§ 3 p.m.
§ The Minister of State, Department of the Environment (Baroness Blatch)My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Baroness Blatch.)
On Question, Motion agreed to.
House in Committee accordingly.
[The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES (Baroness Serota) in the Chair.] Clause 11 [Discounts]:
§ Baroness Hollis of Heighammoved Amendment No. 81: 1061
Page 7, line 11, leave out ("discount equal to the appropriate percentage of that amount if on that day") and insert ("reduction in the amount that the liable person is liable to pay in respect of the chargeable amount if on that day council tax benefit to which he is entitled is in force under the provisions of the Social Security Contributions and Benefits Act 1992 and he will be allowed a reduction equal to the amount of council tax benefit to which he is entitled").The noble Baroness said: In moving Amendment No. 81, I should like to speak also to Amendments Nos. 83, 84, 85 and 89. The first cluster of amendments deals with the issue of discounts. Together, they seek to replace the elaborate, complex structure of rebates plus discounts that the Government have devised with a more generous rebate scheme to which we on this side of the Committee will return when we deal with amendments to Schedule 9. If I may, I should like to speak more generally to the problem raised by the Government's structure of discounts and then very briefly to the separate amendments.On this side of the Committee we have three main objections to the use of discounts for single-person households. First, they are unfair and bear no relationship to need; secondly, we believe them to be unreasonable for, even within their own logic, they bear no relationship to the use of services; and, thirdly, as I hope to argue, they are unworkable given the complexity of the Government's Bill.
Discounts as such are unfair because they bear no relation to income. Rebates target help on those who need it. Discounts do not do so: they throw money at a problem which does not exist. We are not now talking about the single person or the widow in modest circumstances, or the lone parent or single pensioner. All those people can, should and must be helped through a rebate scheme which should be made more generous to take account of their circumstances. Who, then, would the discount scheme help? It would help only those outside the rebates' range—that is, the more prosperous single-person household.
Perhaps I may give Members of the Committee some examples of the latter. A single person enjoying a discount will pay virtually the same as a couple in a property two bands below. In other words, a pensioner couple in a £42,000 terraced house and on a £6,000 a year income will be paying more than a single, wealthy barrister earning £60,000 a year and living in a property worth double that amount. A barrister with a property worth twice as much as theirs and with an income six times higher will actually be paying less. That cannot be fair. It is certainly not necessary.
We would also argue that, even within the logic of the Bill, discounts for single-person households are unreasonable. The Government, not us, named the tax. They called it a council tax: council because it is going to the local authority and tax because it is presumed to bear some relationship to people's income. But, after introducing discounts, the Government then behave as if we are dealing not with a tax but with a charge; in other words, a charge for services used. But they then fail to follow through their own logic.
Let us again take our barrister as an example. He is divorced with two children, both of whom attend local schools. On the other hand, the pensioner couple do 1062 not use the education service, which accounts for half of all local authority budgets. The barrister drives his car thousands of miles on roads maintained by the local authority, while the pensioner couple do not even own a car. He generates far more rubbish for the bin men to collect and his property may require far more policing because of its location. With six times their income, double the value in property and a far greater use of local authority services, he is still paying less than the pensioner couple. Yet those local authority services represent about 90 per cent. of local authority expenditure.
Take-up of education depends on children, of highways on whether one has a car and of the police and fire services to some extent on where one lives, but none of that has anything to do with being single. Therefore, our single, wealthy or divorced man is not paying his way in terms of the value of his property, in terms of the size of his income or in terms of the use of services. It is quite indefensible. The more expensive the property he lives in, the bigger the discount that he enjoys. I hope the Minister will not tell us that he is paying his way through income tax. I say that because that was argued in the case of the four strapping sons living next door to the widow. The Government were singularly unimpressed by that argument at the time, as I am sure Members of the Committee will be should the Minister deploy it now.
We do not accept that local authority tax is a charge which relates to use. It is not a contract between the individual taxpayer and the council on the basis of a market relationship. If it were, a couple living in a village in Norfolk, for example, with no children, no car, no street lights in their village and who never see a policeman, could demand a discount. But of course they do not do so because local authority services are something which we all need and enjoy. We all need each other's education; we all need each other's good health; we all need planning; we all need safety on the streets; and none of us can opt out of street lighting and road repairs. Therefore, because local authority services are a tax and not a charge, we believe that a discount principle which assumes that a single person who uses services less should pay less is not valid.
Finally, we believe that discounts are actually unworkable. There are two reasons for that argument. First, the vast majority of people eligible for rebates are pensioners and lone parents. They do not move very much, nor do their circumstances change very much during the course of the year. Whether we calculate that on an annual, daily or monthly basis, it is simple and fair. But discounts—and that is what the Bill introduces—relate to occupancy. People move. It is the movement of people that has made a nightmare of poll tax collection. As we know, 40 per cent. in the shire districts and 60 per cent. in London; and, indeed, the noble Lord, Lord Renfrew, at an earlier stage referred to an 80 per cent. figure in respect of movement for one year in Oxford.
As the Audit Commission said:
The turnover on the community charge register has been very much greater than originally expected. This implies that there may be a large amount of movement between one and two-person adult households".1063 But who moves? They are mostly young, single people who move in and out of premises. They are living by themselves, with a friend, with a co-habitee or with their parents. Most of those young, single people will not be eligible for rebates; they lose rebate when their income exceeds £80 or £90 a week unless they are unemployed. However, they will move in and out of discount. In other words, far more of them will move in and out of discount than ever moved in and out of rebate. When they do so, they will alter every other person's eligibility for rebate and discount in the house into which they have moved. Every move they make will require the local authority to remap on a daily basis the configuration of every household they join.The second reason that it is unworkable is not just that discounts will generate very many more claims than was the case with rebates—a third of the entire population of households is likely to claim discounts quite unnecessarily —but the interlocking of discounts with rebates will make the scheme extremely complex.
As I have tried to argue, and as we all know, discounts have nothing to do with fairness, nothing to do with the logic of the Bill and nothing to do with simplicity; they are a gesture to keep happy the diehards and the dinosaurs who retain an affection for the poll tax with all its ills. We believe that the council tax will combine the worst features of the rates, in that it is not fully progressive, with the worst features of the poll tax, in that it is a head tax. For that reason, we seek to replace discounts with rebates. I beg to move.
§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)We have now come to the noble Baroness's main assault on the Bill and the main assault on the discount provisions in the legislation. However, I presume that if the noble Baroness withdraws Amendment No. 81—and I hope that she will do so after my response—she will also withdraw Amendment No. 82, which would extend the system of discounts to cover other groups not provided for under Schedule 1.
The group of amendments before the Committee would replace discounts with a number of alternative schemes of so-called "reductions". They are not to be confused with the reductions for people with disabilities and the transitional reductions that the Government intend to introduce under Clause 13. The "reductions" proposed here are in fact benefits. In any case benefits will almost invariably be given as reductions in the bill payable.
If imitation is the sincerest form of flattery, the Government should be flattered by a number of these amendments, because the Opposition have constructed their system of reductions by drawing on the Government's benefit proposals. A number of the amendments refer to the social security consolidation Bills presently before the House, and the amendments to them contained in Schedule 9 to the Bill. It is good to know that Members opposite approve of the Government's benefit proposals. However there is no need to give effect to those proposals twice, as Amendment No. 81 would.
1064 Let me remind the Committee of those proposals. Benefits of up to 100 per cent. will be available for liable persons whose income is at or below income support levels. There will be no minimum contribution to the council tax. However, the amounts included in income related benefits to reflect the minimum contribution to the community charge will not be "clawed back", so that claimants will be significantly better off than they would otherwise have been.
The noble Baroness will be aware that that provision has added some £700 million or so to the amount of money available for income support in the coming year. Benefits to people on incomes above income support level will be assessed on a sliding scale, again, as the noble Baroness will be aware. The benefit system will take account of the needs of, for example, pensioners, families and people with disabilities, allowing them benefit at the higher levels because of the higher premiums available to them in the income support system. They will be at higher levels than other people who are on what one might call the basic level of income support.
So, both sides agree about the broad scope of council tax benefit provisions for people on low incomes. Why then has the noble Baroness tabled the amendments? The reason—and the noble Baroness made this clear—is that she wants to delete from the Bill the idea of the discount. She thinks it fair that a sole resident of a property should pay the same as a family of residents. The Government disagree. That was one of the fundamental flaws of the domestic rating system to which the Opposition want to return.
The noble Baroness cited the case of the barrister in his large car driving up and down the local authority streets, reducing the roads to rubble. There is nothing wrong with him paying less on the grounds that he is living on his own. As she admitted, he is paying far more in income tax. It is income and other taxes which go to support local authorities. The noble Baroness is well aware of how much money is now raised by the community charge and how much will be raised by the council tax, how much comes from the uniform business rate and how much from the national Exchequer and the general taxpayer. There is nothing wrong in the concept of a discount.
§ Lord Stoddart of SwindonPerhaps the Minister will help me because I am a little perplexed. We are talking about a council tax. We are not talking about a charge; we are talking about a tax. Under national taxation, a single person pays more than a married couple. That is so, is it not? Why are we reversing the position at local level and making one person pay less than two?
§ Lord HenleyThe noble Lord is trying to find an illogicality in the fact that allowances are made in the national taxation system for the fact that some people have greater expenses in the form of families. All we are saying is that there was a perceived unfairness in the old rating system, in that a single person paid a flat rate dependent upon the house, and received no discount to allow for the fact that there was just one 1065 person in the house compared to the two or three—some earners and some non-earners—living next door.
We have introduced a simple system—the discount —which Members opposite do not seem to understand. It is a simple system that removes some of the perceived unfairness by allowing a discount on the bill chargeable on that property. In other words, the so-called rich barrister driving around in his large car will pay much more in tax which will go towards local services as well as paying the council tax. I see no illogicality in that. The proposal deals with the perceived unfairness of the two households paying the same amount with no allowance being made for the fact that one house may be occupied by the rich barrister or the single widow. I do not know why it is the rich barrister that the noble Baroness has picked on. The rates did not take into account income, and hence the idea of the discount.
I do not believe that there is a demand in the country for a return to a system of local taxation based solely on property, with no allowance made for the fact that one person only was living in a house. I am sure that the noble Lord has a long memory. One of his noble friends was asked whether the Opposition had a long memory. He will remember the enormous opprobrium attached to the rating system. People did not think it fair that a single resident should face a full local tax bill. That is why the Government propose a system of discounts for single residents, and a benefit system to deal with those on low incomes, rather than the proposals put forward by the noble Baroness for no discounts but for benefits, at the same time as her own reductions, because in the amendment the noble Baroness has not seen fit to withdraw the benefit provision and therefore she will find she has dealt with the problem, if there is one, twice.
For that reason alone, the amendment is defective. I hope that she will understand that her system would dismember the system of discounts. It would burden local authorities with a double assessment of incomes —once for discounts and once for benefits. The provisions which the Opposition want to put in its place add little or nothing to the benefit arrangements which the Government are already proposing. I hope therefore that the noble Baroness will feel able to withdraw her amendment and not move the associated amendments.
§ 3.15 p.m.
§ The Countess of MarBefore the Minister sits down, will he tell us how he would deal with the rather nomadic tendency of single people, as described by the noble Baroness? For example, if our barrister has a girl friend and they are both living in their own accommodation for a period of time, claiming the discount, and then they decide to move in with each other and, say, live together for six months in the course of a year and then part, will the local authority have to track them down every time they move in and out?
§ Lord HenleyAs set out in the Bill, it will be up to those people to notify the local authority of their 1066 change in circumstances. We debated this point the other day. They will notify the local authority of the change in circumstances from the date of the change in circumstances.
§ The Countess of MarI am sorry to return to the point, but there has been enough of a problem over the collection of the poll tax. People will not tell the local authority when they move in with each other, will they? It is clear that the same thing will happen again.
§ Lord HenleyI do not accept what the noble Countess has said. As I have tried to point out, the old rating system was perceived to be unfair. All we have done is introduce the simple idea of a discount to allow a reduction where one person is living on his or her own. When the girl friend of our so-called rich barrister moves in with him, the person liable—the barrister or her—will notify the local authority from that date of the change in circumstances. The girl friend will no doubt wish to notify the local authority of her change of circumstance—that she has moved out of the other residence.
§ Baroness HamweeWe have heard excellent speeches from both Benches in favour of a tax which unhappily we are not debating. That, of course, is a local income tax. We have heard a splendid speech about the need for a tax which reflects ability to pay, and we heard another speech about accountability which pointed out the centralisation of local government funding, and the fact that 85 per cent. of local government finance will come from central government.
It will be known to many Members of the Committee that we on these Benches advocate both local income tax and an integrated tax and benefit system. I wish that we were debating those today, but we are not. It seems that we are debating a negative amendment, not one which advocates the advantages of a benefit system at any length; it is negative against the discount arrangements. I dare say that the Committee will be left with the impression that what matters most is penalising single people more than the positive arrangements for benefits which are part and parcel of the amendments that we debated last week. They went back to the rates or, as the Labour Party calls them, the so-called fair rates.
We have a proposal for, fundamentally and essentially, a property tax. We on these Benches are not enormous enthusiasts for the discount arrangements, but they are part and parcel of the Bill before us. The proposals of the noble Baroness cannot lie with what we have here, and I regret that on this occasion we cannot support her.
§ Lord Stoddart of SwindonBefore we complete the discussion, the reason I am a little worried about the debate and the answer the noble Lord gave to me is that the whole position of the Government appears to have changed. When the Government introduced the community charge, one understood that it applied to individuals. The Government have gone away from taxation. They told us that they wanted to do away 1067 with local taxes. They wanted people to pay for the services they received through the community charge. Is that not right? I believe my memory is correct.
§ Lord HenleyPerhaps the noble Lord will give way since I have already given way to him. We are not discussing the community charge at the moment; we are discussing the council tax. I am trying to make quite clear that the council tax exists as a tax on the property; but we are allowing a discount of 25 per cent. for those living on their own or in certain other circumstances. That is a simple concept.
§ Lord Stoddart of SwindonThat is where the noble Lord is wrong. It is not simple. As I was trying to explain, we could understand that there was a certain logic in it so long as the Government believed that local authorities provided community services and all those who enjoyed them paid a community charge. On the basis of that, individuals had to be taxed as individuals. However, now the Government have changed their minds. They are no longer talking about a community charge. Those were their words. We believed that it was a poll tax, but the Government tried to convince people that this was a charge for community services. They have changed their minds and they now come forward not with a community charge but with a council tax. We have come back to taxation.
The point I was making is that in terms of taxation it is generally accepted that people should pay a tax in accordance with their ability to pay. That has been generally accepted for a long time, almost throughout my life, I think. But here we have a situation where a tax is being levied not on the basis of an individual's ability to pay but that if there is only one resident in a dwelling, he should pay less in tax. This is a complete reversal of the position in national terms where a single person is deemed to be able to pay more tax and a married couple are deemed to be able to pay less tax.
All I want from the Government is consistency. They have not given us that in the Bill. My noble friend Lady Hollis is trying to bring some consistency into an inconsistent Bill.
§ Lord HenleyThe noble Lord is having enormous fun, but everything he says is totally and utterly irrelevant. There are a great many taxes: the council tax, which we propose; income tax; value added tax; road tax. In the road tax, there is nothing about ability to pay. The noble Lord buys his tax disc and ability to pay is not involved. Taxes are devised to raise revenue in different ways for different requirements. In income tax we consider the problems of the family and therefore make allowances for the married man or married woman that are greater than those for single people. It is not necessary to do that with the council tax, which is a property tax on a much simpler level with a small discount of 25 per cent. for those living on their own.
§ Baroness PhillipsI wish to ask a simple question. I live in a terraced house that is situated between two properties which are rented—I may say at ridiculous rents. They are both occupied by single persons. 1068 Presumably under the Bill the landlord has to pay the tax. I cannot work it out. These are single people living alone. (The previous tenant, who was an Australian, skipped off owing six months' rent.) By the time the Bill is passed, will the point about a single person have been decided? At what time is it decided that there is one person living alone in the house?
§ Lord HenleyIt is fairly simple. In every case one assumes that there are two people. If someone wants a discount, then they apply to the local authority, saying, "Look, I'm living on my own" or saying that they qualify in some other way, whatever other rules apply under Schedule 9. That is perfectly straightforward. The local authority assumes that two people live there, and if anyone wants a discount they go to the local authority and say that they are on their own.
§ 3.30 p.m.
§ Baroness Hollis of HeighamI find the Minister's reply singularly unpersuasive. In my view, at no stage did he explain to us why a blanket 25 per cent. discount off the bill is appropriate, irrespective of one's income. I understand—and the Minister will correct me if I am wrong—discounts will cost local taxpayers £780 million a year with perhaps compensation through grants. That is throwing money at a problem which does not exist.
Surely, the right way is to target money on those who need it, giving help with their bills. One of our amendments on the Marshalled List is to increase the premium for single pensioners. Later, under Schedule 9, we shall debate amendments to reduce the severity of the taper so that people will continue to enjoy more rebates for longer.
Perhaps I may give an example. If we reduce the taper from 20p in the pound, as the Government propose, to 15p in the pound, which exists already under the poll tax, it will only cost the Government —I say only, but that is relative to the discount—£60 million to £70 million. Yet they are spending £780 million on a discount scheme, the major part of which will go to people on high incomes who do not need it. That is neither fair nor sensible; the money could be recycled to help those in the greatest hardship.
Further, the Minister tried to suggest that the tax was related to the fact that single person households do not use services as much as the two-person household. He has established no evidence for that. None whatever. We on this side suggested that the big expenditure on services by local authorities goes on: education; police and fire; and highways. The use of the first depends on whether one has children; the use of the second depends on whether one has a car, and the use of the third service depends on where one lives. None of those has anything to do with whether one is single. In that case, why relate the tax to whether one is single rather than whether one uses the services?
As my noble friend Lord Stoddart has repeatedly argued, we have tried to point out that we are talking about a tax and not a charge because in local government there is a common weal of good, a 1069 common weal of purpose, a common weal of services in which the well-being of each person is interlocked with that of everyone else.
The Minister reiterated his claim that this was a simple tax. The noble Countess, Lady Mar, has referred to my next point. The tax would be simple only if people did not move. However, some people move regularly and frequently. Some 60 per cent. of people in inner London move frequently. In some university towns between 70 and 80 per cent. of entries on the register have to be changed frequently because people move. Those people will have to be tracked down.
