the matter; other legislation would be required.

Baroness Hanham

I am enormously glad that I moved the three amendments. We have tempted the Minister away from his notes and into a lecture tour of various legislation. I could not possibly begin to answer all that he said. I shall have to read his response and take advice on its nuances to decide whether the matter needs to be returned to at a later stage. I enjoyed the Minister's response enormously.

Lord Rooker

I was going to tell all my abattoir stories, but I decided against it.

Baroness Hanham

Well, remind me to move another amendment the next time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 142 and 143 not moved.]

Clause 68 agreed to.

Clauses 69 and 70 agreed to.

Clause 71 [Local retention of rates]:

Baroness Hanham moved Amendment No. 144: Page 34, line 30, after "fit- insert "after consultation with all interested parties

The noble Baroness said

I do not want to pre-empt Amendment No. 145A, tabled by the Liberal Democrats, with which I happen to agree. The purpose of the amendments is similar: to ensure that the Government do something that they do not always do; that is, to consult with interested parties, notably local authorities, before prescribing central rules. It is right to expect the Government to do that and to put them under pressure to do so.

I ask the Minister to reflect positively on the matter and, at the very least, to set out in detail the consultation procedures he intends to follow, so the Committee can form a view of whether it is necessary to write into the Bill a requirement to consult. I beg to move.

Baroness Hamwee

Amendment No. 145A is tabled by the Liberal Democrats. I am tempted to say "abattoirs", as the stories about them would be more interesting than what we have before us. Local retention of rates is very important, and we support it. This convoluted scheme leaves one and a half or two tiers, not three. Again, we seem to have the concept of a reward in the clause.

I tabled the amendment before seeing the ODPM draft note—I am not sure of its technical name—on the clause. Paragraph 13 states: We intend to consult all interested parties on the details of this calculation". I am not convinced that that goes as far as the noble Baroness or I seek. It relates to detail rather than something more headline and in the nature of principle. The more reassurances we receive from the Government today, the better.

Lord Bassam of Brighton

The two amendments would have a similar effect. Essentially, both noble Baronesses wish to include in the Bill a requirement to consult. Obviously, we favour the principle of consultation—that much we have shared in the Committee. As Members of the Committee will know, we intend to consult on options for a local authority business growth incentives scheme this summer. But we see no need for statutory duties of the type proposed.

In response to Amendment No. 144, we do not think that it is appropriate to include a statutory duty to consult every time a rule is made or amended, however minor the change. Even if it were considered appropriate, it is not clear what is meant by the term "interested parties" in the case argued.

On Amendment No. 145A, it is not appropriate to specify a statutory duty to consult every time a minor rule about the relations between billing and precepting authorities is changed. Some of the changes will be very insignificant. If the amendments were honoured, it would mean very detailed consultation over minutiae.

The existing powers to make regulations under Section 99 of the 1988 Act, to which the amendments refer, do not require consultation. So the amendments would be inconsistent with what has developed as good, effective practice and would be very time-consuming. There is also a defect with Amendment No. 145A in that it would apply only to regulations for England, while Clause 71 covers Wales also.

We favour the principle of consultation. The issues will be dealt with in greater detail through regulations, but we do not think it right to proceed as the noble Baronesses wish. We will be very careful to consult the usual organisations, and I am sure that if we miss someone, they will tell us. We will take great care to listen to them.

Baroness Hamwee

Can the noble Lord help us? Paragraph 13 of the draft note states: We intend to consult all interested parties on the details of this calculation". That is fine so far as it goes. But it misses out what the noble Baroness and I seek—that is, consultation on the regulations. If the amendment is inconsistent with the 1988 Act, so much the worse for that Act. Let us get it right now.

The amendments relate to how to set about consultation. I accept the criticism of the deficiency in my amendment; that it does not extend to Wales. But the principle is still important. The issue of sharing between a billing authority and a precepting authority surely requires consultation before one even reaches the details of the calculation.

Lord Bassam of Brighton

Perhaps I can reassure the noble Baroness that we will consult on the underlying principles. As night follows day, it follows that we will consult. It makes good sense and good practice, so it would be foolish to do otherwise. We recognise that there are sensitivities.

Baroness Hamwee

Night may follow day, but the Government do not always consult, which is why I wish to place the issue on the record.

Baroness Hanham

The exchange between the noble Baroness and the Minister has probably exhausted the argument running throughout the Bill that, wherever there are regulations, there should be consultation or some means of ensuring that people's views are taken into account to a greater extent than they are here. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 145: Page 34, line 40, at end insert— (4E) Notwithstanding the provision of section 143 of the 1988 Act (orders and regulations), no rules may be made under subparagraph (4A) unless a draft of the regulations containing them has been laid before Parliament and approved by resolution of each House."

he noble Baroness said: This amendment is very topical. Its purpose is to raise the issue of whether the discretionary rule-making powers taken by the Government should not be subject to affirmative resolution and scrutiny by Parliament. Ministers constantly say that powers are existing, routine or, in the most dubious cases, only reserve. But the problem is that there is now some form on the subject. As I made clear in speaking to the previous amendment, the issue runs throughout the Bill. The Government are trying to exert the powers without the House having the opportunity to consider them closely.

Clause 71 extends the Government's powers and enables them to intervene with discretionary incentive schemes. It also excludes the City of London from such schemes. That may be for very good reasons, but I do not know what they are. The purpose of the amendment is to raise the question again of why the powers are being taken without draft regulations coming before the House. I beg to move.

Lord Rooker

At the risk of repetition, the Select Committee on Delegated Powers and Regulatory Reform has considered the delegated powers contained in the Bill and recommended changes. To the best of my knowledge, we are accepting most of the changes, if not all of them. My advice and that of the ODPM is that, by and large, we should accept the changes. However, this change was not proposed.

If the amendment were agreed, time would need to be set aside for debates in the House and in another place. That does not mean that the issue cannot be debated. Prayers can always be laid under the other procedures, but the affirmative resolution is not necessary for these detailed, technical regulations.

I rest my case on the fact that the Select Committee has looked at the issue and decided not to comment on that part of the Bill. I take it that no comment means that the Select Committee is not dissatisfied. As such, this Committee should be content with the Government's original proposal simply on the basis of the Select Committee's detailed scrutiny of the legislation.

Baroness Hanham

I thank the Minister for his reply. It does not surprise me. It has been a consistent theme throughout the Bill. By tabling the amendment, perhaps we have drawn attention to the number of opportunities in the Bill for the Secretary of State to take decisions by order without having an affirmative resolution attached. It is just another marker on the procedure. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 145A not moved.]

Baroness Hanham moved Amendment No. 146: Page 36, line 20, at end insert ", but does not include any regional assembly established pursuant to a referendum conducted under the Regional Assemblies (Preparations) Act 2003 (c. 10).

The noble Baroness said: The purpose of the amendment is to probe what would happen in the unlikely event of a limited response to the soundings about holding a referendum and, ultimately, establishing a regional assembly. Does the Minister envisage a regional assembly being classed as a major precepting authority? It is clear that it will have precepting powers. Does a power exist to define it as such?

Can the Minister assure the Committee that regional assemblies will not be given financial powers by the back door but will be conferred only in explicit regional legislation? I am sure that I will now be told that it will happen only in explicit regional legislation. None the less, I wish to ensure that it does not happen under this Bill. I beg to move.

5.30 p.m.

Lord Rooker

My noble friend Lord Bassam and I have an agreement today to respond to alternate amendments but the order is not the same as this morning. I am now about to reply to Amendment No. 147, when I should be replying to Amendment No. 146.

Amendment No. 146 seeks to exclude any elected regional assemblies set up following a referendum under the Regional Assemblies (Preparations) Act 2003 from benefiting from regulations enabling local authorities to retain part or all of their non-domestic rates. However, the sub-section to which the amendment relates is concerned with Section 38 of the Local Government (Wales) Act 1994. So it would not have what I assume to be the desired effect.

In any case, the proper time for this House to consider the issue of whether the new regional assemblies should be major precepting authorities is when the Bill that sets up those assemblies comes before the House if there is a "Yes" vote in a referendum. If there is a "No" vote, there will not be a Bill.

The Earl of Caithness

Perhaps the Minister could be a little more forthcoming than that. He cannot just duck it until the next piece of legislation. Surely the Minister should be able to give a little fuller explanation. We had long discussions about whether regional assemblies would become precepting authorities. If my memory serves me right, we were firmly told that they would not be part of local government. Presumably, therefore, they could not be precepting authorities.

Lord Rooker

With respect, this Bill is not about elected regional assemblies. If there are to be any, there will be proper legislation in a Bill which will be discussed in full. I guarantee that it will not be before 2005 because the referendums will not take place until the end of 2004. There may be a Bill just after that, but I do not know the date of the referendums. But there will be a proper Bill in due course. I have nothing further to add about the regional assemblies to what I said in the Chamber when I repeated the Deputy Prime Minister's Statement. I would simply be standing here waffling—I am trying not to do that!

Baroness Hanham

It would be so unlike the Minister to stand and waffle. The Minister said that in a Bill—in the House today we were promised a draft Bill, so presumably within the draft Bill—there would be the information as to whether regional assemblies were to be precepting authorities or not. Judging by what was said, presumably a draft Bill should be available before the first referendum. Otherwise the information will not be available to those taking part in the referendum. For the record, the Minister nods his head.

Lord Rooker

I shall not add to what I said in the Chamber because I cannot remember what I said and therefore I might get it slightly wrong. Members of the Committee will then use two different answers to the same question against me should I happen to be dealing with the Bill for setting up the regional assemblies.

