Local Government Finance Bill

HL Deb 28 January 1992 vol 534 cc1203-44

5.5 p.m.

House again in Committee on Schedule 2.

Lord McIntosh of Haringey

moved Amendment No. 147: Page 86, leave out line 14 and insert: ("(f) that a notice must contain the amount given by the formula in section 34(2), for each special item in part of a billing authority's area the amount given by the formula in section 34(3), and the amount given by the formula in section 44(1); (ff) that a notice must contain other prescribed matters;"). The noble Lord said: The amendment before the Committee is a technical one designed to elicit, as it appears we have to, how the Government will interpret in regulations some of the many problems which arise from the Bill. Members of the Committee will recall that the council tax demands will be formulated in such a way that district councils will have to take into account the parish council figures in their demand and they will have to reflect parish council expenditure in their budget. It seems to us that it would be unfair if it were not possible—indeed, required—for district councils to show the parish council amount separately in the council tax demands which they send out. In that way ratepayers can see, as they can between county council and district council, where the responsibility for expenditure lies and what proportion of the amount demanded can be properly allocated to parish councils as opposed to district councils.

We would be quite satisfied with an assurance from the Government that the regulations under paragraph 2(3)(e) of Schedule 2 will in fact cover that point. If such an assurance were forthcoming, we would not seek to press the amendment. I beg to move.

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

We believe that the detail of demand notices is a matter which is appropriately left to regulations, not least because it is the kind of detail about which it is important to consult local authorities. Therefore, I should like to assure the noble Lord that it is our intention that the regulations covering demand notices will require billing authorities to include in their demand notices the council tax for each relevant tier applicable to the chargeable dwelling concerned, including the amount of any parish precept. We are at present consulting the local authority associations on the details.

As a Scottish Minister, I should perhaps also point out that Schedule 2, which includes this provision, applies to Great Britain as a whole. Therefore, the amendment proposed would be wholly inappropriate to Scottish circumstances where the concept of special items, precepting authorities, and so on, do not apply. I hope that that explanation is useful.

Lord McIntosh of Haringey

I am grateful for that assurance. It is entirely what I sought to achieve. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Mountgarret

moved Amendment No. 148: Page 86, line 38, after ("payable") insert ("with interest added at the rate of 2 per cent. over Bank Rate"). The noble Viscount said: I shall speak also to Amendment No. 149 which is consequential upon Amendment No. 148. We have heard a great deal recently about the fact that councils have been receiving less poll tax than they should and are therefore having to charge more to the people who have been honest, good and law-abiding and who have paid up. Those people will have to pay more this year as councils are short of money because of those who have not paid.

The Bill contains many provisions giving powers to bailiffs to enter property. It provides for restraint and so forth, but that is a long-winded process. It may have to happen occasionally. The Inland Revenue and —I believe I am right in saying—many firms charge interest on moneys due. If they are not paid by the due date, interest is charged and accrued thereon. That is a simple procedure and it is fair and right. If that provision were written into the Bill it may remove some of the difficulties that local councils are experiencing as a result of being short of money. At the same time, people who fail to pay—they must be given a reasonable time in which to pay—will know that they will have to pay interest on moneys due.

I asked my noble friend Lady Blatch about this matter. She was good enough to reply to me. Among other things, she said that she was not sure that an additional deterrent for non-payment, such as adding interest charges, would justify the additional effort involved in collecting such charges. I do not regard it as a deterrent. It does something which is necessary. If one owes money, one will have to pay interest thereon. I have received a sweet letter from a pensioner and I shall read an extract from it. It illustrates what ordinary people feel. The letter states: We are pensioners, and it is very annoying"— that is a good word— to have an extra amount added to our bill for the purpose of covering the loss expected from people who will not pay. I did pay my poll tax for the last year, but deducted this extra cost when I paid this year. I very quickly received a bill and a threat of going to court if it was not paid". That is a sad letter. I hope that my noble friend and the Government will take the point on board and accept the amendment. I beg to move.

The Earl of Balfour

I should like to draw the Committee's attention to paragraph 2(2) of Schedule 8 on page 109 because the schedule applies to Scotland. Line 20 states: The sheriff, on an application by the authority … shall grant a summary warrant … by Act of Sederunt authorising the recovery … of the sum remaining due and unpaid along with a surcharge of 10 per cent. of that amount". The bottom of page 109 states: The Secretary of State may by order substitute another percentage", for the 10 per cent. stated. It should be for the court to determine the means and, if necessary, the social background of the offender. I am sorry that I am not familiar with English court procedure in this respect, but I have a feeling that similar provisions may be contained within Schedule 4 applying to England and Wales.

5.15 p.m.

Lord Monson

This is an important amendment which, in principle anyway if not in terms of the precise wording, deserves the Committee's support. As a general rule, interest is always charged on overdue tax in this country. The rates were never technically a tax. Realistically, the community charge was, perhaps, 75 per cent. tax and only 25 per cent. a charge for value universally received; nevertheless, technically it was called a charge, whatever the general public may have called it.

However, the proposed local government tax is unashamedly a tax and is formally designated as such. It would therefore be illogical and inconsistent if interest were not to be charged on overdue payments. As we have heard, many people, mainly for political reasons, have refused to pay their poll tax. Those people are not just those who find it difficult to pay. They include many people who can well afford to do so. It may be expected that there will also be a number of people—perhaps not so many—who for doctrinal reasons will refuse to pay the new local government tax. That is unfair, as the noble Viscount pointed out, to honest people who pay their tax, whether they like it or not, and who have to pay not just for themselves, but have to shoulder the burden imposed by non-payers. For that reason, the amendment deserves serious consideration.

Lord Renfrew of Kaimsthorn

There may be some merits in the proposal although it will prove administratively—

Lord Stoddart of Swindon

The amendment—

Noble Lords

Order, order!

Lord Stoddart of Swindon

It is the turn of this side, if noble Lords do not mind. The Conservatives have had two goes and the Cross Benches one. I think that we are entitled to say a few words.

Lord Renfrew of Kaimsthorn

I am giving way.

Lord Stoddart of Swindon

I thank the noble Lord. The amendment has a certain attraction, there is no question about that. Let me make it clear that I, and I am sure all my colleagues, are not in favour of people evading their proper responsibilities as laid down by Parliament. I resent people who decide which tax they shall pay. One either believes in Parliament and parliamentary sovereignty or one does not. I happen to believe in it, and so I believe that people should pay the taxes which are imposed, and, if they do not like those taxes, at the next election they should throw out the people who imposed them. That is the proper way to exercise British democracy.

I am attracted to the amendment because it tells those people who are reluctant to pay up that if they do not do so they will be penalised. Frankly, I believe that they should be penalised for two reasons. The first reason is the obvious one—that it is a debt which they owe—and, secondly, by delaying payment, or not making payment at all, they are inflicting a higher payment on other people. I very much resent that.

I resent the fact that under the poll tax system I am having to pay an extra £118 a year because some of my fellow poll tax payers in Reading have not paid up. Some measures should be taken to make them pay up or to encourage them to make an early payment. I must say that, rightly or wrongly, under my administration in Reading we gave a 2.5 per cent. discount for early payment. I do not know whether the Government would like to consider that idea. I am sure that it would be acceptable to a number of Members of the Committee but perhaps not so acceptable to local authorities.

The amendment has attractions. The wording may need some alteration, but I hope that the Government will give it serious consideration.

Lord McIntosh of Haringey

I had not realised that noble Lords opposite who were so keen to intervene were no longer so keen. We should be grateful to the noble Earl, Lord Balfour, for drawing attention to the differences between enforcement in England and Scotland. I notice that the Scottish provision in Schedule 8 to which he referred deals only with what a sheriff may do in giving a summary warrant. Not far from here—indeed perhaps closer than Scotland—in France local taxes are sent out with a notice which states the due date of payment and gives advance warning that 10 per cent. will be charged on any bills not paid by the due date. That is probably a good deal more practical than the 2 per cent. above bank rate which is proposed by the noble Viscount.

I fear that the complexity of applying interest at a varying rate for varying periods on relatively small amounts could be very great indeed. The noble Viscount may wish to seek a simpler way of achieving in principle a laudable objective.

Baroness Gardner of Parkes

I support the principle of the amendment but I do not believe it is necessary to write it into the Bill. There should be general powers for local authorities to charge interest on amounts unpaid, just as I believe the Inland Revenue should pay interest if a taxpayer has paid and was wrongly charged.

There are certain limits above and below which the charge does not operate for the reason to which the noble Lord, Lord McIntosh, referred—that it is too expensive to collect. If people properly pay the council tax bill when it arrives and later prove that it was incorrect, it is only right that they should receive interest on their money. The general principle is right, but I do not believe the amendments are necessarily the right way of going about it.

Lord Boyd-Carpenter

The amendment will not do because it will be complicated to operate. I leave aside for the moment the general question as to whether interest should be added to such liabilities. There is obviously a case for it, but to provide that interest should be added at 2 per cent. over bank rate will involve a most complicated operation. After all, the bank rate changes. Your Lordships' House often spends a great deal of time urging that the bank rate should be changed.

If there is a quite small debt to which must be added 2 per cent. over the bank rate at several levels of the bank rate during the period of liability, the organisational problems and the expense will be greater than the gain. My noble friend may wish to consider the suggestion of interest, and I like the concept of the French provision of which we were reminded by the Front Bench opposite. However, I hope that he will not accept this amendment which will involve more work than the money it gains.

Lord Renfrew of Kaimsthorn

Perhaps I may add a tiny detail to support that point. Under Amendment No. 149, if it turns out that someone pays, whether inadvertently or deliberately, a sum in excess of that which is required, they will be rewarded by being refunded the amount with interest of 2 per cent. in excess of the bank rate. That is not necessarily wise if the person deliberately or by his or her own carelessness does so. There are details in the amendment which do not work out.

