Local Government Finance Bill

HL Deb 21 January 1992 vol 534 cc730-838

3.6 p.m.

The Minister of State, Department of the Environment (Baroness Blatch)

My Lords, I beg to move that the House do now resolve itself into Committee on the Bill.

Moved, That the House do now resolve itself into Committee. —(Baroness Blatch.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Chairman of Committees in the Chair.]

Clause 1 [Council tax in respect of dwellings]:

Lord McIntosh of Haringeymoved Amendment No. 1: Page 1. line 10, at beginning insert: ("( ) This section has effect for the purposes of introducing a new scheme of local taxation as specified in subsection (1) below which shall be based on the occupation of property, namely lands, houses, mines and sporting rights.").

The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 3, 5, 10, 14 and 88, and to the notification given in the Marshalled List that we wish to oppose the Question that Schedule 1 be the first schedule to the Bill.

I can see that my words will not be given the same attention as the words of the late Lord Chelwood at a similar stage of the last Local Government Finance Bill. I well understand that for personal reasons and in terms of the political significance of the Bill. Nevertheless, as the other Bill was described, this Bill is the flagship of the last Session of this Government's Parliament. It is necessary that we give it the attention which the Opposition propose to give it over the next six days of the Committee stage. It is right that we should introduce the discussion in Committee by commenting in some detail on the way in which the different parts of the Bill do or do not hang together, and what might be rational criticisms which can be made of the fundamentals of the council tax as proposed in the Bill.

It is right that we should do so, not only because it is our duty as a revising Chamber, but because we cannot forget the experience of nearly five years ago with the introduction of the last Local Government Finance Bill, and the way in which the warnings that we gave at that time about the impracticability and the injustice of the poll tax were brushed aside by Government. They have since been proved to be entirely justified.

Unfortunately, we enter consideration of the Bill without any admission yet by Government that our arguments were correct and our criticisms justified. In introducing the Bill, all we are told by the Government is that it is necessary because the public has not been persuaded that the poll tax was fair. That does not sound to me like an adequate conversion or an adequate basis for objective thinking about local government finance or about the principles on which it should be regulated.

It seems much more likely—and I shall show that that is indeed the case—that the recognition only of the public relations failure, rather than the actual failure, will lead to an attempt to introduce a new council tax which sticks to as much as possible of the unfairness of the poll tax, that sticks to as much as possible of the blatant discrimination in favour of the rich against the poor (which was the central feature of the poll tax) and confines change as far as possible to public relations rather than substance. That, as we shall show over the six Committee sittings, is the way in which the Bill has been framed.

Amendment No. I refers to the purpose of the introductory clause in the Bill and suggests that rather than simply naming it a council tax it should be based on the, occupation of property, namely lands, houses, mines and sporting rights". That is a curious definition, but I understand that it is well recognised in property law.

Amendment No. 3 is purely consequential on that. Amendment No. 5 replaces the word "dwellings", which is, as will be seen in future amendments, a peculiarly unsatisfactory basis for taxation, with the word "property". Amendment No. 10—and this is a very critical element in our opposition to the Bill—replaces the concept of discounts which are awarded on an arbitrary basis by central government but are paid for by local taxpayers in the billing authority's area, with proper rebates. We shall come back to that issue on a number of occasions.

Amendment No. 14 refers to the necessity for dealing with individual values of property in order to get a just taxation system rather than the banded system which is the basis on which the Bill is drafted. Amendment No. 18, again, is a consequential amendment which eliminates from the Bill the concept of discounts and Amendment No. 88 refers to Schedule 1 which is the schedule in which the detail of the concept of discounts is given flesh in the legislation.

All of these amendments are necessary if we are to make a genuine start to escape from the shambles which the poll tax imposed on the people of this country. They are all necessary if we are to recognise that the experience of the poll tax has been perhaps the most unpleasant and unjust experience which has ever been imposed on local authority finance in the history of this country. I am sorry that the noble Earl, Lord Russell, is not in his place because he is an expert on the historical aspects of this. Most people seem to think that the poll tax of 1381 was the last real example, but as the noble Earl has reminded us in recent articles there was another attempt to introduce a poll tax in 1641. It was introduced by a Parliament on its last legs, as this Government are on their last legs. It was introduced in despair rather than in any confidence of success. It was introduced without any adequate assessment of what the revenue was likely to be. Although it was a graduated tax, unlike the poll tax of 1987 and 1988, it was introduced in such a way as to favour those whom Parliament and the upper classes favoured and it failed to work almost entirely. Instead of the million pounds or so which was intended to be raised it took 18 months to raise something in the order of £50,000. Even though it was not as bad in principle as this Government's poll tax it was as much a failure as the poll tax now has been. Of course, as it was being introduced it aroused the same level of disobedience —in many cases justified disobedience—confusion and failure to maintain the financial responsibilities of the Treasury. We have exactly that position now.

3.15 p.m.

Lord Harvington

Would the noble Lord care to go a little further and give the Committee some information on where we can look this up. It would be most interesting to know the date in the 17th century.

Lord McIntosh of Haringey

I am delighted to help the noble Lord, Lord Harvington. I can give him the reference to the article by the noble Earl, Lord Russell. It is in History Today, Volume 37, dated October 1987. I do not have the exact page numbers, but perhaps the noble Lord will forgive me for that.

Lord Tordoff

Perhaps I can assist the noble Lord. The article can be found on pages 9, 10 and 11.

Lord McIntosh of Haringey

Academic rectitude can hardly go any further than that! This is a more serious matter than historical references, as noble Lords will be well aware. This is a matter which goes to the heart of the relationships between central and local government and, above all, between both central governments and their people and between local governments and their people.

If we impose again, after one dramatic failure, a system of local government finance which alienates local authorities from their electors and which fails to recognise the principle of the ability to pay—which was what Lord Chelwood was seeking to impose on the last occasion—then we shall have done something even more unforgiveable than allowing the passage of the last legislation. That appears to me to be what the Government are intending to do and that is what these amendments are intended to rectify. I beg to move.

Baroness Hamwee

Nobody could disagree with the noble Lord, Lord McIntosh, in being glad to say goodbye to the poll tax. However, I am not entirely sure that the Committee stage of the Bill is quite the place to give it its valedictions.

The amendment that has been presented is an amendment to the proposed council tax. However, it seems to me that it shows how near the Labour Party and the Conservative Party are on the issue. Not so long ago they were united in their very fierce opposition to a property tax. Now they seem to be very close together again on their support for a tax on dwellings. I am not sure whether it is because the Labour Party was unsure of its position or realised the similarities, but it did not, as did the Liberal Democrats, endeavour to have a dialogue with the Secretary of State some months ago with regard to the proposed new tax.

We on these Benches make no secret of our criticisms of the council tax but we are prepared to do what we can—if there is anything that can be done to improve a tax that the Government are clearly so bent on introducing. I am not sure either that Labour's heart is entirely in this proposal; at least, perhaps not the hearts of all Labour Members. Many of them over the years have made comments about the inadequacy of rates as a basis for raising local revenue. But I do agree that there is an unfairness, as the noble Lord, Lord McIntosh, has said in various debates, both in the poll tax and in rates and in the council tax and, I have to say, in the so-called fair rates. Property, as we all know, is not an absolute guide to wealth or income or, of course, ability to pay. People may come to own property through so many different circumstances. It may—

Lord Stoddart of Swindon

If the noble Baroness will allow me. I have been listening to her very carefully and have noted her strictures on both the Labour Party and the Conservative Party for supporting a tax on property. I have always believed —perhaps I am wrong and out of date; no doubt she will tell me if I am—that the Liberal Party was very much in favour of site rating. Does that mean that that policy, which always seemed to me to be quite a reasonable policy, worthy of consideration, has been thrown completely aside and that the Liberal Party now believes that no property should be taxed in any way?

Baroness Hamwee

No, I use the term "dwellings". Our policy is for a local income tax on individuals. We will, I hope, have an opportunity at a later stage to discuss the best way of raising taxes on business property. I have not discarded lock, stock and barrel site value rating or a tax on land. However, at this point in the Bill we are discussing a tax on individuals.

The value of property is not a guide to ability to pay. That is especially the case in London and the South East. I see that the Minister is nodding. This is where we get on to the point about part of the tax being a personal tax. I shall not allow myself to be tempted into a discussion about discounts on this amendment.

There is an attempt in the amendments to make the rates fair but it is not a substantial attempt. We have a list of those who would be assisted by rebates. One must welcome the fact that those people have been listed. It is not done in as imprecise a way as is the case in the Labour Party document Fair Rates, where in rather amorphous terminology the word "particularly" in the context of "particularly old people" and "particularly lone parents" is used in a way that is quite difficult to pin down when one is dealing with legislation. We are asked to consider the single retired person. We had some discussion during the Second Reading debate about single millionaires. I do not know whether the noble Lord is suggesting that single millionaires are not likely to live alone.

On these Benches we accept that those on the lowest incomes need the most help, but there is a difficulty when that is dependent on a rebate system. Inevitably it is those who are just above the cut off point, unless it is a high cut off point, who will suffer. It is seen not only in the benefits system. One sees it in so many other areas. Legal aid is one example of where those having little income or capital receive assistance while those who have some means do not. That points out to me how inadequate the rebate system is for the purpose for which it is intended.

Would the tax be administratively easier to deal with than the council tax? Under the proposal there is to be an annual rolling revaluation. The noble Lord is right to identify the problems of revaluation and the difficulties involved in facing up to a revaluation as some of the catalysts which led to the death of the rates—if a catalyst can lead to death—and the introduction of the poll tax. However, I do not have much faith in the administrative efficiency of the proposed tax.

I shall not today move an amendment to introduce local income tax. On these Benches we feel that such an amendment would be a wrecking amendment. We have no wish to detain the Committee.

Lord McIntosh of Haringey

Except for Scotland, in respect of which the noble Baroness and her colleagues are to bring forward an amendment to introduce local income tax.

Baroness Hamwee

I thank the noble Lord for reminding me of that. He is perfectly correct. We shall say sorry to Scotland by seeking to take it out of poll tax a year earlier than the rest of Britain. I am not attempting to overturn the whole Bill, as this amendment must necessarily do, by proposing at this stage a local income tax. It is inevitable that we shall have something of a set piece debate at this point in the Bill. I understand the noble Lord's try. However, fair rates would not be accountable or cost effective and would not be directly related to ability to pay in the way that a local income tax would be. Local income tax would be fair. I regret that the word "fair" in the context of Labour's fair rates amendments is little more than a euphemism.

Lord Renfrew of Kaimsthorn

The exchange between the noble Baroness, Lady Hamwee, and the noble Lord, Lord Stoddart, surely illustrates precisely why the Bill is such a prudent one. It does not advocate rates, on the one hand—the noble Baroness has given clear reasons why that would be unsatisfactory—but it certainly does not introduce a capitation tax or a local income tax, such as we are promised to hear about, first, in relation to Scotland, and then, on some later occasion no doubt, in relation to England. Instead the Bill offers a middle way. It is beautifully simple. It is not about rates as such; it is not about a poll tax as such; it is a Bill relating both to property and to occupancy.

One of the main objections to the poll tax was not only that it was unsatisfactory in itself but that it was very difficult to operate. That to me is what particularly recommends the present Bill. It relates to dwellings. Dwellings are assessed as if occupied by two persons so that no listing of individuals is needed. But if occupied by fewer than two persons there is a system of discounting on application. The onus rests on the person who wishes to make such application. For those on low incomes or zero income there is a system of rebates.

The amendments to which I wish particularly to refer are Amendments Nos. 18 and 88. They would demolish the system of discounting, which is set out clearly in Schedule 1 and in Clause 11 and which we shall doubtless debate at a later stage. Discounting is an integral part of the Bill. Although the noble Baroness may not wish to move wrecking amendments, surely to accept this group of amendments would have the effect of wrecking the entire Bill, a Bill which offers above all a workable solution to the difficulties that have arisen in relation to the poll tax.

Lord Stallard

It is inevitable at the beginning of any Committee stage, when we are finding our way through the maze of amendments, that we set down markers. I do not wish to follow the noble Baroness, Lady Hamwee, except to say that I can recall—and I have no doubt that the noble Lord, Lord Boyd-Carpenter, can recall—that we discussed income tax early on in the debate on the Bill introducing the poll tax in Scotland. That was many years ago now. We had a short discussion on local income tax during which I spoke in favour of it. No one supported me. I dare say that it would be like that now. We are not discussing that at the moment. When we come to such a proposal I may participate again.

Clause 1 of the Bill has nothing to do with a local income tax. The Government have admitted that the poll tax did not work. It did not work for all the reasons that we gave when the measure was passing through the House. In the end they had to confess. I'll tell you the trouble with the poll tax. We were bounced into it quickly because there was such a fuss about rates in Scotland and we were bounced without thinking because of the political fuss". These are not my words: those are the words of the Prime Minister, the right honourable John Major, speaking in November 1990. In that one sentence he said what we have been saying for years—that the poll tax Bill was a panic measure introduced, guillotined and pushed through Parliament in order to bring the poll tax into operation as quickly as possible. This Bill is on exactly the same trajectory as the poll tax Bill.

Baroness Blatch

Will the noble Lord tell us where we can read that my right honourable friend the Prime Minister said that it was a panic measure and was rushed through simply for convenience?

Lord Stallard

It was in the Daily Mail on 24th November 1990—

Noble Lords

Oh!

Lord Stallard

It is your paper. It has nothing to do with me. If the Daily Mail does not quote the Prime Minister correctly, the noble Baroness should take the matter up with her friends. She should not complain to me. The Prime Minister was quoted as saying: I'll tell you the trouble with the poll tax. We were bounced into it quickly because there was such a fuss about rates in Scotland and we were bounced without thinking because of the political fuss". Those words appeared in the Daily Mail on 24th November 1990. If necessary, I shall look up the quotation later and inform the Committee as to the source.

3.30 p.m.

Baroness Blatch

I am grateful to the noble Lord for allowing me to intervene. The noble Lord may have read that quotation in the newspaper, but it is not consistent with what he said at the beginning of his remarks.

Lord Stallard

It is exactly the same quotation.

Baroness Blatch

It is not. It is different from the one that the noble Lord quoted earlier.

Lord Stallard

I shall not argue the point, even though I think that it is the same. However, such a case would not be unusual. For example, just the other day one of the noble Baroness's noble and learned friends mentioned the boredom of constantly raising the question of unemployment. But I see in the Hansard report of last Thursday that the word "boredom" does not appear; it was reported as becoming "a pall" on the population. The word "boredom" was taken out because it might do some damage. Although I shall not tinker with Hansard, it would not be unusual for people to say the same thing in two or three different ways.

There is no doubting the fact that the Bill is on the same trajectory as the poll tax. It is almost as long in terms of clauses as the Local Government Finance Bill which introduced the poll tax. However, it has less time than the original Bill to go through Parliament. In fact, it was guillotined in the other place before most of them had time to find out what it was all about. We may take a little longer in this House, but there is still the same kind of protest.

My first point—and I make it every time such panic legislation for social security or anything else comes before us—is that much of what is proposed will be done by regulation. None of us will see the regulations before we discuss their effect. As yet, there is no timetable for the introduction of the regulations. That means that councils will, effectively, have less than one year in which to undertake the development work which is needed on the very complicated computer systems which will have to be introduced. They will not be able to do that until they have seen the regulations. Therefore, they will have even less time than they had for the poll tax—and that was a disaster. This will continue to plague local authorities for many years to come.

In the first amendment, we are saying that this is not a council tax, although the Government have attempted to portray it as such. It has nothing to do with taxing: it is more of a Whitehall tax than a council tax. It has been imposed from above and pushed down to local authorities so that they have to get on with the problems. It is a blatant attempt to pacify the supporters of the poll tax. It is no more than that. The poll tax was a complete disaster. They think that they will have to get rid of it or they will lose the election. But they are wasting their time, because they will lose the election for sure. They think that by getting rid of the poll tax they might enhance their chances in the next election. They did so to pacify those people, most of whom are now on the Tory Front Bench.

I remember the marvellous speeches that those people made in defence of the poll tax. They are not saying so now; but they did say some wonderful things about the benefits of the poll tax system. Of course the "old widow" came into the debate as she always does. The Government are trying to pretend that the council tax is some kind of improvement. It is not. The new tax is really two taxes instead of one: it is a property tax because it exaggerates the property charge as we know it and it appears as though they will give some discounts to smaller households. In my view, a more accurate description of the new tax would be that it is a property tax plus a 50 per cent. surcharge if there is only one resident in the house, or a 100 per cent. surcharge if there are two or more persons resident. Thus, in reality, the so-called council tax is a property tax plus a poll tax. Therefore, one iniquitous tax is being replaced by two equally iniquitous taxes.

The granting of personal discounts to certain classes of individuals is based on the poll tax principle of taxing people rather than incomes. Again, it has nothing to do with the ability to pay and nothing to do with the constructive points which were raised in the discussions on the poll tax. It is certainly taxing people rather than taxing incomes. Therefore, the council tax retains a head tax element which is not related in any way to the ability to pay. Extensive records will have to be kept, although the Government have said that there will be no need for a register. However, I wait to hear that debate when we discuss a further amendment.

The Government have said that extensive personal records will be kept by local authorities. I do not know what one would call that if it is not a register. There will have to be a register in order to operate the head tax element. If they do not keep a register and a check on the situation, how will they know how many people there are in a household? I think that that is a blatant lie which has emerged right at the beginning. The councils will again experience the same administrative problems in identifying the liable persons and counting the number of persons in households as happened, and is still happening, with the poll tax.

I believe that we should begin by recognising the fact that it is not a council tax. It is two taxes: it is a head tax and a poll tax. Both of them are worse than the initial system. The new tax does nothing to improve the situation and councils will find themselves in a tremendous mess when trying to introduce the new tax while, at the same time, trying to collect debts which have accrued under the poll tax system. I have no hesitation in supporting the first batch of amendments. I look forward to hearing further arguments.

Baroness Carnegy of Lour

I was not able to be present on Second Reading. However, I have said before that if Opposition parties—and at this moment I have to point out that we have been listening to the Labour Party—will not accept whatever Parliament decides is the law of the land and the way in which local government collects taxes, and if the Labour Party continues to treat the way that local government collects taxes as a political football—

Noble Lords

Oh!

Baroness Carnegy of Lour

Members of the Committee may laugh, but if the Labour Party intends to do that through the years ahead, it is my view that it would be very much better not to have local councils raising tax at all but that taxes should be collected through a general taxation of one sort or another.

Lord McIntosh of Haringey

I believe that there are precedents for political parties changing their minds, which is what I suppose the noble Baroness means by a "political football". There are also precedents for political parties opposing the views of their opponents, which might be another definition. However, is the noble Baroness suggesting that there is any precedent for a government in the course of one Parliament kicking towards one goal and missing it, and then kicking determinedly in the opposite direction?

Baroness Carnegy of Lour

I am not great shakes at football. However, Opposition parties in this place have a duty to lead the criticism and the scrutiny of the Bill which is before us. That is absolutely correct; that is the way we operate. But the fact that many councils have set ludicrously high poll taxes, the fact that they have arranged convoluted and complex systems for collection which people cannot understand, the fact that far too many Labour-controlled and Scottish Nationalist councils have been overtly encouraging people not to pay (and are still doing so) and the fact that the Labour Party and the Scottish Nationalist Party stood by while that was going on is, to my mind, exactly what I have been describing: playing political football through the years.

It seems to me that, because that has been done in the past, it is no reason to revert to a system whereby someone living alone pays the same as a group of people who are wage-earners and who, collectively, live in a similar house. That is no reason for us to return to the rates system. That is what the Labour Party seems to be suggesting. I believe that if we proceed with the Bill, look at the arrangements and the combination proposed and do not, so to speak, fight the general election before it comes, that would give a better lead to the country for accepting whatever tax Parliament decides. If we do not do so, either local government will come to an end or we shall have to give up the idea of local government raising taxes. That is inevitable. I hope that we will not go on like this.

Lord Stoddart of Swindon

I am sure that Members on this side of the Chamber listened with increasing incredulity as the noble Baroness, Lady Carnegy, kept talking about political football. It is true that a game of political football has been going on, but it has been going on on the other side of the Chamber. The result has been a series of own goals. That is why we have the Bill. I do not know the number of local government Bills introduced over the past few years. There have been so many that we have lost count. We on this side have not been playing political football. We have been trying merely to ensure that local government remains independent and properly financed. That is our objective.

The Government are making, as they did in the case of the poll tax, a big mistake by introducing the Bill and the tax in haste. The matter has not been properly thought out. The poll tax was introduced in Scotland —my noble friend referred to that point—because the Conservative Government were afraid of the results of the Scottish revaluation. Similarly, because the Government are frightened of the electoral consequences of the poll tax, they are now hurrying this Bill through Parliament. It is a mistake, and it will be shown to be a mistake, with equally disastrous consequences.

If we are to have a property tax, and I believe that it is right that we should have one, it should be a properly thought out tax and one which people can understand and relate to their own circumstances. The tax, as presently proposed, will not appear to people to relate to their own circumstances. In general, people have a pretty good idea of the value of their house. When they see that their house is banded in a wide band that will seem to have no relevance to them. So the Labour Party is correct in believing that there should be proper valuations of individual properties. That is the only proper basis upon which one can form and put forward a tax.

It was a big mistake ever to have got rid of the rates. The only problem with the rates was that, although a local tax, they were expected to finance great national services. If we had dealt with the problem by ensuring that the great national services were financed out of the national Exchequer, leaving local services to be financed by the rates—the local tax—and had the tax base—the valuations—been dynamised, the rates were a good and reasonable form of tax easily understood by ordinary folk.

I sincerely and firmly believe that a local tax, based upon property, is the best that can be put forward. Although I understand the commitment of the party of the noble Baroness, Lady Hamwee, to a local income tax, it is difficult to understand her party's commitment to all-purpose authorities, which would probably be smaller, plus a local income tax, because the smaller the local authority the more difficult it becomes to administer a local income tax due to the change and movement of population within those smaller areas.

Baroness Hamwee

What does the noble Lord believe to be most important, administrative convenience or fairness?

Lord Stoddart of Swindon

The most important thing is ease of collection. The problem with the poll tax is that it has been almost impossible to collect from a large proportion of the population. We do not want to replace that defect with another defect which is what would occur if we had a local income tax, especially if it were applied to smaller local authorities. The great beauty of a property tax is that it cannot be evaded. One cannot pick up a house and take it somewhere else, so it is possible to reach the occupant or the previous occupant in one way or another.

3.45 p.m.

Lord Mancroft

Does the noble Lord agree that any tax is difficult to collect if one party, and some of the MPs within that party, increasingly encourages its members to break the law and not pay the tax?

Lord McIntosh of Haringey

Perhaps I may—

Lord Stoddart of Swindon

No, my noble friend should let me answer. It is my speech. I have to say that I know of no such party. That is the only answer that can be given to the noble Lord.

I shall conclude as I began. I believe that the Government are making a grave error by hastening the Bill through. Even at this stage I urge them to rethink their policy. Never mind about party! What is important is that we now have a tax that will stick, not for five minutes but for at least 25 years. That is why it is important that we get the matter right at this stage. That is why I appeal to the Minister to consider that real property values, with proper revaluation periods, should be the basis of the tax and that there should be proper provision so that people pay the tax according to their ability to pay and nothing else.

Baroness Gardner of Parkes

I oppose the amendments because I support the Bill. If the amendments were passed they would make the Bill impossible. I have listened to the noble Lords, Lord Stallard and Lord Stoddart. I was interested in the points they made about revaluation. The noble Lord, Lord Stallard, said that the Prime Minister had commented on the anxiety that arose in Scotland over the rating revaluation. I am sure that we all remember that. It had been so long since the previous revaluation that the changes were going to be dramatic and upsetting. The rating system, as it existed, had become wrong.

Lord Carmichael of Kelvingrove

Does the noble Baroness realise that in Scotland we had a quinquennial revaluation? The Government were worried because it had been so long since the previous English revaluation. It was not the domestic but the commercial ratepayers who were most worried. It was the Perth conference of 1965 that caused the problem.

Baroness Gardner of Parkes

I thank the noble Lord for that helpful comment. I had not fully understood the position in Scotland. I was aware of the anxiety about the revaluation expressed by people in Scotland. The noble Lord says that it was only five years after the previous revaluation. That makes it even more interesting. The previous English revaluation had been in 1973. Everything under the rating system related back to 1973. If those terrible anomalies and great increases had appeared suddenly for people in Scotland after only five years, how much more dramatic and frightening would it have been for people in England.

The Labour Party is misguided in believing that people would like to return to a rating revaluation system. When we had rates there was a permanent outcry to get rid of them. No one liked the system, and no one wanted it to continue. Under the proposed new tax a much greater slice of expenditure would be borne by central government. That is what I believe will keep down the new council tax. It is a much better and simpler tax. The noble Lord, Lord Stallard, called it a head tax and talked about registers. He overlooked totally the fact that one will not have to do anything unless one wishes to claim a reduction. Therefore, no register needs to be kept of anyone who accepts that their property is subject to a normal charge. It will only be where the 25 per cent. reduction for one person is requested that one will have to apply for it, as I understand the provision.

The noble Baroness, Lady Hamwee, said that acceptance of the the amendments would overturn the whole of the Bill. That is true. The amendments would overturn the whole Bill. Therefore I must oppose them.

Lord Desai

The only welcome part of the new tax is that it is a property tax. It is not a good property tax, but it is a property tax. As I said on Second Reading, politicians of all sides spread much ignorance and confusion about the nature of the rating system and thereby encourage confusion. The rateable value of a property had flexibility and made sense. It had flexibility because one could compare two houses near each other and still conclude that they were subject to different rateable values. The banding system may prevent that. Also, because there was poundage, local authorities could change the incidence of taxation on the property according to local circumstances.

Those two important features of the rates system have somehow either not been understood or have been ignored. Everyone has concentrated on the problem of revaluation. The difficulty was not that revaluation was impossible in principle but that every chance was taken to postpone it. Rather than the quinquennial valuation I suggest that an annual indexed revaluation is the only proper way of having a rateable system, with periodic, thorough revaluations when desired.

Since our system of property ownership and taxation, which supports house ownership, is based on an inflationary psychology and has added to inflationary pressures in the economy, revaluations are a consequence of owning property in an inflationary economy. To support home ownership and mortgage interest relief and then to oppose revaluation is a contradiction in terms. As I said on Second Reading, it has landed us in this amazing mess with local authority finance which has been going on for nearly 20 years.

It would have been better if we had taken the opportunity to go back to the rating system and correct the anomalies it possessed, such as the lonely widow living in a large house. Instead, we have once again a halfway house based on two rather peculiar principles. The first is a great suspicion of local authorities. The poll tax was born out of that suspicion and while it has been partially abandoned, there is still great reluctance to have a totally transparent, sensible property tax.

The noble Baroness, Lady Hamwee, says that one ought to judge the fairness of the tax. I argue in all humility that one should look upon the whole tax system in terms of its fairness and not consider each tax in isolation. We do not have adequate taxation of wealth in this country, it is lightly taxed; there should be income tax, indirect taxes and wealth taxes. They should be judged together as a package in deciding whether or not the whole tax system is fair. It is absurd to judge individual taxes in terms of fairness.

One should therefore welcome the property element, such as it is, of the present tax system. One should deplore the regressiveness that it has introduced, the fact that it continues to be a capitation tax and also its somewhat arbitrary criteria for rebates which are not really tied to ability to pay, as my noble friends pointed out. Thus, this is a lost opportunity. Let us hope that we shall soon have the opportunity to do better.

Lord Tordoff

I am confused by the messages coming from the Benches on my left. I had thought that a brand new tax was being proposed by the Labour Party to solve the problems of local government taxation. It seems, however, to be getting mixed up with nostalgia for the rates. Take, for example, the following quotations from the past: Rates are the most unjust of all taxes and local rates … take most from those who can afford the least". That is what Mr. Kinnock was saying 10 years ago.

Let us consider also what appeared in Hansard on 23rd May, 1988. I believe that even the rates are better than what is now proposed; but I am the first person to say that they are desperately inadequate as a fair basis for raising revenue for local government".[Official Report, 23/5/88; col. 652.] Those words came from the noble Lord, Lord McIntosh of Haringey.

I was expecting something new but today sounds to me rather like the Second Reading of a Bill being introduced by the Labour Party. After 45 minutes, perhaps we may proceed to dispose of the amendment.

Lord McIntosh of Haringey

To dispose first of the misrepresentations coming from the Benches on my right, the noble Lord, Lord Tordoff, is being misled by his noble friend Lady Hamwee and not by anyone else. Both seem to think that we are putting forward in these amendments the Labour Party alternative to the council tax. As I said, I hope clearly enough at Second Reading, we do not see our role as the Opposition in the revising Chamber as being to put forward a complete alternative.

It is an illusion of politicians, whether in government or opposition, to believe that what they want can be produced by simple legislation. People keep coming up to me and saying, "You know, all we need to do is to have a little one-clause Bill and we have solved the problem". It is not like that. I suspect that when the Labour Government introduce their fair rates legislation, what is produced by the parliamentary draftsman and the Department of the Environment could well contain 169 pages, 118 clauses and 14 schedules. It is excusable for oppositions to have that kind of misunderstanding about the simplicity of legislation. It is not excusable for governments to have that view.

It is clear that the Secretary of State thought that he could introduce a simple Bill to replace the poll tax. The noble Lord, Lord Renfrew, despite the evidence before him, still seems to believe that it is a simple alternative to the poll tax. Clearly, he has not weighed the Bill as carefully as he might, let alone read it.

I say, in order to get it out of the way before the government reply and we continue with the debate, that the intention of the amendments is not to present a fully costed alternative. The intention is to point out the extent to which the Government's proposals are "son of poll tax"; the extent to which they continue many of the worst features of the poll tax; and the extent to which those worst features are linked in the proposed legislation. If the Liberal Party would concentrate on the amendments before us, rather than attempting to make a case which it is not willing to put down in the form of amendments, then we should make much more effective progress.

4 p.m.

Baroness Blatch

For a moment I thought I was on Second Reading, I listened to the noble Lord, Lord McIntosh, and thought he was winding up the debate. We have had a good deal of politics and a small measure of substance on the amendments. I agree with my noble friend Lord Renfrew that these are wrecking amendments to the Bill; that is absolutely how I see them.

