Local Government Finance Bill

HL Deb 17 February 1992 vol 535 cc992-1052

Report received.

Clause 1 [Council tax in respect of dwellings]:

Lord McIntosh of Haringey moved Amendment No. 1: Page 1, line 13, at end insert: ("( ) Within three months from the date of Royal Assent to this Act the Audit Commission and the Comptroller and Auditor General shall report on the financial, managerial and personnel costs of implementing council tax and on the preparedness of billing authorities for the introduction of such a tax").

The noble Lord said: My Lords, I must confess that I had hoped that the formal business that we have just dealt with would have enabled the exodus to take place before I got to my feet. I am disappointed, and must now take it personally.

The text of Amendment No. 1 is the result of the statement made by the Minister in Committee, who said: The council tax is based on commonsense principles and its operation will be straightforward".—[Official Report, 21/1/92; col. 759.]

I know that the noble Lord, Lord Renfrew of Kaimsthorn, believes that, but I do not know whether his faith has been cracked as a result of some of the revelations that were made in Committee. I do not think that anybody else in the country believes that the operation of the council tax will be straightforward.

As time expires towards the deadline of the end of March 1993, when the poll tax is supposed to die and to be replaced by the council tax, evidence becomes more and more weighty that the operation of the council tax will not, by any means, be straightforward. Without referring to any outside evidence, I cite only the draft regulations that are now circulating among the local authorities. As of the end of last week, there are no fewer that 16 sets of draft regulations, some of which are a second version, and all of which require comments to be made between the middle of January and the end of February. These are complex regulations, as was evident when, in response to a question from me, the Minister agreed that the regulations should be placed in the Library.

This is a complex Bill, as is the system. There are regulations on exempt dwellings; the liability of owners; discount disregards; additional provisions for discount disregards; the reduction scheme for England; the calculation of the council tax base; the administration, billing and collection; the council tax demand notice; chargeable dwellings; the contents of valuation lists; practice notes on valuation lists; reductions for disabilities; appeals; setting the council tax; precepting and funds; and enforcement. All of those regulations are now in the field, so to speak. They are being, or have been, responded to by local authorities and local authority associations. There is no evidence that the flood of paper from Marsham Street will diminish, let alone come to an end, while Marsham Street remains intact.

Enormous concern is being expressed within local authorities about those regulations, and, in particular, about what will happen as regards them when there is a general election, as there must be within the next few months. I understand that regulations which are subject to the negative resolution will count as many days as are applicable towards their 40 days before the dissolution of Parliament, and will take up counting again when the new Parliament assembles. That means that there will be a time gap of anything between three weeks and five weeks during which those regulations may be prayed against and, therefore, may or may not take effect.

For regulations subject to the affirmative resolution, the position is somewhat worse. When the affirmative resolution is required, I understand that the regulations can have no effect until Parliament's affirmation has been received. Here again there will be a delay—I do not know whether it was planned for —in the decisions about the basic way in which the council tax will apply.

The poll tax, which may or may not have been more complicated, took place within a stable basis of local authority taxation—the rating system—and a further year was provided between the legislation and the implementation of the tax that is now provided for in respect of the council tax. The council tax may or may not be simpler. That remains to be seen. The council tax is planned to be implemented at a time when many of the problems of the poll tax are still in full flood. They are problems not just of non-collection but of definition and of how the tax was designed. Under those circumstances, it is hardly surprising that local authority practitioners, supported by CIPFA, the CSL Group Ltd., consultants to the Department of the Environment, and, above all, by the Audit Commission, which advised the Government on those matters, are worried about the timetable for the implementation of the council tax.

This is a modest amendment. It does not seek to delay or damage the implementation of the council tax. It does not impose any additional deadlines upon the Government. It provides that: the Audit Commission and the Comptroller and Auditor General shall report on the financial, managerial and personnel costs of implementing council tax and on the preparedness of billing authorities for the introduction of such a tax".

That will leave it to the Secretary of State of the day to make his judgment on the report of the Audit Commission and the Comptroller and Auditor General as to whether special steps may have to be taken to facilitate the implementation of the council tax or, at worst, whether some delay is necessary in the implementation of the council tax.

Let me make it clear that we do not want to delay the death of the poll tax, but we do not want the unprecedented disruption and chaos in local authority financial administration caused by the poll tax to be succeeded by a further period of disruption and chaos caused by the implementation of an inadequately prepared, worked out and funded new system of local government taxation. The amendment is a protection for government and in no way a threat, but it is also a protection for local authorities and the people who live in their areas. I beg to move.

3.15 p.m.

Lord Renfrew of Kaimsthorn

My Lords, in Committee, a whole series of amendments, similar to this one, was proposed by the Opposition, ostensibly requiring the publication of supposedly useful information; but in reality making rhetorical points, not always of great substance. The amendment contains a great deal of rhetoric because the information it seeks would not be of great use to anyone. Our job is to make the Bill, when it is enacted, work. If I may say so, the Opposition are making heavy weather of the enterprise, because the Bill, in its outline and principles, is one of considerable simplicity. I made that point previously. The noble Lord was kind enough to refer to it just now.

One hopes and believes that it will be much simpler to collect the council tax than the community charge. The costs of collection, which are the subject of the amendment, are likely to be very much less than any scheme the Opposition are likely to propose. The outlines of the Opposition fair rates scheme are far from clear; but, nonetheless, it involves, first, valuing every property in the land, and then proceeding to add to the valuation the notion of rental value for every property, and, in addition, maintenance costs and rebuilding costs. No wonder that, by contrast, the Opposition have sometimes suggested that the valuation-by-band scheme is over simple.

On Second Reading (at col. 1636 of Hansard for 9th January), the noble Baroness, Lady Hollis, observed that the original estimated cost of valuation was £120 million. She pointed out that it had decreased to £20 million. She suggested that that might be 20 pence per property. She went on to say: Far from the valuation being carried out from the back of a car, it is now being carried out from the back of an office". So much the better. If there is a valuation scheme for properties in a given area—she gave the example of Barrow —where many properties are of approximately the same value, the valuation can be achieved by studying the type of properties without having a separate exercise for each one, and how much more efficacious that will be. That is one of the great strengths of the Bill. That is why I feel that the amendment is essentially rhetorical. When it comes to discounts, let us remember that although local authorities will make every effort to give an appropriate estimate for discount in the bills sent out, it will be open to those receiving the bills to make application for discount to their satisfaction.

Benefits are of course more complicated, but then benefits always are more complicated. I feel that the Opposition are exaggerating—they may be wilfully exaggerating, but I shall not make that point seriously —the complications involved in the application of the Bill. The great strength of the council tax is that it should be simple to collect and, as the noble Baroness said, the valuation will be simple. Those are positive features.

Baroness Blatch

My Lords, first may I thank my noble friend for making one or two of the points—

Lord McIntosh of Haringey

My Lords, I believe that my noble friend Lady Phillips wished to speak before the Minister. We are at Report stage.

Baroness Phillips

Thank you, my Lords. If the Minister is too sharp, I could understand why she might neatly cut us out. That could be the case, but knowing her, I do not believe that that was what she intended. Having listened to the contribution of the noble Lord, Lord Renfrew, regarding simplicity, I shall tell a simple tale. This week, in my own area, I heard of two elderly ladies of great distinction and intelligence who are alone and dependent on someone else to call on them now and again to help them with the bills they receive which are becoming more and more complicated. One needs to study finance now just to pay the electricity bill. Those two ladies, without realising what it was, received a summons to attend court because they had not paid their tax bill. When questioned by the lady who called on them they both said, "I did not understand what it was all about". These are people of good, high character. If they cannot understand it, they will not be alone—they are typical. The lady who called on them immediately wrote out cheques for both of them for their tax. When she telephoned the tax office—or whatever it is called these days in the town hall—and pointed out the situation, she was told, "They will still have to pay for the summons, £23 each".

What condition have we reached where good, honest people receive a summons to a civil court simply because they have not understood the unnecessarily complicated ways in which we deal with Acts of Parliament? For heaven's sake, let this next tax be understandable. The previous one certainly was not.

Lord Boyd-Carpenter

My Lords, this is an odd amendment. For the Audit Commission and the Comptroller and Auditor General to have to investigate these matters within three months of Royal Assent would simply have the effect of imposing additional work on the local authorities. Moreover that would happen at the the very moment when they should be and would otherwise be concentrating on bringing the new tax into operation and carrying out all the administrative work. If they are to be distracted from that in order to supply a mass of statistics and material in this way, it would complicate their task and delay the implementation of the tax.

There, perhaps, the secret peeps out. I notice that the noble Lord, Lord McIntosh, said that if the reports indicated that there were difficulties in bringing the tax into operation, then the Government would have to consider delaying or amending it. That is the purpose of the amendment. It is simply designed—quite ingeniously—with the hope of delaying the implementation of the Bill. It would have no practical value; it is simply a rather intelligent piece of obstruction.

Lord Stoddart of Swindon

My Lords, the noble Lord, Lord Renfrew, suggested that the operation of the tax would be simplicity itself; it would be easy, no problem, everyone would know what he had to pay and would pay up and there would be no further problems.

However, I sat here listening to the same arguments about the poll tax. I was told, "Here is a simple, easily understood tax which applies to everyone. It is fair, everyone who uses services would pay a contribution. As a result, bills would be far less for every payer". We now know what happened. We found that the poll tax was the most complicated of taxes ever devised. We also found that, except in a few cases, bills were sometimes twice as high as they were previously and that now many people throughout the country have to pay an extra £45, £50 or £52 in order to make up for those who have not paid. The local authorities have been unable to catch up with the non-payers. Thus, what was supposed to be a simple tax and was represented to the House as a simple tax proved to be a nightmare, not only for the collectors but for the whole population.

We are now being told that this tax is simplicity itself, people will understand it and will therefore succumb and pay it without further problems. However, what will people say whose houses are valued at between £160,000 and £320,000? They may find that they pay as much tax on their house in a less salubrious area as a person living in a comparable house twice the size in a very salubrious area. That will not appear to them to be simple. My noble friend was right in saying that when people are informed of the so-called value of their houses, many will be so appalled that they will rush to appeal against the valuations. That in turn will cause difficulties for the local authorities.

I hope that the Government will not just cast the amendment aside. It is right that whatever colour the Government may be, they should be aware of what is going on and what the difficulties will be. Had such amendments been accepted by the Government and passed in relation to the poll tax legislation, a good many of the problems which have arisen as a result of that tax might have been avoided. I urge the Government not to spurn this amendment out of hand. It is designed to help.

Baroness Hamwee

My Lords, when I first saw the amendment I was in two minds about the wisdom of imposing on local authorities and local government yet another exercise in considering various problems. Having thought about it, I see the wisdom of the amendment. It does not ask for individual local authorities to become involved in the exercise. The proposed report could involve the local authority associations. Given the huge complexities of which we have all become aware as we consider the Bill, I do not believe that any of your Lordships feel more confident about the ease of administration of the legislation than when we began examining the Bill about a month ago.

I believe that the amendment is not a bad suggestion for giving the various parties the opportunity to assess where we are and also for local authority associations to be reassured. I am sure that the Minister will tell us that a dialogue is going on with the local authority associations. I accept that, but your Lordships may wish to have it on record. There would be an opportunity for discussion and assessment and perhaps a revision of some regulations which are being considered at the moment.

Although I have some doubts as to exactly what additional dialogue we wish to add to the exercise, I understand the wisdom and the thrust of the amendment.

3.30 p.m.

Baroness Blatch

My Lords, first, I wish to apologise to the noble Baroness for seeming to interject too quickly. I did not think that anyone else was rising. I hope she knows that I would not wish to interrupt.

Baroness Phillips

My Lords, I still love the noble Baroness!

Baroness Blatch

My Lords, perhaps I may begin with the point made by the noble Baroness, Lady Hamwee. The exercise will take time and cost money. As my noble friend Lord Boyd-Carpenter said, this is not the time to impose yet more time-consuming exercises. It is certainly not the time to incur greater costs over and above those that are already being incurred.

As regards reporting on the preparedness of billing authorities for introducing the tax, we all know that some authorities are getting on well with that work and will be ready to introduce the tax while others will not. I cannot understand how such an exercise can be undertaken without considering each individual authority. If it is to be just a general exercise, it will tell us what we already know—that some local authorities are highly efficient and others are not. A general overseeing exercise will not be fruitful.

The noble Lord, Lord McIntosh, was worried about the general election. If I may say so, he rather laboured the point that local authorities have a number of matters to cope with at this time in preparing for the council tax. That is rather rich coming from a member of a party that is also preparing for government in the not too distant future. As my noble friend Lord Renfrew has already pointed out, that party is prepared, almost within days of the election, to return to the former rating system that is only—

Noble Lords

No!

Baroness Blatch

My Lords, I hope I may continue. The Labour Party would like to return by 1993 to the former rating system. To achieve that that party would have to get on with that process almost as soon as a general election had taken place, otherwise local authorities could not cope with the workload. As I have said, the former rating system is 19 years out of date and it has many inequities and iniquities.

As my noble friend has already said, at almost the same time another piece of major legislation would be put in place to establish an evaluation system to be carried out annually. That evaluation system would assess rental values, capital values, rebuilding costs and repair costs and the system is related to assessing the income of each household. In the first year of its operation—even before the return to the former rating system—it requires legislation to effect 100 per cent. rebates for individuals in the tail end of the community charge.

We understand the Labour Party also intends to put legislation on the stocks quickly to establish regional assemblies and to devolve some government to Scotland. All of that legislation will place enormous burdens on local authorities. The system of council tax to raise revenues for local authorities that we propose is simple and fair. I believe local authorities are getting on with the work of implementing that tax and are already making immense progress. We congratulate them on that progress.

The Audit Commission and Comptroller and Auditor General are independent bodies with wide remits to investigate the efficiency, economy and effectiveness with which public services are provided. It is for them to decide, in the light of their other responsibilities and priorities, whether there is a need to conduct an inquiry of the kind proposed by noble Lords opposite. It would be inappropriate to seek to direct their studies through this Bill.

In any case there is no need for such an inquiry. No one is better placed than local government to assess its own costs in implementing the council tax. I am glad to tell your Lordships that the cost of valuation in England, Scotland and Wales is now expected to be £83 million compared to our initial estimate of £250 million. This saving is due to keen tenders from private sector valuers. It is an example of what can be achieved through co-operation between the public and private sectors.

Noble Lords opposite argue that we have underestimated the cost to local authorities of preparing for the council tax. We commissioned an independent consultant to look into this matter and we accepted its findings in full. I have heard nothing today to persuade me that the initial estimates were unsound. The arrangements for funding the preparation of the local tax seem to have been generally welcomed by local government. Despite what noble Lords opposite might say, there are no grounds for thinking that local authorities will have any difficulty in implementing the council tax by 1st April 1993. We are doing all we can to help them. Apart from financial support, we have circulated a user requirements specification to all local authorities to use in specifying and evaluating computer software for the council tax. Only a minority of authorities are planning to design their own software. Most will rely on commercial products. I understand that the user requirements specification has been very well received.

We have been consulting the local authority associations about draft regulations and orders since before Christmas. Last week we sent copies of the latest drafts to all local authorities and to the main software houses. These drafts cover all main aspects of the council tax which are needed for the preparation of computer software and the development of administrative systems. Subject to parliamentary approval of the Bill, we intend to lay the orders and regulations as soon as possible after Royal Assent.

I should say to the noble Lord, Lord McIntosh, that the main regulations for the council tax will be subject to negative resolution. We intend to lay them shortly after Royal Assent. They will come into effect in 21 days, regardless of whether Parliament is prorogued. As the noble Lord knows, they can be prayed against within 40 days. As I believe he is also aware, the clock stops during prorogation. This amendment is another attempt to overlay a layer of bureaucracy. It is also another attempt to thwart the implementation of the council tax. I ask the House to reject the amendment.

Lord McIntosh of Haringey

My Lords, I cannot let this moment pass without expressing my gratitude to the Minister for the information she has imparted about the Labour Party manifesto. She seems to know a great deal about Labour Party policies for the forthcoming election including the priorities for different kinds of legislation. It is useful to have her informed knowledge on this subject.

I shall now return to the subject of the amendment which is about government policy rather than Labour Party policy. I was interested to hear the comments of the noble Lord, Lord Renfrew, which I noted down with great care. He did not say the Bill was simplicity itself, but rather that it was of considerable simplicity in outline. That was an interesting remark. My noble friend Lord Stoddart effectively gave the lie to that by pointing out that the poll tax was simplicity itself in outline as it was intended to be a flat rate tax levied on everyone in the country by local authorities. I agree with my noble friend that one could not imagine anything more simple in outline and more complex in practice.