Earl Howe

Perhaps I may address first the point raised by my noble friend Lord Balfour. He mentioned interest being charged on debts in Scotland. He is correct that a surcharge will be added to council tax debts in Scotland on the granting of a summary warrant. That simply continues arrangements which exist under the community charge. The purpose of the surcharge is to meet the costs of recovery and is applied only at the time when the arrears case comes before the sheriff. One cannot make comparisons between this and the arrangements in England where recovery procedures are entirely different.

I hesitate to say that this afternoon we have already debated an amendment which has important implications for the administrative load imposed on local authorities. But I have to say that these amendments would impose an additional administrative burden for what may be only small sums of money.

However, I have and the Government have considerable sympathy with the reasons for the amendments and I understand the concerns which Members of the Committee have expressed. On several counts I am advised that in their present form the amendments are not acceptable. I shall therefore, without commitment, see whether we can bring forward government amendments at Report stage to deal with the question of interest. I should qualify that by saying that it will not be easy to draft regulations covering this complex issue but we will wish to discuss it with the local authority associations. I hope that with that reassurance my noble friend will agree to withdraw the amendment.

Baroness White

Is the Minister assuming that in Wales we pay no such taxes?

Earl Howe

I apologise to the noble Baroness, but would she repeat her question?

Baroness White

As the Minister did not mention Wales, only England and Scotland, does he assume that in Wales we pay no taxes?

Earl Howe

I shall look into that point between now and Report stage.

Baroness White

Perhaps he could write to me about it.

Lord Monson

Before the noble Earl sits down—for the second time—as he has been kind enough to say that he will take the matter away and consider it, will he bear in mind that the noble Lord, Lord Boyd-Carpenter, is quite right that to base any interest charge on the bank rate would be difficult because of the fluctuating nature of the bank rate? Nevertheless, at present the Inland Revenue levies a charge on unpaid tax of, I believe, 9.25 per cent. This changes rarely, perhaps only once a year. It may be a pattern which the Government should consider.

Earl Howe

I am happy to consider that point. I should stress that I have not given a commitment to bring back an amendment at Report stage, but we shall look very seriously indeed at the issue. I am grateful to Members of the Committee for their contributions.

Lord McIntosh of Haringey

Will the Minister include in his consideration the example I gave of the simple French system? It seems to work; it makes me pay on the day before the due date.

Earl Howe

Yes, my Lords.

Baroness Hamwee

Again, before the noble Earl sits down, I do not believe that he commented on the point made by a number of Members of the Committee about overpayment. It is particularly material in the case of a tax where there may be overpayment as a result of someone having to claim a discount.

Earl Howe

That is an important aspect of the subject but I feel that it contributes to the severe administrative difficulties that will ensue from the simple system that underlies the amendment. That is why we ought to look more deeply into the practicalities before proposing anything definite.

Baroness Hamwee

The amendment gives rise to administrative problems, but it also highlights the fact that the payer, not knowing that the discount was available, may himself or herself suffer after having overpaid.

Lady Saltoun of Abernethy

Before the noble Earl sits down, would he bear in mind that when I pay the Inland Revenue too much tax, it does not pay me interest?

Earl Howe

There are provisions that oblige the Inland Revenue to pay interest once an overpayment has been outstanding for a certain time. But it does not start immediately the overpayment is made. The noble Lady will, however, find that the provisions are there.

Viscount Mountgarret

I am sure that the Committee would like to make progress but I should say that I am extremely grateful to my noble friend, if I understood him correctly, for saying that the general point underlined by the two amendments will be considered by him and the Government to see whether they can come up with something which embraces the principle.

I put down the amendment relating to 2 per cent. above the bank rate only because it is a simple guideline. As my noble friend Lord Balfour said, it could be 10 per cent. or whatever one wishes. I do not mind. All I sought to do was to remove the penalties that are being inflicted on the people who pay their poll tax and who will subsequently pay the council tax. They may find that they have to pay more because of the people who are naughty and do not pay up when they should. That is all I seek and I believe that the point has gone home.

The suggestion of my noble friend on whether payers should receive a refund is embodied in the principle of Amendment No. 149. Clearly they pay their tax and, if on appeal they find they have paid too much, they will be reimbursed with the appropriate amount of interest. I am grateful to my noble friend for his reply. I look forward to hearing what the Government will produce on Report. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 149 not moved.]

5.30 p.m.

Lord McIntosh of Haringey

moved Amendment No. 150: Page 87, line 14, at end insert: ("(2A) No regulations under sub-paragraph (2) above shall be made unless a draft of the statutory instrument has been laid before and approved by resolution of each House of Parliament."). The noble Lord said: In moving Amendment No. 150 I wish to speak also to Amendment No. 151 which represents an alternative version just in case we find ourselves in breach of privilege by the use of the words "each House of Parliament". I also wish to speak to Amendment No. 225 which relates to Clause 112. That clause summarises orders and regulations concerning affirmative resolutions.

Amendment No. 150 may seem a technical amendment in that it seeks to make the provisions of subparagraph (2) of paragraph 4 of Schedule 2 to the Bill subject to affirmative resolution by each House of Parliament. However, subparagraph (2) is extremely important and raises one of the biggest issues, both of principle and of practice, in the Government's proposals for the council tax. I feel it is necessary to read out subparagraph (2) in full. It states: Regulations under this Schedule may include provision that, before making any calculation of the chargeable amount for the purposes of regulations under this Schedule, the authority shall take reasonable steps to ascertain whether that amount is subject to any discount, and if so, the amount of that discount". Ministers have claimed from the first day the council tax was proposed that it could be introduced —and that the discount structure in particular could be introduced—without the need for any form of register. They persist in that claim even though local authority associations, many of the professional bodies concerned with rating and valuation and anyone who has experience of the operation of discount structures of this kind would say that it is simply not enough in the first place to require those who seek discounts to claim them and then, secondly, to leave it to regulations to determine what authorities should do to ascertain whether the amount is subject to any discount. It is not good enough simply to say that an authority shall take reasonable steps in this matter. It is not good enough to leave that matter to regulations and not to Parliament as regards deciding what the reasonable steps should be.

It is difficult enough to get the information requirements clear for the initial billing itself. Unless the bill is to be addressed simply to the council tax payer, surely it should preferably be addressed to a named individual. How will a local authority know who the named individual is? By 1993 the former rating records will be three years out of date in England and Wales and four years out of date in Scotland. The community charge register is all very well—it is supposed to be a complete register but, as we know, it almost certainly is not—but it gives no indication of where the person named in that register fits into the hierarchy of liability. We have already debated that matter. Can housing records be used in this regard? Clearly those will be incomplete. Can any survey work that is carried out by the billing authority be used in this respect? If that is the case, is it to be a statutory survey or a non-statutory survey? Is it to be a survey backed by other legislation, such as Section 16 of the Local Government (Miscellaneous Provisions) Act 1976? All of those questions have yet to be resolved. I do not believe that the Government have adequate proposals to deal with them.

As regards discounts, the information requirements pose an even greater difficulty. It is not just a matter of checking on whether a claim for a discount is justified and whether anybody else is living at the property in question. The matter is complicated by the elaborate provisions that exist for securing that other people living at a property may or may not be invisible in terms of this Bill. Local authorities might be tempted, if they were being cynical, to say, "If discounts are not claimed, we shall not bother to do anything about it as it is to our advantage not to award discounts". Nevertheless those local authorities will not wish to send out claims which do not take into account the possibility of discounts because, if discounts are claimed only when there is a default on payment, the cost of settling the matter after the initial bill has been sent out—I refer to the cost of sending out a new bill among other such matters—will be much greater than if a proper list had existed in the first place.

It is right that there should be a provision for local authorities to compile a register on the basis of which they can send out accurate bills to named individuals. It is only the Government's ideological commitment to pretending they are moving away from the poll tax and the poll tax register that prevents them giving this matter adequate consideration. The Government's blinkered approach has resulted in their relegating this vital issue—how local authorities are to ascertain whether an amount is subject to a discount—to a totally inadequate provision; namely, regulations may provide that an, authority shall take reasonable steps". Parliament should not be treated in that way as regards this important matter. If the Government have anything sensible to say about the information which local authorities must have and the registers they will have to keep, they should say it to Parliament. They should not dodge the issue until after the legislation has been passed. I beg to move.

Earl Howe

Amendments Nos. 150 and 151 propose the affirmative resolution procedure for regulations under subparagraph (2) of paragraph 4 to Schedule 2. These regulations will require billing and levying authorities, before calculating the council tax payable for any dwelling, to take reasonable steps to ascertain whether that amount is subject to any discount and, if so, how much.

The regulations will allow local authorities to find out about discount entitlement. Local authorities will be under a duty to take any reasonable steps to establish the discount entitlement of households in their area. The noble Lord asked what was meant by the term "reasonable steps". I should inform him that authorities will already have a great deal of information on single-person households—for example, students—from their existing records. In most cases they will already know where discounts are applicable. Many authorities may nevertheless want to give all households a chance to claim discounts before 1st April 1993. But there will be no obligation to respond to any such requests. Where a person entitled to a discount received a full bill, he would of course be able to write back claiming a discount.

As the noble Lord explained, Amendment No. 150 provides that the regulations should be subject to affirmative resolution in both Houses. Amendment No. 151 provides that any regulations made under subparagraph (2) should be subject to the affirmative resolution in another place only. I believe the noble Lord places undue emphasis on that point. The affirmative resolution procedure is normally used only for the more important constitutional and financial matters. It is appropriate that, for example, an order under Clause 11 to change the appropriate percentage for discount purposes should be subject to the affirmative resolution procedure. But, in our view, it is not necessary for regulations requiring authorities to take steps to establish discount eligibility to be subject to affirmative resolution. The negative resolution procedure is appropriate for such regulations.

Amendment No. 225 is consequential, as the noble Lord, Lord McIntosh, explained. It adds to the list in Clause 112 a reference appropriate to the affirmative resolution procedure proposed in the earlier amendments.