The amendments would mean a return to the rates together with some curious proposals on rebates. Domestic rates were the most unfair of all taxes. That is not just the opinion of Her Majesty's Government. We have already been reminded of some of the comments made by several people but in particular by the leader of the Labour Party. The noble Lord, Lord Desai, has said he does not have to agree with the leader of the Labour Party on these matters. He said on Second Reading that as an economist he talks sense. Perhaps I may also assume that the noble Lord, Lord Stoddart of Swindon, is in agreement with the noble Lord, Lord Desai.

Rates were unrelated to ability to pay. They took no account of the numbers of people in a property. They were based on an obsolete and little understood valuation basis. They tried to assign an individual valuation to each property. The tax rate varied directly with the valuation resulting in some homes facing excessively high bills. The results of revaluations were so drastic that successive governments, not just this Government, found it necessary to postpone them time after time.

The Opposition have labelled their own scheme with the word "fair". That cannot disguise the fact that domestic rates relating to property alone could never be fair. Not only would the Opposition return to the old system based on valuations which was determined 19 years ago but, what is far worse, they propose a valuation system based on an amalgam of four factors: capital value, rental value, repair and rebuilding costs. It is interesting that the Opposition have not so far published the formula which would enable these factors to be combined into a sensible and understandable valuation for each property. That is not surprising as it is almost impossible to see how that could be done. The Opposition's proposals include plans for annual rolling revaluations. That is a recipe for looking back to the future.

Under the Labour scheme there will be no ceiling on property values and no limit on the bills some people could be asked to pay. Many people would face severe hardship, especially those in expensive properties who are above the level for rebates but who have no cash flow to meet the rates bills. Those people might be forced to sell their property or possessions to meet those bills.

The proposal to remove council tax discounts takes us back to another feature of rates which was deeply resented. There was no difference in the bills faced by a single person living alone and a family of four earners living in an identical property next door. To get over that problem Members opposite are proposing special rebates for pensioners and disabled people. The amendments are not specific but, as I understand them, help would go to people in those two groups regardless of their income. However, what is more important, there would clearly be people outside those groups who would face excessive bills under the Opposition's proposals but who would look in vain for help.

Our proposals for the council tax seek to remedy all the deficiencies of the old rating system. First, houses will be placed in bands according to their capital values. The bands will be straightforward and easily understood. The banding system dampens the effect of relative changes in value and so removes the need for regular or frequent revaluation. The limited range of tax rates ensures that no household faces a disproportionately high bill for local services. Single adult households are no longer penalised. The single person discount ensures that single people receive a substantial reduction in their bills. The other status discounts which we have proposed will extend this help to a number of other deserving groups.

Our generous rebate proposals will ensure that people who do not have the income to meet their bills will get the help they need. People on income support or with similar levels of income will get 100 per cent. rebates. There will be a sliding scale of assistance above that to help people with rather higher incomes. These rebates will be available to all who qualify and not just to the restricted groups covered by the Opposition's proposals. There will also be special help for disabled people. They will qualify for rebates at higher levels of income than other people because of the special premiums and income disregards which they enjoy. We have also announced that they will be entitled to reductions under Clause 13 of the Bill if their disability means that they need more space or special facilities in their homes.

Labour's proposals for a so-called fair tax would be a recipe for punishing many middle-income people who have incomes above the rebate level, and who have worked hard to purchase or improve their homes. Couple this with proposals for a 50 per cent. tax rate and no limits whatever on national insurance contributions and it is clear that to Members opposite the word "fair" has a strange and distorted meaning. The council tax, as provided for in this Bill, is a fair tax based on common sense principles. The Opposition's fair rates make no sense at all. I urge the Committee to reject these amendments.

Lord McIntosh of Haringey

I am delighted that at the end of her speech the Minister deigned to defend the proposals in the Bill instead of simply attacking her own conception of Labour Party policy.

Baroness Blatch

I am grateful to the noble Lord for giving way. My duty at the Dispatch Box at this stage of a Bill is to fend off the Opposition's amendments. I addressed the amendments on the Marshalled List today and that is my duty.

Lord McIntosh of Haringey

I welcomed the part of her speech in which the Minister did just that. I repeat that I welcomed the latter part of her speech. When the Minister is fending off amendments, as she elegantly put it, she should be a little more careful about reading the wording of the amendments. She talked as though what we are proposing—I believe she was referring to Amendment No. 10 in this group of amendments—is relief rebates irrespective of income for single retired people who live alone, pensioner couples, persons and families on low incomes and persons with disabilities. I do not think the noble Baroness can have read the preceding line of the amendment which refers to "persons including the following". I certainly do not think the Minister can have read the earlier part of the amendment which states that this amendment seeks to amend the Social Security Contributions and Benefits Act 1922 and the Social Security Administration Act 1922. In other words, it should be quite clear that these are rebates in the classic sense which are adopted by governments of all parties. There is no proposal to give rebates irrespective of income, nor is there a proposal for rebates to be restricted in the way the Minister has suggested.

After an hour of debate it is clear that the Government have no intention of denying the charge behind all these amendments that the Bill represents the least possible departure from the poll tax the Government think they can get away with. The whole concept of discounts irrespective of income—I turn the phrase used by the noble Baroness back on her —and the whole concept of a gap between the highest and the lowest assessments of only 3:1 instead of something which is more progressive in the form of the rates, or even more progressive in the form of local income tax as envisaged by the Liberal Democrats, are clearly minor departures from the poll tax. That becomes even clearer when we consider the way in which the poll tax can be expected to operate in practice in different parts of the country.

It is clear that in central London, the North-West, Yorkshire and many other parts of the country individual local authorities will band the vast majority of their properties into no more than three or, at most, four bands. The result will be that the gap between rich and poor in those areas—that gap exists irrespective of whether or not properties are rated highly—will not be reflected in the council tax which people pay.

The poll tax had a system of rebates which was about as bad as any system of rebates could be. First, it only allowed 80 per cent. of the total liability. Secondly, it was restricted to what was called an applicable amount; that is to say, not the real amount of poll tax but the average levels of poll tax. Thirdly, it was based on the Government's idea of what average levels of poll tax would be rather than on the reality of what actually happened. Fourthly, it was supposed to be corrected by changes in income supplement, but it is quite clear that that has not happened.

We can hardly be blamed for thinking that the discount system with which the Government now propose to replace those inadequate rebates is likely to be just as unfair and unrealistic as the existing system. If that were not the case, the Government would agree with the proposal we shall be making that the 20 per cent. limit on rebates should be abolished as from this year for the poll tax rather than waiting until 1993.

This Bill is bad because it is a son of poll tax. It is so close to the poll tax. We shall and must deal with the individual defects of the Bill as we go through the Bill. With these amendments we have an opportunity to express our distaste for the manoeuvres which the Government are undertaking to recover popularity, but not to restore justice. That is the purpose of the amendments and I commend them to the Committee.

4.10 p.m.

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

Their Lordships divided: Contents, 67; Not-Contents, 175.

Division No.1
CONTENTS
Birk, B.	Llewelyn-Davies of Hastoe, B.
Blackstone, B.	Lockwood, B.
Boston of Faversham, L.	Longford, E.
Bottomley, L.	Lovell-Davis, L.
Brooks of Tremorfa. L.	McIntosh of Haringey, L.
Bruce of Donington, L.	Mallalieu, B.
Callaghan of Cardiff, L.	Mason of Barnsley, L.
Carmichael of Kelvingrove, L.	Milner of Leeds, L.
Carter, L. [Teller.]	Molloy, L.
Cledwyn of Penrhos, L.	Morris of Castle Morris, L.
Clinton-Davis, L.	Nicol, B.
Cocks of Hartcliffe, L.	Parry, L.
David, B.	Peston, L.
Desai, L.	Phillips, B.
Donoughue, L.	Prys-Davies, L.
Dormand of Easington, L.	Richard, L.
Ennals, L.	Sainsbury, L.
Falkender, B.	Serota, B.
Gallacher, L.	Shackleton, L.
Galpern, L.	Shepherd, L.
Graham of Edmonton, L.	Stallard, L.
[Teller.]	Stedman, B.
Greene of Harrow Weald, L.	Stoddart of Swindon, L.
Hatch of Lusby, L.	Strabolgi, L.
Hirshfield, L.	Taylor of Blackburn, L.
Hollis of Heigham, B.	Turner of Camden, B.
Hughes, L.	Underhill, L.
Jacques, L.	Varley, L.
Jay, L.	Wallace of Coslany, L.
Jeger, B.	Wedderburn of Charlton, L.
Jenkins of Putney, L.	Williams of Elvel, L.
John-Mackie, L.	Willis, L.
Judd, L.	Wilson of Langside, L.
Kirkhill, L.	Wrenbury, L.

NOT-CONTENTS
Acton, L.	De Freyne, L.
Ailesbury, M.	Denham, L.
Aldington, L.	Denton of Wakefield, B.
Alexander of Tunis, E.	Dormer, L.
Allen of Abbeydale, L.	Downshire, M.
Allenby of Megiddo, V.	Eccles of Moulton, B.
Ampthill, L.	Elibank, L.
Amwell, L.	Ellenborough, L.
Astor, V.	Elks, B.
Auckland, L.	Elliot of Harwood, B.
Aylestone, L.	Ezra, L.
Balfour, E.	Faithfull, B.
Banks, L.	Falkland, V.
Beaumont of Whitley, L.	Fanshawe of Richmond, L.
Belhaven and Stenton, L.	Ferrers, E.
Bellwin, L.	Flather, B.
Bessborough, E.	Foot, L.
Blatch, B.	Fraser of Carmyllie, L.
Blyth, L.	Gainford, L.
Boardman, L.	Gainsborough, E.
Boyd-Carpenter, L.	Gardner of Parkes, B.
Brabazon of Tara, L.	Geddes, L.
Broadbridge, L.	Gladwyn, L.
Brougham and Vaux, L.	Glenarthur, L.
Butterworth, L.	Grey, E.
Caithness, E.	Gridley, L.
Campbell of Alloway, L.	Grimston of Westbury, L.
Carnegy of Lour, B.	Hailsham of Saint Marylebone,
Carnock, L.	L.
Cavendish of Furness, L.	Hampton, L.
Chalfont, L.	Hamwee, B.
Charteris of Amisfield, L.	Hanworth, V.
Clanwilliam, E.	Harding of Petherton, L.
Cockfield, L.	Hardinge of Penshurst, L.
Coleraine, L.	Harmar-Nicholls, L.
Colnbrook, L.	Harris of Greenwich, L.
Constantine of Stanmore, L.	Henderson of Brompton, L.
Cottesloe, L.	Henley, L.
Cross, V.	Hesketh, L. [Teller.]
Cullen of Ashbourne, L.	Hives, L.
Dacre of Glanton, L.	Holme of Cheltenham, L.

Hood, V.	Orr-Ewing, L.
Hooper, B.	Oxfuird, V.
Hooson, L.	Palmer, L.
Hothfield, L.	Pearson of Rannoch, L.
Howe, E.	Pender, L.
Hunt, L.	Peyton of Yeovil, L.
Hylton-Foster, B.	Platt of Writtle, B.
Ironside, L.	Pym, L.
Jeffreys, L.	Reay, L.
Jenkin of Roding, L.	Renfrew of Kaimsthorn, L.
Johnston of Rockport, L.	Renton, L.
Joseph, L.	Rippon of Hexham, L.
Killearn, L.	Ritchie of Dundee, L.
Kimball, L.	Rochester, L.
Kimberley, E.	Russell, E.
King of Wartnaby, L.	St. Davids, V.
Kinloss, Ly.	Saltoun of Abernethy, Ly.
Knollys, V.	Savile, L.
Lauderdale, E.	Seccombe, B.
Long, V.	Seear, B.
Lucas of Chilworth, L.	Selborne, E.
Lyell, L.	Skelmersdale, L.
McColl of Dulwich, L.	Soulsby of Swaffham Prior, L.
Mackay of Ardbrecknish, L.	Strange, B.
Mackay of Clashfern, L.	Strathcarron, L.
Malmesbury, E.	Strathclyde, L.
Mancroft, L.	Strathcona and Mount Royal,
Marlesford, L.	L.
Masham of Ilton, B.	Strathmore and Kinghorne, E.
Mayhew, L.	[Teller.]
Melville, V.	Terrington, L.
Merrivale, L.	Teynham, L.
Mersey, V.	Thomas of Gwydir, L.
Monckton of Brenchley, V.	Thomson of Monifieth, L.
Monk Bretton, L.	Tordoff, L.
Monson, L.	Tranmire, L.
Montgomery of Alamein, V.	Trefgarne, L.
Morris, L.	Trenchard, V.
Mottistone, L.	Trumpington, B.
Mountgarret, V.	Ullswater, V.
Mowbray and Stourton, L.	Vivian, L.
Munster, E.	Waddington, L.
Nelson, E.	Westbury, L.
Newall, L.	Wharton, B.
Norrie, L.	Winchilsea and Nottingham, E.
O'Cathain, B.	Wise, L.
Ogmore, L.	Wyatt of Weeford, L.
Orkney, E.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.18 p.m.

Lord McIntosh of Haringeymoved Amendment No. 2: Page 1, line 10, at beginning insert: ("( ) This section has effect for the purposes of introducing a property poll tax.").

The noble Lord said: In moving Amendment No. 2, I should like to speak also to Amendments Nos. 4 and 229. The Committee does not seem to like reasoned argument against the antecedents and contents of the Bill. Let us try, as Dr. Johnson once said, to clear our minds of cant and set out to remove from the face of the Bill the canting term "council tax", which, so far as one can see, is an attempt to put the blame for central government decisions on local government. Instead let us call the tax by its proper name, a property poll tax.

As I said earlier, this is as near to a poll tax as the Government dare to go. It still arouses opposition from many of the Government's own Back-Benchers, certainly in another place although I do not know whether or not that is the case in this Chamber. It seems only proper that we should not have a public relations phrase such as "council tax" on the face of the Bill or in the title to it. Instead we should have the truth. The truth is that this is a version of the poll tax mediated through the property taxation system. It is no more and no less than that.

Over the coming weeks in debate it will prove to be as complicated, as weak, as ineffective and as unjust as has already been predicted. It should at least be called by its proper name. I beg to move.

Lord Boyd-Carpenter

It is quite obvious that the amendment is simply a propaganda move without any serious intent behind it. So far the Bill has proceeded on the basis that it is a council tax, and that is what it is. I hope that the Committee will insist on keeping it that way and not waste any more time on Opposition frivolities of this kind.

Lord Jenkin of Roding

At the risk of incurring the wrath of my noble friend Lord Boyd-Carpenter, to call something a property poll tax is a complete contradiction in terms. A poll tax has nothing to do with voting; it means a tax per head. A property tax is a tax on property. How on earth anyone can conceive the title of a property poll tax and waste the time of the Chamber in putting it forward passes my understanding.

We are at the beginning of what will be a long and contentious Committee stage. I agree with my noble friend. If we are to waste time on such points, it rather demeans the Chamber.

Lord Stoddart of Swindon

I should like to make just one comment. There is a great deal in a word. It was interesting to note that the Government, indeed government Ministers, tried to get the two words "community charge" to stick. By the end of the debate on that issue and the beginning of the debate on this Bill, the Secretary of State himself talked about a poll tax. Words do matter.

Baroness Blatch

I was touched by the newly found enthusiasm for the old rating system. In moving the amendment, the noble Lord, Lord McIntosh, referred to the word "cant". I have to say that all that was said came pretty close to that word. As the noble Lord, Lord Stoddart, said, there is a great deal in a word, but that word has no relevance whatever to the Bill which is before the Committee.

These amendments will provide for the tax introduced by the Bill to be called the property poll tax. The council tax is not any kind of poll tax, as my noble friends Lord Jenkin of Roding and Lord Boyd-Carpenter said. It is based on property and the rate at which it is levied varies according to the capital value of the dwelling and the number of residents. It has been argued that in many areas the majority of dwellings fall within a single band and that in those areas the tax is effectively levied at a flat—

Lord Stoddart of Swindon

Perhaps I may interrupt the Minister. She said that the tax will vary according to the property value and the number of residents, but that is patently untrue. It is certainly based on property value to some degree, but not on the correct property value, and on the difference between having one or two residents and no more. The noble Baroness does not intend to mislead the Committee but she does not put forward the true operation and effect of the Bill.

Baroness Blatch

I do not mislead the Committee. The tax is based on the capital value of the house—the value of the property. The other element of the tax, the other 50 per cent., relates to people in the property. It is stated quite clearly and explicitly on the face of the Bill that two people are deemed to live in each property. Indeed, if one excepts those to whom the tax does not apply, that covers over 87 per cent. of all households in the land. In fact, it encompasses a very large number of properties. There is nothing misleading in what I put to the Committee.

Let me continue. The difference in bills arising from discounts is ignored but in any event that is purely a reflection of local circumstances. If neighbouring properties in the same council's area have similar values within a band it is right that they should face the same level of council tax. Even if the Opposition's preferred system of valuation were in place there would be many areas where the properties were all of similar value and where bills would be very similar. But the Opposition's valuation system would result in minor differences in valuation, which would be inexplicable to the householders concerned and would lead to a large number of appeals.

The banding system is fair and reduces the scope for appeals. Council tax is a perfectly neutral and accurate term for the new tax. Property poll tax is meaningless and not relevant to this Bill. I urge the Committee to reject the amendment.

Baroness Hamwee

I cannot resist asking the noble Lord, Lord McIntosh, whether he might think that another of Dr. Johnson's sayings is applicable and that this second attempt at a tax is the triumph of hope over experience.

Lord McIntosh of Haringey

The noble Baroness may well be right. Unfortunately the experience will not go away. The Minister made my case for me very clearly. She reminded the Committee that this tax is based 50 per cent. on property and 50 per cent. on persons. That is exactly a property poll tax. As my noble friend Lord Stoddart rightly said, the community charge was a deliberately cant phrase, designed to disguise the nature of the tax introduced by the Local Government Finance Bills of 1987 and 1988.

Baroness Blatch

I am grateful to the noble Lord for giving way. My understanding of the poll tax is that it is a per capita tax. There are very large numbers of people who, for the purposes of this Bill, are invisible. They simply do not exist. They are third or fourth residents in a house, many students, student nurses and all kinds of other people who are qualified for exemption. They are not counted for the purposes of the tax. This is not a poll tax. It is not a per capita tax.

Lord McIntosh of Haringey

It is a per capita tax when, to use the Minister's own words only five minutes ago, it is based on the assumption that there are two persons in a house. In other words, it is a crude poll tax. Nevertheless it is a poll tax. The weasel words of "community charge"—which, incidentally, the British people were far too wise to allow to enter common currency and preferred to use more accurate words—are continued in the weasel words of "council tax". Today the relationship between central government and local government, is such that central government is responsible for 85 per cent. of the funding of local government and a very high proportion indeed of the decisions on local expenditure, while local authorities have very little discretion about what they spend. To call this measure a council tax is a deliberate attempt to transfer unpopularity from central government to local government. The implication of calling it a council tax is that local authorities have a degree of financial independence and operational authority which, throughout the period of their existence, this Government have consistently been denying them.

The phrase "property poll tax" is strictly accurate: 50 per cent. property and 50 per cent. poll tax. That is what it should be called and I commend the amendment to the Committee.

4.30 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 59; Not-Contents, 140.

Division No.2
CONTENTS
Blackstone, B.	Kirkhill, L.
Boston of Faversham, L.	Llewelyn-Davies of Hastoe, B.
Bottomley, L.	Lockwood, B.
Bruce of Donington, L.	Longford, E.
Callaghan of Cardiff, L.	Lovell-Davis, L.
Carmichael of Kelvingrove, L.	McIntosh of Haringey, L.
Carter, L.	Mallalieu, B.
Cledwyn of Penrhos, L.	Mason of Barnsley, L.
Clinton-Davis, L.	Milner of Leeds, L.
Cocks of Hartcliffe, L.	Molloy, L.
Cudlipp, L.	Morris of Castle Morris, L.
David, B.	Nicol, B.
Desai, L.	Parry, L.
Donoughue, L.	Peston, L.
Dormand of Easington, L.	Phillips, B.
Falkender, B.	Prys-Davies, L.
Gallacher, L. [Teller.]	Redesdale, L.
Galpern, L.	Richard, L.
Graham of Edmonton, L.	Shackleton, L.
[Teller.]	Shepherd, L.
Greene of Harrow Weald, L.	Stallard, L.
Hatch of Lusby, L.	Stoddart of Swindon, L.
Hirshfield, L.	Strabolgi, L.
Hollis of Heigham, B.	Turner of Camden, B.
Hughes, L.	Underhill, L.
Jay, L.	Varley, L.
Jeger, B.	Wallace of Coslany, L.
Jenkins of Putney, L.	Wedderburn of Charlton, L.
Judd, L.	Williams of Elvel, L.
Kilbracken, L.	Willis, L.

NON-CONTENTS
Acton, L.	Belhaven and Stenton, L.
Aldington, L.	Bellwin, L.
Alexander of Tunis, E.	Bessborough, E.
Allenby of Megiddo, V.	Blatch, B.
Amwell, L.	Blyth, L.
Astor, V.	Boardman, L.
Auckland, L.	Boyd-Carpenter, L.
Balfour, E.	Brabazon of Tara, L.

Bridgeman, V.	McColl of Dulwich, L.
Broadbridge, L.	Mackay of Ardbrecknish, L.
Brookeborough, V.	Mackay of Clashfern, L.
Brougham and Vaux, L.	Malmesbury, E.
Butterworth, L.	Mancroft, L.
Caithness, E.	Marlesford, L.
Campbell of Alloway, L.	Melville, V.
Carnegy of Lour, B.	Merrivale, L.
Carnock, L.	Mersey, V.
Cavendish of Furness, L.	Monckton of Brenchley, V.
Chalfont, L.	Monk Bretton, L.
Charteris of Amisfield, L.	Monson, L.
Coleraine, L.	Montagu of Beaulieu, L.
Colnbrook, L.	Montgomery of Alamein, V.
Constantine of Stanmore, L.	Morris, L.
Cottesloe, L.	Mottistone, L.
Cross, V.	Mowbray and Stourton, L.
Cullen of Ashbourne, L.	Munster, E.
Dacre of Glanton, L.	Nelson, E.
Denham, L.	Newall, L.
Denton of Wakefield, B.	Norrie, L.
Dormer, L.	O'Cathain, B.
Eccles of Moulton, B.	Orkney, E.
Elibank, L.	Orr-Ewing, L.
Ellenborough, L.	Oxfuird, V.
Elles, B.	Palmer, L.
Elliot of Harwood, B.	Pearson of Rannoch, L.
Faithfull, B.	Pender, L.
Ferrers, E.	Peyton of Yeovil, L.
Flather, B.	Platt of Writtle, B.
Fraser of Carmyllie, L.	Pym, L.
Gainford, L.	Reay, L.
Gainsborough, E.	Renfrew of Kaimsthorn, L.
Gardner of Parkes, B.	Renton, L.
Geddes, L.	Renwick, L.
Glenarthur, L.	Rippon of Hexham, L.
Gridley, L.	St. Davids, V.
Grimston of Westbury, L.	Saltoun of Abernethy, Ly.
Halsbury, E.	Savile, L.
Harding of Petherton, L.	Seccombe, B.
Hardinge of Penshurst, L.	Selborne, E.
Harmar-Nicholls, L.	Skelmersdale, L.
Henderson of Brompton, L.	Soulsby of Swaflham Prior, L.
Henley, L.	Stanley of Alderley, L.
Hesketh, L. [Teller.]	Stodart of Leaston, L.
Hives, L.	Strange, B.
Holderness, L.	Strathcarron, L.
Hood, V.	Strathclyde, L.
Hooper, B.	Strathcona and Mount Royal,
Howe, E.	L.
Ironside, L.	Strathmore and Kinghorne, E.
Jeffreys, L.	[Teller.]
Jenkin of Roding, L.	Terrington, L.
Johnston of Rockport, L.	Thomas of Gwydir, L.
Killearn, L.	Tranmire, L.
Kimball, L.	Trefgarne, L.
Kimberley, E.	Trenchard, V.
King of Wartnaby, L.	Trumpington, B.
Kitchener, E.	Vivian, L.
Knollys, V.	Waddington, L.
Long, V.	Westbury, L.
Lucas of Chilworth, L.	Wharton, B.
Lyell, L.	Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendments Nos. 3, 4 and 5 not moved.]

Lord McIntosh of Haringeymoved Amendment No. 5A: Page 1, line 13, at end insert ("and shall notify to the Secretary of State, its best estimate of the cost of introducing Such a tax not later than 31st March 1993.")

The noble Lord said: With this amendment, I should like to speak also to Amendment No. 201. I think it would be Convenient if I also spoke to Amendment No. 206, in the name of the noble Lord, Lord Mackie of Benshie, and the noble Baroness, Lady Hamwee, which is on the same subject. Amendment No. 206 refers to Scotland rather than to England and Wales.

The provision in Amendment No. 201, which is the critical amendment in this group, is the requirement that:

"The Secretary of State shall not later than 31st January 1993 lay before Parliament a report setting out—

1. (a) the likely cost of preparations for the introduction of the council tax; and
2. (b) the overall estimated cost of the introduction and withdrawal of the community charge".

As can be seen, there are two quite separate elements to the report and they have to be dealt with separately. The Government have commissioned consultants to estimate the costs that authorities would incur in introducing the council tax, and they have made estimates that up to and including 31st March 1993 the costs would be revenue costs of roughly £115 million and capital costs of £41.5 million. The proposal of the Government is that the Government will pay a specific grant of 75 per cent. of the revenue expenditure and they would issue supplementary credit approvals for the £41.5 million of capital expenditure.

It is not unreasonable for the local authority associations to say that the provision of central government funding is inadequate. There was a change, first, from the rates to the poll tax and, secondly, from the poll tax to the council tax. That means that local government shall take the opprobrium of the additional cost of 25 per cent. of the revenue and ultimately all the capital expenditure involved. Clearly, that capital expenditure would not have been incurred unless the changes in the local government finance system had been introduced.

In a Written Answer given on Monday, 13th January Mr. Key, the Under-Secretary of State in the Department of the Environment estimated that the costs of the council tax would be no more than half the costs of the poll tax. I do not know whether that is good news. I do not know whether it means that the Government have realised that after hitting one's head against a brick wall for a long time it will be less painful to do so at only half the frequency. I do not know whether the Answer is good news because we do not yet know adequately the full costs of the poll tax. There is an attempt in the Explanatory and Financial Memorandum to suggest that the savings in administrative costs as compared with the poll tax will amount to £200 million per annum. However, it must be made clear by the Government how many years will elapse before those savings outweigh the additional costs incurred by the disastrous poll tax.

I can give only our estimates of those costs, based on information supplied by local authorities. As regards England and Wales, we understand that in 1989–90, the preparatory year for the poll tax, there was non-recurring capital expenditure of £135 million and there was revenue expenditure, grant-aided at the rate of 50 per cent., of £110 million. In 1990–91 there was the cost of transitional relief of £360 million and special grants such as the inner London education grant and the area safety net of £187 million. That amounted to a total of £547 million. In 1991–92, the current year, the transitional relief scheme rose to a cost of £1,250 million. The special grants cost £550 million and the poll tax reduction grant—that accounted for the increase in VAT on 1st April last year—amounted to the enormous figure of £4,830 million. In 1992–93, the last year of the poll tax under the Government's proposals, the transitional relief will again cost £1,250 million and the special grants £360 million. We can expect the poll tax reduction grant now incorporated in revenue support grant to be £5.1 billion. Added together those figures amount to more than £14 billion, excluding the increases in revenue support grant of £2 billion in 1991–92.

By anyone's standards those figures are enormous. They were stoutly denied when suggested during the passing of the poll tax legislation. I do not have in front of me the Explanatory and Financial Memorandum for the 1987 and 1988 Acts. On reflection I should have prepared them. However, there was certainly no indication then that the poll tax would cost such an enormous sum. We can be sure that the figures now included in the Explanatory and Financial Memorandum will bear no relation to the real costs in introducing the council tax.

Baroness Carnegy of Lour

I thank the noble Lord, Lord McIntosh, for giving way. Does he know how much of that cost is due to non-payment of the poll tax? Does he know from the local authorities how much of the increase was necessary because of non-payment?

Lord McIntosh of Haringey

None of that amount was due to non-payment. They are strictly additional costs caused solely by the introduction of the poll tax and the abolition of the rates. That question does not arise as a result of my amendment. It is necessary for us to make these proposals not merely because we do not trust the Explanatory and Financial Memorandum—or rather we do not trust the Government who have drawn up the Bill for which that memorandum has been prepared—but because, at the minimum level of accountability to local people, the Government must come clean about the costs of their two switches in policy during the course of one Parliament. It is not good enough to report on any gross increases in the revenue which must be collected by local authorities without recognising the fact that a substantial part of those increases has been caused directly by the diktat of central government in changing the local government finance system and that all that money has been wasted. That fundamental point must be made clear. We do not believe that this Government should be able to introduce a new system of local authority finance without openly explaining to the people of this country what their changes of mind and new proposals have cost and are likely to cost. I beg to move.

4.45 p.m.

The Earl of Balfour

I believe that it is worth Members of the Committee looking at page iii at the beginning of the Bill. I realise that there will be a great deal of expenditure. The first paragraph states: Savings in administrative costs when the new system is in operation are estimated at £200 million a year".

Lord McIntosh of Haringey

I am sorry if I did not make myself clear. I was trying to point out that the savings are not against a rational scheme of local authority finance but against the poll tax. It is an exploded scheme of local authority finance. Unless we understand what the poll tax is costing us now and will cost us next year, unless we understand the magnitude of the waste of public resources caused by the introduction of the poll tax, we shall not understand what part that £200 million savings is playing.

Baroness Hamwee

The noble Lord, Lord McIntosh, was too polite to put the issue in the terms that it was put to me: that the Government have got local authorities, taxpayers and ratepayers into this mess and they should know the cost of getting out of it. That is a blunt but correct way of summarising the purpose of the amendment.