Baroness Hanham

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 147: Page 36, line 20, at end insert?— () No rule made under this section shall increase the individual liability for non-domestic rates of any ratepayer.

The noble Earl said: Amendment No. 147 stands in my name and that of my noble friends. This amendment is designed to protect ratepayers from inadvertently facing additional payments as a consequence of government action. Members of the Committee will recall that in the pre-Budget report by the Chancellor in November 2002, he announced that local authorities would be empowered to retain additional rates achieved through successful regeneration. The Chancellor explained that the policy would be a matter for consultation. The noble Lord, Lord Bassam of Brighton, said, "Of course, we consult. As night follows day, we consult". But they have not consulted on this.

Consequently, what next occurred was an amendment on Report in another place. There has been no consultation, which has rather shattered the trust and confidence between surveyors and the Government. My simple amendment is trying to elucidate more information from the Government as to what the situation is, when they will consult, who will be affected and how it will actually work. I beg to move.

Lord Bassam of Brighton

I am grateful to the noble Earl for his explanation. He is probably after a restatement of what is already government policy, which is that no business will pay more non-domestic rates through this scheme. In addition, there is no way under the scheme that they could be increased directly. To answer the specific point about consultation, the Government will produce a consultation paper later in the summer. I know that that can mean any time between now and maybe September or October, but I think that it will be sooner rather than later. However, it will be produced and obviously we shall listen carefully to what it says. I hope that the noble Earl, Lord Caithness, will feel reasonably reassured by that.

Our concern, should this amendment be agreed at some point, is that it could have an unintended and perhaps even rather negative effect. It is our view that if rateable values in an authority's area rose faster than the national average because it had improved its business environment as a result of the scheme, after a revaluation those businesses would naturally pay more business rates. The amendment could inadvertently prohibit the scheme encouraging any business growth. We believe that it could have a rather counterproductive effect. For those reasons, and more, I hope that the noble Earl will withdraw his amendment.

The Earl of Caithness

I am grateful for some of those reassurances. Does the noble Lord not think that it is a little odd to legislate before one consults?

Lord Bassam of Brighton

It is the case that we consult, we legislate and we consult some more. It is a rolling process, is it not? Sometimes it may not always appear like that, but we are perfecting the scheme. We shall consult and I am sure that the organisations with which the noble Earl is obviously very closely in contact will be happy with that consultation.

The Earl of Caithness

Of course, the Government are always right and consultation is there to justify what the Government put forward. I am glad that the noble Lord confirmed that there is to be consultation. We look forward to receiving it soon. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 71 agreed to. Clause 72 agreed to.

Clause 73 [Provision of information]:

Baroness Hanham moved Amendment No. 148: Page 37, line 24, leave out "21" and insert "28

The noble Baroness said: In moving Amendment No. 148, I shall speak also to Amendments Nos. 150 and 151 which are not directly related but which, to assist the progress of the Committee, we are happy to debate together. Amendment No. 148 addresses the reasonableness of the period of 21 days in which a person must respond to a notice from a local authority. We fully recognise that this is in the context of a penalty notice—a situation where someone has already not replied for a period of 56 days.

However, there are two other important differences which this Bill enacts from the 1988 Act. First, Clause 73(2)(a) removes the important rider that the information sought must be in the "possession or control" of the person being contacted. That is no longer to be part of the law. The question of possession or control comes into play only once a person appeals—with all the costs involved in that—against a fine of at least £200 and up to £700 for not supplying information that he may never have had in the first place.

Secondly, the innocent looking subsection (3) removes a "reasonable excuse" defence for noncompliance and once again removes it to the end of the process when the full £700 penalty has already rolled up. In these circumstances, we do not think it reasonable to allow a period of 21 days only for a person to respond to a penalty notice that could unleash penalties of a large scale without any prior right to claim that the information is not in that person's control. The reality is that in the modern world many people take holidays of three weeks or more and may not be back in time to fulfil an obligation of three weeks. It therefore seems only reasonable to allow a person in receipt of a penalty notice to have an extra seven days with which to comply with a request for information. I hope that the Minister can agree to that.

Amendment No. 150 also addresses the same situation. As the Bill is drafted, a quite innocent person with a reasonable excuse for not supplying information, and who may not even have that information in his possession, may have been hauled over the coals by what is all too often an insensitive bureaucracy. By this time it is possible that a person may have been fined up to £700. He would then have had to go to the expense of appealing to a valuation tribunal where he wins his case. After all that, he would be told that the tribunal may only mitigate or repay the penalty that has been unjustly visited upon him.

This must surely be a case of "shall" not "may", leaving the valuation tribunal no option but to repay the money and not to do so at its discretion. A person who wins his case should be entitled to restitution of an unjust fine. I hope that the Minister will agree to that.

Amendment No. 151 suggests a further improvement to the system on grounds of fairness. There may be circumstances where it becomes so obvious that a person has been unjustly pursued and has a good excuse not to provide the information that there is no point in the machinery grinding to a conclusion. In those circumstances it ought to be possible for the person to withdraw his appeal against the unjust penalty and for the tribunal to settle the matter out of court and repay the penalty. I suggest that this would be appropriate and sensible and would allow unnecessary time, expense and worry to be avoided. I hope that the Minister can look positively at all these proposals. I beg to move.

Lord Rooker

Clause 73 amends the 1988 Act by removing the criminal penalty for the non-return of information requested by the Valuation Office Agency. The VOA sends out requests for information about properties and rents to occupiers prior to a revaluation in order to build up a body of information on which to base its valuations. Occupiers are currently asked to return the information within 21 days or risk criminal prosecution. That is acknowledged as being an inappropriate sanction and was universally ignored. As a result very few forms are returned, simply increasing the cost to the Valuation Office Agency.

The clause changes that sanction from a criminal to a civil penalty and extends the time allowed. The expectation is that this will improve the level of response and include a more appropriate penalty for non-compliance.

Amendment No. 148 is aimed at giving ratepayers more time—28 days instead of 21—before the daily penalty starts being incurred. Before the further £100 penalty and daily penalties of £20 are incurred, the person concerned would have had 21 days to reply to the information notice under paragraph 5 of Schedule 9 to the 1988 Act and would have failed to do so.

The person would have had 56 days from first being sent the information request notice under paragraph 5 before being subject to the first £100 penalty. They would also have ignored the penalty notice for a further 21 days. In total, before the extra £100 penalty and daily penalties are incurred, the person will have failed to respond for at least a minimum of 77 days! We feel that this is sufficient time.

Amendment No. 150 obliges the valuation tribunal to remit any penalty if the appellant is successful in an appeal explaining their reason for not supplying the information. I think that we need to leave the discretion with the tribunal. If the circumstances of a case are such that the tribunal feels that the penalty or penalties ought to be waived or reduced, it can do so.

Tribunals ought to have discretion as to how they act and should not be under a duty to waive or reduce the penalties in all cases. There may be circumstances in a case that mean that the valuation tribunal decides that although there was a reasonable excuse, the penalty should not be waived. I do not know what kind of circumstances those are but I suspect that if I had talked to some of my friends who serve on valuation tribunals they could have given me chapter and verse with regard to the "awkward squad". We must allow the members of valuation tribunals discretion in that regard.

Amendment No. 151 gives the power to the valuation officer to mitigate or repeal any penalty. This is already covered by new paragraph 5B. There is nothing to stop the valuation officer waiving or remitting the penalty if a settlement has been reached even if the person has started appeal proceedings. The appeal would then be withdrawn and the matter would be over. So the amendment is not needed, it is already covered. I hope that with those reassurances the amendments will be withdrawn.

5.45 p.m.

Baroness Hanham

I thank the Minister for that reply. However, I wish to return to two points. As I understand it, subparagraph (2)(a) removes the rider that the information sought must be in the possession or control of the person being contacted. So that requirement on the part of the valuation tribunal has been taken out. Therefore, I cannot see what the problem is with accepting Amendment No. 148 under those circumstances. The relevant words have been taken out and no longer constitute part of the law. When I spoke to the amendment, I accepted that the period of 56 days would already have passed. However, I suggested, for a number of very good reasons, that a period of 21 days might not be sufficient and that 28 days would be more appropriate. The problem is whether the person has the information, or can possibly be expected to have it, within their knowledge or possession before the fines procedure begins to apply.

On the question of valuation tribunals being able to decide whether to waive money after an appeal has been won, that seems to me very strange. I do not know whether I can think of any other situation where, if you won an appeal, you would not get your money back. Even Transport for London can eventually be shamed into reimbursing a parking fine if it was not justified in the first place and you win your case on appeal. There must be a rationale for ensuring that that is the case. I accept the point about Amendment No. 151. If the matter is already covered, I shall not pursue it.

Lord Rooker

As regards the second point the noble Baroness made, I do not have any examples but in ordinary cases before the courts if people win they are not necessarily awarded their costs, even on appeal.

There is no general presumption in that regard. In my former constituency a case arose that I raised in an Adjournment debate in the House a long time ago. The person concerned had served a term of imprisonment and, after his release, the appeal was heard and the conviction was quashed. A police officer was involved, believe it or not. One could not turn back the clock. Try to get compensation for that! But it is normally the case that even if you win an appeal, you are not necessarily awarded your costs. That will depend on the circumstances of the case. We have to leave that to the discretion of the tribunal.