However, there is another reason why the tax is not simple. It interlocks with rebates. Therefore, people will be moving from discounts to rebates, back to discounts and then to a position where they lose the discounts if someone moves in with them. All of these changes have to be tracked by local authorities to ensure there is no question of fraud. At the same time local authorities have to try to protect people's privacy under the terms of data protection legislation. However, that is just not possible.
§ Lord HenleyAs always, the noble Baroness waxes lyrical—or did earlier—about the so-called rich barrister who earns £60,000 a year. However, I wish to direct her attention to a single person earning £6,000 or £7,000 a year. What kind of benefit would the noble Baroness allow such a person under her amendment? Such a person would receive absolutely nothing. He would not be covered by the income support premium as he would be well above the income support rate. We are not talking about giving something away to the rich, as the noble Baroness with her politics of envy likes to suggest. We are talking about removing what was the perceived unfairness of the former rates system, which was that the single occupier of a house paid the same as the occupants of the house in multiple occupation next door. All we are trying to do is to establish a simple system to allow some discount to those people living on their own.
§ Baroness Hollis of HeighamIf Ministers on the Benches opposite think that this is a simple tax I must assume they do not fully understand the implications of this aspect of the Bill. I accept that the noble Baroness, Lady Carnegy, and the noble Lord, Lord Jenkin of Roding, understand the complexities of the position and the anomalies that would arise. However, I am sorry that that understanding of the problems of local government is not shared by Ministers opposite.
We are not talking about the politics of envy. To use a phrase used by the noble Baroness, Lady Hamwee, on another occasion, we are talking about the politics of fairness. Under the discount scheme the Government have made no attempt to justify the fact that they are throwing money at people who do not need it. That money could go to those who need it. We on our side believe that some of that money should be targeted to those who most need help. We believe that a more generous scheme should be established to help those people.
The Government's proposals will involve us in the complexities of daily liability. The proposals will 1070 involve us in problems with a register. They will have repercussions in terms of invasion of privacy. The Government's proposals will also involve local authorities in trying to track down fraud in all kinds of unpleasant and unfortunate ways. At its heart the discount scheme is not fair, workable or reasonable. I regret greatly that there appears to be no meeting of minds on this matter. I am sure we shall return to it on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Baroness Hollis of Heighammoved Amendment No. 82:
Page 7, leave out lines 13 and 14 and insert:("( ) the person who is liable under section 6 or their partner has savings of less than £16,000 and is in receipt of any one of the following benefits—retirement pension;invalidity pension;disability working allowance;disability living allowance;severe disablement allowance;invalid care allowance;unemployment benefit;family credit;housing benefit;a training allowance payable under the Youth Training Scheme, the Employment Training Scheme or any similar scheme; and").The noble Baroness said: Amendment No. 82 is a fallback amendment in which we seek to persuade the Government that if they are not prepared to abolish discounts altogether they should at least restrict them to those on low incomes. That would involve a greater degree of fairness. In other words, the discounts would remain restricted to people who live alone although the amendment would extend entitlement to couples as well as to single people. Such an amendment would avoid elaborate means testing and would allow those receiving one of the defined benefits to use it as a passport to a discount.It is reasonable to assume that such people as listed in the amendment would either be on low incomes or would have additional needs such as those arising from disabilities. They may be both on low incomes and have additional needs. The amendment would also allow a few people such as single pensioners who are not eligible for rebate because they have a modest occupational pension to qualify for discounts.
I wish to discuss the case of a couple who live with a mother who has Alzheimer's disease. The wife may receive an invalid care allowance because she looks after her mother. The husband has a part-time job which takes their joint income just above rebate level. As the Bill stands, the couple would receive no help although the husband has a part-time job and his wife is looking after an elderly parent who has Alzheimer's disease.
Under the terms of Clause 11 of the Bill such a couple would receive no discount as there are three adults in the couple's home. They will fail to qualify for a rebate because of the husband's earnings. However, our amendment would ensure that the couple would be eligible for a discount because the wife receives an invalid care allowance. Therefore, her mother would remain invisible under the terms of Schedule 1. The amendment would ensure that those 1071 who most need help on grounds of hardship would receive it because the discount would be restricted to them. The benefit they already receive would act as a passport to discount. Our amendment would also ensure that a single, wealthy barrister would not be entitled to discount. He does not need such a discount, but under the Bill as it stands public money and public largesse is being bestowed upon him. I beg to move.
§ Lord HenleyI commiserate with the noble Baroness as she has a difficult case to argue. First, she argues the case against discounts on the grounds they favour single, wealthy barristers. However, she then tables an amendment which, as I understand it, could easily give the single, wealthy barrister that same discount. The noble Baroness has provided in the amendment a long list of benefits that would act as passports to discounts, as she puts it. However, not all of those benefits are in any way income related. The only ones that are income related are the disability working allowance, family credit and housing benefit. I appreciate that the single, wealthy barrister whom the noble Baroness likes to mention on these occasions could not receive unemployment benefit as he would probably be self-employed and it is rather difficult for self-employed people to obtain unemployment benefit. However, I see no reason why he could not be in receipt of the disability living allowance in one form or another. He could also be in receipt of an invalidity pension.
The noble Baroness cannot have her cake and eat it. She cannot have it both ways. She is trying to muddy the waters by suggesting that eligibility for discounts should depend on receipt of one of a number of social security benefits, subject to the capital cut-off that occurs with income-related benefits. We do not know, of course, what capital a wealthy barrister has, but it may be that none of his capital qualifies under the capital rules. Therefore he might still be entitled to receive a discount. I do not think the "trigger benefit" approach, particularly in a long list such as this where there is no mention of income support, is necessarily the right way forward. However, I accept there may be a good reason why income support is not mentioned in the list. Perhaps it is covered elsewhere. I hope the noble Baroness will feel able to withdraw the amendment.
§ Baroness PhillipsI believe the Minister is being naïve, or perhaps his party is not as skilled as my party in playing this game. First, one moves an amendment which seeks to achieve a broad change. If that is not successful, one then tries a different approach. There is nothing inconsistent in that. It is simply a question of taking a slightly different line if one's first approach is unsuccessful. I am amazed that the Minister does not know people who come into the categories mentioned in the amendment. He has not referred to the retirement pension, although he referred to all the other benefits in the list.
§ Lord HenleyI mentioned the retirement pension as a benefit that is not income related. Therefore, someone in receipt of a retirement pension still 1072 receives it irrespective of his income. According to this amendment, provided the capital of such a person is less than £16,000 he could still receive a discount.
§ Baroness PhillipsThe Minister may not have mentioned the retirement pension but the amendment lists it. I hope I may point that out. I know people who fit into the categories listed in the amendment. I live among such people. They are the people who have always won the approval of this Government. They have worked hard and they are in receipt of small company pensions. They have saved their money. They are the salt of the earth. They have not asked the state for anything. They receive the retirement pension as they are entitled to that. These people constitute a large group.
The Government should count their friends. One good rule in politics is never to attack the people who have voted for one's party. However, the Government appear to be doing that now. I do not know why I am bothering to tell the Government that. We all know people who genuinely save their money and do not ask for anything from the state. Those people need some help. I meet such people all the time. They put on a good front and they never ask for anything. They never ask for any extra benefit. This amendment would ensure that those people receive help. Such people constitute a large, fairly silent group of people. The Government should try to get on the right side of that group. Those people do not take part in campaigns and they do not complain. It is a very real point and the Government would be wise to accept the amendment.
§ Lord Boyd-CarpenterIt is a very odd amendment. It is particularly odd to include in the qualifications for the advantages which the amendment proposes to confer the receipt of a retirement pension. Of all social security provisions the pension has less relevance to someone's wealth than almost any other because, thanks to careful administration over the years, it is a benefit universally enjoyed by virtually everybody in this country over 65 or 60. If one looks round this Chamber there must be a considerable number of Members who are in receipt of a retirement pension. I am in that position. Equally, it is enjoyed at all levels of wealth. Therefore to include it in the amendment with the intention of helping people to qualify for a particular additional benefit is very odd and suggests a haphazard approach to the whole issue.
§ Baroness Hollis of HeighamPerhaps I may draw the noble Lord's attention to the wording of the amendment which reads:
the person who is liable … or their partner has savings of less than £16,000 and is in receipt of any one of the following benefits".I am not sure whether many of the people to whom the noble Lord referred, including Members of this Chamber, would have savings of less than £16,000 and a retirement pension. If they do they would be eligible.
§ Lord HenleyPerhaps I may answer on behalf of my noble friend.
§ Lord Boyd-CarpenterI am much obliged to my noble friend. I can do so adequately, but he will do it superbly.
§ Lord HenleyIf there were a capital limit of £16,000 one could have considerable resources beyond that and be very well off indeed. For example, there could he a large pension. A pension of any size would not be taken into account in that £16,000. A house and all the chattels attached to that house could form part of the capital but would not be counted within the £16,000 unless the noble Baroness is suggesting further amendments to the appropriate social security Act to change the definition of "capital" in social security legislation.
§ Baroness PhillipsTo what does the noble Lord refer when he mentions capital? I live in a house which represents my capital but that capital cannot be used, except ultimately by my heirs and successors, unless I sell the house.
§ Lord HenleyPerhaps it would help if I explained that the house in which the noble Baroness lives is not counted as capital for the purpose of income-related benefits. Nor are all the Van Dykes, Rembrandts or other paintings which the noble Baroness may have on her walls. The noble Baroness will remember that because we had a rather comic discussion in relation to the last Social Security Bill about whether a Rembrandt on one's wall counts as capital. It does not, unless the noble Baroness happens to be a dealer in Rembrandts in which case it counts as capital. If she has the painting for her own personal enjoyment it is not counted as capital. Nor is the occupational pension from which the noble Baroness may benefit counted as capital. All that counts as capital is other land or cash which the noble Baroness owns. Her own house and the chattels which go with it are not counted as capital.
§ Baroness PhillipsI should like to put the noble Lord right. I do not have any Rembrandts or anything valuable. I should like that to be known in case the press should make use of this exchange and a few burglars break in to my house thinking I am wealthy. I am the poor Baroness!
§ Lord Boyd-CarpenterWill the poor Baroness therefore condescend to explain the relevance of receipt of a retirement pension to this issue?
§ Baroness Carnegy of LourPerhaps I may ask the noble Baroness who moved the amendment to explain why one of the categories included in the amendment is people in receipt of a youth training allowance under the youth training scheme. I may be mistaken, but paragraph 4 of Schedule 1 on page 82 of the Bill tells us that a youth training trainee is disregarded. Therefore, why include that category if such people are totally disregarded? If I am right on that point I wonder whether the amendment has been fully thought out.
§ Baroness HamweeNo one could claim that the system advocated by the amendment would produce a perfect world, but that is the problem with the Bill as 1074 a whole. The amendment represents a reasonable attempt in the circumstances to make a bad system fairer. On that basis we support the amendment.
§ 3.45 p.m.
§ Baroness Hollis of HeighamAs many of my noble friends have made clear, this is not our preferred amendment. We would not wish to start from here. However, the amendment, which seeks to confine discounts to those people in receipt of one of the benefits listed and with savings of less than £16,000, is at least fairer than a system in which discounts are thrown at every single-person household irrespective of income and irrespective of need. It is a fall back amendment.
I accept that the amendment is not as finely targeted as the rebate system we prefer, but because it links entitlement to a particular benefit or a pension with a savings limit of £16,000, it provides a rough and ready way of meeting need and responding to need with a more generous system but without the need for individual means testing. The benefits are used as a passport. Using benefits as a passport is a well established principle of social security.
I was somewhat surprised by the comment of the noble Lord, Lord Henley, that we had omitted income support. I feared that Members of the Committee opposite did not fully understand the complexity of the Bill. Someone on income support receives a 100 per cent. rebate and therefore is not eligible for discount. The situation does not arise. Linking the benefit in this way would respond to the needs of those who receive only a partial rebate.
A number of comments have been made. I accept that the amendment is not as perfectly tuned as it would be if there were only rebates. However, at least it ensures that if we spend public money to discount bills that money will go to those in receipt of the benefits listed who have low incomes or additional needs and low capital resources. At least it ensures a fairer, more reasonable and straightforward use of public money than the system now proposed.
§ Lord HenleyThe noble Baroness said that the amendment would allow better use of public money. The noble Baroness attacked our discount system on the grounds that it was throwing some £700 million willy-nilly. Therefore, it would be only fair to the Committee if the noble Baroness would say how much her amendment would cost. It is no good her saying that it would be cheaper. It could easily cover a much wider range of people. It includes a large number of couples. It would be only fair if the noble Baroness gave her costings of the amendment to the Committee.
§ Baroness Hollis of HeighamThe Government propose a system offering £780 million in discounts without giving any figures as to the income groups which those discounts would benefit. If the Government do that, it is unreasonable to expect me to be able to identify figures when I do not have in front of me the books which the Minister has at his disposal to identify the precise costs. However, I am confident that it will be less than the sum of money the 1075 Minister mentioned. The important point is that it would be targeted at those who most need it. The Minister's Bill would not target the money.
§ Lord HenleyWhy would the amount be less if the proposal includes not only single people but a large number of partners?
§ Baroness Hollis of HeighamThat would apply only in such cases as the Alzheimer's example which I mentioned where one partner enjoys one of those benefits.
I believe that we have discussed the issue enough.
§ Baroness Carnegy of LourBefore the noble Baroness tells the Committee what she wishes to do with the amendment will she answer my question? Is the amendment flawed in that it mentions the allowance payable under the youth training scheme? Such people are disregarded under Schedule 1.
§ Baroness Hollis of HeighamI am not sure that I understand the point raised by the noble Baroness. In any case, we can perhaps follow it up later. We have discussed this matter for long enough. Although the amendment is not as generous as I would wish, it ensures that public money would be more fairly targeted on those who need it. In those circumstances, I should like to test the opinion of the Committee.
3.50 p.m.
On Question, Whether the said amendment (No. 82) shall be agreed to?
§ Their Lordships divided: Contents, 80; Not-Contents, 123.
1076| Division No. 1 | |
| CONTENTS | |
| Acton, L. | Hooson, L. |
| Ardwick, L. | Hutchinson of Lullington, L. |
| Beaumont of Whitley, L. | Jay, L. |
| Birk, B. | Jenkins of Putney, L. |
| Blackstone, B. | John-Mackie, L. |
| Bonham-Carter, L. | Judd, L. |
| Boston of Faversham, L. | Kennet, L. |
| Bottomley, L. | Kinloss, Ly. |
| Bruce of Donington, L. | Listowel, E. |
| Carmichael of Kelvingrove, L. | Llewelyn-Davies of Hastoe, B. |
| Cledwyn of Penrhos, L. | Longford, E. |
| Cocks of Hartcliffe, L. | Lovell-Davis, L. |
| David, B. | McIntosh of Haringey, L. |
| Dean of Beswick, L. [Teller.] | Mallalieu, B. |
| Desai, L. | Mar, C. |
| Donaldson of Kingsbridge, L. | Masham of Ilton, B. |
| Donoughue, L. | Mason of Barnsley, L. |
| Dormand of Easington, L. | Mayhew, L. |
| Ennals, L. | Milner of Leeds, L. |
| Ewart-Biggs, B. | Mishcon, L. |
| Falkender, B. | Molloy, L. |
| Foot, L. | Morris of Castle Morris, L. |
| Gallacher, L. | Murray of Epping Forest, L. |
| Galpern, L. | Nathan, L. |
| Gladwyn, L. | Nicol, B. |
| Graham of Edmonton, L. | Ogmore, L. |
| [Teller.] | Peston, L. |
| Grey, E. | Phillips, B. |
| Hampton, L. | Prys-Davies, L. |
| Hamwee, B. | Ross of Newport, L. |
| Hanworth, V. | Sainsbury, L. |
| Harris of Greenwich, L. | Seear, B. |
| Hilton of Eggardon, B. | Sefton of Garston, L. |
| Hirshfield, L. | Shackleton, L. |
| Hollis of Heigham, B. | Shepherd, L. |
| Stallard, L. | Tordoff, L. |
| Stedman, B. | Turner of Camden, B. |
| Stoddart of Swindon, L. | Wallace of Coslany, L. |
| Strabolgi, L. | White, B. |
| Taylor of Blackburn, L. | Williams of Elvel, L. |
| Taylor of Gryfe, L. |
| NOT-CONTENTS | |
| Ailesbury, M. | Hood, V. |
| Aldington, L. | Hooper, B. |
| Alexander of Tunis, E. | Howe, E. |
| Allenby of Megiddo, V. | Hylton-Foster, B. |
| Ampthill, L. | Ilchester, E. |
| Arran, E. | Jeffreys, L. |
| Astor, V. | Johnston of Rockport, L. |
| Auckland, L. | Joseph, L. |
| Balfour, E. | Kintore, E. |
| Belhaven and Stenton, L. | Knollys, V. |
| Belstead, L. | Long, V. |
| Bessborough, E. | Lyell, L. |
| Blake, L. | Mackay of Clashfern, L. |
| Blatch, B. | Malmesbury, E. |
| Blyth, L. | Mancroft, L. |
| Boyd-Carpenter, L. | Marlesford, L. |
| Brabazon of Tara, L. | Merrivale, L. |
| Brigstocke, B. | Mersey, V. |
| Brougham and Vaux, L. | Monckton of Brenchley, V. |
| Butterworth, L. | Mountevans, L. |
| Caithness, E. | Mowbray and Stourton, L. |
| Campbell of Alloway, L. | Moyne, L. |
| Carnegy of Lour, B. | Munster, E. |
| Carnock, L. | Nelson, E. |
| Cavendish of Furness, L. | O'Cathain, B. |
| Cayzer, L. | Orkney, E. |
| Chalfont, L. | Orr-Ewing, L. |
| Clanwilliam, E. | Oxfuird, V. |
| Cochrane of Cults, L. | Pender, L. |
| Cockfield, L. | Pennock, L. |
| Colnbrook, L. | Peyton of Yeovil, L. |
| Constantine of Stanmore, L. | Prior, L. |
| Cottesloe, L. | Pym, L. |
| Cox, B. | Quinton, L. |
| Denham, L. | Reay, L. |
| Denton of Wakefield, B. | St. Davids, V. |
| Derwent, L. | Saint Oswald, L. |
| Donegall, M. | Shannon, E. |
| Dundee, E. | Shaughnessy, L. |
| Effingham, E. | Shrewsbury, E. |
| Elibank, L. | Skelmersdale, L. |
| Ellenborough, L. | Stanley of Alderley, L. |
| Elles, B. | Strange, B. |
| Elliot of Harwood, B. | Strathclyde, L. |
| Elliott of Morpeth, L. | Strathcona and Mount Royal, L. |
| Erne, E. | |
| Erroll of Hale, L. | Strathmore and Kinghorbe, E. |
| Ferrers, E. | [Teller.] |
| Flather, B. | Sudeley, L. |
| Fraser of Carmyllie, L. | Terrington, L. |
| Gainford, L. | Teviot, L. |
| Geddes, L. | Thomas of Gwydir, L. |
| Gray of Contin, L. | Thorneycroft, L. |
| Gridley, L. | Thurlow, L. |
| Grimthorpe, L. | Trefgarne, L. |
| Hailsham of Saint Marylebone, L. | Trumpington, B. |
| Ullswater, V. | |
| Halsbury, E. | Vivian, L. |
| Harlech, L. | Waddington, L. |
| Harvington, L. | Wade of Chorlton, L. |
| Haslam, L. | Wharton, B. |
| Henley, L. | Whitelaw, V. |
| Hesketh, L. [Teller.] | Wise, L. |
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 3.58 p.m.