There is natural scepticism about the figures that have been published for the start-up costs of the new council tax because there has not been a comprehensive trawl to establish precisely the costs of setting up the poll tax. The figure for costs which the noble Lord, Lord McIntosh, gave us, as the noble Baroness, Lady Carnegy, spotted, do not deal with all the costs. They are only certain costs, such as the safety net provisions, the VAT amendments of last year and so on. In my view many would rightly say that the amounts which have not been collected—and we are not talking about wilful failure to pay by those who can pay; we are talking about problems of non-payment by those who cannot pay—should also be included as a cost of the community charge which has been wasted.

When the poll tax was introduced the Association of District Councils persuaded the Government to divide the starting up costs into 50 per cent. specific grant and 50 per cent. as part of the normal rate support grant. A local authority in the south of England told me that on that basis it received £60,000 in specific grants. One would have thought that a similar figure would be included in its rate support grant. In fact the RSG for that year was only £59,000. That is the sort of thing which leaves people extremely puzzled as to how the arrangements will apply and whether they can be assured of receiving the amounts which are promised. I support the amendment.

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

I shall deal also with Amendments 201 and 206. These amendments relate to the cost of the council tax. My noble friend Lord Balfour drew to the attention of the Committee that the Explanatory and Financial Memorandum to the Bill contains the Government's estimate of introducing the council tax throughout Great Britain broken down between local and central government.

I am aware of the accusation which the noble Lord, Lord McIntosh, makes that the figures in those estimates are not always exact. That is because they are estimates.

Lord McIntosh of Haringey

I am not saying that the £200 million is not exact. I have no way of knowing that. It is not an absolute figure but a relative figure. It claims to be a saving but it does not tell us what figure the saving is on.

Lord Strathclyde

I shall come to that point. It is on the costs of the community charge, which is the subject of the amendment in the name of the noble Baroness, Lady Hamwee.

We now expect the valuation exercise to cost £100 million less than our original estimate, thanks to the very competitive tenders from private sector valuers. The cost of £19 million to value about 12 million properties in England and Wales shows what can be achieved through co-operation between the public and private sectors. Consultants have estimated that additional costs for local authorities in Great Britain are £185 million. There is nothing to lead us to believe that the initial estimates were unsound. We have already made generous provision for financial support of local authority expenditure in preparation for the council tax.

In England my right honourable friend the Secretary of State for the Environment found £86 million in "new money", over and above the original total for aggregate external finance for 1992–93 in order to pay grant towards 75 per cent. of the estimated revenue costs. My right honourable friend the Secretary of State for Wales also found "new money" worth £6 million to meet 75 per cent. of estimated revenue costs for local authorities in that country. In addition, we shall be providing cover for authorities to borrow to meet the estimated capital costs. My right honourable friend the Secretary of State for Scotland made generous provision for revenue expenditure on preparation for the council tax in the the Scottish 1992–93 AEF settlement. Because of that generous provision, and in response to representations from Scottish local authorities about the level of their capital allocations, he used his share of "new money"—a sum of £10 million—to enhance capital allocations in 1992–93.

I think it is fair to say that those arrangements have been generally welcomed by local government, and recognised as both fair and generous. I do not think we could be expected to offer more without removing all incentive to efficiency and economy. I am sure that the Committee would welcome that aim. The only effect of these amendments would be to distract local authorities from their paramount task of introducing the council tax itself. I therefore ask the Committee to join me in resisting these amendments.

The part of Amendment No. 201 relating to the community charge is simply unnecessary. Those costs have been, and will be, shown in the departmental reports for the Department of the Environment and the Scottish and Welsh Offices, and in the annual local government financial statistics published by the Government. The Government have never sought to hide information of this kind in the past and there can be no question of wishing to do so in the future. There is no need for the special provision for this purpose, and I hope that the amendments will be withdrawn in the light of the reassurance that I have just given.

Lord McIntosh of Haringey

I am intrigued by the Minister's last remarks. I confess that I do not take the departmental estimates to bed with me, but since the introduction of the poll tax I have never noticed that they explicitly give the information for which we have been asking; namely, the cost of the introduction and withdrawal of the poll tax—in other words, the administrative costs which arose over and above those which would have arisen from the collection of the rates. I thought that they were included in broader headings.

I am surprised that the Minister should boast that the valuation will cost £20 million rather than £120 million. If I had budgeted for something to cost £120 million and then found that it was to cost £20 million, I should wonder whether it had fallen off the back of a lorry. I believe that that is what has happened as regards the prices being charged by the estate agents carrying out the so-called banding valuation. What appears to be happening is that estate agents, who have been driven desperate by the failure of the Government's housing policies and the collapse of the housing market brought about by the Government's economic policies, have been looking for a little cash, even if they are not covering their costs. However, at the same time the operation is being carried out in the cheapest possible way. I shall not be readily convinced that a valuation which costs, in some parts of the country, 20p per property will be adequate. If I were a householder whose property had been valued at that price, I should be tempted to lodge an appeal straight away. Indeed, if I find that that is what has happened in Haringey, that is what I shall do.

All that we hear about the valuation process, which has already been proceeding under the powers conferred by the paving Act, confirms that it will be an extremely slap-dash affair. Where a house has a garden which is bounded by a fence and a passageway, the valuers have tried to peer over the fence to see whether there is an extension at the back. When there is no such access, they have not been able to do that and they simply do not know. There are even stories of valuations being carried out from low flying planes and helicopters. That has given rise to the delightful phrase, "in-flight valuation". That will not command a great deal of confidence. The fact that it is costing only £20 million does not seem to me to be good justification for the system.

The amendment is more serious than that. The words of the Scottish amendment and the amendment relating to England and Wales are very similar; there is no difference in substance between them. The amendments point out that those so-called savings referred to in the Explanatory and Financial Memorandum are not savings on any stated figure. If it is a £200 million saving on £210 million expenditure, then it is a worthwhile saving. However, a £200 million saving on £2 billion expenditure is much less worthwhile. I do not believe that financial memoranda should contain relative figures of that kind. They should expose the real amount of expenditure to be incurred by the institution of the council tax.

In view of the comments made by the Minister and in view of my need to refresh my memory of the content of the departmental estimates, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5 p.m.

Lord McIntosh of Haringeymoved Amendment No. 5B: Page 1, line 13, at end insert ("and provide the Audit Commission with such information as it may reasonably require for the purposes of its duties under section (Report by Audit Commission) below"). The noble Lord said: In moving Amendment No. 5B I shall speak also to Amendment No. 204. It will be well known to those who attended the Second Reading debate that a number of professional bodies and also the Audit Commission were deeply involved in the preparations for the council tax. To varying degrees they expressed anxiety about the feasibility of introducing a tax of this kind in the timescale proposed.

It was suggested by my noble friend Lord Stallard, in the discussion on Amendment No. 1, that the Bill was being rushed through Parliament at an excessive rate. That is certainly true of the way in which it went through the House of Commons. But more serious than that—I am not failing to take Parliament seriously—is the short timetable for the implementation of the council tax and the risk involved of something going badly wrong.

The timescale for the introduction of the poll tax was at least one year longer than the timescale for the introduction of the council tax. The poll tax had at least the advantage of being introduced on top of a stable rating scheme—not everybody liked it, but that is not the point —which actually worked and which could be put on automatic pilot while work was being done on the poll tax. I do not believe that even the staunchest defenders of the Government's policies on local government finance would claim that the poll tax is a stable scheme.

At the lowest level there have been a number of changes in legislation since the original poll tax legislation was introduced, all of which have had to be implemented by local authority officers. There have been all the problems of the interpretation of legislation and, above all, the collection and collectability of the poll tax which have bedevilled it since its introduction. If that brings the noble Baroness, Lady Carnegy, to her feet I shall not be surprised. She will forgive me if I do not express enormous enthusiasm in advance.

It is proposed to introduce the council tax on a tight timescale on top of a tax which even the Government admit is not working. The questions in the report from the Audit Commission, for which Amendment No. 204 asks, include, first, whether the legislation can be introduced in time. The Minister said when the legislation was going through the Commons that there was no suggestion that it would be impossible for local authorities to meet the deadline. However, CIPFA, the Chartered Institute of Public Finance and Accountancy, expressed doubt about it; the local authority associations expressed doubt. The Government's own consultants, CSL, did not exactly express doubt—that is not in their remit—but certainly said that rigorous conditions must be fulfilled if the timetable is to be adhered to. The Audit Commission, as it looked at the problems of implementation, again did not express doubt; that is not its job. But it warned of the difficulties involved in the implementation of the council tax.

The second question which the amendment requires the Audit Commission to ask is whether the proposal will actually work. We have behind us the experience of the poll tax which we were assured by the Government would work and which patently does not. That question should be independently examined by the Audit Commission before 1st April 1993; that is, before the date of implementation of the legislation.

The later reports, which the amendment calls for in alternate years, ask important questions. We have all seen in the newspapers in the past week or so suggestions that there are subsequent changes to the council tax which Ministers are considering and have not chosen to include on the face of the Bill. There is talk of a three-year revaluation of the council tax. I am interested to see that the Minister shakes her head and is denying that suggestion. As far as I know it has not been officially denied from the Government Front Bench before, so it is a worthwhile response which I am glad to have recorded in Hansard.

It will be interesting to see whether the Minister shakes her head at the suggestion made in the newspapers last week that there are to be other forms of council tax sweeteners designed to help the Rhodes Boysons of this world who are concerned about Tory voters in the outer suburbs of London and the South East who may suffer from the high banding of their houses, and that there may be ways in which, subsequent to the passage of the Bill, the conditions of the legislation could be changed. The Minister does not shake her head at that suggestion, which I find equally interesting. Whitehall sources, as we read in the newspapers, say that the Bill is, "not the final word" on the council tax. It will be interesting to know the final word and why the final word is not put before Parliament.

The Bill is full of arbitrary elements, not least the arbitrary discount structure proposed in Clause 11 with which we shall deal later, or the arbitrary elements of administration which we shall deal with when considering Schedule 2. In all those matters it is apparent that we should be wary of the Government's intentions: of the Government's willingness to break away from its disastrous preceding policies. The reports called for from the independent Audit Commission, both before the introduction of the council tax and in alternate years thereafter, would be a good way of informing the public how far the assurances given by the Government are likely to be realistic and what kind of tax we are likely to end up with as a result of the legislation. I beg to move.

Baroness Blatch

The amendments show a rather negative view of the Opposition towards these matters. The council tax is based on common sense principles and its operation will be straightforward. But in any event, there is no need for the Bill to instruct the Audit Commission in its duties. The Audit Commission is charged with enabling local authorities to give better value for money. They will monitor the performance of local authorities as they implement and operate the council tax. And, just as with rates and the community charge, I would expect them to find that there is a wide range between the best performers and the worst. Under the Local Government Bill recently passed by your Lordships' House, the Audit Commission will publicise the performance of authorities. Where they find poor performance the auditor will draw it to the attention of the authority concerned, who will then, I hope, take steps to improve.

The amendment also requires the Secretary of State to consider the proposed reports in deciding whether to make alterations to the operation of the system. The Secretary of State is able to exercise his discretion in these matters in the light of a wide range of factors, which can certainly include the sorts of matters mentioned in the amendment.

The noble Lord reads too many newspapers. Perhaps he is one of those people who believes everything he reads. He also reads too much into what my right honourable friend the Secretary of State said in another place when he said that this is not the last word. Much fine tuning is made to legislation. I do not believe that there has been a piece of legislation that has passed through either House where there has not been a need to redress some issue in it.

If there were a return to an unamended old rating system, in addition to complex evaluations when the new system is introduced based on capital, rental, maintenance and rebuilding costs, and subject to annual revaluations, it would be interesting to know whether the noble Lord advocates that there should also be an Audit Commission report every two years on the cost, economy, efficiency and effectiveness of the new system that the noble Lord advocates should be put in place.

The answer from noble Lords opposite to any problem is to increase bureaucracy and cost. That is not our way. We believe that we have given the Audit Commission sufficient power to determine efficiency and effectiveness both in administration and in the way in which local authority performs its functions. For those reasons I hope that the Committee will reject the amendment.

Lord McIntosh of Haringey

Perhaps I may take the Minister's last point. If we were introducing new local government finance legislation, we would expect the Audit Commission to produce independent reports on the efficiency and effectiveness of our proposals. There is no need for doubt on that score.

I find more disturbing the suggestion of the Minister that the role of the Audit Commission is the monitoring of local authorities. That is not an unworthy objective. I do not say that the Audit Commission should not monitor local authorities and consider the differences between the most efficient and the least efficient. However, we seek something different. We propose that the Audit Commission use the information at its disposal from the accounts of local authorities and from the activities of local authorities to monitor the effects of government legislation on local government. That is the significant factor. That is what the noble Baroness omits from her description of the functions of the Audit Commission. It is that part of her response that convinces me that the reports we ask for are necessary.

The Minister made no attempt in her response to calm any of the fears that have been expressed about the practicability of the introduction of the council tax within this timescale. Those are not so much my fears but those of the professional bodies, the local authority associations and the consultants who have been employed by the department. It may well be a matter that we shall wish to return to at a later stage. Clearly the practicability of the proposals is absolutely critical to the success of the Bill. It is not a matter on which I seek to divide the Committee at this time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.15 p.m.

Lord McIntosh of Haringeymoved Amendment No. 5C: Page 1, line 13, at end insert ("and shall provide such information as the Secretary of State may reasonably require for the purposes of his duties under section (Progress of Billing Authorities) below".).

The noble Lord said: Amendment No. 5C is a paving amendment for the longer amendment, Amendment No. 202, which is, like the others, a new clause after Clause 65.

Again, it is a matter on which I expect the noble Baroness, Lady Carnegy, to be tempted to rise to her feet. We are concerned with the progress of billing authorities in the introduction of the council tax. We are concerned with another aspect of the matters to which I referred in discussing the last amendment. The Minister is quite right when she says that no piece of legislation is the last word on the issue that the legislation covers. On some occasions that is truer than others.

The Bill has 43 order-making powers and 295 regulation-making powers. One could therefore turn the Minister's defence on its head and say that perhaps the Government ought to have made up their mind about a few more of the issues before putting the legislation before Parliament. However, they have not done so.

A more serious factor is that all those regulations will be required in the short timescale between now and the time when the council tax is planned to be implemented. Yet we have only what are described as the first draft regulations going out to local authorities at the present time for consultation. Local authority associations are being required to keep those first draft regulations in confidence. They cannot therefore discuss them widely as they would wish to do.

I put down a Question for Written Answer to Her Majesty's Government on the subject last week. I asked whether they would now consider publishing the draft regulations which are in the hands of local authority associations. I do not know whether the Minister is in a position to respond to that Written Question. It would enormously help us in the consideration of the Bill if, within the next couple of days, any Member of this House were able to discuss with local authority associations the content of the draft regulations which contain a great deal of the meat which surrounds the skeleton—the text of the Bill.

Lord Harris of Greenwich

Perhaps I may ask the noble Lord one question. Does he agree that it would be a truly extraordinary situation if the local authorities, having been consulted, were asked to keep documents in confidence and Parliament was not given the opportunity of having them produced for its own examination?

Baroness Blatch

If the noble Lord will allow me to intervene, perhaps I may clear up that point. I have today signed the Answer to that Question. I have deposited the documents in the Library of the House.

Lord McIntosh of Haringey

I am most grateful. The point that the noble Lord, Lord Harris, made was indeed the position until I raised the matter in a Question for Written Answer last week and received the Answer today. Perhaps I may express my gratitude to the Minister for that. I cannot guarantee that we shall be able to digest the regulations in time for the relevant consideration in Committee stage. However, I can assure the noble Baroness that we take those regulations seriously so far as the timescale allows during the passage of the Bill.

A second element relates to the order and regulation-making power. I refer to the national specification of user requirements. I understand from those who are concerned with such matters that the national specification of user requirements for the council tax is not in the form which enables local authorities to specify and commission the software which will be necessary. Anyone who knows anything about the specification of administrative software will know that the timescale between now and 1st April 1993 is very short indeed.

I had not given the Minister notice of the question. I have not put down a Question for Written Answer on the subject. However, if she were able to give us any assurance about the specification of user requirements and how soon it will be available it would be enormously helpful.

On the issue of the draft valuation list, if I remember rightly, the early reports to the Government about the implementation of the council tax were based on the assumption that the draft valuation list would be available in December 1991. We now understand that it will be available at the end of September 1992. Clearly that has enormous implications for local authorities' budgetary planning for 1993–94 with regard to their estimation of what their council tax base is likely to be. They must have that before they start to make the more delicate and difficult calculations of the likely cost of the discount and rebate structures. I say this, I am sorry to say, in the absence of the noble Lord, Lord Renfrew, who seems to think that this is a simple piece of legislation.

The timetable between now and the implementation of the legislation is extremely tight. Everybody who has been concerned with it in detail on a professional basis, on an advisory basis or in any capacity, has expressed grave anxiety about the difficulties. The only way in which we can tackle the problem and bring it to the attention of the public is by tabling amendments of this kind. Our amendment provides that the Secretary of State shall lay before Parliament a report setting out progress by billing authorities and that he will do so in conjunction with associations representative of the billing authorities. What action the Secretary of State then takes if he finds that progress towards the implementation of the council tax is not satisfactory remains to be seen.

It is of course in the power of the Secretary of State to delay any part of the implementation of the legislation. I hope that it does not come to that. I hope it will not be necessary. But it is desirable that the public should be involved in discussion of the timetable not only for the administrative convenience of local authorities but in the interests of freedom of information generally. I beg to move.

Earl Howe

Amendments Nos. 5C and 202 introduce an element of what I fear is unnecessary bureaucracy because they would require a report by the Secretary of State on the progress being made by billing authorities in implementing the new tax.

If the noble Lord, Lord McIntosh, believes as he has indicated, that billing authorities will be unable to meet the deadline for the introduction of the council tax then he is very wide of the mark indeed. Progress to date has been remarkable. The Government have been working closely with the local authorities to ensure that the council tax is ready for introduction on 1st April 1993, and the local authorities have been co-operating wholeheartedly with us to ensure that this result is achieved.

We established regular working contacts with the local authority associations, to ensure that the practical details of the council tax were given thorough discussion before the introduction of the legislation. That group continues to meet, and has turned its attention to the secondary legislation which will be required. It will also join with the Government in producing practice notes to help local authority practitioners with the details of the legislation.

The Government have issued good practice guidelines on the implementation of the council tax, including a detailed implementation plan. Authorities thus have had a model from which to work in making their own arrangements for the implementation of the new tax.

We have also listened to those many bodies who recommended the production of a national computer specification for the council tax. CSL looked into this and recommended that the Government should make available to local authorities a comprehensive statement of user requirements. Such a statement, produced by local authority computer professionals, was circulated free of charge to all authorities before Christmas—confounding many who said that such a document could not be produced in good time. We understand that the document is proving extremely useful to local authorities as they negotiate with computer suppliers about systems for the new tax.

We have said that the secondary legislation will be ready as soon as possible after Royal Assent. Initial drafts of the major regulations and orders have already been sent to the local authority associations for consultation. We are now revising them in the light of comments received, and the next round of consultation will go rather wider. We are well on target for making the regulations at the earliest possible moment.

The Government have done everything possible to ensure that local authorities are able to implement the council tax in time. At the outset many said that the timetable was challenging. We have ensured that it is achievable. The scepticism of the noble Lord opposite is misplaced. I hope, therefore, that he will feel able to withdraw his amendment.

Lord McIntosh of Haringey

I never doubted that local authorities and local authority associations were co-operating fully with government in seeking to achieve the implementation of the council tax on time. They have the same interest that we all have—the replacement of the poll tax at the earliest possible opportunity. There is no disagreement on that point.

The points that we are raising are severely practical and I hope that I am to be encouraged by the response made by the Minister and that what he said is reflected in the experience on the ground.

I was a little nervous to hear him say that the national specification for software requirements was circulated before Christmas. Of course I am aware of that fact and I hoped that I had made that clear. What I said was that the software specification was not detailed enough to enable the software actually to be specified in the absence of the regulations. It is particularly an issue of transitional relief that is going to have to be built into the software from an early stage. It does not appear, from my information, that there has yet been adequate specification of transitional relief. However, clearly this is a matter which is continuing. It is clear that every time the matter comes before Parliament there will be different degrees of progress. I am not in any way suggesting that the Government are dragging their feet. Indeed, I was not intending to do so. What I was proposing in these amendments was that the process should be made public. To some extent the amendment has had a limited virtue already in that the noble Earl has made public some facts about progress towards implementation which, until today, had not been made public. I am grateful for that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey

moved Amendment No. 5D: Page 1, line 13, at end insert ("and notify the Secretary of State of the capital collection rate by such date as he may specify for the purposes of section (Collection rates) below"). The noble Lord said: In moving Amendment No. 5D I shall speak to the substantive amendment, Amendment No. 203, which is concerned with a report to be produced on collection rates and enforcement. This, again, is a matter on which I am perfectly willing to be reassured if the Government are able to do that. This amendment seeks to require the Secretary of State to lay a report on the expected collection rate among billing authorities and the impact on the collection rate of the implementation and enforcement of the community charge—in other words, of the poll tax.

I have already said that the present difficulties facing local authority finance departments are enormously compounded by the fact that they are being required to introduce a new tax on top of an unstable tax rather than on top of a stable tax, as were the rates when the poll tax was originally introduced.

The danger is that the experience of the poll tax has changed people's attitudes towards the payment of local authority taxes. That is a fact of life. Let me not deny that among the 7.5 million people who are behind in the payment of their poll tax there will be a certain number who have not been paying their poll tax for ideological reasons. But that cannot be a significant number of those who have not been paying their poll tax. It cannot be true that opposition to taxation extends to 7.5 million of our fellow citizens. No, the real reason for failure in collection rate of the poll tax has been the fact that, as the Government recognise in their abandonment of the poll tax, the tax is very much more difficult to collect than the rates ever were and, I hope, than the proposed council tax will be.

The poll tax is more difficult to collect because fundamentally it is based on people who can move around rather than on property which cannot move around. It is more difficult to collect because it is perceived to be unfair due to the fact that it is a flat rate tax, and it is more difficult to collect because changes in legislation—even well-meaning changes like the change which took place last year to take £140 off the notional tax levied—mean that local authorities have been forced to produce their poll tax demands later than they would wish to do and to change them and to withdraw them after they had originally been issued.

All of those difficulties can and must be squarely laid at the door of government. I shall not hear with equanimity any further accusations to the effect that it is the Labour Party which is encouraging defiance of the law. On the contrary, it is the Government who, by introducing laws that are impossible to implement effectively, have encouraged far too many of our people to be put in a position of debt to their local authorities, a position which they were never in before the poll tax legislation was introduced.

Lord Jenkin of Roding

Has the amendment been moved? I can understand the sensitivity of the noble Lord, Lord McIntosh, about the charge that members of his party have encouraged people not to pay their community charge. Well may he be sensitive. His party leader, Mr. Kinnock, has sought to distance himself from the elements in the Labour Party who have been going around the country, and are still going around the country, defying the poll tax and encouraging people not to pay it. The noble Lord will not be allowed to get away with that. His party is rightly sensitive to it because it is a reality.

I have one question which perhaps my noble friend on the Front Bench will be prepared to answer when she replies to the debate. It is about the admissibility of computer print-outs in courts where community charge enforcement is sought. That is a most unfortunate development which I have no doubt Ministers are addressing as a matter of urgency. It would be reassuring to the Committee to know exactly what the position is and whether local authorities will be able, as they have always expected to be able to do, to prove non-payment of the community charge by reference to their computer records.

This applies not only to local authorities and community charge records. It applies to every business which seeks to enforce payment of debt. Virtually every business now has these operations computerised. It is unfortunate that the courts are taking what seems to be a quite unduly legalistic line and are regarding such records as somehow hearsay evidence and therefore not eligible to be put before the court. The amendment refers to collection. I hope that I have raised that matter at the appropriate point.

5.30 p.m.

Lord McIntosh of Haringey

The noble Lord is seeking to make an interjection in my speech before the amendment has even been moved. I would never have given way to him if I had known that he was going to make a speech of his own in the middle of my speech.

Lord Jenkin of Roding

I apologise. I thought that we were already into the debate on the amendment.

Baroness Phillips

Perhaps I may intervene to point out that Carol Thatcher lives in my borough and did not pay her poll tax. Was she forced by the Labour Party not to pay the poll tax?

Baroness Gardner of Parkes

Will the noble Lord give way?

Lord McIntosh of Haringey

I shall not give way any more. It is quite improper. I have not finished introducing the amendment and the Question has not been put. We are in Committee and there is plenty of opportunity for debate. I shall gladly listen to what the noble Baroness, Lady Gardner, has to say, but it would be quite improper, even with the relaxed rules of Committee stage, for me to go on giving way in the middle of introducing an amendment.

Baroness Gardner of Parkes

My noble friend Lord Jenkin asked whether the amendment had been moved. He was under the impression that the answer given was yes. I think that he is being blamed wrongly for that.

Lord McIntosh of Haringey

With respect, neither Member of the Committee has been paying adequate attention to our proceedings. I shall take an opportunity to come back to the comments of the noble Lord, Lord Jenkin. However, if he thinks that Mr. Kinnock has sought to distance himself from the Labour Party and that it has been encouraging lawlessness, he has been paying little attention to the reality of politics over the past four or five years. It only shows that he is sensitive to the charge that I am making in introducing the amendment, which is that the ability to collect the poll tax is itself very deeply in doubt and that the ability of local authorities effectively to collect the poll tax can and must be squarely laid at the door of government and not at the door of the Labour Party, which has consistently, right from the very beginning, defended obedience to the law and been the protagonist of obedience to the law.

The final matter to which the noble Lord referred was the defect in the laws of evidence which appears to cast in doubt the ability of computer records to be used in evidence. That is a matter to which the Government Front Bench will have to respond. I hope very much that it will and I look forward with great interest to the answer. I understand, not that it matters, that the issue involves legislation passed in 1972, which again was during a period of Conservative government.

Let us leave those matters on one side for the moment, although we can come back to them if we want to at a later stage. The point is that the effective implementation of the council tax cannot be conducted in isolation. We have to know, before we can see whether the council tax can be implemented, how its implementation will be affected by the success of the implementation and enforcement of the community charge. That is what the amendments seek to achieve. I should have thought that anyone, whatever his political point of view, would be able to recognise the necessity of that information to guide us in the implementation of the council tax. I beg to move.

Lord Boyd-Carpenter

I hope that my noble friend the Minister will deal with this difficult question of the use in evidence of computerised records. It appears on the face of it to raise widespread difficulties, so widespread that if this turns out to be so, there must be a case for government action. I very much hope therefore that my noble friend will deal with the matter when she comes to reply.

On the general issue, I greatly admire the characteristic skill with which the noble Lord, Lord McIntosh of Haringey, evaded the well-known fact that large numbers of members of his party have been urging people not to pay the poll tax. That is well known. It includes quite a number of Members of another place. It includes not just junior or unofficial members of the Labour Party but quite senior people. It is all very well for the noble Lord to stand at the Dispatch Box full of self-righteous indignation that he himself would never urge people not to pay their taxes. It is a known fact that the Labour Party has been doing everything it can to discourage the collection of this tax.

Noble Lords

Not true!

Lord Boyd-Carpenter

Do Members of the Committee opposite say that the Labour Party has been urging people to pay their tax?

Lord McIntosh of Haringey

That is exactly what we say. From the beginning right up until now the Labour Party has always urged people to pay their tax.

Lord Boyd-Carpenter

I am afraid that that only indicates that the noble Lord simply does not know what is happening. He does not know what is happening in his party, a view that I have often formed of him, and he certainly does not know what is happening in the country. It is a well-known fact that people throughout the country have been urged by the Labour Party not to pay this tax. All kinds of cases have been made where those holding quite responsible positions in the Labour Party have urged people to refuse to pay a tax that is lawfully due. It is no use the noble Lord trying to get away with it.

Lord McIntosh of Haringey

Perhaps I may draw the noble Lord's attention to the speech —in fact, I shall send him the newspaper cutting—made by the Conservative opposition chief whip on Camden council who pursued his opposition to the Hampstead residents' parking scheme to the extent of saying that Hampstead residents should not pay their poll tax until the council had withdrawn the scheme. Of course, there are individual members of all parties, and of none, who encourage law breaking. Moreover, because the Labour Party represents those most in need and because those most in need are those who suffer most from the poll tax, there will inevitably be more individual members of the Labour Party who encourage law breaking than there are of the Conservative Party, although, as I said, there are examples from the latter.

The Labour Party as a party has never condoned or encouraged law breaking. Indeed, we have expelled Members of Parliament and councillors from Labour groups when they have done so. That is our position; it has always been our position; and it will continue to be so.

Lord Boyd-Carpenter

The noble Lord has simply confirmed, and at much greater length, what I said. Members of the Committee will have noticed that he mentioned the fact that the Labour Party had found it necessary to deal with Labour Members of Parliament who advocated such non-payment.

Baroness Hamwee

Perhaps we should try to return to the amendment. I hope that it is not impertinent for an interested observer to the squabble to wonder whether we could at some point declare a truce on the subject. Many tough words have been spoken. I feel that I should not express the sympathies that I might otherwise have done because I would not then be able to describe myself as an observer.

We are all interested in the question raised by the noble Lord, Lord Jenkin of Roding, with regard to evidence. Perhaps the Minister will be able to distinguish—if that was the point made—between evidence at the magistrates' court regarding collection of the poll tax through the criminal procedures and collection of a civil debt to which reference was made.

Like the Minister, I have no particular fondness for bureaucracy. However, one cannot ignore the underlying point to the amendment; namely, the problem, for very good reasons, of collection of the poll tax. I should like to make a point that I do not think has yet been made. We need to know the real rates of collection because of the effect on grant. For example, in the past there have been differences between the local authorities and the department as to the rate at which the poll tax was collected and, therefore, the amount that local authorities might expect to achieve from it. That is becoming increasingly important with the gearing effect which will arise from the tax. I make a plea for information so that the debates between local authorities and the department as to the level of grant can take place on the basis of information and not speculation.

5.45 p.m.

Baroness Blatch

I should like to point out at the outset that what we are talking about is one bill per household. Therefore, there ought not to be, in terms of collection or collectability of the tax, a great deal of difference from any kind of property tax. The fact that that one bill will contain within it an element which addresses occupancy does not bear on whether the tax is collectable. I really do not understand the fuss.