However, the council tax is not even simple in outline let alone in practice. As Ministers have been at pains to explain, the council tax is a compromise between a property tax and a personal tax. It is supposed to be 50 per cent. property tax and 50 per cent. personal tax. It is complicated further by the provision of a discount structure, and further still by the addition of a rebate structure which, as the noble Lord has rightly said, can never be simple. What he does not observe, of course, is that there is an interaction between the discount structure and the rebate structure which increases enormously the complexity of the operation of the tax, not least as regards the software systems which local authorities have to put in place to give effect to the council tax and to establish individual or property obligation for the council tax.

I fear there is a great confusion in the minds of noble Lords opposite about this concept of simplicity. They have mentioned the cheapness of the valuation system. They claim that because the valuation system is cheap that in itself will provide simplicity in the operation of the tax system which results. I suggest to your Lordships that the opposite is the case. It reminds me of Richard Brinsley Sheridan who said about writing that one writes with ease to show one's breeding, but easy writing is damned hard reading. I rather suspect that easy valuation will be damned hard to implement. All the evidence suggests that that will be the case and there will be a far higher number of appeals because people will feel a far greater sense of injustice both as a result of the similarities between properties which people think should be valued differently and as a result of the differences in values of properties which people think should be given similar values.

In a characteristic intervention the noble Lord, Lord Boyd-Carpenter, made much of the work which would be imposed on local authorities. That point was answered effectively by the noble Baroness, Lady Hamwee, who said, quite rightly, that that work would be done by the associations rather than by individual authorities.

Lord Boyd-Carpenter

My Lords, will the noble Lord allow me to intervene? I nearly intervened when the noble Baroness spoke. If the noble Lord looks at his own amendment he will see that it refers to the work to be done by the billing authorities, not by the associations.

Lord McIntosh of Haringey

My Lords, as I was about to go on to say, the report will be on: the financial, managerial and personnel costs of implementing council tax". I do not believe that the noble Lord is seriously suggesting that local authorities are not already calculating the financial, managerial and personnel costs of implementing the council tax. Indeed, they have to do so because 75 per cent. of the revenue costs will be reimbursed by central government. No additional work is involved there. The point at issue is not the complexity of the information demands but the quantum of additional expenditure which is involved in the implementation of the council tax.

It would be irresponsible of us not to propose in the amendment that there should also be a report on the preparedness of billing authorities for the introduction of such a tax. Otherwise one might find that the Audit Commission and the Comptroller and Auditor General reported to the Secretary of State and to Parliament that the costs were enormously higher than had been anticipated and, though they might know that local authorities were not as prepared as they ought to be for implementation on 1st April 1993, because Parliament had not ordered them to do so they could not say anything about that. That would be like the Bellman in The Hunting of the Snark, who adapted the principle that no one should speak to the man at the helm with the corollary that the man at the helm should speak to no one so that there was no communication between the helm and the rest of the crew. As Lewis Carroll said, during those bewildering intervals the ship usually sailed backwards.

As we have made clear, this is a helpful amendment. It is intended to bring forward as rapidly as possible into the domain of public information the real progress towards implementation of the council tax and enable the Secretary of State, if he thinks fit, to do something effective about it. To deny that is to will the end but to refuse to provide the means. The House should give its opinion of the amendment.

3.42 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 83; Not-Contents, 133.

Division No. 1
CONTENTS
Beaumont of Whitley, L.	Boston of Faversham, L.
Birk, B.	Bottomley, L.
Blackstone, B.	Broadbridge, L.
Bonham-Carter, L.	Carmichael of Kelvingrove, L

Castle of Blackburn, B.	McIntosh of Haringey, L.
Cledwyn of Penrhos, L.	Mackie of Benshie, L.
Cocks of Hartcliffe, L.	Mallalieu, B.
David, B.	Mason of Barnsley, L.
Dean of Beswick, L.	Mayhew, L.
Desai, L. [Teller.]	Milner of Leeds, L.
Donaldson of Kingsbridge, L.	Mishcon, L.
Dormand of Easington, L.	Molloy, L.
Ennals, L.	Morris of Castle Morris, L.
Ewart-Biggs, B.	Morris of Kenwood, L.
Ezra, L.	Nicol, B.
Falkland, V.	Ogmore, L.
Fisher of Rednal, B.	Peston, L.
Fitt, L.	Phillips, B.
Gallacher, L.	Pitt of Hampstead, L.
Galpern, L.	Prys-Davies, L.
Gladwyn, L.	Ritchie of Dundee, L.
Graham of Edmonton, L. [Teller.]	Robson of Kiddington, B.
	Rochester, L.
Grey, E.	Ryder of Warsaw, B.
Hampden, V.	Sainsbury, L.
Hampton, L.	Seear, B.
Hamwee, B.	Sefton of Garston, L.
Hanworth, V.	Serota, B.
Harris of Greenwich, L.	Shackleton, L.
Hatch of Lusby, L.	Shepherd, L.
Hirshfield, L.	Stallard, L.
Hollis of Heigham, B.	Stedman, B.
Hooson, L.	Stoddart of Swindon, L.
Jay, L.	Strabolgi, L.
Jenkins of Hillhead, L.	Taylor of Blackburn, L.
Jenkins of Putney, L.	Underhill, L.
John-Mackie, L.	Wallace of Coslany, L.
Judd, L.	Warnock, B.
Listowel, E.	Wedderburn of Charlton, L.
Llewelyn-Davies of Hastoe, B.	White, B.
Lockwood, B.	Williams of Elvel, L.
Lovell-Davis, L.
McCarthy, L.
NOT-CONTENTS
Acton, L.	Denton of Wakefield, B.
Ailesbury, M.	Derwent, L.
Aldington, L.	Dudley, E.
Alexander of Tunis, E.	Effingham, E.
Ampthill, L.	Elibank, L.
Arran, E.	Ellenborough, L.
Astor, V.	Elles, B.
Auckland, L.	Elliot of Harwood, B.
Balfour, E.	Elliott of Morpeth, L.
Beaverbrook, L.	Elton, L.
Belhaven and Stenton, L.	Erne, E.
Beloff, L.	Erroll of Hale, L.
Belstead, L.	Faithfull, B.
Bessborough, E.	Flather, B.
Blatch, B.	Gainford, L.
Blyth, L.	Gardner of Parkes, B.
Boardman, L.	Geddes, L.
Borthwick, L.	Gridley, L.
Boyd-Carpenter, L.	Haddington, E.
Brabazon of Tara, L.	Haig, E.
Bridgeman, V.	Hailsham of Saint Marylebone, L
Brigstocke, B.
Brougham and Vaux, L.	Havers, L.
Butterworth, L.	Hayter, L.
Caithness, E.	Henderson of Brompton, L.
Campbell of Alloway, L.	Henley, L.
Carnegy of Lour, B.	Hesketh, L.[Teller.]
Carnock, L.	HolmPatrick, L.
Cavendish of Furness, L.	Hood, V.
Clanwilliam, E.	Hooper, B.
Clitheroe, L.	Howe, E.
Cockfield, L.	Hylton-Foster, B.
Colnbrook, L.	Inglewood, L.
Colwyn, L.	Ironside, L.
Crawford and Balcarres, E.	Jeffreys, L.
Cullen of Ashbourne, L.	Jenkin of Roding, L.
Dacre of Glanton, L.	Joseph, L.
De L'Isle, V.	Killearn, L.
Denham, L.	Kinloss, Ly.

Kinnaird, L.	Prentice, L.
Kinnoull, E.	Rankeillour, L.
Knollys, V.	Reay, L.
Lauderdale, E.	Rees, L.
Long, V.	Renfrew of Kaimsthorn, L.
Lyell, L.	Romney, E.
Mackay of Clashfern, L.	St. Davids, V.
Macleod of Borve, B.	Saltoun of Abernethy, Ly.
Malmesbury, E.	Selkirk, E.
Mancroft, L.	Strange, B.
Manton, L.	Strathcarron, L.
Marlesford, L.	Strathclyde, L.
Merrivale, L.	Strathmore and Kinghorne, E. [Teller.]
Mersey, V.
Middleton, L.	Sudeley, L.
Milne, L.	Terrington, L.
Milverton, L.	Teviot, L.
Morris, L.	Thomas of Gwydir, L.
Mountevans, L.	Thurlow, L.
Mowbray and Stourton, L.	Trumpington, B.
Munster, E.	Ullswater, V.
Nelson, E.	Vaux of Harrowden, L.
Newall, L.	Waddington, L.
Newcastle, Bp.	Westbury, L.
Orkney, E.	Wharton, B.
Pearson of Rannoch, L.	Whitelaw, V.
Pender, L.	Wise, L.
Peyton of Yeovil, L.	Young, B.
Platt of Writtle, B.

Resolved in the negative, and amendment disagreed to accordingly.

3.52 p.m.

Clause 3 [Meaning of "dwelling"]:

Earl Howe moved Amendment No. 2: Page 2, line 22, leave out from ("which") to ("is") in line 23 and insert: ("(a) is a composite hereditament for the purposes of Part III of the 1988 Act; and (b) would still be such a hereditament if paragraphs (b) to (d) of section 66(1) of that Act (domestic property) were omitted,").

The noble Earl said: My Lords, in moving this amendment I shall speak also to Amendment No. 4. During Committee we debated the purpose of Clause 3 and the differences between Clause 3 of this Bill and the schedule to the Local Government Finance and Valuation Act. The matter was similarly debated very fully in Committee in another place.

In the course of those debates the Government made clear that the intention of subsection 3(4) is to ensure that only properties which include living accommodation should be subject to the council tax. Garages, storage premises, yards, gardens and such like which are hereditaments in their own right should not be chargeable dwellings.

Amendment No. 2 puts beyond doubt that the same should apply to any composite hereditament which does not include living accommodation. These amendments specifically exclude from the definition of a dwelling any composite hereditament which is only a composite by virtue of the fact that it includes a domestic garage, storage premises, yard, garden or other domestic property which is not living accommodation. Amendment No. 4 is consequential.

As a result of detailed debate in Committee we realised that these technical amendments are needed to deal explicitly with the case of composite hereditaments which contain no living accommodation. I beg to move.

Lord McIntosh of Haringey

My Lords, I had thought that the noble Lord, Lord Renfrew, was going to congratulate the Government on the simplicity of this measure.

On Question, amendment agreed to.

Baroness Hamwee moved Amendment No. 3: Page 2, line 34, at end insert: ("(d) a dwelling which is—

1. (i) an establishment, nursing home or mental nursing home which is required to be registered under the Registered Homes Act 1984 or would be so required but for section 1(4), (5)(j) or 21(3) (a) of that Act; or
2. (ii) a property or part of a property in which residential accommodation is provided under section 21 of the National Assistance Act 1948 or paragraph 2(1) (a) of the National Health Service Act 1977; or
3. (iii) a "hostel" in that it is an establishment in which residential accommodation is provided and which is—
1. (a) managed by a housing association registered with the Housing Corporation under section 5 of the Housing Associations Act 1985; or
2. (b) operated other than on a commercial basis and in respect of which funds are provided wholly or in part by a Government Department or agency or a local authority; or
3. (c) managed by a voluntary organisation.

and where the sole or main function of the establishment is to provide personal care or support, combined with board, to persons who are solely or mainly resident in the establishment.").

The noble Baroness said: My Lords, this amendment seeks to maintain the status quo by removing residential care homes, nursing homes and similar establishments from liability for council tax.

I refer to the council tax's two predecessors. I understand that residential homes and hostels were treated as domestic property for rates but, in effect, were exempt from liability through the disabled rate relief scheme. That principle was extended to the poll tax, although under that tax the mechanism is different: individuals in such establishments are exempt under statutory instruments from liability for poll tax. From previous debates on this Bill we all understood that the regulations on exempt dwellings would cover properties which had been exempt from the poll tax. Certainly I thought that residential and nursing establishments would be exempt. However, the draft regulations do not exempt those properties. Indeed, those who are concerned with this sector have been informed by various members of the Government that they will not be exempted.

There is certainly some confusion about the mechanisms of exemption and doubt as to what will be the future for the establishments referred to in this amendment. I hope that the Government can explain whether there has been a change in Government thinking from that on poll tax and indeed the rates. If there is to be a difference, will they explain why that is so?

The amendment seeks to exclude certain establishments from the definition of "dwelling". It does not propose that they should be exempt dwellings. It uses the wording in the community charge regulations to define the establishments which it is proposed should not be liable for council tax; in other words, the amendment seeks to restrict the concession to those establishments where residents are exempt from the poll tax and which were exempt from domestic rates.

I should be glad to know why there is a break with previous practice and why those homes will be liable for council tax. I should like to know the thinking behind the change. I beg to move.

Baroness Hollis of Heigham

My Lords, we on these Benches support the amendment. As the noble Baroness, Lady Hamwee, clearly explained, such properties have always been exempt under the rates by virtue of disabled rate relief and under the poll tax because the individuals therein were exempt. We wish to ensure that such properties continue to be exempt. Having read the discussions in Committee in the other place, it may well be that Ministers intend them to be exempted. In that case, we hope that this will be an opportunity for the Government to make clear their thinking on this matter.

Lord Renfrew of Kaimsthorn

My Lords, I believe that at Report stage one wants amendments to make sense as one reads the legislation and to go on making sense as they are enacted. I apologise for making what may be a pedantic point but it is, I think, a not inappropriate one.

In the unamended Bill Clause 3(4) states that none of the properties (a), (b) and (c) is a dwelling. The amendment proposes to add a paragraph (d), "a dwelling". We are therefore told that none of the properties in (d) is a dwelling. In other words, the legislation will state that a dwelling is not a dwelling.

That cannot be good drafting. At Report stage it would be appropriate to have drafting which, when read in conjunction with the original Bill, does not result in what appears to be a contradiction in terms.

The noble Baroness seeks to elicit some information. I am sure that her request will receive a response. But perhaps I may speak to the content of the amendment. It seems to me that if one wishes to exempt such dwellings, the substance of the amendment could be included in Clause 4(3), along the lines of Amendment No. 7. That would place in the category of exempt dwellings those listed by the noble Baroness. That would perhaps make drafting sense.

Most of the dwellings that are listed are dwellings which also contain people whom one might well expect to be liable to pay the council tax. Many of the nursing homes will have proprietors. There may be other persons who will perfectly appropriately be subject to council tax. We understand from Committee stage that the warden of a student hostel will very probably be subject to council tax; and why not? The warden of a student hostel is in no different position from any other wage earner. The same may well apply to the proprietor of an establishment—a nursing home or a mental nursing home. It is not clear to me whether that category of person should be exempted, in which case it is not necessarily appropriate to make such residences exempt dwellings.

One understands the point that the noble Baroness seeks to achieve. It may well be appropriate that some persons do not pay council tax. No doubt we shall discuss their eligibility for benefits later. That alternative avenue might well be more within the logic of the Bill. However, apart from the trivial drafting point with which I began, there is a more substantial point which makes the amendment not altogether appropriate.

4 p.m.

The Earl of Balfour

My Lords, perhaps I may follow on from what my noble friend Lord Renfrew said. I believe that the provisions ought to be in Clause 8 and not Clause 3. Clause 8 provides for liability in prescribed cases. That might meet some of the arguments. As my noble friend Lord Renfrew said, where a dwelling—the word "hostel" is used in the amendment—is managed by a voluntary organisation, it is the voluntary organisation which would be involved. I believe that the amendment is totally unsuitable in Clause 3. However, I have some sympathy with the considerations underlying the amendment.

Lord McIntosh of Haringey

My Lords, a number of serious misunderstandings were revealed in the speech of the noble Lord, Lord Renfrew. First, he seems to believe that it is wrong to point out that there are circumstances in which a dwelling is not a dwelling. Unfortunately it is a trap which the Government have built for Parliament and for the country through the drafting of this legislation. The whole of Clause 3 is concerned with the definition of a dwelling. Subsection (1) attempts to define a dwelling. Subsection (6) gives the Secretary of State power to say that a dwelling is not a dwelling if he thinks fit by regulation afterwards.

The difficulty arises because the Government have changed their mind since the paving Act passed in the summer of last year. The phrase used then was "a domestic property". If we had stuck to that, we might not be in the difficulty in which we find ourselves.

The noble Lord's second misunderstanding arose from what he said about the warden of a student hostel. The tax is a tax on property. If a warden of a student hostel is to have exemption under a discount or rebate system, that will be dealt with in the appropriate way. However, the tax is on the dwelling. The amendment, quite rightly, seeks to provide that certain dwellings—in common parlance, places where people live—ought not to be included for good, humanitarian, charitable reasons.

Lord Renfrew of Kaimsthorn

My Lords, the noble Lord kindly gives way. The misunderstanding is largely on his side. My understanding was that students resident in a student hostel, for instance, will not be subject to council tax, but that nonetheless provision will be made so that a warden can be expected to pay council tax. That was my understanding. We shall have to ask my noble friend to clarify the matter. It was the substance of the noble Baroness's announcement at Committee stage.

It would he anomalous to exclude the warden of a nursing home when one does not exclude the warden of a student hostel. I was appealing on the ground of symmetry.