§ [Amendments Nos. 83 to 86 not moved.]
§ Baroness Hamweemoved Amendment No. 87:
Page 7, line 25, leave out ("25") and insert ("40").1077 The noble Baroness said: In moving this amendment I shall speak also to Amendment No. 126. There is a different discussion point on these amendments: to increase the discount from 25 per cent. to 40 per cent. for single people. We readily admit that the discount system will not be entirely straightforward to administer and that it will allow some who can pay the full amount to pay a reduced sum. If we are to have a tax which is essentially property based, that will be one of the consequences.We are to have discounts. In that case those discounts should go some way towards making the tax a fairer one and, crucially, one that is seen to be fairer. The Minister told us earlier in Committee stage and also at Second Reading that the reason for the introduction of the tax was that the poll tax was perceived to be unfair. I believe that we all accept that it is necessary for a tax to be seen to be fair in order to make it collectable. The discount should be as fair a proportion as possible.
Huge numbers of single people will be affected by the discount. The Government's own consultation paper, referring to the family expenditure survey for 1987 to 1989, referred to 25 million people in two-adult households. The next largest group—7 million people—were in single-person households. On average 33 per cent. of households are single-person households. In London, the average is about 40 per cent. One London borough estimates that the figure is as high as 50 per cent. In my borough of Richmond the 1981 census showed 19,700 single-person households. By last year it is estimated that the figure had increased to 23,100. By the year 2001 it is estimated that the figure will be 25,500. That is an increase of almost 6,000 persons over a period of 20 years in one of the smallest London boroughs.
I accept that some of those single people will be wealthy. However, for every single millionaire there will be many single parents and elderly people in financial difficulties. For personal reasons, such as divorce or widowhood, many will be left in a property which does not match their income. The "widow factor" was one of the most hated symbols of the rates, and rightly so. It is important that those who are required to pay the tax consider it to be an appropriate tax, but not just for cosmetic reasons.
The retirement pension of £52 for a single person represents about 62 per cent. of the pension for a married couple. The 1989 family expenditure survey indicated that a single retired person mainly dependent on state benefits has a pension income which is 58 per cent. of a couple's income. In 1987 net income figures for pensioners given in a Written Answer in another place indicated a similar level. In other words, a single person has an income which on average is less than 75 per cent. of a couple's income.
I propose that the discount be 40 per cent. Since a single person's income represents 60 per cent. that of a couple, such a discount is closer to that figure. The figures that one quotes are never entirely up-to-date. However, there is no reason to believe that the proportion has changed. To assume that 60 per cent. is about the right figure is a reasonable conclusion 1078 from the figures that I have studied. That assumption is supported by Age Concern, which also puts forward a similar figure.
In an earlier debate mention was made of the use of services. We were asked to consider whether a single person uses as much of a local authority's services as a couple. A number of arguments can be put forward on that subject. I believe that everyone should contribute appropriately to the overall needs of society. But let us take education. It is reasonable to regard education as requiring about 50 per cent. of a local authority's expenditure. Good adult education takes place around the country. However, education is mostly for the children of our society. I do not accept the logic of the argument that a single adult should pay as much as two adults or 75 per cent. of the amount paid by two adults. We refer to a service for the whole of society.
The property-based tax has many difficulties and anomalies. However, I believe that logic dictates that discounts should more closely match the means of people living alone. The amendment is a means of achieving that objective. I beg to move.
§ 4 p.m.
§ Lord McIntosh of HaringeyI have a great deal of difficulty with the amendment. I should have liked to support it because clearly it would have some beneficial effects. As the noble Baroness rightly said, a number of groups of people would benefit from an amendment to increase the discount percentage. I refer to people in detention, those who are severely mentally impaired, school pupils over 16, students and hospital residential home patients. However, my difficulty is that although it is a humanitarian amendment it makes the injustices of the discount system worse rather than better. It still does not have regard to the ability to pay. For example, the amendment would increase the discount for a second home from 50 per cent. to 80 per cent. I am sorry that the opportunity was not taken to extend the list of eligible categories in Schedule 1 to equally deserving cases. Even though we have not persuaded the Committee of the injustice of the discount system, I do not believe that it is the right tack to seek to extend the system. With regret, we cannot support the amendment.
§ Baroness BlatchIt is a fundamental principle that the council tax will reflect both the value of a property and the number of residents. We have explained many times why we consider that to be fair. We considered very carefully the balance between the personal and the property element of the tax and took the view that half and half would be appropriate.
Since the vast majority of households contain two adults or less, it is reasonable to base the council tax bill on the assumption that there are two adults in a property and then apply discounts where there are less than two adults. It follows that a single adult should be expected to pay the property element of the tax in full, but only half the property element, giving a 1079 discount of 25 per cent. In an empty dwelling only the property element is payable, giving a discount of 50 per cent.
A personal discount of 40 per cent., on the other hand, would imply a property element equivalent to a mere 20 per cent. of the Bill. This would not retain the balance we have struck between the personal element and the property element. The council tax is not a personal charge.
We believe that a local tax should take account of most adults, should be simple and cheap to collect, should demand less of single adult households than larger ones and should vary, within a limited range, according to property values. The council tax meets those objectives.
In addressing the amendment the noble Baroness has disregarded, first, the 25 per cent. discounts for single people; and for those on low incomes—for whom she rightly expressed a concern—there will also be rebates of up to 100 per cent. of the whole council tax bill, their share of it being 75 per cent. Indeed, the other category of persons referred to by the noble Baroness, for whom again we should have a concern, is the single adult parent living with a number of children. Again, the rebate system would work more generously for someone with children, and rightly so, because the allowances would come into play and the premium would play a part. Therefore, the level at which the rebate works would be much more generous than for someone living in a household without children.
The amendment places far too much emphasis on the personal aspect of the tax. We cannot accept it. I hope that the Committee will not accept it.
§ Baroness HamweeThe noble Lord, Lord McIntosh, referred to the difficulty of relating amendments to ability to pay. I expect that we shall continue to struggle to find ways to reflect ability to pay. We have already discussed the problem today and will continue to do so because that difficulty is an inherent problem in the Bill. The amendment is one of a series put forward by Members of the Committee in order to attain a tax which is somewhat nearer to such ability to pay.
§ Baroness BlatchI thank the noble Baroness for giving way. Amendment No. 87 has nothing whatever to do with ability to pay. It gives much larger discounts to single people, irrespective of income. Therefore, it is wrong to say that the amendment is an attempt to address the ability-to-pay factor.
§ Baroness HamweeAs I explained, the amendment is an attempt to assist in meeting the difficulties that a large number of people will have in paying the tax. It reflects the fact that by and large the income of single people is considerably less than that of a couple. To that extent the amendment is directly related to ability to pay.
I do not ignore the rebate arrangements. The rebates are welcome although not as welcome as better rebates would be. The amendment represents another attempt to skin this particular cat. There may be only 1080 a minority of people, but it is a substantial minority, who will experience the unfairness of the tax and draw their own conclusions. However, it appears that I am unable to take Members of the Committee with me and, therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Baroness Hamweemoved Amendment No. 87A:
Page 7, line 30, at end insert:("( ) An order made under subsection (3) above shall not be valid unless it is made on or before the 31st March in the financial year before the year preceding the year in which the charge is to take effect.").The noble Baroness said: The amendment is similar to that proposed last week to Clause 5. It ensures that a date is given after which an order made under the clause cannot be put into effect. It states the period that local authorities have in which to organise themselves. Last week the Minister said that local authorities would be given time to absorb change. He said that he was confident that a year's notice would not be necessary in every circumstance, although he accepted the fact that it would often be necessary to change the software.We on these Benches note the assurances that are given. I am moving the amendment at the request of CIPFA. It believes, and I agree, that an appropriate way to proceed would be to have the time period spelt out on the face of the Bill. I beg to move.
The Earl of BalfourSurely, this is a case where, in the interests of people receiving benefit and so forth, the order might be made upon the discovery by the Secretary of State that something had gone slightly wrong. I believe that the amendment could have the effect of making the position restrictive.
Earl HoweAmendment No. 87A would require the Secretary of State to make any order under Clause 11(3) to amend the appropriate percentage—that is, the value of the personal discount—a full 12 months before the relevant financial year begins. The Government accept that local authorities need good notice of any changes to the council tax system so that they can be implemented efficiently and effectively. But this amendment goes rather too far. Many parts of the local government finance system depend on government decisions that are announced a few months before the financial year begins; for instance, the national non-domestic rate multiplier and the amount and distribution of revenue support grant. There is no reason why any change to the appropriate percentage could not be made on a similar timescale. This would still allow local authorities ample time to adjust their systems to effect the change. I am advised that the relevant software is being designed with that contingency in mind.
I wish to reassure the Committee, and in particular the noble Baroness, that the Government have no intention of using their power to change the appropriate percentage, let alone any plans to do so at an unreasonably late stage. The reasons were spelt out in reply to Amendment No. 87. I hope that the noble 1081 Baroness will accept therefore that her amendment is unnecessary and, for the reasons that I mentioned earlier, positively counter-productive.
§ Baroness HamweeI thank the Minister for that reply. Many Members of the Committee are well aware of government decisions that affect local government budgets being made less than a year ahead of the relevant date—indeed, a great deal less than a year ahead. I am sure that we have all experienced examples of moving goal posts which make local authority budgeting an interesting exercise.
However, it is useful to have the Minister's assurances on the record. I have no doubt that practitioners will point to them should the Government not play fair. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ 4.15 p.m.
§ The Deputy Chairman of Committees (The Earl of Listowel)Before I call Amendment No. 88 I must point out to the Committee that if it is agreed to I cannot call Amendment No. 89.
[Amendments Nos. 88 and 89 not moved.]
[Amendment No. 90 had been withdrawn from the Marshalled List.]
On Question, Whether Clause 11 shall stand part of the Bill?
The Earl of BalfourI apologise for not having given my noble friend earlier notice of my intention to speak on this Question. The clause represents a good example of the difficulties that I have in understanding parts of the Bill. A great deal has been said about wealthy people with second homes and, at the other end of the scale, disabled and elderly people in respect of the discount provision in Clause 11 relating to England, in Clause 79 relating to Scotland and in Schedule 1.
I am thinking about the coal miner, the steelworker or the electrician who has been made redundant during the current recession. I am thinking of the very people in labour-intensive industries who traditionally have always tended to support the Labour Party or at least have never voted Conservative. I am thinking of the typical family of a husband, wife and two children. Let us suppose that the husband is made redundant and manages to obtain employment in another part of the country. He is then faced with the difficult problem of trying to run two homes; his home in the town of his new employer and his old home with his wife and children. Under subsection (1) (a) he is the sole resident of his new home and under subsection (1) (b) his wife is the only person counted in his old home. Therefore, a 25 per cent. reduction in the council tax can be obtained on both houses. That is good news and a good example of the way in which the Government are doing something for people who are prepared to help themselves.
Perhaps I may now play the devil's advocate and put a fly in the ointment by installing in the old home the grandfather who is suffering senile decay or who has Alzheimer's disease. That means that the 1082 household has two adults and therefore will not be eligible for a discount. That leads me to ask a number of questions. First, can the husband claim a double discount under subsection (2), because he lives only temporarily in his second home and is still officially resident in his old home with his family? In that respect I ask the Government to bear in mind the fact that any new employee is on probation for at least the first year of his employment. Furthermore, if there are any redundancies, the new employer will always dismiss the most recently employed.
Secondly, will the grandfather fall within Schedule 1(11) which states:
such description as may be prescribedor can his share of the council tax be recovered under social security benefit support? Again, I ask the Government to bear in mind that grandfather prevents the wife from obtaining a job because he is much more trouble than her children. The children are sent off to school in the morning and sent to bed at 8 o'clock in the evening. However, grandfather will be under the wife's feet all day long. The only peace she will have is when he is asleep watching television. It is much cheaper for the state if grandfather lives at home rather than in a geriatric hospital.I find extremely confusing the connection between Clause 11 and Schedule 1 because of the expression:
shall be disregarded for the purposes of discount".That is very nearly a double negative. To confuse me still further, there is the double discount in Clause 12(2) with Welsh billing authorities being able to make their own arrangements.
§ Baroness BlatchClause II gives effect to our discount proposals which are one of the most distinctive and desirable aspects of the council tax. The clause will ensure that single adult householders will face reduced bills compared with larger households living in similar dwellings. That removes what was perceived to be the greatest unfairness of the rating system to which Members of the Committee opposite wish to return.
My noble friend gave us a scenario of a typical family—a man, his wife and two children. The husband is made redundant and goes away to work. My noble friend is right in his assumption—and he recognises that it is good news —that the man will be able to qualify for the discount.
If the grandfather with Alzheimer's disease is severely mentally impaired, he is eligible for discount and the wife will still receive the 25 per cent. discount. As regards whether the husband could claim the double discount under subsection (2) because he is only living temporarily in a second home, he could still have his sole or main residence at the marital home. If so, he would obtain the double discount at the second home in the town in which he is working.
My noble friend asked whether the grandfather could fall within such a description as may be prescribed under paragraph (11) of Schedule 1. I assume that he is mentally impaired. Am I right in that assumption?
The Earl of BalfourI was thinking in terms of him being mentally impaired. One problem regarding 1083 people suffering from senile decay is that one needs a shoehorn to get them to go to a doctor. That is where the real difficulty lies. The wife cannot go to work. It would be a great help if the grandfather would go to see a doctor to be certified as slightly insane. However, by that time usually the person is a hospital case in any event. I was really playing the devil's advocate but so far I am pleased with the answers that I am receiving.
§ Baroness BlatchI can confirm that the grandfather would qualify for the discount. My noble friend referred to the form of words in Clause 11. That form of words means that people listed in Schedule 1 are eligible for discounts as long as there are less than two other adults in the property who do not qualify for discount. Therefore the 25 per cent. discount would be given. Does that answer my noble friend's questions?
The Earl of BalfourI am most grateful.
On Question, Clause 11 agreed to.
Clause 12 agreed to.
Clause 13 [Reduced amounts]:
§ Lord McIntosh of Haringeymoved Amendment No. 91:
Page 8, line 14, at beginning insert ("Subject to subsection (2A) below").The noble Lord said: In rising to move Amendment No. 91, I shall speak also to Amendments Nos. 92 and 93.Clause 13 is euphemistically headed "Reduced amounts". To laymen like me that means transitional relief. I am sorry to say that the history of transitional relief is not particularly good. If one looks at its history as applied to the poll tax we see that there was not just one decision that was politically motivated but there was a whole series of politically motivated decisions about transitional relief.
The original intention was that the poll tax would be introduced over a period of 10 years, with a four-year transition period specifically in inner London. There was a complicated system of area safety nets which involved losing and gaining areas. It was supposed to be carried out through an equalisation scheme rather than by the Treasury paying. That did not work and the Treasury agreed that for 1991–92 it would meet the whole cost of the area safety net.
Going back to 1989 when it was clear already that the initial poll tax bill would be higher than expected, the Minister of State, Mr. David Hunt, announced at the Conservative Party conference that there would be £350 million of transitional relief to protect those individuals or households where poll tax bills were more than £3 a week higher than the rates bill. That did not work terribly well because it was based on notional rather than actual poll tax bills.
By July 1990 the new Secretary of State, Mr. Patten, announced amendments to the 1991–92 scheme lowering the threshold and extending the scheme to 1994–95—another £310 million in transitional relief.
Finally, the present Secretary of State announced in January 1991 a community charge reduction scheme —a new name for the same beast—with the threshold 1084 reduced to £1 per week and all poll tax payers qualifying rather than only two poll tax payers per property. That amounts to another £1.3 billion on transitional relief. Therefore, it can be seen that transitional relief is an extremely expensive exercise.
What do we have now? We have no details of the nature, scope or cost of transitional relief because Clause 13 provides that that will be dealt with by regulation. In that way there is no need for any explanations in the Explanatory and Financial Memorandum. However, there is a crude and simple bribe for Conservative voters. It is obvious that any improvement on the poll tax will mean that in general better off people will suffer and poorer people will gain because the poll tax was designed to make the rich richer and the poor poorer. Therefore, any move away from a flat tax towards a degree of progression in local government finance will make the rich a little poorer and the poor a little bit better-off. That has been confirmed.
Independent academic studies have indicated that the comparative effect of the council tax over the poll tax is that there will be roughly equal numbers of gainers and losers, as there always will be when there are changes in a system without a change in the total amount demanded: that the top 30 per cent. of income bands would be worse off under the council tax and the bottom 30 per cent. would be better off. Indeed, 80 per cent. of the people in the top 10 per cent. income band would lose as a result of the council tax. However, the amounts of money are not enormous. Only 5 per cent. of families would lose more than £5 a week, so the social problem which is being addressed by transitional relief is not enormous.
The important point about transitional relief is that, however meagre the move towards a better and more progressive taxation scheme for local government which is proposed under this legislation, it is to be weakened still further by the introduction of transitional relief. Therefore, on a scale of injustice, if the poll tax is the worst and council tax the next to worst—and beyond that we could go to a more fair rates system or to local income tax; we do not need to take an ideological position at this stage on that— because of transitional relief we have something which is not even as fair as the council tax would appear to be.