Moreover, if we take the last three amendments together, it seems to me that we are taking bureaucracy to some very extraordinary lengths. Amendment No. 5B calls upon the Government to require the Audit Commission to produce a report prior to implementation of the council tax and, thereafter, every two years, to produce another report on the efficiency and effectiveness as it impacts on local authorities. The next amendment refers to further reports to be produced six months after Royal Assent and two months before introduction. Now we are being asked to produce yet another report for Parliament by January 1993. Such energy and costs ought to be applied to something much more productive and not directed to all that bureaucracy. I have to tell the noble Lord, Lord McIntosh of Haringey, that what is proposed would not have any practical advantage.

It is sometimes argued that the experience of the community charge has somehow brought about a culture of non-payment. That is nonsense. The collection rate for the community charge is by no means as bad as noble Lords opposite have implied. Local authorities have collected 95 per cent. of their budgeted yield for 1990–91. That figure will obviously grow even better as enforcement action continues. In the first half of this year, authorities have collected 39 per cent. of their budgeted yield. That is an impressive achievement given the delay in issuing initial bills this year. The collection performance in the second quarter of this year has been better than in the comparable period last year. A survey published yesterday in The Times showed no evidence of large-scale non-payment of the community charge.

There is no reason to suppose that the collection rate for the council tax will be worse than that for rates. Many of those who did not pay their community charge will have no liability for the council tax. That includes those who are entitled to the maximum benefit. Let me make it quite clear that I do not accept arguments that such people were unable to pay their community charge. The contribution that they were expected to make was included in their benefit. But the fact is that they will not have to pay the council tax. That will take many of the non-payers out of the system.

The Opposition have always claimed that property taxes are easier to collect than individual taxes. That is what is being proposed to the Committee today in terms of its collectability. The Government have openly recognised that many people did not perceive the community charge to be fair. That does not excuse non-payment. But, however misguidedly, there can be no doubt that many people who could well afford to pay deliberately withheld payment, thus ensuring an unfair burden on their fellow citizens. It is interesting to see what a narrow interpretation of fairness some people have.

I join my noble friends who have highlighted those members of the Labour Party involved both at local and national level and the way in which they have encouraged non-payment. It is a case of setting one's face against the facts. Indeed, only last week I was in the presence of a Labour councillor who openly encouraged people in a meeting not to pay what he perceived to be a tax with which he did not agree. Day after day we hear examples of such encouragement. Similarly, it is not right to say that the Labour Party officially, and from the outset, was so publicly condemning. It is true that it was so eventually; but not from the outset. That took a long time to happen. In fact, in terms of the number of people who encouraged non-payment, the Labour Party has dealt with rather few of them.

The council tax is fair, and will be seen to be fair. It has been widely welcomed. There is no evidence whatever of a campaign of non-payment. In seeking to suggest that the British people will seek to avoid their duty to pay, the Opposition are, I am afraid, not only being pessimistic; they are also being provocative. Moreover, they are guilty of seeming almost to encourage such behaviour yet again. The amendments show the Opposition in a very poor light, and I hope that they will be withdrawn.

In response to the question posed by my noble friend Lord Jenkin of Roding and the supplementary put forward by the noble Baroness, Lady Hamwee, I can say that my colleagues at a very senior level are giving urgent consideration to the whole issue of non-payment and the admissibility of evidence in court. I should also like to say that I am wholly sympathetic to all the comments made. The situation is quite monstrous. The people concerned have not paid the tax and they are liable to do so. They need to be brought to book. As I said, the issue is being addressed by my senior colleagues in the Home Office.

Lord Harris of Greenwich

I am glad—as I am sure are all Members of the Committee —that the issue is being addressed. But when are we likely to be told the result of the Government's consideration of the matter? The sums of money involved are clearly substantial. Indeed, so far as concerns some local authorities, they are bound to be significant. Therefore, it seems incumbent upon Ministers to produce their solution to the problem as speedily as possible. I should be most grateful if the noble Baroness could give the Committee some indication as to when we will be told what action the Government propose to take, perhaps by some form of new order or legislation. The question was put by two noble Lords opposite. I believe that they will be as interested as I am to have some idea as to when Ministers will be in a position to share their views on the matter with the rest of us.

Baroness Blatch

I understand the urgency being pressed upon me by the noble Lord. I said that the matter was being addressed urgently. As soon as a way forward can be determined this place will hear what the Government intend to do.

Lord McIntosh of Haringey

The last part of the Minister's reply is what might have been expected: the Government do not know what to do. They would not be giving the matter serious attention if they knew what to do. It is the responsibility of government. It should have been anticipated when the legislation was put forward, because the responsibility for the shambles is due to the fact that the poll tax legislation took the issue of non-payment to the magistrates in civil proceedings. It is there that the laws of evidence are inadequate. The Government should have thought of that at the time.

I find it a bit rich that a government who have wasted £14 billion of public money on introducing a poll tax, and more money on removing it, should complain about the cost of bureaucracy involved in the production of reports designed to inform the public what is happening. I should have thought that the minimum requirement of freedom of information was that there should be such reports and that the public should be given the facts upon which to make a judgment about the progress towards implementation and the success or otherwise of the council tax.

The Minister is of course right to say that the council tax does not have many of the features of the poll tax which made the poll tax uncollectable. She is right to point out that it is a household tax and not an individual tax, although when we debate the next amendment we shall deal with the issue of discounts, which will cause much more difficulty than she thinks it will. She is right to point out that many of the problems that existed with the poll tax do not exist with the proposed council tax.

But of course that poll tax was introduced by the Government, despite the opposition from these Benches and, at that time, the Liberal Benches. I see that they are now tempering their opposition to the Government proposals. We were all saying that we could not have a tax which worked effectively if the poorest people had to pay 20 per cent. of their poll tax on the phoney argument of accountability; that we could not have a tax which worked effectively in urban areas where there is high mobility and people have to be chased around to establish their liability; that we could not have a tax which worked effectively if there were ponderous recovery procedures; and that we could not have a tax which worked effectively if there were any difficulty in establishing certainty. It is not just a matter of computer records; there is the issue of establishing who lived where at what time and, to a tiny extent compared with the manifest unfairness of the poll tax, the non-payment campaigns in some parts of the country.

In 1991, only 14 local authorities had a higher collection level than in 1990. The collection figures that the Minister gave, with which she sought to reassure the Committee, were based upon a percentage collection of budgeted receipts; not of 100 per cent., because many local authorities, anticipating a shortfall, had budgeted for recovery rates of 95 per cent. or, more likely, 90 per cent. Conservative-controlled authorities are finding it at least as difficult as Labour-controlled authorities to collect the poll tax. The example I have been given is Norfolk. The only district in Norfolk which is collecting more successfully in 1991 than in 1990 is Great Yarmouth, the only Labour-controlled authority.

Baroness Hollis of Heigham

What about Norwich?

Lord McIntosh of Haringey

It is the only Labour-controlled authority apart from Norwich in the whole of Norfolk. The argument that the non-collection is caused by wicked Labour agitators does not stand up. It is in any case irrelevant to the main thrust of the amendment which is that the successful implementation of the council tax is dependent upon a stable tax base. We do not have that stable base. Things are much worse than the Minister seeks to assure the Committee because of the defects in the poll tax that were pointed out by us at the time the legislation was going through.

We shall clearly not make progress with the modest aim of the amendment which is to secure that we have adequate information for the public. We shall have to find some other way of achieving that aim.

Baroness Hamwee

I did not want to interrupt the noble Lord because I support the amendment. Perhaps he will accept that, in voting against the first amendment, we were not so much voting with the Government as voting against the amendment.

Lord McIntosh of Haringey

I said that the Liberals were tempering their opposition. I thought that I chose my words carefully. I shall adhere to those words. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 6 not moved.]

Lord McIntosh of Haringeymoved Amendment No. 7:

Page 1, line 13, at end insert:

("(1A) The duty specified in subsection (1) above shall be applicable from the date therein referred to, whether or not preparations for the introduction of discounts in accordance with section 11 and Schedule 1 below have been completed by such date as the Secretary of State may specify which shall be not later than three months before the date specified in subsection (1).

(1B) In any case where subsection (1A) above applies, the provisions of section 11 and Schedule 1 below shall not apply for the period of the financial year concerned.

(1C) Notwithstanding the provision of subsections (1A) and (1B) above, the provisions of Schedule 9 below concerning eligibility for income support up to 100 per cent. of the amount of any council tax liability shall have effect from the date specified in subsection (1) above.").

The noble Lord said: The amendment highlights one of the most difficult aspects of the council tax. I have already accepted that the council tax is by no means as bad as the poll tax in terms of collection. I think that "joy in heaven" is the relevant phrase here. The most difficult element of the council tax is likely to be the discount structure. Local authorities inevitably are still unsure about the discount structure. They find it difficult to make the decisions that they will soon have to make. They do not know at what stage before the implementation of the council tax they should be granting discounts. They do not yet have an adequate definition of what is a sole or main residence which will apply to the discounts under Clause 4 —the exempt dwellings part of the legislation. They have no information about the extremely complicated issue of the interaction between discounts and social security benefits.

What is needed, as we shall say later, is 100 per cent. rebates rather than a discount structure, because that would have a single coherent basis which could be approached properly thorough well-tried procedures. The idea of discounts for single-person households is a new one. It will inevitably cause practical difficulties. If we are interested in ensuring that the council tax is introduced on the proposed starting date of 1st April 1993, it should not be held up by one issue—the threat of the discount structure not being in operation.

We should prefer to see the end of the poll tax in 1993 even if there were to be some delay in the implementation of the discount structure. We should prefer even more to see a different structure—a comprehensive system of 100 per cent. rebates—but this modest amendment would be a protection for the Government, which I hope that they will accept in the spirit in which it is meant, against what would be an unnecessary and damaging delay in the implementation of the council tax. I beg to move.

6 p.m.

Lord Strathclyde

Amendment No. 7 appears to reflect the Opposition's doubt about the discount provisions and local authorities' ability to make preparation for them. The amendment is unnecessary. The discounts are straightforward, easy to administer, and most households will receive and pay a standard bill.

Local authorities already have a good deal of information on single person households, students and so on, from their existing records. Local authorities will be required by the Bill to take reasonable steps to ascertain discount entitlement, but if they have no information they will then be able to send out a standard bill. Any household which receives a standard bill will be able to inform the local authority if it believes that it should be entitled to a discount. I should make it clear that there will be a duty on those who receive a discount to tell the authority when that entitlement ceases or reduces.

In this legislation we have sought to make life as easy as possible. The administration and enforcement provisions of the Bill are very similar to those of the Local Government Finance Act 1988. One of the reasons was in order to minimise the extent to which local authority practitioners would have to face a completely new system. Further, we have issued good practice guidelines and a model implementation plan to all local authorities. Our draft practice notes and regulations are being drawn up in conjunction with the local authority associations and we have also sent every local authority in England a detailed user requirement specification for council tax computer systems which the local authority associations say they find useful.

The Government are doing everything possible to help local authorities to implement the council tax on 1st April 1993 and will continue to do so. That of course includes the use of the discount regime. I hope that, in the light of that, the noble Lord, Lord McIntosh, will feel able to withdraw his amendment.

Lord McIntosh of Haringey

I hope that the Minister is right and that all these precautions turn out to be justified. I am not given great confidence when he says that the enforcement procedures are the same as in the 1988 Act. We have just heard a long discussion, including a relevant intervention from the Minister's own Back-Benchers, which indicates that enforcement procedures under the 1988 Act are not working well. I feel that that part of the script might have been rewritten in the light of recent experience.

The second way in which the script might have been rewritten in the light of recent experience is the repeated claim that the user specifications which have been issued to local authorities have been well received by them. I have no doubt that they say that the specifications are helpful, but I am told by local authorities that they cannot use them yet because there are many aspects—notably transitional provisions and items to be specified in regulations—which are not yet decided. Therefore the software cannot yet be ordered. I should be grateful if the Minister could find some opportunity, either on this amendment or on a later one, to think again about those two elements of his response.

I hope that the Minister is right about the more important and central issue: discounts. He pointed out that it is the responsibility of individuals to notify the billing authority if the eligibility for discount changes, whether it is an exempt dwelling discount or a single person discount. That sounds to me suspiciously like the kind of obligation which existed on individuals under the poll tax legislation. I fear that with high mobility—and not just mobility but changes in household structure, particularly in our cities—it will not be anything like as simple as the Minister thinks. We have, Cassandra-like, warned. If our warnings are ignored, so be it. I still believe that there are dangers. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringeymoved amendment No.8: Page 1, line 15, leave out ("the Common Council").

The noble Lord said: This is a commonsense little amendment. I am not much of a supporter of the City of London, as Members of the Committee may know. However, this amendment is not against the interests of the City of London or the Common Council. There are fewer than 5,000 charge payers in the whole of the City of London; therefore presumably there are even fewer residential dwellings. Is it not rather a bureaucratic nonsense to make them an independent billing authority? Could not that responsibility be taken over by a neighbouring authority, even if it were Westminster? I beg to move.

Lord Jenkin of Roding

I was relieved to hear the disclaimer by the noble Lord, Lord McIntosh, that this amendment is not aimed at getting rid of the Common Council but rather to help it. I read it as being a paving amendment for a Bill, about which we would presumably hear some other time, to abolish the whole of the City of London government. I was prepared to weigh in with a long and authoritative speech about how valuable it is on matters such as Epping Forest, Burnham Beeches and many other useful activities of the City of London. However, I shall not do that.

I do not disagree with the idea that perhaps to have a whole separate billing authority for the City of London might be unnecessary. Could there be some provision in the Bill which would allow an authority like the Common Council to contract out to another authority the collection of its council tax? Would not that be a sensible way of dealing with the problem, so that if they wanted to do it they could do so? It is now totally within the philosophy of local authorities that, if they can find someone else to do something more cheaply and effectively, they should be entitled to do so.

Baroness Gardner of Parkes

The City of London has always been treated differently in terms of local government and it is quite a unique area. As the Committee may know, my dental surgery was in the City and I was well aware of the small number of residents who attended it as patients.

I oppose the amendment because I believe it is right that as long as the City is a local authority—and I hope that that will long continue—it should retain its rights in the same way as anyone else. If it cares to use some other form of computer help from a business or another independent body, it should be its choice. However, we should not, through this Bill and on the face of primary legislation, consider the erosion of the rights of the City.

Lord Boyd-Carpenter

I agree entirely with the noble Baroness. It would be a great mistake to eliminate an element of the City of London merely because the element is fairly small. I disagree very much with my noble friend Lord Jenkin and hope that the Minister will reject the amendment.

Earl Howe

As has been explained by the noble Lord, Lord McIntosh, the amendment would mean that there would be no council tax bills in the City of London. The residents—few though they may be—would not pay a penny towards local services. I find that unacceptable. I cannot for the life of me see why residents of the Barbican should not pay council tax. However small the population in an area, we believe that the residents should contribute to local spending. That is the issue.

The noble Lord, Lord McIntosh, is obviously concerned that, because there are so few dwellings in the City of London, the council tax may be set at an exceptionally high level. His concern may not be entirely unconnected with the wish of his party to see the City of London as an entity disappear. But that is by the way.

I can, however, assure him that what he fears will not happen. The residents of the City will be protected against inordinately high bills. Under the community charge we provided special arrangements to ensure that the charge payer was protected against changes in the authority's spending level. Under paragraph 5 of Schedule 10 to the Bill we shall introduce even simpler arrangements to guard against similar problems with the council tax.

To clarify one further point that has been raised, the City of London could contract out of collection of the tax if it wished. However, that is a separate issue altogether. I therefore hope that the noble Lord is persuaded to withdraw the amendment.

Lord Jenkin of Roding

I wish to make one point since the proceedings may be carefully studied in the Guildhall. I should like to make it clear to my noble friend Lord Boyd-Carpenter that I did not suggest that the amendment should be accepted. I am greatly reassured by what my noble friend on the Front Bench said; he has exactly answered my case. If the authority wishes to contract out its tax collection, it can do so. That is all I asked about.

Lord McIntosh of Haringey

The noble Earl has adequately answered my point, I was concerned only with the contracting out of billing procedures. It certainly was not my intention in the amendment to suggest that residents of the City should not pay the council tax. If the amendment says that, then it is bad drafting on my part and I apologise. Other Members of the Committee opposite have sought in their non-speeches—they made non-speeches in the absence of the kind of speech they expected from me—to cast doubt on my motives in moving this amendment. They think, rightly, that I am antagonistic to the continued existence of the City of London in its present form. However, the amendment is not about that. I am satisfied with the assurances the Government have given. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringeymoved Amendment No. 9: Page 1, line 16, leave out ("may") and insert ("shall").

The noble Lord said: Amendment No. 9 returns to the issue of regulations. This gives me an opportunity to ask the Minister—it was the noble Baroness, Lady Blatch, who gave me the assurance that I much welcomed about the publication of regulations—to explain in more detail what material is being placed in the Library. I ask that as I have not had the opportunity to leave the Chamber to check what is available.

Many types of regulations are provided under the Bill. The draft regulations so far issued for consultation cover an order to exempt dwellings; regulations placing liability on owners; an order defining a person disregarded for discount; regulations prescribing conditions for discount disregards; administration and enforcement regulations and calculation of tax base regulations. I have no doubt there are others. I hope the Minister can assure me that all those regulations have been placed in the Library and are now available for public debate. They are rather important as regards our ability to consider adequately the impact of the Bill.

The amendment, in contrast to the way we usually approach order-making powers in the Bill, suggests that the Secretary of State should be required to make regulations of this kind rather than merely have the ability to do so. It may be thought this is just a question of semantics and that if the Secretary of State is going to make the regulations anyway there is no reason why he should object to the word "shall" rather than the word "may". However, if the Secretary of State will make regulations about some things and not about others—that is why I read out the list of matters that I understand are the subjects of consultation at the moment—it is important that the Government should say what regulations will be made. The Government should not shelter behind the use of the word "may" rather than "shall".

This amendment in effect gives the Government the opportunity to set out a timetable for the making of regulations and for decisions about regulations. We have heard some helpful speeches from the Government Front Bench on that subject and we have learnt a lot more about what is in the Government's mind. I should make it clear that this is only a probing amendment at this stage. However, I hope those aspects of the regulation process will be spelt out in greater detail. This amendment gives the Government an opportunity to do so. I beg to move.

Lord Renfrew of Kaimsthorn

I appreciate the noble Lord has moved simply a probing amendment about regulations in general. However, I hope I may indicate an inconsistency in this context. I was pondering Amendment No. 10. I realise that amendment has already been discussed, but that does not prevent my pondering it. It is an extraordinary feature that Amendment No. 10 requests that the remainder of the subsection under discussion which states, containing rules for treating a dwelling as situated in a billing authority's area", should be omitted altogether. I am left uncertain as regards the noble Lord's concern about this subsection which he is seeking to amend. Clearly, as regards Amendment No. 10, the noble Lord had another horse to flog in urging the deletion of the rest of this subsection. Does he not feel, however, that it is a little inconsistent in one amendment, which he personally proposed, to suggest omitting altogether the remainder of the subsection while stating in Amendment No. 9, which he is now proposing, that the provision is so important it should be mandatory rather than optional?

Lord McIntosh of Haringey

I shall deal with that point before the Minister replies as there is a simple answer. Amendment No. 10 sought to remove a form of words and replace those words with a stronger form of words.

Lord Renfrew of Kaimsthorn

That amendment dealt with a quite different provision if I am not mistaken.

Lord McIntosh of Haringey

The provision still related to regulations, which is what Amendment No. 9 concerns. It is entirely appropriate that we should seek to strengthen a form of words on two separate occasions rather than just once.

6.15 p.m.

The Earl of Balfour

While I realise this is a probing amendment I think it is worthwhile drawing attention to Clause 1(3) and particularly to the final words of the subsection which state: if part only of the dwelling falls within the area". With great respect to the noble Lord, Lord McIntosh, I hope I may again draw his attention to Clause 10(2), which is printed almost at the top of page 7 of the Bill. Here again we are dealing with the problem of where a property or a dwelling is situated within a billing authority's area. There may be some doubt about that provision. These are the kind of cases where the word "may" in relation to the Secretary of State will be rather important as opposed to the word "shall".

Lord McIntosh of Haringey

I hope I may get this peripheral item out of the way. With all due respect to the noble Earl, I should inform him that we shall be dealing with Clause 10(2) in later amendments.

Earl Howe

This amendment would require rather than permit the Secretary of State to make regulations concerning the treatment of dwellings which straddle the border between billing authorities. I hope I can reassure the noble Lord in a few words that that wording does not detract from the flexibility the Secretary of State needs. At the same time it achieves the desired result. I thank my noble friend Lord Balfour for his intervention, which I found most helpful.

As I have said, I hope I can reassure the Committee on this matter in a few words. Such regulations exist now for the community charge. Similar regulations have also been laid under the Local Government Finance and Valuation Act 1991 to enable the valuation of dwellings to proceed. I assure the Committee that the necessary regulations concerning these matters will be made in good time for the introduction of the council tax. The draft regulations that have been produced so far are now available in the Library. I hope that in view of that assurance the noble Lord will feel able to withdraw the amendment.

Lord McIntosh of Haringey

I am satisfied with that assurance. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

[Amendment No. 10 not moved.]

[Amendment No. 11 had been withdrawn from the Marshalled List.]

Clause 1 agreed to.

Clause 2 [Liability to tax determined on a daily basis]:

Baroness Hollis of Heigham

moved Amendment No. 12: Page 1, line 19, leave out ("a daily") and insert ("an annual"). The noble Baroness said: In moving Amendment No. 12 I wish to speak also to Amendments Nos. 13, 19 and 20. The purpose of these amendments is to replace the daily calculations of liability with annual calculations of liability for the council tax.

As I am sure the Committee will accept, the poll tax has fallen for two broad reasons: first, because it was clearly unfair and, secondly, because it was almost impossible to collect. It is the latter issue that I wish to explore in this amendment. Why was the poll tax so hard to collect? Over and beyond the issue of fairness which my noble friend Lord McIntosh has explored, the poll tax was difficult to collect because—the Audit Commission reported this to this Chamber and to Members in another place—people moved.

Some 40 per cent. of people in shire districts, 50 per cent. in most cities and 60 per cent. in parts of London move each year. Trying to track them and bill them, with each entry and deletion of the register requiring three or four transactions by the local authority, caused considerable expense and contributed largely to the chaos caused by the uncollectable nature of the poll tax.

By retaining the poll tax element in this property poll tax—the council tax—the Government are perpetuating much of the same problem. Daily liability may be superficially fairer and is fine if people do not move. But then, of course, one may as well have annual liability. If we need daily liability precisely because people move, that is precisely the reason why the tax is almost impossible to collect.

At least under poll tax the sum which local authorities sought to collect was reasonably constant throughout the year. People just failed to pay it. Under the council tax the position will be far worse. Not only will local authorities have to track people on a daily basis, as with poll tax, but, given that the council tax is a property tax on to which has been grafted a discount scheme based on occupation as well as a rebate scheme based on income, it produces considerable complexity in calculation on a daily basis.

Perhaps I may give a couple of examples. The first is that of a mother in low-paid work with a son working three or four days a week in a shop, who moves in and out of home according to the affections of his girl friends and in and out of work according to the job market. Sometimes the mother may be eligible for a single person discount, which may or may not be more advantageous to her than a rebate. When the son moves in, she loses her discount but remains on rebate. However, depending on the son's income and whether or not he is in work, she may or may not be better off claiming the second adult, low income rebate. Her bill may change every three to four weeks, but not by very much. It may well change by less than the administrative cost of recalculating and rebilling her daily liability. I can assure Ministers opposite, who may have been away from handling the financial affairs of local authorities for some years, that such cases are not uncommon.

The second example, which I offered at Second Reading, is the case of a putative student son. He finishes his degree at one university town, goes home for the summer, moves into a flat and then in the autumn moves on to a third city or town for postgraduate training. That son will have gone through three local authorities, four types of benefit rebate, five changes of address and six changes of status, all within six months. It is all, apparently, to be calculated on the basis of daily liability. It cannot be done.

In other words, under the council tax we have all of the problems of the poll tax in chasing daily liability. We have a whole new set of problems associated with the interlocking rebate discount scheme, which will be explored more fully in subsequent amendments, without a statutory register to map that complexity. We clearly need a property tax rather than a property poll tax. We clearly need rebates rather than rebates plus discounts. We clearly need fair rates.

I urge the Government not to be complacent about the problems and not to ignore yet again the warnings about how hard this tax will be to administer. It is on that basis that I beg to move Amendment No. 12.

Lord Elton

Will the noble Baroness tell the Committee what she proposes for people or dwellings qualifying on the last day of the year? Are they to pay the tax for the other 364 days?

Baroness Hamwee

I have some sympathy with the amendment but it raises issues such as the point which the noble Lord has just mentioned. Under the rating system there was annual liability but when a property was sold the obligation could be resolved between the seller and purchaser of the property. That was easily done and the amount was included on the end of the completion statement. The proposal to make this an annual tax would be very unfair. Unless there was a change in the middle of the year, somebody would be bound to lose out to the benefit of someone else.

I apologise to the Committee, having said that I would not intervene on these amendments, but I shall allow myself occasionally to make the point that with a local income tax on a personal basis this sort of problem would not arise.

Baroness Carnegy of Lour

I cannot understand how an annual calculation would work. I am sorry that the noble Baroness did not reply to the question from my noble friend Lord Elton immediately because it was an interesting one. I trust that my noble friend on the Front Bench has a good and clear answer because I hope that there will not be scope for a local authority to do what the local authority where I live has done. I do not know whether or not its action was avoidable but I should have thought that it ought to have been. An old lady living in a village near my home did not pay her poll tax because she was puzzled by the fact that she had accumulated 47 demand books, which she piled up in the corner of her room. The reason for receiving so many books was that her circumstances kept changing. She did not realise that and was in despair until somebody helped her sort the matter out.

If the changes in circumstances described by the noble Baroness continued over a period of time, I do not see how a council could do anything other than keep sending new demands. I regard that as a serious problem but I hope that I shall hear that there are answers to it.

Lord Mackay of Ardbrecknish

Three points arise from the interesting debate on which the noble Baroness has launched us. I find it interesting to contemplate why the amendment should have been put down other than to explore some minor technical point. If I heard the noble Baroness correctly, the amendment would mean that people who became eligible for rebates in the course of a year would not qualify. I am sure that that is not what the party opposite intend. But that would be the result of the amendment. Clearly, that cannot be the case. While complexities arise where people move in and out of rebate, we have to accept that as one of the consequences of having rebates.

The second part of the noble Baroness's argument concerned the single person discount. The noble Baroness was, I believe, merely continuing the Labour Party's campaign on the subject. I am sure that my noble friend will be able to deal with the point.

I turn now to the property element of the tax. I hope that my noble friend will be able to confirm that the legislation contains provisions, both for Scotland and for England and Wales, for apportioning rates between the buyer and seller of a house which, as the noble Baroness, Lady Hamwee, mentioned, applied under the old rating system. I meant to raise the subject in my Second Reading speech but now is also an appropriate time. If that element were not calculated on a daily basis the person who owned a house at the beginning of the year—or the middle or the end, depending on which date was chosen—would pay the tax for the whole year. That was not how the old rating system worked. It would not be a fair method. I presume that the legislation contains provision for part-year calculations when a property changes hands.

Earl Russell

My noble friend Lady Hamwee has hit the nail on the head. She is clearly right. There are considerable problems about calculation on a daily basis. In Oxford the poll tax register has suffered an 85 per cent. change within one year. That clearly creates a vast amount of unnecessary work, helps to create confusion and hinders payment. On the other hand, my noble friend is also right to say that it is hard to have proper provision for mobility in a calculation which is part property and part personal. If the noble Baroness believes that there is a satisfactory answer to the problem I shall be interested to hear it. The property does not move; the person does. That is an argument for saying that maybe we still have not got this problem quite solved. That seems to me to be a pity.

6.30 p.m.

Lord Jenkin of Roding

It is worth putting on the record one other fact about this matter. One can talk, as did the noble Earl, of 85 per cent. changes. I have not studied the Oxford community charge register. My guess may be wrong, but my impression is that in the vast majority of areas the great majority of the population is stable. There is a high turnover among a minority of the population and occupancy of dwellings may change several times a year. Therefore it is possible to exaggerate the problem of the administrative cost of dealing with changes in circumstances during the year.

I totally agree with my noble friend Lord Mackay and others who have spoken. It would be quite wrong not to have the possibility of adjusting a person's liability if his circumstances change. I wonder whether the noble Baroness, Lady Hollis, intended to suggest that as in a rent clause (or the opposite of it), there should be a downwards-only adjustment: the local authority would not be entitled to claim any increase if the circumstances change but the council tax payer would be entitled to any additional discounts or rebates. That would seem to me to be a very one-sided operation.

One comes back to the proposition that there will inevitably be complications if one is to have some means of tempering a tax to take account of people's ability to pay. After all, that is the main purpose of the substitution of a council tax for the poll tax. Those administrative costs are bound to be incurred. I very much oppose the amendment.

Lord Strathclyde

As we heard from the noble Baroness, Lady Hollis, the amendments would result in liability for the council tax being determined on an annual basis rather than on a daily basis, as we propose. Originally, we approached the question of daily liability with an open mind. But following consultation—and as this short debate has shown —we came to believe that liability calculated on a daily basis provides the fairest base on which to assess liability for the council tax. It avoids the inequities that would result from annual liability. As so many of my noble friends have shown, if discounts were awarded for a full year based on the position at 1st April, people who qualified on 2nd April might have to wait a full year before they could receive any discount.

I know that the noble Baroness, Lady Hollis, produced an example—no doubt the first of many examples that we shall hear in the Committee stage —and often her examples are absolutely correct. I do not contest that this evening. But it is up to people to claim their discounts if they feel that they are entitled to them. For instance, under the old rates system, if a husband died half way through the year, there was no rebate for the rates that had been paid in the past. My noble friend Lady Carnegy raised some interesting points about the benefits system and the attached rebates, which I have noted. The noble Earl, Lord Russell, offered some examples from Oxford and mentioned an 85 per cent. change in the community charge register. The whole point of the Bill is that it does not relate to a community charge. It will affect a far smaller proportion of the population than does the community charge. Students, who I expect played a great part in that 85 per cent. movement in Oxford, will be exempt. So already there will be a reduction in the number of people affected.