The noble Lord, Lord McIntosh, asked how a local authority will know the name of a liable person. I told the Committee last week that we are currently discussing the information needs of local authorities with the local authority associations. As I said then, we shall consider whether any specific powers are necessary in the light of those discussions, which will be concluded shortly.

Local authorities have not been pressing for further specific powers in relation to discounts and we believe that the Bill as drafted provides all that is needed. I hope that in the light of that response the noble Lord will feel easier about the matter as a whole and will feel able to withdraw the amendment.

Lord McIntosh of Haringey

That is a profoundly unsatisfactory answer both in terms of the way in which the legislation will be implemented and the principle behind it. The noble Earl said that the affirmative resolution procedure should be used only for matters of constitutional and financial importance. I assume that he included such matters of profound constitutional and financial importance as the paralytic shellfish orders which seem to appear on your Lordships' Order Paper with monotonous regularity. It does not come well from the noble Earl, as a member of a government who rely on regulation at the expense of primary legislation to the extent that this Government do, to suggest that there should be such restrictions on the use of the affirmative resolution procedure.

The noble Earl said that local authorities already have information relating to the names of occupiers of properties. He cited the example of students in particular, about whom other information is known. He will readily admit that such information is bound to be incomplete. He must be aware of the talks that are taking place between the local authority associations and the Department of the Environment on that subject in which the associations have pointed out the difficulty of being forced to send bills to the occupier when there are outstanding issues such as who is responsible for the hierarchy of liability for council tax and when there is a possibility of discounts arising.

I do not believe that the noble Earl has taken seriously enough the point that I made about the cost involved if a discount is not provided for in the initial bill but is discovered only when the bill is not paid or when a subsequent claim for a discount is made. It is not merely a matter of the cost of sending out another bill and correcting the initial one, although that is serious enough. The important point which the noble Earl has not taken into account is that the level of discounts to be claimed is an important element in the resources part of the local authority's claim for revenue support grant and has to be known in advance, certainly in the first year, if that claim in respect of the resources element of revenue support grant is to be accurate and meaningful. There has been no answer to that point.

Most important of all, the noble Earl did not give any practical examples of what is meant by reasonable steps. I should have thought that the discussions on that important matter between local authority associations and the Government had gone far enough for the noble Earl to give the Committee exemplifications—which I believe is the technical term —of what is meant by reasonable steps. I invite him to share with the Committee a little more of the thinking of the Government on this important matter.

5.45 p.m.

Lord Boyd-Carpenter

Perhaps before my noble friend replies the noble Lord, Lord McIntosh, will clear up one point which puzzles me about the two amendments. Amendment No. 150 provides that the approval of both Houses is required to the draft regulations. Amendment No. 151, which is in very similar terms to Amendment No. 150, provides only for approval by another place. Will the noble Lord explain why he has made that curious distinction?

Lord McIntosh of Haringey

I referred to the matter in introducing the amendments. I am sorry if I did not make myself clear. Anything I say is said with due deference as one who has not been a Member of the other place, unlike the noble Lord, Lord Boyd-Carpenter. The second amendment has been put down in case anybody should claim in another place that we were exceeding our prerogative under the Parliament Acts by insisting that an affirmative resolution of this kind should come before this Chamber. I may be wrong but we would rather be safe than sorry.

Earl Howe

As I said earlier, our discussions with the local authority associations are proceeding and will be concluded shortly. The noble Lord asked whether I could give exemplifications of what is meant by reasonable steps. In my initial answer I said that the information and database which local authorities already have at their disposal will provide the main source of reference in this context. That is as far as I can go at the moment. I hope that, despite the shortcomings which the noble Lord sees in this area, he will be content to withdraw the amendment.

Lord McIntosh of Haringey

The noble Earl will not be surprised if I repeat my view that the answers are entirely unsatisfactory. It is not good enough for the noble Earl to respond in terms of what he calls the database which a local authority holds. A local authority does not hold a database about individuals; it holds information from a number of different sources. That information includes the electoral register, information from old rating records, information from the community charge register, information from housing records and so on. None of that amounts to a database which forms an adequate basis for determining in advance—because it has to be in advance—with the help of those who wish to claim discounts, whether a discount is required.

I am even more convinced that by putting this matter into regulations and making the regulations unclear the Government are avoiding admitting in public that this legislation will require what is in effect a council tax register. That register will be subject to all the same difficulties as any register of individuals in respect of the poll tax register.

Does the noble Earl not recall and do the Government not recall, because the community charge is still with us, the extent to which community charge registers are inadequate because of the extent to which people move around, particularly in cities and notably in inner cities? I understand that Croydon sent out 240,000 original community charge bills and that 240,000 amendments were made because people moved house. That happened in Croydon, which is a relatively stable area of Greater London. The matter will result in a register which will be subject to all the same disadvantages as the poll tax register. We are not debating the matter properly in Parliament only because the Government have not faced the issue, have not examined the problems and are not willing to share their views with Parliament and with this Committee.

I know that the amendment itself is not adequate to deal with the problem. Corrective action must be taken by the Government and cannot be taken by us. Nevertheless I feel that I should seek the view of the Committee on the matter.

5.50 p.m.

On Question, Whether the said amendment (No. 150) shall be agreed to?

Their Lordships divided: Contents, 66; Not-Contents, 149.

Division No. 1
CONTENTS
Airedale, L.	Hooson, L.
Ardwick, L.	Houghton of Sowerby, L.
Aylestone, L.	Hughes, L.
Beaumont of Whitley, L.	Jeger, B.
Birk, B.	Jenkins of Putney, L.
Blease, L.	Kilbracken, L.
Brooks of Tremorfa, L.	Kirkhill, L.
Callaghan of Cardiff, L.	Llewelyn-Davies of Hastoe, B.
Carmichael of Kelvingrove, L.	Lockwood, B.
Carter, L.	Longford, E.
Cledwyn of Penrhos, L.	Lovell-Davis, L.
Cocks of Hartcliffe, L.	McIntosh of Haringey, L.
David, B.	Mason of Barnsley, L.
Dean of Beswick, L.	Meston, L.
Desai, L.	Nicol, B.
Donaldson of Kingsbridge, L.	Parry, L.
Dormand of Easington, L.	Pitt of Hampstead, L.
Ewart-Biggs, B.	Prys-Davies, L.
Falkland, V.	Rea, L.
Gallacher, L.	Redesdale, L.
Galpern, L.	Richard, L.
Gladwyn, L.	Russell, E.
Glenamara, L.	Seear, B.
Graham of Edmonton, L.	Serota, B.
[Teller.]	Shepherd, L.
Greene of Harrow Weald, L.	Skidelsky, L.
Gregson, L.	Stedman, B.
Grey, E.	Stoddart of Swindon, L.
Hamwee, B.	Strabolgi, L.
Hanworth, V.	Taylor of Gryfe, L.
Hatch of Lusby, L.	Underhill, L.
Hilton of Eggardon, B. [Teller.]	White, B.
Hirshfield, L.	Williams of Elvel, L.
Hollis of Heigham, B.

NOT-CONTENTS
Abercorn, D.	Cross, V.
Acton, L.	Cumberlege, B.
Ailesbury, M.	Denham, L.
Aldington, L.	Denton of Wakefield, B.
Allenby of Megiddo, V.	Derwent, L.
Alport, L.	Donegall, M.
Ampthill, L.	Dundee, E.
Arran, E.	Dunrossil, V.
Astor, V.	Eccles of Moulton, B.
Astor of Hever, L.	Eden of Winton, L.
Auckland, L.	Effingham, E.
Balfour, E.	Elibank, L.
Beloff, L.	Elles, B.
Belstead, L.	Elliot of Harwood, B.
Birdwood, L.	Elliott of Morpeth, L.
Blatch, B.	Elphinstone, L.
Borthwick, L.	Erne, E.
Boyd-Carpenter, L.	Faithfull, B.
Brabazon of Tara, L.	Ferrers, E.
Bridgeman, V.	Forester, L.
Brookeborough, V.	Fortescue, E.
Brougham and Vaux, L.	Fraser of Carmyllie, L.
Burton, L.	Gardner of Parkes, B.
Butterworth, L.	Glenarthur, L.
Caithness, E.	Goold, L.
Campbell of Alloway, L.	Greenway, L.
Carnegy of Lour, B.	Gridley, L.
Carnock, L.	Hailsham of Saint Marylebone,
Cavendish of Furness, L.	L.
Clinton, L.	Hardinge of Penshurst, L.
Cochrane of Cults, L.	Harlech, L.
Coleraine, L.	Harmar-Nicholls, L.
Colnbrook, L.	Hemphill, L.
Constantine of Stanmore, L.	Henderson of Brompton, L.
Cowley, E.	Henley, L.

Hesketh, L. [Teller.]	Perry of Southwark, B.
Holderness, L.	Peyton of Yeovil, L.
Hooper, B.	Platt of Writtle, B.
Howe, E.	Plummer of St. Marylebone, L.
Hunter of Newington, L.	Quinton, L.
Hylton-Foster, B.	Rankeillour, L.
Ironside, L.	Reay, L.
Jeffreys, L.	Rees, L.
Jellicoe, E.	Renfrew of Kaimsthorn, L.
Johnston of Rockport, L.	Rennell, L.
Kenilworth, L.	Renton, L.
Kimball, L.	Renwick, L.
Kinloss, Ly.	Ripon, Bp.
Knollys, V.	Saint Oswald, L.
Lane of Horsell, L.	Saltoun of Abernethy, Ly.
Lauderdale, E.	Selsdon, L.
Lawrence, L.	Shannon, E.
Layton, L.	Skelmersdale, L.
Lindsey and Abingdon, E.	Stockton, E.
Long, V.	Stodart of Leaston, L.
Lucas of Chilworth, L.	Strange, B.
Lyell, L.	Strathclyde, L.
Mackay of Ardbrecknish, L.	Strathcona and Mount Royal,
Mackay of Clashfern, L.	L.
Macleod of Borve, B.	Strathmore and Kinghorne, E.
Marlesford, L.	[Teller.]
Marsh, L.	Swinfen, L.
Massereene and Ferrard, V.	Terrington, L.
Merrivale, L.	Teviot, L.
Mersey, V.	Thomas of Gwydir, L.
Mottistone, L.	Thurlow, L.
Mowbray and Stourton, L.	Trumpington, B.
Munster, E.	Ullswater, V.
Nelson, E.	Vivian, L.
Nelson of Stafford, L.	Waddington, L.
Orkney, E.	Wade of Chorlton, L.
Orr-Ewing, L.	Westbury, L.
Oxfuird, V.	Wharton, B.
Palmer, L.	Wise, L.
Park of Monmouth, B.	Wyatt of Weeford, L.
Pender, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.58 p.m.