These amendments would seek to ensure that transitional relief is related not only to the totally unfair poll tax, which is what the Government are proposing, but that we should go further back to look at obligations under the rates and apply transitional relief to that period. There is nothing remarkable about extending transitional relief. As I said, Mr. Heseltine announced in January last year the extension of transitional relief until 1994–95.
In order to justify these amendments it is not necessary to say that the rating system was ideal. As noble Lords from all sides of the Chamber have said, the rates were deeply flawed as a basis for local authority finance, but they were better than the council tax and very much better than the poll tax. Any improvement to the council tax which takes the rates into account rather than weakening the 1085 progressive element by taking the poll tax only into account is an improvement in the progressive nature of local authority finance. It more adequately reflects ability to pay than either the council tax itself or the council tax as modified by the transitional relief proposed in Clause 13.
These are important and necessary amendments because the Government, by regulation, are seeking to keep closer to the poll tax than they are willing to admit on the face of the Bill. I beg to move.
§ 4.30 p.m.
§ Lord SkelmersdaleI have been trying to follow the noble Lord's explanation of the amendment. I recall that about 30 per cent. of people did not pay rates at all. That causes me to ask the noble Lord directly how one can have transitional relief on nil rates. Presumably one would get the whole amount paid straight back to one as a freebie, which cannot be the noble Lord's intention.
§ Lord McIntosh of HaringeyI do not see any problem in that. No transitional relief scheme, whether it is a Hunt, Patten, Heseltine or McIntosh scheme, can be a 100 per cent. scheme. It is a balance, a judgment, between what was being paid before and what is being paid now.
§ Lord SkelmersdaleBut it is almost an infinity scheme. If nothing was paid before and something is being paid now, there will be transitional relief under the noble Lord's proposals.
§ Lord McIntosh of HaringeyI did not notice the noble Lord raising those objections when transitional relief between rates and the poll tax was introduced. Those were not infinity schemes; they were a balance between obligations under the rating system and those under the poll tax. This is a balance between obligations under the rating system and those under the council tax. There is no difference in principle between the two.
§ Baroness BlatchI am grateful to my noble friend for his pertinent question. It is also true that many people have moved, and they may well have paid either no rates or different rates from those which relate to the property which they then inhabit. The noble Lord has thrown no light on how the system would work.
In speaking to the amendment, the noble Lord and his colleagues continue to ignore the 85 per cent./15 per cent. split for local authority finance. They talk in terms of the rich single barrister and of the very top of the income scale, while conveniently forgetting the very large number of people on middle incomes who would fall right into the very punitive thinking of the noble Lords opposite. They simply cannot wait to tax those on middle to higher incomes.
The noble Lord, Lord McIntosh, referred to the rates as being deeply flawed. In saying that, he highlighted a very considerable confusion between himself and his colleagues; and, indeed, his noble friend Lord Desai who is sitting not a few feet away from him. All of them have commented very favourably on the old rating system and have quite 1086 fundamentally disagreed not only with the noble Lord, Lord McIntosh, but with their right honourable friend the leader of their party in another place.
If we are to accept what the noble Lord, Lord McIntosh, has said, we must take it that he is talking about a deeply flawed system, advocating a return to it, and also advocating that the new council tax should take account of what he believes to be a deeply flawed system. This Government moved away from that system because we agreed that it was flawed and that it was iniquitous and inequitable. Therefore we want no return to it.
These amendments are not helpful. In the first place, the last domestic rates bills were sent out in respect of the financial year beginning 1st April 1989. Since then new dwellings have been completed and obviously no rates bills have been issued in respect of them. Added to that are the number of people who have moved home since that time. The fact is that for the past two years the relevant form of local taxation has been the community charge, and it is against that baseline that we must consider the need for transitional protection. However, to some extent increases over the rates have already been taken into account in the present system of transitional relief. For all those reasons, I do not believe it would be useful to build in any reference to the old domestic rating system.
Finally, noble Lords will also be aware that we propose to make regulations under Clause 13 providing for a scheme of reductions for people with disabilities, so that where their home has to have special facilities in order to meet their needs their bill is calculated as if it had been placed one band lower. Earlier domestic rates bills should have no relevance to that process. I urge the Committee to reject the amendment.
§ Baroness HamweeIt seems to be a question of to which deeply flawed system one relates the transitional arrangements. This is a matter on which I feel particularly strongly, having witnessed the mixture of puzzlement and fury experienced by a number of people who lived in my own ward at the time the poll tax was introduced. I found myself explaining to people who lived in a council estate on the boundary of Richmond and Wandsworth that they were each paying £44 towards the residents of Wandsworth. I have to tell the Committee that the houses facing them across the road, in the borough opposite my borough, are very large.
We might again be told that the politics of envy are affecting what we are saying, but I have to say that that has left a very nasty taste. It leaves me with the feeling that any system of transitional relief must be considered very carefully. I support the amendment.
§ Baroness BlatchBefore the noble Baroness sits down, perhaps I may ask her what she would do, given the high mobility of people in London, about all those people who have moved away? Can she say how the transitional relief scheme will work for them?
§ Baroness HamweeThis is a property tax. We look at the properties and compare them.
§ Baroness BlatchPerhaps I may repeat a point that was made earlier. Those people may not have paid rates before.
§ Lord McIntosh of HaringeyThe Minister is succeeding in confusing the issue in her own mind, but whether she is succeeding in confusing anyone else, I do not know. She spent three-quarters of the time in replying to the amendment by not referring to the amendment at all, but by seeking to attack Labour Party policy. In another place Mr. Speaker has ruled that that is an undesirable way for us to spend the next few months until the election. I share that view. Throughout consideration of this Bill we are and have been concerned with the Government's proposals. It is proper that we should do that; it is our job and we should not be distracted by the generalised peppershot of political abuse which is being thrown around.
The Minister seems to believe that she has answered any question as to the justice or otherwise of the council tax system by reminding us of the 85 per cent. to 15 per cent. split between central government and local government expenditure. We shall table amendments on that subject at a later stage of the Committee. We shall seek to point out that central determination of the national non-domestic rate is a serious step backwards in the accountability of local government.
Even if that were not the case, is the Minister saying that because central government pays 85 per cent. of the costs of local government, it is wrong to get the 15 per cent. right? That does not seem to be a logical argument. When the Minister speaks about practical difficulties of a somewhat extended transitional relief scheme, I agree with her to some extent. It is obvious that the longer the period of time for the transitional relief scheme, the more difficult it will be to collect the tax and to find a just way of defining it. That is exactly what the Secretary of State did in January of last year, for purely party political reasons, when he spent £1.3 billion of public money on transitional relief. He planned that a sum should continue to be spent until 1994–95.
It does not come very well from those who have used transitional relief as outright and very expensive bribes to begin to complain about those of us who seek to show that the tax is even less effective in achieving justice in local government finance than the Government's proposals on the face of the Bill. The clinching argument is that Clause 13 is purely an enabling measure. It enables the Secretary of State to make such regulations as he thinks fit for transitional relief at such cost as he thinks fit. When one considers that the Explanatory and Financial Memorandum to the Bill goes into detail about relatively insignificant costs—£5 million for the annual cost of the preparation of valuation lists, or £15 million for the initial expenditure on setting up valuation lists—and ignores the fact that hundreds of thousands of millions of pounds are to be spent by the Government by regulation alone as bribes to Conservative voters, then the indignation expressed by the Government Front Bench seems to be particularly spurious. The Committee should take a decision on this amendment.
§ 4.44 p.m.
§ On Question, Whether the said amendment (No. 91) shall be agreed to?
§ Their Lordships divided: Contents, 77; Not-Contents, 135.
1089| Division No. 2 | |
| CONTENTS | |
| Airedale, L. | Jeger, B. |
| Ardwick, L. | Jenkins of Putney, L. |
| Beaumont of Whitley, L. | Judd, L. |
| Birk, B. | Listowel, E. |
| Blackstone, B. | Llewelyn-Davies of Hastoe, B. |
| Bonham-Carter, L. | Longford, E. |
| Boston of Faversham, L. | Lovell-Davis, L. |
| Bottomley, L. | McIntosh of Haringey, L. |
| Bruce of Donington, L. | Mackie of Benshie, L. |
| Carmichael of Kelvingrove, L. | Mallalieu, B. |
| Cledwyn of Penrhos, L. | Mason of Barnsley, L. |
| Cocks of Hartcliffe, L. | Mayhew, L. |
| David, B. | Milner of Leeds, L. |
| Dean of Beswick, L. | Molloy, L. |
| Desai, L. [Teller.] | Monkswell, L. |
| Donaldson of Kingsbridge, L. | Morris of Castle Morris, L. |
| Donoughue, L. | Morris of Kenwood, L. |
| Dormand of Easington, L. | Mulley, L. |
| Ennals, L. | Nicol, B. |
| Ewart-Biggs, B. | Peston, L. |
| Falkender, B. | Phillips, B. |
| Falkland, V. | Pitt of Hampstead, L. |
| Foot, L. | Prys-Davies, L. |
| Gallacher, L. | Ross of Newport, L. |
| Galpern, L. | Sainsbury, L. |
| Gladwyn, L. | Seear, B. |
| Graham of Edmonton, L. | Sefton of Garston, L. |
| [Teller.] | Serota, B. |
| Grey, E. | Shackleton, L. |
| Hampton, L. | Shepherd, L. |
| Hamwee, B. | Stoddart of Swindon, L. |
| Hanworth, V. | Taylor of Blackburn, L. |
| Harris of Greenwich, L. | Taylor of Gryfe, L. |
| Hilton of Eggardon, B. | Thomson of Monifieth, L. |
| Hirshfield, L. | Tordoff, L. |
| Hollis of Heigham, B. | Turner of Camden, B. |
| Hooson, L. | Wallace of Coslany, L. |
| Hughes, L. | White, B. |
| Jay, L. | Williams of Elvel, L. |
| NOT-CONTENTS | |
| Acton, L. | Colville of Culross, V. |
| Aldington, L. | Constantine of Stanmore, L. |
| Ampthill, L. | Cornwallis, L. |
| Arran, E. | Cottesloe, L. |
| Astor, V. | Denham, L. |
| Auckland, L. | Denton of Wakefield, B. |
| Balfour, E. | Derwent, L. |
| Belhaven and Stenton, L. | Donegall, M. |
| Beloff, L. | Dundee, E. |
| Belstead, L. | Elibank, L. |
| Bessborough, E. | Elles, B. |
| Blake, L. | Elliot of Harwood, B. |
| Blatch, B. | Elliott of Morpeth, L. |
| Blyth, L. | Erne, E. |
| Boardman, L. | Ferrers, E. |
| Boyd-Carpenter, L. | Flather, B. |
| Brabazon of Tara, L. | Forbes, L. |
| Brigstocke, B. | Fraser of Carmyllie, L. |
| Brougham and Vaux, L. | Geddes, L. |
| Burton, L. | Gray of Contin, L. |
| Butterworth, L. | Gridley, L. |
| Caithness, E. | Hailsham of Saint Marylebone, L. |
| Campbell of Alloway, L. | |
| Carnegy of Lour, B. | Halsbury, E. |
| Carnock, L. | Harlech, L. |
| Cavendish of Furness, L. | Harmar-Nicholls, L. |
| Clanwilliam, E. | Harvington, L. |
| Cochrane of Cults, L. | Haslam, L. |
| Coleraine, L. | Hayter, L. |
| Colnbrook, L. | Henley, L. |
| Hertford, M. | Oxfuird, V. |
| Hesketh, L. [Teller.] | Park of Monmouth, B. |
| HolmPatrick, L. | Pender, L. |
| Hooper, B. | Pennock, L. |
| Howe, E. | Perth, E. |
| Hylton-Foster, B. | Peyton of Yeovil, L. |
| Jeffreys, L. | Plummer of St. Marylebone, L. |
| Jellicoe, E. | Pym, L. |
| Jenkin of Roding, L. | Quinton, L. |
| Kenilworth, L. | Rankeillour, L. |
| Kintore, E. | Reay, L. |
| Kitchener, E. | Renton, L. |
| Knollys, V. | Renwick, L. |
| Lauderdale, E. | St. Davids, V. |
| Layton, L. | Saint Oswald, L. |
| Lloyd-George of Dwyfor, E. | Saltoun of Abernethy, Ly. |
| Long, V. | Shaughnessy, L. |
| Lucas of Chilworth, L. | Shrewsbury, E. |
| Lyell, L. | Skelmersdale, L. |
| Lytton, E. | Stanley of Alderley, L. |
| Mackay of Ardbrecknish, L. | Strange, B. |
| Mackay of Clashfern, L. | Strathclyde, L. |
| Malmesbury, E. | Strathcona and Mount Royal, |
| Mancroft, L. | L. |
| Marlesford, L. | Strathmore and Kinghorne, E. |
| Merrivale, L. | [Teller.] |
| Mersey, V. | Sudeley, L. |
| Milverton, L. | Swinfen, L. |
| Mottistone, L. | Teviot, L. |
| Mountevans, L. | Thomas of Gwydir, L. |
| Mountgarret, V. | Trefgarne, L. |
| Mowbray and Stourton, L. | Trumpington, B. |
| Moyne, L. | Ullswater, V. |
| Munster, E. | Vivian, L. |
| Nelson, E. | Waddington, L. |
| Newall, L. | Wade of Chorlton, L. |
| O'Cathain, B. | Wharton, B. |
| Orkney, E. | Whitelaw, V. |
| Orr-Ewing, L. | Wise, L. |
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 4.53 p.m.
§ [Amendments Nos. 92 to 93 not moved.]
The Earl of Balfourmoved Amendment No. 93A:
Page 9, line 30, leave out from ("Acts") to end of line 32.The noble Earl said: The social security Acts of 1992 are consolidation Acts which encompass all the relevant social security legislation referred to throughout this Bill and are specifically mentioned on page 78 in Clause 115, "Interpretation: general". I have received a letter today in which my noble friend has explained that the 1992 Acts are mentioned in Clause 13 to emphasise their importance. I am prepared to accept that. However, the Scottish mirror clause, Clause 80, does not mention the 1992 Acts. Although there are differences in the legislation in Part I for England and Part II for Scotland, when it comes to social security matters, there should be no difference. Therefore I feel that it is perhaps a pity that they are not mentioned in Clause 80. I suspect that it is the Scottish economy of words that is behind the reason.While I am on my feet it is worth pointing out that in subsection (8) on page 9, I think the reference to Section 111(2) should read Section 112(2). However, this is a correction which can be made off the Floor of the Committee. I beg to move.
§ Lord Boyd-CarpenterSpeaking as one who was once responsible for social security legislation, I agree with what my noble friend has said as to the 1090 desirability of using the same formulae in respect of England and Scotland. I hope that the Minister will find some reason (with his ingenious mind, he often does) for what on the face of it appears to be a violation of that principle.
§ Lord HenleyI would be the first to compliment my noble friend Lord Balfour on taking the trouble (unlike, I suspect, so many of us,) to read the Bill in such great detail. One is reminded of the words of Sydney Smith:
I never read a book before reviewing it. It prejudices me so.My noble friend certainly does not follow that advice.I am grateful to my noble friend for his thoughtful suggestions on this section of the Bill. He is well aware that Clause 115 provides a number of definitions, including those of the social security Acts. They are defined as the Social Security Contributions and Benefits Act 1992 and the Social Security Administration Act 1992.
But in order to be helpful to the reader, and I hope that this will deal with the point made by my noble friend Lord Boyd-Carpenter, the Bill also explains what is meant by the abbreviated terms at the point where they first appear. So when the term "Social Security Acts" first appears, as it does in Clause 13, and then later in what my noble friend Lord Balfour referred to as Clause 80, the Scottish mirror clause, it was on this first occasion that we felt it was appropriate to offer a meaning here and that it was not necessary when one gets to the so-called mirror clause, Clause 80. A similar example may be found in Clause 3 where, instead of merely referring to "the 1988 Act", which is later defined in Clause 115 as the Local Government Finance Act 1988, subsection (2) (c) provides its full title.
I hope therefore that both my noble friends will agree that on this occasion this is a useful practice and is consistent with the Committee's desire for clarity. I hope that he will now feel able to withdraw his amendment.
§ Lord Boyd-CarpenterBefore my noble friend sits down, if a different form of words is used in respect of the same matter relating to England and to Scotland, is there not a danger that a lawyer might think that some different effect was intended? In order to prevent this misunderstanding, would it not be simpler to have the same phraseology for both?
§ Lord HenleyI quite take the point made by my noble friend. It is a point which I put to those who advised me this morning when we were going through various amendments. I am advised that it is permissible on this occasion, and that a separate meaning is not created on a second occasion merely by the exclusion of the words used on the first occasion. It was for the clarity of the legislation that we felt it would be helpful to include it in this clause.
Perhaps I may deal with another point made by my noble friend Lord Balfour and with which I forgot to deal. He asked about subsection (8):
Without prejudice to the generality of Section 111(2)1091 As he said, that should read "112(2)". That is a typing error and can be corrected without going through the procedures of the Committee but corrected in the way that typing errors are corrected.
The Earl of BalfourI am grateful for that answer. All the same, I am glad that the point has been raised. I wondered for a while whether social security legislation affected by this Bill might bring in even more legislation, or other Bills, in respect of Scotland. It clearly does not. That has been aired. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 agreed to.
5 p.m.
Clause 15 [Valuation tribunals]:
§ Lord McIntosh of Haringeymoved Amendment No. 93B:
Page 10, line 1, at end insert:("(3) Such tribunals shall compile, and the Secretary of State shall publish, annually from 1st April 1994 reports setting out—
- (a) the numbers of appeals to each tribunal;
- (b) the proportion of appeals which were successful; and
- (c) an estimate of the average waiting time before appeals were heard, measured at the beginning and end of the financial year concerned.").
The noble Lord said: Clause 15 deals with the setting up of valuation tribunals, which used to be called and indeed are still called valuation and community charge tribunals. This appears to be the most convenient place for us to point out the conflict between the costs of the valuation lists as explained in the Explanatory and Financial Memorandum, which are estimated as £15 million of initial costs and approximately £5 million a year in running costs, and what seem to us to be the inevitable much larger costs of dealing with appeals. I realise that the Government are still obsessed with the idea that there are broad bands and by dint of not telling people where their properties are in those bands—in other words, not telling them the exact valuation of their property—the number of appeals will be reduced rather than increased. I take the opposite view and most of those who are involved in these matters—the practitioners in local government finance and valuation—also take the opposite view.