I said that we started off with an open mind but when we consulted with the local authority associations they unanimously favoured daily liability. The practitioners representing the associations have a detailed knowledge of local authority administrative procedures. They told us that there would be no overall administrative advantages to calculating liability on an annual basis. They agree that daily liability represents the most practical and fairest way of calculating the tax.

The Chartered Institute of Public Finance and Accountancy wrote to confirm its support for daily liability. I quote a short extract from the letter: One area of accountability in respect of a local property tax is the ability to be able to relate the amount paid to the period of occupation. Computerised systems can adequately cope with daily liability and any attempts to introduce any other method of calculating liability should be resisted". It is therefore difficult to understand why the noble Baroness, Lady Hollis, feels that liability based on an annual rather than a daily basis would be an advantage.

Finally, to answer the question of my noble friend Lord Mackay of Ardbrecknish. When a house is sold, the liability for paying the council tax is taken on as from that day.

In the light of what I have said, I hope that the noble Baroness will feel able to withdraw her amendment.

Baroness Hollis of Heigham

It has been an extremely interesting, short debate. I thank those who have taken part. It partly surprised me in the comments from the noble Lords, Lord Elton and Lord Mackay, and the noble Baroness, Lady Carnegy—though perhaps she more than other Members of the Committee shares a concern for administrative feasibility—that we seem to have overlooked the pattern of collection under the old rating system. With the rates, an annual bill for liability was sent out each year which fell on the occupier and if there was no occupier on the owner. The occupier, or in the absence of an occupier the owner, would pay in monthly instalments, usually 10 of them. If the occupier or owner had a low income, he or she would apply for rebate. Equally, if the property were unoccupied, given local circumstances and discretion, the owner might be eligible for half-rating.

That scenario worked entirely successfully for many years, indeed for decades. There was absolutely no problem in annual liability, monthly bills and individuals triggering a rebate or claim for half-rating if the property were unoccupied, as appropriate. In other words, the responsibility for the payments and the calculations fell, in the sense of triggering the situation, on the occupier or owner and not on the local authority. That is my point of concern. The whole push of the Bill makes the local authority responsible for handling the administrative complexities. As I said, I welcomed the concern shown by the noble Baroness, Lady Carnegy.

As the Minister said, it is for the individual to claim the discount. An individual is of course entitled to claim a discount. Equally, if an individual has been receiving a discount and his circumstances change during the course of the year—for example, a single person discount or status discount no longer applies —the onus is on that individual to inform the local authority and have his liability changed.

Let us be clear. The Minister in another place on 27th November at Committee stage (col. 531 of Hansard) on repeated questioning made it clear that local authorities were expected to send out their bills net of discount and net of rebate where possible—for entirely honourable reasons. The point there was that the obligation was on the local authority and not, as the noble Lord, Lord Strathclyde, said, on the individual to trigger the application for discount.

At the heart of this debate is the issue identified by the noble Earl, Lord Russell. It is innate. There is a structural problem with this tax. Trying to combine a property tax which is simple to collect with a personal tax on people who move, complicated by problems of occupancy based on discounts, produces a set of calculations which will be extremely complex to track. I do not doubt that computers can calculate daily bills but for daily bills and daily liability to be accurate, the computer must know every change in circumstance (not only of income) relating to the main householder. It must also know the situation of the second person involved, including eligibility for discount and rebate; for example, second person, adult, low income status. That information has to be acquired by the local authority and fed into the software system.

I suggest that it is very unwise to overlook the administrative problems that will fall on local government. I repeat that the council tax is administratively more complex and structurally more complex to collect than the poll tax. Your Lordships may shake your heads; but, having talked this through with a number of members of finance departments in local government, I can assure noble Lords that they share this view. That is why I am moving the amendment.

Lord Strathclyde

I thought I had taken some care in explaining the view that we had consulted very carefully on this matter. This was not a dogmatic conclusion that the Government came to in a rush or in a moment of panic. We discussed it with local authority associations and they were unanimous. We received a letter from CIPFA saying that any other system should be resisted. I do not understand why the noble Baroness is getting so excited.

Are we to understand that the policy of the noble Baroness is that if a wife or a husband dies on the second day of the year from when the liability is calculated, the partner surviving will not be entitled to discount for the rest of the year? This is very important and we need an answer.

Baroness Carnegy of Lour

I am not thinking of this from the point of view of the local authority at all. I am thinking about it from the point of view of the person who is receiving the bill. Perhaps I may ask my noble friend Lord Strathclyde whether people will constantly receive updated bills which they do not know what to do about. My noble friend suggested that I was simply talking about benefit. My example was related to income, but are individual council tax payers going to get constantly amended bills under the system? I do not think the amendment of the noble Baroness, Lady Hollis, will solve the problem at all. I do not think an annual bill would work. But I should like to know what will happen because we must not just consider what local authorities want. My local authority thought there was nothing wrong in sending a lady 47 bills, one after the other. It was she who found it difficult.

Lord Strathclyde

If there were any change of circumstance by a payer of the council tax, he or she would make that change known to the social security office, and the calculation would be on a daily basis to take account of the payment that would have to be made. I hope that that is clear.

Baroness Hollis of Heigham

I do not think that is at all clear. But this is an issue which we genuinely need to come back to at Report stage in order to clarify some of the administrative complexities that local government would experience.

The question that the noble Lord, Lord Strathclyde, posed to me concerned what the liability would be if someone were unfortunate enough to lose their husband or wife in the course of the year. The situation would remain as it is with the rates: if an individual's circumstances changed, that could trigger a discount, but the presumption would be that the liability would be for the year, and the local authority could calculate it accordingly.

Lord Strathclyde

That would not be so under the way that this amendment is currently drafted.

Baroness Hollis of Heigham

My advice was rather different from that given to the noble Lord, Lord Strathclyde. In any case, at this stage this is not an amendment which I wish to push to a vote. We shall want to explore this at Report stage. I seriously urge the Government to think about the complexity of calculating on a daily liability when, given that a poll tax element has been grafted on to a property element, household configurations may be changing every three or four weeks, and the work of the local authority in calculating bills will have to be done accordingly. The Government are very unwise to underestimate the amount of work and the number of problems that would be generated for local government. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 13 not moved.]

The Principal Deputy Chairman of Committees (Baroness Serota)

In calling Amendment No. 14, I should point out to the Committee that if this amendment is agreed to, I cannot call Amendments Nos. 15 to 17 inclusive.

[Amendment No. 14 not moved.]

6.45 p.m.

Baroness Hollis of Heigham

moved Amendment No. 15: Page 1, line 22, leave out ("valuation band") and insert ("individual value"). The noble Baroness said: Amendment No. 15 proposes individual valuations in place of bands. To some extent, we are anticipating arguments that we hope to explore more fully later on under Clause 5. Perhaps I may remind the Committee why we believe that the system of banding proposed in the Bill is deeply unfair.

First, this is virtually a flat rate tax in most of the country. Most of the North is in the bottom two bands while much of the South East is in the top three bands. For example, 60 per cent. of properties in St. Helens, 61 per cent. in Barrow, and 68 per cent. in Hull are in band A. Indeed, I have calculated that about 46 per cent. of properties will fall in just two bands. That is virtually a flat-rate property levy and is therefore regressive.

Secondly, the tax is regressive in another way within bands. If one takes three properties with values of £39,000, £42,000 and £50,000, there is £3,000 difference between the first two properties; but on a headline council tax of £400 there is nearly £50 a year difference. But those with properties of a value of £42,000 and £50,000 (which is a difference of £8,000) are paying the same. In other words, in each band the cheaper properties are overvalued and the more expensive properties are undervalued. There are greater differences within bands, although they are paying the same, than there are between bands although they are paying differently.

The third reason why we seek to have individual valuations rather than banding is because such banding is inevitably inaccurate at the boundaries. By definition, statistically a third of all properties are going to be within the bottom £2,000 or top £2,000 of a band. For example, in my own authority most of the Victorian partly-modernised terraced housing would be on the £40,000 band, and many of the post-war council houses that have been sold would be on the £52,000 band. Whether they are above it or below it will depend on whether they have done £2,000 worth of extra work on an extended kitchen, a second small shower or a brick-built conservatory.

How will the valuers know? The noble Lord, Lord McIntosh, said that there will be no internal inspections, not even individual external inspections, not even street-by-street on-foot inspections, not even street-by-street inspections by car. Many valuers will gaze at a photograph which may have been taken for the local building firm's calendar four years previously. Therefore, those wanting to pay less council tax will appeal to go down, and those wanting to sell their property and affirm its value will appeal to go up.

This amendment will take account of an individual property and assess its worth. It will take account of improvements made or, indeed, the environment in which the property is placed, such as how close it is to the fish and chip shop or to the park. It gives householders a basis on which to judge relevant household payments.

The Government may say, as the Minister has already indicated, that bands will reduce complexity. That is so, but that complexity will be shifted on to the appeal system and we shall see the same backing up on the appeal system as we see in terms of non-payment of poll tax in the magistrates' courts.

Secondly, the Minister may say, as was said in another place, that the difference between two bands, say £267 and £311, is relatively small. So in many cases was the 20 per cent. poll tax contribution. If it is unfair —and under the poll tax people have a heightened sense of what is fair —there will be an appeal.

Banding valuation is wrong not just because it is a flat rate across much of the country, regressive within bands and inaccurate at the boundaries, but also in terms of the structure of the council tax because the relativities between bands are not properly and fairly progressive and proportionate. As a result, contributions to the council tax will not be properly and fairly progressive and proportionate.

Across the country as a whole the bands are artificially compressed so that cheaper properties pay too much and more expensive properties pay too little. Within local authorities the bands are artificially compressed so that cheaper properties pay too much and more expensive properties pay too little. Within each band values are artificially compressed so again cheaper properties pay too much and more expensive properties pay too little. Given the disproportionate contributions by band to the total council tax, families on lower incomes will pay proportionately more and families on higher incomes will pay proportionately less. And this is a tax which the Government call fair. I beg to move.

Lord Renfrew of Kaimsthorn

The noble Baroness was right to point out areas in which the Bill may introduce complexity of administration. I admire the Bill for the simplicity and coherence of its structure. I hope that there will be a degree of simplicity in its administration. The noble Baroness made an interesting point about which I wish to think more. She emphasised that as regards diminutions the local authorities must take the initiative. I do not know whether that is right or whether the householder must take the initiative. However, that is not the point being addressed in this amendment.

Surely, the banding system has the great merit of simplicity. The question is whether it carries with it any great degree of unfairness. Clearly, divisions within bands will create boundaries and a small displacement will put one into a different band. That cannot be disputed. However, far from being disparate, the bands appear to go up at intervals of 30 per cent. until the highest band at which there is an increase of 100 per cent. A 30 per cent. interval seems to be entirely reasonable. The bands in the tax payable go up at intervals of approximately 15 per cent. That is a matter which the noble Baroness will no doubt address when speaking to a subsequent amendment.

The matter is simple. The noble Baroness says that she is aware of local authorities in which 60 per cent. of the houses fall within a single band. Well, so much the better. It means that 60 per cent. of the houses are worth almost the same within a margin of 30 per cent. That position is admirably simple and means that local authorities can press the same button on the computer in order to spew out all the forms necessary to collect the council tax. That is simplicity itself; it is the benefit which the Bill brings. There may be some inequities but I do not see what they are.

I respect the point made by the noble Baroness that if the tax is to succeed it must be simple to collect. The amendment addresses the simplicity of administration. That is the justification for the bands and it is the reason why it would be regressive to return to individual valuations as advocated by the noble Baroness. Such a return would lead to all kinds of elaborations. Imagine the problems of valuing every house anew at this stage—no doubt there will be appeals—and compare that with the simplicity of assigning houses to the bands. If 60 per cent. of the houses in one area fall within the same band it will be easy to achieve the valuations in that area. Therefore, I do not believe that in this amendment the noble Baroness has the interests of simplicity on her side.

Baroness Blatch

I am grateful to my noble friend Lord Renfrew for his exceedingly clear intervention. His remarks were right in every aspect. His intervention refers to a previous amendment but has relevance in this case. The starting point for levying the tax assumes that the property contains two people. Any deviation will arise in two ways. Local authorities will gather a great deal of intelligence in preparation for the tax. As that intelligence is gathered it will be applied. In addition, if there is a deviation from a property containing two people and any change of circumstance it will be for the person affected by that change to make application for a modified bill. On that basis the provision is simple. There will be an obligation to report any change of circumstance whether that incurs a larger or a smaller bill. The obligation will be on the part of the applicant.

The noble Baroness and her colleagues advocate a rating system by which evaluations will be based, first, on capital values. So, when the market is buoyant, capital values will increase, but when it is not, the values will decrease. Secondly, they will be based on rental values so that when a house owner adds a room to his home the rental capacity increases thereby increasing the bill. Thirdly, repair costs will be taken into account which will affect the bill levied on a household. Fourthly, they will be based on rebuilding costs so that when the construction industry is buoyant, rebuilding costs will increase and therefore the bill will increase; however, when the industry is in the doldrums the bill will decrease. When that system is compared with the system advocated in the Bill there is no contest.

A banded approach to valuations means that the worst excesses of the old rating system can be avoided. Banding ensures that the council tax is fair for all. Everyone will make a reasonable contribution towards the cost of local government services but nobody will face an excessive bill. That is because the bill for a family living in the most expensive property in an area can be no more than three times its bill if it lived in the cheapest property in the area.

Members of the Committee will understand that the provision does not mean that the better off will pay less than their fair share towards the cost of local government services. Only 15 per cent. of the cost will fall on the council tax. The remaining 85 per cent. will be funded through business rates and national taxation. That will ensure that those who can afford to pay the most will do so through national taxation and through local taxation by being at the top end of the band.

Members of the Committee opposite need to grasp the important fact that a banded system does not require precise valuations of each property. That fact bears repeating. Valuers will need to establish in which of the broad bands each property should be placed. The precise valuations called for in the amendment do not need to be known and will not be known. The use of bands is quicker and cheaper than producing precise figures based on a convoluted evaluation system. All homes will have been banded in good time for the introduction of the council tax on 1st April 1993. The requirement of individual valuations based on capital values would mean delaying the introduction of the council tax. That is not something that we wish to countenance.

The task of producing capital valuations pales into insignificance compared with the valuation approach proposed by Members of the Committee opposite. It would be interesting to know how long they believe a valuation based on their approach would take to complete, the cost of that valuation and the rolling annual cost.

Banding will also avoid large numbers of appeals as people seek to reduce their bill through small reductions in their valuation, a point made by my noble friend Lord Renfrew. I am sure that Members of the Committee will agree that we could argue at length about the precise valuation of our homes, especially when that could lead to a reduction in our tax bills. By contrast people will quickly recognise and in most cases agree the band in which they believe their home should be placed. We recognise that there will be some difficult cases and that is why a full appeals procedure will be provided.

A system of local government finance based on broad bands of capital value is the right way forward. I have no doubt that Members of the Committee will join with me in rejecting the amendment.

Baroness Hamwee

We have returned to the trade off between fairness and simplicity in the administration of the tax. That is the point that the noble Baroness, Lady Hollis, is making. I do not wish to put words into her mouth but Members on these Benches have no doubt about the banding approach. We understand that it does not require individual inspection and so forth. I do not wish to repeat the arguments of the noble Baroness, Lady Hollis. The reaction which she fears will be provoked on the part of potential taxpayers has led her to propose this amendment. Leaving aside the fairness argument, I believe that she has a good point as regards administration.

7 p.m.

Lord Jenkin of Roding

I am filled with horror at the thought of returning to individual valuations. Obviously, the noble Baroness, Lady Hollis, does not bear any responsibility for the policies of her party. However, if there were individual valuations, it would be necessary to have frequent revaluations. There is no doubt about that. One advantage of the banding system is that, although local government retains the right to have revaluations if that becomes necessary, the system does not depend on a quinquennial revaluation, as did the old system. The problem was that those quinquennial valuations did not take place and, therefore, the problem became worse.

I repeat a point which I made at Second Reading of the 1988 Act. Since the war no Labour Government ever had the guts to undertake a revaluation in England and Wales. Every time it fell to a Conservative Government to do that. The only reason that that was not done in the early 1980s was that the Green Paper had been published on local government finance and it did not seem sensible to have a revaluation if there was to be a thorough reform. However, it does not lie in the mouths of Front Bench spokesmen opposite to argue for individual valuations, which would require regular revaluations, when their party never had the guts to do that.

Baroness Gardner of Parkes

I am opposed to returning to the old valuation system. I always appealed against my rates. Wherever I lived, I always appealed against the valuation. Each time I moved house, I appealed again. I was a terrible nuisance to the valuation officer. I considered it my right to be so. However, in order to have one's rating appeal heard, one sometimes had to wait two or three years. There was an enormous queue of people picking on tiny points.

I always thought that under the old system it was wrong that a person who had saved money to improve his house—for example, to install central heating—then had to pay more tax because he had used his hard-earned money to do that. If the house was allowed to decay, it became worth less, the notional rent became less attractive and it was possible to apply for a reduction in the rateable value. That was quite wrong. The system was wrong on two grounds: first, the individual valuation was never fair; secondly, the system was cumbersome, time-consuming and extremely expensive.

My husband sits on valuation rating appeals and I hear the other side of the story from him. He is one of many people in this country who receive something like £7 per day to hear those cases. Therefore, the system relies largely upon the goodwill of such people. If those people were paid more realistically, that would mean an enormous expense. He complains about people like myself who continue to press some painful point and are determined to see the matter through to the bitter end. They take up many hours of court time. Therefore, I believe that banding is a good answer for it means that people quibbling over £50 or £100 will not appeal because, even if they did appeal, they would remain in the same band. I believe the system of broad banding will be extremely effective.

Baroness Hollis of Heigham

I am grateful to all Members of the Committee who have taken part in this mini-debate. First, I take up the point made by the noble Baroness, Lady Hamwee. She was entirely right in her response to the comment made by the noble Lord, Lord Renfrew. On the Opposition Benches we are trying to balance the need for administrative simplicity against fairness to the individuals concerned. That is our view.

The noble Lord, Lord Renfrew, said that the bands were simple but he asked whether they were fair. Whenever there are boundaries, there will be problems on either side of the boundary. That is the consequence of the Government adopting a system of valuation based on boundaries. By definition the problems as regards simplicity will be transferred from assessment to appeal. By any statistical distribution a third of all properties will be within £2,000 of the top or bottom of a band. If that makes a difference of some 20 per cent. to 30 per cent. in the council tax payable, then people will appeal, whereas if they are charged perhaps an extra £10 because they have installed central heating then they may not think it worthwhile to appeal.

Lord Renfrew of Kaimsthorn

If one-third of the people involved are in a position in which they can appeal, does that not then reduce the potential number of appeals to one-third? Is that not the point which my noble friend was making? Therefore, shall we not be better off?

Baroness Hollis of Heigham

Obviously, under the old rating system a proportion of people appealed. I believe that we were dealing with quite modest statistics, although I cannot recall them at present. However, I should be surprised if the percentage of domestic appeals were in double figures. Under the new system it will probably be worthwhile for one-third of property owners to appeal. We may not see that and I hope we do not.

Lord Mackay of Ardbrecknish

I do not wish to argue about the figure of one-third although I believe I could do. However, I wish to argue with the idea that that one-third will come from the top and bottom of the range. Surely those householders at the top of the range will not appeal because the likely result is that they will move up into the next band. It cannot be in their interests to appeal. Therefore, the suggested figure of one-third immediately becomes one-sixth.

Baroness Blatch

This Bill requires one valuation at the outset and infrequent valuations thereafter. Therefore, most of the appeals will be in the early stages, after the first valuation. By and large, once those appeals are dealt with, the relativity of the value between one house and another will remain the same for a long time. It will be stable.

The noble Baroness advocates a system in which every single household must be assessed on a combination of factors, all of which are highly sensitive to an increase or decrease in valuations. That will be done on a rolling programme of annual valuations. Householders will not understand a common yardstick because there will not be one. Under the old system, one reason that my noble friend Lady Gardner was such a pain to the valuation department was because she was not entirely au fait with the mysterious way in which the valuation was arrived at in the first place. That is a problem of the system advocated by the noble Baroness. Therefore, not only would there be difficulties in the first instance but it would be an annual challenge for people to appeal against their valuations.

Baroness Hollis of Heigham

In response to the noble Lord, Lord Mackay, I was not saying that one-third of householders would appeal. I was saying that statistically one-third of properties would fall in the bottom £2,000 or top £2,000 of a band. People who appeal will not know where they are within a band. In fact, they may appeal to try to ascertain their property value in conjunction with the band. Someone about to sell a property may believe that his property has a value which is different from that of a neighbouring property. If he is in a band whose value is below that for which he wishes to sell his property, he will seek to appeal upwards. Others may seek to appeal downwards. I believe that there will be movement in both directions. I tried to make that point at the outset.

As regards the Minister's response, to say that banding is fairer than individual valuations is like saying that there should not be individual assessment of income for rebates but that that should be broad-banded; for example, it may be said, "Let us take an income of £20 per week" or, "Let us take an income of £30 per week", because that will be simpler.

Baroness Blatch

The noble Baroness puts an interpretation on what I said which is wholly wrong. Rebate systems are particularly sensitive to the circumstances of individuals. We expect those systems to be highly sensitive and to be dealt with on a daily basis. We have already said that we should require a system which is highly sensitive to the particular circumstances of individuals. This amendment deals with valuations of properties within bands.

Baroness Hollis of Heigham

I entirely accept that point. However, the fact remains that if the argument for banding is fair then it applies in most areas of social policy.

The point is that properties differ. Without having internal inspections, valuers are not in a position to do other than put houses into bands. But individual properties vary. That is why, when one walks down any street and finds "for sale" signs, each property will carry a different price. It is precisely for that reason that we believe that in terms of the council tax those properties should enter into the relativities with individual valuations. In the same way as no estate agent would assume that all properties in the same street have the same market price when they come to sell—they will discriminate on issues of improvement and the like—so that is the argument we are urging; that is, that properties vary in quite sensitive ways. That is precisely why individual valuations should take place. I believe that the noble Baroness made my point for me.

Secondly, in terms of administrative simplicity I repeat and accept that there will be some original simplicity. The fact that many valuations are being done for less than £2 a time suggests that all we will obtain is a rough and ready, broad and simple, crude and vulgar valuation. That simply shifts the problem on to the appeal system. I should have thought Members of the Committee would perceive how fragile an instrument that is when we consider the problems of collecting the poll tax.

Thirdly, the noble Lord, Lord Renfrew, welcomed the fact that perhaps 60 per cent. of properties, particularly in some of the northern cities, may fall into one band. He suggested that was fair. I must urge the Committee to accept that if, as I try to suggest, in almost half of all local authorities half of their property falls into two bands, then one does not have a progressive tax; it is a flat rate tax. That may be welcomed and thought fair and desirable, but it is not a progressive tax. It is a flat rate tax.

The problem with the flat rate tax is that though the property values may vary by little, incomes vary much more. One point that has been urged time and again from our side is that within the total range of bands there is only a 1:3 ratio, whereas incomes vary by something like 1:7.

A point was made regarding contributions through income tax. It was said that the valuation bands did not need to be particularly sensitive because a small proportion of local authority spend was coming from council tax and a high proportion from central taxation and, of course, from the business rate, which is a local tax nationally hijacked by central government. My point on that is that Ministers play the income tax card to suit themselves. When we hear about the four strapping sons all in work paying the same as the elderly widow it is not suggested by Members opposite that those four strapping sons are paying their way through the income tax system. But when it comes to the rough and ready crudities of a banding system the Minister will tell us that that can be compensated through the more sensitive adjustments of the income tax system. It would be helpful to us on this side—I say that in all humility—if we had a consistent view from Ministers about the appropriateness of income tax when it is brought into play in the arguments of contribution to local authority spend.

The noble Baroness, Lady Gardner of Parkes, made a point about improvements. To paraphrase her comment, she said that if somebody had saved up their hard-earned money to make an improvement, why should they be penalised? That is not essentially different from somebody who has saved their hard-earned money to buy a better house. Why should they be penalised? If a person is enjoying a significantly and substantially improved house as a result of an improvement, then that should be reflected—given a property tax—in the liability of contribution to the local authority.

With regard to the points on discounts that we are arguing to and fro, perhaps the Committee will allow me to come back to that later. Given the hour, I shall not press the amendment and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Baroness Hollis of Heigham

moved Amendment No. 16: Page 1, line 22, leave out ("is") and insert ("and individual value are"). The noble Baroness said: In moving Amendment No. 16 I shall speak also to Amendment No. 17. I shall be brief. I hope that the Minister will support them.

The amendments require that liable persons be notified of the valuation ascribed to their dwellings. Under the provisions of the Bill neither the local authority nor the valuation officer are required to notify people of the band into which their property has been placed. It is a simple amendment.

The only duty of the local authority at the moment is to make the valuation list available for inspection at the main office. Unless people exercise that right of inspection the first that they will know of the band into which their property has been placed will be when they receive their council tax bill. That seems to us to be prima facie unreasonable. We therefore urge the Committee and the Minister to agree that people should be notified of the band into which their property has been placed. I beg to move.

7.15 p.m.

Baroness Blatch

The noble Baroness is making an attempt, albeit brief, to impose a detail of her advocated system onto a system which we believe is more straightforward, simple, fair and more easily understood.

As I said earlier, the Government take the view that the individual valuation of dwellings for the council tax would be unnecessary, expensive and, because of the spurious accuracy of such valuations—in other words, within a band —vulnerable to unwarranted appeals.

Members of the Committee have already accepted our arguments by rejecting Amendment No. 15. Rather, the balance of the debate was very much in favour of rejecting that amendment. I did not notice around the Chamber too much support for the noble Baroness in her amendment and shall not repeat the arguments. However, the noble Baroness may wish to test the opinion of the Committee at some point.

Although valuation lists will be available for public inspection from December 1992, the bills sent to council tax payers will be the first notification of banding for most households. We expect the first council tax bills, however, to be sent out in March 1993. We therefore expect that people will have been informed of the band in which their home has been placed before the first day on which they become liable to pay council tax.

On the advice of the local authority associations we took the decision not to require early notification of banding to each liable person after the draft valuation list is made public in December 1992. Local authorities, the organisations best placed to issue such notifications, advised us that they could not guarantee to have software in place in time and it was suggested that such a requirement might delay the implementation of the council tax.

Where there are any subsequent alterations to the valuation list, the listing officer will always write and confirm any change. Liable persons will, of course, have the right of appeal against any such alterations.

I hope that the Committee will agree, on reflection, that the amendments are unnecessary.

Lord Jenkin of Roding

Perhaps I may add a point to the debate before the noble Baroness replies. I understand the reasons why there should not be individual notification. In view of the timescale of the whole operation that is probably inevitable.

However, there is another reason. To know one's own valuation without knowing what has happened to anybody else is of precious little value and purpose. The lists will become available and be made public. No doubt people will want to pop along to libraries and town halls to see not just their own valuation but whether the houses nearby are in the same band. That will be a much more useful piece of information than merely having one piece of paper saying that one is in band D or E. That will not mean anything to anyone. It is the opportunity to see what band the house next door is in that will be useful.

If one cannot view an individual notification and people want to see where they stand, it will be more useful for them to be able to go to see where everybody else is and whether in those circumstances the banding is fair. The suggestions in the amendments are therefore probably unnecessary and unhelpful.

Baroness Blatch

Before the noble Baroness responds to both my points and those of my noble friend Lord Jenkin of Roding, perhaps I may say that that is a fundamental point missed by Members on the Opposition Benches throughout the whole of the debate on valuations; that it is important that houses in bands above one's own home are, by and large, worth more and that those in bands below are worth less. In other words, what is essential is knowledge that the relativities of the valuation of one property as compared with another are in the right order.

Baroness Hollis of Heigham

The opening remarks of the Minister were directed to Amendment No. 15 on the grounds that it had been rejected. As we are not discussing Amendment No. 15, and as it was not rejected, I shall not speak to it. I shall stay with the amendments moved and spoken to—Amendments Nos. 16 and 17. A government that is pressing on the public The Citizen's Charter did not place copies in public libraries or town halls for people to consult but posted copies to each individual household. At various points when we have had planning Bills and so on—and I pay credit to the Ministers concerned—the need to notify the public individually was accepted. I do not refer to individual valuations. I refer to the valuation band into which the property has been placed on the basis of which one's liability for council tax has to be calculated. I find it extraordinary that one is not to be personally notified. What does the Citizen's Charter mean? What does empowering citizens mean? What does local government accountability mean when citizens do not know what valuation band they are in until they receive their first bill through the door?

Baroness Blatch

Will the noble Baroness explain what she means by stating that citizens will not be notified? Everyone will be notified of the bands. The noble Baroness is speaking of when that notification takes place. The noble Baroness was talking when I made the point that local authority associations have argued against the provision that the noble Baroness seeks in these amendments.

The banding for houses will also be on public display. If someone wishes to find out, it will therefore be possible to do so. What information is being withheld from the citizen?

Baroness Hollis of Heigham

Had I been able to complete what I was trying to say I believe that the point might have been addressed. We are arguing that when property has been placed into its original valuation band, people are entitled to know that band.

I entirely take the point of the noble Lord, Lord Jenkin. If people feel uneasy about the valuation and wish to find out how it relates to other valuations, they can consult further. However, it seems entirely right and proper that individuals are entitled to know at the earliest possible stage their position on the valuation band.

On the issue of complexity, the Minister earlier urged that it was administratively simple through the computer to do elaborate and complicated calculations of interlocking rebates and discounts on a daily basis. However, she then finds it apparently complicated and administratively not feasible to notify people of the band into which their property has been placed at the earliest possible opportunity. I fail to comprehend that. I beg leave to withdraw the amendment.

Baroness Blatch

Before the noble Baroness withdraws the amendment, she has become masterly in the skill of putting words into my mouth. It is extremely important that I put on the record exactly what I said.