I accept that there are different categories of residence which it may or may not be convenient to call a dwelling. I objected to the pedantic wording. To say that a dwelling is not a dwelling cannot be good drafting.

Lord McIntosh of Haringey

My Lords, I shall not give way again at Report stage if, in order to clarify the position, the noble Lord makes second speeches in place of an intervention.

The purpose of the amendment, as is quite clear, is to extend the protection—which has already been extended to some deserving cases—to others. The amendment deserves the consideration of the House on that basis.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)

My Lords, I am grateful to my noble friends Lord Renfrew and Lord Balfour for explaining some of the technical deficiencies of the amendment. I was also surprised that the noble Baroness, Lady Hollis, and the noble Lord, Lord McIntosh, did not support the amendment by putting their names to it, but no doubt that was an oversight. The noble Baroness, Lady Hamwee, said that there was some confusion on the issue. Perhaps I may clarify that confusion.

As the noble Baroness pointed out, the amendment would exclude from the definition of "dwelling" residential care and nursing homes and certain hostels. This would mean that no council tax was payable in respect of such buildings.

The residents and owners of care homes and hostels benefit from local services just as other people do. Their refuse is collected; they can call on the police or the fire brigade; their residents use the highways. It is fair that they should contribute something to the cost of providing those services, provided that they have the means to do so, and provided that they are not required to pay a disproportionate amount.

Many care homes and hostels are based in large houses, which are likely to fall in one of the higher council tax valuation bands. As such, they will benefit from the banding arrangements the Government are proposing, which ensure that the bill for the most expensive property is limited to three times the bill for the smallest.

Homes and hostels which provide extra space or special facilities because they have disabled residents will be entitled to have their bill reduced to that for the band immediately below. Therefore a home whose value would put it in band G would only give rise to the bill for a band F property.

Those properties will therefore be well treated under our general proposals. We have also made specific provision for them. We propose to designate care homes under Clause 8 of the Bill so that the owner, rather than the residents, will be liable for the council tax. And under paragraph 7 of Schedule 1, residents receiving care in care homes will be disregarded for the purposes of discount. Therefore any home where the staff reside elsewhere will face only a 50 per cent. council tax bill.

Perhaps it will be beneficial if I cite an example of a typical case. Some large homes will be in band H, the top valuation band. The basic bill for such a property might be about £800, based on the council tax levels that we estimate would have prevailed had the tax been in force this year. If the home included a treatment room for disabled residents the bill would be reduced to £668. If there were no resident staff the local authority would apply a 50 per cent. discount, cutting the bill to £334.

Let us consider that in the context of the total costs of a residential care home. In the case that I considered there might be 20 residents. The fee for each resident might typically be £175 per week, so that the total running costs of the home would be in the region of £180,000 per year. Plainly a £334 increase in those costs will barely be noticeable.

If the care home owner in this case decided to pass those costs on to the residents, the result would be a fee increase of about 32p per week each. Residents receiving benefits will have this cost met by the local authority. But even for residents not receiving benefit, the tax would cost just 32p within a total bill of £175.

Although that contribution may be small, the Government believe that it represents an important principle which goes to the heart of our care in the community policy. The principle is that of equivalent treatment for those who are cared for in institutions and those who receive their care in the wider community. Many elderly and disabled people in the community will be liable to pay their council tax. Rebates will be available if they are in receipt of low incomes. There is no reason why elderly and disabled people should not contribute to local services simply because they receive their care in a residential home.

In opposing the amendment, the Government are seeking to ensure equal treatment of those in the community and those in care homes and hostels. I hope that I have been able to clarify the position for the noble Baroness and that she will feel able to withdraw the amendment.

Baroness Hamwee

My Lords, I suppose that when we are considering how well or badly we treat properties as opposed to people such confusion is likely to arise. I used the phrase "treating property well" because it was used by the noble Lord, Lord Strathclyde—he said that properties will be well-treated. I half accept some of the points that were made about the drafting. One becomes accustomed to phraseology such as "a dwelling shall be a dwelling only if" and "a dwelling is not a dwelling when". I had hoped that we could concentrate more on the underlying thrust of the amendment than on its terminology. I know that the noble Lord, Lord Renfrew, agrees with that.

The noble Earl, Lord Balfour, suggested that the provision should appear in Clause 8. However, I proposed an amendment in this part of the Bill in order not to reach the point of valuing the property and levying a tax. It may well be that a warden of such a property should pay the tax. A dilemma arises in that we are dealing with a tax which has its roots as a property tax rather than as a personal tax. I do not seek to exempt wardens who ought to pay their taxes in the same way as everyone else. However, they are in an unfortunate situation because they live in large properties which fall into a high tax band.

There is the opportunity for a reduction by one band but that will not apply to all the properties which fall within the provisions of the amendment. The reduction may apply to nursing homes but is unlikely to apply to joint homes for people with learning disabilities, for instance. The provisions which ameliorate the situation as described by the Minister will not apply to people in short-stay homes and to people who are receiving respite care. I believe that to be a matter for the Government's community care policy.

I am sad that whatever the drawbacks of the drafting of the amendment, its underlying thrust has not been accepted, nor do we appear to have had a great deal of movement towards acceptance. I shall consider whether an amendment may find more favour with your Lordships at a later stage of the Bill. However, I am now more anxious about the matter than I was when I first moved the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe moved Amendment No. 4: Page 2, line 36, leave out ("or (3)").

On Question, amendment agreed to.

[Amendment No. 5 had been withdrawn from the Marshalled List.]

4.15 p.m.

Lord McIntosh of Haringey moved Amendment No. 6: Page 2, line 43, leave out from ("amend") to ("any") in line 44.

The noble Lord said: My Lords, I shall pause judiciously at suitable points in the proceedings if the Government Front Bench do not pursue their own amendments. Late at night in Committee we debated an issue which deserved greater attention. It was the provision at the end of Clause 3 for the Secretary of State by order to amend the definition of "dwelling" which appears in Clause 3(2). I do not wish to go over the full panoply of the Henry VIII argument. It was made successfully when the Local Government Bill was being debated, and we must return to the matter in considering Commons amendments to that Bill. It was distressing to note that the Government used their majority in another place to reinstate in a slightly different form the Henry VIII provisions to which your Lordships took exception.

A similar attempt is made in this Bill to allow the Secretary of State to change by order a provision which appears on the face of the Bill. It is not that the matter is unimportant. The definition of "dwelling", as we discussed when considering the previous amendment, is of great importance. It has been changed by Government since the paving Act of 1991.

The Government have always made clear that the way in which "dwelling" is defined is critical to the operation of the council tax.

When in Committee we moved a more comprehensive amendment to remedy that fault, the Minister said that the Government had no intention of changing the definition but that they could not promise that that would be the last word. She drew attention to the need for a proper congruity—I do not believe she used that word—between the definition of "dwelling" for the council tax and the definition of a non-domestic hereditament from the point of view of the non-domestic rating system.

I can say only that if the Government cannot get their act together after a number of Bills and produce a satisfactory definition for both terms, they have not been trying very hard. With all its faults, the rating system never had any difficulty in distinguishing between domestic hereditaments, mixed hereditaments and non-domestic hereditaments. They were always well-defined and the definition became better defined in case law subsequent to the passing of legislation. It would be a simple solution for the Government to return to those well-tried definitions rather than to introduce this objectionable procedure whereby the Secretary of State may amend primary legislation simply by order.

Amendment No. 6 would eliminate the power of the Secretary of State to substitute another definition for any definition of "dwelling" which is effective for the purposes of this part of the Bill. However, it would allow the Secretary of State to make amendments rather than substitution. The reasoning behind that provision is, first, that we know that in accordance with the procedures of the House we cannot return to an amendment which has been voted on in Committee. Secondly, we recognise that there is a ghost of a case for making procedural amendments as time goes on. However, there is no case for a substitution by order of a definition laid down in primary legislation.

The distinction was made—notably by the noble and learned Lord, Lord Simon of Glaisdale, and, in coming to his assistance from the historical point of view, the noble Earl, Lord Russell—that although Henry VIII provisions are not always wrong, it is certainly wrong for them to be introduced when they are merely convenient rather than essential. I suggest that this is a classic example of a Henry VIII provision being introduced simply for the convenience of the Government because they cannot be bothered to get the wording right. That is not a satisfactory justification for the breach of the primacy of primary legislation. I beg to move.

Lord Jenkin of Roding

My Lords, I am sure that there must be a provision in this clause to give the Government power to amend the definition of "dwelling" in order to avoid the need for primary legislation if, as the noble Lord, Lord McIntosh, recognises may well be the case, decisions of the courts produce a solution which is not acceptable to Parliament. Parliament may then be perfectly ready to amend. When a new tax is being introduced and when there are new parameters, and, therefore it is necessary to have new rules, it seems to me to make a great deal of sense that there should be power to amend.

Having said that, I have some sympathy with those who say that amendment is one thing but merely to take power to substitute an entirely different definition is another. I speak before my noble friend has spoken, but I remain to be convinced that the words which the amendment seeks to omit —namely, "or substitute another definition for"—really are necessary for the Government's case.

That is the most offensive kind of Henry VIII clause because it would give power by order to remove an entire subsection or indeed most of the clause and put something else in its place. I am happy to see a power to amend, but I require some persuasion that a total power of substitution is an appropriate way of legislating in these circumstances. My noble friend on the Front Bench may be able to convince me, but for the moment I am all agog to hear her reasons. I am not sure that those words add so much to the powers of the Government that they should stay in the Bill.

The Earl of Balfour

My Lords, I do not believe that this amendment should be accepted. The Bill as drafted is much more satisfactory. If the amendment proposed by the noble Lord, Lord McIntosh of Haringey, is accepted, it may prevent the Secretary of State transferring a residential property of one kind to a prescribed dwelling under Clause 8. That is not in our best interests for the future.

Baroness Blatch

My Lords, as has been pointed out, Clause 3(6) allows the Secretary of State, by order, to amend or substitute the definition of "dwelling". Amendment No. 6 seeks to prevent the Secretary of State from substituting the definition of "dwelling". However, it would still be possible to amend the definition.

I have listened to what the noble Lord, Lord McIntosh, and my noble friends Lord Jenkin of Roding and Lord Balfour have said. I have heard enough for a questionmark to be planted in my mind and I need to take further advice on this matter. Perhaps noble Lords will be assured that I shall profitably use the time between now and Third Reading. I should preface that by saying that I make no commitment but I need to be convinced. My noble friend Lord Jenkin of Roding has pointed out that from time to time the Government will need power to amend and Amendments Nos. 2 and 4, which I have moved this afternoon, amend definitions; those positive amendments were accepted by the House. However, I take the point about wholesale substitution. If the noble Lord, Lord McIntosh, will accept that I shall consider this matter further with my advisers, in which case he may not feel it necessary to press the amendment.

Lord McIntosh of Haringey

My Lords, the Minister cannot say fairer than that. I am grateful for what she said. I accept that she does not give assurances. If she wishes to discuss this matter between now and Third Reading I shall be happy to do so, as I am sure will be the noble Lord, Lord Jenkin of Roding. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Dwellings chargeable to council tax]:

Baroness Hollis of Heigham moved Amendment No. 7: Page 3, line 9, at end insert ("except that all dwellings occupied exclusively by persons defined in Schedule I to this Act shall be exempt dwellings.").

The noble Baroness said: My Lords, this amendment seeks to extend the principle of the exempt dwelling. There are two kinds of discounts of which I am sure your Lordships are aware. The first is the 25 per cent. discount for single adult occupancy which is an occupancy discount. The second is the personal discount based upon status; for example, student, trainee, a person with severe mental impairment, the 18 year-old who is still at school and so on. Whether or not such people are members of a household, they are invisible and their presence makes no difference to the final bill. In other words, if they live in a three-person household, the bill will be as though for two people and if they live in a two-person household, the bill will be as though for one and hence attract a 25 per cent. discount.

In a half-way house occupied by two or three adults with severe mental impairment, each would receive a 25 per cent. discount up to a maximum of 50 per cent. of the total bill but would still be liable for the residual 50 per cent., which is the property element. This amendment seeks to make those people exempt. After all, there is the existing precedent of full-time students and Project 2000 nurses. Where two or four students or Project 2000 nurses share a dwelling, the entire property is exempt rather than each individual carrying a 25 per cent. discount. The argument is that such people are outside the benefit system and therefore the dwelling should be exempt. However, in the cases that I have mentioned—the severely mentally impaired or young adults living in a sheltered workshop—those people may receive a very low income but nevertheless will still be eligible to pay part of the bill because rebates, particularly under the Government's proposals, end very abruptly at £75 per week on an average council tax bill. Therefore, this amendment seeks to extend the recognition which the Government have already attributed to those groups so that property which is occupied only by such people should be exempt, following the precedent of students and Project 2000 nurses. I beg to move.

The Earl of Balfour

My Lords, the amendment states: except that all dwellings occupied exclusively by persons defined in Schedule 1". That includes people in prison or in a mental home. I do not see how this amendment can in any way achieve that which the noble Baroness, Lady Hollis, put forward. Although I sympathise with her arguments, as the amendment is drafted it will not work.

Earl Howe

My Lords, Amendment No. 7 would exempt all dwellings occupied exclusively by persons falling to be disrgerded for the purposes of discount. The Government propose that only the 50 per cent. property element of the council tax should be payable in respect of such dwellings.

It may be helpful to your Lordships if I again explain the Government's thinking. It is the Government's intention that people entitled to "status discounts" should not add to the personal element of the tax. Most of them had special status under the community charge—they were either exempt, or paid only 20 per cent. of the charge. Those people will continue to receive special status within the personal element of the council tax. But the tax also has a property element. There is no reason why the property element of a local tax should depend on the personal status of the residents of a property. There was no such exemption under the rates.

If people in these groups are on low incomes, they will generally be able to claim rebates. These will meet the full bill for people whose incomes are at or below the income support level. Such people will pay neither the personal nor the property element. As the noble Baroness reminded us, the one exception is students and nurses on Project 2000. Students are not generally eligible to claim income-related benefits; their support is instead channelled through the student grant and loan systems. Because they will be unable to claim council tax benefit we have made special provision for them. Student halls of residence and dwellings where all the residents are students will be exempted from the tax under Clause 4.

However, that is not appropriate for other groups of people entitled to status discounts. They will be eligible for rebates. They should also not qualify for the special exemption arrangements. For those reasons, the Government are opposed to this amendment and I hope that the noble Baroness will not press it.

4.30 p.m.

Baroness Hollis of Heigham

My Lords, the Minister and we on these Benches share the same reading of the Bill. There is no misunderstanding of interpretation between us. However, perhaps I may make two further comments on the examples raised by Members opposite in regard to the amendment.

I believe that it was the noble Lord, Lord Balfour, who raised the question of prisoners and why they should be eligible, given Schedule 1. The amendment will ensure that, under Schedule 1, while someone is in prison he will receive no council tax bill. As I understand it, under the Bill as drafted while a prisoner has an unoccupied house in the community he will still be required to pay 50 per cent. of the bill. How can he do that while in prison? That is one anomaly which the amendment seeks to overcome.

I am more concerned with the effect on mentally impaired young people who may be single, sharing a half-way house and in a sheltered workshop with low incomes but nonetheless beyond the rebate scheme. Under the poll tax they were entirely exempt. Under the council tax they are not. On grounds of humanity we are seeking to continue the same kind of exemptions under the council tax as existed under the poll tax for people who are already suffering enormous disabilities and problems. The cost is not high. But the result, which will allow those people to continue to lead a worthwhile life in the community, is important.

We shall probably want to return to the issue and look at other exempt groups at Third Reading. In the light of what I have said perhaps the Minister will look at the groups that I have mentioned. They present real anomalies as between the poll tax and the council tax as the Bill presently stands. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Robson of Kiddington moved Amendment No. 8:

After Clause 4, insert the following new clause:

("Transitory arrangements for student nurses —(1) Without prejudice to the provisions of section 4 above, any dwelling occupied wholly by student nurses shall be prescribed as an exempt dwelling. (2) For the purposes of this section, "student nurse" shall be taken to mean any person undertaking a full time course in nursing education which would enable such a person to qualify for registration under the terms of the Nurse, Midwives and Health Visitors Act 1979. (3) This section shall cease to have effect after 31st December 1999.").

The noble Baroness said: My Lords, your Lordships will remember that I moved a similar amendment at Committee stage on 30th January. On that occasion there was heartening support from all sides of your Lordships' House. It therefore encouraged me to table a slightly altered amendment for today. It still contains a proper definition of a student nurse. That is a tremendously important part of the amendment. We must get away from the feeling that there are two different kinds of student nurse who are not of equal value. There is a great feeling of dissatisfaction among student nurses on the conventional type of course and we should support them.