However, if information is statutorily requested by an authority of someone and that person is not in possession of the information, he or she should tell the authority that he does not have the information. However, if the person does not tell the relevant authority that he or she does not have the information, he is obstructing the work of the valuation office. If the person does not have the relevant information, he or she should simply tell the valuation officer that he does not have it. The failure to inform the valuation officer that one does not have the information constitutes an obstruction. The worry about the wording of subparagraph (2)(a) that the noble Baroness mentioned is irrelevant. As I say, if a person does not have the information that is requested of him or her, he should simply say that he does not have it. What he should not do is ignore the request for information.

Baroness Hanham

I sought a period of 28 days rather than 21 in order to provide the information. However, I hear what the Minister says. I do not wish to pursue the matter further at this stage. However, I am perplexed by what the Minister said about the repayment of a penalty. If one has been fined a penalty, I believe that that should be reimbursed if it is discovered on appeal that it is not justified. I am not talking about costs. Costs could constitute an astronomical sum if counsel have been briefed. I referred to a penalty. The Bill states that, the valuation tribunal may mitigate or remit any penalty". We sought to change the word "may" in that sentence to "shall".

Lord Rooker

If the noble Baroness wishes to provide any examples of where people have been treated unfairly as regards the matter that we are discussing, I shall certainly consider them before Report. I am not saying that I shall take away the amendment and reconsider it but I shall need to be given some facts and details of unfair treatment to respond to the matter if it is raised at the next stage of the Bill. I do not have any examples of that. As I say, I am more than prepared to consider such examples, but the matter must be based on facts, not what we consider might be unfair. The present system seems to work all right. I am not aware of massive problems with the present system. If we are going to change it, we would have to have a damned good reason for doing so.

Baroness Hanham

I thank the Minister for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 149: Page 37, line 40, at end insert— (6) For the purposes of sub-paragraph (2) above—

1. (a) where a valuation officer serves a notice under this section, this will comply with guidance to be published by the Secretary of State for the purposes of this section; and
2. (b) before publishing any such guidance, the Secretary of State shall consult with such persons or organisations as appear to him to be relevant."

The noble Earl said: This amendment follows on to some extent from the discussion that we have just had. The Minister explained the reasons for Clause 73. By and large, I support the Government in what they are proposing. I am not a great one for increasing bureaucracy but I believe that there is a case here for a little more bureaucracy in the form of guidelines. The Government are giving valuation officers quite a degree of discretion and powers to remit and to levy additional fines. I believe that that ought to be governed by a code of practice or a statement from the Minister. That is what my amendment seeks to achieve. I beg to move.

Lord Bassam of Brighton

I understand why the noble Earl tabled the amendment which follows on from the previous debate. We believe that the scheme works well as it is. Perhaps the noble Earl is aware of problems, difficulties and complaints than we are. The amendment seeks to ensure that new guidance is introduced when the regulations are produced. The clause replaces a criminal penalty with a civil penalty. The scheme should operate largely as it operates at present. I cannot see any major differences.

There is already a clear legal framework and set of requirements with regard to serving a notice. If that is not done in accordance with proper practice, I am sure that any court would rule on behalf of the person on whom the notice is served. We do not believe that additional guidance on that process is required. No doubt the noble Earl may wish to make some further representations on that point on behalf of his profession, but the scheme works well as it is. As I say, we are replacing a criminal regime with a civil one. We believe that the scheme will continue to work well within that regime.

The Earl of Caithness

We all hope that the scheme will work well but it did not work under the criminal regime as no action was taken, as the noble Lord, Lord Rooker, said. What the Government are doing—I support that—is introducing a civil regime. However, you are giving valuation officers a degree of power and ability to remit and to levy additional penalties. I believe that guidance should be given on that. In a court situation, one has all the paraphernalia that goes with a court, but valuation officers do not have that. As there are about 1.6 million ratepayers out there, one needs to give some thought to how they might react to the decisions of a valuation officer. I hope that the noble Lord will reconsider the matter with his officials between now and Report as this is a small but important point. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments Nos. 150 and 151 not moved.]

Baroness Hanham moved Amendment No. 152: Page 38, leave out lines 36 to 39.

The noble Baroness said: I fear that there is a whole string of government amendments grouped with my Amendment No. 152.

This amendment is closely related to the previous debate. It once again brings up the point that occurs time and time again under the Bill that the Government are trying to take far-reaching powers to amend the law. At least in this case it is proposed that there should be an order-making power. But what it says on the face of the Bill is that the Secretary of State can change a penalty without any limit. So, in place of £700, he could potentially introduce £1,000, £7,000 or any figure above or between. Are the Government expecting some sudden surge of inflation that we do not know about?

I happen to think that the penalties in the Bill—exercised in the ways that I have described—are quite large enough and, indeed, onerous. It is difficult to imagine the need for further alteration. If there should be further alteration, it is difficult to see why that should not be done in the context of primary legislation.

We all know that a large increase in penalty could be included in a more general unamendable regulation. That would not be acceptable. I have studied Schedule 9 of the 1988 Act which is being replaced under the clause—I hope that the Minister will explain this matter—and find no comparable power. The Government should not have the power I am discussing without it being subject to scrutiny. I beg to move.

Lord Rooker

Before I reply to the amendment, I should like to take a little pop at the system in this House. I thought that I had obtained a written agreement, or an agreement between the usual channels, that when government amendments were grouped with Opposition amendments, the letter "G" or the word "Gov" would appear beside the relevant amendment, as occurs in another place. I know that it is a horrible habit to want to drag practices of the other House into the Lords, but I assure the Committee that it is much easier to interpret the Groupings List when the government amendments are identified. That happened the first week after I requested it. but it has not happened since. I turned over the page and thought, "Oh, my God, these are my amendments". I make that suggestion for my own but also other people's convenience. I do not refer to the Marshalled List but to the list that is also available to the public. I believe that if my suggestion were followed, it would be easier to find one's way through the Bill. It was agreed that my suggestion would be adopted. Everyone thought that such a measure would be helpful even though it comprised a nasty practice from another place.

In due course I shall move the string of amendments in my name. As I say, Clause 73 amends the 1988 Act by replacing the criminal penalty for the non-return of information requested by the Valuation Office Agency with a civil penalty.

The main amendment, Amendment No. 228, makes any increase or decrease in the level of the penalty subject to affirmative resolution in both Houses of Parliament in accordance with the recommendation of the Delegated Powers and Regulatory Reform Committee of your Lordships' House. All the other amendments are purely consequential and I do not propose to speak to them.

Amendment No. 152, tabled by the noble Baroness, Lady Hanham, removes the power to increase or decrease the amount of the penalty. It is obvious that over time it might be necessary to review the penalty. We believe that making any increase or decrease in the level of the penalty subject to affirmative resolution of both Houses is sufficient safeguard, while enabling the penalty to be reviewed in the light of changing circumstances. I believe that that is right and proper. It should not be for a Select Committee of this House to come up with such a recommendation. Frankly, it should have been in the Bill in the first place that any change to such penalties should be by affirmative resolution. Nevertheless, the committee has an important role to play.

I hope that with those assurances the noble Baroness will not press her amendment, that I have answered the specific question she asked and that she is satisfied with the reply.

6 p.m.

Baroness Hanham

My question related to why the Government should be able to increase a penalty without any limit. Is it fair that the Secretary of State can increase the penalty without further reference to Parliament?

Lord Rooker

Parliament will fix the penalty. It is not a question of the Government being able to have a penalty without any limit. Parliament will fix it by affirmative resolution, so it could be voted down. If Ministers are to review the penalty they will have to come forward with a proposal that will be reasonable for both Houses to support.

Baroness Hanham

I thank the Minister for his reply. I look forward to all the other strings that will come along. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 73 agreed to. Clause 74 agreed to.

Clause 75 [Exception of students from joint and several liability]:

Lord Hanningfield moved Amendment No. 153: Page 39, line 11, at end insert?— ( ) After section 6(4) of the Local Government Finance Act 1992 (c. 14) there is inserted—

( ) Subsection (4) shall not have effect in relation to a student who has a freehold or leasehold interest in the dwelling on which a council tax liability has been incurred and is resident in that dwelling."

The noble Lord said: We now turn to the provisions in the Bill concerning council tax. Clause 75 allows for the removal of students from joint and several liability with regard to council tax. Perhaps I may say to begin with that we welcome the Government's intention in the Bill to increase flexibility as regards council tax discounts and their objective of supporting students. We are broadly sympathetic towards those principles.

However, we are concerned that these provisions are loosely drawn. As the Minister is aware, the majority of students—for example approximately 60 per cent of entrants into higher education—are mature students, and the majority of mature students study part time. Many might be employed and earning good salaries. Presumably, the way the clause is drawn relies on dealing with this through the definition of "student". I see from the Explanatory Notes that the definition is set out in paragraph 4 of Schedule I to the Local Government Finance Act 1992.

However, the schedule states that the Secretary of State may by order set out the definitions. Rather than attempt to continue to pursue this paper trail, I should be grateful to know from the Minister what the order sets out as far as concerns the definition of "student" and whether there is any proposal to change it in the light of these new provisions.

I also suggest that rather than get bogged down in the definition of "student", which will inevitably lead to loopholes in these provisions, Ministers should simply make provision that this clause does not apply where the student is the owner or part-owner of the property in which they reside. In most cases, students might not be homeowners. They are unlikely to be in a position to pay council tax and are quite rightly exempted from joint and several liability. However, if a person who happens to be a student is sufficiently well off to part-own a property, for example, surely they should not he exempt from liability. We would ask the Minister to consider this again. I beg to move.