[Amendment No. 151 not moved.]

Baroness Hollis of Heigham

moved Amendment No. 152: Page 87, line 24, at end insert: ("(c) where the chargeable amount is subject to a discount, the authority shall not require information from the liable person if other persons who fall to be disregarded under Schedule 1 become resident in the dwelling."). The noble Baroness said: This is a probing amendment seeking further clarification on the issues raised when we discussed the matter of annual as opposed to daily liability. As the Committee will recall, daily liability requires a taxpayer in receipt of a discount to notify the authority every time that another adult moves in or out of the property. As was then argued, following the evidence from the Audit Commission, it is clear that we are dealing with very large numbers of movements—60 per cent. and up to 80 per cent. in some university cities.

This amendment has been tabled in order to relieve the liable person of the responsibility to notify the local authority if the person moving into the household was invisible—in other words, if the person was notifying of someone who then turned out not to affect the position as regards the discount; for example, a student, a nurse or a trainee. I do not say that they had not been noticed but merely that in terms of the wording of the Bill they were invisible. That would clearly reduce the number of notifications that would have to be processed by the local authority.

In another place on 27th November, Mr. Portillo accepted that as a sensible and helpful way forward. That was fine. But we have tabled this amendment because other problems are thrown up. I hope that the Minister will be able to respond to some of them that follow as a result of this measure. It is presumed that the liable person knows whether another person moving in or out of the house is invisible and therefore he or she need not notify the local authority of that. But for that to be true the liable householder has to have a clear view of who is invisible and whether the property is the second person's sole or main residence so that he or she can remain eligible for a single person discount.

Perhaps I may give two very simple examples. The husband works abroad and there he has purchased a flat. He returns to his wife every three months or so for three or four weeks. At that point does she have to notify the local authority that he is back? Is he invisible for these purposes or, more to the point, does that house then become his sole or main residence while he is at home? Let us also consider the son of a lone parent who is taking a year off before going to university. He goes to work as a community service volunteer at, say, a Steiner home in the West Country and comes home for the month of Easter. Is he resident at home with his parent for that month? Does he count? Is he invisible? It is on questions and anomalies of that kind that we hope for clarification from the Minister. I beg to move.

6 p.m.

Lord Strathclyde

I recognise, as the noble Baroness said, that this is a probing amendment. I appreciate that her concern is to ensure that people are not placed under a duty to inform local authorities about changes in the household which in practice would not have any effect on the discount entitlement of the household. I hope that I can reassure the noble Baroness on that point. The only duty that is placed on people in relation to discounts is to allow the person to inform the local authority if there has been a change in the household which may reduce the discount entitlement or remove it. That duty is set out in Schedule 2 paragraph 4, subparagraph (5). There is no duty to inform the authority if there may be an increase in discount entitlement. In that circumstance it is clearly in the interest of the liable person to inform the authority, but he does not have to do so. If he does not do so, he will not receive his extra discount.

The noble Baroness used examples and by way of clarification perhaps I may use an example. A student nurse moves in with a single person who has already received a 25 per cent. discount. In that case there would be no change in discount entitlement because the student nurse would not add to the bill. There would be no requirement to tell the local authority of the change. If the student nurse moved out again, the same point would still apply, but if the student nurse ceased to be a student nurse while living in the dwelling, then there would be a change in discount entitlement and the local authority would have to be kept informed. That is clear.

I believe that that arrangement is straightforward and sensible. The powers and duties set out in Schedule 2, paragraph 4 are sufficient to enable the local authority to operate the discount arrangements effectively but do not require unnecessary intrusion on individuals. I know that the noble Baroness produced her examples. I believe that the same principle applies to them as well.

Baroness Hollis of Heigham

I thank the Minister for his reply. There is no difference between us in our understanding of the Bill in the examples that he gave. Clearly, if someone is carrying invisibility with them it makes no difference to the single person status of the liable householder. However, there is a second related issue, and I refer to the two examples that I gave. A household becomes a two-person household, and therefore the liable person would lose the single person discount, if the second person moving in would not have been invisible but nonetheless it is not his or her sole or main residence. In my example I was addressing that issue, and the noble Lord did not respond to that.

I gave the example of the husband who largely works abroad. I was avoiding the example of the seaman which was given in the other place. The husband who works abroad has a flat there, but he comes home for quite sustained periods of time, which may be four to six weeks. At that point does it become a two-person household, whereupon the wife has to report the change in eligibility? The second example I gave was that of a youngster who might be working in a Steiner home but who returns home.

Another example given in the other place was that of a mentally handicapped youngster who might live in a therapeutic community but who comes home to stay with his parent for six weeks at a time. Where then is his sole or main residence? By coming home to his parent, does he cost that single parent the single person discount? We are seeking some comment from the Minister as to what counts as the sole or main residence.

Lord Strathclyde

I do not want to make the Bill any more complicated. The noble Baroness has produced some very good examples which raise complications. In most cases the position will be absolutely clear as to where the sole or main residence is. Is the person just visiting or is he genuinely resident for a certain amount of time? If there is doubt, then the liable person who is seeking the discount or believes that he or she may be breaking the law by not telling the local authority about an addition to the household should advise the local authority of the circumstances. It will be for the local authority to determine what should be the appropriate decision in all the circumstances. One cannot legislate for every seaman or married couple where the husband may work abroad for part of the time. That is not practical. One has to have some kind of flexibility within the system that allows for the local authority to make a decision in the light of the circumstances as they stand.

Baroness Hollis of Heigham

That was not a very helpful response. I realise the difficulty under which the Minister may be labouring. Clearly, if a person has a second residence elsewhere and that person stays with another, the question does not arise, and if that person is invisible by status then the same question does not arise. But I was trying to suggest a situation where a husband may have a property abroad or a youngster may be acting as a community service volunteer. In those circumstances they do not have an alternative residence in England but when they return they are here for a limited period. To that degree would the discount be affected? Quite a substantial minority of people are in that category. It is not good enough for the Minister to say that it is for the local authority to decide. In that situation the matter would be sent to the courts for adjudication. The Minister must give some advice to the local authority as to what will count as the residence, and therefore whether the liability will arise.

Lord Strathclyde

Of course we shall give advice to local authorities, not just on this case but on a whole range of cases. We have made that quite clear throughout the Committee stage. The noble Baroness has made a good point, but she is labouring it slightly. In different circumstances different situations will apply. It depends how often someone comes to stay and how long they stay for. I know that the noble Baroness sees that. That is why it is appropriate for the local authority to deal with this matter on an individual basis. I am not trying to be difficult. I am trying to be as clear as I possibly can. If there is no obvious case for the person having a sole or main residence in the place where they are staying, then the local authority will have to make a decision.

Baroness Hollis of Heigham

As I have said, this is a probing amendment and I shall be withdrawing it. The Minister needs to give us further guidance if we are not to return to this matter at Report stage. There is clearly an anomaly here of some substance. We have had little help from the Minister by way of clarification. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 153 and 154 had been withdrawn from the Marshalled List.]

[Amendment No. 155 not moved.]

[Amendments Nos. 156 and 157 had been withdrawn from the Marshalled List.]

[Amendment No. 158 not moved.]

Schedule 2 agreed to.

Schedule 3 [Penalties]:

Baroness Hamwee

moved Amendment No. 159: Page 94, line 25, at end insert: ("(c) in purported compliance with the provision he knowingly supplies information which is inaccurate in a material particular"). The noble Baroness said: In speaking to this amendment I shall speak also to Amendments Nos. 160, 161, 162 and 163. If nothing else they have the merit of moving the Committee five amendments down the list. Amendments Nos. 159 and 161 are probing, although they are drafted to add a further offence relating to the inaccurate notification of information to billing authorities and levying authorities. Perhaps the Minister will tell the Committee that notify … in accordance with the provision in sub-paragraph (b) covers the supplying of inaccurate information as well as the failure to give any information.

The other amendments increase the penalty from £50 to £200. They are tabled in order to give Members of the Committee an opportunity to consider whether in 1993 £50 will appropriately reflect the offence. I beg to move.

The Earl of Balfour

I shall not speak on Amendments Nos. 159 and 160. However, Amendments Nos. 161, 162 and 163 apply to Scotland which I consider is adequately covered in paragraph 2 of Schedule 3.

I ask the noble Baroness, Lady Hamwee, to note that at the bottom of page 94 appears the provision that, in the case of Scotland, any failure will result in a further penalty of £200. It is only in Scotland where the person requested to give information has failed to do so that the penalty increases from £50 to £200. Therefore, I sincerely hope that the noble Baroness will not press Amendments Nos. 161 to 163. Furthermore, paragraph (c) in Amendment No. 161 which the noble Baroness proposes to insert in the Bill already appears at line 40 of page 94.

Lord Strathclyde

Again my noble friend Lord Balfour has been most helpful in providing greater clarification of the Bill. In introducing the amendments the noble Baroness explained that they are concerned with penalties. She also explained that the Bill provides for penalties to be imposed by the billing authorities for certain failures to notify them of changes or to provide certain information on request. There is a duty to notify the billing authority when a dwelling ceases to be exempt and also when a discount entitlement either disappears or is reduced. The Bill does not provide that these failures are criminal offences but allows the authority to impose a civil penalty of £50, which can be added to the council tax bill.