Subsection (3) clearly points out what a short-term expense to the Government the amendment would be. It will cease to have effect on 31st December 1999. In fact, it will almost cease to have effect by 1997 as the progress of the introduction of Project 2000 is carried forward. Since Committee stage the Minister was kind enough to write to me setting out in a summary table the annual income of different types of student. I accept the figures and in my comparisons I would like to use them for the whole of the country rather than just for London.

A student grant plus loan amounts to £2,845; a Project 2000 nurse earns £4,320 and a student nurse's first year salary is approximately £6,440. I accept those figures as being correct. However, we must compare like with like. In order to make a fair comparison the different forms of student support must be considered, taking into account the following points. On the conventional system a student nurse with the higher income must pay tax and national insurance; that does not apply to the other two types of student. We are therefore not comparing like with like. The net income should be taken into account if we are to use those figures.

There are three different courses for nursing education producing three different types of student. First, there are degree students; secondly, Project 2000 students; and, thirdly, conventional students. The conventional students are paid an income over 52 weeks a year. They are employee students and work for those 52 weeks. The bursary of Project 2000 students is calculated over 45 weeks of the year. A degree student has a work basic of 30 weeks over the year. There is therefore a difference when one compares the incomes.

Conventional students rely solely on their training allowance. Undergraduates and Project 2000 students have between seven and 22 weeks during the year when, if they wish, they can earn extra income by working as auxiliary agency nurses. But the students who have time free to earn outside income are also those considered most favourably by the council tax.

I was given an analysis of figures by the Royal College of Nursing. If one uses the table to which I have just referred, which was given to me by the Minister, one can take the income of £4,320 of a Project 2000 student and, dividing it over the 45 weeks, produce a weekly income of —96. The degree course student with £2,845, divided by 30, has a weekly income of £94.83. The employee student with an income of £6,440, when divided by 52, earns £96.83 per week, before deducting tax and national insurance. Other anomalies exist.

Baroness Blatch

My Lords, perhaps the noble Baroness will give way. Does the noble Baroness agree that a student nurse earning between £6,440 and £7,450 per annumߞthat is the student nurse on conventional training across the country—would be earning between £123.85 and £143.27 per week before tax and national insurance were deducted?

Baroness Robson of Kiddington

My Lords, the figures I received from the Royal College of Nursing give me £96.83.

Baroness Blatch

My Lords, perhaps the noble Baroness will again give way. This is important. There is a real difference between net and gross. I am saying that somebody earning between £6,440 and £7,450 —the pay for a nurse on a traditional training course; not in London, because the figures are much higher there—would be earning weekly, before the deduction of tax and national insurance, between £123.85 and £143.27.

Baroness Robson of Kiddington

My Lords, I apologise for my mistake. I did not realise that the figures I received from the Royal College of Nursing were net. I take back the last sentence I added in regard to tax and national insurance.

There are other anomalies. For instance, Project 2000 students over 25 get additional bursaries. Something else I cannot quite understand is that employees of the NHS who take the Project 2000 course maintain their old salary for the duration of the course. They, too, are being treated differently from the normal, as we understand it, conventional student nurse.

What worries me most of all about the whole problem is that it has created a feeling of resentment among large numbers of our student nurses. We cannot afford to create resentment. It is not fair to treat them differently. Considering that by 1997 there will be hardly any conventional nurses left—they will practically all be Project 2000 nurses—I hope that the Government can see their way to agreeing that we should treat all nurses the same way. I beg to move.

Lord Jenkin of Roding

My Lords, I was not present when the Committee stage of the Bill was taken but when I first saw this amendment and read the report of the Committee stage my first reaction was, in a sense, to echo what the noble Baroness, Lady Robson, said about the undesirability of drawing distinctions between different kinds of students. But one is not seeking to say that there are two kinds of students in the sense that they give rise to different qualifications, or that one form of training is superior to another. On the contrary, in a perfect world it would have been desirable to have moved entirely to Project 2000.

Project 2000 is a development in which I have taken a great deal of interest. It originally stemmed from the creation of the Nurses, Midwives and Health Visitors Council to which I made the first appointments as long ago as 1980. I was very pleased when eventually the council was able to put forward Project 2000, as it became known, and was accepted by the Government for progressive introduction. In general, it is more desirable that student nurses are trained in the way that is now being brought in than in the traditional way of the past. Of course, they reach the same qualifications.

However, it simply is not possible for the purposes of taxation—and we are talking about local taxation —to ignore the quite significant differences in income and (I mention this not to put a great deal of weight on it) entitlement to benefit. There may well be rare cases where income support might be appropriate to which the Project 2000 nurses are not entitled, because they are treated like other students, whereas student nurses in the traditional traditional form are entitled to it. They have a higher income and for that reason it is not reasonable to regard them as equally exempt.

I do not shy away from taking a firm view that those who are to be regarded as students—the Project 2000 student nurses—should be regarded as exempt. After some hesitation the noble Baroness agreed figures. We have been quoting them for outside London, but the gap is a good deal wider in London. Nurses are being paid higher salaries, even after tax and national insurance has been deducted. That they should be regarded as equally exempt seems to me to be unfair. It is mainly unfair when one considers some of the other categories of young people who may be in low paid occupations and for whom there is no suggestion that they shall be regarded as exempt simply by virtue of their status.

One can imagine young people who have not long left school who are serving in shops; young people who are living at home and working as care assistants in circumstances under which they do not qualify under Schedule 1; and young people in a variety of occupations. We must not allow ourselves to be mesmerised by the natural feeling of respect, and even of emotion, that one feels towards the nursing profession. It is not just because someone is a student nurse that they ought to be entitled to some form of tax exemption. If a student nurse is on the relatively low salary which the noble Baroness quoted—£4,320 per annum outside London; that is, £83.07 per week —then it seems perfectly reasonable that the exemption should apply.

However, for student nurses in London on the traditional basis with a remuneration that can go up to £9,247 per annum —£177.83 per week—to simply say that, because they have chosen the nursing profession, somehow they have to be equally exempt simply does not stand to reason. We have to take—

Baroness Robson of Kiddington

My Lords, will the noble Lord give way? The noble Lord quoted £4,320 for Project 2000 nurses. That is from the "elsewhere" column. The noble Lord then quoted £9,427 from the "London" column. Perhaps we can have a correct comparison.

4.45 p.m.

Lord Jenkin of Roding

My Lords, I made it perfectly clear to the House that I was quoting up to the maximum figure that applies in London. I was not seeking to compare the two. I was simply saying that the effect of the amendment would be to extend the exemption to traditional student nurses who, in London, are earning up to over £9,000 a year; that is, nearly £178 a week from which, of course, one would have to deduct tax and national insurance.

It simply does not seem to me to be self evident that one profession earning those rates—and outside London it is nearly £7,500 per annum at the top of the scale—should receive a total exemption which is not to be extended to anybody else. Yes, we all love the nurses but this is not a particularly good basis for establishing a legislative exemption.

I believe that when these figures are understood and when they are appreciated, even within the nursing profession and certainly within other low-paid occupations (some of them, I suspect, lower than the traditional student nurses) there would be a good deal of indignation if it was found that simply because someone is training to be a nurse they had a tax exemption which is not available to a lot of other people on the same or even lower incomes. For that reason, wherever one's heart might move one, I am sure one's head should very firmly say that this amendment ought not be accepted.

Baroness Hollis of Heigham

My Lords, I hope that the House will not be seduced by the arguments of the noble Lord. It seems to me that he conceded much of what the noble Baroness, Lady Robson, was arguing. The first point was about equity between nurses doing the same work. The noble Baroness, Lady Robson, showed that the ordinary first year nurse—the employee nurse, if you like—is earning about £6,400 gross outside London for 52 weeks at work, or about £5,000 a year net, compared with—

Baroness Blatch

My Lords, will the noble Baroness please give way? The figure is actually £7,450 gross outside of London. It is £9,247 gross within London.

Baroness Hollis of Heigham

My Lords, I am giving the first year figures from the Royal College of Nursing. In Committee we were told that a first year student nurse outside London receives £6,400 gross or around £5,000 net compared with a bursary for a 45-week year of £4,300, which, as the noble Lord, Lord Jenkin, said, if averaged out over 52 weeks, comes to £87. If averaged out over the 45 weeks for which the bursary runs, it comes to around £96, which is virtually identical to the net income of the salaried nurse. Therefore, in terms of equity, the disposable income for the period of work of a Project 2000 nurse on a bursary and a student employee nurse of the NHS is virtually identical. That is the first point the noble Baroness, Lady Robson, was seeking to make.

Student nurses on Project 2000 or indeed degree students have vacations. It is entirely reasonable therefore to take their bursary or grant into account only for the period of term time study. As a university teacher myself I know very well that even in these difficult economic conditions every student—I am sure that this point will be supported by the noble Lord, Lord Renfrew—tries to obtain vacation work to amplify his grant. Therefore the figures offered by the noble Baroness, Lady Robson, as given by the Royal College of Nursing, are entirely correct.

I note incidentally that the noble Lord, Lord Jenkin, thought that the figure of £87 for a student nurse on Project 2000 was sufficiently low to entitle her to exemption. That is interesting because a single person on an income of £75 a week will come out of rebate. Therefore, I hope to see the noble Lord's support for extending the rebate scheme for those on £87 a week or on such low incomes that they should be exempt altogether. That is another point.

Lord Jenkin of Roding

My Lords, just as a matter of correction, the figure was £83.07. Let us have the right figures on the record.

Baroness Hollis of Heigham

My Lords, I am still looking forward to the noble Lord joining us when we seek to improve the rebate scheme so that a single person on £83.07 will be exempt by virtue of rebate. I should like to think that the noble Lord will join us, but I rather doubt it.

The noble Baroness, Lady Robson, established that there should be equity between nurses with similar disposable incomes. Another factor is that there is an administrative problem in dealing with mixed houses. It will be difficult enough for local authorities to track exempt dwellings among students. How much more difficult will it be when a local authority has to work out whether, in any household of three nurses, all three are Project 2000 nurses and are therefore exempt, or one nurse is Project 2000 or two are Project 2000? If three nurses are all on Project 2000 the dwelling is exempt. If, however, one nurse is not Project 2000 but is a year older and is therefore an employee, that property will pay 50 per cent. The local authority will somehow have to find out what kind of nurses they are and not merely that they are nurses.

A household may have three nurses all of whom are Project 2000. However, one leaves and the remaining nurses want to replace her. They may want a friend, an acquaintance or someone with whom they share a ward. The first question they must sensibly ask is, "Are you a Project 2000 nurse? I know that you do the same job as us; I know that you have the same income as us; but if you come in and you are not Project 2000 we face a 50 per cent. bill. If you are Project 2000 we will not have to pay anything." That cannot be administratively sensible. This morning I asked the assistant treasurer of my own local authority how it would do this. He said, "Heaven only knows".

I would be more impressed by the Government's position—this concerns the third point raised by the noble Baroness—if it were a continuing anomaly. However, as she rightly said, it is a transitional problem. At the moment, of 52,000 nurses, around 7,500 are on Project 2000. By 1995–96 virtually all will be. We have a temporary anomaly which would not cost very much to correct. The numbers involved will dwindle over time. Nonetheless major administrative problems will be produced for the local authority and a major sense of injustice will be produced among the student nurse population. I hope that the Government will support the noble Baroness's amendment.

Lord Monson

My Lords, the noble Baroness, Lady Hollis, maintained that there should be equality between people doing the same kind of work. Surely, what is more important is that there should be equality between people receiving the same amount of gross pay. As I understood the noble Lord, Lord Jenkin of Roding, he was asking why a young person who works in a shop and receives £125 a week gross should pay more council tax than a student nurse also earning about £125 a week gross. That question is an unanswerable one.

Baroness Phillips

My Lords, my contribution may not be relevant to the debate but I feel that this is one of those occasions when your Lordships make me feel upset. Noble Lords have spoken in reverential tones about some unfortunate person who is receiving the princely sum of £94 a week. It is a wonder that we have any nurses. They must be dedicated even to contemplate two or three years on such measly money. I would suggest to your Lordships that the administrators who have to work out these figures are probably earning about £10,000 a year. If we saved on some of the administration—

Lord Irvine of Lairg

My Lords, they are probably earning £20,000.

Baroness Phillips

My Lords, the top man will get around £20,000. The people who do the work on computers will get around £10,000. That is the nature of the beast. There is no reason why, when we are discussing these matters, we should adopt this reverential tone. I suspect that some noble Lords will go out this evening for dinner and think nothing of paying £40. What can you do with £94 a week? How do people manage to buy clothing?

Baroness Fisher of Rednal

That is two dinners, my Lords.

Baroness Phillips

Or you can find a gentleman who will be kind to you, I suppose.

Lord Boyd-Carpenter

My Lords, does the noble Baroness recall that leading members of her party went out the other night to a dinner for which they paid £500?

Baroness Phillips

My Lords, that has nothing whatever to do with the debate. I merely ask in the name of these splendid young people—not only nurses but all kinds of young people—that the figures should not be referred to in reverential tones. The nurses whom I saw in Westminster had to pay a lot to live in the nurses' home. They were paying nearly £100 a week to live in the nurses' home. I wondered how they managed. Anyone who receives a reasonable salary wonders how people on small salaries manage, particularly in London.

Baroness Gardner of Parkes

My Lords, I believe that we have got this issue the wrong way round. I have worked all my life in the health service and I have great sympathy for nurses. The noble Baroness, Lady Hollis, said that the different types of nurses do the same work. That is not strictly correct. As I understand it, some are working all the year with a small amount of holiday time while others are working in terms and have vacations. I do not consider that it is an identical form of work.

The noble Baroness also said that local authorities will have to check between different types of nurses. That will not be the matter being checked. The matter being checked will be whether they are students or not students. I have been opposed to the fact that students should receive these benefits at all. Rather than all nurses receiving a rebate I would ask why student nurses are receiving it, even the Project 2000 ones. When I checked into the matter I found that full-time students are not eligible for rebates or an allowance. I have therefore withdrawn my opposition because I think it was ill founded. I support the fact that students are getting the benefit.

The comparison has to be with anyone else who is training in a job. One has to look at apprentices, people doing on-site training and so on. I sit on an industrial tribunal and I am quite surprised by how many low paid jobs there are. The noble Baroness, Lady Robson, said that resentment would develop between different types of nurses. Will not greater resentment develop between nurses and other people who are in even worse paid jobs?

We must consider that aspect of the matter. We must appreciate the fact that the way to deal with categories other than students is simply on a rebate system. If the earnings of such people are so high that they lose the rebate, that means that they are not the people determined to receive one. If the council tax proves to be a major factor when salaries are being negotiated—I do not believe that it will because I think that the more simple we keep it the lower the cost of collection will be—surely that will be taken into account when the scales of pay are set for ensuing years.

I did not vote for the proposal in Committee. I abstained, because I thought that the arguments put forward on that occasion were very sound. However, having looked into the facts and figures, I find that the details put forward were not accurate. I believe that the proposal would be unfair to many other people in society. Although I have every sympathy with the desire not to create divisions in the nursing profession, I realise that such divisions already exist. Indeed, even when a nurse is fully trained she will be graded according to the type of nurse she is and the level of her qualifications. The nursing profession has a wide variety of classifications within it. I believe it is right that those who are receiving the other treatment should be classified as "students" and not as nurses.

5 p.m.

Baroness McFarlane of Llandaff

My Lords, I have listened with interest to the debate. Because of the confusion as regards the figures that have been bandied around, I find it very difficult to know who is quoting the right figures; still less, do I understand student nurses being able to comprehend how they are being perceived in your Lordships' House. It seems to me that student nurses will inevitably feel aggrieved as regards the interpretation put on the position in which they find themselves.

Lord Renfrew of Kaimsthorn

My Lords, I have one point to make. I am not in any way well informed on the issue. I should really like to ask a question of the noble Baroness who moved the amendment. Is not the essential distinction that between unsalaried student nurses and salaried student nurses? When one uses the word "student" in general parlance, one does not really think of students in general terms as being salaried; indeed, as we have heard from the figures quoted, they receive a grant. Is that not the key? It seems that we have two categories of student nurses: those who have a salary and those who do not. Those who have a salary receive something like £2,000 a year more. Of course, one can divide by 52 or by 45 and arrive at different answers. However, that seems to me to be the long and the short of the matter.

I agree with the comments made by my noble friends on this side of the House that that is the fundamental distinction. Even so, one appreciates that the salaried student nurses are not earning vast sums of money. That is a perfectly reasonable point. One very much values and appreciates the work which they undertake. But noble Lords have pointed to other segments of the community with commensurately low salaries, sad though it may be, for different classes of work. One should not lose sight of the distinction. It has been said that student nurses do not understand why they are being treated differently. But surely they must be more aware than most of us that some of them have salaries while others do not. I hope that my noble friend will correct me if I am wrong in that respect.