I take the opposite view for two reasons. First, the very fact of not knowing where one's property is in a band means that one will be tempted to think that one is at the bottom end and therefore can justifiably appeal in order to get into a lower band. The deterrent of feeling that one is a long way away from the boundary will be reduced by ignorance. Secondly, although we have consistently said that the differences in the bands are too flat from the point of view of progressive taxation, nevertheless they are so crude that there could be substantial benefits from appealing successfully. If, for example, there were a valuation of the property of only £1,000 that could mean at the right boundary a benefit of £50 a year—£1 a week or as much as 16 per cent. of the bill. That is clearly a worthwhile benefit and is not just the kind of marginal 1092 improvement that might have been gained from an appeal under the old and much maligned rating system.
I listened carefully and with great interest to the noble Baroness, Lady Gardner of Parkes, who confessed to the Committee that she had always appealed against her rating assessment in the old days and that she had done so not only for herself but for neighbours as well. She said that she sometimes received significant benefits. However, in doing so, the noble Baroness was, as I think she agreed at the time, relatively unusual. The appeals burden of the rating system was not enormous. The potential appeals burden of the council tax system, because of the ignorance of where one starts and the substantial benefits to be gained, is very much greater. We think that this matter ought to be kept not only under review but under public review. Therefore Amendment No. 93B provides that the valuation tribunals shall compile, and the Secretary of State shall publish, reports setting out the numbers of appeals, the proportion of appeals which were successful and an estimate of the average waiting time before appeals were heard, measured at the beginning and end of the financial year.
This is not a radical amendment designed to defeat the banding system. The amendment tries to ensure that there is public knowledge of the inevitable and damaging effects of the banding system which the Government are not prepared to acknowledge. I beg to move.
§ Lord Stoddart of SwindonBefore the noble Baroness replies I wonder whether she can answer a question. I seem to recall that under the old rating system there was an appeal from the local valuation tribunals to the lands tribunals. Is there any such appeal under the Bill? Is it intended that there shall be an appeal other than to the valuation tribunal as shown in the Bill?
§ Lord Boyd-CarpenterCan the noble Lord confirm my impression that if the amendment is not carried there is nothing whatever to prevent a noble Lord or a Member of another place putting a Question to Ministers whenever he or she thinks fit to elicit this information? In other words, is it really necessary, in order for the information to be available, that this provision should be inserted in the Bill?
§ Lord McIntosh of HaringeyI am delighted to confirm what the noble Lord has said. However, that is the case for large amounts of information which are produced by government and very often produced by governments for propaganda purposes rather than for the information of the public. The point about publication is not merely parliamentary responsibility. It is our responsibility to give information directly to the public at large rather than through the chance that an individual Member of Parliament or a Member of this House chooses to put down a Question. I have no difficulty in confirming what the noble Lord said, but I do not think that it in any way weakens the argument.
§ Baroness Carnegy of LourDo the Government envisage people appealing for their property to be moved into a higher band? If the noble Lord, Lord McIntosh, is right and there will be an advantage of £100 if one moves downwards, it might well be worthwhile to appeal to have one's band moved upwards if one is about to sell one's house or even to let it. The advertisement will give the banding. I wonder whether the Government have thought of this point. It might be an economical way of increasing the value of one's house. I hope that I am not bowling an unnecessary fast one at my noble friend when she is under great pressure on the Bill but I think that it is a point worth looking at.
§ Baroness BlatchPerhaps I may take those questions in reverse order. It will be possible to appeal against the banding, whether it is an upwards movement or a downwards movement. At my more Machiavellian moments I would be inclined to allow all appeals to a higher band. But no doubt the appeal would have to take its proper course through the system. In answer to the noble Lord, Lord Stoddart of Swindon, there would not be a second stage appeal but there would be the right of appeal to the High Court on a point of law.
My department has just undertaken a wide-ranging financial and policy review of valuation and community charge tribunals, the results of which will be published shortly. One of our key aims was to involve the tribunals more in their own strategic management, and in particular in setting targets for the clearing of appeals.
Statistics concerning the handling of appeals are already presented in a quarterly monitor. I believe that that will probably help my noble friend Lord Boyd-Carpenter. As regards access to that information, I should point out that those figures are not published publicly. However, they are available to the public on request. Therefore, the public have access to them. The information is not only available through the mechanism of a Question in Parliament, it is also possible for a member of the public to have access to such information. The information is collected and circulated to all tribunals. Aggregate clearance rates for the service as a whole are included in those figures, as appropriate, in my department's annual report.
At the moment we do not maintain statistics on waiting times. But we will discuss qualitative measures such as these with the tribunals with the aim of incorporating them into the management strategy for tribunals. Targets should not only encompass the number of appeals cleared each year, but also measure the quality of the service provided. Achievement of such targets would be very much in the spirit of the Citizen's Charter.
I doubt whether it would be especially meaningful to attempt to record the proportion of appeals which are successful. Successful to whom? There is of course more than one party to an appeal: the individual council tax payer may be one, but a billing authority or a listing officer may be the other. Sometimes all three may be party to an appeal. How shall we measure success? How shall we interpret those appeals that are withdrawn? Presumably one of the parties has 1094 become satisfied whereas he was not before. As a result of that withdrawal, one could deem it to be a success, but it would not form part of the statistics. That could be termed a "successful" outcome, perhaps to all parties.
I hope that I have satisfied noble Lords opposite that there certainly has been a review, the results of which will be published. There are also quarterly figures which are accessible on request. I believe that most of what lies behind the amendment in terms of the noble Lord's concern has been met. The matter before the Committee is a management issue rather than a policy question. Therefore, I do not think that the face of the legislation is the appropriate place to make this type of detailed statistical requirement; neither has the formulation of the statistics proposed in the amendment been well thought out. On reflection, I hope that noble Lords will agree not to press the amendment.
§ 5.15 p.m.
§ Lord McIntosh of HaringeyI certainly agree with the Minister that this is not a major policy issue; it is indeed a management matter. However, behind it lies a very significant policy issue and a very significant matter of concern for the public purse. In her reply, I noticed that the Minister did not respond to any of the points that I made about the likelihood of a large number of appeals arising as a result of the provisions for crude banding and the lack of information about individual bands. That is the policy point which we were seeking to make. I readily concede that the amendment is much more limited in its scope.
§ Baroness BlatchIf I may, I should like to respond to that specific point. I apologise to the noble Lord for not doing so earlier. First, the actual basis upon which properties are valued will be visible and well understood. It is based on capital values and, therefore, there will be a much better understanding on the part of individual property owners. Secondly, because people's property will be placed in bands, they will be able to verify that by consulting the list. They will also be able to see how other like properties in the locality are banded and will be able to make judgments. A great deal more information will be accessible to an individual without recourse to the appeal system. It is only if people believe their situation to be anomalous that they will need to invoke the appeal system.
The alternative advocated by the noble Lord, Lord McIntosh, is for a valuation on four different factors and a unique valuation of each property. But it is shrouded in mystery as to how those four factors would actually work. It would be exceedingly difficult for an individual to make any judgment about whether his or her property has been fairly dealt with. I believe that the system before the Committee will be infinitely simpler, much better understood and that it will give rise to fewer appeals.
§ Lord McIntosh of HaringeyIt is a great pity that the Minister when she had something helpful to say, as she did in her first speech about the review which is being carried out and which will be reported, should 1095 then cast doubt on the validity of that review by retreating again behind the smokescreen of attack on an alternative policy which is not before the Committee. It detracts from the accuracy and the point of our debate if, every time we make a point about the Bill, the Minister does not respond to it but instead turns around and makes a quite irrelevant attack on Labour Party policy.
§ Baroness BlatchI hope that Members of the Committee will be sympathetic to the fact that I constantly respond to the attack from the noble Lord opposite that, somehow or other, the system before the Committee will give rise to more appeals and is more complex compared with the system advocated by him, which would mean fewer appeals. I respond to that specific point on each occasion.
§ Lord MonkswellI should like the Minister to clarify a point. I refer to the element in the amendment which deals with appeals. The noble Baroness commented upon the proportion of appeals which are successful. I hope that she will agree that it would be a matter of public concern if, in a particular area, the number of valuations that were changed on appeal was significantly high. That would indicate a problem with the original valuations.
I take on board the Minister's point about judgment of the success or otherwise of an appeal, given the number of persons who could appeal, and how success could be judged. However, I wonder what her response would be if, instead of,
the proportion of appeals which were successful",the amendment read,the proportion of appeals which resulted in a change in the valuation".
§ Baroness BlatchI shall take the final point first. The proportion would feature in the statistics that the noble Lord could request to see. Details of the appeal system would be collated in that information. That is the purpose of the appeal system. For example, if there has been wholesale poor valuation across an area, I believe that that would show up very quickly. The appeal system would do that. Indeed, I believe that it would also give rise to a speedy resolution of any appeals if it were seen that properties across an area had all been dealt with on a basis that was seen not to be fair. The information that the noble Lord would like to find would be contained in the statistics that are produced on a quarterly basis.
§ Lord McIntosh of HaringeyI think that that final answer to my noble friend raises more difficulties than it solves. I say that because the Minister is now raising the possibility that there could be wholesale errors in the valuation process. Of course, I do not mean to imply that that applies right across local authorities.
§ Baroness BlatchI was simply saying—and it was a hypothesis—that if that were to happen, there is a system to deal with it.
§ Lord McIntosh of HaringeyThe Minister's response is that it will be dealt with by the appeals procedure. It seems to me that it could be an 1096 extraordinarily clumsy way to deal with wholesale inaccuracies in the valuation process if every single person affected by it has to appeal in order to get the matter put right. I believe that we shall have to return to this matter at a later stage, although it is not one that is reflected in the amendment before the Committee. I see that the noble Baroness wishes to intervene again. I am happy for her to do so.
§ Baroness BlatchI apologise. The noble Lord is most generous in allowing me to intervene again. I believe that I can be helpful to him. My understanding is that there will be some monitoring as the valuations come in to ensure that there has been a standard approach across the country. That is a preliminary step to iron out something as serious as an area which is anomalous within the system. Only if it failed that test, and there still appeared to be a problem, would it go through the appeal system. I hope that that is helpful. As I said, there will be monitoring right across the country to ensure that there has been a standard approach to valuation.
§ Lord MonkswellPerhaps I may come back on the Minister's answer. One of the difficulties that she presents is that the review statistics, which she says will be on a quarterly basis, are not published. That leads to the presumption that a significant number of people will not know the results; so how shall we ensure fairness? If there is a poor valuation return in an area, how will that knowledge be made available to everyone in the area so that they can all appeal and have their properties valued properly? Some people may hear about it on the grapevine, appeal and obtain the advantage, while other people will not hear about it and will effectively be treated unfairly.
§ Baroness BlatchThe noble Lord seems to be talking about two different things. The statistics refer to appeals once they have happened, whereas the amendments relate to the publishing of results of appeals; in other words, appeals which were or were not successful, as I understand it. The noble Lord asks how people will know whether they have been fairly judged. They will have a view themselves as to whether they have been fairly treated. They will have access to the lists so that they can look not just at the value of their own property, but at the value of other properties, if they wish to peruse the lists. If people believe that they have been treated anomalously within an area, it will be up to them to invoke the appeals procedure.
§ Baroness Carnegy of LourI am sure that the noble Lord, Lord Monkswell, is right to be anxious, but if he casts his mind back to how the rating appeal system worked when we had domestic rates, he will know that if someone succeeded with a rating appeal in an unusual way, it made the headlines in the local press. If a whole street or series of streets succeeded in altering the banding on appeal, I should imagine that there would not be any difficulty in hearing through the grapevine, because the excitement would be deafening.
§ Lord MonkswellI must come back on that point, because we are dealing with two different systems. One is a system administered by a quasi-independent public authority with a long history of established professionalism, training and everything which goes to make up an organisation's professional judgment; and the other is a new system outwith public administration in the sense that, as far as I can judge, we are effectively hiring estate agents to provide global valuations within bands. It is a different situation.
§ Baroness Carnegy of LourIn the previous system, the professionals gave the evidence. The people who decided were people like myself. I did it for years. We decided after hearing the evidence. It does not sound to me that the system will be all that different.
§ Lord McIntosh of HaringeyNo one is criticising the integrity of those who served on the rating valuation panels. My noble friend was saying—it is a valid point—that the original valuations are to be done on a cheap and dirty basis.
§ Baroness BlatchNo, no!
§ Lord McIntosh of HaringeyThere are parts of the country where valuations are being done at 20 pence a property. The total cost of doing valuations for the whole country is about £20 million instead of the £100 million that has been budgeted. I do not believe that the words "cheap and dirty" are inappropriate in those circumstances.
We have strayed a considerable way from the purpose and rationale of the amendments. We have had an unconvincing second go by the Government at claiming that there will not be large numbers of appeals. The criticism of the amendment itself has been trivial. As my noble friend rightly said, there is a perfectly good definition of what is successful. Something is successful if it changes something. I see no difficulty with that concept. We have dealt with the point about matters being subject to parliamentary questioning. The point has been made more clearly than the Government would wish. The valuation process itself is unsatisfactory; information available about valuation is unsatisfactory; the banding procedure is such as to encourage rather than discourage appeals; and, despite all our warnings, I believe that there will be trouble. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 15 and 16 agreed to.
§ Clause 17 [Completion of new dwellings]:
§ Lord McIntosh of Haringeymoved Amendment No. 94:
Page 10, line 44, after ("6") insert ("and subject to subsection (1A) below").The noble Lord said: I should like to speak also to Amendments Nos. 95 and 96, the important amendment being Amendment No. 95. The issue in Clause 17 relates to when is the proper completion date of a new building from the point of view of the council tax. In all previous legislation there has been an attempt to provide an adequate definition of the completion date; but, as drafted, the Bill contains no real attempt to define the matter properly. We have 1098 what appears to be an unnecessarily complicated procedure as between the valuation office agency and local authorities.The intention appears to be that the authority's rating inspector, who is not, incidentally, himself a surveyor, will note that a new dwelling is apparently complete. The local authority will then report that fact to the valuation office, and it will serve a completion notice on the person liable. A member of the valuation office will then visit the property to band it and to decide, in a qualified opinion, that it is or is not complete. If the valuation office decides, on the basis of better information, that it is not complete, the process has been unnecessarily protracted and will lead to an unnecessary and damaging disagreement between the valuation office and the local authority. I suppose if they decide that the building is complete one might argue that part of the process was unnecessary.
There is no party political point involved in this matter. The Federation of Master Builders was so unhappy about Clause 17 that it was willing to support an amendment which would have deleted Clause 17 and replaced it with a much simpler version. The proposed system appears to be complex and roundabout. The amendment, which would place the responsibility in the hands of the Commissioners of Inland Revenue, would be an improvement on the Bill as drafted.
The Earl of BalfourSurely the local authorities would know whether a new building had been completed and it should be for them to notify the Inland Revenue.
Earl HoweI am grateful to the noble Lord, Lord McIntosh of Haringey, for introducing the amendments, the purpose of which, as he explained, is to make the Commissioners of Inland Revenue responsible for determining the completion day of a new dwelling for the purposes of a completion notice. I agree with the noble Lord that this is not a party political matter; it is very much a practical matter. However, I hope that, when he has listened to me, he will agree that there is no logic in such a proposal, and I shall explain why I believe that to be the case.
Procedures for the service of completion notices are contained in Schedule 4A to the Local Government Finance Act 1988 and are already well-established for the purposes of non-domestic rates. Perhaps I may speak for a few moments about the procedures relating to non-domestic property because they are analogous and relevant to the procedures we propose for domestic property. A vacant building may give rise to a liability to non-domestic rates after it has been empty for three months. For a new building it is necessary to determine the date of completion of the building works in order to establish the commencement of the three month rate-free period. That is the duty of the local authority which also has other functions in relation to the construction of a new building under planning and building control legislation. As their inspectors are already involved in 1099 monitoring the progress of new buildings, local authorities are best placed to determine when a building is complete.
All the same considerations apply equally to the council tax except that the rate-free period will be extended to six months. Local authorities monitor the construction of new dwellings and they are best placed to determine completion days. Their decisions will be subject to a right of appeal to valuation tribunals. It is only when a dwelling is complete or a completion notice has been served that the billing authority will inform the listing officer (who is appointed by the Commissioners of Inland Revenue) so that he can value the property and enter it in the valuation list.
I agree with my noble friend Lord Balfour that it would be illogical to require the Commissioners of Inland Revenue to serve completion notices. They have no sources of information other than local authorities to tell them where or when new houses are completed. Even if the duty were placed on the commissioners, all the information would have to come from local authorities. The workload of local authorities would not be significantly less before the notice was issued and they could still be called as witnesses at appeals.
The noble Lord, Lord McIntosh, asked whether it should be the listing officer who decides whether the building is complete after the notification by the local authority. Arising from what I said, the noble Lord may realise that perhaps he has slightly misunderstood the procedure. The local authority decision is final, subject to an appeal and cannot be overturned by the listing officer.
We recognise that the serving of completion notices on domestic properties will place a new duty on local authorities. But they will also have a range of duties removed when the community charge is abolished. I can assure the Committee that when we come to look at revenue support grant settlements for 1993–94 and subsequent years we shall take proper account of all these changes in the duties of local authorities and frame the settlement accordingly.
I repeat that there is no logic in giving the Commissioners of Inland Revenue the responsibility for a task which can be carried out more easily and efficiently by the billing authority. I hope that the noble Lord will feel able to withdraw the amendment in that light.
§ 5.30 p.m.
§ Baroness Gardner of ParkesThe point made about the Commissioners of Inland Revenue was interesting, but I do not support it. The present system works perfectly well and there is usually quite a clear-cut moment when a building is completed. I speak as one who had to demolish and rebuild a structure. A time is agreed between the architects and builders.
A point on which I seek clarification from the Minister is that he said that there would be a rate-free or tax-free period of six months, whereas under the present system or the previous rating system that only applied if the property remained unoccupied for six months. From the date of occupation, the council 1100 would send a circular to ask on what date a person moved in, and there was no free period of six months after completion unless the property remained empty. Will my noble friend confirm that that remains the same?
Earl HoweI may receive clarification later but as I understand it, the six-month period relates only to unoccupied property. If a buyer comes forward for a new house, the house will immediately become subject to the council tax when the purchaser moves in.
§ Lord McIntosh of HaringeyBefore I consider my response on the amendment, I should be grateful if the noble Earl could tell me whether there has been consultation with the construction industry, particularly the Federation of Master Builders, which expressed concern to us. I referred to the federation in my opening remarks.