Lord Bassam of Brighton

I am rather puzzled by the amendment. I have always thought that local taxation is best when kept simple. That is what I liked about the rates system and what I did not like about the poll tax. Poll tax brought in a whole raft of people who previously had no experience, knowledge of or interest in paying local taxes. Many thousands were students. As the leader of my council at the time I had the horrible job of trying to enforce payment orders on students who were subject to poll tax. I appreciate that the noble Lord, Lord Hanningfield—I do not think—has ever been involved in a collecting local authority; Essex is a precepting local authority. So, perhaps he did not have the same experience as me and other noble Lords in the past.

The problem with the amendment is that it muddies the waters. We are trying to get rid of an anomaly which means that students who are not liable for council tax could find themselves with a council tax bill if they live with non-students. The amendment would prevent the complete removal of what I believe to be an anomalous situation, as it would retain joint and several liability for a student who lives in a dwelling with one or more non-students and who has an equal freehold or leasehold interest in the property with one of the other residents. Amendment No. 154 would retain joint and several liability for a student who lives in a dwelling, who had an interest in the freehold or leasehold and was married or lived as a husband or wife with another occupant of the dwelling.

The way in which the amendments are drafted means that students who are renting a property on a standard six-month tenancy agreement would be caught. The amendments would not apply just to those with long leasehold interests. I can see the noble Lord's argument that such students may well have sufficient resources. However, it makes the situation and the system that we are trying to apply more complex. I have a feeling that the noble Lord's friends in district councils probably would not be too happy about that. During our discussions there have been many complaints about bureaucracy—

Baroness Maddock

I thank the Minister for giving way. He referred to the fact that the noble Lord said that students who own their homes or had a leasehold interest might have sufficient means. Surely the whole point is that when one is a student, regardless of where one lives, it is one's revenue income that is the problem. One may well own a property, just as many elderly people do. We argue vehemently that the elderly poor living in their own homes do not have any revenue. Surely that is the point. So how are these people affected? They may have bought a house but they have given up their job to pursue further education. In particular a lone parent, a mother, would have no other income to pay. It is the income that is important, not the assets.

Lord Bassam of Brighton

I completely agree. I think that the noble Baroness has rather perfected my point for me. I do not see that the amendments are of great benefit. They would penalise certain classes of students and confuse a situation which is already confused with this anomaly. We think that the amendments are unnecessary. We are trying to tidy up and make the system neater. The amendment would bring into liability a class of students whose revenue interests, frankly, we are trying to protect, as the noble Baroness, Lady Maddock, explained.

I hope that the noble Lord will see sense on this point and withdraw his amendment.

Lord Hanningfield

I believe that the Minister has not understood what we are trying to do. No one wants to penalise students who do not have the resources to pay. Perhaps the wording of the amendment is not exactly right and we should consider that again. There is a loophole here. As I said, some 60 per cent of students are adults. I accept that some have given up their jobs and have moved and so forth. However, many people who will not be paying council tax could use this as an excuse to avoid paying it.

I asked who would define "students". The Minister did not provide an answer to that. The regulations state that at some stage someone will have to define "students". That is what I was trying to probe by tabling the amendment. This could be open to abuse. No one—certainly not us—is trying to do anything other than help the students mentioned by the Minister and the noble Baroness, Lady Maddock. No one wants to hurt those students. We want to stop any system of abuse, which I am sure those collecting council tax would not want because they need the revenue. I still need a definition. Who will define "student"? That is what someone has to do.

Lord Bassam of Brighton

I do not have a definition of "student" here. We do not have the statutory instrument with us. Clearly there is a definition. However, that is not what the noble Lord said. He did ask about that but he also moved an amendment which would increase the liability of a whole class of students. Worse than that, it would make for complexity and an added level of bureaucracy for billing authorities. Frankly, we do not think that that is a sensible way to proceed. I hope that the noble Lord will withdraw the amendment.

Lord Hanningfield

Bureaucracy is introduced anyway because someone has to find out who are students and who are not. So, the policy introduces bureaucracy. We are not disputing the fact that we welcome this type of policy but it needs clarity. We shall need to return to the definition of "student" at some stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 154 not moved.]

Clause 75 agreed to.

Clause 76 [Second and empty homes: England]:

Lord Morgan moved Amendment No. 154A: Page 39, line 21, after "England" insert "and Wales

The noble Lord said: In moving Amendment No. 154A I shall speak also to Amendments Nos. 155A, 159A, 165A and, in Schedule 6, Amendments Nos. 228A to 228C. We believe that it is important that the provisions in Clause 76 being made for England should be extended to Wales.

The thrust of Clause 76 will allow English billing authorities to reduce or remove the 50 per cent discount which applies to dwellings with no residents for classes of dwellings prescribed in regulations made by the Secretary of State. Welsh local authorities already have power under Section 12 of the existing Local Government Finance Act 1992—a Wales-only provision—to reduce to 25 per cent or remove altogether the current 50 per cent discount for classes of unoccupied dwellings as prescribed by the Welsh Assembly.

Clause 76 gives English authorities some additional flexibility over second and empty homes that is not included in the existing provision for Wales. Extending Clause 76 to Wales would allow the Welsh Assembly to prescribe classes of dwellings where a local authority could reduce the discount to amounts other than the 25 per cent or zero permitted under Section 12, and also to decide whether those discounts apply to the whole or part of a billing area to take account of its circumstances.

The proposals are supported by the Welsh Assembly and the Welsh Local Government Association. I trust, as does the noble Baroness, Lady Gale, that the amendments will be accepted by the Minister. It is important that the powers conferred by Clause 76 on English authorities should be at the disposal of Welsh authorities. I beg to move.

Lord Rooker

I have listened carefully to the comments made by my noble friend. The new power we propose for the English authorities provides greater flexibility than the current power, which the Welsh authorities have. Therefore, I am happy to agree to take away this set of amendments in the hope that I can return to this on Report, to see whether we can be positively helpful to our colleagues in the Welsh Assembly and give the Wales authorities the greater flexibility we are planning for England. In the light of that, I hope that the amendments will be withdrawn. I am extremely grateful for the issue being raised and shall return to this on Report.

Lord Morgan

I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 155: Page 39, line 24, leave out "the Secretary of State sees fit" and insert "regulations under this section may provide

The noble Lord said: The purpose of Amendment No. 155 is to seek clarification from Ministers on the working of this clause. Clause 76 enables the Secretary of State to prescribe classes of dwelling to apply for council tax discounts in accordance with, such factors as the Secretary of State sees fit". Reference is then made to two particular factors. However, it is clear from the wording of the Bill that these are simply illustrative. The Bill does not limit the Secretary of State's scope to those two factors.

If the examples cited in the Bill are, indeed, simply illustrative, one wonders what their purpose is other than to signal the intention of Ministers. Elsewhere, as we have gone through the Bill Ministers have been content to signal their intention orally rather than through illustrative provisions, so it is not clear to me why in this case there needs to be a different approach.

Putting that to one side, however, the substantive issue is that we should like reassurance that the factors that the Secretary of State thinks fit are comprehensively depicted by the regulations under subsection (1), and that no other factors can be introduced by the Secretary of State without parliamentary scrutiny. The Minister will appreciate that, as later amendments demonstrate, there is a great deal of detail about how the provisions are framed. It is important that they benefit from further parliamentary scrutiny. I beg to move.

6.15 p.m.

Lord Bassam of Brighton

Last November, we announced our intention to give billing authorities the freedom to reduce the current 50 per cent council tax discount on second homes and to reduce or remove the current 50 per cent discount for long-term empty properties. We have made our draft regulations available to your Lordships' House, and we plan to consult on them later in the year.

The draft regulations set out classes of second homes and long-term empty property. Where necessary, appropriate definitions are included, as in relation, for example, to "job-related dwelling" and "unoccupied". We do not see how setting out factors in the regulations will help particularly. Our policy is clear enough, and we shall consult on the regulations to give effect to the policy once we have the necessary primary powers. We think it nonsense to say that requiring the expansion of the regulations in the way that the noble Lord suggests will add anything.

I appreciate that that does not satisfy the point that the noble Lord raises, but the consultation will be there. We think that the system will work well enough and be able to provide sufficient clarity, given how the regulations are drafted and the explanations that go with them.

Lord Hanningfield

I thank the Minister for that answer. It is illustrative of the fact that a lot of the Bill—what regulations decide and what the Secretary of State should decide—should be looked at in terms of parliamentary scrutiny. Obviously, we have only just begun to scrutinise the regulations thoroughly, as we only received them recently. I accept what the Minister says at the moment, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 155A not moved.]

Lord Hanningfield moved Amendment No. 156: Page 39, line 31, leave out from first "area" to end.

The noble Lord said: The Bill currently allows local authorities to reduce the discount for council tax on second and empty homes further in some parts of an area than in others, so long as the discount remains at least 10 per cent of the full tax. That seems unnecessarily divisive and complicated.

We are, of course, in favour of local flexibility and of providing local authorities with the power to respond to the local needs of their communities. We believe that providing a power to disapply discounts provides that flexibility. However, in principle we would be cautious about going down the route of differential levels of council tax for the same class of dwellings in an authority. We think that people in a local authority area will find such differential charging hard to understand.

For any tax regime it is important that there be confidence in its fairness. Transparency is something that generates that confidence. The provisions are in danger of damaging that transparency and that confidence. At a time when council tax is coming under intense scrutiny, we believe that the Government should be wary of introducing measures likely to lead to confusion and a lack of understanding. I beg to move.