Lord Desai

My Lords, before the noble Baroness replies, I should like to draw attention to a strange anomaly. Usually, when talking about income, noble Lords opposite complain about taxation and worry about how much tax is taken. Suddenly, today, we are referring only to the gross earnings of nurses and not to their net earnings. As the noble Baroness said, the correct comparison is between net earnings of salaried nurses and the grant of non-salaried people. Why are people suddenly ignoring the burden of taxation? Is it just because it happens, in this instance, to be falling on poor people?

Baroness Blatch

My Lords, perhaps I may deal first with the point made by the noble Lord, Lord Desai. One reason why it is difficult and misleading to use one single net figure is that we are not talking about one single gross income. I have put forward a range of incomes which I shall repeat, because it is important for the sake of the record that I should do so. I appreciate the point made by the noble Baroness, Lady McFarlane. I believe that there is a great deal of confusion in the matter. It is important that the correct figures should be recorded.

Not only will there be a range of income; there will also be a range of circumstances of the individual and the basis upon which they are taxed. The figure of £96 has been used extensively in the debate. I believe that to be a misleading figure.

Baroness Hollis of Heigham

My Lords, perhaps the Minister can clarify a point. Does she agree that in her letter to the noble Baroness, Lady Robson, she established the fact that the first-year salary for a student nurse—not a Project 2000 nurse—outside of London was indeed £6,400; in other words, the figure used both by the noble Baroness, Lady Robson, and myself?

Baroness Blatch

My Lords, I was just about to put forward all the figures for the record. Therefore the noble Baroness will be able to see whether there is consistency between what I wrote to the noble Baroness, Lady Robson, and what I am about to say.

In London, Project 2000 nurses have an income of £5,075 per annum. That is another figure which has not been used. It is a per-annum figure. In that respect, I can confirm that it is true that Project 2000 nurses work for 45 weeks a year. That is equal to a sum of £97.59 per week. For the sake of the point made by my noble friend Lord Renfrew, let us talk about the salaried nurse so that there is no confusion between a student nurse on Project 2000 and a student nurse receiving conventional training under the traditional system whom I describe as a salaried nurse. The salaried nurse in London receives £8,187. That is not static: it ranges to £9,247 per annum. As a weekly income, that works out at £157.44 and ranges to £177.83 per week.

Baroness Robson of Kiddington

My Lords, did the Minister use the figure £4,320 for Project 2000 nurses?

Baroness Blatch

My Lords, I was referring to London. I am now about to move on to Project 2000—

Baroness Robson of Kiddington

My Lords, I did not hear the figure of £5,075 which is what the Project 2000 nurse receives in London. We must compare like with like.

Baroness Blatch

My Lords, I shall return to the figures that I gave the noble Baroness and then I shall continue with the presentation that I was giving on figures.

As regards London—these are the figures I quoted to the noble Baroness, Lady Robson, in my letter—the student grant plus loan for those people working just 30 weeks a year is £3,505. For the Project 2000 nurses in London, the figure I gave was £5,075. They receive a bursary for 45 weeks. The student nurse salary is £8,187 ranging to £9,427. The figures for elsewhere in the country are as follows: for the student working 30 weeks, £2,845; for the Project 2000 nurse with a bursary for 45 weeks, £4,320; and for the student nurse who is salaried, £6,440 ranging to £7,450.

Perhaps I may return to those annual sums for each of the categories of student nurse. As regards the Project 2000 nurse in London, the figure for weekly income is £97.59. The weekly figure for the salaried student nurse in London is £157.44 ranging to £177.83. No mention of such figures has been made by noble Lords opposite. They have always talked about the first-day salary; they have not talked about the continuing incremental increase as the student nurse goes through training. That is different from the purely inflationary increase which goes to the student on 45 weeks a year. Elsewhere in the country, other than London, the weekly income of Project 2000 nurses is £83.07 and the weekly income of the salaried student nurse is £123.85 rising to £143.27.

Another factor that has not been mentioned is that in practice student nurses who are salaried receive on average —and it is an on average price—salaries that are 10 per cent. higher than those that I have quoted because of allowances. Such allowances do not apply to Project 2000 nurses and do not apply to other student nurses.

My noble friends have made many points about other young people who are on comparable salaries. I take the point made by the noble Baroness, Lady Phillips; indeed, it was a proper point to make. However, I should have more respect for the points raised by noble Lords opposite if they had the same kind of sympathy for all of those people on comparable salaries who are not student nurses. I should also like them to recognise the cost of doing so.

I should like to give some examples of comparable salaries and categories of worker in the Civil Service. Typists earn £132 per week in London and £124 per week elsewhere, but do not receive a discount and are under an obligation to pay the property tax element, unlike the arrangements that the amendment seeks to introduce for student nurses. An administrative assistant earns £120 per week in London and £112 per week outside London. I stress that I am giving starting salaries, as the noble Baroness, Lady Hollis, referred to starting salaries for nurses. An administrative officer will earn £137 per week in London and £128 per week outside London. I shall take the health service as my final example. The majority of staff who work as ancillaries in the health service earn £123 per week, with more experienced staff earning £153 per week.

There is, therefore, an inconsistency about whom one is fighting for, which I should like to put into context. If the system were in place today and if only the property element of £133 for a band A property had to be met, the bill would be less than £2 per week for a salaried student nurse. I stress that the sums would be shared between the number of nurses in the property. The potential bill for a band D property would be £200, which would mean that £4 per week would have to be shared between however many nurses shared the property. The very highest bill would be £400, which would mean that a bill of £8 per week would have to be shared between all the nurses living in that property.

As I said, we are talking about salaries of £123.85 per week out of London, before tax and national insurance deductions, for salaried student nurses. Even after tax, however, and accepting that, on average, those staff receive 10 per cent. more in allowances, they are still significantly better off than the Project 2000 nurses.

We come down to the question of how we treat a salaried nurse who is in a more favourable financial position than her counterpart Project 2000 nurse. I disagree seriously with the noble Baroness, Lady Hollis, who says that the two types of nurse do exactly the same work. They do not. The whole point of Project 2000 was to stop hospitals using student nurses as fully fledged members of staff. That was a kind of exploitation, and the argument against it has been won. Project 2000 is a much better course for young people. A Project 2000 nurse is not doing the same work as someone whom the noble Baroness, Lady Hollis, has referred to as an "employee", which is how salaried student nurses have often been described.

There are three categories of student. The first two categories receive a discount and an exemption for the property element of the tax, and only those young people receive that exemption. The other group of students is salaried. I believe that I have given enough evidence to show that a reasonable distinction can be drawn between the way in which the two groups are treated financially and that that difference allows salaried student nurses to pay their share of less than £2 per week, £4 per week or, at the maximum, £8 per week. That bill can be shared between those with weekly before-tax salaries that range from a London minimum of £157.44 to a maximum of £143.27 outside London. It would be helpful if the same tax and national insurance deductions, where they apply, could be made for student nurses because, in terms of costs, that would put all the nurses on an equal footing.

The noble Baroness, Lady Robson, said that we must get away from having two types of nurse and that we should have equal treatment for all nurses. That is precisely the Government's policy. Our policy now is that there should be a category of "student nurse", which should be treated properly and have a properly designed course that is responsive to the needs of the nursing profession. Although that is happening, in the interim, the salaried nurses are being treated financially more favourably than their student counterparts. The noble Baroness, Lady Hollis, shakes her head. Perhaps she will rise if she wishes to counter any figure that I have given.

Baroness Hollis of Heigham

My Lords, with pleasure. Let us compare two first-year students outside London. If we take their net disposable income and divide it by the number of weeks for which that income applies, the difference is between £96 per week and £96.70 per week.

5.15 p.m.

Baroness Blatch

My Lords, the noble Baroness does some funny accounting. I have given the annual incomes for 45-week nurses and for salaried nurses who probably work for only 48 weeks per year because of their holidays. Student grants are given for the whole year. The Project 2000 nurse is given an annual income, and the salaried nurse is given an annual income but, in practice, the Project 2000 nurse works for 45 weeks whereas the salaried nurse may work for 48 weeks. The noble Baroness, Lady Hollis, has, however, chosen to divide the figures that she has given by 30, 45 and 52 weeks. I have given annual incomes for all young nurses. I think that I have said that, even after tax, there is sufficient financial distinction to allow a salaried student nurse to meet a share of £2 per week for a band A property, of £4 per week in a band D property and of £8 per week in a property in the highest band in the land.

We should not turn our backs on somebody who earns a comparable sum, but who does not qualify for a discount or for exemption from the property element of the tax. Are we to say to somebody on a low salary, "Because you are a typist or an ancillary worker in the health service you are not as precious to society—your work is not as valuable to society—as a salaried nurse who is being trained"? A student nurse, I would still argue, is being treated financially more favourably.

We think that student nurses are very important. I do not want anything that I have said to detract from the importance that we attach to student nurses or to the need to have professionally trained student nurses. That is what Project 2000 is all about. We believe that we have been fair to the nurses and have recognised the distinction between them. I wonder whether the salaried nurses would swop their salaries for the Project 2000 financial arrangements during the interim period so that we really could compare like with like.

I rest my case on the fact that I believe that the Government have recognised the professionalism of nurses and have been fair in recognising that, whatever their category, they should all qualify for a discount. However, in terms of the property element, we believe that the salaried nurses, who have a greater financial ability to pay, should be allowed to meet what is not a demanding bill.

Baroness Robson of Kiddington

My Lords, I thank the Minister for her reply. I thank also the noble Baroness, Lady Hollis, for raising the collection of the tax. I spent some time on that subject in Committee and do not want to repeat that point now, although it is important and local authorities will find it difficult to address.

Much has been said about comparing salaried student nurses with other young people who work for not very high incomes. Of course, we all feel sorry for people who do not earn enough or who earn very little money, but we are talking now about a profession in which two groups of people are undertaking a full-time course that will enable them to qualify for registration under the terms of the Nurses, Midwives and Health Visitors Act 1979. Both groups are aiming at the same thing. We cannot compare them with a shop assistant. We can compare them only with each other because they are working towards the same end. I believe that they should be treated the same during their training period, but this is an interim—

Baroness Blatch

My Lords, of course we want them to be treated the same. After all the figures that have been given to the House, does the noble Baroness agree that they are treated differently in the way that they are paid?

Baroness Robson of Kiddington

My Lords, I agree that they are in receipt of a salary. If the Minister uses the calculations that I used she will see that there is not much difference between the income of the Project 2000 nurses and that of salaried nurses. The other point that upsets me is that we are talking about a short interim period. If the House accepts the amendment it would make nurses feel that we appreciate what they are doing. It would make an enormous difference to student nurses in both schemes, because there is a feeling that they are not being treated the same. Once again, I should like the House to decide.

5.21 p.m.

On Question, Whether the said amendment (No. 8) shall be agreed to?

Their Lordships divided: Contents, 96; Not-Contents, 140.

Division No. 3
CONTENTS
Addington, L.	Jenkins of Putney, L.
Airedale, L.	John-Mackie, L.
Aylestone, L.	Judd, L.
Beaumont of Whitley, L.	Kennet, L.
Blease, L.	Listowel, E.
Boston of Faversham, L.	Llewelyn-Davies of Hastoe, B.
Bottomley, L.	Lockwood, B.
Brooks of Tremorfa, L.	Lovell-Davis, L.
Callaghan of Cardiff, L.	Mclntosh of Haringey, L.
Carmichael of Kelvingrove, L.	Mackie of Benshie, L.
Carter, L.	Mallalieu, B.
Castle of Blackburn, B.	Mayhew, L.
Cledwyn of Penrhos, L.	Milner of Leeds, L.
Cocks of Hartcliffe, L.	Morris of Castle Morris, L.
David, B.	Murray of Epping Forest, L.
Dean of Beswick, L. [Teller]	Nicol, B.
Desai, L.	Parry, L.
Dormand of Easington, L.	Peston, L.
Ennals, L.	Phillips, B.
Ewart-Biggs, B.	Pitt of Hampstead, L.
Falkender, B.	Ponsonby of Shulbrede, L.
Falkland, V.	Prys-Davies, L.
Fisher of Rednal, B.	Richard, L.
Gallacher, L.[Teller]	Robson of Kiddington, B.
Gladwyn, L.	Rochester, L.
Graham of Edmonton, L.	Seear, B.
Gregson, L.	Sefton of Garston, L.
Grey, E.	Serota, B.
Hampton, L.	Shepherd, L.
Hamwee, B.	Stoddart of Swindon, L.
Hanworth, V.	Strabolgi, L.
Hatch of Lusby, L.	Taylor of Blackburn, L.
Hollick, L.	Tordoff, L.
Hollis of Heigham, B.	Turner of Camden, B.
Holme of Cheltenham, L.	Underhill, L.
Houghton of Sowerby, L.	Wedderburn of Charlton, L.
Hughes, L.	White, B.
Irvine of Lairg, L.	Williams of Elvel, L.
Jay, L.	Winchilsea and Nottingham, E
Jeger, B.
Jenkins of Hillhead, L.
NON-CONTENTS
Acton, L.	Belstead, L.
Aldington, L.	Blatch, B.
Arran, E.	Blyth, L.
Astor, V.	Boardman, L.
Auckland, L.	Borthwick, L.
Balfour, E.	Boyd-Carpenter, L.
Barber, L.	Brabazon of Tara, L.
Beaverbrook, L.	Bridgeman, V.
Belhaven and Stenton, L.	Brigstocke, B.
Beloff, L.	Brookeborough, V.

Brougham and Vaux, L.	Leathers, V.
Caithness, E.	Lindsey and Abingdon, E.
Campbell of Alloway, L.	Long, V.
Carnegy of Lour, B.	Lyell, L.
Carnock, L.	Mackay of Clashfern, L.
Cavendish of Furness, L.	Mancroft, L.
Cochrane of Cults, L.	Manton, L.
Coleraine, L.	Marlesford, L.
Cox, B.	Merrivale, L.
Craigmyle, L.	Mersey, V.
Crawford and Balcarres, E.	Milne, L.
Crickhowell, L.	Milverton, L.
Dacre of Glanton, L.	Monson, L.
De L'Isle, V.	Mottistone, L.
Denham, L.	Mountevans, L.
Denton of Wakefield, B.	Mountgarret, V.
Derwent, L.	Mowbray and Stourton, L.
Eden of Winton, L.	Munster, E.
Elibank, L.	Napier and Ettrick, L.
Ellenborough, L.	Nelson, E.
Elles, B.	Newall, L.
Elliot of Harwood, B.	O'Cathain, B.
Elliott of Morpeth, L.	Orkney, E.
Elton, L.	Pearson of Rannoch, L.
Erne, E.	Pender, L.
Faithfull, B.	Platt of Writtle, B.
Fanshawe of Richmond, L.	Prentice, L.
Ferrers, E.	Pym, L.
Flather, B.	Rankeillour, L.
Fraser of Carmyllie, L.	Reay, L.
Gainsborough, E.	Renfrew of Kaimsthorn, L.
Gardner of Parkes, B.	Rennell, L.
Grantchester, L.	Renton, L.
Gray of Contin, L.	Renwick, L.
Gridley, L.	Robertson of Oakridge, L.
Haddington, E.	St. Davids, V.
Haig, E.	Saint Oswald, L.
Hailsham of Saint Marylebone, L	Saltoun of Abernethy, Ly.
	Seccombe, B.
Hanson, L.	Skelmersdale, L.
Harmar-Nicholls, L.	Slim, V.
Henderson of Brompton, L.	Stanley of Alderley, L.
Henley, L.	Strange, B.
Hesketh, L. [Teller]	Strathclyde, L.
Holderness, L.	Strathmore and Kinghorne, E [Teller]
HolmPatrick, L.
Hooper, B.	Sudeley, L.
Howe, E.	Swinfen, L.
Hylton-Foster, B.	Thomas of Gwydir, L.
Jeffreys, L.	Trumpington, B.
Jenkin of Roding, L.	Ullswater, V.
Johnston of Rockport, L.	Vaux of Harrowden, L.
Joseph, L.	Waddington, L.
Kenilworth, L.	Whitelaw, V.
Killearn, L.	Wise, L.
King of Wartnaby, L.	Wyatt of Weeford, L.
Knollys, V.	Young, B.
Lauderdale, E.
Lawrence, L.

Resolved in the negative, and amendment disagreed to accordingly.

Resolved in the negative, and amendment disagreed to accordingly.

5.30 p.m.

Clause 5 [Different amounts for dwellings in different valuation bands]:

Lord McIntosh of Haringey moved Amendment No. 9: Page 3, line 17, leave out subsection (1) and insert: ("(1) This section has effect for the purposes of—

1. (a) determining that the amounts of council tax payable in respect of dwellings within the area of any billing authority shall be in proportion to the rateable value of the property held on the valuation list; and
2. (b) specifying the valuation bands to be applied for the calculation of amounts of council tax, and the Secretary of State shall not use the bands established or by order substituted under this section as the basis for the distribution of revenue support grant to local authorities, or make such calculations derived from them.").