Earl HoweMy understanding is that there has been no direct consultation with the federation; but perhaps I may write to the noble Lord about it.
§ Lord McIntosh of HaringeyI must say that it is a pity. This is a technical rather than a political question; but my understanding—and I stand to be corrected—is that the valuation list is the property, the list, of the Inland Revenue.That is why the commissioners should be concerned with it. The valuation office agency is the professional arm of the Inland Revenue in this respect. Will it not be a next steps agency? The valuation agency has the professional expertise, whereas the local authority rating inspector may be qualified in building regulations but not necessarily on the question of whether a building is complete for valuation.
I fear that the Government are putting quite an onerous responsibility on to a local authority which does not have the qualified people rather than in the hands of the agency which does.
§ Baroness Gardner of ParkesThis matter is becoming unnecessarily complicated. The system which has always worked is quite simple and is a technical matter in terms of construction. Although I have had no direct brief from the building industry, I believe that it keeps us well informed. I am a member of the all-party parliamentary group, and if this were an issue, the industry would have told us.
The noble Lord opposite is right in one respect: the valuation group keeps a list. When I had to demolish my house, it was fascinating: the valuation office kept sending a man to see whether demolition had started because I kept sending the form in one day too early. The office is very particular. The actual business of when people move in —the technical completion—seems to be a matter of agreement between the architects, the builders and the district surveyor; or his equivalent now that district surveyors have been abolished. That seems a technical building matter on which there has been no problem.
Most local authorities determine the date on which one pays by sending people a form and asking them to complete it, stating the date on which they moved in. It is not the date on which it was empty or when the 1101 sale was completed, it is the date on which people move in and occupy the house. I appreciate from what the Minister said that there may be a maximum of six months, and if the premises remain unoccupied there may be liability. However, the introduction of the Commissioners of Inland Revenue is an unnecessary complication in a system which has worked well.
Earl HoweI am grateful to my noble friend for those remarks. Perhaps I may add that the local authority has a direct interest in making sure that completions are properly recorded because it represents income to them. That is their incentive.
The Earl of BalfourOne other point may have a bearing on the matter. A completion notice may be served, then the Inland Revenue values the house. Under the old rating system, the house was not rated until furniture was moved into it. If it was unfurnished, then it was not subject to rates, so far as 1 know. I imagine and hope that that is still the case under this legislation.
§ Lord MonkswellWe are all grateful to the noble Baroness, Lady Gardner of Parkes, but I suspect that her experience differs from that of some others of us. She may live in London and may have demolished a house and rebuilt it. She would obviously be keen to move in. That is one set of circumstances, but other circumstances need to be considered. Where a builder has built a new house or an estate, in a recession such as we are suffering at the moment, houses are completed, they are built, but the builder cannot find a buyer and no one lives in them. My understanding of the Bill is that they would become liable for the council tax. The builder has a vested interest in declaring to the local authority that the houses are not complete, when by any sensible measurement they are complete, as he thereby evades a tax liability. That situation is not just a minor technical matter that can be dealt with by professionals. This is something that needs to be sorted out and clarified.
§ Lord McIntosh of HaringeyI suspect that we are making heavy weather of this amendment, and I suspect that is my fault. I did not mean to take 15 minutes over a technical amendment. I shall read carefully what the noble Earl has said. I shall also read what the noble Baroness, Lady Gardner of Parkes, has said with the benefit of her experience, when I consider what to do with the amendment. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendments Nos. 95 and 96 not moved.]
§ Clause 17 agreed to.
§ Clauses 18 to 21 agreed to.
§ Clause 22 [Compilation and maintenance of lists]:
§ Baroness Hamweemoved Amendment No. 97:
Page 13, line 44, leave out subsection (2) and insert:("(2) The list must be compiled on 1st December 1992 and shall come into force on 1st April 1993.").The noble Baroness said: I hope this matter will not be regarded as party political. Amendment No. 97 is grouped with Amendments Nos. 98, 99 and 100. We 1102 shall perhaps spend a little time in debating Amendments Nos. 98, 99 and 100. However, I shall speak briefly to Amendment No. 97.The amendment is intended to assist local authorities in a practical way by providing them with some certainty. The amendment seeks to provide that the valuation list for an authority should be compiled on 1st December 1992 rather than on 1st April 1993. Such a change would allow local authorities to estimate their tax base for grant purposes and for budgeting purposes. They will need to adjust their estimates to reflect their discounts. After all, the higher the band, the greater the discount.
The amendment is intended to help both local authorities and taxpayers. There is to be no individual notification of this information to taxpayers. Information will, however, be posted at town halls and no doubt in such places as libraries. However, I believe that Clause 22(6) leaves this matter to local authorities to decide. Subsection (6) states that an authority shall,
take such steps as it thinks most suitable for giving notice".That provision may not, however, preclude local authorities from giving notice, but the thrust of this amendment is to allow information to reach a certain stage at an earlier point than would otherwise be the case. I beg to move.
§ Baroness Gardner of ParkesI do not see the need for this amendment. As I read Clause 22, it covers this matter already. Clause 22(5) refers to a date,
not later than 1st December".It is important not to make that date mandatory on the face of the Bill. Surely under the terms of this amendment a draft list must be prepared by then. Clause 22(3) states:the listing officer must take such steps as are reasonably practicable … to ensure that it is accurately compiled".It is important that the list is accurately compiled. I cannot see the need for this amendment.
§ Lord McIntosh of HaringeyBefore the noble Earl responds for the Government, I shall speak to Amendments Nos. 98 to 100 as they are grouped with this amendment. Amendments Nos. 98 to 100 are concerned with subsection (5) of Clause 22. They propose a more modest advancement of the dates for notification by the listing officer to the billing authority, and for the provision of lists. We are proposing that the first date should be advanced by two months to 1st July of this year, and that the following dates should be advanced by one month to refer to a point between the middle of October and the beginning of November rather than between the middle of November and the beginning of December. I realise the dates themselves are relatively trivial as we shall reach them in only a few months anyway. However, the issues here are important because a billing authority has to do a great deal of work which depends on the provision of the lists.
The lists are the basis for estimating the tax base for revenue support grant purposes and for budgeting purposes. However, they are also necessary as the authority must know what properties fall in which bands in order to make some estimate of what level of discounts is likely to be required. That is an important 1103 element in the setting of the council tax because discounts are financed by the other council taxpayers rather than by the Treasury. For those reasons, it is of the utmost importance to local authorities that the copy of the list should be supplied as soon as is physically possible. Amendments Nos. 98 to 100 seek to encourage the Government to advance the dates as far as they possibly can.
§ 5.45 p.m.
Earl HoweLet me deal briefly with Amendment No. 97. Valuation lists will be available on 1st December. But they will not formally exist within the terms of this Bill until 1st April 1993, when the council tax replaces the community charge. The only practical effect of the amendment would be to freeze the lists as at 1st December 1992. Liability for council tax will depend on the valuation list. It is right that the list should be as up to date and as accurate as possible when liability first arises, that is on 1st April 1993. It would be wrong not to reflect changes in circumstances between 1st December 1992 and 1st April 1993.
Subsection (5) of Clause 22 sets out the dates at which the valuation office must supply local authorities with valuation lists. The valuation office is already working to a tight timetable to produce valuation lists. Private sector valuers have been appointed to ensure the target dates in the Bill can be met. I have to tell the Committee that the valuation will not be complete in time to allow delivery of lists on 1st July as Amendment No. 98 seeks to require. Revenue support grant payments for 1993–94 will be based on the lists delivered between 15th November and 1st December. This is clearly of importance to all local authorities. We need to ensure that we use the most up-to-date information possible. I agree with my noble friend Lady Gardner that the lists should also be as accurate as possible. It does not therefore make sense to advance these dates. We are well aware that the timetable for local authorities is also challenging. But I have no doubt of their ability to meet the timetable. We are keen to give as much help as possible and that is why we are using professional advisers, particularly in regard to the computing implications of our proposals.
Local authorities will have the necessary resources. We have ensured that this is the case by providing council tax preparation grant. The 1992–93 revenue support grant settlement is also generous with central government support increasing by much more than the rate of inflation. There is no reason why the council tax cannot be implemented within the timescales set out in the Bill. For those reasons I urge this Committee to demonstrate its confidence in local authorities by rejecting these amendments.
§ Baroness HamweeThat is almost irresistible. Apparently a tight timetable has become a challenge. That is a challenge local authorities could do without as they have plenty of challenges. Apparently it is a commercial challenge for local authorities to make the best use of their finances. Local authorities have many challenges on their plates. It is appropriate that we 1104 should raise the issue although I did not expect that the amendment would be accepted. The noble Baroness, Lady Gardner, is quite right: I should have looked at subsection (3) and amended that at the same time. I apologise. In any event, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendments Nos. 98 to 100 not moved.]
§ Lord McIntosh of Haringeymoved Amendment No. 101:
Page 14, line 15, at end insert:("(6A) The listing officer shall deposit a copy of the lists mentioned in subsections (5) (a) and (5)(b)above at his principal office and take such steps as he thinks most suitable for giving notice of it.").The noble Lord said: In moving Amendment No. 101 I should like to speak also to Amendment No. 102. The amendment is necessary because, no doubt unwittingly, we gained the wrong impression from the Minister, the noble Baroness, Lady Blatch, in Committee on 21st January about early notification of banding to liable persons. At col. 795 of Hansard the Minister said: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".I have now had an opportunity to look at the minutes of the council tax technical sub-group meeting on 11th July which considered the matter. The impression that I gain from paragraph 34 of those minutes is not the same as the impression which the noble Baroness, Lady Blatch, gave in her speech last Tuesday. In order that there shall be no misunderstanding I shall quote the whole of paragraph 34, which reads:The Associations took the view that if advance notification of banding was necessary then it should come from the VO rather than LAs. The AMA thought it would be useful for there to be advance notification, but the ADC took the view that notification could be done with the first council tax bills".The first issue is that it was not that they were opposed to advance notification, but that they thought that it should come from the valuation office. After all the valuation office is in possession of the lists. That does not seem to me to be resisting the idea of early notification. Secondly, there was admittedly a disagreement between the Association of Metropolitan Authorities and the Association of District Councils but it is not accurate to say that it was the local authority associations which gave the advice not to require early notification. The Minister may like to think again about that particular answer.There may be different views on the matter, but as one who will pay the council tax I should have thought that the earlier I were notified about the band in which my property would fall the better for all concerned. If the information is available from the valuation list, I should be pretty upset if the first positive approach to me came with my first council tax bill around 1st April 1993. There are provisions for public inspection of the lists, and there will be further amendments on that 1105 subject, but positive notification of a matter of considerable importance to individual households ought to be made as early as possible. I beg to move.
Earl HoweIt is as well if I clarify some aspects of our proposals for valuation lists. In so doing I hope that I can show why I believe the amendments are unnecessary.
The valuation lists provided to billing authorities by 1st September 1992 will be provisional. Their purpose is threefold: first, to give billing authorities an early indication of their tax base; secondly, to help the Government in their revenue support grant deliberations; and, thirdly, to allow local authorities to make an early start in setting up their council tax database. That initial list will be provisional and may be subject to amendment. New properties will be added and omissions corrected. It may also be necessary to include estimates rather than final bands for some dwellings. The first list will have a very brief currency. It will be superseded by the draft valuation list which billing authorities will receive between 15th November and 1st December. That later list will be available for public inspection. I do not believe that the public would benefit if the 1st September list were also made available.
Clause 22 of the Bill already requires each billing authority to deposit a copy of the list received between 15th November 1992 and 1st December 1992 at its principal office and to give notice of having done so. The valuation office will also make the lists available at its local offices. I believe that the provisions in the Bill achieve what is needed. People who wish to know the band for their home will be able to establish it well before the first council tax bills are issued.
The noble Lord, Lord McIntosh, made reference to remarks made by my noble friend Lady Blatch last week. It may be illuminating if I quote from a letter which she wrote today to the leader of Newcastle council in which she says that she stands by what she said at col. 795 last week. She wrote that:
we put a proposal for early notification to the Associations but, having heard the views of their practitioners, decided not to pursue it.As I explained to the Committee, local authorities would be the organisations best placed to issue notifications. I understand that the Associations were unanimous in saying that this would be expensive and time consuming and could delay the council tax".The extract from confidential minutes which the noble Lord read out confirmed that.I hope that in the light of that response the noble Lord will be satisfied and feel able to withdraw the amendment.
§ Lord Ross of NewportBefore the noble Lord, Lord McIntosh, responds perhaps I may pose a question. I apologise if I have missed something. The noble Earl said that the lists would appear at the principal office of either the listing officer or of the Inland Revenue valuation office. Am I correct in thinking that those are the only two places at which the local authority or valuation office will be required to exhibit the list for public inspection? If that is the case in my part of the world it means going to Ludlow, which is 17 miles away, or to Abergavenny, which is 65 miles away. It is almost impossible for someone who lives in 1106 Knighton, as I do, to get to Ludlow unless he has a car because it is impossible to do so by public transport. Can we be assured that the list will be available in the principal towns of each rating authority?
Earl HoweMy information is that the lists will be available at the local offices. However, it would be as well if I obtained a closer definition of what that means.
§ Baroness HamweePerhaps I may follow up that point. Subsection (6) refers in the singular to the authority depositing the list at its principal office. We should welcome an amendment to clarify and expand on that point. If the Government were to bring forward an amendment to clarify it I am sure that we would co-operate.
§ Lord McIntosh of HaringeyI am afraid that I am satisfied neither by the answer in respect of the amendment nor by the answer given on the issue of the statement made last week. The minute which I read out makes it abundantly clear that local authority associations were not opposed to advance notification in itself, but were opposed to their being made responsible for it. As the noble Earl rightly said, they were concerned that it would be expensive and time consuming for them to set out such notification.
At the very least I suggest that the Minister had cut corners in the way in which she reported the matter to the Committee last week. If I am accused of quoting from a confidential document I can only say that I do so with good justification as the question arises because the Minister reported on confidential advice given to her by local authority associations.
Under those circumstances it is not open to criticise me for attempting to correct the record. The Minister's letter of today's date to the gentleman whom the noble Earl described as "the leader of Newcastle Council"—in reality the chairman of the Association of Metropolitan Authorities, in which capacity he wrote to the Minister—still seems to me to confuse the two issues.
The impression given by the Minister in her speech last week (at col. 795) was that local authorities were opposed to advance notification. That was a debating point made in relation to a comment from my noble friend Lady Hollis. The truth of the matter is that the Association of Metropolitan Authorities is in favour of advance notification but believes that it should be done by the valuation office. That seems to me to be an entirely respectable, reputable and defensible point of view.
To shortcut the argument, as the Minister did last week, is not to do adequate justice to the negotiations taking place between the Department of the Environment and the local authority associations. I very much regret that the Minister should have felt it necessary to write to Jeremy Beecham today stating:
I stand by what I said".She has no justification for doing that. The amendment still has the validity which it had before the Minister made her points about the views of the local authority associations. It may be a matter to which we shall wish to return. In the meantime, I beg leave to withdraw the amendment. 1107 Amendment, by leave, withdrawn.[Amendment No. 102 not moved.]
Clause 22 agreed to.
[Amendment No. 103 not moved.]
Clause 23 agreed to.
Clause 24 [Alteration of lists]:
§ 6 p.m.
§ Baroness Hamweemoved Amendment No. 104:
Page 14, line 34, after ("State") insert ("(a)").The noble Baroness said: Clause 24 gives very full discretion to the Secretary of State with regard to the alteration of lists. It goes so far as to provide in subsection (7) for retrospective effect. In order to maintain as much confidence in the system as one might reasonably hope to have, I ask the Committee to address the issue of regular revaluations.It seems to me that providing for revaluations at a fixed date would give certainty to the arrangements and would allow taxpayers to know in a more easily comprehended fashion precisely how life will go in the future. They will not be left with the uncertainty of revaluations at a time to be determined. I propose that there should be a revaluation on a five-yearly basis. I beg to move.
§ Baroness BlatchI am grateful to the noble Baroness for explaining the purpose of the amendment. As I suspected, it relates to changes to the list and regular revaluations.
Clause 24 concerns the alteration of lists once they are in force. Alterations will be needed to allow for new dwellings, changes of band on appeal and other circumstances. Regulations will be made setting out the detailed procedures to be followed. The amendments on the Marshalled List would require those procedural regulations to be made every five years. We believe that that would be quite unnecessary.
The noble Baroness indicated that the amendment was intended to lead to five-yearly revaluations. The need for regular revaluations was considered by the Committee in great detail last week. I shall briefly repeat our position.
As the Committee knows, one of the attractions of banding is that frequent revaluations are not needed. Even though property values may have changed, a large number of properties would be in the same band both before and after revaluation. As I explained, it is the relativities between properties which matter. That is an important point which bears repeating. Banding means that revaluation does not affect all dwellings.
Only when there has been a significant, long-term shift in relative house values would a general revaluation be needed. Local taxation should not be subject to short-term fluctuations in the property market. Our proposals ensure that it is not. There may be a need for a general revaluation. That is why the Bill provides for one. But we believe that regular revaluations will not be needed. I hope that the noble Baroness will withdraw the amendment.
§ Lord Ross of NewportI was very interested in the Minister's reply. I apologise that I was not in the Chamber last week when this point was very fully 1108 debated. I shall not go into great detail now. I have one or two amendments to put before the Committee which I hope will show to the Government Benches that they are likely to get into the most appalling mess if they do not allow for more frequent reviews.
I am hopeful—I am sure that the Government and everyone in this Chamber are hopeful —that house prices have now settled down and will not drop too much more. We hope that there will be a more stable situation over the next 10 years than has existed over the past decade. However, there are provisions which will allow for upwards-only revaluations where, for instance, additions are made to properties. I shall move an amendment in that respect later. When an addition to a property is made before 1st April 1993, that property will fall into a higher banding than the property to which an addition is made after that date. One will get many anomalies unless at some fixed period there is a revaluation.
The point is that if those changes are taking place in a period of 10 years or more before there is a revaluation, the records will get hopelessly out of date and a great deal of unfairness will be seen by the owners or occupiers of the properties. The Government ought to think again on that issue.