The bills that are put out to properties will deem that there shall be a property tax—which is 50 per cent. of the bill—and that there are two people in the household. Any deviation from that will be for the authority itself voluntarily to collect intelligence on that matter, and for the applicant to apply for any deviation from that. The noble Baroness stated that I argued for complex daily calculations. We did not. First, we responded to a very sincere request from the local authority associations that they wished to operate on a daily basis. Secondly, we on these Benches said that where the personal circumstances of an individual change—the noble Baroness referred now to the rebate system—we should have a system that responds as sensitively as possible. In other words, where someone qualifies for a reduction in their bills or an increase in the rebate, it is important that the system responds as sensitively as possible. The local authorities said that if they were allowed to calculate on a daily basis—neither complicated, convoluted, nor, as the noble Baroness said, impossible—they could be more sensitive and could respond to people's changed circumstances more quickly and effectively.

Lord McIntosh of Haringey

I am sorry to intervene. The Minister returns to an earlier amendment; I do not believe that it is a good idea. My understanding is that local authority associations were asked a rather different question: would it be easier to operate the system with a discount structure on a daily or annual basis? If they had been asked a question without the issue of a discount structure involved, their response would have been that they would prefer an annual basis. I do not believe that it is a matter we ought to pursue now. It is an issue to which we might return at Report stage.

Amendment, by leave, withdrawn.

[Amendments Nos. 17 to 20 not moved.]

Baroness Hollis of Heigham

moved Amendment No. 21: Page 2, line 6, at end insert: ('(3) For the purposes of making any determination in accordance with subsection (2) above, a billing authority may request such information as appears to it to be reasonable to enable it to carry out its duties in accordance with paragraph 11A of Schedule 2 to this Act."). The noble Baroness said: In moving the amendment, I speak also to Amendment No. 155, which raises the issue of a register. To some extent we are returning to some of the same issues of administrative practicality that were raised in relation to daily and annual liability.

I suggest that local authorities will need to keep a register for three reasons. First—an issue which I believe was not explored in another place—local authorities will have to calculate in advance the number of discounts falling within each tax band during the period September to December this year. Personal and status discounts look set to vary between local authorities by between 30 per cent. and 50 per cent. across the country. In my local authority it looks as though about 44 per cent. of households will have a status or personal discount. Those discounts have to be attributed to each valuation band in order for local authorities to be able to determine and report to the DoE the revenue base generated by a council tax at standard spending assessment so that theoretically the revenue support grant can compensate in lieu.

For the local authority to return information to the DoE on the number of discounts falling in each property valuation band will require a full and detailed canvass interlocking the configuration of each household with its property band. I suggest that it is critically important for local authorities to get that calculation correct. The figures seem to be highly sensitive to error. For example, in my authority if 50 per cent. rather than 44 per cent. of households are eligible for a single person discount at the headline tax but the local authority has failed to have the accurate figures reported, it would mean a loss to the local authority of £0.5 million on a budget of about £15 million. That is no mean sum. To return accurate figures to the DoE on the basis of which local authorities would receive their revenue support grant requires a register.

Secondly, the hierarchy of liability is so complex that no one—certainly not the local authority—can know who is responsible for paying what. To locate responsibility, for example, local authorities will need to register who among three single adults, friends who share a flat, is the liable tenant and who is responsible for the bills. That takes place in a culture of non-payment. Local authorities will have to pursue energetically the payment of bills.

Thirdly, the amount of the bill will be determined by the interaction of discounts and rebates. Local authorities will need a register to establish that.

Let us consider a straightforward example. There are two different names in a household. I was going to suggest John Smith, but under the circumstances perhaps I ought to say David Smith, and Mary Black. The two names are on the electoral register. What is the financial implication for the council tax? They may be partners and cohabitees. In that case, they will be expected to pay a two-person bill with possible rebates on his income. But if she has no income of her own, she is not eligible for a rebate or a discount as a second person. That is one calculation based on the knowledge that they are cohabitees.

Equally, they may be two friends who are not cohabitees. In that case, those same two names in the household will pay a two person bill but with the option of a rebate on his income or a low income discount on hers as a second adult.

Those two people may be an elderly father and a widowed or divorced daughter with her own earnings. In that case, there might be a rebate on his income perhaps offset by a non-dependent adult deduction on her income.

Those two names might indicate a householder with a student lodger who is invisible; it is therefore a one-person bill. Finally, both of them may be students, in which case the entire property is exempt. They will pay nothing. Those are entirely plausible possibilities based on a simple example of two people with different surnames in one household. For the local authority to establish what they should pay it will need to keep a register. Somehow local government has to map those configurations because it is supposed to send the bills out net of discounts and, where possible, net of rebates, as was emphasised by the Minister, Mr. Portillo, in Committee in another place on 27th November 1991. Another member of the Standing Committee had stated (at col. 531) that, the Government were not pretending that any effort would be made to establish where single-person discounts were applicable and that a large number of inaccurate bills would be sent out. Mr. Portillo then said: I should like to correct that. We are encouraging local authorities to take reasonable steps to discover in advance who is likely to claim a discount. They may look at the community charge register or they may wish to conduct a canvass", and so on. The Minister made it very clear that in advance of sending out the Bill and in order to acquire eligibility for the full revenue support grant that they will seek to get, local authorities would need to determine the exact status of those two people in those five possible households that I have suggested. The only way to overcome that is obviously to scrap the discounts and go for a more generous rebate scheme, as we on this side of the Committee have been urging.

However, given that the Government at the moment have locked themselves into this incredible complexity of interlocking rebates and discounts on a property tax, then local government will need a register, a canvass, a record, a list, or whatever one cares to call it. Yet the Data Protection Registrar has warned local authorities that they could be breaking the law if they maintain that register for all adults for the purpose of the council tax. But local authorities will need to do so to get their grant, to establish liability, to send out bills net of discount and rebates, to avoid fraud and to calculate on a daily liability. The whole will generate resentment, resistance, confrontation, fear of snooping, claims of invasion of privacy.

We on these Benches dislike this because we would rather it was not necessary. It would not be necessary if government were not going for this structurally flawed tax. However, given that it is necessary then this amendment seeks to make it legal and legitimate for local authorities to have a register. I beg to move.

The Earl of Balfour

Surely almost all the points requested in Amendments Nos. 21 and 155 are covered in Clauses 27 and 28, for the English provisions, or if it applied to Scotland—Schedule 2 is referred to—in Clauses 90 and 91. No matter what type of local government tax we have, if it is involved with persons and property then the local authority or the Inland Revenue, or whatever authority it is, must have that information. It must be able to obtain it and have the right to ask householders for the information that is being asked for in the amendments on the Marshalled List.

Baroness Hamwee

The noble Earl makes an important point. He is pointing to the fact that far more thought appears to have gone into how inquiries are established with regard to property than with regard to the personal element of the tax. I am sorry if I gave the noble Lord, Lord McIntosh, such a fright when I started. As he knows, and as I have said in previous debates, we on these Benches do not see that it is sensible for the Government to have taken the line that they have with regard to the register. The noble Baroness, Lady Hollis, has made important points about the need to collect information in order for the tax to be administered both properly and fairly.

I suggest that there is another problem. The Government say that the onus is on the claimant to claim a discount. That seems to me to lead to an extra step in this process. The Bill will go out before information has been collected—because no information will be collected in a formal manner involving the individuals—and the taxpayer will realise that there is a liability. Generally there will be increasing public awareness about the tax; the taxpayer will realise that there may be the possibility of a discount and will claim. That will delay payment of the tax. If it means extra steps in the processing of the tax by the local authority it will add to delays in payment and it will add to cashflow problems and will result in the sort of confusion that we are all aware happens only too easily. Local authority officials, tasked with getting out enormous numbers of bills in a short period of time—while they are still of course trying to collect poll tax and rates—perhaps push the computer button a couple of times and the computer spews them out twice. They are then followed by another couple of bills, and so on. One then gets the sort of situation that the noble Baroness, Lady Carnegy, described earlier this afternoon.

There are very good reasons for supporting this amendment. The attitude of the treasurer of Birmingham City Council has already been referred to in this Chamber. He said, "Whatever the Department of the Environment says, I am going to have a council tax register". I support the amendment.

Baroness Gardner of Parkes

I am not in favour of this amendment for several reasons. One is that I support the civil liberties argument that there should be no unnecessary keeping of registers. I consider this to be an unnecessary keeping of a register because the onus is on the person to apply for a reduction and to prove that he or she is a one-person household rather than a two-person household. Therefore, those cases will automatically present themselves. Of course, there will have to be some sort of record of the fact that that person has so applied. But that is different from a complete and total register, which I understand is the suggestion.

I have already made the point at a previous stage of this debate, that Westminster Council knows already that one in two households in Westminster is a single-person household. If local authorities do not know that in respect of their own districts presumably they will send out a bill for the total amount and then the people concerned will apply. But very few private individuals pay their total charges to their local authority, whatever form of charges they are—whether rates, community charge, or, as now, this new council tax. Very few people pay the tax in one lump sum. Most of them spread it over 10 payments in the year. Therefore, there would certainly only be a hardship of one-tenth of the 25 per cent. that would be deducted if one had paid the first original instalment in toto.

Where I think that the noble Baroness, Lady Hollis, has raised a very interesting point is in the biennial budget for the Department of the Environment. I do not understand the technicalities of that well enough and I ask the Minister to comment on it. If it is true that it would be very difficult to work out how much authorities will get in their grant then that is a problem and the department should look at some other way of dealing with that. For example, in many businesses there is a budget for what is estimated will be spent in a year, then at the end of the year there is a reassessment on the basis of what was actually spent —or what was really collected, in the case of councils. Perhaps there is some other way that the Department of the Environment could consider. I thought that the noble Baroness raised a very interesting point.

I am not in favour of the other point concerning the practicalities and the need for a register, but I should like to know how the Government would deal with this special spending assessment.

Earl Howe

Perhaps I may first of all address the points raised by the noble Baroness, Lady Hollis. I have to say that much of what she said was conflating two distinct issues: the council tax and how that is going to be assessed and the benefits that a resident will be entitled to claim. As regards the council tax, a local authority will have a duty to use the knowledge that it possesses in drawing up its estimates. If it does not know particular details about a house it will submit a bill to the liable person based on a two-person household. That is clear. As regards the benefit side of the equation, it is up to the resident of a household to claim the benefit that he thinks he is entitled to. There is no mystery about that system. I cannot accept that a register in the form set out by the noble Baroness is in any sense required in the Bill.

The amendments would give local authorities power to request information in order to enable them to carry out their duties under the Bill. The Government have been considering this matter carefully. We are concerned to ensure that local authorities should not gather more information than they need. On the other hand, we recognise that it is reasonable for a billing system to record the names of those to whom bills will be sent.

My honourable friend the Minister for Local Government and Inner Cities addressed this question in another place. He was considering the use which local authorities were proposing to make of Section 16 of the Local Government (Miscellaneous Provisions) Act 1976. That gives local authorities a wide power to require information about occupiers of land and others having an interest in it. My honourable friend said that he was considering disapplying that power for council tax purposes and that he would be consulting the local authority associations on it.

We have indeed been consulting the local authority associations and our discussions are still continuing. As part of those discussions we have been considering whether, if Section 16 is to be disapplied, there is a case for replacing it with an information power more closely tailored to the needs of the council tax. We have asked the associations what they would like such a power to provide if the Government were minded to provide it. We are still awaiting a reply on that point. When we have their views—and we have asked for them as a matter of urgency—we shall consider whether it would be appropriate to introduce a specific information power. I suggest therefore that it might be appropriate if the noble Baroness were to withdraw her amendment and return to the subject, if necessary, on Report.

Before concluding my remarks perhaps I may address the question raised by my noble friend Lady Gardner of Parkes. So far as concerns discounts, it will be up to the local authority to make an assessment or an estimate—its best estimate—of discounts in its area based on the information it has at its disposal, which is fairly considerable, as she will appreciate. The RSG will take that estimate into account. I hope that that is helpful.

Baroness Hollis of Heigham

What is the difference between the canvass that the Minister in another place, Mr.Portillo, encouraged local authorities to conduct, and the record that would follow such a canvass? What is the difference between that record and a register?

Earl Howe

The difference is very wide. The local authority is looking for liable people. The information that a local authority will need consists perhaps of three elements; the property, the liable person and whether or not discount applies to that property. That is a different matter from the full-scale register such as we have for the community charge.

7.45 p.m.

Baroness Hollis of Heigham

I am entirely unpersuaded by the Minister's distinction. It seems to be a distinction without a difference. If a local authority has to canvas in order to find out not only who is the liable person but also the nature of the household in terms of whether it is eligible for discount, that is in my view a register.

The noble Baroness, Lady Hamwee, has already responded to the point raised by the noble Earl, Lord Balfour, on Clauses 27 and 28, which refer to information about properties and not about persons. Perhaps the noble Earl will accept that that is why we proposed the amendments and why they are necessary. It is very often said by Members of the Committee opposite that the onus will be on the individual to claim the discount. The individual is entitled to claim a discount that has been overlooked but I repeat the point —Mr. Portillo made it clear time and again in another place—that for good administrative reasons—I do not suggest otherwise—the expectation would be that the local authority would, on the basis of a canvass, know in advance, or would seek to ascertain in advance, the number of discounted householders in its area. Using that it would not only be able to return figures to the DoE but send out the bills. That is clear in cols. 531 and 532 of the Hansard report of the Committee proceedings in another place.

I am grateful to the noble Baroness, Lady Gardner of Parkes, for raising the issue of civil liberties. She is entirely right. I hoped that we had made it clear that we do not welcome a register. However, the consequence of building in a discount system and of needing to lock that into a rebate scheme, knowing that people may move between the two—that is what the Bill ensures—is that one has to have the information to avoid fraud. Registers may not be good but secret registers which people cannot inspect but which will certainly be kept by local authorities are much worse. The noble Baroness, Lady Hamwee, referred to the treasurer of Birmingham council. I have checked with several—

Earl Howe

Perhaps I may address that point. My advice is that there would probably be difficulties under the Data Protection Act for any kind of register that incorporated more information than was required for the purposes of the council tax.

Baroness Hollis of Heigham

That is entirely correct. I made the point in my opening remarks that it would be disallowed by the Data Protection Registrar. He has warned local authorities of precisely that. With the five examples of two names in a household, the only way the local authority could ascertain what the proper bill should be is by having quite detailed and explicit information about the nature of cohabitation, eligibility for rebates to second person adults of low income status, individual discounts and the like. Unless local authorities have that information they will not be able to ascertain that the bill people pay is the proper one.

Baroness Blatch

Does the noble Baroness agree that it is up to the person in the house, whether a liable person or another adult, to submit evidence for a claim for rebate? It is not up to local authorities to acquire that information about individuals willy-nilly across their areas.

Baroness Hollis of Heigham

Perhaps I may turn the question back to the Minister. Does she accept that as the Bill is structured a person may have a single person discount? If, however, a person is better off claiming rebates he may switch. The local authority has to establish the number of discounts in its area in order to claim compensation through the revenue support grant. Whether an individual woman—for example, a lone parent—claims a discount as a single householder or claims rebate, which may be financially more advantageous to her, will depend on a quite complicated assessment of her income. She will have to make that decision. The local authority, however, will have to know which of the two she will claim and will have to have that information registered in order to obtain the grant that it is entitled to receive, because although the rebates will be compensated for by the Department of the Environment up to a figure of 95 per cent., the discount will not be compensated for except through the grant structure.

I hope the Minister accepts that these decisions about discounts cannot be isolated, much as he may wish it, from the information about rebates. The two interlock, as I have tried to establish, at almost every point along the way. That is precisely why local authority treasurers around the country are saying that, even though they do not wish to, local authorities will have to maintain a register in order to prevent fraud and to ensure that the situation is handled in an administratively straightforward way.

However, we have probably gone as far as we can today. The Minister was kind enough to say that he was in consultation with local authorities to discuss the question of an information power. Can he say whether he will be able to tell us before Report stage what the progress of those discussions has been? That will influence Members on this side of the Committee as to whether they wish to press this issue to a vote tonight.

Earl Howe

We are keen to bring this issue back to the Chamber at the earliest possible stage. I very much hope that that will be at the Report stage.

Baroness Hollis of Heigham

Given that we need that response from local authorities, I have no alternative but to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Earl Howe

With the leave of the Committee, I should like to suggest that this may be a convenient moment to take a break in the Committee's proceedings until 8.45 p.m.

[The Sitting was suspended from 7.49 to 8.45 p.m.]

Clause 3 [Meaning of "dwelling"]:

Lord McIntosh of Haringey

moved Amendment No. 22: Page 2, line 9, at end insert: ("(1A) For the purpose of this Part, 'dwelling' means any property which would have been a domestic property for the purposes of the Schedule to the Local Government Finance and Valuation Act 1991 if that Act remained in force."). The noble Lord said: Amendment No. 22 and the next few amendments seek information from the Government as to why there are differences between the wording of the Local Government Finance and Valuation Act 1991 which we passed with great speed last year and that of the present legislation. I have chosen to take the amendments separately because I thought that it would be easier for the Government to reply to each individual point. However, that does not mean to say that we need take a great deal of time over them.

Amendment No. 22 refers to the definition of "dwelling" which is the word used in the present Bill. We suggest that it should be defined in the Bill in the same way as in Schedule 1 to the 1991 Act. We do not really understand why the present Bill has dropped the concept of "domestic property" which was, after all, used when the present valuation proceedings were embarked upon. That definition is the legal justification for those proceedings. We do not understand why the Bill has dropped the concept of domestic property and replaced it with the word "dwelling" as defined in Clause 3. We should be most grateful to receive an explanation as to whether there is any real difference or whether it is simply a matter of presentation. I beg to move.

Baroness Blatch

The amendment before the Committee is intended to render inoperative Clause 3 as it stands. It would substitute for the provisions in the clause the provisions in the schedule to the Local Government and Finance Valuation Act 1991. But the amendment is ineffective as there is little in Clause 3 which could not equally be achieved by order under the schedule to the 1991 Act. However, we have chosen to make some changes on the face of the Bill.

Perhaps I may spell out for the benefit of Members of the Committee the differences of substance between Clause 3(2) to (6) of this Bill and paragraphs 2 to 5 of the schedule to the 1991 Act. Clause 3(2) has at its end a provision to disregard rules as to Crown exemption. That is needed to ensure that Crown property which is non-domestic in nature does not fall to be liable to the council tax by virtue of the fact that it either does not appear in a rating list or is exempt from non-domestic rates. The provision simply ensures that only genuinely domestic properties are included.

Clause 3(3) provides a slightly different treatment for composite hereditaments from that contained in the schedule to the 1991 Act. The purpose is to enable the valuation provisions for non-domestic rating and those for the council tax in respect of composite hereditaments to mesh precisely. For non-domestic rating, the valuation officer assesses the rateable value of a composite property according to the extent of non-domestic use of the property. To mirror that, we intend to provide in regulations that only the value attributable to domestic use is taken into account for council tax purposes. That will ensure that there is no double taxation of composite properties.

Clause 3(5) allows the Secretary of State to prescribe that, for the purposes of the council tax, a single hereditament may be treated as two or more dwellings or that several hereditaments may be treated as a single dwelling. Some single hereditaments consist of a number of clearly separate and self-contained houses or flats. In those cases, we wish to provide that each of the separate units should be valued separately and give rise to separate council taxes.

There are also circumstances, such as houses in multiple occupation, in which it may be appropriate to treat a number of hereditaments as a single dwelling, as was allowed under the General Rate Act 1967. We need to include a discretionary element reflecting the discretion available under the 1967 Act. That is a feature of Clause 3 which is not available under the schedule to the 1991 Act.

So what, if anything, might the amendment achieve? It would subject some non-domestic property to the council tax; it would subject some property with both domestic and non-domestic use to double taxation; and it would subject some people in multiple occupation to separate bills when there was only a single bill under domestic rates. I believe that there is a misunderstanding over the amendment, and I call upon the noble Lord to withdraw it.

Lord McIntosh of Haringey

There may be some misunderstanding, and it may be my fault, but I found that answer extremely puzzling. The Minister has chosen to respond to a number of amendments which I have not moved and to which I have not spoken, but she has not answered the two fundamental questions I raised on Amendment No. 22. The first is: why are we changing from the concept of domestic property contained in the 1991 Act and replacing it by the concept of a dwelling? What is the difference between the two?

Secondly, if there is any change in substance, as opposed merely to a change in terminology, what effect will that have on the valuation process, which has already been embarked upon under the authority of the paving Bill? If I can have answers to those two simple questions rather than answers to questions which I have not yet posed, I shall feel happier about what, after all, was intended only to be a probing amendment.

Baroness Blatch

I could repeat the differences that I suggested existed between the substance of Clause 3(2) to (6) and paragraphs 2 to 5 of the schedule to the 1991 Act. I have given in detail what I believe to be the substance of the difference. If the Committee wishes me to, I shall repeat it all in detail. Perhaps the noble Lord can be persuaded to read what I have said, because I spelt out that the consequences of accepting the amendment would be to subject some non-domestic property to the council tax. In other words, those properties that were not named would be deemed to be domestic properties and would therefore be subjected to council tax. Those properties may, for example, be Crown exemption properties for which there is a larger bill under the other scheme. The amendment would also subject some mixed hereditaments to which I referred, where part is domestic and part is non-domestic, to double taxation. Thirdly, it would subject some people in multiple occupation to separate bills where there was only a single bill under domestic rates. There are substantial differences, and perhaps the noble Lord will read in detail what I have had to say.

Lord McIntosh of Haringey

I am willing to do that. I am not anxious to prolong a fruitless discussion, especially if I am not entirely sure that I know what I am talking about. The Minister is not being especially helpful on this occasion. She has continued to refer to Crown properties and mixed hereditaments, the subject of future amendments to which she will have an opportunity to reply.

I have a simple question. In the 1991 Act, the basis for the valuation procedure now being carried out, there was what was thought to be—it was proposed by the Government as such—an adequate definition of "domestic property". Since the valuers have no other authority, presumably they are working to that definition. What is changed by calling the property a dwelling? I am not talking about mixed hereditaments, Crown property or any of those things. I am talking about the instructions which the valuers who are now working have. Those instructions are based on Schedule 3 to the 1991 Act and refer to domestic property. What has changed?

Baroness Blatch

Perhaps I may spell out the first difference. Clause 3(2) has at its end a provision to disregard rules as to Crown exemption. It is needed to ensure that Crown property which is non-domestic does not fall liable to the council tax by virtue of the fact that it does not appear in the rating list or is exempt from non-domestic rates. One example of not having the provision is that Marsham Street could be liable to the council tax. That would result in a low bill for a building that enjoys Crown exemption where the Crown pays the non-domestic rate on behalf of the occupier.

Lord McIntosh of Haringey

I wonder whether we are talking at cross purposes for a simpler reason than that of my stupidity. I think that the Minister believes that we are talking to Amendment No. 23 which is to leave out lines 20 and 21. We are in fact talking about Amendment No. 22 which has nothing to do with Crown property. It has to do with the definition of a dwelling. The word "dwelling" is fundamental to the concept of the council tax. In the absence of any other definition that I can find, we are seeking to define "dwelling" in terms of the 1991 Act and the instructions now being used by valuers. It has nothing to do with Crown property. We shall come to that later.

The Earl of Balfour

Before my noble friend replies, I took the trouble to look up the Local Government Finance and Valuation Act and felt satisfied that all the important provisions in that Act are now incorporated in the Bill. The whole of that Act is being repealed by Schedule 14 to the Bill.

Baroness Blatch

Perhaps I may assure the noble Lord, Lord McIntosh of Haringey, that I am speaking to Amendment No. 22. My reply set out the changes, and I explained why the changes were made. I am afraid that there is little that I can add to what I have said.

Perhaps I may return to what the noble Lord said. He talked about the definition of a "dwelling". That is what I am talking about. There are some properties that do not appear on the rating list. They may be deemed wrongly to be domestic or non-domestic. It is important that there should be a clear distinction, which must appear on the face of the Bill, to ensure that each dwelling is allocated to the appropriate category. As I said, it is possible to have distorted bills, and I am sure that that is not what the noble Lord is seeking.

As I said, I can repeat the specific differences between the Bill and the Act. I cannot respond to the point made by my noble friend Lord Balfour. I shall read what he said and if I need to come back to him, I shall of course do so.

9 p.m.

Lord McIntosh of Haringey

We seek to define the word "dwelling", which is introduced in the Bill and which does not appear in the 1991 Act—the points which the Minister raised do not apply—as a "domestic property" for the purpose of the schedule. What is wrong with that? How does that involve Marsham Street and any of the other examples? With the best will in the world, I am totally at a loss.

Baroness Blatch

I shall give this piece of information then perhaps we both ought to go back and read the record. "Domestic property" was depicted in the 1991 Act solely for the purpose of valuation. The definition was never intended to be a definitive answer to the question of which property would be charged council tax. The definition did not deal with all the difficult cases. The definition of "dwelling" in this Act covers all the difficult cases in the way I have set out. I have great difficulty in reading the writing on my brief, but I wonder whether the noble Lord follows that explanation. There is a need to be explicit on the face of the Bill, to cover all properties so that they are all dealt with appropriately.

Lord McIntosh of Haringey

For the first time, there is a glimmer of light in my numskullish brain; I understand that there is a difference. It looks like rather sloppy or broad-ranging drafting in the 1991 Act if the valuers are required to value properties on the basis of a definition which would not stand up in subsequent legislation when it comes to imposing taxes on them. It seems to mean that the definition of "domestic property" in the 1991 Act is not satisfactory for the purpose of levying a tax. It may well mean that valuers are doing things which they would not otherwise have had to do, if the legislation at that time had been properly drafted. However, we seem to have made progress.

Baroness Blatch

The noble Lord had me at a disadvantage earlier. I was slightly unnerved by the fact that he did not understand at all the initial explanation that I gave. It is necessary for the purposes of the Bill to have an exact definition of where liability falls. I took pains to read out quite specifically the three areas where it was important to have that definition.

The noble Lord misunderstood my first answer and my attempt to come back. The final answer I gave him did no more than put in lay terms exactly why it is important to have what we argue should be on the face of the Bill. The exact definition of liability and where it should fall should be explicit.

Lord McIntosh of Haringey

I am a layman and it needs to be explained in lay terms. I believe it is not improper to demand that the Government should explain these matters in lay terms which people can understand.

Baroness Hamwee

I thank the noble Lord for giving way to me. I wish to add to the request to the Minister to explain the point on Clause 21, which provides for valuations, when she comes back on this matter. Perhaps she will tell us whether there is any difference between that clause and the Act passed last year, in the light of the explanation that last year the dwellings had to be defined in order to start the valuation process. The question concerns dwellings that must be valued under Clause 21. However, I do not expect an answer now.

Baroness Blatch

Perhaps I may tell the noble Baroness that I explained why this Bill requires an absolutely explicit, exact definition of where liability should fall on a property. Because a few buildings fell outside what might have been an exact definition which related to the previous Act, it was necessary to make sure that it was put right on the face of the Bill.

Lord McIntosh of Haringey

I understand all that and I understood the last answer that the Minister gave. However, she will understand that, unless she says to us in laymen's terms that the valuation Act 1991 was not sufficiently precise—and she did not say that in her first answer—and that all kinds of exceptions and loopholes have been found which must be plugged, it is difficult for us to understand the differences. For the record, the Minister is saying that she gave an answer which I would not accept.

Baroness Blatch

I apologise for not rising; the noble Lord is most generous. I gave an example but he did not accept it. The example was of Crown exemption properties.

Lord McIntosh of Haringey

The Minister gave an example of something she had not explained. It is extremely confusing if the Government are not willing to admit, until they have been questioned for what is now nearly 18 minutes—for which I apologise—that the 1991 Act was drafted in such a way as to leave loopholes when it comes to deciding who is charged and who is not charged the council tax.

It would never have have occurred to a layman that one had to be less precise when carrying out a valuation than when charging tax. However, we have made progress. As the Minister suggests, I shall read with care what she said from first to last—preferably last. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey

moved Amendment No. 23: Page 2, leave out lines 20 and 21. The noble Lord said: It may well be that the Minister considers that she has answered the amendment, although she insisted that she was not trying to do so. I can only repeat that the definition of "domestic property" in the 1991 Act made no reference to rules relating to Crown exemption. The definition of "dwelling" in Clause 3 of the Bill has been modified so that no account shall be taken of rules relating to Crown exemption. For the record, we have to ask whether there is any significance in the change and what is the relevance of the reference to Crown exemption.

Baroness Blatch

I shall try my best to answer. As has just been explained, the reference to Crown exemption is needed to ensure that some property which is clearly non-domestic in character does not become liable for the council tax. An example may help to clarify what is intended. Properties such as government offices are not liable for non-domestic rates because they enjoy Crown exemption. Instead, a contribution in lieu of rates is paid. Since such offices were exempt from rates, they would not be shown on local rating lists. If this amendment were accepted, such properties would become subject to council tax. I am sure that is not what the noble Lord would wish. With that brief and I hope clear explanation, perhaps the noble Lord will feel able to withdraw the amendment.

Lord McIntosh of Haringey

I am grateful for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey

moved Amendment No. 24: Page 2, line 24, leave out from ("dwelling") to end of line and insert: ("in respect of that part of the hereditament which would have been domestic property for the purposes of the Schedule to the Local Government Finance and Valuation Act 1991 if that Act remained in force."). The noble Lord said: I shall continue in the same vein, but I shall not speak at great length. In the 1991 Act there was a definition of domestic property which differentiated between the domestic and non-domestic elements of composite hereditaments. I understood that at the time, or I thought in my innocence that I did. I understood that meant that if there was a composite hereditament the domestic element would constitute domestic property for the purpose of the council tax and the non-domestic element would not be domestic but presumably would be subject to the national non-domestic rate. In Clause 3(3) of the Bill there is no distinction. That subsection states only that a composite hereditament is a dwelling. Does that mean there is now no distinction between the domestic and non-domestic elements of a composite hereditament? Will the dwelling, as defined in Clause 3(3), be subject to corporation tax? I beg to move.

Baroness Blatch

This amendment also proposes returning to the provision of the 1991 Act. In my earlier reply the reason for the proposed change in the treatment of composite properties was explained. I was going to say I did not wish to repeat the arguments, but perhaps I should do so for the benefit of the noble Lord. Clause 3(5) allows the Secretary of State to prescribe that for the purposes of the council tax a single hereditament may be treated as two or more dwellings, or that several hereditaments may be treated as a single dwelling. Some single hereditaments consist of a number of clearly separate and self-contained houses or flats. In those cases we wish to provide that each of the separate units should be valued separately.