The noble Lord said: My Lords, the amendment returns to one of the most controversial issues of the council tax proposals. It was debated at considerable length in a different form at Committee stage. I do not apologise for returning to it because it lies at the heart of our objections to the council tax proposals. I can summarise our objections to them readily. First, the banding system which is introduced in Clause 5 is insensitive to differences between different properties. It is also insensitive to similarities between different properties, a matter to which I shall return.

Secondly, it is not only insensitive, but because of the difference in property prices in different parts of the country, in many areas it will approximate to being a flat rate tax or at any rate a tax with only two or three different bands affecting the majority of occupiers of residences in a given local authority area.

Thirdly, because it is a banding system and the information about the position of any property within a band is not to be revealed, it will be widely misunderstood. Noble Lords will recall that when the Government backed down on the poll tax they did so not because they accepted that the poll tax was wrong but because they accepted that they could not sell it. They accepted that the poll tax was felt to be unjust. That psychological factor is a significant element in the defects of the proposed council tax.

Fourthly, a matter to which we shall return with a later amendment is that there is no provision within the legislation for the regular revaluation of properties. That is necessary if the council tax is truly to reflect the value of properties as an element in the discriminatory capacity of the tax. Fifthly, and above all, the council tax is regressive. It is not only more regressive than income tax, but more regressive than any straightforward property taxation, such as the rates.

The significance of subsection (a) of the amendment is that we propose that the amounts of council tax payable should be in proportion to the rateable value of the property rather than on the arbitrary basis of the three to one difference provided for in Clause 5.

Having done that, in the amendment we attack a second major defect of the council tax proposal; namely, the likelihood —although it is not referred to directly—that the council tax base, the property base as assessed in the council tax, will be used as part of a measurement of the resources of a local authority.

Obviously, the Government will not be able to do that in a crude way. For example, it will be recognised that the fact that property prices are high in Hackney and low in Bury does not mean that the Government will not have to take other elements into account. Clearly it would be wrong to say that Hackney was richer than Bury by the extent to which property prices are higher, and still less, that Hackney was richer than other parts of London where property prices are lower but incomes are considerably higher.

It would be wrong for this peculiar, arbitrary banding and differential system of valuation to be used in any way as a measure of the resources available to the local authority. That is so not only because of the bands themselves, but because, given that there are only a certain number of bands and that the bottom band is below £40,000 and the top is above £320,000, there is a peculiar statistical effect. In the poorer areas where there is a higher proportion of properties in band A, all the properties below £40,000 will be overvalued. In other words, they will be valued at the maximum of £40,000, whereas in the richer areas with higher property values, there will be a flattening in the other direction. All the properties worth much more than £320,000 will be undervalued at the figure of £320,000. In practice, that means that there will be a further flattening of the valuation system. As a result there will be less for the poorer areas and more for the richer areas. Thus the three to one which applies in theory between the lowest and the highest band will be flattened still further.

Those are the bases on which we question the whole banding and differential element in the council tax. They are not essential to a reform; the abolition of the poll tax could well take place without them. If the Government so wished, it could take place on an individual valuation basis; it could take place on a basis which more adequately reflected the real value of the properties and the ability to pay of the occupiers of the properties. However, we are not in the business of proposing alternatives; we are in the business of pointing out what is wrong with the Government's proposals.

What I have said may not differ much from what I said at Committee stage, but since the Committee stage many of our fears about the practicalities of the banding proposal are already proving to be true. In the issue of Public Finance and Accountancy of 14th February, I find that already, before I would have thought it possible, a firm of estate agents in Yorkshire based in Halifax has launched a major advertising campaign in the Kirklees and Calderdale districts. It urges: the prudent public to have a banding valuation between now and April 1992 undertaken by a professional firm to ensure that the inspection date corresponds with that of the Inland Revenue … Our banding valuation will involve an internal inspection of the property and this will obviously carry weight in any subsequent appeal against the limited external 'street' inspection of the government valuer".

I shall not give the name of the firm any undeserved publicity because I do not approve of what it is doing, but it is significant that that is happening. The firm proposes that the basic fee for a prompt and carefully considered banding valuation will be £10 plus VAT. The advertisement continues: There is great concern throughout the profession and indeed throughout the local authorities about the quality and accuracy of valuations carried out for such low fees".

The Minister already told us earlier this afternoon about the total cost. I understand that the current figure is that the average cost of valuations carried out by the valuation office is £1.80.

I do not approve of people taking advantage of the public in this way. I do not believe that the public will gain advantage from a valuation carried out now, and I do not recommend anyone to pre-empt their valuation by spending money on a speculative basis. However, the fact is that the professions in the business have recognised what we have said all along: there will be a high figure rather than a low figure of appeals.

We shall find that the system which is supposed to replace the misunderstood poll tax will be a misunderstood council tax. Misunderstandings are already beginning. It is important not that we should exaggerate them or give them unnecessary publicity or support, but that we should seek to put right the system which gives rise to misunderstandings. If we accept this amendment and provide in the Bill that valuation is carried out on a proper individual basis and that the grant to local authorities is not dependent on an inadequate valuation, we shall have made major and worth while changes to the council tax proposals. I beg to move.

Lord Renfrew of Kaimsthorn

My Lords, when I read this amendment I was uncertain whether it was a wrecking amendment or whether it was, in a literal sense, nonsense—that is to say, it did not make sense in what it proposes. I must confess I am not certain which of those applies—

Lord Boyd-Carpenter

Both‡

Lord Renfrew of Kaimsthorn

My Lords, my noble friend in front of me says both of those interpretations apply and he may well be right. I say that this is a wrecking amendment. It would be such an amendment if the noble Lord seriously proposed that the Bill should be amended in such a way—the amendment certainly does not make that clear—that each property should be given a specific value of X thousands of pounds, for example £150,000 or £151,000.

I assume that the noble Lord is well aware that the Bill makes provision that properties should be assigned to bands and that is the extent of the valuation process. Amendment No. 9 states: determining that the amounts of council tax payable in respect of dwellings within the area of any billing authority shall be in proportion to the rateable value of the property held on the valuation list". It is apposite to invite the noble Lord to say what he imagines the rateable value of the property held on the valuation list will be. If we take the example of band G which ranges from £160,000 to £320,000, what is the rateable value there according to the notion of the noble Lord? Is it the middle of the band and, if so, what is the rateable value of properties in band H which is open-ended at the upper end of the range? It is clear that the provision suggested by the noble Lord could not operate under the valuation system proposed in the Bill. Therefore I conclude that the noble Lord is in a sense proposing a wrecking amendment; that is to say, he is insisting that each property should he separately valued to a specific sum. That is exactly what Members on this side of the House have stressed again and again is the complexity which the Bill ingeniously and effectively avoids by the provision of valuing to bands.

5.45 p.m.

Baroness Blatch

My Lords, I am grateful to my noble friend for pointing out the inconsistencies in this amendment. That at least saves me a minute or two in responding to the confusion I believed existed on this matter. We have heard what I believe represents a trained valuer's charter from the noble Lord, Lord McIntosh. The noble Lord has tried ingeniously at each stage of the Bill so far to move us back to a unique valuation of each property, preferably on the basis of rental values, capital values, repair costs and rebuilding costs. Therefore when one improves one's house, a valuation officer would assess the improvements and the householder would pay more in rates. We have tried to get away from that system. Even the Leader of the party of the noble Lord, Lord McIntosh, has always said that he would never revert to such a system. Yet here we have an amendment that seeks to return to individual valuations of properties.

Noble Lords will have noted that the amendment requires yet another valuation system to be established and to be maintained. If the Labour Party had its way, we would quickly be drowned in a sea of administrative red tape. Faced with a bill only a trained valuer could understand, goodness only knows how the poor taxpayer would cope.

Noble Lords will not need reminding that under the former rating system those living in high value properties suffered greatly from disproportionately large local tax bills. That is an arrangement to which the Labour Party proposes to return. It is interesting that the Labour Party says—however, it does not address the detail of this proposal—that it would wish to relate the system to the income of each household. I suggest that that could be assessed in one of two ways. It could be assessed partially by linking with the Inland Revenue and partially by some kind of submission of income assessment on the part of each individual person living in a household. That is an arrangement which the Labour Party considers to be fair. However, that proposal would not reflect a taxpayer's ability to pay but the Labour Party's enthusiasm for unlimited liability.

We propose that the bills sent to households in different bands should bear a fixed relationship to each other. That will ensure that everyone is asked to make no more than a reasonable contribution to the cost of providing local services. I believe that the range of bills we have proposed, where the highest can be no more than three times the lowest, is fair and sustainable.

The amendment also proposes that valuation bands should not be used as the basis of the distribution of revenue support grant. The noble Lord has not said how he would replace such a system or how grant would be distributed with no reference to properties and the banding system. Nothing in the amendment deals with that point either. As I have said, it would have been more interesting to hear what basis noble Lords opposite propose rather than what basis they do not. Again, I fear that is something which is unlikely to emerge in the course of this debate.

We have set out in detail how grant will be distributed between local authorities when the council tax is introduced. If all authorities in England spend at the level of their standard spending assessment, the council tax in every band could be the same across the country. There will be similar arrangements in Scotland and Wales but with different levels of council tax.

In areas where property values are predominantly low, the deemed income from the council tax from those properties will also be low. The grant system will reflect that. Conversely, in parts of the country where property values are predominantly high, that will be reflected in the grant. That is fair. However, if that provision were removed from the Bill, I wonder how one could distribute grant with the council tax in place. I hope the noble Lord will tell us when he replies how he would intend to distribute the grant. It is not good enough for him to say that the council tax would not be in place. What we are talking about here is the council tax and a grant distribution that is fair and reflects the fact that in some parts of the country property values are predominantly low, whereas in other parts of the country property values are predominantly high.

The cost of providing a standard level of services in each area, the standard spending assessment, is estimated. The method of calculating SSAs is set out each year in a report to Parliament. We propose that each local authority should be able to fund this level of spending by setting the same council tax. We call this the council tax for standard spending. The income from that council tax, however, will vary from area to area, depending on the number of properties in each of the eight valuation bands and the number of discounts. Grant will bridge the gap between the SSA and the income from the council tax for standard spending, less, of course, the authorities' income from non-domestic rates. This part of the amendment, therefore, goes to the heart of the council tax. If the distribution of grant were to take no account of the valuation bands, the fairness of the council tax would be destroyed. It is incumbent upon the noble Lord who has tabled these amendments to say exactly how grant would be distributed if the amendments were to be accepted. I ask the House to reject the amendments.

Lord McIntosh of Haringey

My Lords, I suppose it is only as we enter the last four weeks of nearly 13 years of Conservative government that we descend to that kind of level of argument. I find, both in the speeches of the noble Lord, Lord Renfrew, and of the Minister, a remarkable assumption about the work of this House. They seem to think that any amendment which would make a major difference to the Bill—this amendment certainly would make a major difference to the Bill—is somehow a wrecking amendment. They used the term "wrecking amendment", but what they really mean is lèse-majesté. They think that a government has a divine right not only to establish the principles on which taxation and all other aspects of public administration shall be conducted, but that the Opposition has no right to make fundamental criticisms of those principles and of the way in which it is proposed they are implemented in legislation. That is not the position in which we find ourselves as regards this Bill. It is our duty to examine the legislation before us, to point out the consequences of the legislation before us and to seek to amend it, either in detail or more broadly, to meet what we understand to be the needs of our people and our society.

Secondly, increasingly—and I suppose that we have to put up with this for another four weeks—as soon as we criticise government legislative proposals it is urged in reply not that the government legislative proposals themselves are right or can be defended (no argument is put forward to support those government proposals); it is simply stated that they are there and that we should do nothing about them. Indeed, we are given lengthy expositions of what the Government understand to be Labour Party policy. Having listened to those during six days in Committee, at the beginning of three days of Report stage my heart sinks. Lengthy expositions of Labour Party policy are not an appropriate use of your Lordships' time. I am sure that the Liberal Democrats will agree a fortiori with what I have just said. It is not our job to fight an election campaign as we consider the Government's legislation. I have refrained from doing so throughout the consideration of the Bill.

We have pointed out, and we have received no effective answer, that the taxation system which is proposed in the Bill departs as little as possible both from the general injustice of the poll tax and from the capacity to be misunderstood which the Government claim to have been the downfall of the poll tax. It is not sufficiently realised the extent to which there will be an outcry when people realise that the valuations which are now being made of their properties will not be revealed to them. They will not be told the valuation of their property. We shall all be told merely into which band our property falls. That misunderstanding is very widespread. It extends to the director of the Institute of Revenues Rating and Valuation, who is quoted in the same article to which I referred when I quoted cases in Yorkshire. He said that the pre-emptive valuation exercise was unnecessary because: People would be better advised to wait until they know what the actual value of their home is before deciding whether to appeal". They will not know the actual value of their home. They will not be told the value of their home. Because they will not be told the value of their home they will certainly feel a sense of injustice, and firms of estate agents like those in Yorkshire will have a ready market among those who feel that there is a case for appeal and who will seek alternative valuations.

To answer the noble Lord, Lord Renfrew, of course it is clear what the amendment means. Of course we are advocating a return to individual valuations. That is the only form of valuation which will be accepted by the people of this country as fair. It is the only form of valuation which will be understood.

Lord Jenkin of Roding

My Lords, I am most grateful to the noble Lord. I am not intervening in his speech, but merely wish to make a few remarks before he withdraws the amendment. I hope that that is in order.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, it is Report stage.

Lord Jenkin of Roding

My Lords, I have not spoken yet.

Lord McIntosh of Haringey

My Lords, the procedure at Report stage is that noble Lords who wish to make speeches should do so before the Government and the mover of the amendment reply.

Lord Boyd-Carpenter

My Lords, surely that convention demands also that the noble Lord who replies from the Opposition Front Bench does not attack a noble Lord who has not spoken.

Lord McIntosh of Haringey

My Lords, I have not attacked a noble Lord who has not spoken. I spoke entirely about the contributions of the noble Lord, Lord Renfrew, the Minister and nobody else at all. I think that the noble Lord will agree, on reflection, that that is the case.

Lord Boyd-Carpenter

My Lords, the noble Lord, Lord McIntosh, made an attack upon a noble Lord who had not dealt with any of the issues. He suddenly made that onslaught.

Lord McIntosh of Haringey

My Lords, who did I attack? I referred to the speeches of the noble Lord, Lord Renfrew, who had spoken, and of the Minister. I am at a loss. I do not think that I have in any way breached the conventions or rules of the House. I think that when he reads Hansard the noble Lord, Lord Boyd-Carpenter, will agree that that is the case.

I am proud of the important and fundamental changes which are proposed. I believe that it is necessary for them to be proposed. I believed that it is necessary for us to state clearly at every opportunity that this is a dangerous and unfair way of reforming the poll tax. It is the wrong to reform the poll tax. We have made that point on at least one occasion. It is a matter which will now have to be determined by an election. However, I believe that I should give your Lordships one last opportunity to express a view on this matter before we move on.

5.56 p.m.

On Question, Whether the said amendment (No.9) shall be agreed to?

Their Lordships divided: Content, 80; Not-Contents, 135.

6.4 p.m.

Baroness Hollis of Heigham moved Amendment No. 10: Page 3, line 22, at end insert: ("(1A) The amount of the council tax payable in respect of dwellings in Band A shall be subject to a reduction of 12.5 per cent. If—

1. (a) a listings officer has determined that there has been a material reduction in the value of the dwelling due to any adaptation to make it suitable for use by a physically disabled person, as defined in section 24(10) below: or conditions as specified in regulations made under section 13 and would thereby qualify under the disability reduction scheme for reduction in band except for the fact that it falls within Band A.;
1037
2. (b) the dwelling meets the prescribed conditions as specified in regulations made under section 13 and would thereby qualify under the disability reduction scheme for a reduction in band except for the fact that it falls within Band A.").

The noble Baroness said: My Lords, in moving this amendment, I should like to speak also to one of the Scottish amendments, Amendment No. 33. Perhaps I may point out a small printing error in Amendment No. 33: line 2 of paragraph (b) should read "under section 80" instead of "under section 13".

This amendment comes with the full support of RADAR, MENCAP and other disability organisations. It seeks to make a band A property occupied by a disabled person eligible for 12½ per cent. Relief—12½ per cent., which is roughly equivalent to the same percentage drop between other points coming down from band C to band B or from band B to band A. At Committee stage our arguments were based on two grounds: hardship and equity. The ground of hardship arises because, as noble Lords will know, disabled people have low incomes and high costs. They have incomes which are on average only 72 per cent. of the incomes of non-disabled people, and three-quarters of disabled people are on benefits. They have high costs for heating, clothing, diet, special aids, adaptations and gadgets. There are also additional costs faced by the disabled when they have to buy that help in order to do what someone fully fit could do for themselves; namely, cleaning, decorating, driving, shopping, and so on.