Amendment No. 159 and its Scottish equivalent, Amendment No. 161, would provide for penalties in cases where the person had not simply failed to notify the authority but had deliberately provided inaccurate information. No doubt the noble Baroness wishes to ascertain why there is not within paragraphs 1 and 2 (1) of Schedule 3 the same kind of provisions dealing with the supply of inaccurate information that are to be found within sub-paragraphs (2) and (3) of paragraph 2. The simple reason is that paragraphs 1 and 2(1) do not impose obligations to provide detailed information as is the case under paragraphs 2(2) and (3). The obligation on the person is to notify loss of exempt dwelling status or loss of reduction of discount entitlement. Either the person has notified the change or he has not, in which case the £50 penalty is applicable.

Amendments Nos. 160, 162 and 163 would increase the civil penalty from £50 to £200. The figure of £50 reflects the level of penalties currently applicable for various failures to comply with a statutory duty under the community charge. I believe that it provides a sufficient disincentive to people who may feel tempted to keep quiet about a change of circumstance, particular since when imposed it will be accompanied by a revised bill for the new liability, including back tax at the appropriate rate for the period following the change.

I hope that my explanation is clear and that the noble Baroness will withdraw her amendment.

6.15 p.m.

Lord Swinfen

Before my noble friend sits down, will he say whether there is provision in the Bill to amend these penalties at some time in the future should that be necessary?

Lord Strathclyde

I am not sure that there is. Perhaps I can write to my noble friend.

Lord Stoddart of Swindon

How are these penalties to be enforced? Perhaps I have missed something in the Bill.

Baroness Gardner of Parkes

I believe that it should be possible to upgrade the penalties as the years go by. We saw how the dog licence became totally out of date and that could apply to this penalty if the law continues.

Lord Strathclyde

I have received some inspiration that there is no power in the Bill to amend the overall level of tines. However, that is true of many Acts on the statute book. They can be revised generally through various powers and that is probably the most appropriate way of dealing with the problem. In those circumstances we shall avoid the difficulty mentioned by my noble friend Lady Gardner.

Lord Stoddart of Swindon

It appears that my suspicions were correct. Although a local authority may levy the penalty of £50 for non-information it can do nothing if the person who fails to give the information decides not to pay the £50. Is that right?

Lord Strathclyde

No. Once the £50 penalty is added there is a revised bill. The total bill becomes the new charge which the person must pay and then the matter will go through the normal enforcement procedures.

Lord Swinfen

Will my noble friend consider bringing forward an amendment at a later stage allowing the penalties to be altered by an affirmative instrument?

Lord Strathclyde

That is a fair proposal and perhaps it is one that I can take away and look at.

Baroness Hamwee

I thank Members of the Committee who took part in the debate. The point made by the noble Lord, Lord Swinfen, became apparent to me as I sat down having moved the amendment. Many Members of the Committee will wish to have more detail about the various powers referred to. However, I do not blame the noble Lord, Lord Strathclyde, because he was bowled a difficult problem. The penalty of £50 is hardly more than that imposed for various parking infringements and it would be regarded by some people as a penalty which they could incur without particular concern.

Lord Elton

The amount of the fine is important. It is not the right solution merely to increase the fine, because if inflation returns on the scale that it once was the fine will become too small. What is needed is not a statutory instrument which the Secretary of State can alter whether by parliamentary procedure or not, but the well-tried system whereby it is a point on an established scale as used in fines imposed by magistrates. That is indexed and will change.

Lord Swinfen

Yes, if that is not a penalty that must be imposed by a court rather than by a local authority.

Lord Elton

I was suggesting that the system used by the courts in respect of fines could easily be inserted into the schedule of the Bill.

Lord Strathclyde

I recognise that there are two basic anxieties: first, as regards whether the overall level of the fine should be £50 or more; secondly, how the fine will be increased. I shall consider carefully those two areas to see whether or not any adjustments can be made.

Baroness Hamwee

I thank the noble Lord for that. I shall look forward to hearing his conclusions. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 160 to 163 not moved.]

Schedule 3 agreed to.

Schedule 4 [Enforcement: England and Wales]:

Lord Henderson of Brompton

moved Amendment No. 164: Page 96, line 7, at beginning insert: ("( ) No enforcement order shall be made to recover any sum under this Act unless the court is satisfied that the authority has correctly determined whether there is an outstanding claim for council tax benefit in respect of that sum."). The noble Lord said: This is another amendment which has the support of the citizens advice bureaux. I consider it to be just as important as the amendment which they supported dealing with weekly or fortnightly payments. It mostly concerns people on low or very low incomes.

It is a simple proposition that: No enforcement order shall be made to recover any sum under this Act unless the court is satisfied that the authority has correctly determined whether there is an outstanding claim for council tax benefit in respect of that sum". The citizens advice bureaux wish, as I am sure we all do, to uphold the Citizen's Charter which is being so forcefully advocated by the Prime Minister. The charter states: Every citizen is entitled to expect: Explicit standards, published and prominently displayed at the point of delivery. These standards should … include … accuracy in accordance with statutory entitlements, and a commitment to prompt action". For good or ill, council tax benefit plays an extremely important part in the council tax system. It is designed to ensure that people on low incomes are not called upon to pay a disproportionate contribution to local taxation. I support the notion underlying the provision of that benefit. However, there is no provision for people who are in difficulty with payments. When they are in difficulty with payments, that can lead to an accumulation of arrears. The citizens advice bureaux' evidence, which I shall not cite because it would take too long, is that a large number of people have found themselves to be in that situation as regards the community charge.

Despite the publicity given to the council tax benefit scheme, many people were unaware of how they could claim or even that they could claim. Others claimed but waited months for the claims to be processed. That is solid evidence and is despite the fact that, under the regulations, local authorities should pay any benefit within 14 days of a claim being made or as soon as possible after that. Even if estimated payments were made in the interim, that could result in a considerable accumulation of arrears.

The most disturbing problems created in that regard, which are caused by delays by the council in processing claims, are those where enforcement action was taken by a local authority while clients were still waiting for another department in the same local authority to process a benefit claim.

On the early amendments we were told about the poor old computer, which could not cope with weekly or fortnightly payments. It now looks as though nobody has thought of the solution to this very real problem. Surely it is possible to put the amount of the benefits and the payments to be made into the computer. One can then do an extremely simple sum in order to find out what is the net payment. I believe that that should be within the capacity of a quite antiquated computer, let alone a modern one. I hope that that will be done. It would make a huge difference to those people on low pay. Indeed, it would make a huge difference to all of us who are in receipt of benefits but who, at the same time, have to pay local council tax. It would then be possible to know what is the net credit or debit. That should be within the capacity of modern technology.

When this matter was raised in another place, Mr. Robert Key, with whom I had extremely fruitful conversations only yesterday afternoon, said: I know that there are problems—there is no denying it. However, it is usual for a local authority to behave reasonably when a person's particular circumstances arc explained". I am trying to persuade Mr. Robert Key and the Government that it should not be left to a local authority to decide whether it should be "usual"; it should be common practice.

Unfortunately the evidence from the citizens advice bureaux is that it is far from being common practice. That is why I raise this matter today. It is not good enough to let the bad, less efficient local authorities behave in such a way that a person is billed by one department when he is due to be paid a sum by another department. That should not be allowed to happen. It is a scandalous situation which drives people at or near the bottom of the heap into accumulating mounting debts.

I should like to give the Committee one shocking illustration of this. A CAB in East Anglia reports that its local authority simply tells clients not to turn up to court—when proceedings have reached that stage—to face a court summons when a benefit claim has yet to be determined because the authority will not act on the liability order. That cannot be contemplated in the legislation. The Government cannot wish to see that state of affairs persist. This amendment is designed to address that situation.

We are asking that best practice, in line with the Citizen's Charter, is incorporated in legislation. It is unacceptable for people to have to be subjected to the acute anxiety aroused by a court order when it is not necessary. It could be obviated by a more efficient council getting together two arms of its service and matching them in a computer. The authority which is approaching the citizen who must pay his community tax will then know whether the net sum is either a debit or credit to the council. A person finding it difficult to pay his community charge should not be faced with court proceedings, bailiffs and all the horrors that follow from that when he has an amount owing to him from the council. I beg to move.

6.30 p.m.

Earl Russell

On behalf of these Benches and on behalf of my noble friend Lady Hamwee, I support the amendment. The key points are, first, that we have a situation where people are being penalised for a defect which is not under their control. One often cannot make local authority machinery move within a limited space of time.

My second point is that this is a mischief which is a great deal more common than some of us realise. We normally only hear of the cases that are reported, which affect those who seek advice. There are a great many who do not seek advice; who do not know where to go to obtain it. It so happens that I came across precisely that problem two weeks ago. Someone who was eligible for community charge benefit and had not received it was faced with a poll tax bill. It happened to a personal friend of my son. She had no idea where to turn for advice. Fortunately, her father took the matter in hand and a settlement was reached the day before the court hearing. But a considerable amount of time and public money had been wasted before that came about. There could be a more efficient system of dealing with the problem.

We do not always allow for quite how overstretched many local authority administrations are, especially in areas in inner London where there is a high mobility of population. Some of them—and I must mention my own local authority of Brent, which I regret to say is exactly the same under different political control as it was before—are almost impossible to get through to. I had dealings with Brent poll tax department in regard to receiving mistaken information. It is impossible to obtain a response except by going through a councillor. That is an inefficient way of proceeding.

It would be much better to clarify an arrangement whereby people do not receive summonses until they receive their community charge benefit and are in a position to pay. We must think about the court's time as well as everything else. I hope that the Government will look sympathetically on the amendment. It will make the wheels turn more smoothly than they do without it.

