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§ THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD) rose to move, That the Draft Rate Rebates (Limits of Income) Order 1972, laid before the House on December 14, 1971, be approved. The noble Lord said: My Lords, in moving this Motion, I should like to speak also to the Draft Rate Rebates (Limits of Income) (Scotland) Order 1971, which my noble friend Lord Mowbray will move after I have moved this Order. Drafts of both Orders were laid before the House on December 14. The rate rebates scheme is designed to provide some relief—roughly two-thirds—from rates for householders with low incomes, who number rather over 750,000. What is meant by a low income for the purposes of this scheme is defined by Order. These Draft Orders now laid before your Lordships' House are the third of their kind, and they raise the figure defining a low income from £12.25 to £14.75 a week for a married couple and from £10 to £12 for a single person, and in addition, for a dependent child, from £2 to £2.50.
§ My Lords, this change follows last September's increases in National Insurance retirement pensions and other benefits. It is designed broadly to ensure that the increases in these benefits and of income arising from them do not have the effect of depriving those receiving them of continuous entitlement to rate rebate as well. That is why the increases in the figures defining low income for the purposes of this scheme are in line with the increases in pension and social security benefit. Perhaps I ought at this point to remind your Lordships that 80 per cent. of those enjoying rent rebates are in fact pensioners.
§ Entitlement to rebate (starting in April) is calculated on income received in the previous half year, ending in December. The increases in benefit which began in September last have affected the income 274 in the half year ending last December, and this will in turn affect entitlement to rebate from April 1 next. However, the Order, if the draft is approved, will become effective on February 1 in order that applications for rebate may be made, in accordance with the usual practice, two months in advance of the date on which it will actually be available. I hope that with that short explanation I may commend these Orders to your Lordships' House. I beg to move.
§ Moved, That the Draft Rate Rebates (Limits of Income) Order 1972, laid before the House on December 14, 1971, be approved.—(Lord Sandford.)
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§ LORD GARNSWORTHY
My Lords, the House will be very grateful to the Minister for the explanation that he has just given. For our part, we welcome the Order, since it is a very necessary measure to help meet the effects of inflation which has occurred since the previous Order was made. There is also the fact of increasing local government expenditure. In their report, Return of Rates 1971–72, the Institute of Municipal Treasurers and Accountants show that for 858 local authorities in England and Wales the average rate increase for that year was in the neighbourhood of 14.5 per cent. Now it is true that the domestic ratepayer did not feel the full impact because of the item of domestic rate relief. That was increased from 8½p in 1970–71 to 9½ in 1971½72. But here, my Lords, I would point out that this Government, as compared with what the previous Labour Administration did and intended, have halved the domestic rate increase; and, indeed, they propose to be equally unhelpful in 1972–73, in that again they will halve the increase due under the domestic element of the rate support grant. The Green Paper on Local Government Finance, which was issued in July of last year, stated that it was the Government's intention to hold growth of expenditure on the part of local authorities to 4 per cent., as compared with a fairly consistent increase—indeed, I think one might say an actual increase—throughout the last few years of 5 per cent. per year.
The case for a rate rebate scheme, and indeed the need for this Order, is the 275 regressive nature of the only tax within the control of local authorities. As the Allen Committee reported in 1965, rates hit low income householders particularly hard. As a percentage of household incomes, they found that rates took 1.8 per cent. for those with incomes over £30 a week; for those whose incomes were between £15 and £20 a week, rates accounted for 2.9 per cent.; for those with household incomes between £10 and £15 a week, the figure rose to 3.8 per cent.; and for those under £6 a week—and there were many of them; indeed, as the Minister has said, many of them were pensioners—the percentage of income required to meet rate demands was as high as 8.1 per cent. So, clearly, lower-paid workers and pensioners were hit hardest by way of rate payment, as indeed they have been the people who have suffered most as a result of the erosion of the value of the pound.
I believe that the Act of 1967, which followed the Allen Report, was one not merely of social justice but, if I may say so, an Act of social decency, introducing as it did a system of rate rebates which, in 1970–71, gave rating relief (again as the Minister has said) to some 800,000 persons on an average throughout the year. But, my Lords, there is not merely a case for examining the position of, and giving consideration to, those who got relief, but for considering whether in point of fact a great many other people ought not to be claiming rate rebate relief as well. Of those who did claim rate relief, some 84 per cent. were wholly or mainly retired, and for these—pensioners, the very lowest paid workers and those with particularly large families—the rate rebate scheme introduced by the last Labour Government has indeed been a boon. But the benefits it confers are enjoyed only if they are applied for, and as I said a moment ago there may very well be many who ought to benefit but who have never, as yet, applied. The approval of this Order could be an occasion to bring to their notice the possibility of entitlement, and that there is need to apply. As did my noble friend Lord Greenwood when he was Secretary of State, I would ask the Government to give some consideration to mounting a 276 campaign, a powerful and sustained campaign, to bring to the attention of all who may be entitled the fact that they ought to apply.
It is as well to remind ourselves, I think, of those who are entitled to full benefit. They are married couples with weekly incomes of £14.75 or below and single persons with weekly incomes of £12 or below, with £2.50 added to those figures for each child; and those with slightly higher incomes would be, and indeed are, entitled to reduced benefits. For those who get maximum rebate, the benefit they draw is that they have to pay the first £3.75 of the rate demanded and then only one-third of the remainder; and I understand that the average rebate enjoyed by those claiming in England and Wales for the year 1970–71 was in the neighbourhood of £18.39.
The amended figures which this Order introduces are but a matter of social justice in the present economic situation, and little more, if I may say so, than an attempt at a holding operation. I think it might be pertinent to pose the question whether rate rebates are to be a temporary, means-tested benefit to bridge a gap until we can find a better, fairer system of financing local government at local level, or whether they are to be perhaps a basis for a permanent scheme for relating the rate burden in an equitable way. There are many other questions that one could ask, but perhaps they are better left until we have an opportunity to discuss more fully the whole field of local government finance. Meanwhile, on this side of the House we support the Order in the hope that maximum advantage will be taken of it by those entitled to its benefits.
§ LORD SANDFORD
My Lords, I am grateful to the noble Lord for expressing, his support for these Orders. I would confirm that an examination of the whole system of local government finance is, as he said, in hand, and rate rebates will be included in it. I also confirm that publicity will be specially directed, as before, to those entitled to these rebates and to their right to apply for them.
§ On Question, Motion agreed to.