The Disablement Income Group (DIG), has calculated that the extra costs of being severely disabled are on average some £60 a week—£60 being paid out by someone with an income of only three-quarters that of a non-disabled person. Benefits do not cover those costs. So there is an issue of hardship.

There is also an issue of equity and that is the point about the reduction of 12½ per cent. Disabled people living in a property that falls in a higher band will have their council tax reduced—we welcome that reduction and were at pains to say so at Committee stage—by a band, which is worth approximately 12½ per cent. off their bill. We calculate that outside London a disproportionate number of disabled people will be in band A properties. Virtually all the local authority and housing association specially designed flats for the elderly or single disabled person will come into band A. Indeed, we calculate that in places in the North, for example, where 50 per cent. of the property is in band A, probably something like 75 per cent. of all disabled people will be living in a band A property. We cannot of course be firm on our figures until the valuation lists are published.

We sought to argue the point in Committee and were glad to see that there was considerable support from many Members. However, the Minister—1 hope that I paraphrase him correctly—rejected the amendment on the grounds that, if there existed a band A which was the lowest band, by definition a property in band A could not fall down a band because there was no further band into which that property could fall. The Minister nods and I am glad that he does so. It is tautology; it is true by definition because the Minister has defined it to be so.

If this amendment is accepted, in practice another band will have been invented for that category of occupant and therefore people in that property will have another band to fall into. I hope the Minister will find that this is a helpful amendment to overcome the limitations of the tautology of his own designation. Let us presume that there exists a band ZA below band A. We should then accept, on the logic of his decision, that a property would fall into that category if it enjoyed relevant material alterations.

We propose this amendment not just on those grounds. This amendment, taken in conjunction with the Minister's comments on an amendment put forward at Committee stage on Clause 24— Amendment No.114—opens up a whole new set of arguments which require further exploration. On that amendment and over the course of the debate on the two amendments made in Committee, we established that there were four situations in which a property might be affected by disability, with consequential implications for valuation. I shall take those four situations in turn.

The first is that a property might gain a second bathroom or an additional bedroom, but that would not push up the property valuation by a band. However, as the Minister conceded at the time, that addition would not push up anyone's valuation by a band until the point of sale. That is not therefore a concession that advantages the disabled; everyone is eligible. The concession applies to all.

The second situation explored in Committee was that alterations such as widening a door for a wheelchair to go through or lowering the level of kitchen units might materially reduce the value of a property and therefore the property value should be reduced by a band. However, we established that if a person's property suffered a material reduction—for example, through a change in the physical environment—that concession too applied to anyone. Therefore, there is no concession to the disabled alone. It applies in principle to all, although I accept that it is more likely to apply to disabled persons than to others. The only argument for a property valuation not dropping below band A is that there is no lower band to drop to. I hope that the Minister will accept the logic that were such a band to exist the property would drop to a lower band.

Let us turn to the arguments used by the Minister in Committee relating to a later clause. Clause 114 deals not with valuation but with the issue of alterations as they affect valuation. The position is interesting. If one takes the third of four considerations, the Minister agreed that where a disabled person moved house to a different property—presumably larger—but did no alterations to it, its valuation did not go up (by which he would not be penalised) nor down (by which he would be helped). Nonetheless he enjoyed a banded reduction. Why? I welcome the reduction but it has nothing to do with the property; the property has not been touched. It is simply because of the use made of that property by someone who is disabled.

Lord Henley

My Lords, perhaps the noble Baroness will give way. If she quotes me, she ought to get it right. The point I sought to make was that if a person moved to a property of a larger size because of his disability, obviously he was entitled to some reduction in his bill. He had to move to the bigger property because he needed the extra space for his wheelchair, or whatever, the old property from which he had moved not being adequate.

Baroness Hollis of Heigham

My Lords, the Minister is entirely correct. In Committee, at col. 1123 on Monday, 27th January, he stated: Definitely one could have a reduction in band if one had to move to a larger house because of a disability". The noble Lord is entirely right; there is no disagreement between us.

I seek to establish that the property comes down a band not because of anything done to the property but because someone moved to it who had a disability.

Lord Henley

My Lords, I do not like intervening in this way at Report stage. However, I must get the position right. I thought that I had explained it at our meeting the other day. It is not the property that comes down a band; in effect the bill comes down one band for the individual in the property.

Baroness Hollis of Heigham

My Lords, I entirely accept that. That is correct. Of course we welcome such reduction. However, for someone in a band A property the bill cannot come down. The point I seek to establish is this. In the first two examples there was an alteration to property. In the example to which I now refer we speak of someone who by virtue of disability enjoys a reduction, no changes having been made to the property. I sought to establish that there was inequity between someone in a larger property who can move down a band and someone in a band A property who cannot.

Why? The argument is not that the property falls in value but that the property should be reduced a band by virtue of who uses and occupies it; that is, a disabled person. The Minister conceded that point at Clause 114 in Committee. We were happy that he should do so. It seemed an honourable way forward.

Interestingly, the Minister went one step further. It is my fourth situation. He stated that if a person were in a band B property, perhaps a two-bedroomed flat, and paying a band B council tax, but then became disabled and as a result made new and significant use of the facilities in that same flat —perhaps needing a separate bedroom or making greater use of the sitting room which was larger for a wheelchair—without the person moving to another property, without any alteration being done to the property, the property would drop a band. All other factors remain unchanged except the new disability incurred by one member of the family. In other words, the reduction is attached to the person irrespective of the band in which his property lies, until one considers the poorest people in the lowest band. They are denied that reduction because the Minister has defined that to be the case.

A disabled person who has sufficient resources to live in a higher banded property will receive a 12½ per cent. reduction on average on his council tax bill whether he has or has not done anything to the property. I welcome that worthwhile reduction. It is not a compensation for the reduction in value of the property, as the Minister first argued. The disabled person need do nothing; he still receives that reduction. However, those who are most in need—the disabled person with probably the lowest income, suffering the greatest hardship, living in the poorest property, often alone and because they live alone with the highest need for help—will receive nothing.

In other words, if a disabled person improves his house, adapts his house, moves house, or does nothing to his house and stays put, if he is disabled and in a property in band B or upwards he gains a reduction of a band. But if one is disabled with a property in band A, one receives nothing. Nonetheless, that is where hardship is most likely to be acute. Therefore on the grounds of equity, fairness and consideration of hardship, I ask the House to support the amendment.

Baroness Hamwee

My Lords, I wish to associate those on the Liberal Democrat Benches with the amendment, simply—I do not discount the many arguments put forward so cogently by the noble Baroness —on the ground of equity. Although we may be treating the matter as an intellectual debate, it is not seen as that by the people who are affected by the provision. I go along with this straightforward question. If one's property is in a higher band and one achieves a reduction, and if those same circumstances apply to someone in a property in the bottom band—it may be a different band in each of the three countries—on what logic should there not be a reduction? I support the amendment.

Baroness O'Cathain

My Lords, is it not true that if a disabled person lives in a higher banded property, he still pays more than a disabled person living in a band A property? Listening carefully to the noble Baroness, Lady Hollis, if someone has had to move to a property in bands B, C, D, or E because of severe disability, even with a reduction he would still pay more than the person in band A. Is that true?

Baroness Hollis of Heigham

My Lords, perhaps I may respond to that point with noble Lords' permission. If a person were in band B, he would not. He would pay the same as a person in band A who did not enjoy a similar reduction.

Baroness O'Cathain

My Lords, I referred to someone in a higher band. I suggested band E, F or whatever. Disabled people are not all paying the same. People in band A pay less than those who receive a discount living in a higher banded property.

Lord Stoddart of Swindon

My Lords, I was watching the noble Lord, Lord Henley, and the noble Baroness, Lady Blatch, while my noble friend spoke. They became very agitated. The noble Baroness, Lady Blatch, shook her head vigorously and appeared to be saying, "No, it is not right that people in band A would be disadvantaged although they were the poorer sector of the community and could not have the advantage of a reduced band because of their disability."

Baroness Blatch

My Lords, I am grateful to the noble Lord. He is having fun interpreting my facial expressions on this side of the House. Perhaps I may say this. The poorest in society, the most disadvantaged—those who are described by the noble Baroness, Lady Hollis—are also subject to 100 per cent. rebates for the bills that they pay.

Lord Stoddart of Swindon

My Lords, if they are subject to a 100 per cent. rebate, that is all right. However, many of those people who will be living in properties in band A will not be in receipt of social benefits. They are the people about whom we must be concerned. I can assure the Minister that I do not think that the matter is funny; it is very serious. Perhaps all other noble Lords understand the issue but it will have to be explained to me why in moving the amendment my noble friend was not correct in saying that people who would in general be poorer and living in properties in band A should not receive the same benefit of a 12.5 per cent. decrease as those living in properties in bands B, C, D, E or F.

Baroness Seear

My Lords, the argument is about a simple principle. It is that people who are disabled will pay less than they would pay if they were not disabled. If that principle applies to bands B, C, D, E and F, why does it not apply to band A? It is not the band within which one falls that leads to the reduction but the disability. If one is disabled, one is disabled no matter which band one is in. The fact that one cannot move into a lower band is neither here nor there.

The Earl of Balfour

My Lords, I wish to comment on Amendment No. 33 which is very defective. First, it confuses Parts I and II of the Bill. It refers to "listing officers" who apply only to England. It should refer to a local assessor. It refers to "section 24(10)" but that should read section 87, as the noble Baroness, Lady Hollis, said. Furthermore, it refers to "section 13" which should be Clause 80. Under those circumstances, I cannot accept the amendment as drafted.

To a great extent the reduction of 12.5 per cent. that is being sought can be obtained under Clause 13, or Clause 80 as the case may be for England or Scotland, by the Secretary of State subject to the approval of Parliament. That is how the provision should be made, and on those grounds I am not sure that the amendment is necessary.

Lord Carmichael of Kelvingrove

My Lords, the noble Earl is correct in pointing out those errors. Had it been a Government amendment, they would have put them down to typographical errors. I agree that the term "listing officer" is used in the English legislation, and I apologise for that error. The reference to "section 13" instead of Clause 80 is a typographical error and I apologise.

Lord Henderson of Brompton

My Lords, I am increasingly in sympathy with noble Lords on the Liberal Democrat Benches. The noble Baronesses, Lady Hamwee and Lady Seear, have put their fingers on the issue in pointing to the position of the poor, disabled people. As was said by the noble Baroness, Lady Hollis, disabled people will consider the situation unfair unless they enjoy a 12.5 per cent. reduction in the bottom band A. For the life of me, I cannot see how that sense of unfairness can be removed from the disabled community unless one can go some way towards the mechanism provided in the amendment or provide another means of restoring equity.

I understand that the Bill proposes two different forms of disability tax relief. The first is in cases of adaptations to the property, for instance, special lifts. In that case under Clause 24 the taxpayer can claim a material reduction which will be eligible for a rebate. The second is in cases where facilities are needed by a disabled person, whether or not specially made by that disabled person, the dwelling will be eligible under regulations made under Clause 13 for a reduction in its band. Those are the two ways in which disability tax relief can be obtained under the Bill.

However, I understand that if one is in band A, one cannot claim tax relief in either of those two circumstances. I cannot believe that any Member of this House cannot see that that is unfair vis-à-vis those who are more fortunate in their income or in the value of their houses and are in higher bands. It is that sense of unfairness which the amendment seeks to eradicate for those at the bottom of the class of disabled person. Therefore, I hope that the House will be sympathetic to this amendment.

Lord Swinfen

My Lords, I support the idea behind the two amendments. One must bear in mind that often the income of disabled people is less than that of others. Band A will cover the smaller and often older dwellings which make them more difficult and often more expensive suitably to convert for disabled people. If such dwellings are owned by disabled people, it is probable that they will have to pay a higher figure for the necessary adaptations out of their smaller income. They will probably have to take out a mortgage and therefore they will have higher monthly or quarterly payments and higher amounts of interest to pay. When disabled people living in dwellings in other bands have a reduction in tax because of their disabilities and the adaptations to their dwellings, I can see no reason why those in band A should not also receive a reduction.

Lord Skelmersdale

My Lords, there is a slight difficulty in that we are discussing two separate amendments. The first applies to a people-related relief, a matter touched on by the noble Baroness, Lady Hollis. The second is a property-related relief. I readily accept that both are for the undeniable need of disabled people. The noble Lord, Lord Henderson, pre-empted me because I have no difficulty with the people-related amendment. I believe that such an amendment is needed. The trouble is how to get a people-related amendment within the scope of this part of the Bill. Amendment No. 10 states: a listings officer has determined that there has been a material reduction in the value of the dwelling due to any adaptation to make it suitable for use", and for no other purpose. That will not help those people in band A who also need to be helped.

In spite of what the Minister said in Committee on the likelihood that there would be a material reduction in the value of the dwelling if it were a band A house and adapted specifically for disabled people, that cannot always be the case. For example, my noble friend Lord Swinfen spoke about putting a lift in a building. That will not materially decrease the value of the building. We should perhaps use social security legislation rather than this Bill to provide the relief which is needed.

6.30 p.m.

Lord Swinfen

My Lords, my noble friend misquoted me. I did not mention a lift at all. He will perhaps be interested to know that putting in certain adaptations—for example, enlarging ground floor facilities to form lavatories, showers and so on and, on a single floor dwelling, enlarging rooms to provide facilities where there is room for a wheelchair to manoeuvre—can reduce the value of the building because of the loss of other accommodation. Also, altering the height of work surfaces in kitchens may mean that, if a property is sold or transferred to an able bodied person, sometimes a considerable amount of money needs to be expended on it to make that kitchen suitable for use by an able-bodied person.

Lord Skelmersdale

My Lords, I am grateful to my noble friend and I am sorry if I misheard him. However, that does not alter the fact that there will be circumstances in which there will be a material reduction. I agree with that. Equally, there will be occasions when there will be an increase in the value of the property.

Lord Henderson of Brompton

My Lords, I mentioned lifts. I know the widow of a very severely disabled person who had installed a lift; she has now taken it out in order to restore the value of her property. I do not mind how this amendment is made so long as it is made. I do not mind whether that is achieved by way of attacking the principle of property or people.

Lord Henley

My Lords, the noble Baroness, Lady Hollis, argued her case on the twofold grounds of hardship and equity. Perhaps I may deal with hardship first. My noble friend Lord Skelmersdale said that we should look to the social security system to provide help for the less well off disabled. I agree with him.

I must stress that for those disabled people who are on low income and who may have difficulty in meeting the bill, the benefit system—and we heard little of the benefit system from the noble Baroness, Lady Hollis —will provide rebates of up to 100 per cent. of the bill. As regards the benefits system it is important to remember that premiums and other allowances are built into the income support regime. They give those who are disabled who are either in receipt of disability premium or severe disability premium or both considerably higher incomes than other people who are less well off. In other words, they can receive income support or 100 per cent. council tax benefit on a much higher income than an able bodied person whose circumstances are similar in other ways.

I move from the question of hardship, which I believe was the second line of attack of the noble Baroness, to the question of equity which was the point which most noble Lords have argued. I believe that the noble Baroness, Lady Seear, argued that people should pay less because they are disabled. I have some difficulty with that. We are arguing that no one should pay more because of a disability. There is a great distinction between the two concepts: whether you should pay less because you are disabled or whether you should not pay more because of your disability. We have taken considerable care to ensure that the council tax is fair to disabled people, both in the way that dwellings are valued and through the separate scheme for delivering reductions for disabled people where they need more space or extra rooms in their homes, a point touched upon by the noble Lord, Lord Henderson. As I said, we have taken particular pains to make sure that people should not have to pay more tax simply on account of space or fixtures required because of a physical disability.

The noble Baroness prays in aid RADAR and I accept that RADAR may support the amendment. However, we have discussed these matters at great length with RADAR and other bodies and I am grateful for their help in framing the measures which we have taken. They believed that it would be unfair if a disabled person had to pay more tax than others because of a disability. They put it to us that someone who needed an extra room to store wheelchairs or for kidney dialysis equipment might have to buy a two-bedroomed flat or a house with two reception rooms whereas, but for their disability, a smaller property with a lower capital value would have sufficed. Similarly, someone who needed to use a wheelchair inside the home would need larger rooms than would otherwise be the case in order to manoeuvre a wheelchair. We took on those anxieties that some people may pay more tax because they need to live in larger and, therefore, more expensive dwellings. However, when we spoke to the organisations concerned, we were not asked for a general reduction for disabled people purely on the grounds of their disability. We were asked to provide equal treatment where a disability may have led directly to a higher bill.

We accepted those arguments and developed a special scheme under Clause 13 which will give a reduction where a disabled person needs to use a wheelchair in his home, or needs an extra kitchen, bathroom, or other room. So a disabled person who might be living in a band E property because of his need for a room to serve as a treatment room would be eligible for a reduction under the scheme. In this case the bill would be calculated as if the dwelling were in band D, so that he would not have to pay more tax on account of his need for an extra room.