Lord Boyd-Carpenter

The noble Lord, Lord Henderson of Brompton, made an impressive case for the amendment. There may be an answer and I shall wait with interest to hear from my noble friend whether there is. However, on the face of it the noble Lord has a valid point and unless my noble friend intends to accept the amendment, I hope that he has a convincing answer.

Baroness Hollis of Heigham

We on this side also support the amendment. It is sensible and humane not to pursue an enforcement order while the taxpayer waits apprehensively for the outstanding benefit to which that person is entitled. Indeed, a person may be entitled to 100 per cent. rebate and yet end up faced with a nil bill but a claim for costs, thus adding insult to tension, stress and distress.

To follow the point made by the noble Earl, Lord Russell, and as the Audit Commission indicated in November 1990, local authorities have been overwhelmed by the volume of applications for benefit. No one on these Benches would defend local authorities poorly administered and insensitive to benefit claims and the like. However, it is only fair to recognise the pressure under which local authorities are working.

Across local authorities, up to half of all poll tax payers applied for benefit; around 30 per cent. ultimately received it. As the Audit Commission said, the problems of volume are exacerbated by the time consuming nature of assessment, cross references to register and the like. Members of the Committee will probably be aware that it takes six to nine months to train up a member of staff who is then in a sensitive and difficult job, and there are severe shortages of trained staff.

That is when local authorities are dealing only with rebates. We are about to move to a council tax with the mapping of households and the interplay between discounts and rebates in which the calculations that the local authority benefit staff will have to make will be infinitely more complex and in which the likelihood of delays will be exacerbated. It is not a reason for not accepting the amendment. We on this side support it. But we should not ignore the problems and believe that it is simply a question of staff shortages. Local authorities are to be faced with an extremely complex structure while, under capping procedures, they do not have the resources to increase the staff to deal with it. We support the amendment.

Lord Wise

I too support the amendment. I can add little to what has been said in the arguments in favour of it. As the noble Lord, Lord Henderson, pointed out, it is surely unacceptable that people should face the anxiety and cost of a court summons and enforcement action where their liability, net of benefit entitlement, has yet to be determined.

As the noble Lord said also, the evidence from the citizens advice bureaux shows that a considerable number of distressing cases of that nature have arisen in relation to the community charge. The amendment seeks to ensure that similar situations do not arise with the council tax. It will ensure that any outstanding claim for benefit is processed before an application for summons is made. I hope that my noble friend will look favourably upon it.

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

Amendment No. 164 seeks to prevent a liability order being issued unless any claim for council tax benefit has been dealt with or, as the noble Lord, Lord Henderson, said, the court is satisfied that the authority has correctly determined whether there is an outstanding claim for council tax benefit.

It has never been the case that a claim for benefit suspended the liability of a ratepayer or a chargepayer from paying any sum lawfully demanded of them. That was upheld in a recent Court of Appeal judgment last year—Regina v. Bristol City Council, ex parte Willsman and Young—where the court held that it was not unreasonable for the authority to press ahead with obtaining a liability order once a summons had been issued even if it was alleged at court that there was a benefit claim outstanding. In that case the authority concerned had undertaken not to enforce the order until the claim, if any truly existed, was determined.

Although I can appreciate and sympathise with the reason why the amendment was tabled, I can see no reason for changing that position for the council tax. If such a change was made, I am afraid it would leave the way open for taxpayers to avoid or delay their liability to pay the council tax by making bogus claims for benefit and causing those claims to be delayed by failing to provide the correct information. Most authorities will continue to act reasonably if approached by someone with an outstanding benefit claim and would not continue their recovery process until the claim was settled. That is the advice which has been given in a practice note issued by the Department of the Environment to all authorities on enforcement of the community charge and will be reiterated in guidance on enforcement of the council tax.

The noble Lord, Lord Henderson, welcomed the council tax benefit and the provisions for it. I welcome that support. However, he said that there was no provision for dealing with arrears of council tax. Council tax benefit is not designed to pick up the arrears that may have built up when the person liable did not have an entitlement to council tax benefit. That cannot be the purpose of council tax benefit. However, if arrears have built up while there has been an entitlement to council tax benefit, it will be open to a claimant to put in a claim for council tax benefit going back over the previous 52 weeks—in other words, from the date of claim back 52 weeks—provided good cause can be shown, as is the case with all other social security benefits where claims can be backdated 52 weeks.

It is then up to the local authority, as was said by various Members of the Committee, to deal with the claim. Local authorities have a full statutory responsibility for dealing with claims for housing benefit and community charge benefit and will have such responsibility for council tax benefit. Regulations prescribe that claims must be processed within 14 days or as soon as possible thereafter.

I understand there have been complaints that some councils have been somewhat slow in dealing with claims. I cannot give precise figures as to how well they are all dealing with them. This is not a matter for my department; these matters are dealt with by local authorities. The latest available information suggests that most claims are processed within the target time. Certainly, I would hope that as long as they are dealt with within that target time the problems should not arise.

The noble Baroness, Lady Hollis, complained that the local authorities were overwhelmed by the amount of work they had to deal with in processing housing benefit and community charge benefit and therefore there were extensive delays which were much greater than 14 days. I accept that on many occasions councils have not been able to meet that 14-day target. But one must stress that with council tax benefit, first, there will be fewer people paying the tax and therefore presumably fewer people to deal with in terms of processing the claims; secondly, despite what the noble Baroness has said, the procedure is far simpler in council tax than it was in community charge benefit; and, thirdly, it is far simpler than anything that is likely to emerge from the party opposite.

It is always open to the local taxpayers to appeal to the local authority ombudsman if they consider their case has been dealt with in an unsatisfactory way. District auditors themselves can make a report to the council if they consider any aspect of an authority's administration, such as the procedure for housing benefit or council tax benefit, is being dealt with inefficiently. I go back to the advice that will be given by the Department of the Environment that will follow the advice given on council tax benefit—that the authorities should act reasonably and should not press ahead with the recovery process until the claim is settled.

With those assurances, I hope that the noble Lord will feel able to withdraw his amendment.

Earl Russell

I cannot help expressing some disappointment with that answer. My noble kinsman seems determined to resist the line of argument of the amendment, even to the uttermost folly. There is perhaps a tendency in government quarters—I can understand why but it is not necessarily useful—to see the smell of evasion behind every attempt to tidy up matters. There was no such intention behind the amendment.

Lord Henley

If my noble kinsman will give way, I was not suggesting that the noble Lord, Lord Henderson, was trying to evade council tax, or even that my noble kinsman or any noble Lords opposite would ever wish to evade any tax whencesoever it came. I was suggesting that it might be that other claimants—not those pressing the amendment—might wish to evade payment of tax such as council tax.

Earl Russell

I thank my noble kinsman for that clarification which makes precisely the point I was intending to bring out. There is now common ground between us. My noble kinsman was suggesting that the amendment could have this intention, and I am glad to say he accepts that such was not the intention of any noble Lord who put down the amendment.

Our intention was that it lead to the more efficient collection of the money, which I think would be in the Government's, the local authorities' and the public's interest. It is not useful to try to collect money from people who do not have it.

I am very glad to hear the Government say that the local authority may be relied upon to act reasonably. We do not hear that very often, and I am glad to hear it, but unfortunately my noble kinsman has chosen to say it in the wrong place. I do not know where he gets his evidence from, but the evidence suggesting that claims are regularly processed as fast as he says does not seem to have much in common with the evidence available to the rest of us. It is a great deal more difficult for a local authority in an area of high population mobility to keep track of everybody going in and out of benefit—maybe being on benefit for six weeks and then getting a job and going off it—than he suggests. There is far more movement both in and out of benefit and in and out of addresses than has ever been conceived in the discussion of this subject.

My noble kinsman gave one crumb of comfort. He mentioned possible reference to this subject in guidance. If he was able to elaborate on that a little further I might find it rather helpful.

Lord Henley

I made it quite clear that most authorities can process housing benefit and community charge benefit applications within the 14 days specified in the regulations. If the noble Earl wants more precise figures, the latest information dating back to 1989–90 indicates that around two-thirds, 65 per cent., of claims meet that statutory 14-day target. He asked me to go further on the advice that was being given by the Department of the Environment. All I can say is that a practice note was issued by the Department of the Environment on the enforcement of the community charge and that that guidance stressing that the same policy should be adopted will be followed in the council tax. I should have thought that would be sufficient for my noble kinsman.

6.45 p.m.

Baroness Hollis of Heigham

The Minister has just given a very interesting figure about the claims, in which I think he aggregates housing benefit and community charge. Would he be good enough to break the figures down and give them separately for the community charge? Throughout the discussion —for perfectly honourable reasons I am sure—the Minister has referred to housing benefit, which has not been mentioned by any of us on this side. Given that people's housing circumstances change very little in terms of eligibility for benefit compared with the poll tax, I suspect that disaggregating those figures would reveal a very different pattern.

Lord Henley

I cannot disaggregate the figures. The reason why I gave them together is that they are dealt with by the same department, by the local authority, unlike all other benefits, which are dealt with by the Department of Social Security. The noble Baroness said that for some reason people do not seem to move around for housing benefit, which I do not understand, but they do seem to move around for council tax benefit. We are now talking about council tax benefit. This was what I was trying to stress—that it will be much simpler to deal with council tax than with community charge benefit.

Baroness Hollis of Heigham

The point I am trying to make is that, although we are dealing with a rebate scheme which is fairly simple—housing benefit is a rebate scheme—on to that the Benches opposite have layered a discount scheme. That is what will produce the complexity. The Minister may shake his head, but it is true.

Lord Henley

The discount scheme does not add to the complexity of what the noble Baroness likes to call the rebate scheme, which is in fact council tax benefit. That will be easier because there will be fewer people with whom to deal. Therefore, the existing claims departments dealing with housing benefit and community charge benefit, which will be dealing with housing benefit and council tax benefit, will have a much easier time in the future.