As regards composite properties, Clause 3(3) provides a slightly different treatment for composite hereditaments from that contained in the schedule to the 1991 Act. The purpose is to enable the valuation provisions for non-domestic rating and those for the council tax in respect of composite hereditaments to mesh precisely. For non-domestic rating, the valuation officer assesses the rateable value of a composite property according to the extent of non-domestic use of the property. To mirror this we intend providing in regulations that only the value attributable to domestic use is taken into account for council tax purposes. That will ensure there is no double taxation of composite properties.

I am not sure whether that explanation is helpful to the noble Lord. However, the Bill, as drafted, is designed to ensure that composite properties pay their fair share of both the council tax and non-domestic rates but do not face double taxation.

Lord McIntosh of Haringey

I am grateful for that answer. I hope the Minister will forgive me if I did not understand what was intended in regulations which may have been drafted but have not yet been published. I am not a mind reader and therefore cannot tell what is intended in those regulations. The Bill, as drafted, does not remove my anxieties.

The Minister's explanation of what is proposed to be in regulations provided me with a full and satisfactory answer. However, she also attempted to reply to Amendment No. 28, which stands in my name. I do not propose to anticipate that amendment. If that is the only reply the Minister intends to give to Amendment No. 28, I shall certainly not be satisfied with it. However, in the light of the Minister's response to Amendment No. 24, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 24A not moved.]

Lord McIntosh of Haringey

moved Amendment No. 24B: Page 2, line 28, leave out ("living accommodation") and insert ("a dwelling"). The noble Lord said: This amendment is moved out of a sense of complete puzzlement. I am slow but I can gradually be taught to use the word "dwelling" rather than the term "domestic property". But suddenly there has been a change. We are now required to use the term "living accommodation". What is the distinction between living accommodation and a dwelling? What is the distinction between living accommodation, a dwelling and domestic property? Clause 3(4) (a) introduces a definition of property used, wholly for the purposes of living accommodation". Why do we need a third definition? I beg to move.

Baroness Blatch

Amendment No. 24B again seeks to use a definition different from the definition of domestic property in Section 66 of the Local Government Finance Act 1988. All such changes should be rejected on the same arguments I deployed in the debate on Amendment No. 24A. The effect of this amendment as compared with the Bill as drafted would be to say that yards, gardens and outhouses which are separate hereditaments enjoyed with composite hereditaments are not dwellings. Again, those hereditaments would be non-domestic under the 1988 Act and so cannot be a dwelling. There is no need for another provision which says that they are not dwellings. I hope that the noble Lord will feel able to withdraw the amendment.

Baroness Gardner of Parkes

It is important that in due course, but not at this stage of the Bill, we should have clarification regarding garages, for example. In the old days of the rating system there was confusion because if the garage was within the curtilage of one's own home, it was regarded as part of one's home; but if it happened to be five doors away it was rated separately. There will be many complications in the case of small outhouses or of barns, for example; and in due course perhaps we can hear more about that question, but not tonight.

Lord McIntosh of Haringey

Yes, tonight. The noble Baroness, Lady Gardner, is right. She anticipated my Amendment No. 24F. She described an anomaly which existed under the old rating system. I should not anticipate the debate, but the Government propose to replace that by the opposite anomaly. In other words, they propose to include for valuation under the council tax a garage which is attached to the dwelling but not a garage which is not attached to the dwelling. There are anomalies whichever way one looks. So much for the noble Lord, Lord Renfrew, who thinks that these matters are simple.

I am not satisfied with that answer but it is not a matter on which I shall divide the Committee. The answer I received is more like the answers which the Minister gave in response to my earlier amendments. It does not seek to explain in layman's terms why different words should be used for what is essentially the same thing.

I shall read in Hansard what the Minister said. If I still do not understand it, I shall seek further explanation or come back to the matter at a later stage. In the meantime, I beg leave to withdraw the amendment.

9.15 p.m.

Lord McIntosh of Haringey

moved Amendment No. 24C: Page 2, line 30, leave out from ("which") to ("is") in line 31. The noble Lord said: I had not intended to move Amendments Nos. 24C and 24D, but in view of the intervention of the noble Baroness, Lady Gardner, perhaps I should do so. There are still anomalies in the definition of a garage. For some reason Clause 3(4) (b) defines a garage as being less than 25 square metres. I do not understand the significance of that figure. I am told that there are people—although I do not know any—who have double or treble garages which may be considerably larger.

Amendment No. 24D relates to the definition of a garage in terms of accommodation for a private motor vehicle. There are all sorts of other vehicles in addition to motor vehicles. These are perhaps trivial matters but the noble Baroness, Lady Gardner, referred to them and it is as well that she and I should have an explanation.

The Earl of Balfour

I wonder whether one of the reasons for this item being included in the Bill is that garages come within strict building regulations under which requirements relating to the extent to which a garage should have additional ventilation and fire-proofing apply when the garage is larger than 25 square metres because of the risk of people committing suicide in their garages by turning on the ignition and gassing themselves. Under Scottish regulations there are strict rules governing garages.

I am glad that in future garages are not to be considered separately for council tax. I hope that they will be included as part of the building in order to avoid the old problem of small bills coming in for all kinds of different items.

Lord Strathclyde

Amendments Nos. 24C and 24D relate entirely to garages. Amendment No. 24C would have the effect of bringing into council tax small lock-up garages with an area of less than 25 square metres and not used for the accommodation of a private motor vehicle. That cannot be right as such garages have no living accommodation. They should not be subject to a tax based partly on property values and partly on numbers of residents. The effect of the Bill as drafted is to ensure that they are subject to neither the council tax nor non-domestic rating.

Amendment No. 24D seeks to exclude from council tax garages larger than 25 square metres used to accommodate private vehicles which are not motor vehicles. The amendment would have no effect since such garages are not domestic property and cannot be dwellings. They would be subject to non-domestic rating. That is a fairly full explanation but if the noble Lord is not satisfied I shall be delighted to explain further.

Lord McIntosh of Haringey

The Minister threatens me with a two-page or even three-page version. I move these amendments only to satisfy fully the noble Baroness, Lady Gardner.

Baroness Gardner of Parkes

Perhaps I could briefly intervene as I seem to have started discussion on this issue. It is important that the Government should look at what these amendments will do, even in terms of non-domestic rates. It is very common in London in developments and perhaps in some other places to put all the garages together. At the moment where people still pay water rates on their house, usually they do not pay water rates on the garage. They pay a drainage rate which is very much less. A garage is not therefore rated in the same way as full non-domestic or business premises.

I hope that some thought will be given to that point so that people will not be greatly disadvantaged by the difference between having their garage in a block of garages and having it beside or attached to their house.

Lord Strathclyde

Briefly in reply to my noble friend, garages which are not part of a large domestic property will in no circumstances be the subject of the council tax. They are not at present subject to the standard community charge. Garages that have an area greater than 25 square metres and are not wholly or mainly for the accommodation of a private motor vehicle will be subject to the non-domestic rate.

I hope that my comments clarify the point about garages which are far from, say, a block of flats.

Lord McIntosh of Haringey

That certainly makes the matter much clearer. It still strikes me as impossible to provide a satisfactory mesh between the non-domestic rate and the council tax in these circumstances. I understand what the Government say and shall consider it. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 24D and 24E not moved.]

Lord McIntosh of Haringey

moved Amendment No. 24F: Page 2, line 35, leave out from ("dwelling") to end of line 36. The noble Lord said: I move this amendment to make sure that I have properly understood the situation. My understanding is that garages are included if they are part of the dwelling but not included if they are not part of the dwelling. Those who are forced to have garages away from their homes and who use them for exactly the same purposes as those who have garages within the boundaries of their homes will feel that there is something unfair about that situation. I beg to move.

Baroness Blatch

This amendment is rather different from the other amendments to Clause 3(4) which we have just debated. The purpose of the amendment is to take out of consideration for the valuation of dwellings, those yards, gardens, outhouses, garages and storage premises which fall within the boundaries of a single hereditament. It is a nonsense to suggest that a house with an integral garage should be valued as if that garage were not there. It is quite right that lock-up garages, storage premises and other such hereditaments should not be subject to the council tax in their own right. We have provided for that. But I cannot accept that such property which is part of a single hereditament which includes living accommodation should be excluded from the dwelling.

Again, I believe that the amendment would make valuation of dwellings very difficult. I hope that the noble Lord will feel able to withdraw it.

Lord McIntosh of Haringey

I understand the answer. It does not solve the problem which the noble Baroness, Lady Gardner, raised about the differential rating of garages according to whether or not they are next to the properties. However, this is not a matter of sufficient moment for me to pursue now. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Baroness Lockwood)

I must point out that if Amendment No. 25 is agreed to I cannot call Amendments Nos. 26 and 27 under the pre-emption rule.

[Amendment No. 25 not moved.]

Lord McIntosh of Haringey

moved Amendment No. 26: Page 2, line 37, after ("may") insert ("for the purposes specified in subsection (5A) below"). The noble Lord said: Amendment No. 26 is a matter of a certain amount of substance beyond the amendments we have been discussing so far. I should like to speak also to Amendment No. 27. There was a certain amount of debate in another place but the amendments proposed there, although they happened to have the same numbers as these amendments, were very different. At that time it was proposed that subsection (5)—the subsection which provides that the Secretary of State can say that one dwelling should be treated as more than one or that more than one dwelling should be treated as one dwelling—should be taken out and replaced by a more restrictive provision.

We are not doing that now. We are now attempting to modify the provisions in subsection (5) by saying that they shall have effect for the purpose of prescribing the treatment of dwellings in multiple occupation and dwellings which have been converted to provide separate accommodation—commonly known as granny flats—for members of the same family.

In the other place there was no adequate answer from the Government about what other conditions could apply to make it necessary for the Secretary of State to implement the provisions of subsection (5) in the form of an order. What, other than houses in multi-occupation or granny flats, would justify the making of such an order?

Obviously, there are plenty of examples of types of dwelling which might appear on the surface to be more than one dwelling and should be amalgamated for the purpose of the council tax. That is not a problem. But what type of dwelling other than the ones in our new subsection (5A) should be treated as two or more dwellings when they would otherwise be considered as a single dwelling? The amendment is moved for the purpose of having an answer to that question. I beg to move.

The Earl of Balfour

As I understand the position, the idea behind Amendments Nos. 26 and 27 in providing for dwellings in multi-occupation is to some extent covered by Clause 8 of the Bill, which deals with liability in prescribed cases where there is accommodation for more than one person, and will be subject to regulations produced by the Secretary of State.

Lord Skelmersdale

That is all very well. But the amendment provides a peg for my noble friend to explain exactly what is a single hereditament, a dual hereditament, or an even greater hereditament, and also to indicate what is in the Secretary of State's mind at this moment.

For example, many people not miles away from your Lordships' House are paying guests at various houses in London. In order to satisfy the contract for paying guests, they have the opportunity to use a room and, one would hope, a bathroom too in this day and age, and also perhaps have the use of a kitchen and a sitting room. There are other people, again not miles away from your Lordships' House, who have a discrete part of a house which is defined from the point of view that it is their sole occupation, albeit on a part-time basis. But it is also very much part of a single house under the old rating system. It would be useful to know what the Secretary of State intends to do about those two cases.

Baroness Blatch

As I understand it, the purpose of these amendments is to limit the effect of Clause 3(5) so that it can apply only to dwellings in multiple occupation and to dwellings which have been divided up to accommodate members of the same family.

There is no need to limit the provision in the way suggested by the amendments. There will be an opportunity to consider the way in which the powers provided by Clause 3(5) have been exercised when the relevant order is laid, and we shall all have an opportunity to see the terms of that order. I hope Members of the Committee will agree that that is a sufficient safeguard.

I do not for one minute pretend that the order will confine itself to the circumstances described in the amendment. However, I shall spell out to the Committee what we intend to achieve by the exercise of the power conferred by Clause 3(5). First, we wish to ensure that the residents of every separate and self-contained house or flat are subject to the council tax in their own right. We believe that that is only fair.

It would not be fair if, due to an accident of history, three houses which happen to comprise a single hereditament under the old rating system were subject to a single shared council tax bill while an identical house nearby which was a hereditament were subject to a different council tax bill. We wish to see all properties of a similar value in an area facing a similar council tax bill. That will help to make the council tax fair and, we believe, understandable.

However, conversely, there are some cases, such as houses in multiple occupation, where the individual residents should not have to face separate bills even though the definition of a hereditament under the General Rate Act 1967 might suggest that they should. The 1967 Act made provision in Section 24 for hereditaments to be combined under certain circumstances and it is our intention to use Clause 3(5) to continue such treatment.

A number of specific and technical questions were raised during the debate. It will be part of my job to spend some time between now and Report to ensure that due consideration is given to them. We believe that the amendment would restrict the Secretary of State's ability to achieve a fair and comprehensible treatment of certain kinds of dwellings. For that reason we ask for some flexibility to be retained.

The noble Lord, Lord McIntosh, asked for examples of dwellings to be split. A public school may contain masters' houses all of which would have been part of a single hereditament for rates. That is because they have the same rateable occupier; that is the school. Another example might be a hospital with houses in its grounds or flats for doctors. During discussions this morning my noble friend Lord Howe told me that he received a rate bill for a group of buildings within the curtilage of his home which, for the purposes of the council tax, should be dealt with separately.

I know that the noble Lord, Lord McIntosh, will be familiar with the term "hereditament" while other Members of the Committee will not. It is a unit of property which would have been liable to a rate under the General Rate Act 1967. Essentially it means a single property in one occupation. I have given a number of examples where we believe it appropriate to consider that there is more than one unit of property which is eligible for the council tax.

9.30 p.m.

Lord McIntosh of Haringey

I am grateful to the Minister for attempting to give examples, although she gave only one, of a case where a building should be treated as being two or more dwellings. As we reach the end of this series of amendments it is becoming increasingly clear that all the difficulties of definition have been brought upon the Government by themselves. At least the much-reviled rating system had the advantage of having a reasonably clear definition of a hereditament.

Hereditaments covered the whole country. They could he divided into domestic rate and non-domestic rate. If they were mixed, the non-domestic rate could be charged on one part and the domestic rate on another part. If they were not mixed, the valuation system was precise enough to take into account all the special cases which have now been forced onto the face of the Bill. It was the responsibility of the owner or occupier of the hereditament as a whole to apportion the rates between the occupiers of the different parts which gave rise to the rating assessment. That was a logical, satisfactory, comprehensible and comprehensive way of levying a property tax.

We now have a bastard tax. It is a tax in between a property tax and a poll tax. The Government admit that it is 50 per cent. of one and 50 per cent. of the other. The property element of it is so crude that it is not capable of taking into account all the complexities of the parts within what would otherwise have been a hereditament but which must now be called a dwelling.

All those difficulties could be avoided if the Government were to abandon their obsession with mixing up a property tax and a poll tax and if they were to abandon their obsession with a crude method of valuation which is incapable of taking into account all the precise elements which give rise to the valuation.

Baroness Blatch

I suggest to the noble Lord that what is being suggested is less crude. Without our proposal, without any proper definition of a dwelling, the noble Lord would have every reason to consider that the tax was crude.

Lord McIntosh of Haringey

I readily concede that. The basic formula for valuation is crude. Clause 3 and various other parts of the Bill must be introduced because the crudity is too obvious to be avoided. Therefore, Clause 3 seeks to temper the crudity of the valuation system by an extremely complex method of assigning what would otherwise have been hereditaments into different dwellings or they must be deemed not to be dwellings at all. The Minister has made an extremely good case for me.

As I said, we are almost at the end of this group of amendments. When we have dealt with Amendment No. 28, I shall have a few remarks to make about the way in which we should proceed with the matter. However, that is clearly not in the form of Amendment No. 26 and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 27 not moved.]

Lord McIntosh of Haringey

moved Amendment No. 28: Page 2, line 43, leave out subsection (6). The noble Lord said: With Amendment No. 28 we come to the crux of the matter. After all the attempts to temper the crudity of the definition of a dwelling, what does the Secretary of State do in subsection (6)? The Bill states that: The Secretary of State may by order amend, or substitute another definition for, any definition of 'dwelling' which is for the time being effective for the purposes of this Part". On the kindest possible interpretation that means that the Government have not the faintest idea as to what is a dwelling and they will make it up as they go along.

On a much less kind interpretation—and it is the one to which I lean—the Government really want to have the ability to make up the definition of a dwelling as they go along because they believe that there is a substantial political and fiscal point in having the power by order to alter the definition of a dwelling.

The point is that the definition of "dwelling" is set out on the face of the Bill. Subsection (6) proposes that the Secretary of State may by order alter the provisions on the face of the Bill. We have heard detailed explanations from the Minister about why it is important on the face of the Bill to define accurately the word "dwelling". We have had detailed explanations of why the definition of a domestic property in the 1991 Act was not satisfactory. Therefore, we must assume that the increased precision provided by Clause 3 is satisfactory. That is on the face of the Bill. That is supposed to be the satisfactory drafting of the Bill.

I believe that it would be advisable for Ministers to listen to this point: it is now being said that under subsection (6) the Secretary of State will have power to alter what is on the face of the Bill. That is a Henry VIII provision. We are talking about the ability of the Secretary of State by order to alter the provisions made in the Bill.

We have been told at some length—I have been insisting that we be told at some length—that these definitions of a dwelling are better than the definitions used in the 1991 Act and that they must be precise for the purpose of levying the council tax. There cannot be any doubt that the definition of a dwelling is critical to the success or otherwise of the operation of the council tax system. How can there be any justification for a provision which says that a definition, which was arrived at with care, concern and detail to drafting, can be altered at whim by the Secretary of State?

It is no good the Minister saying that it is provided by order, and that the House can consider an order. It would not satisfy the noble and learned Lord, Lord Simon of Glaisdale, if he were here and it does not satisfy me. We deserve from the Minister a much more detailed and convincing explanation of the power now being conferred on the Secretary of State to alter primary legislation by order. I beg to move.

Baroness Blatch

The noble Lord has made much of the amendment. He has used phrases like, "This is the crux of the matter", and "It is highly critical." I can tell the Committee that the Government have no plans to amend the definition now on the face of the Bill. But I would not be so brave as to claim that this is the last word; that it is a perfect definition which will suffice for all time. We cannot pretend to know what the future will hold. Nor can we know if some unthought-of anomalies will arise whereby some properties escape local taxation altogether.

The same power is contained in the 1988 Act in relation to the definition of domestic property for the purposes of non-domestic rating. The power is therefore required here in order to ensure consistency between the council tax and non-domestic rating. If we do not have the power there is a risk that some property will be subject to double taxation. It is important that the Secretary of State retains the discretion to deal with uncertain future events. We believe that that is a sensible and prudent way forward. I therefore call on the noble Lord to withdraw the amendment.

Earl Russell

I should like to ask the Minister to take this matter a little more seriously. I thank the noble Lord, Lord McIntosh of Haringey, for bringing it to the attention of the Committee. He is correct; it is a Henry VIII clause. It is a provision to alter, by order, what is contained on the face of the Bill.

For my part I am perfectly prepared to accept the noble Lord's first hypothetical explanation; that is, that the Government are not certain what definition they will use. Although I accept what the Minister says about there being no plans to alter the definition, that fact weakens the case for taking the power.

It is all very well to say that the Secretary of State can be given the power to do whatever he likes. That is what the argument of the noble Baroness amounted to. However, if we go too far down that road, I do not see what we are doing here at all. We could simply allow the Secretary of State discretion and leave him to get on with it. That is what I am increasingly coming to think of in terms of the category of contingency legislation. Since the range of contingencies which may arise is literally infinite, the Secretary of State cannot provide for all his possible anxieties except by taking to himself the power to deal with absolutely any possible contingency that may arise.

The problem therefore with the Minister's argument is that it does too much. It authorises the Secretary of State to take a far wider range of powers than even the Secretary of State is claiming. The first point about the Henry VIII clause is that we need to be shown some specific reason why the powers are needed to achieve a specific objective. In this case we have been told that there is no particular objective. I entirely accept that. However, I cannot see that there is any point in taking powers at random. That is what it amounts to. I do not believe that that situation is good enough.

I feel some misgivings too about a general principle which allows the Secretary of State a power to alter legal terms. After all, legal terms have a considerable history and a considerable body of precedent behind them. Therefore if those terms can be changed by the Secretary of State by order then the legal consequences—I speak as a layman; I do not know how far those consequences extend—could be far-reaching. I do not understand how the noble Baroness can make out an argument for taking those powers just in case there is some hypothetical reason why she may need them in future.

9.45 p.m.

Baroness Blatch

Perhaps I may respond to the noble Earl. I take personal exception to his allegation that I did not take the amendment seriously. I have taken every amendment seriously that has come before the Committee; I shall continue to do so while the Bill is being discussed in this Chamber. It is an important Bill. The noble Earl has every right within this Chamber to challenge the Bill because that is the business and stuff of what we are about in this place.

The noble Earl is right always to put pressure on a government for excessive use of Henry VIII clauses. I do not argue with that. However, I believe that the Government sensibly take those powers for unforeseen circumstances. The legislative workload of this Chamber would be considerably increased if we had to come before this Chamber for what very often are minor changes to primary legislation. I make no apology for that.

However, the final point I pray in aid of the defence of rejecting the amendment is this. In practice, the Government's record of taking those powers which may cover unforeseen circumstances which may deal with minor points but nevertheless prevent us having to clog up the system by coming back for primary legislation, is very good. Over the past years there is no evidence of this Government abusing those powers. If there were any evidence that the Government had abused their powers the noble Earl would have every reason to be concerned about our taking a power for which there is considerable precedent. I have cited the 1988 Act as an example of where the power has been taken but not abused.

Earl Russell

I must make my apologies to the noble Baroness if I inadvertently gave offence. I should perhaps re-phrase the wording about taking the amendment seriously. I did not mean to insinuate that the noble Baroness was not responding to it. Will she accept a form of words which states that I wished that she had recognised more the gravity of the matter of the amendment?

I comment on only one other point. The noble Baroness states that this Government have not been guilty of any abuse of power. If that is so, it is the first government for which that claim can be made since Adam.

Lord McIntosh of Haringey

I cannot resist saying that the Minister could not have made either of the replies that she has just given in the presence of the noble and learned Lord, Lord Simon of Glaisdale. I was criticised by the noble and learned Lord for my over-simplified view of Henry VIII clauses. I had listened to what he said about the Donoughmore Committee and about the history of Henry VIII clauses from the time of Henry VIII, and no doubt before. Unwisely I expressed the view that they were always undesirable and always to be opposed.

The noble and learned Lord corrected me. He said that the distinction had to be made between those opportunities provided in legislation for a Secretary of State to overturn primary legislation by order where such a power was absolutely essential and where it was merely convenient. I have heard nothing from the Minister that indicates to me that that power is anything other than convenient to government. There are reasons, both looking forward and looking back, for that statement. Looking back, the reason is that the 1988 Bill was so badly drafted that the Government have had to come back on a couple of occasions to improve the drafting. They will probably have to come back again when they realise the gravity of the issue in regard to computer records in the enforcement of poll tax orders. The argument which is based on past failures does not lead very far in conviction that the Government are likely to get it right in the future.

The argument for being anxious about the future is stronger than that. All the Minister has been able to say to us is that she cannot predict that definitions will not need to be changed in the future and that it would be more convenient—she did not use the word "convenient"; I do not want to put words into her mouth—for that to be done by the Secretary of State rather than by primary legislation.

We spent—and I plead guilty to causing this—more than an hour on the definition of "dwelling". We have done so because the Government have insisted on a more precise definition of dwelling than that which was contained in the 1991 paving Act. We have done so on the assurance of Government that it was necessary to have a precise definition of "dwelling" in order for the council tax to be implemented. We have done so on the understanding, which I think all Members of the Committee have, that the definition of dwelling is a critical part of the Government's ability to define adequately who is eligible to be charged the council tax and who is not. All that we are now being told is that the Secretary of State wants the power, in some circumstances which are yet to be defined, for his own convenience to change that definition. If ever there were an example not only of a Henry VIII clause but of a Henry VIII clause which would come under the strictures of the noble and learned Lord, Lord Simon of Glaisdale, and other constitutional lawyers, this is it. This is a matter on which I am obliged to take the opinion of the Committee.

9.52 p.m.

On Question, Whether the said amendment (No. 28) shall be agreed to?

Their Lordships divided: Contents, 21; Not-Contents, 58.

Division No. 3
CONTENTS
Boston of Faversham, L.	Judd, L.
Carmichael of Kelvingrove, L.	Kennet, L.
Dean of Beswick, L.	Lockwood, B.
Desai, L.	McIntosh of Haringey, L.
Graham of Edmonton, L.	Russell, E. [Teller.]
[Teller.]	Seear, B.
Grey, E.	Shepherd, L.
Hacking, L.	Stoddart of Swindon, L.
Hamwee, B.	Thomson of Monifieth, L.
Hollis of Heigham, B.	Tordoff, L.
Jay, L.	White, B.

NOT-CONTENTS
Ampthill, L.	Jenkin of Roding, L.
Arran, E.	Johnston of Rockport, L.
Astor, V.	Kimball, L.
Balfour, E.	Kinloss, Ly.
Bauer, L.	Lauderdale, E.
Birdwood, L.	Long, V.
Blatch, B.	Lucas of Chilworth, L.
Brabazon of Tara, L.	Mackay of Ardbrecknish, L.
Bridgeman, V.	Mackay of Clashfern, L.
Brigstocke, B.	Mancroft, L.
Brougham and Vaux, L.	Monk Bretton, L.
Butterworth, L.	Pearson of Rannoch, L.
Byron, L.	Pym, L.
Carnegy of Lour, B.	Reay, L.
Cavendish of Furness, L.	Renfrew of Kaimsthorn, L.
Craigmyle, L.	Renton, L.
Denton of Wakefield, B.	Seccombe, B.
Eccles of Moulton, B.	Selborne, E.
Elibank, L.	Skelmersdale, L.
Ellenborough, L.	Stockton, E.
Elton, L.	Stodart of Leaston, L.
Ferrers, E.	Strange, B.
Flather, B.	Strathclyde, L.
Fraser of Carmyllie, L.	Strathmore and Kinghorne, E.
Gardner of Parkes, B.	[Teller.]
Glenarthur, L.	Thomas of Gwydir, L.
Harvington, L.	Trumpington, B.
Henley, L.	Ullswater, V.
Hesketh, L. [Teller.]	Waddington, L.
Huntly, M.

Resolved in the negative, and amendment disagreed to accordingly.

10 p.m.

Clause 3 agreed to.

Clause 4 [Dwellings chargeable to council tax]:

Lord McIntosh of Haringey

moved Amendment No. 29: Page 3, line 1, after ("payable") insert ("in accordance with section 5 below"). The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 30, 31, 32, 35 and 36. We are still dealing with the thorny question of the definition of the word "dwelling". But we are now dealing with a clause which seeks to define the word more precisely by bringing in the definition of an "exempt dwelling". Of course none of that has any meaning because, as the Committee has just confirmed, under Clause 3(6) the Secretary of State can change it all if he wishes to do so. Therefore, we are wasting our time debating any definition of the word "dwelling".

However, just for the record, let us say that the amendments proposed appear to us to go to the other extreme from the extraordinary provision made for second homes in the poll tax legislation. Members of the Committee will recall that at the time of that legislation fears were expressed—notably by those with second homes rather than by those on this side of the Chamber—that the opportunity for a council to charge extra poll tax on a second home, which was provided for in the Bill, would in fact be taken. But the Government pooh-poohed that idea. They said, "Oh no, district councils will not do anything so cruel and unreasonable". In point of fact, by 1991–92 (the present year) I believe that there is no single district council in the country which does not charge double poll tax on second homes on the justification that, on average, there are two people in every second home.

I do not wish to stand up as the defender of those with second homes. But I believe that the provision here is much too open and that it enables the Secretary of State rather than the billing authorities to have far too much freedom about how second homes should be treated. Therefore, we propose the new definition of a "special dwelling". We also propose that the council tax for a "special dwelling" defined in that way shall not be more than a single council tax under the legislation. It is a very simple series of amendments and one which, although it may not appeal to all Labour supporters, will appeal to those who have a sense of justice which was not satisfied by the provisions of the 1988 Act. I beg to move.

Lord Renfrew of Kaimsthorn

When I first read Amendment No. 30, I had some difficulty in understanding precisely what it meant. The difficulty is that it introduces the word "special" without giving any clear definition of what that might mean. It removes the word "exempt"—I believe that I know what that word means in the general sense—and inserts the word "special" in its place. Without more of a guidance or indicator to define what "special" might mean, the amendment presents one with a difficulty.

However, as one reads the clause with more care, one finds that "special" could be defined by referring to line 6 of subsection (2) which refers to, any dwelling of a class prescribed by an order made by the Secretary of State". The noble Lord has made great play over Henry VIII clauses. I do not claim that this is a Henry VIII clause, but it seems to me that it allows the Secretary of State to give any conceivable meaning to the term "special" that he might wish. I never imagined—I may be lacking in imagination —that the amendment referred to second homes.

The noble Lord has just used the term "second home", and so now I may imagine—having been given that helping hand—that "special" has something to do with second homes. I could well see the point that the reduction for some categories, which is on offer, might not be offered for second homes. I could see that the Opposition might propose such an amendment. The noble Lord makes great play over the issue of clarity. As I have said earlier, I see the Bill, in the main, as a clear one. I am not sure that the amendment adds to its clarity. Where in the amendment do we have the faintest intimation that "special" relates to second homes?

Lord Strathclyde

I tend to agree with my noble friend that these are strange amendments. They range from the unnecessary to the positively undesirable. Amendment No. 29 seems to seek an assurance that the amounts of council tax payable in respect of a chargeable dwelling shall be determined according to Clause 5; but that will already be the case. The amendment achieves precisely nothing. I therefore hope that the noble Lord will quickly withdraw it.