In answer to the point made by the noble Baroness, Lady O'Cathain, anyone in band D or reduced from band D to band C would pay more than someone in band A but in the case of someone who was in band B who had his band reduced to band A, I accept that the two would pay the same amount.

We also recognised that disabled people might need to adapt their homes to accommodate their disability, and that in some cases this could reduce the value; for example, altering the layout of a house or flat, or installing a lift, especially in a smaller property, could well reduce the value. We will be providing in regulations under Clause 24 that where such adaptations are made, and the value of the dwelling is reduced, then the reduced value will be reflected in the banding of the property.

But in the case of a band A property, it is simply not possible for someone to be paying more on account of a disability. A disabled person living in a band A house or flat cannot say that he is paying more tax because more space or adaptations to accommodate his disability have placed his home in a higher band than would otherwise be the case. The dwelling is already in the lowest band, and the taxpayer will already be paying the smallest amount of tax possible for his area. The case that was put to us—that disabled people could be paying more because of their disability—simply does not arise in a band A property.

The noble Baroness accused me of tautology and claimed that because I said that one could not go lower than band A, there could be no lower band. If band A is the lowest band, one cannot go below it. However, to be ingenious the noble Baroness came up with what she calls her new band—band ZA —for certain people. It would not be fair to allow some people but not others, who feel that they have just as good a case, to benefit from what would be a lower valuation band; that is, band ZA. Those in the most modest dwellings of all with a capital value well below the band A limit would no doubt feel that they should benefit from any new lower band. We have already explained at some length why we believe that the eight bands are appropriate. I accept that noble Lords opposite do not agree with that. They have just pressed an amendment to a Division and the House resolved quite conclusively that our view should prevail on this matter. We have decided that eight bands are appropriate and we do not consider that a band below band A is necessary.

If there is to be a banding system, there has to be a bottom band. We believe that our proposals strike the right balance. The measures we have taken have been in direct response to the representations made to us; that is, that disabled people should not be disadvantaged in comparison with others because property values form the basis of the council tax.

There is a basic divide between myself and the noble Baroness, Lady Hollis. I am saying that the disabled should not pay more because of their disability. The noble Baroness is seeking to give a bonus to the disabled purely on account of their disability. I cannot accept that, for the reasons I have given. Further, it is condescending to disabled people to say, "Simply because of your disability, you should pay less". We are saying, "Because you have to adapt your house and live in more expensive property, you should not pay more".

That is the right way forward, and I hope that the House will reject the amendment of the noble Baroness.

Baroness Hollis of Heigham

My Lords, given the response from Members on the Government side, I was hoping that the Minister would at least have recognised that an issue exists. I am willing to be persuaded that there are more effective ways of dealing with the issue, which was the point made by the noble Lord, Lord Henderson. It seems to me that no noble Lord can be persuaded that a problem does not exist, having heard the remarks of the Minister. He basically responded on two points and perhaps I may comment on those.

First, the Minister made the point about hardship and that anybody severely disabled is likely to enjoy sufficient benefit—I hope that I am fairly paraphrasing him—such that the hardship will be met in other ways. I accept that in many situations people who are disabled will be enjoying premium benefits which will enable them to enjoy substantial rebates. But what does the Minister say to the situation when the disabled person is living with a relative who is the liable person—it is often the relative who is liable to pay the bill—and has an income slightly above rebate level which may only be £90 to £100 a week. That household must therefore meet the cost of the disability without any rebate help at all.

Under the rates system, the lowest value properties would have qualified for some reduction in the bill to help those people. Many disabled people living with a relative who is the liable person, will not be helped, as the noble Lord suggested, by rebates or benefits because they will not be eligible. Rebates only follow the liable person, with one or two specific exemptions. Therefore I hope that the House accepts that the Minister has not met our case on that point.

Secondly, the Minister argued in regard to equity. The case we are trying to advance does not concern equity between people within a band but equity within the disabled community. The noble Lord, Lord Henley, said that no one should pay more because of their disability. He made the points that I tried to outline in three of the four situations I gave. First, that if disabled people improve their property they should not be disadvantaged. But under the Bill as it stands neither would I. That is not a concession to the disabled. Secondly, if people make alterations to their homes which devalue their property, they should benefit from that; but so would I. The situation is not specifically targeted to help the disabled. Thirdly, the Minister accepted that when disabled people moved to a larger property they should nonetheless have the bonus of a lower band, and I welcome that.

However, the Minister did not address the situation I outlined in my fourth example, that people in their own property may become disabled, perhaps as the result of a car accident, and therefore make a somewhat different use of the house. Although no changes have been made to the fabric of the property, nonetheless they enjoy a discount. The discount is enjoyed and the property goes down a band not by virtue of anything that has been done to the property but, as the noble Baroness, Lady Seear, said, simply by virtue of their disability.

That is what we are trying to establish. By virtue of their disability, the person enjoys a reduction in the level of a band; that is, unless, as the noble Lord, Lord Swinfen, said, they are living in properties that are difficult to adapt with possibly the lowest incomes. That is not fair. I do not believe that anyone in this Chamber, in their heart of hearts, would agree that it was fair.

I am willing to take the amendment away and come back with another which more accurately picks up the anxieties of the noble Lords, Lord Skelmersdale and Lord Swinfen. I am anxious, howsoever it is achieved, that the poorest of the disabled should acquire the same benefit that the better off among the disabled will enjoy. I pay compliments to the Government for that, but I cannot understand why a Government that are willing to help the better—off disabled —which we all welcome—will do so little to protect the disabled at the bottom of the pile. I cannot understand that.

I may be wrong, but in the hope that we can obtain some movement, particularly by Members on the Government Benches, to explain to the Minister that there may be ways forward to meet the issue, I am willing to withdraw the amendment and return to it at Third Reading. But return to it at Third Reading I must. I beg leave to withdraw the amendment.

Noble Lords

No.

Lord Henderson of Brompton

My Lords, I believe it is an abuse of the procedures of the House for a Minister from the Front Bench to refuse leave. It is a disgraceful ploy which should not be indulged in. I ask noble Lords on the Front Bench to think again.

Lord Boyd-Carpenter

My Lords, in reply to the noble Lord, Lord Henderson, it is frequently done. It is in accordance with the rules of the House, as no one knows better than the noble Lord.

Lord Henderson of Brompton

My Lords, I do not believe that it is frequently done, and if it is, it is not to my knowledge.

Lord McIntosh of Haringey

My Lords, it has been done to me on many occasions. I object to it just as strongly as the noble Lord, Lord Henderson, and for good reason on this occasion. In seeking to withdraw the amendment, my noble friend said that she recognised the force of some of the arguments raised in regard to the wording. She was seeking to come back to it at a later stage. It is not an abuse of the procedure of the House, but under these circumstances I should have thought that the noble Lord would think better of it as a matter of courtesy.

Baroness Blatch

My Lords, the Question has been put to the House to which there can be a negative or affirmative Answer. We have chosen to give a negative Answer and that is an end to the matter.

On Question, amendment negatived.

Lord McIntosh of Haringey moved Amendment No. 11: Page 4, line 19, after ("order")insert("in the third year following the coming into force of this section and not less frequently than in every third year thereafter").

The noble Lord said: My Lords, I half apologise that Amendment No. 11 is identical to one that I moved at Committee stage. I still feel as strongly as I felt at that time that the amendment is right in principle and that we should revive the former practice of carrying out rating revaluations at regular intervals. The practice has existed for many years and ought not to be abandoned simply for the convenience of the Government.

There is always the danger that revaluations carried out on a haphazard basis or at the whim of government will be carried out at a time when they are politically advantageous to the government. Provision for regular revaluation, as set out in the amendment, would deal with the problem.

I have an additional reason for returning with the amendment. I confess that when these matters were debated in Committee I was not quick enough off the mark. In response to an earlier amendment moved by the noble Baroness, Lady Blatch, the Minister criticised our demands for regular revaluation on the grounds that we did not perform regular revaluations ourselves. The noble Baroness and, indeed, the noble Lords, Lord Renfrew and Lord Jenkin, said that it was the Labour Party that ran away from revaluations.

The Minister said, It is extraordinary that the noble Lord [she meant me] should be so critical of the system proposed in the Bill when he knows that his party, when in office, never faced the pain of a revaluation".—[Official Report, 23/1/92; col. 958.]

I should have responded to that immediately. I had completely forgotten that it was a Labour Government who embarked on a revaluation in 1979 before the 1979 election. No sooner was the 1979 election through than we had the then Secretary of State, who is the present Secretary of State, cancelling the revaluation. On 22nd June 1979 there was a DoE press notice headed: 'Tear them up' says Michael Heseltine—rating revaluation cacelled". It went on: The Government has cancelled the rating revaluation now in progress and householders who have received questionnaires from the Valuation Office should 'tear them up', said Michael Heseltine, Secretary of State for the Environment, today". It continued: Cancellation of the revaluation will provide the opportunity for the Government to sort out the longer-term future of the rating system".

That was 13 years ago. It took the Government another seven or eight years to come to the first wrong conclusion about the longer-term future of the rating system and then another three years to come to a second wrong conclusion. I really felt that I could not let Ministers get away with the accusation that it was we who were running away from revaluation when it was quite patently not only this Government, but the present Secretary of State who was running away from revaluation. I beg to move.

Lord Boyd-Carpenter

My Lords, the issue that arises on this amendment is not whether at an appropriate time revaluation is appropriate—it obviously is—but whether a rigid system should be introduced under which, whatever has happened, or not happened, every three years we must go through the elaborate and expensive process of a revaluation. It is perfectly true that if we were in an era of galloping inflation a revaluation might well be inevitable quite frequently. But surely it is equally true that if we have a stable economy and minimal inflation, it would be an enormous waste of effort to go through the machinery of revaluation simply because we were into the third year. That is surely unnecessarily rigid.

If we look at it in the present circumstances, we know that, thanks to the Government policy, inflation has been largely eliminated from our system and that we look forward to a very stable system of prices for the years ahead. In the face of that, simply to lay down that because we get to a third year we have to go through all that process again is surely very wasteful and likely to antagonise public opinion and, if I may say so bluntly, quite pointless.

Lord Strathclyde

My Lords, of course the noble Lord, Lord McIntosh of Haringey, has no need to apologise for bringing forward this amendment. He was very entertaining in his introduction. The point is that revaluation in rates is an entirely different thing from revaluation of the council tax.

It will not be possible for the Secretary of State to substitute other valuation bands without commissioning a revaluation of dwellings at the same time. That is so because they will be valued into bands from the outset, in an exercise which is already under way, rather than being given precise values.

However, one of the attractions of the banding procedure is that frequent revaluations are not needed. Even though property values may have changed, a large number of properties would be in the same band both before and after a revaluation. That is an important point which bears repeating. Banding means that revaluation does not affect all dwellings.

Only when there has been a significant, long-term shift in relative house values would a general revaluation be needed. Local taxation should not be subject to short-term fluctuations in the property market. Our proposals ensure that it is not.

The point as regards this amendment is that what counts is the relationship between different prices of houses throughout the housing market, rather than specific values. I hope that the noble Lord will be convinced that revaluations every three years will be a bureaucratic nonsense and I hope that he will feel able to withdraw the amendment.

Lord McIntosh of Haringey

My Lords, I was delighted, as I am so often, by the intervention of the noble Lord, Lord Boyd-Carpenter. His argument was against what he called a rigid, regular revaluation. The amendment is not rigid, it simply refers to every three years. During the bulk of the time when he was in government the law required a general rating revaluation—at that time every five years. The valuation lists which were in force in 1979 and which Mr. Heseltine continued, came into force in April 1973, and a general revaluation would have been required for 1978. That was cancelled by the Labour Government on the grounds that the Layfield Committee had been appointed and there could be changes in the rating system. That was done by the General Rate Act 1975 which I did not think was a particularly contentious issue. Certainly I do not recall there being any controversy about it.

Both the Minister and the noble Lord, Lord Boyd-Carpenter, seemed to rely in their response on the argument that we have, first, a stable economy; and secondly, that we have such a crude valuation system that even major changes in the economy would not affect valuation very much. Clearly we have a stable economy, if bumping along the bottom can be called a stable economy. However, even given the quite extraordinary lack of effective financial management by this Government, that does not mean that there are not still significant regional variations. It certainly does not mean that there have not been changes in property values which do not go along with other changes in the economy. This is a matter which was raised in the same form at Committee stage and, having made the necessary additional points, I do not think it would be appropriate for me to divide the House on this occasion. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Persons liable to pay council tax]: Page 5, line 1, after ("statutory") insert ("assured").

Lord Dean of Beswick moved Amendment No. 11 A: Page 5, line 1, after ("statutory") insert ("assured").

The noble Lord said: My Lords, the purpose of this amendment is to ensure that assured tenancies are included at an appropriate point in the hierarchy of persons liable for council tax. Clause 6 sets out a hierarchy of persons liable to council tax, starting with a resident freehold owner and descending in order of liability via resident leaseholders, resident tenants, resident licensees, residents with no such interest and ending with a non-resident freeholder.

Paragraph (c) of subsection 2 refers to the liability of those people who are both resident and tenants. However, the tenancies referred to are only "statutory" under the Rent Act 1977 or the Rent (Agriculture) Act 1976 or "secure" under the Housing Act 1985. There is no reference to assured tenants under the Housing Act 1988, which has been the common form of tenancy for both housing associations and private sector landlords since 15th January 1989.

When the matter was raised in Committee, the noble Earl, Lord Howe, responded that assured tenants are already included within the provisions of Clause 6. He added, A person who has such a tenancy has a leasehold interest in the dwelling and, if a resident, will therefore fall within Clause 6(2) (b)".—[Official Report, 23/1/92; col. 1024]

The National Federation of Housing Associations is surprised by that response. If that is the reason for excluding mention of assured tenancies, it points out that the same logic can be applied to secure tenants under the Housing Act 1985. Section 621(1) of that Act specifically states: In this Act 'lease' and 'tenancy' have the same meaning".

However, secure tenants are specifically referred to in paragraph (c) of Clause 6(2). In other words, they are one ring lower in the hierarchy than resident leaseholders, and, if the Government are correct, one ring lower than assured tenants. Surely that is illogical.

It would also raise particular problems for housing association shared housing, where tenants will have a tenancy for sole occupation of a room or rooms and share other facilities in the house. In such cases, there may well be a mixture of secure and assured tenants in the dwelling. Such tenants must, for the sake of equity, be on the same level in the hierarchy of liability for council tax. It would be wholly unjust if the assured tenant was liable for the whole of the council tax. The proposed amendment would make the assured tenant's position in the hierarchy beyond all doubt as well as pre-empting any possible injustice. I beg to move.

The Earl of Balfour

My Lords, I wonder whether the noble Lord, Lord Dean, is confusing the issue here. Under the Rent Act 1968, which was a consolidation Act, statutory tenants were those next in line who had inherited from a private tenancy. Under the old Rent Acts someone's son could carry on the tenancy after the original tenant's death. He then became a statutory tenant. It is in this respect that I think the provision is referring back to those Acts. There are still quite a number of people today who are in the position of being statutory tenants and have security of tenure under the old Rent Acts for as long as they live. The tenancy comes to an end when the statutory tenant dies or gives up the lease, whichever is the first. I do not think it would be wise in this case to change the word "statutory" for the word "assured". I think that we are referring to quite different Acts.

Lord Strathclyde

My Lords, it is always a delight to welcome the noble Lord, Lord Dean, to our proceedings. I should like to set the noble Lord's mind at rest on this issue. I know that it came up at the Committee stage and I hope that I can clarify the position entirely.

Assured tenants are already included within the provisions of Clause 6. A tenancy under which a dwelling house is let as a separate dwelling is an assured tenancy for the purposes of the Housing Act 1988—subject to certain exceptions. It may be either a fixed term tenancy or a periodic tenancy. A person who has such a tenancy has a leasehold interest in the dwelling and, if a resident, will therefore fall within Clause 6(2) (b) of the Bill. There is a separate provision in Clause 6 for statutory tenants under the Rent Acts because they do not have a leasehold interest in a dwelling. In addition, secure tenants under the Housing Act 1985 may have only a licence and not a tenancy. Statutory tenants and certain secure tenants would not therefore fall within Clause 6(2) (b) and are included in a separate category—Clause 6(2) (c).

I have tried to explain the position. I hope that I have given the confirmation which the noble Lord requires.

Lord Dean of Beswick

My Lords, I am grateful to the Minister for warmly welcoming my appearance at the Dispatch Box. I have tried to understand his answer. It was necessary to clarify what will happen when the Bill becomes an Act. It is only when one sees the provisions of an Act in operation that one understands the end result. However, I am grateful to the Minister for taking the time to respond and for indicating that the provision is there for protection. I shall study what he has said. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe

My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, perhaps I may suggest that the Report stage does not begin again before 8.5 p.m.

Moved accordingly, and, on Question, Motion agreed to.