Lord Henderson of Brompton

We shall see, shall we not? I regret that the Minister introduced a party political note into what had hitherto been a discussion into which party politics had not entered. But that is merely an expression of opinion.

I would have hoped that the Minister would have listened carefully to the opinions which came from all sides of the House, and in particular to an opinion which I value very much—that of the noble Lord, Lord Boyd-Carpenter. He said he thought that a good case—in fact he said an impressive case—had been made out. I do not know whether he thought the answer was impressive. That was not the impression given to those of us who listened to the arguments for and against.

Unfortunately, the Minister did not seem to be listening to the arguments. He was reading from a brief which was uttered as if no arguments had been propounded in this Chamber from any quarter. I would ask him if he would be so good as to report the opinion of this Committee, not only the general opinion but that of the noble Lord, Lord Boyd-Carpenter. This is not a matter of party politics. That is why I regret that that tone was introduced into a non-party political debate.

Lord Henley

I am sorry if the noble Lord thinks that I brought in a party political tone to the debate. Possibly in responding to the noble Baroness, Lady Hollis, I might have made the odd party political point, but I do not think that I did in responding to the noble Lord, Lord Henderson. I responded to every point that the noble Lord made. I have made a perfectly good case. I have no intention of reporting back the views of the noble Lord. I cannot move on this, and I have no intention of moving. I have dealt with every point that the noble Lord has made. I have stated quite clearly that the Government will issue guidance that will deal with this particular point. I am not going to take the amendment any further.

Lord Henderson of Brompton

That sounds rather shirty to me. It is so extraordinary that this rather shirty and adamant response should come only the day after I had a much more agreeable conversation with the Minister, Mr. Robert Key.

When the noble Lord talks about the guidance, which is of course welcome, has it has any force? If it has no force, then the one-third, or whatever it is, of the authorities which are not up to best standards will continue to be below the best standards which we all want, and which the Prime Minister is urging on the noble Lord and his colleagues.

The noble Lord said that he answered all the points that I made. He did not answer the point I made about the Citizen's Charter. I would ask the noble Lord if he could be a little more flexible and report to his noble friends in the department, and possibly to the Prime Minister, that here is an amendment which he could readily accept and which would be squarely within the provisions of the Citizen's Charter.

His principal defence of the status quo is that as things have been they remain, or should remain, and that if a court has expressed an opinion, that that is the law of the Medes and the Persians. But of course that is not. We have put forward the case for the alteration of the law, the alteration of the law as was so clearly expressed in the courts quite recently. That is what I ask the noble Lord to take back in a more reasonable spirit than I thought he had uttered before he said he was not prepared to take anything back at all.

Lord Boyd-Carpenter

Before my noble friend replies to that, let me say at once that I did not find anything shirty—I think that was the word used—in his reply. It was the Minister's usual skilful, suave and effective debating style. However, I hope that he will have taken note that there was some unhappiness on all sides of the Committee about this issue, and that the mere statement that guidance will be given did not appear to have a wholly reassuring effect.

Perhaps at the next stage of the Bill the Minister will be in a position to tell us the terms of that guidance and the degree of authority which will be manifested in it. He must understand that there is unhappiness about this issue. It is not in any sense a party political issue, but there is a general feeling in the Committee. Perhaps an indication that he appreciates that and will take the matter back and discuss it with his right honourable friend, will be reassuring to some of us.

Lord Henley

I thank my noble friend for those remarks about my shirtiness or lack of shirtiness. I merely responded to the noble Lord, Lord Henderson, in the manner that I did because, to tell the truth, I took exception to his allegations that I had dealt with the noble Lord's arguments and the arguments of others in a less than polite manner and in possibly a cavalier manner. I dealt with the arguments as they were put to me, and I answered them fairly. I made the Government's position quite clear which was that we shall issue guidance to the local authorities. The guidance is something to which the local authorities must have regard.

As to the contents of the debate, the debate is a matter for the public record and it will appear in Hansard tomorrow. My honourable and right honourable friends in another place and in the Department of the Environment will be able to read and take note of the views of noble Lords.

Lord Henderson of Brompton

I am very grateful to the noble Lord. I apologise if I upset him by calling his reply shirty. I should like to make friends with him, if I may, by withdrawing that word.

I am extremely obliged to the noble Lord, Lord Boyd-Carpenter, for what he said. We are all anxious to see that this matter is taken aboard. When I asked the noble Lord whether he would report back to Ministers, he really said no. However, now that he has made plain that it is a matter of record, I cannot believe that they will not read what has been said, particularly by his noble friends. For that reason, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mottistone

moved Amendment No. 165: Page 96, line 30, at end insert ("at which stage the magistrates' court may adjudicate on the ability to pay and prescribe the amount and method of payment;"). The noble Lord said: This is a somewhat different amendment but it is on the same theme.

The purpose of my amendment, on which I have been advised by the Magistrates' Association, is to give magistrates some discretion in the making of a liability order to take account of the ability of the debtor to pay. Being close to local communities, magistrates are particularly aware of the effects, especially on young families, of unreasonable monetary or other penalties on the breadwinners of families. Indeed, local communities very much expect them to be so aware. Their association is thus particularly alert in seeking to avoid legislation which deprives magistrates' courts of the freedom to take account of ability to pay in sentencing or in equivalent decisions. I had an example of this in the passage of the Criminal Justice Act 1991 through this House last summer, when I was able to persuade the Government to amend Section 58 of that Act to give courts greater discretion with regard to the binding over of parents or guardians than it originally intended.

With regard to Schedule 4 of the Bill, Mr. Roger Sims, who was also advised by the Magistrates' Association when the Bill was passing through another place, endeavoured to remove reference to magistrates' courts altogether from paragraph 3 of this schedule. The Government did not accept that in debate, and subsequent correspondence between the chairman of the Magistrates' Association and the department of my noble friend the Minister led to two letters from Mr. Robert Key on 19th December and 13th January, insisting that magistrates should remain involved in the making of liability orders under the provisions of Schedule 4 of the Bill.

For the reasons that I have given in my opening remarks, I am particularly keen that magistrates should have some discretion in making liability orders, but I have taken account of the correspondence to which I have referred in proposing Amendment No. 165.

I therefore hope very much that my noble friend will be able to deal favourably with the amendment. It meets a great deal of what people were asking for on Amendment No. 164. It enables magistrates to have the discretion which is so important for the maintenance of their status within the community in which they live. I beg to move.

Lord Henley

My noble friend seeks an amendment to require the magistrates' courts to hold a means inquiry before making a liability order against a council tax defaulter and to prescribe how the outstanding amount should be repaid.

At the earlier stage of enforcement, that taxpayer will have failed to pay, despite the opportunity of instalments and the reminder from the authority. To a certain extent the summons and the liability order stage is the final reminder. Many people do pay at this stage, and most do not turn up at court. It would be impractical to hold a means inquiry at that particular stage. It would place an unacceptable burden on both the courts and the authorities. Having obtained the liability order, we believe that it is reasonable for the authorities then to be able to enforce payment using the remedies provided: distress (which we shall be discussing later); attachment of earnings; and so on. Magistrates will have to inquire into a taxpayer's means before imposing the ultimate sanction of imprisonment.

I do not believe that the inquiry that my noble friend is suggesting is either necessary or desirable at such an early stage as that of granting the liability order. One should also note that under the council tax those with the fewest means—those on income support—will always receive 100 per cent. benefit and those on low incomes above income support levels will always receive partial benefit. I therefore hope that my noble friend will feel able to withdraw his amendment.

7 p.m.

Baroness Hamwee

I am a little puzzled by that reply. The amendment contains the word "may" and not "shall" and seeks to give the magistrates a discretion. That would remove the air of rubber stamping that has unfortunately grown up in connection with how they have had to deal with community charge enforcement. I am not referring merely to the difficulties of which we have all recently been made aware. The amendment is not prescriptive. It would allow discretion.

Lord Henley

I accept the distinction made by the noble Baroness in pointing out that the word is "may" and not "shall". I still believe that it would impose a considerable extra burden on the courts because they would then have to consider whether they "shall" or not in these circumstances. I was trying to say that the most appropriate time to look at the means of the individual is at a much later stage and not at this earlier stage.

Lord Mottistone

I am surprised by my noble friend's reply. The amendment was suggested to me by the Magistrates' Association. If the association thought that there would be an unacceptable burden on the courts it would not have suggested the amendment. I do not see how my noble friend's department or the Department of the Environment can possibly know enough about the courts and how they function to make a decision of that nature. Once again my noble friend read out a reply which paid no regard to why and by whom the amendment was being put forward. It is harmful to the image of the magistrates in their local community if they are thought of as being involved in rubber stamping. As for the number of times they will use this facility, that would depend entirely on the circumstances. All they are asking for is to have the flexibility to be able to do this. In view of what has been said by myself and by the noble Baroness, Lady Hamwee, I ask my noble friend to take the amendment away and think about it. I do not think that the departments concerned really know about this subject. It would be worth their while to listen to what I have had to say as put forward by the magistrates.

It is important that one does not forget the credibility of the magistrates in their area. There have been all kinds of complaints about them around the country during the past few years. It is important that they should be allowed to have the flexibility to do the job as they think fit. That is all the amendment asks for. It would go some way towards dealing with the problems that were mentioned in relation to Amendment No. 164. I hope therefore that my noble friend will be persuaded to say that he will take the amendment away and look at it again.

Lord Henley

Without prejudice and without giving any promises to my noble friend—I imagine that he is about to withdraw the amendment—we would be more than happy to have another look at it. I suspect that I shall be unable to move as my noble friend wishes me to, but I shall certainly have a look at it.

Lord Mottistone

I am sorry that my noble friend found it necessary to add those final remarks. They spoiled what was otherwise quite a good response. In view of that qualified undertaking and certainly reserving the right to come back again at the next stage, because I think that the amendment has been atrociously handled, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Henderson of Brompton

moved Amendment No. 166: Page 99, line 48, after ("may") insert ("apply to"). The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 167. It has certain affinities with the amendment moved by the noble Lord, Lord Mottistone. I very much support the line that he took and I hope that he persists with it.