Lord Rooker

I fully understand the points that the noble Lord makes, but I hope that I shall he able to satisfy him that there are good reasons why the Bill is drafted as it is. The clause has been drafted so as to allow a billing authority to have different levels of discount in different parts of its area. The amendment would remove that flexibility and require an "all or nothing" approach. We included the flexibility for a good reason. Local authority areas are not homogenous. For example, there may be a particular issue with second homes or long-term empty property in only one part of the district. That is why we believe that the billing authority should be able to choose how it uses the new power.

Last November, the local government Minister, Nick Raynsford, announced that we intend to allow local authorities to retain the additional revenue generated by the reduction in the current 50 per cent discount on second homes. We decided that it was important that the second-home owners had an incentive to tell their local authority that the home was a second home, so that local authorities would know how much extra income was being generated. That is why we propose that the local authority should offer a minimum 10 per cent discount. Taken together, Amendments Nos. 157, 158 and 159 would mean that we would lose the ability to insist on that minimum. In turn that would make it difficult for the local authority to identify the extra revenue, which would undermine the policy of allowing the local retention of the extra income.

I fully accept the noble Lord's points, but the measure is a way for us to identify the extra income that local authorities could generate, which they would be able to keep themselves. I hope that he will find that explanation satisfactory.

Baroness Hanham

I want to pursue that particular matter. It is good to know that local authorities can retain the additional income, but will it be truly additional? Will it be swept up in the revenue support grant discussions, or is it on top of all that? Is it a separate sum of money that can be used for some community purpose?

Lord Rooker

I plead guilty to not knowing. It would be unfair were the income to be swept up in the rate support grant, but I do not know about the future formulas for that. It is intended that the change shall be advantageous to local authorities. I do not think that it would be swept up—I hope that it would not be—so the answer has to be no.

Oh! Here is where we find out. The income is genuinely additional to the revenue support grant. I knew that the Government would not want to cheat local authorities. I knew that we genuinely wanted to work in partnership, and that it was intended that extra revenue be generated. To be able to identify that, we need the incentive for the second-home owner to come forward and say, "It's a second home; I claim my 10 per cent". Therefore, it can be worked out from where the extra income is generated.

Lord Hanningfield

I thank the Minister for that answer. We welcome the extra flexibility that local authorities have. I shall not repeat my point about some confusion being caused, and we welcome the assurance that local authorities will be able to keep the money rather than having it taken away from them in their rate or revenue support grant settlement. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 157 to 159 not moved.]

Lord Hanningfield moved Amendment No. 160: Page 39, line 40, at end insert— ( ) No dwelling may be prescribed by the Secretary of State under subsection (1) above on the ground that it is unoccupied if the owner or occupier is a sick or disabled person who is resident in a hospital, hospice, residential care home or nursing home. ( ) No discount may be removed from a mentally or physically disabled person under this section on the ground that a dwelling is unoccupied if it is unoccupied by reason of long-term illness or infirmity.

The noble Lord said: The amendment is part of a series comprising Amendments Nos. 160,161 and 162. As I said earlier, we have looked at the draft regulations and some matters are covered. However, I should still like to explore some of them with the Minister. Clause 76 accords the Secretary of State wide-ranging powers to classify types of dwelling according to physical characteristics or the fact that a dwelling may be unoccupied. Have the details of how that might work in practice been left to regulations? We are concerned about a number of provisions, and I should be grateful for clarification.

For example, we are concerned that the clause will leave certain groups of people vulnerable to increased tax that they cannot afford, for services that they do not use. In several places, the Bill and the draft regulations are not clear on whether particular classes of individuals will be caught. We are concerned about elderly people who have taken up occupancy in a care home, for example, and individuals in residential care with a long-term illness. Having read the draft regulations, we do not feel assured that those individuals will not fall within the scope of provisions designed to capture unoccupied dwellings. Will the Government give us some assurance that those individuals will not become victims of increased taxation?

Baroness Maddock

I have sympathy—

Lord Hanningfield

I beg to move.

Baroness Maddock

I apologise. It must be the quality of the air in this room. It can get a bit soporific after a while, and one is desperately trying to keep awake to do whatever one is going to do.

I have a certain amount of sympathy with the amendment. I had assumed that the Government would deal with the classes under regulations. It is important that we are flexible on the matter, because one wants the ability to adjust what one is charging for according to what is happening in the housing market in particular. Years ago, we would not have thought that we would have so many elderly people going into rest homes and so forth. It is right that the matter is handled under regulations.

Like the noble Lord, Lord Hanningfield, I should like the Minister to give us some reassurance that the classes of people will be included in regulations. As we are, in effect, discussing empty homes, I declare an interest as patron of the Empty Homes Agency, which I am quite sure will not let the Government get away with awful regulations that do not include the people whom we are not in the business of penalising.

Lord Bassam of Brighton

I agree with the noble Baroness; it is quite easy to be sympathetic to the amendment. However, it ignores the fact that we need a rational scheme that works nationally. I hope that the noble Lord will accept that we are not trying to disadvantage people advantaged by how the scheme works as it is.

The amendment appears to attempt to prevent the nationally set second-homes and long-term-empty discounts from being changed in relation to property owned or, in the case of second homes, that would be occupied by sick or disabled people but is unoccupied, either because the relevant person is sick or disabled and in residential care or hospital, or because the relevant person is mentally or physically disabled and has a long-term illness or infirmity.

As the law stands, no council tax discount is available on a person's property because an owner or occupier is in hospital for a short period. If the person goes into long-term care and has no intention of returning to their old home, there is a council tax exemption if that property was their sole or main residence and is now unoccupied. However, that does not apply to second homes or to vacant property which was not the person's sole or main residence, although they would be entitled to the nationally set discounts.

As I said, we sympathise with those who cannot live in their own homes because of illness or disablement but, if someone is in hospital for only a short period, plainly it would be an administrative nightmare for the billing authority to keep track of when there was a council tax liability and when there was not. I remember when my mother had some residential care and then came back to her council bungalow. One can see such situations replicating themselves all over the place. Trying to keep account of them, particularly when the short term is involved, is quite difficult.

The amendment has cast its net very wide. Sympathetic though we are to it, it would create a layer of complexity and we cannot go with it, despite understanding the point that the noble Lord is getting at. The amendment requires more thought from him, and we are not minded to accept it.

Lord Hanningfield

I thank the noble Lord for that answer. Care for the elderly changes rapidly the whole time. As time moves on, there is much more reason to get people back in their own homes. People can be out of their home for quite a while, but an effort is made by the hospital services, health services and social services to get people back eventually in their own homes with all sorts of assistance. That will happen more and more. People will not be so much in residential care, so quite a lot of homes will be empty for quite a while, waiting for people to come back to them.

All sorts of other matters are relevant. I am going through the process with my elderly father at present. When people are in hospital or some sort of residential care, the stopping and starting of all sorts of things has to be organised. I am sure that my suggestion would not be too much extra to organise, from the points of view of both the local authority and the family during that time.

The Minister said that he had sympathy for the amendment. As we move on and more and more people are in this situation, regulations will have to change to accommodate them. The Minister may have some sympathy for the amendment, but I—and, I believe, the noble Baroness, Lady Maddock—believe that we cannot simply ignore the issue these days. We must pursue the issue and ensure that regulations cope with that group of people.

6.30 p.m.

Baroness Maddock

Is it the Government's intention to stipulate in regulation some period of time whereby property can remain empty when people are in longterm care or are ill? That is what we are talking about. Will the Government consider that in regulations? If not, we may need to return to it later on.

Lord Bassam of Brighton

That is not a commitment that I want to give. In tabling the amendment, the noble Lord may have missed the essential point. The clause is primarily about second homes and long-term empty homes, not people's sole or main residence. We are talking about empty properties and, in those situations, there will be shared family responsibility. One would expect that efforts would be made to ensure that those long-term empty properties were brought back into use, and that is part of the purpose behind the clause.

Lord Hanningfield

I thank the Minister. We shall have to consider what has been said on this subject. There is a group of people involved in this matter, as the noble Baroness, Lady Maddock, and I have outlined. We may have to return to the matter, but for the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 161 not moved.]

Lord Hanningfield moved Amendment No. 162: Page 39, line 40, at end insert— ( ) No dwelling may be prescribed by the Secretary of State under subsection (1) above and no discount may be removed or reduced under this section on the ground that a dwelling is unoccupied if the owner is actively marketing the property with the purpose of letting, lease or sale.

The noble Lord said: I did not move Amendment No. 161, because, having read the regulations, we decided that the issue had been covered. Therefore, I am now moving Amendment No. 162.

We are concerned that an exception should be made for properties when the owner is attempting to sell or lease. Some people move out of one property before finalising a sale, and would become liable for double taxation under the new legislation. We recognise that a system whereby property for sale was exempt from the clause could be abused. We therefore suggest, in accordance with a proposal put forward by the Royal Institution of Chartered Surveyors, that a property that has been actively marketed should continue to qualify for a council tax discount. We would support the Government in issuing local authorities with guidance and an appropriate definition of such properties.

The measures in the Bill may also have a negative impact on the housing market in some areas. Vacant property in certain areas actually reflects the collapsed property market, and a decrease in council tax discount in those areas could exacerbate the problem. I would be grateful for the Minister's views. I beg to move.

The Earl of Caithness

I support my noble friend's amendment. I am particularly concerned about property that is for sale. The Minister was right to draw attention to the fact that the clause relates to second homes. My noble friend's amendment would address that issue.