Amendments Nos. 30 to 32 seek to introduce the new concept of "special dwellings" to replace "exempt dwellings". The principle of exemption is a clear one. There are certain properties to which the council tax should not apply because of their special circumstances. Those properties will be designated in regulations. We propose to exempt a number of categories, including dwellings left unoccupied and unfurnished for up to six months, and dwellings where all the residents are students.

Properties which are not exempt will give rise to a bill which depends principally upon the valuation band in which they fall. That is the idea of a property-based tax. The amendments attempt to do away with that idea in some cases to be known as "special dwellings". I can see no justification for the proposal that some dwellings should be taxed in a way that takes no account of their value.

The idea of a "special" dwelling also undermines the banding system. Although the tax payable on a special dwelling is to be some amount between zero and the amount for a band H property, there is nothing in the amendment to say that the amount should be that payable for a property in a particular band. So with this amendment we should have a two-faced system, in which the majority of dwellings were taxed according to the normal tax bands, but the rest were taxed on some separate, arbitrary basis.

We shall come on to the advantages of a banded system later in our proceedings. But there are two key benefits. First, the tax is simple to administer, as my noble friend Lord Renfrew said. Secondly, the tax payable on the most valuable dwelling bears a fixed relationship to the tax on the most modest. Clause 5 proposes that the tax on the former dwelling should be limited to three times the tax on the latter. That is an important provision, and a great advance on the old rating system.

I turn now to Amendments Nos. 35 and 36. Clause 4 presently allows the Secretary of State to prescribe categories of exempt dwellings by reference to the physical characteristics of the dwellings, the fact that they are unoccupied, or the purpose for which they are occupied or the description of their occupants. Subsection (3) ensures that the power is not limited to those factors; it allows the Secretary of State to prescribe categories of exempt dwellings by reference to such factors as he sees fit.

Amendments Nos. 35 and 36 would remove subsection (3), and hence restrict the Secretary of State's power of prescription to the factors which I have just enumerated, which appear in subsection (4). Subsection (4) lists some of the more important factors to which the Secretary of State might wish to refer in exempting dwellings, but it may not be sufficient to cover all eventualities. In practice, the only effect of the amendment would be to impose an unnecessary restriction on the Secretary of State's power to exempt categories of dwelling. That restriction might rebound on noble Lords when they plead that one or other special case should be exempted.

I hope that in the light of what I have said, and the remarks of my noble friend Lord Renfrew, the noble Lord, Lord McIntosh, will reconsider.

Lord Jenkin of Roding

Like my noble friend Lord Renfrew, I never saw this clause as having anything to do with second homes. I marvel at the ingenuity of the noble Lord, Lord McIntosh, who seemed to be able to read a reference to second homes into it. As he has done so, perhaps I should explain that I still have my constituency home and also, because the noble Lord, Lord McIntosh, and his noble friends go on so late into the night, I have a flat in Westminster. So I have a second home. I thought that the arrangements under the poll tax were remarkably fair for second homes. I did not quarrel with them when the Bill was passed.

However, having said that, I must ask my noble friend to be a little more specific as to what his right honourable friend has in mind for the extra factors that he may wish to bring in. I hope that I am not giving aid and comfort to the enemy, but when I read this clause I was reminded of the nice little rhyme which Sir Robert Megarry produced in his Miscellany-at-Law when he was criticising some of the modern legislation: If anything shall seem, then the Minister may deem; A certificate of demption provides complete exemption". I do not know whether there is yet a draft order but the matter is left wide open. We must have some idea of the other factors, besides the last subsection, that the Minister has in mind. I can understand her wishing to retain flexibility, but has a draft order yet been published? I am afraid that I have not had time to browse through the drafts which have so far been placed in the Library, but there must be some limit on the degree of discretion which the House can confer on Ministers in such legislation.

Lord McIntosh of Haringey

The noble Lord, Lord Jenkin, should have been present on a number of earlier occasions. If he had been, perhaps he would not have voted the way he did. He talks of giving aid and comfort to the enemy but I remind him that we are his opponents. He is the Government's enemy in this case because he quite rightly says that Clause 4 gives far too great a power to the Secretary of State.

Since he was not in his seat earlier, I say to him that Clause 4 is quite unnecessary because Clause 3(6) gives the Secretary of State power to amend the definition of "dwelling" in any way he wishes. Therefore, all the complexities of Clause 4 do not make matters worse.

The noble Lord, Lord Renfrew, has read with care some of the amendments on which I spoke, but clearly not Amendment No. 31. Accepting the unjustifiable freedom which Clause 4 gives to the Secretary of State, in Amendment No. 31 we are trying to make some restriction on the power the Secretary of State may have to authorise the charging of high rates of council tax on what we call special dwellings rather than exempt dwellings. The words "exempt dwelling" are weasel words because the Minister described the Secretary of State's intention. His description is all we have to go on and some of the cases about which he spoke may not turn out to be exempt although they will be described as exempt under the conditions of Clause 4.

We have debated most of the issues in Clause 4 during our consideration of the last amendment on Clause 3. It would not be proper for me to detain the Committee any longer on them. I like being accused of ingenuity, but I do not think that my ingenuity goes so far as to claim that every single word of this group of amendments is immaculate or self-explanatory. On that basis, I beg leave to withdraw Amendment No. 29.

Amendment, by leave, withdrawn.

[Amendments Nos. 30 to 32 not moved.]

10.15 p.m.

Baroness Hollis of Heigham

moved Amendment No. 33: Page 3, line 6, after second ("dwelling"), insert ("set out in subsection (2A) below and any other dwelling"). The noble Baroness said: In moving Amendment No. 33 I wish to speak also to Amendments Nos. 33A, 33B and 34. Both pairs of amendments appeared to have the support of the Minister in another place. We hope that we may have the support of the Minister in this Committee and perhaps be able to amend the face of the Bill.

The purpose of Amendments Nos. 33 and 34 is fairly straightforward. Under the poll tax, people in hospital, residential care or nursing care who are detained under certain circumstances—for example imprisonment—were exempt from the personal poll tax. Regulations also ensured they did not have to pay the standard poll tax on their unoccupied homes for the first 12 months. Schedule 1 to this Bill does not exempt these groups from the council tax. It simply provides them with up to 50 per cent. discount under Clause 11. We believe, however, that Ministers implied in the House of Commons that it was the intention of the Secretary of State to produce regulations that will exempt unoccupied properties owned by these groups from liability for the council tax. These amendments would ensure that those groups are exempt from the council tax on their unoccupied homes for at least 12 months and that this principle is not left simply to regulations.

The amendment would also address the position of certain carers—we shall return to that group later—who have given up their own homes for up to a year in order to move in with someone else to provide care or support. Without those safeguards there would be a considerable disincentive to provide care in the community. For example, an elderly person needing fairly long-term residential care would lose any possibility of returning to the community if he decided to give up his home because he was worried about running up a council tax bill. Equally, owner-occupiers who are considering becoming community service volunteers and living with a disabled person might be deterred from that course if they also faced a council tax bill on their unoccupied homes. There may be little to divide us on the issue. We would welcome assurances from the Minister to that effect.

Amendments Nos. 33A and 33B address the situation of students. The purpose of the two amendments is to strengthen the commitment to exempt certain student dwellings by putting that provision on the face of the Bill. On numerous occasions in another place the Government said that student hostels and halls of residence would be exempt from liability for council tax. That is understood by us to mean that all student residences that are owned or leased by an educational institution, plus all other dwellings where all the adult residents are full-time students, are exempt from liability. I see nods around the Committee and therefore I believe I am correct. The amendments seek to ensure that that commitment is put on the face of the Bill.

We would be happy to receive that assurance and even happier if the Minister could accept the amendments. We have certain questions we hope the Minister will be able to answer. Matters still remain unclear even after consultation. What is the position of the resident and the non-resident landlord of a property with student occupants? On 13th January, in a Written Answer to a parliamentary Question concerning liability for council tax of landlords of houses—not particularly with student occupants—in multiple occupation, the Minister in another place, Mr. Key, stated that landlords of such properties would be liable.

What happens in a situation where some of the residents are students, where more than two of the residents are not students and where the landlord has the liability for the tax? What assurances would students have that this would not be passed on to all residents—students included—in houses in multiple occupation in the form of a higher rent charge? That is a matter of concern. When the poll tax replaced the rates and students who were paying rates with their rents then found themselves not liable under the terms of the standard charge, nonetheless their rents were not rebated and landlords continued to cream off an existing level of rent. I hope that the Minister will be able to comment.

I have a further point which is related to the remarks I have just made. What is the situation where a landlord lets to students in the course of the academic year and to non-students during the summer vacation? What happens as regards liability for the tax? I hope the Government can respond to that point. If such dwellings are to be totally exempt from liability, will there be a mechanism for local authorities to receive compensation for lost income, perhaps through the revenue support grant as can happen in the case of discounts? That is obviously an important issue in university towns where a substantial number of properties may be entirely occupied by students and where those dwellings may be exempt from liability. I am trying to do some speedy calculations. I believe that in my own local authority a council tax income of between £100,000 and £200,000 could be lost through such a provision. Other university towns would like to know what compensation they might receive if such properties were exempt from the council tax. I beg to move.

Lord Renfrew of Kaimsthorn

There are two points that I should like to make in relation to the amendments. The first relates to Amendment No. 33A. I am very much in favour of that amendment and Amendment No. 33B as probing amendments. At Second Reading I asked what the position would be in relation to students and was told that broadly they would be exempt. Statements have been made in the other place to that effect. Therefore, I look forward to some encouraging remarks from my noble friend the Minister.

The noble Baroness, Lady Hollis, is right to put down the amendment because it must be confessed that within the Bill there is not the faintest inkling of those matters. All that we have heard about them are rumours and rumours of rumours from the other place. Therefore it would be very helpful to have further information. I leave it to my noble friend the Minister to decide when it would be appropriate to make a full statement about students. I hope that that will be a full and coherent statement so that we may understand the position and ask the slightly difficult questions about the fine print which the noble Baroness rightly asked.

I hope that the noble Baroness will not think me unhelpful if I reflect on Amendment No. 34. In the context of the simplification which the noble Lord, Lord McIntosh, offered that amendment is extraordinary. Paragraph (ii) of the amendment reads: It is owned by a person to whom paragraphs 1, 6, 7 or 9 of Schedule 9 to this Act applies". Paragraph 6 of Schedule 9 refers to polygamous marriages. By reconstructing the thought processes of noble Lords opposite I am in a position to assure the Committee that Schedule 1 is intended. By reading "Schedule 1" for "Schedule 9" one can avoid the polygamous marriages. Paragraph 1 of Schedule 1 refers to persons in detention, paragraph 6 to people in hospital, paragraph 7 to patients in homes in England and Wales and paragraph 9 to care workers. It is not clear to me why paragraphs 2, 3 and 8 are omitted from the list. Paragraph 2 relates to persons with mental difficulties, paragraph 3 to persons receiving child benefit and paragraph 8 to patients in homes in Scotland. It is not clear why the helpful attentions of the noble Baroness opposite are focused upon persons in homes in England and Wales but not in Scotland.

There is some very odd drafting, quite apart from the typographical errors. Perhaps I may ask the noble Baroness a question in relation to persons in detention. A person, who may be noble, honourable or neither of those, who is in detention may own 10 properties. He is a profiteer. That is perfectly possible. Every one of those properties would be exempt under the amendment. I am not being frivolous. If I am correct—and that is how the amendment reads—this is another case of drafting which is simply not good enough. Noble Lords opposite have said that this is a complicated Bill and questioned the need for all the small print. They should look at their own small print. I look for an explanation from the noble Baroness on those rather tortuous matters.

Earl Russell

I should like to speak in support of Amendments Nos. 33A and 33B. While we are on the subject, I should like to ask for clarification of the definition of student used in the Bill in paragraph 4(2) of Schedule 1 which reads: In this paragraph 'apprentice', 'student', 'student nurse' and 'youth training trainee' have the meanings for the time being assigned to them … by the Secretary of State". That is certainly flexible. It is flexible to the point of contortionism. On this occasion all I intend to do is to ask for further guidance as to how the Government intend to apply that definition. I should be grateful in particular for advice on how the Government intend to handle the status of the part-time student.

Some other questions arise which have not yet been addressed. On Amendment No. 33B, I accept the Government's assurance. It is an intention to exempt properties owned by an educational institution or where all the occupants are full-time students. "Where all the occupants are full-time students" is a phrase which raises one or two marginal cases on which I should be grateful for guidance, and in particular the case of the married student or the student who is a single parent. How is it proposed to treat those cases?

In the case of a hall of residence I should like to know whether any liability rests on the educational institution. There is also the type of case which is particularly common among my own pupils; namely, where there is a flat shared by a considerable number of students. Who will be liable? Who will be liable when the population is changing? I look forward to seeing the answer in the record and I thank the noble Lord. I think I have literally read the noble Lord's lips.

Amendment No. 33A is a probing amendment. The difficulty arises from the reply given by the Minister to a Question for Written Answer to the effect that landlords in houses in multi-occupation will be liable. There are plenty of such houses in which some of the tenants are students and some are not. I believe that I see a faint doubt about the Minister's Answer in the other place; so I shall find the reference. It is worth clarifying. It is a Written Answer from Mr. Key on 13th January 1992 so it cannot yet be regarded as out of date.

The problem is that if the landlord is liable, the landlord, I think we may safely presume, will seek to recover the tax. If some of his tenants are students and some of them are not, it is not to be presumed the landlord will seek to recover it only from the non-student tenants, unless he is actually under a duty to do so.

I recall a great many exchanges on this matter of passing on liability under the 1988 Act. Under that Act there was no doubt, at least in my mind, about the Government's good faith. The difficulty was that the Government had done nothing to make their own good faith binding on the landlord. Since it was not binding on the landlord, the landlord had naturally acted in his own commercial interests.

These are probing amendments but I should be grateful for some clarification of those points.

Lord Strathclyde

I believe it was my noble friend Lord Renfrew who said that these were very useful amendments. I agree with him. It is useful to discuss the variety of issues which arise from them at this Committee stage.

The amendments deal with the power in Clause 4 to exempt certain types of dwelling from payment of the council tax. Amendment No. 33 exempts all those dwellings which are subject to the criteria listed in new subsection (2A) proposed by Amendment No. 34 and empowers my right honourable friend the Secretary of State to exempt other dwellings by order. My noble friend Lord Renfrew spotted the deliberate mistake made by the noble Baroness in drafting the amendment. We are all grateful. I assumed as well that it was Schedule 1 rather than Schedule 9.

The amendment is quite unnecessary. Dwellings which were previously the sole or main residence of the people in the groups listed—prisoners, hospital patients, patients in homes and people providing care —currently benefit from a standard community charge multiplier of zero; that is to say, they are exempt from the poll tax. Therefore I am pleased to tell the Committee that we intend to exempt from the council tax all those dwellings which are subject to a zero standard community charge multiplier.

With regard to the example quoted by my noble friend Lord Renfrew, who made the point of the prisoner with 10 homes, he would only be exempt for the home which was his sole or main residence as opposed to all the others.

The amendment should be rejected for one further reason. It proposes exemption only where dwellings have been unoccupied for less than 12 months. However, the groups listed currently benefit from an unlimited period of exemption. That will continue under the council tax. It is clear that our proposals are far less restrictive than those of the noble Baroness.

Amendments Nos. 33A and 33B deal with the exemption of student dwellings from the tax. I can assure the noble Baroness and the noble Earl that these amendments are unnecessary. We have already announced our intention to exempt student hostels and halls of residence from the tax. That will be achieved by means of regulations to be made under Clause 4. We are at present consulting local authorities, the Committee of Vice-Chancellors and Principals and other higher education bodies about the precise terms to be used in the regulations.

We have also announced that houses and flats where all the adult residents are students will be exempt from the tax. That too will be set out in the regulations. That deals, I believe, with the noble Lord's question of who is going to be responsible if you have four or five students living in one residence. The answer is nobody, because the property is exempt. In addition, students will be eligible for personal discounts, so that where they live with non-students they will not add to the household bill.

Taken together these arrangements mean that students in halls, and those living alone or sharing a flat or house with other students, will not have to pay. Students living with their parents or in digs will not increase the bill for the household because of the personal discount. Students who choose to live with non-students will receive a personal discount, but in that case the property will not he exempt.

Both the noble Baroness and the noble Earl talked about the landlord-tenant relationship. That shows, I believe, the noble Baroness's socialist tendencies and the great desire to meddle in the affairs of private individuals. It has to depend on the private contract made between the tenant and the landlord, whether the tenant is a student or not.

Where lots of students live in tenanted accommodation, it becomes exempt. Where a landlord lives with some students, the students themselves have a personal discount. Whether or not the landlord charges them rent to make up what he is paying in council tax entirely depends on the relationship between the two.

10.30 p.m.

Baroness Hollis of Heigham

If the Minister will permit me, that was not the example I gave. The question I asked was: where there was a non-resident landlord but the property he owned was occupied by a mixture of students and non-students, would he be responsible as landlord for the council tax, which he would then normally redistribute to the occupants of the house? I wanted some assurance, if assurance could be given, that the students, who were invisible, would continue to be invisible for council tax. Let us assume a house with six or eight people in it, perhaps three of them students. I wanted to be sure that the students were not carrying a proportion of the total property's council tax through an increased rent when they were invisible on the bill.

Lord Strathclyde

The point I was trying to make was that that depends on the relationship between the tenant and the landlord. The student is a tenant: he either agrees with the rent that he is charged or he does not. The point is that if the tenants are responsible for the community charge they agree among themselves how they are going to share the liability for the council tax. But each student will not increase the total bill if there are fewer than two of them. If there are more than two adults in a house who are not students, they get charged the full amount.

Have I made that clear to the noble Baroness? If not, as it is a complicated matter it would perhaps be easier if I wrote to her and explained it line by line.

Baroness Hollis of Heigham

The Minister has made his views clear. I am not sure that his response entirely reflects the Bill as we understand it, but we will obviously study it. I suspect that he may at a later stage wish to amplify or amend his answer.

Lord Strathclyde

The noble Earl, Lord Russell, asked what was the definition of a student. That is very important. Students will be defined as they currently are for the purposes of the community charge; that is, those who are undertaking full-time courses of education at prescribed institutions, which will include universities, polytechnics and some others. Full-time means subsisting for at least a year and undertaking at least 24 weeks of study during an academic year and 21 hours of study per week. Part-time students may be in full-time or part-time work and can claim benefit. That is why they are not included for discounts or exemptions.

The noble Earl also asked about married students and student single parents. Currently non-student partners of students are able to claim housing benefit and it is intended that similar arrangements will apply under council tax rebates. Vulnerable students, including students who are lone parents, if they are liable, are able to claim housing benefit and also council tax benefit. I hope that that explanation clarifies the situation.

Earl Russell

I thank the Minister for a reply which was helpful on many points. However, perhaps he will forgive me if I ask for further clarification on one or two further aspects. I shall not argue with the general definition of student, as in the community charge legislation. I wish to ask for help with one point in those regulations with which I have had considerable personal difficulty. It is the definition of a postgraduate, in particular at what point a part-time postgraduate becomes eligible for exemption. I have sat for an hour with my departmental secretary who has to issue the certificates trying to work out what the regulations mean. The trouble is that they define full-time and part-time postgraduates in terms of a course and prescribed numbers of hours of study. In my subject at least that is not the way it is with postgraduates; they are not engaged in undertaking a course but in undertaking research. In fact, they are doing piecework; one sees the finished product but one does not usually know how many hours it took to produce. I should be grateful if the definition could be looked at again. It would be most helpful in practice.

I was also be grateful for the answer about students living together. One slightly awkward question occurred to me. I do not know what answer the Minister will give; indeed, I do not know what answer he ought to give. I thought about a case among my recent pupils: four students and one secretary are living together in a flat. Will the one secretary bring the council tax with her, like the plague, and make all the others liable? If that is so, will it encourage the creation of a student ghetto? I appreciate the problem and the fact that the line has to be drawn somewhere. However, if there are to be such side effects perhaps we should think about them before we reach them.

I still have a slight misgiving about the problem of the landlord. I should be grateful if I could have a copy of the Minister's letter to the noble Baroness, Lady Hollis. Perhaps I may try to see whether I have understood what the Minister said. There will be no personal council tax liability attaching to the student but the property element of it will be paid by the landlord. Therefore, some share of the property element may in practice be passed on by the landlord to the student because no restriction is legally being put upon it. Is that a correct understanding of what the Minister said? If not I apologise.

Lord Strathclyde

The noble Earl asked a number of detailed questions. First, I understand that at present postgraduates are regarded as students and would therefore be exempt. If there is a problem, as there clearly appears to be, I shall be happy to look at it and write to the noble Earl.

The noble Earl asked whether the secretary would bring the plague—in the form of the council tax—with her. I believe that she would bring the council tax with her but she would be eligible for the single person discount, which is helpful.

I do not quite follow the noble Earl's explanation regarding what he thought I had explained concerning whether the landlord lived with the tenant. I have already said that I shall write to the noble Baroness about that. It is complicated. It is clear in my mind but I am incapable of making it clear to anybody else.

Baroness Hollis of Heigham

First, I apologise for the typographical error in the amendment. I am grateful to the noble Lord, Lord Renfrew, for pointing that out.

In response to the comments made by the noble Lord, Lord Renfrew, the amendment seeks to mirror the exemptions which currently exist under poll tax legislation—neither more nor less. The concept of a prisoner with 10 properties had not occurred to me but I suppose that, given the extent of white collar fraud, it is reasonable. However, I believe that the noble Lord, Lord Strathclyde, responded fully to that and we welcomed his response.

As regards the Minister's reply on Amendments Nos. 33A and 33B, we shall all be interested to see the contents of the letters. I was seeking to pursue the problem of houses of mixed occupation—students and non-students—with more than two non-students. For the purposes of the council tax, students are invisible. This amendment seeks to ensure that students do not end up paying part of the council tax from which the Bill exempts them. That is the issue. We wish to prevent them from being charged for a share of the bill for which the Government do not intend that they should pay any part.

The noble Earl, Lord Russell, did not represent fully what the noble Lord, Lord Strathclyde, intended to say about the 50 per cent. contribution because, for the purposes of the tax, students are invisible. If there are enough of them, the entire property becomes exempt. Therefore, in that context, we shall wait to see what the regulations contain.

Finally, with the leave of the Committee, I should like to return to comments made by the Minister on two earlier amendments which I moved.

Lord Hesketh

Order, order!

Baroness Hollis of Heigham

In that case, I shall follow up the matter through correspondence as we believe positions were misrepresented and we are seriously perturbed about that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 33A to 36 not moved.]

Lord McIntosh of Haringey

moved Amendment No. 37: Page 3, line 16, at end insert: ("and of which the resident has an income or assets falling below a value or values prescribed for this purpose by the Secretary of State."). The noble Lord said: We have already discussed the weakness of Clause 4. That has been made very clear. Subsection (3) states that a class of dwellings, for the purposes of Clause 4, can be: prescribed by reference to such factors as the Secretary of State sees fit". In other words—I use the classic phrase—the Secretary of State may do what he likes. I do not know who is attempting to kid whom because subsection (4) states: Without prejudice to the generality of subsection (3)" — in other words, the power of the Secretary of State to prescribe classes of dwellings by reference to such factors as he sees fit— a class of dwellings may be prescribed by reference to one or more of the following factors—

1. (a) the physical characteristics of dwellings;
2. (b) the fact that dwellings are unoccupied".

Members of the Committee who are not familiar with my modest, constructive and helpful way of seeking to amend legislation may choose to misinterpret what I am saying. However, we are saying that we are not trying to overturn the structure of Clause 4. We are seeking simply to add a third factor which the Secretary of State may use in prescribing exempt dwellings. We are seeking to add the provision that they should be dwellings, of which the resident has an income or assets falling below a value or values prescribed for this purpose by the Secretary of State". Or, as in Amendment No. 38, the fact that dwellings are occupied or owned by persons", who qualify in that way. It is the least controversial way we can think of of bringing into the Bill a condition which we consider to be essential to property legislation; that is, the provision that it should have adequate regard to ability to pay as expressed through income.

Without even seeking to overturn the weak and wide-open provisions of Clause 4, we hope that the Government will not feel it necessary to oppose the possibility that the Secretary of State may add these conditions to those provided under subsection (4). I beg to move.

10.45 p.m.

Earl Russell

Did I hear the noble Lord on the road to Damascus? Did I hear him say that the provision must have adequate relation to ability to pay through income? Has the noble Lord been converted to the idea of a local income tax?

Lord McIntosh of Haringey

The noble Earl should come in and listen to his colleagues at earlier stages of the debate. The noble Lord, Lord Tordoff, tried that one on. He tried to quote against me a statement which I made in the House in 1988 to which I entirely subscribe now. I have always thought that property tax by itself was inadequately progressive. A property tax as provided under this legislation is far too inadequately progressive. Income tax is adequately progressive, but a combination of property tax and regard for ability to pay through income is Labour Party policy and one which does not require any road to Damascus.

Lord Strathclyde

That will certainly bear reading again. I am confused as to what Labour Party policy is. However, it is late at night and perhaps we should not delve too much into that at the moment.

Amendment No. 38 would allow the Secretary of State to prescribe a category of exempt dwellings by reference to the low income or assets of its residents. Amendment No. 37 appears to have a similar intention.

It would be possible to exempt people on low incomes from the tax without the amendment; however, the Government have no such intention. Instead we intend to ensure that such people can claim rebates of up to 100 per cent. of their bills. The effect will be the same, in that those with incomes at or below the income support level pay nothing. But by making such arrangements through benefits we can ensure that there is only a gradual increase in liability as income rises. If instead we exempted people on low incomes they might suddently face a large council tax bill simply because their income had risen by a pound or two. I cannot believe that that is the effect the noble Lord wants. No doubt he will withdraw the amendment.

Lord McIntosh of Haringey

I shall, but not for that reason. The Minister is proposing a circuitous way round to achieve that which we want to achieve; that is, proper recognition of the ability to pay as a criterion for local government finance. I readily concede that we have probably been too clever by half in attempting to introduce an amendment of this kind into a clause which is itself as defective as Clause 4. We shall find some other way of expressing the strong views we hold regarding ability to pay. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 38 to 40 not moved.]

Clause 4 agreed to.

Clause 70 [Council tax in respect of dwellings]:

Baroness Hamwee

moved Amendment No. 41: Page 46, line 35, leave out subsection (1) and insert: ("(1) In respect of the financial year 1992–93 each local authority shall impose a tax payable in respect of the taxable income of each person resident."). The noble Baroness said: I move the amendment on behalf of my noble friend Lord Mackie. It has a relationship with Amendment No. 207 which no doubt we shall debate next week. I learned a phrase from my noble friend on another occasion last year when he said, "What I am about to say has been said before in this debate but it will do your Lordships no harm to listen to it again". I am perhaps pre-empting that by saying now what he will no doubt say on Amendment No. 207, if he is able to be present.

The amendment provides an opportunity to apologise to the Scots for having introduced the poll tax a year earlier, and having experimented in Scotland, but not ending it a year earlier than will be the case in England and Wales. The Conservatives had no mandate to introduce the poll tax in Scotland. They did not pay heed to the warnings of the consequences. They did not listen to the Scots at the time of the 1987 general election. The electoral events in Scotland over the past few years, and in particular the past few months, should have been no surprise to anyone.

In Scotland as elsewhere the poll tax has caused hardship. There have been difficulties in collection. Public opposition has been overwhelming. The Scots have had to live with that position for a year longer than people in England and Wales. It was rather ignored that Scotland was suffering during that period.

It is perhaps a little ironic that the poll tax is to be replaced by a property tax, because it was the problems caused by the rates which led to the hurried introduction of the poll tax four years ago.

One quick method of relieving the Scots of the burden of the poll tax for a year before the council tax would be to apply a local income tax. That would mean an end to the huge waste and cost of collection of the poll tax and the hardship of the 20 per cent. provision. Members of the Committee may say that it is a grand and meaningless gesture. It is a grand and symbolic gesture. It would be very symbolic to the people of Scotland if the Committee accepted a mechanism for relieving them of the burden of the poll tax a year earlier to compensate for their having suffered it a year earlier. I beg to move.

The Earl of Balfour

Since the subject of a local income tax has been raised, I should like to say a few words. I have given the problem much thought. One of the main reasons why I dislike any form of local income tax is because that tax will be collected at one's place of work. I believe that the functions of the local authority are mainly to do with someone's home. One of the side effects of having a local income tax is, in my opinion, that the cities would become very much wealthier and the country areas very much poorer. The council tax—or the property tax—must be associated with one's place of residence.

Lord Strathclyde

Naturally I listened very carefully to the exposition by the noble Baroness of the benefits for local income tax. To the advocates of such a system it appears to be the simple panacea to all the problems of local government finance. However, I must urge the Committee not to be lured by such siren voices, because I fear that in practice a local income tax would prove to be complicated to administer, unwieldy and unfair.

The noble Baroness talked about Scotland suffering. I did not hear any evidence to support that view. The noble Baroness suggested that we should bring local income tax forward into Scotland, presumably as an experiment—turning the Scots into guinea pigs one more time. That is surely not a very good idea, coming from the Liberal Democrats.

The noble Baroness also mentioned a symbolic gesture. We do not need any more symbolic gestures in Scotland. We need hard solutions to difficult problems. This amendment is one where the noble Baroness and the Government will have to agree to differ.

Baroness Hamwee

That does not surprise me. Perhaps I may answer the point raised by the noble Earl, Lord Balfour. Local income tax would be collected for those on PAYE in relation to work because Schedule E tax is dealt with on a salary basis. But the tax is not levied on the place of work. The tax, like any other form of income tax, would be levied on the individual. Where he happens to work would not be relevant. It would not mean moving substantial funds into the cities, away from the country.

With regard to the evidence that Scotland has suffered, I cannot speak as eloquently as any Scot would on that point. But I do feel that it is a little tongue in cheek to say that there is no evidence of that. The Scots have been very vocal on it and the latest evidence is that 8,000 or so souls in Kincardine and Deeside have been saying very eloquently that they have not been happy at the way they have been governed. One of the most obvious ways in which they have been misgoverned over the past few years has been through the poll tax. What is the formula at this late hour? Perhaps I should ask the leave of the Committee to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 70 agreed to.

Clauses 71 to 73 agreed to.

Lord Cavendish of Furness

I beg to move that the House do now resume.

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

House resumed.