Like the noble Baroness, I believe that it is possible that there will not be many alterations made but there will have to be some. What happens if someone in the £90,000 to £100,000 bracket sells the property for £150,000? Presumably that property goes into the higher banding when the figure is fed through to the valuation office. (I am not sure how it will get there now because there will not be any stamp duty, but that is another matter.) On a broad basis let us say the property is on a rather nice estate in South London. Properties like the one that has just been sold may be very similar indeed. The property may be in Dulwich or somewhere like that where, we are told, properties could be worth £650,000. Perhaps now they have been reduced somewhat. Will the other properties be revalued or let for an interminable time until the Secretary of State might (or might not) choose to call for a revaluation? Knowing politics, he probably would not do so. But the people living in that house will feel very indignant to find themselves in a much higher band than their next door neighbour.
I put that as a possible case. I think that this arrangement will come unstuck unless there is a fixed term, probably five-yearly or quinquennial reviews.
§ Baroness Gardner of ParkesMy understanding of the debate last week was that persons paying the higher rate in an improved property would do so only if they had bought the property after improvement. Improvement to one's own home will not result in any upward valuation until it is sold. Therefore, if that upward valuation comes at the time of sale, the person who buys the property does so knowing that it will be in a particular band. They know that from what they pay for the property. The noble Lord may wish to hear that point, which was brought out very clearly earlier.
§ Baroness BlatchPerhaps I may come back on the point made by the noble Lord, Lord Ross. If I am wrong I shall make sure that I correct it. For the 1109 particular example he gave, my understanding is that if there is no material change and the owners of the property have not extended or improved it in some visible way, it will retain its 1991 value until such time as there is a general revaluation.
§ Baroness HamweeMy noble friend explained very effectively just what confusions can arise. We are all struggling with this point a little; and if we struggle with it, I believe that others outside the Chamber will be struggling considerably more.
§ Baroness Gardner of ParkesIf the noble Baroness will give way, perhaps I may say that we are not at cross purposes. It must be appreciated that I was discussing a situation where a material change had been made to the property. The Minister was discussing the situation where no material change had taken place. There was nothing contradictory in what we said.
§ Baroness HamweeI sought to explain that because so many different arrangements will apply to different situations, householders will not understand. It is a recipe for dissatisfaction.
§ Baroness BlatchI am grateful to the noble Baroness for allowing me to intervene. The position is not confusing; it is straightforward. If there has been a material improvement by the owner to a property, as and when the property changes hands there is a revaluation because it is a different home from the one that was revalued on that day in 1991. If there is no material change to the property, if the property remains the same in essence as the property that was valued in 1991, there is no change, and it remains in the same band.
§ Lord Ross of NewportPerhaps I may come back on the issue. If the property was in a banding of, say, £90,000 and, no improvements having been carried out to it, it is sold for £150,000, is it not possible that under subsection (5) (a) of Clause 24 someone other than a listing officer,
may make a proposal for the alteration of the list with a view to its being accurately maintained"?If it is similar to a property on an estate in, say, Dulwich, could not that person propose that the property be upgraded in banding?
§ Baroness BlatchIt could not be so proposed for the reasons given by the noble Lord in his example. It is possible that specific sums of money achieved as receipts for houses will change from the 1991 figure. The physical sums of money received for homes in 1991–92 or 1992–93 will inevitably change. Some will change for the better, some for the worse. It will not affect the banding unless there is a general revaluation and unless there has been a material change to the property.
§ Baroness HamweeI understand the point that the noble Baroness makes with regard to a sale. However, it is part of my argument that the purchaser of a property in such a situation will find himself in a higher band than his neighbours as a result of the sale.
§ Baroness BlatchNo. It will be a different home from the one valued in 1991. It will not be the house that was valued in 1991.
§ Baroness HamweeWe could continue to trade examples. Perhaps I may make one comment on another point that the Minister made with regard to banding maintaining relativities. I understand the point. However, I would have understood the position better had we accepted the regional banding amendments that were proposed last week. In this country we have experienced differing rates of fluctuation in house prices in different regions. There seems no reason why the pattern should alter. However, we have passed that point in the Bill. I regret that I cannot accept that the Minister's response satisfies the point that I made.
Having debated further aspects of the alteration of lists, revaluation and so on, perhaps it is an issue to which we shall return at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ 6.15 p.m.
§ Lord Stanley of Alderleymoved Amendment No. 105:
Page 14, line 34, after ("regulations") insert ("and, in the case of subsection (6) below, shall make regulations").The noble Lord said: In moving the amendment, I speak also to Amendment No. 109. The purpose of the amendment is to ensure that should there be a disagreement between the listing officer and another person making a proposal for an alteration to the list an appeal will be possible to a valuation tribunal.As the Bill is written, it merely states that the Secretary of State may allow an appeal. As I understand it, if he is so minded there is no need for him to do so. I cannot see any reasonable Secretary of State not making sensible regulations for allowing an appeal. Therefore why not put the provision on the face of the Bill? I beg to move.
§ Baroness BlatchMy noble friend is absolutely right to point out that regulations allowing people the right of appeal against their valuation band must be made. I can give the Committee an absolute assurance that such regulations will be made. I hope that with that assurance my noble friend will not press his amendment.
§ Lord Stanley of AlderleyI am grateful for that assurance. However, do I understand that my noble friend will put forward an amendment at Report stage to insert the word "shall" instead of "may"?
§ Baroness BlatchI should like to suggest that I am a reasonable person. I shall at least press the request on my noble friend's behalf. My understanding is that this is the normal phraseology. However, I shall seek an assurance without prejudice to the outcome.
§ Lord Stanley of AlderleyI am most grateful to my noble friend. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 106 not moved.]
§ Lord Ross of Newportmoved Amendment No. 107: 1111
Page 15, line 7, leave out from ("dwelling") to ("or") in line 8.The noble Lord said: In moving the amendment, I speak also to Amendment No. 114 which is relevant to it. The Government propose that properties should be revalued upwards only if there has been a material increase in value and a relevant transaction has been carried out. It means that full account will be taken of extensions built before 31st March 1993 in valuing properties for the council tax but that no account will be taken of those built after 1st April 1993 until the property changes hands.I wish to return to what we discussed a few moments ago. That provision will create serious anomalies between two neighbours, one of whom builds an extension in March 1993 and the other an identical extension in or after April 1993. The first person, having completed the work, may well end up in a higher valuation band.
Perhaps I may cite another example between two neighbours, one of whom builds a six-bedroomed extension in May 1993. As I understand it, he will continue to pay the same council tax as a neighbour who lives in an identical house without such an extension, if we do not have some review.
I read some of the exchanges in another place during Committee stage. The Minister, Mr. Stewart, was questioned about properties which have been sold at a higher value band than that under which they are listed. He said that a property can be banded upwards on sale, which is the point at which the owner realises his capital gain. Presumably he will not be taxed on that gain because it is a private house. When a sale takes place and the matter percolates through to the valuation officer, if it is of a substantially higher figure than that at which the property is banded—it is increased by two or three bands—can the valuation officer, or some other body such as the local authority ask for the banding to be changed?
Surely there will be anomalies unless one has a complete review. There will be anomalies, for instance, if someone has improved his property by building extensions between certain dates. I sought to clarify that position in the amendment. I believe that there will have to be more regular reviews than the Government have in mind. Otherwise one will finish up with an appalling mess. I beg to move the amendment, and I look forward to the reply.
Earl HoweThese amendments seek to widen the circumstances in which a dwelling would be re-assessed for council tax purposes. They would remove the requirement for a sale to take place before an extended or improved dwelling may be moved to a higher band.
We have made it abundantly clear that we have no wish to penalise those who improve their homes. That point was made eloquently last week by my noble friend Lady Gardner. Members of the Committee opposite may hope for a system where householders face council tax increases following even the smallest improvements. That is not a situation we should like to countenance.
1112 The situation where a dwelling changes hands is very different. People moving into a house are well aware of the liabilities that they are taking on. We believe it right that at that stage the council tax band be re-assessed and altered if necessary. This will ensure that properties which have changed hands are in the same band as identical properties elsewhere in an area, but that in the meantime home improvements are not discouraged.
A banded system of valuations has many advantages. One of the benefits is that the great majority of dwellings will remain in the same band over the duration of the list. Even many properties that are improved and subsequently change hands would not move between bands. Such stability should be welcomed by all.
It is possible to imagine anomalies in any system. However, one of the advantages of the banding system is that many improvements which are carried out will not be band significant. I hope that the noble Lord will join me in seeing the logic of the Government's view.
§ Lord Ross of NewportI have tried hard to do so, but I do not. I do not think that any Member of the Committee believes that if someone installs central heating or a bathroom where there was not one before he should automatically have an increase in his rateable value. Such increases occurred in years gone by, although they have not occurred recently. However, as regards someone who builds a major extension to his house costing £40,000 or £50,000, it would be fair to bring the property into a new band despite the fact that it has remained within the same ownership and has not been sold. I understand that a property must be sold before it can be moved into a new band.
We are dealing with provisions in the Bill in respect of which there will be trouble ahead. I want the measures to succeed because otherwise we shall be in a terrible mess. As I said on Second Reading, I believe that capital values and banding can be made to work. It was not our choice, as is well known, but we believe that it can be made to work. It is up to Members of the Committee to try to make the best job of the Bill that they can. The Bill's life was shortened in the other place because the Government want it on the statute book in double quick time. I shall read what the Minister has said about the amendment and consider whether to bring it back on Report. I believe that it is an issue which the Government will have to think about again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Lord McIntosh of Haringeymoved Amendment No. 108:
Page 15, line 22, at end insert:("( ) that a period of two months, beginning with the date on which a person other than the listing officer makes a proposal, be allowed for the listing officer to deal with the proposal;( ) that, if at the end of the period of two months the listing officer has not dealt with the proposal, an appeal may be made to a valuation tribunal;").The noble Lord said: This is a modest little amendment. It is intended to secure that the valuation office shall be required to deal with proposals about 1113 banding within the same period of time as the local authority has under Clause 16 to deal with complaints about other matters. The amendment adds two new subsections at page 15, line 22.At present the Bill provides that the valuation officer shall have six months in which to deal with proposals on banding in the same way as they do for non-domestic rating. However, councils will have only two months to deal with complaints about matters other than banding before the complainant has an automatic right to appeal to a tribunal. We can see no reason for that distinction. We believe that all issues relating to domestic properties are much closer together—and two months is appropriate—than they are to the non-domestic rating in respect of which we recognise that six months is appropriate. I beg to move.
§ Baroness BlatchIt is the Government's intention that an appeal may be referred by the listing officer to a valuation tribunal at any time when it has become apparent that the proposal cannot be resolved in some other way. In any event, this shall be no later than six months after the proposal is served on him.
Two months is the period allowed under Clause 16 for billing authorities to resolve matters of liability to council tax before a person may appeal to a valuation tribunal. However, valuation appeals are more complex and are likely to require more time to resolve. A provision for appeals to be made after only two months may simply lead to unnecessary references to valuation tribunals which might actually delay subsequent hearings.
Appropriate regulations will be made under powers in Clause 24(6). This amendment is unnecessary and it is misconceived in introducing the two-month period. I hope that the noble Lord will not press it.
§ Baroness Gardner of ParkesIs the Minister saying that the valuation officer must determine an appeal within six months? If so, is that period long enough?I understand that a person wishing to appeal against his banding will be able to do so within six months. However, did the Minister say that there is also to be a time limit on the hearing of the appeal? If so, the two months suggested is inadequate and even six months may prove to be inadequate. I am comparing the situation to dental appeals and so forth where there is a sudden surge of appeals all at one time. It is impossible to deal with them within a fixed period of time. Provided that the allowance of an appeal is dated back to the date of the application—so that if the appeal takes a longer period any downgrading in banding will relate to the date of the application—the time limit is unimportant and the amendment is inappropriate. However, will the Minister say whether there is any time limit?
§ Baroness BlatchThe Government's intention is that an appeal may be referred by the listing officer to a valuation tribunal at any time when it has become apparent that the proposal cannot be resolved. In any event, the referral shall be no later than six months after the proposal is served on him.
§ Lord McIntosh of HaringeyI am not as happy about the situation as is the noble Baroness, Lady Gardner of Parkes. No reference has been made to the provision in Clause 16. It provides that there is a two-month time limit in which:
a person may appeal to a valuation tribunal if he is aggrieved by … any decision of a billing authority … any calculation … of an amount which he is liable to pay".If the billing authority has made no response or has reached no agreement within two months there is a right of appeal to a valuation tribunal. When we dealt with Clause 16 I did not hear the noble Baroness, Lady Gardner, say that two months was too short a time.There is a particular reason why six months may be too long a period. People will have to complain about their banding no later than 30th September 1993. Therefore, they might be unable to go to a valuation tribunal until 1st April 1994. In other words, one will be running into two different valuation years before an appeal to a tribunal is dealt with.
I appreciate that in tabling the amendments to rights of access the Government are trying to make it easier to have the matters settled quickly. However, I still believe that the difference between the provision of six months before there is a right of appeal to a tribunal about the actions of the valuation officer and the provision of two months as regards the actions of a local authority is too great.
§ Baroness BlatchI thank the noble Lord for giving way. He said that an appeal cannot be lodged until September and that if one adds on six months we are talking about the following spring. I understand that the appeals procedure can be invoked as soon as the system is in place, should someone be unhappy about his banding. The procedure could start at the beginning of that time; and there are six months in which to appeal.
§ 6.30 p.m.
§ Lord McIntosh of HaringeyThe proper analogy here is that of deemed refusal of planning consent. If you think you are going to get somewhere by negotiation, you do not go to appeal. However, there must be a limit to the time in which negotiations can take place.
I accept that this is a complicated matter and as this is a probing amendment I shall read carefully what the Minister said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 109 not moved.]
§ Lord Stanley of Alderleymoved Amendment No. 110:
Page 15, line 34, at end insert:("(6A) The regulations may include provision that a person may require the listing officer—The noble Lord said: I must make it clear that this is a probing amendment because I wish to clarify a number of points in order to make it simpler for an individual to decide whether or not it is worthwhile appealing against the band into which his property has been placed.
- (a) to provide him with the listing officer's estimate of the value of the dwelling by reference to 1st April 1991 on such assumptions and in accordance with such principles as may be prescribed, and
- (b) to give him access to such information of direct relevance to the dwelling used in the valuation and the compilation of the list in accordance with sections 21 and 22 above, including information obtained by any notices served under section 27,
1115 and that subsections (4) to (6) of section 28 (information about lists) shall apply as if they applied to regulations made under this section."). First, how will he know whether he is at the top or the bottom end of the band? He is not as likely to appeal if the property is at the bottom end of the band than if it is at the top end. Secondly, how will he know whether the listing officer has correctly assessed his house? It goes without saying that many houses look the same from outside but inside they are quite different. I should point out that that part of my amendment does not mean that there is a need for an individual assessment. It means that it should be possible to find out what criteria were used to place all the houses in that band in that particular locality. After all, I should have thought that the valuers will be issued with these guidelines when preparing lists.
My amendment would tackle those two points by making it possible for an owner to find out what is the value which has been placed on his property. I believe that it would reduce the number of appeals because, as I said, those in the top half of the band will be less likely to appeal.
I appreciate that the problem was discussed at length at about seven o'clock on 21st January. My noble friend will say that it would be extremely expensive and time consuming to value precisely each property within the band. It would destroy the purpose of the relatively wide bands and further complicate an already complicated piece of legislation.
If there is to be an appeal system—and it is provided for in the Bill—some information must be available for those who wish to appeal. I believe it was Adam Smith who said that taxes must be able to be collected and must be seen to be fair. An appeal system which is seen to be fair is essential if the tax is going to work—and I hope that it will work. My amendment provides an answer and makes the appeals procedure very much fuller. If my noble friend cannot accept my proposal, perhaps she will give me an idea as to how the problem can be solved so that I can consider that between now and Report stage. I beg to move.
§ Lord McIntosh of HaringeyI am delighted to have the tacit support of the noble Lord, Lord Stanley of Alderley, for the argument which we have been making in vain over the past few hours. We too have argued that the lack of information about where a property fits within a band is an open invitation for more appeals than would otherwise be the case.
I do not know whether the noble Lord intended this but his amendment states that a person may require a listing officer:
to provide him with the listing officer's estimate of the value of the dwelling".That means an individual assessment of the dwelling, which is what the Government have resisted fiercely since the project for the legislation was first published 1116 last year. We believe that it is proper to have an exact valuation. It will satisfy the requirement that the tax should be seen to be fair, if indeed it is fair. We believe also that it will make it easier to amend more satisfactorily in a progressive way when there is a change of government.
§ Baroness BlatchI must emphasise that, although properties will be allocated to council tax bands on the basis of their open market value, only the band will appear on the valuation list which the listing officer holds. At no stage will the listing officer, as part of his duties under the Bill, be required to hold information about the exact capital value of a property for the purposes of council tax. To that extent, the amendment is flawed in that it would require the listing officer to provide information that he does not hold.
One of the principal advantages of a banded valuation system is that it will not be necessary to assess the exact open market value of each property. Appeals about valuations will not be about the exact capital value of a property but about which valuation band is applicable to that property.
My noble friend Lord Stanley has emphasised in particular that the details should be made available as to how all the houses in an area were put into a band. Properties will have been placed in bands on common principles as set out in the regulations. The valuation officer will guide the process of valuation on the evidence of actual sales in the area around 1st April 1991. Valuation officers will create valuations for typical or beacon properties in order to check the consistency of those valuations.
It would not be sensible to publish that information. It would need a considerable amount of interpretation in order to be useful. However—and this will be helpful to my noble friend—it is our intention that the listing officer should explain to a person making a proposal for a change in the list the information which has been used to assess the band for the dwelling and the basis of the decision. Should the listing officer and the householder not be able to reach agreement, the regulations under Clause 24 will provide that the evidence to be used by the listing officer on appeal should be made available as of right to the appellant.
The amendment would also allow regulations to be made which give access to relevant information held by listing officers. That is unnecessary. Members of the Committee will be reassured to know that we intend to use the powers conferred by Clause 24 of the Bill to make regulations on the alteration of lists and appeals which will follow closely existing regulations for the alteration of non-domestic rating lists. Those regulations will make provision for relevant information held by the listing officer to be shared in good time with the appellant.
It is wrong, however, to assume that matters will always reach an appeal. The normal process will be for the listing officer, or his representative, to discuss the case with the person making the proposal. We would expect the listing officer to explain his decision and the information on which it was based. In the great 1117 majority of cases we would expect agreement to be reached between the two parties without recourse to a tribunal.