We must not forget that housing markets change rapidly. I shall put on my residential agent's hat. I have lived through at least three downmarkets when it has been very difficult to move property. Sometimes, people have to move jobs, and may have to move out of an area and find accommodation before their first property is sold. That becomes their second home. It seems wrong that the legislation should penalise those people if they are actively marketing that property.

The Minister said that he wanted a scheme that worked nationally, but the housing market does not work nationally—it works very locally. I can take the Minister to areas in London where the market did not move for months if not years at times. There are places in Britain now where property is on the market for months and months. We must not get brainwashed by the market in London, which has been remarkably strong for a long time and is still good at the moment. That is a false market, when one is considering the national picture. I support my noble friend strongly on this.

Lord Bassam of Brighton

The amendment would prevent the reduction or removal of the 50 per cent discount if the owner was actively marketing the property. Our main objection is that it would create a bureaucratic practical nightmare for local authorities in keeping track of where properties were entitled to a 50 per cent discount and where the local determined figure applied. For what purpose would it do that? Would it act as an incentive to owners of second homes and long-term empty property to sell or lease them? I do not know that it would. I question the workability of the proposal. At what point does a property become marketed? That is a question that might be asked.

We are endeavouring to get empty houses back into use, but council tax is not payable on a substantially unfurnished property for the first six months when it is unoccupied. If it is undergoing major repair or structural alteration, the exemption period is a year. Surely those exemption periods will give owners more than enough time to market their property, if that is their intention. But when it comes to second homes, I really do not see why the discount has to be kept at 50 per cent if the property is on the market. If the outcome were to be that the second home ceased to become a second home, that might help the local housing pressures in popular areas. However, the chances are that in such areas the property would be sold to another second-home owner. Why should we deny local authorities that income, as well as increasing their administration burdens and costs?

The point made by the noble Earl, Lord Caithness, about the property market is an argument in itself, but I do not believe it to be relevant to what we are trying to achieve through an instrument of national policy. I agree that we do not want to incentivise authorities to remove the empty homes discount in areas where there is little demand—I take that point. That is why authorities will not keep the benefit of the empty homes discount; there is no false incentive on them to end the discount in low demand areas.

I appreciate that the housing market goes through highs and lows, and I see that there may be a problem at certain times. However, by and large the scheme should work well nationally. There are differences in the housing market in different localities, but the anomalies and difficulties that the amendment might create for the billing authority outweigh the possible minor benefits that the noble Lord, Lord Hanningfield, sees in the amendment.

Lord Hanningfield

I thank the Minister. On several of the amendments that we tabled in an attempt to improve the situation, he has commented that they would make difficulties for the billing authority. After we have finished debating these amendments, we must consider how we might make things simpler in the next stage of the Bill. We feel that our amendments might make the system fairer, and we may need to find ways in which it might be easier for the billing authority to implement our proposals, by using modern technology. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 163: Page 40, line 3, at end insert— ( ) A billing authority shall not make a determination under this section unless it has taken reasonable steps to ensure that households affected have been made aware of its intention.

The noble Lord said: Clause 76(6) requires an authority that has decided to disapply council tax discounts to publish a notice to that effect in a local newspaper. The next subsection says that, if it does not do that, it does not matter. The original determination will remain valid. I am unclear whether a local authority is under a duty to do it or not. I can only conclude that a local authority is under such a duty, but that it does not matter if the local authority does not comply. Is that right? It certainly seems very odd.

We also have concerns about the effectiveness of putting in a local paper a notice to the effect that discounts on occupied property are being disapplied. In many instances, that will prove a merely cosmetic measure that will not alert those affected to the decision. However, our major concern and the point of the amendment is that people should have the opportunity to make representations to the council before it takes a decision of this nature, which will have a direct impact on the level of local taxation.

In conclusion, we support local authorities having the power, and believe that good communication encourages public engagement in local democracy and ensures the accountability of local authorities to local communities. As long as the public is notified in advance of any intention to alter the council tax discounts, it is not necessary for the Government to be unduly prescriptive about the ways in which local authorities communicate with the electorate. The amendment would leave it to local authorities to determine how best to do that. We do not see that as an onerous addition to the duties already imposed in the Bill. I beg to move.

Baroness Maddock

I would be grateful if the Minister would give us some idea of the thinking behind subsection (7), which says that the determination is valid even when the local authority does not advertise it. There must be some reason for that, and I hope that the Minister can tell us what it is.

Lord Rooker

Amendment No. 163 would require a billing authority to take reasonable steps to inform all households affected by any proposal to reduce or remove council tax discounts. We recognise the importance of the decision to reduce or remove discounts on second homes or long-term empty property, which is why we have provided for this decision to be taken by a full council meeting. That is achieved by an amendment to Section 67 of the Local Government Finance Act 1992, in paragraph 49 of Schedule 6 to this Bill. We also provide for the billing authority to publish a notice in at least one newspaper circulating in the area. That is achieved by new Section 11 A(6) inserted by Clause 76.

What we are discussing is the minimum requirement. I would expect there to be a full local debate about the issues around changing the second homes or long-term empty property council tax discounts. If the second-home owners say that they did not know about the measure, they do not have much interest in the area in which they have their second home, do they? Think about it. People who are using those second homes will at least participate in the local community to the extent, if not of shopping there, of buying the local newspaper.

The provision is consistent with other parts of the Local Government Finance Act, including the current Welsh provisions. We do not want mass non-payment when there are minor technical breaches by an authority. Of course, the intention is that the advert should appear. The objective of the amendment is to spell out in the Bill that the billing authority has to search out every household affected. That is not a reasonable position in which to put local government. If an authority takes reasonable steps, the decision will have to be made at a full council meeting, not only by a sub-committee. With a minimum requirement of a newspaper advert, local debate would be generated. One sees headlines in local papers in areas where there are second homes. The second-home owner has a responsibility. I do not see why that responsibility should all be put on the local authority—that is, on the general council tax payer.

I hope that that is a reasonable explanation. The amendment is onerous in the extreme, and we are trying not to apply such measures to local authorities. We would not want minor technical breaches to cause difficulties. As I say, the issue would have to be taken up by the full council. I am not sure what other issues require in statute that the full council has to take decisions. That is there for really important decisions, and this is such an important decision and something of which second-home owners should be broadly aware.

6.45 p.m.

Baroness Hanham

The Minister needs a greater realisation of what goes on in council meetings and how much is actually reported. If the Minister is suggesting that every bit of every council meeting is reported faithfully by the local press, he is in cloud-cuckoo land. Half the time, the press does not turn up; nor do members of the public. The fact that something is decided in council will not necessarily ensure that it goes any further than the council chamber.

The decision would be taken in the course of debate on the new council tax regime for the following year, as something that would happen thereafter. As far as I am aware, every council issues a rates statement or council tax statement. The leader sends a letter to the ratepayers or council tax payers. There is a perfectly good mechanism by which the information can be disseminated without the council paying a penny more than it pays normally to make sure that it is available.

It cannot be an onerous responsibility but it is important to ensure that people are aware whether they will have to pay more. It is not up to the second home owner to ferret around trying to find out whether the situation has changed. Local papers are not brilliant. Often, there are no free papers—certainly in country areas. We can debate how people become aware of the information, but there is a responsibility on the local authority, if it is changing its terms of taxation, to make sure that the people affected by it know about it.

Lord Hanningfield

The Minister did not explain an odd thing in the Bill. New Section 1 IA(6) says: A billing authority which makes a determination under this section shall publish a notice in at least one newspaper". New Section 11A(7) says: Failure to comply with subsection (6) above shall not affect the validity of the determination". It is nonsense to have "shall" in subsection (6), if it is negated in subsection (7). Those are odd provisions, and the Minister did not answer that question. One moment, he said that the authority "shall" do it, and, the next moment, he said that it did not matter and would not affect the decision if it did not. No one will waste the money if it does not matter.

Lord Rooker

I did refer to it. Perhaps I did not go into sufficient detail. I made the point that we did not want mass non-payment, if there was some minor technical breach. The intention is that they shall comply.

I go back to what I said originally. I do not believe that second home owners are so stupid that they do not know what is on offer or what changes are being made. They have applied for the discount in the first place, and they have sufficient knowledge of the area in which they have the second home to decide that, if they are not using the services, they will not pay the full council tax. Not every second home owner takes that view. Many second home owners I know say, "No. I will pay the full council tax because there is a responsibility to do so where I have the home, even though I am not using all the services". There are people who take that view. It is incumbent on the others to take a bit of responsibility on themselves and not have everything done for them by the local authority.

I know that the reporting of local authorities varies. Heavens above, Parliament does not get reported these days, but I will not open up a new debate on that. Judging by the headlines that I see in papers in non-urban areas, there are many areas where the local press and the free press print the stuff that they get from local authorities virtually verbatim. I do not accept that people would be unaware.

The intention is that local authorities shall take reasonable steps to publicise the change. I suspect that the vast majority of local authorities will do that. There may be a minor technical breach for some reason—for example, the paper may not appear, or the free paper may not be delivered down a particular street that it used to get delivered in—but we cannot allow a situation in which the circulation of a free paper is changed because someone says that it was not delivered down their street and claims that he relies on it for all his information. That would be a minor technical breach, and we would not want people not to pay because of it. We must be reasonable about it.

Baroness Hamwee

Is it not the case, as a matter of' practice, that an authority would not take that decision other than to have effect at the start of a Financial year? There would be a problem with billing otherwise. It would be costly to bill halfway through the year. Given that, the most straightforward thing would be for it to go into the council tax demand, as part of the statement. My noble friend Lady Maddock and I have been muttering about that, and we assume that it would happen as a matter of routine. Even if the information were not absolutely clear, the authority would have to show the calculations.

I am unconvinced about the need to bother spending money on putting the information into local papers. It would be more proper to make sure that the information is clear in the council tax demand.

Lord Hanningfield

I support what the noble Baroness, Lady Hamwee, just said. In local authorities, we have a duty to send the council tax explanation out. The information could go in that. That might be better than what is suggested in the rather confused line in the Bill. It would be better if it went out with the annual demand.

Lord Rooker

Council tax bills vary depending on location, but a good deal of bumf comes with them. We hope that everyone would read the information. My officials tell me that the details would have to be on the bill. It would be done at the beginning of the year, not halfway through it. There is a presumption that the local authority would comply with subsection (6) in the same way as any other legal obligation. If the information is on the face of the council tax bill, that must satisfy the requirement. It is not an unreasonable expectation that people would read their bills and the accompanying explanatory material so that they can find out how the bill is made and the goodness that comes from putting money into the community kitty.

Lord Hanningfield

On the bill, there are various precepts according to where one lives. There may be a parish precept if one lives in a village. Alternatively, there may be a district precept, a police precept or a fire precept. The bill could give information on what this provision does. That would be the best approach. I think that we all see sense on this issue, so perhaps we could agree. I beg leave to withdraw the amendment today. I am sure that we can all see sense on the matter in future.

Amendment, by leave, withdrawn.

Lord Hanningfield

moved Amendment No. 164: Page 40, line 9, at end insert— ( ) If a billing authority makes a determination under this section, it shall be disregarded for the purposes of distributing revenue support grant to receiving authorities under section 78 of the Local Government Finance Act 1988 (c. 41) (revenue support grant).

The noble Lord said

We have discussed the matter already today, but my remarks should go on the record. The amendments would ensure that any increase in income that a local authority gained from taking up the powers was retained by that local authority to enable it to invest in meeting local needs.

It is the only way to ensure that any increased powers of taxation at local level are met with accountability to the local electorate.

We also seek assurance that any increase in income to a local authority generated by disapplying council tax discounts would not be taken into account by the Government in the distribution to local authorities of the revenue grant or any other grant from central government. In other words, we seek assurance that an increase in council tax income on the basis of discretionary decisions taken by local authorities will not result in a decrease in government grants. Can the Minister assure us that local authorities and local services delivery would benefit from those freedoms?

While I am on the subject, it would also be helpful to have an assurance from the Minister that he will resist any attempts that the Treasury might make to take the opportunity to claw back the extra money in the system created by the provisions from the total funding of local authorities.

It is very important that the provisions are not seen as another attempt by the Government to load further pressure on the council tax. A clear assurance from the Minister on those points would be very helpful. I beg to move.

Baroness Maddock

My noble friend Lady Hamwee has attached her name to the amendments. We have long supported the Government in their attempt to change the council tax on second homes, particularly empty homes, on which I declared an interest earlier. I also declare an interest as a second home owner, which is somewhat alien to me, as I have not had a second home for long. I am not claiming discounts on it, as I thought that that would be too much for a housing spokesman to ask.

The Minister will not be surprised that I raise the issue that the Government believe that, if councils are allowed to retain the extra money they will get from taxing empty homes under the Bill, somehow they will use it in the wrong way. He wrote to me on the issue. and we have heard about it in other arenas. On the other hand, the Government have said publicly at conferences dealing with empty homes that they think councils should have empty property strategies and empty property officers. But if councils cannot use the extra money that they are getting from taxing empty homes, where is the money coming to fund such strategies and officers? It acts as a disincentive for councils to make such provision.

Through my work with the Empty Homes Agency, I know the valuable work that empty property officers do. One of the best examples that I remember was the empty property officer in south Somerset to whom I presented an award. The council had the sense to employ an estate agent—I hope that the noble Earl, Lord Caithness, will not take offence—who knew his way around the property world and was extremely successful in getting empty properties brought hack into use. Of course, that was a small council. It costs money.

The Government are being perverse. They support publicly that type of work, yet they will not allow local authorities to have the money. I will continue to press the issue until the end of the passage of the Bill.

Lord Bassam of Brighton

The amendments have value, in that they seek to ensure that local authorities are not penalised for the way in which they collect the extra revenue. We announced last November that we intended to allow local authorities to retain the additional revenue generated by the reduction in the current 50 per cent discount on second homes. We also said that we would ensure that revenue support grant would not be reduced if local authorities decided to reduce the discount for second homes. That answers the point that worried the noble Lord, Lord Hanningfield. Going further with the revenue support grant, we will continue to calculate the tax base as if there were no determination in respect of second homes, prescribed as a class under new Section 11A(3), which is inserted by Clause 76. In other words, we propose to calculate revenue support grant on the basis that the 50 per cent discount continues for second homes. There is no need to amend primary legislation to bring that about.

In the case of long-term empty property, we intend to give authorities the power to reduce or remove the current 50 per cent discount, but do not wish them to be able to retain the additional revenue. That is because we want to ensure that local authorities decide to reduce or end the discount on long-term empty properties on housing and planning grounds and not for financial reasons. It is right to seek to protect owners of long-term empty properties who are on low incomes or in areas where the property market is such that it is difficult to sell their property from facing an increased tax burden on grounds other than housing need.

I hope that satisfies the points raised by the noble Lord, Lord Hanningfield. I hope that the noble Baroness, Lady Maddock, takes some comfort from what I say, as well.

Baroness Maddock

I cannot say that I do, really. It is perverse to think that local authorities will use the provision in the way described by the Minister, given the housing and homeless strategies that we will discuss later. Many of the empty properties that are brought back into use are used by local authorities to house people with housing needs. There have been plenty of such schemes. I do not understand the Government's thinking, and I do not believe that it is logical.

Lord Hanningfield

I thank the Minister, who may have half-satisfied us. We shall return to some of the housing issues later on. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 165 and 165A not moved.]

Clause 76 agreed to.

7 p.m.

Clause 77 [Billing authority's power to reduce amount of tax payable]:

Lord Hanningfield moved Amendment No. 166: Page 40, line 20, leave out "in relation to particular cases or

The noble Lord said: I have to say that, although I am a supporter of maximising the discretion and freedom of local authorities, I was extremely surprised to see a provision in the Bill to enable local authorities to reduce the amount of tax payable by particular individuals.

That seems, in principle, fundamentally inequitable. I am surprised that a Labour government support the concept of treating individuals differently from one another for tax purposes. Whatever the intention of the provision, does the Minister not recognise that, in practice, the articulate rather than the needy are likely to benefit? Those with the time and ability to argue their case coherently are likely to reap the rewards of the provision.

From a local authority perspective, there is the potential for the system to be truly a nightmare. We have heard a lot today about what might be difficult for local authorities. There is no doubt that if those powers were put on the statute book, local authorities would receive many requests from individuals to have their council tax reduced. It would create an enormous burden on local authorities just to process the paperwork—much more than some of the other areas discussed today. Furthermore, when reductions have been made for some individuals, there will inevitably be questions about why exceptions were made in those cases. The potential expense for local authorities in dealing with that could be considerable. I urge the Minister to think again about whether this is the best way to achieve these ends.

I would be grateful for guidance on the practical dimension to the arrangement. As the Minister will know, in two-tier areas the billing authority is the district council. The power rests with it despite the fact that, on average, roughly 90 per cent of the council tax bill that it will reduce pays for county council expenditure. That is why we have two tiers and we do not have regional government all over the country. I presume that, under these provisions, for a district council to make reductions in a council tax bill there will be a recalculation of the council tax base and a corresponding adjustment upwards to revenue support grant. I assume that that is the case.

My worry is that it will be difficult and expensive administratively where we are talking about individual discounts. Operating many individual discounts could, unless there was a compensatory recalculation of the tax base, have a significant impact on a county council that had no responsibility for, or influence over, those decisions. For the reasons that I have set out, I urge the Minister to think carefully about whether the power is really necessary. I beg to move.

Baroness Hanham

I wish to pick up a point in the Explanatory Notes and ask whether the Minister would be kind enough to explain it. Paragraph 149 states: Authorities may exercise this power in individual cases"— that is reasonably clear from the Bill— e.g. individual hardship, in cases where the taxpayer is not eligible for council tax benefit, for example, where the dwelling is not their sole or main residence)". We have ifs and buts on different categories already. If that will be the situation regarding individual cases, why limit it to those? The whole clause begs more questions than it answers and probably creates more complications than the Government might expect or wish it to make.

Lord Rooker

We should never give examples; you cannot cover all the cases. The noble Baroness makes a fair point.

Clause 77 inserts a new section 13A into the Local Government Finance Act 1992 giving billing authorities discretion to reduce the amount of tax payable. I do not want to start a row but it was interesting to listen to local government bosses saying that they did not want the flexibility to reduce council tax.

In our 2001 local government White Paper we made clear that we are aiming to devolve more decisions on council tax discounts and exemptions. Allowing more decisions to be made locally will give local government greater flexibility to design policies appropriate to their area and give them the ability to respond to difficult cases which are not covered by the present nationally set council tax discounts and exemptions.

This clause does just that by giving billing authorities power to reduce the council tax for a class of dwellings, for example those affected by flooding in a particular location, or for individual circumstances, for example where there is hardship. The billing authority would, of course, have to act reasonably and would have to justify to its auditors what it had done.