The person making the proposal will, however, be expected to make his case for a change to be made to the valuation list based on the best information available to him. I cannot agree that it would be productive to allow people to go on fishing expeditions for information before putting forward a proposal. That would be the effect of the other part of this amendment. I must emphasise that we are in no way seeking to prevent access to information that will be relevant to an appeal. We must ensure, however, that the valuation office is not burdened by requests for information.
Having regard to the guaranteed rights of the appellant as I have spelled them out, I hope that my noble friend will withdraw the amendment.
§ Lord McIntosh of HaringeyBefore the noble Lord, Lord Stanley, responds to that reply, I am interested —as I have been on a number of occasions during the course of the Committee stage—by the new information which the Minister is able to give to the Committee about what will be in the regulations. I sometimes wonder whether, had we not tabled amendments, we should be given that information at all. Is there no systematic way for Parliament and the public to be informed about the Government's intentions as regards the regulations? If the Government are making decisions of that kind which they are prepared to announce, and yet they do not volunteer them except in response to amendments, it makes me wonder whether we are dealing with a substantive Bill or merely an enabling Bill.
On the previous amendment I did not pursue the fact that the draft regulations on valuation tribunal procedures have been awaited for a considerable time. It would be helpful for the Minister to tell the Committee when we may expect them, and particularly whether we may expect them in time for consideration at Report stage.
I am generally unhappy about the extent to which the legislation gives the Secretary of State power to make all the important decisions by regulation. I am even more unhappy, paradoxically, if we only learn, almost by chance, what the regulations will contain.
§ Baroness BlatchThe point being made by the noble Lord is rather unfair. We are talking about the details that follow up primary legislation. The protection is in primary legislation and the detail of implementation is contained within secondary regulations. Also, all the regulations issued so far are available to noble Lords in the Library. My department is already consulting with local authority associations and others about them. When they are published they will be made available to noble Lords.
§ Lord McIntosh of HaringeyThese matters were not made available in the Library until I asked, and most of the negotiations with local authority associations have been in confidence. Therefore, it has been impossible for us to know what the regulations contain and to refer to them. It is only when we get 1118 scraps from the table, so to speak, that we are able to fulfil our responsibilities adequately as an Opposition. I am not happy with the situation.
§ Lord Stanley of AlderleyI am considerably happier than I was on an earlier occasion when I was snapped at by the Front Bench in no uncertain way. The answer from my noble friend today has been extremely helpful, and I shall read Hansard carefully. I fully understand why she does not want each property to be individually valued. If I may say so to the noble Lord, Lord McIntosh, my noble friend has gone out of her way to try to explain what will be in the regulations.
While I am having a go at the noble Lord, Lord McIntosh, perhaps I may say that I thought the purpose of this Chamber was to try to get to the nitty-gritty of the Bill. That is exactly what we have done today. I was particularly keen on paragraph (b) of my amendment. Paragraph (a) was intended simply to keep the noble Lord, Lord McIntosh, happy. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 111 had been withdrawn from the Marshalled List.]
§ Lord McIntosh of Haringeymoved Amendment No. 112:
Page 16, line 16, at end insert ("or by any change in the physical state of the dwelling's locality").The noble Lord said: Although this is not by any means the same amendment, it follows the issues raised by Amendments Nos. 107 and 114. We propose that the definition of "material increase in value", which should be taken as a reason for an increase in the rateable value, should be extended to cover any change in the physical state of the dwelling's locality. There is an apostrophe missing in the amendment as it appears on the Marshalled List.The point has been well established by the noble Lord, Lord Ross. I do not wish to add much to what he said except to reinforce the view he expressed that it is not going to be seen to be fair if these changes take place and they are sometimes reflected in rateable value and sometimes not; in other words, if they are only reflected in rateable value when a property changes hands.
It is not just a question of changes to the individual property—I know that noble Lords opposite are fanatically opposed to the idea of an extension, an additional bathroom or anything of that sort, being used to increase rateable value—but also a question of the locality. It is very difficult to understand why there should be a difference between the definition of a material increase and a material decrease, or rather the way in which they are implemented, when, for example, if you live in a house on a main road and a bypass is built you benefit from the building of the bypass, but if you live on the bypass you suffer from the building of it. It is strange to think that one of the two should be rewarded, or penalised as the case might be, but not the other.
In this supposedly simple Bill the provisions made here will not be seen to be fair and will not be seen over 1119 a period of time to reflect a rational valuation system. The only way to achieve that will be by regular revaluation. I beg to move.
§ 6.45 p.m.
§ Baroness Gardner of ParkesThe amendment overlooks the fact that the Bill as it stands gives the occupant or owner of the house the best choice. If the area goes down in the way that the noble Lord explained—that is, if a bypass is built—one will be able to apply to have one's property revalued down. On the other hand, if, as we have seen in Hackney and other parts of London, young people move into a rather shabby area because it contains property they can afford and if, because of their efforts, the area becomes more desirable and attractive and is revalued upwards, as the noble Lord would want under his proposal, those very people might no longer be able to afford to live in the area. Therefore it would be wrong to bring in that provision.
The fact that the Bill has a provision for a general revaluation from time to time should be enough if a point is reached where people find that everything is getting out of line, as it certainly was with the 1973 list. I think I have explained to noble Lords before how Georgian properties were not fashionable in 1973 and therefore attracted a lower valuation but are now much more valuable than newer properties built in the 1950s. That might happen again. If so, there would be provision for a general revaluation. However, to act as the amendment proposes might penalise very unfairly young people who are trying to improve the lot of themselves and their families.
Earl HoweWe have already debated the principle underlying the amendment, and I have explained why the Government cannot accept that principle. I have also explained to the Committee that our proposals obviate the need for constant revaluations to take account of short-term changes in the property markets. Local taxation should not be subject to short-term fluctuations in the housing market.
Our proposals ensure that when a dwelling changes hands the banding can be reassessed. If that dwelling had been substantially extended since 1st April 1993 a higher band may be appropriate. These proposals ensure that, on a change of hands, those properties are put in the same band as dwellings which were extended before 1st April 1993. That gives consistent valuations while avoiding short-term disincentives to home improvement.
The amendment would remove that principle. To extend the example I have just provided, if there had been a change in the locality, such as the reclamation of derelict land nearby, on change of hands the newly extended dwelling might be placed in a higher band than its identical neighbours. That would not be fair; nor would it be seen to be fair. I agree with my noble friend Lady Gardner that it would not be fair on those people who moved into an area thinking they could afford it only to find suddenly that they cannot.
1120 As I said, while there will be anomalies in any system devised for valuations, this is the fairest system that the Government have been able to devise. I urge noble Lords to support it.
§ Lord McIntosh of HaringeyI suspect that what both the noble Earl and the noble Baroness Lady Gardner have been doing is reinforce my feeling that ultimately the only solution is regular revaluations. I accept that there are still anomalies even if this amendment were to be agreed to, although I do not believe that they would be as severe as the anomalies in the Bill at present. I am always a little surprised to find that those who consistently attack the Labour Party for failing to hold revaluations and who panicked when they saw the results of their own revaluations, should fail to realise that all revaluations are difficult, but delayed and forced revaluations which are provided for in the Bill, are even more difficult. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Baroness Hollis of Heighammoved Amendment No. 113:
Page 16, line 22, at end insert ("or any facilities required to meet his needs which would have been taken into account under the provision of the Rating (Disabled Persons) Act 1978").The noble Baroness said: With this amendment we return to discussing the situation of disabled people in appropriate property. Amendment No. 44, which the Committee rejected, raised the issue of property for the disabled which was in band A and which therefore could not enjoy the advantage that other properties did of dropping a band. Amendment No. 113 turns to what is going on within the property. I hope that we can gain some support from the Minister. It may appear that there is not very much between us.As the Bill stands, it appears that the material adaptions to a property needed for a disabled person to qualify for reductions—that is to say, reducing the band other than for those in band A—is more tightly drawn under this Act than was the case under the rates. I hope very much that the Minister can persuade us otherwise, but at the moment it appears that under the council tax disabled people in property will find that qualification for the reduction is more tightly drawn.
If the amendment is inadequately drafted, nonetheless I hope that the Minister will address the issue behind it. He will correct me if I am wrong, but I understand that, first, improvements which add to the value of the house—for example, another bathroom for use by someone who is disabled —would not alter the valuation until the point of resale. If the house is then occupied by a disabled person, that might be sufficient for a reduction. Secondly, under Clause 24, facilities which have been specifically installed to meet the needs of a disabled person—for example, widened doorways, a downstairs water closet, and the like—would count and as a result the property would drop a valuation band.
Thirdly, there appear to be two anomalies. Where a person has moved to a larger house because of disablement where such facilities were already in place, there is no eligibility to drop a band. Fourthly, 1121 I believe that for certain facilities under the 1978 Act a two-bedroom property would have been regarded as a one-bedroomed flat. For example, when someone becomes disabled and lives in a current property which has facilities like a garage, which is essential for somebody who has severe mental handicap; or a couple living in a two-bedroomed flat where someone becomes disabled and needs a separate bedroom. However, under the present Act that is not the case.
I shall be very happy for the Minister to reassure me that I have misread the Act. It appears that if someone moves to a larger house which has facilities installed because they are needed in view of disablement, the occupant will not drop a band. It further appears that if in the present house a person becomes disabled and certain facilities therefore take on a new significance, that would not render the occupant eligible to drop a band.
Who is to establish a need for such facilities? Will it be the listing or valuation officer? That seems hardly appropriate given their backgrounds. Will it be the responsibility of occupational therapists? In that case there will be a new demand on their time. Who will fund them? This amendment has the support of MENCAP, RADAR, the Disablement Income Group and the Association of Disabled Professionals. As I have said, many disabled people; namely, those in receipt of an attendance allowance, a mobility allowance, a severe disablement allowance, an invalidity benefit, and the registered blind who previously qualified for rate relief, may not now qualify for similar relief under the council tax. I hope that the Minister will respond generously. I beg to move.
§ Baroness Masham of IltonI support this amendment, which has been so clearly moved by the noble Baroness, Lady Hollis of Heigham. The extra needs that disabled people have are not luxuries. They can be the difference between living in the community or living in care. If a person cannot use public transport, but can drive a car, that becomes an essential for independence. A garage or a car port also becomes an essential and not a luxury. Disabled people have become targets for abuse and for being robbed. Therefore, they need help.
I wish to follow on from what the noble Baroness said as regards who is to carry out the assessments concerning disability. There is a very long waiting list for work done by occupational therapists. There are not enough of them. I shall be very interested to hear what the Minister has to say on the matter. Problems of disability are always difficult because they are so varied.
§ Baroness Gardner of ParkesWhen my noble friend the Minister replies to the amendment, can he clarify the position regarding homes built to disabled living standards? There is now encouragement for people who are doing new-build to construct doors that are much wider, and so forth. Does that mean that such a house, when occupied by an ordinary person, would not attract the lower banding? However, if that person or a subsequent occupier, is registered as disabled, would the banding then become one band lower?
§ Lord Henderson of BromptonI support the amendment which was very moderately moved by the noble Baroness, Lady Hollis, and supported by the noble Baroness, Lady Masham. Those of us who are interested in disabled people are most grateful for the concessions on tax relief for the disabled announced by Mr. Portillo in the Standing Committee in the other place.
This is a kind of mopping-up operation and something which perhaps Mr. Portillo did not understand the need for and which has now been emphasised in this Committee. We cannot understand why the statutory provisions for disabled people having access to local tax relief which applied during the rating system under the 1978 Act, have not been perpetuated or reinstated, whatever is the proper term, for the council tax. The onus is on the Government to explain to the Committee why they have made the change. If they cannot do that to the satisfaction of Members, I very much hope that the Government will take the matter away and consider putting disabled people into the same classification as they were in the rating system under the 1978 Act.
The arguments have been so well deployed by the two noble Baronesses that it would be superfluous for me to say anything more except that I support their contention that it is clearly inappropriate that the kind of valuation of the alterations to the homes of disabled people be undertaken by any valuation officer. Some other arrangement would have to be made in that respect in any case. I hope that the Government will look sympathetically on this amendment and perhaps add it to the concessions that were made by Mr. Portillo in the other place.
§ Baroness HamweeI associate Members of the Committee on these Benches with the amendment for the reasons which have been expressed so eloquently by the noble Baronesses, Lady Masham, and Lady Hollis of Heigham. The proposed amendment is not asking for anything novel by referring to the 1978 legislation. It is simply seeking to replicate the situation that applied then. It is not a contentious amendment in that sense, but it is of very great moment to those concerned, and we support it.
§ 7 p.m.
§ Lord HenleyI start by assuring the noble Baroness, Lady Hollis, that on this occasion I have no complaints about her drafting, or that of whoever drafted the amendment for her. Perhaps I may also say how glad I am that the Chamber has filled up during the course of the debate on this amendment. It demonstrates the anxiety that this Committee always feels in matters relating to disabled people and their concerns. I hope I can show that the Government also take those concerns very seriously. I am grateful that the noble Lord, Lord Henderson, welcomed the concessions made in another place by my honourable friend Mr. Portillo. I hope that I can establish that we have gone as far as it is necessary to go.
We have taken pains to ensure that the tax will be fair to disabled people, both in the valuation exercise and through the separate scheme of reductions that we 1123 have worked out with RADAR and other bodies. Amendment No. 113 would allow lists to be altered under Clause 24 if a reduction in the value of a dwelling were brought about by the existence of certain facilities for disabled people.
I should like to say that although I have no complaints about the drafting of the amendment I do think that on this occasion it is misconceived. The facilities in the Rating (Disabled Persons) Act 1978 were all deemed to add to the value of the property; hence the provisions in the 1978 Act to give rebates to disabled people in respect of them.
On the other hand, we are discussing now a reduction in the value of dwellings. Where reductions in value occur because of adaptations for disabled people the Bill allows regulations to be made so that lists can be altered if the reduction in value is large enough to place the property in a lower band. Any increase in value brought about by adaptations for a disabled person will not lead to the property being placed in a higher band, because lists will not be altered until the property changes hands.
The noble Baroness, Lady Hollis, made an interesting point when she referred to someone moving to a larger house because of a disability. She asked whether that could lead to a reduction in band. She also asked—I think I got this right, but the noble Baroness can correct me if I am wrong—about a person becoming disabled and, as a result, certain things in the house which were of no previous significance to the disability having a greater significance because of the greater size.
In regard to the first question, definitely one could have a reduction in band if one had to move to a larger house because of a disability. I cannot give a categoric answer, but my guess is that if certain features of the house take on new significance there could be a reduction in band. For example, where some rooms are very large, and a person became disabled, the size of the rooms would be important because the disabled person would not be able to live in smaller rooms. I am speaking off the top of my head, but I should have thought that that new significance could allow for the reduction in band. As I said. I shall take advice and confirm that in time.
The noble Baroness also asked who exactly establishes the need for disability and who makes the decision. The disabled person applies to the local authority and it is the local authority that makes the decision. If the noble Baroness would like me to go further as to exactly who within the local authority should make that decision I shall certainly be delighted to look at that point.
The reduction scheme is separate from the valuation arrangements. It is a special scheme which we intend to introduce under Clause 13. The scheme has been developed in consultation with RADAR and other organisations for disabled people. It will ensure that people with disabilities who need more space in their homes do not have to pay more tax because their property has been placed in a higher valuation band 1124 than would otherwise be the case. Where the criteria for the scheme are met the bill to apply will be that for the property in the next band down.
This scheme will restore to disabled people the relief which they enjoyed under the rating system in a way which reflects the banded nature of the council tax. I can assure the Committee that the measures we have taken will ensure fair treatment for disabled people. I trust that the noble Baroness will welcome them and will not feel that it is necessary to press her amendment on this occasion.
§ Baroness Masham of IltonBefore the Minister sits down may I ask him whether there will be a time limit for the local authority to make its decision?
§ Lord HenleyI shall have to take advice on that, but I should have thought that there would be a time limit. Perhaps the noble Baroness will accept my assurance that I shall write to her on that point. I do not know the exact form, but I suspect that there is not much of a problem.
§ Lord Henderson of BromptonPerhaps the Minister will very kindly answer my question. The onus is on the Minister to tell us why the wording in the Bill is different from the wording in the 1978 Act. It is that which worries us all.
§ Lord HenleyI hope that the noble Lord will accept that there is nothing sinister in this. We are dealing with two different systems; we are dealing with the old rates and with the new council tax. The council tax, by definition, is a different animal in its banded nature. We have provided the concessions to bring down a band by those means. I hope that that would be sufficient and therefore it is not necessary to mirror exactly the provisions and requirements of the 1978 Act.
§ Baroness Hollis of HeighamI thank all Members of the Committee who have taken part in this small debate. It has been extremely interesting and I am very appreciative of the conciliatory response from the Minister. However, let me see whether I understand him correctly. First, he is saying—I believe both sides of the Committee accept this understanding of the Bill —that lists will be altered if reductions are made to a property by virtue of disability which reduce the value of that property and that it will come down a band; except, that is, for band A, to which we must obviously return. Secondly, as with everybody else, if improvements actually add to the value of a property that will not affect its valuation. So far so good. Thirdly, the Minister believes—and this is obviously critical—that if someone were to move to a house where the facilities necessary for disability were already in place, that person could then apply for a reduction in banding?
§ Lord HenleyI can certainly confirm that that is correct.
§ Baroness Hollis of HeighamFourthly, if in an existing property someone became disabled and, 1125 therefore, features took on a new significance, that person could then apply for a downward valuation of that property. That is a correct reading, is it not?
§ Lord HenleyThat at the moment is my understanding. As I said, it is slightly harder than that where certain features take on a new significance. Perhaps we can leave it at that for the moment. I shall write to the noble Baroness if I am incorrect.
§ Baroness Hollis of HeighamI thank the Minister. I share the same anxieties of the noble Lord, Lord Henderson, that as the Bill stands it looks as though only facilities specifically installed are eligible for revaluation, whereas under the rating Act if facilities were needed, whether they had to be installed, whether they currently existed, or whether they were acquired by moving to another property, at that point one had a downward valuation. If the Minister's response indeed stands up on reflection by his department, then we have met the substance of the argument. However, if it does not, then I give warning to the Minister that we shall need to come back to this point at Report stage, given the degree of interest expressed in this issue on all sides of the Committee. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
[Amendment No. 114 not moved.]
Clause 24 agreed to.
Earl HoweI beg to move that the House do now resume. In moving this Motion I suggest that the Committee stage does not begin again before ten minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.