To accept the noble Lord's amendment would remove the possibility of billing authorities granting discounts in individual cases. It suggests that Members of the Committee opposite—I refer only to council tax "bosses" opposite—do not trust local authorities to have that kind of freedom. But we on this side believe that local authorities should have that flexibility.

In the old days when we had rates and rateable values—this did not apply to the poll tax—it was always difficult to get reductions. But I did my bit before I entered another place to encourage people to seek rate rebates and discounts when they lived, for example, near factories and quarries. I dealt with the bureaucracy on their behalf. People obtained those discounts through revaluation. There is enormous scope for the pavement politicians of this country to exploit the flexibility that I mentioned. Councils may not like that but giving that extra flexibility locally can sometimes assuage people's frustration when they feel as if the council does not care and they cannot get a reduction when it is justified.

I do not say that the flexibility is a panacea, far from it, as the amount of money available is notional. However, people can experience incredible frustration when they believe that their local circumstances are not taken account of. The flexibility to which I referred may let the steam out of the bottle in those cases. As I say, we think that local authorities should have that flexibility but they must use it reasonably. Under the clause, billing authorities will meet the cost of providing discounts. There is no recalculation of revenue support grant. This is a genuine local decision for which billing authorities must pay to meet local demand.

Lord Hanningfield

Most of England is covered by two-tier authorities. A billing authority gets about 10 per cent of the tax whereas 90 per cent goes to the county council for such things as education, social services and such matters as flooding measures. Is the Minister saying that the whole cost of what we are discussing would be funded by the billing authority?

Lord Rooker

I am sorry, I did not read the final sentence. There would be no impact on the preceptors.

Lord Hanningfield

Obviously we are talking about a limited power. I accept what the Minister has said today. We may consider the matter further in terms of how local authorities will work within the new regime. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 77 agreed to.

Clause 78 [Statutory revaluation cycle]:

Lord Hanningfield moved Amendment No. 167: Page 40, leave out lines 27 to 29.

The noble Lord said: We have tabled a number of amendments whose purpose is to probe the Government's thinking over the introduction of a statutory revaluation cycle.

The first of the amendments in the group is clearly probing. We should be grateful, first, for an explanation as to why revaluation is necessary at all. Assuming that, since the Government are introducing this provision, they have strong arguments at their disposal for justifying it in principle. We should be grateful for clarification as to why the Minister has hit on 10 years for the revaluation cycle rather than five years, as I believe is currently the case with non-domestic rates and is the period recommended by the Royal Institution of Chartered Surveyors for council tax revaluation. After all, would not a five-year cycle reflect fluctuations in the property market more accurately and ensure a fairer distribution of council tax charges across local authority areas and between local authority areas nationally? Why does not the Minister propose a five-year cycle? Will he answer that question after he has said why the measure is necessary at all?

If the issue is one of resources, I should be interested to know whether the Minister's department has made any evaluation as to how much a revaluation will cost.

I also oppose the Question that Clause 78 stand part of the Bill. We are unconvinced of the need for a statutory revaluation cycle and therefore propose that this provision be removed from the Bill. I beg to move.

Lord Rooker

Amendment No. 167 would remove the requirement for the listing officer to compile and then maintain a new list for council tax purposes. This would leave no one responsible for the compilation of new lists.

The Government set out their policy with regard to council tax revaluation in the 2001 White Paper entitled, Strong Local Leadership—Quality Public Services. In that we said that there should be a 10-yearly cycle of council tax revaluations with the first one taking effect in 2007. The existing powers in the Local Government Finance Act 1992 made some provision for changing the valuation bands and the ratios between them, but there was no provision for replacement of the valuation list or a statutory cycle of revaluation. We think that council tax revaluation is necessary. That is why we have this clause in the Bill and why the Government are pressing ahead with seeking parliamentary approval for these powers.

I am assured that there is no surprise about this. It is true that I was dealing with other matters at the time. In the Green Paper, White Paper, draft Bill and this Bill there is no surprise about revaluation. If all the properties in the county always increase at the same average, there is no point in revaluation. Relative differences do not change. However, life is not like that. If anything, we should have had a revaluation after the first five years in 1997. I suspect that the then Government could not have got a Bill through the House of Commons let alone through the House of Lords on this issue. It is a very sensitive issue. Areas where values have increased more than average are at an advantage compared to areas where values have increased less than average.

Paragraph 367 of the Explanatory Notes estimates the cost of the proposed revaluation of domestic properties to be in the region of £200 million, including the cost of handling appeals. That is only a broad estimate because the costs would be affected by the method used. Decisions have not yet been taken on this issue. We are some way down the road in 2003 in that respect. I can tell from the other amendments that that will not satisfy the noble Lord. However, that is the reason. If everything always stayed the same there would be no reason for revaluation, but things do not always stay the same.

Lord Hanningfield

One of the problems of establishing council tax, which replaced community charge/poll tax, which replaced rating, and the reason that rating was unpopular, concerned revaluation. The community charge/poll tax was introduced in Scotland because of revaluation. I know that because I listened to Ministers talking about it at the time. There was chaos in Scotland with revaluation. The then Conservative government thought that they did not ever want to revalue again. Governments tend to lose elections after revaluations, so perhaps we should have the revaluations in 2004 rather than later.

I do not believe that the Minister has given an adequate answer as to why £200 million has to be spent on revalution. I know that property values move around, but the system could be left the same and the £200 million spent on something better, such as services for elderly people. I do not believe that the Minister has given an adequate answer. I am sure we shall come back to this. There are other amendments. The whole issue of revaluation, the cost, whether or not it is needed, and banding is a large area which will be contentious. We shall obviously debate it in Committee and I am sure at later stages in the Bill. In the spirit of moving on, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 168: Page 40, line 32, leave out "2005" and insert "2007

The noble Lord said: At present, Clause 78 differentiates between England and Wales with regard to revaluation. Whereas a new list must be compiled in relation to billing authorities in England on 1st April 2007, for Wales the list is to be compiled on 1st April 2005. Amendment No. 168 queries why the two are treated differently. If it is simply for administrative convenience, could the Minister say whether, somewhere down the line, he foresees separate revaluation cycles for different elected regions. which the Government are so keen on? I beg to move.

The Earl of Caithness

I should have liked my noble friend's amendment to have read "Line 31, leave out '2007' and insert '2005"" for the very reason that he gave. I was Minister of the Environment when revaluation was considered. As my noble friend said, it frightened many in Scotland. If he had changed the English date to 2005, at least the Labour Party would have had to live with its decision. If it is left at 2007, the noble Lord, Lord Rooker. will be in opposition and my noble friend will be the Minister of State.

7.15 p.m.

Baroness Maddock

It seems that everyone is worried about revaluation. The purpose of the amendment is to provide for revaluation to happen every 10 years. I support the Minister on the issue. There have been huge changes in house prices around the country; therefore, there must be revaluation every so often. However, there could be problems if there is not provision for when revaluation should take place. It seems good that everyone should know when it would happen.

I read that a Member in another place said that revaluation would not happen more frequently than every 10 years because it costs so much. About 10 years ago, when I was first elected to another place, almost all my caseload dealt with appeals on the value of people's houses which determined their banding. It is not an easy process, but if difficult decisions must be made, I support fixed-term revaluations—like fixed-term Parliaments.

Lord Bassam of Brighton

The reason for the two different dates is on practical grounds. England could not be ready in 2005 because the task there is much bigger. I am sure that the noble Earl knows that there are 20 million properties subject to revaluation in England and only 1 million in Wales. We have taken account of the views of the National Assembly for Wales, which decided that it would like the revaluation sooner than we planned for England. The Valuation Office Agency was able to accommodate that in its work programme. It is a simple explanation of the reason.

Lord Hanningfield

It looks as if we might do rather better in Wales at the general election than in England, given those dates. With that explanation, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker

This might be a convenient moment for the Committee to adjourn until tomorrow at 3.30 p.m.

Baroness Hamwee

Before the Committee takes a decision on that, may I make a plea either for tomorrow's session to be moved to a room where the atmosphere is better or for something to be done about the atmosphere in this room? I suspect that that is not possible. Members of the Committee who have left the room and come back in will have been hit with the unpleasant atmosphere, which we probably do not notice so much when we are sitting here. Add to that the injection of petrol fumes again this afternoon and one realises that, although there are fans, which are very welcome, were it not for the absorbing excitement of the Bill we would have all fallen asleep in this atmosphere.

Lord Rooker

The noble Baroness is quite right. I threatened last week that if something were not done I would take my coat off. That would create ructions. Revolution would come to this place. There is a shortage of rooms, and Black Rod is on the job, but there are not many more remaining sittings of the Committee. However, the situation applies to other people who must use the room. These are appalling circumstances. I do not know whether Rooms 4B or 4A would be better, but at least they have windows that could be opened and they would be perfectly satisfactory. I hope that Black Rod will consider the matter before tomorrow.

The Earl of Caithness

Is there a reason why we are not continuing until 7.30 p.m.?

Lord Rooker

Yes, for my personal convenience, to be honest. Is there a problem? I gave notice that I planned to finish just before 7.30 p.m.

The Earl of Caithness

I am delighted to help the noble Lord if he would help us in return.

Lord Rooker

You started late today. What is the problem?

The Deputy Chairman of Committees (Lord Geddes)

The Committee stands adjourned until Tuesday 17th June at 3.30 p.m.

Committee adjourned at nineteen minutes past seven o'clock.