Until now we have had, if I may say so without offence, stonewalling in the briefs read out by Ministers without regard to the arguments. I believe that my arguments on this amendment are just as compelling as the arguments that I put forward on Amendment No. 164. The purpose of the amendment is to ensure that a person who is in arrears with his council tax is not subjected to bailiff action without first having had an opportunity to repay the debt by reasonable, realistic instalments. What we are really trying to do is to create a better climate between council taxpayers who are poor and find themselves in arrears and those charged with collecting the council tax. That, I reiterate, is again within the terms of the Citizen's Charter, which is being promoted by the Prime Minister to the plaudits of us all. I am very keen on the Citizen's Charter and I hope that this proposal will be looked at in the light of the Citizen's Charter.

The evidence for this proposal comes from the grass roots, the citizens advice bureaux, which know where the trouble lies. They know where there is hardship. They know that a better climate between the tax gatherer and the citizen will lead to better relations between the local authority and the citizen and will lead to less payments in court fees and bailiffs fees and less distress. There would be a gain all round.

A major principle of modern debt recovery is that repayments should be put on to a systematic footing, and where it is necessary, for that to be done by manageable instalments. There are difficulties, of course. Many people are neither in paid work nor claiming income support, so the usual remedies cannot be applied. The citizens advice bureaux have on many occasions reported that local authorities have chosen to enforce a community charge debt by bailiff action immediately, without allowing attachment of earnings or deductions from income support even if those would have been appropriate.

I beg the Minister to take on board that this is hard evidence from citizens advice bureaux of what actually happens on the ground. It is no good saying that the Government will exhort local authorities to behave in a rather more reasonable way. What I have suggested is happening on the ground and is highly undesirable. It often happens that people on low incomes faced with bailiff action are not given an opportunity to pay off the arrears by instalments which take into account their ability to pay.

The solution is roughly in line with the amendment moved by the noble Lord, Lord Mottistone. It is for bailiffs to have the same kind of licensing and authority as they have with the courts. Of course, that is the subject of another amendment; but it would help a great deal to create a more friendly atmosphere between the creditor and the debtor. We do not want to go to the ultimate resource, which is of course the bailiffs or imprisonment, unless we have pursued all other reasonable alternatives. That is the purpose of the amendment.

I should like local authorities to take a leaf out of the book of good practice of the courts. If they do so, there will be a better relationship between local authorities and the ratepayers, just as the good practice in the courts is creating a better relationship between those who work in the courts and those who unfortunately find themselves appearing before them. That is what the amendment aims to achieve. It must surely fall upon receptive ears on the Front Bench. I sincerely hope that it does. I beg to move.

Lord Mottistone

While I support the amendment in principle, I do not think that it meets the Bill's purpose nearly as well as Amendment No. 165.

Lord Henderson of Brompton

I am prepared to concede that point.

Lord Mottistone

I hold that view because it builds in another stage of enforcement and, in fact, would create potentially more work for the courts. I hope, therefore, that my noble friend will be able to say—perhaps in encouragement this time—that he will take away all three amendments and look at them carefully, observing what the people from the citizens advice bureaux say as well as the comments from those working in the courts.

Baroness Hollis of Heigham

Perhaps I may follow up the comment made by the noble Lord, Lord Mottistone, and say that I also hope that the Government will take away Amendment No. 168 and give it the same careful consideration. We on this side of the Committee very much support the amendment so elegantly and eloquently moved by the noble Lord, Lord Henderson.

I should like to make two points. First, as the noble Lord so rightly said, local authorities are inheriting a culture of non-payment and confrontation. Anything which de-escalates that situation and takes away some of the confrontation which has been experienced must be to the good of all parties—that is, local authorities, taxpayers and ultimately government —and to the principle of abiding by laws.

Secondly, as the noble Lord, Lord Henderson, mentioned, at the core of the problem is the fact that those who are in debt with local authorities may also be in multiple debt; for example, they may be in debt with fuel bills, with housing benefit or with the social fund, and so on. Moreover, if they are on income support, they may find that support being top-sliced and, if they are in a waged job, they may find that their earnings are attached. I am sure that the noble Lord, Lord Henderson, is absolutely right; the only way to improve the situation is to enable people to repay their debts in small, realistic, regular and manageable proportions so that they will begin to enter a structured method of handling their money, however low or inadequate their income may be to meet their perceived needs. The amendment ensures that that possibility is more open than would otherwise be the case.

Certainly, a very large number of people who are in prison for under six months are there as small debtors; that is, for non-payment of fines. If the amendment of the noble Lord, Lord Henderson, would prevent that proportion from increasing and instead would decrease it, surely we should all support it.

7.15 p.m.

Earl Russell

I believe that my noble kinsman is very familiar with the problem of recovering sums of money from people on income support. Those are some of the people with whom we are dealing. He knows perfectly well that that cannot be done at once, especially if, as suggested by the noble Baroness, Lady Hollis of Heigham, it is a problem of multiple debt. It is very much more efficient to use instalments. I entirely agree with the noble Lord, Lord Henderson of Brompton, that the amendments before the Committee are not in any sense party amendments; they are intended simply to be helpful. I do not know whether they will be found to be so, but that is the intention.

Decisions have to be taken about how much money can be recovered at any one time. If bailiffs are sent in immediately—there has been a considerable problem with that; and there is again such a problem in Brent which has been given a considerable amount of space in the local press and caused a good deal of ill will all around—they are not the best people to decide how much a person can reasonably pay. Bailiffs are not financial experts. They are concerned, necessarily, in a tense situation with keeping their own end in order.

A citizens advice bureau in Yorkshire reported a case with a client on income support who, when the bailiffs were sent in very early in the proceedings, offered to pay £2.50 a week. I hope that my noble kinsman will agree that that is not an entirely unreasonable rate of instalment when one is on income support. However, the bailiffs insisted that the minimum acceptable payment was £23 a week. I am sure that my noble kinsman will agree that the latter is not a reasonable minimum weekly payment to require of anyone who is on income support. He may even agree with the point that the bailiffs' judgment in that area is not expert.

Moreover, if people on a very low income have capital goods taken by distress—for example, fridges, cookers, and so on—they may, if they have young children, need to replace them. They may even put in social fund claims. That is not good for public expenditure. Then, of course, they will be building up even more debt and therefore the problem will continue. I believe that the amendment sketches out an easier way to deal with the problem.

Lord Henley

I hope that I can be helpful—as, indeed, I always try to be—in responding to the noble Lord, Lord Henderson. I also hope that I was equally as helpful to my noble friend Lord Mottistone when I responded to his amendment. There are problems attached to the amendments. But if Members of the Committee are prepared to listen to me, I can say that there are matters that we should like to reconsider if the noble Lord withdraws the amendment.

As I see it, the problem with Amendments Nos. 166 and 167 is that they seek to bring a second court hearing into the enforcement procedure for the council tax so far as concerns distress. That could certainly hold up the enforcement procedure without any compensating benefit. But, what I want to say is that one must distinguish between the pursuit of non-payment and the practice of the local authorities. Obviously, one can be concerned that many local authorities are possibly using distress at far too early a stage in the proceedings and before they have exhausted other remedies.

The reason we are prepared to consider the matter further in relation to Amendments Nos. 166 and 167 is that the emphasis must be very much upon helping people to pay rather than pursuing the matter with the prosecution service; and certainly upon improving the practice of local authorities. That is what the Citizen's Charter is all about. But, having said that, I hope that the noble Lord will feel able to consider withdrawing the amendment. As I said, there are matters in terms of local authority practice that we should like to consider. I should be unwilling to go down the precise line set out in the amendment, especially as regards distress because that has implications in other matters beyond the council tax field.

Lord Henderson of Brompton

I find that answer to be helpful. Indeed, it is an emollient answer. I hope that the noble Lord will extend the emollience of that answer to the amendment of the noble Lord, Lord Mottistone, to my previous amendment and the amendment which is to be moved by the noble Baroness. They all interrelate; they all deal with the same subject. The Citizen's Charter is relevant to all of them.

I am extremely grateful to the Minister for saying that the emphasis should be on the local authorities acting under a statutory authority or by virtue of a government circular, and on helping people to pay. That is a most important principle. I was glad to hear the noble Lord utter it. Equally, I was glad to hear him say that there are matters in the amendment about which Her Majesty's Government would like to think again. I hope that they will think about the whole group of amendments. Having said that, I clearly not only wish to but shall beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 167 not moved.]

Baroness Hollis of Heigham

moved Amendment No. 168: Page 100, line 17, at end insert: ("(d) a distress may only be made by prescribed persons; (e) a distress may only be made in prescribed circumstances (including the giving of notice); (f) prescribed goods may be exempted from a distress; (g) costs of a distress may be prescribed."). The noble Baroness said: I understand that about 77 per cent. of summonses result in liability orders and that some local authorities send all their liability orders immediately to the debt bailiff for distress. Previous amendments have dealt to some extent with the question of trying to make debts manageable by ensuring benefit offsets, and payment by instalments, and by giving greater flexibility to the magistrates' courts to determine the procedure. In other words, they have dealt with the management of debt.

The amendment deals with the other side of that issue, which has already been trailed to some extent in previous amendments—the management not of the debt but of the bailiffs. Bailiffs employed by the Lord Chancellor's Department for county court procedures are rigorously screened, trained, examined and certificated. The Courts and Legal Services Act 1990 limited their powers of distraint so that they could not take essential items of clothing or household goods. Certified bailiffs appear to have skill in negotiating instalment payments and, although, for example, in 1989 county court bailiffs had about 1.25 million warrants to seize goods only 1,900 sales took place. The others were clearly negotiated in all sorts of ways. Relatively few complaints appear to arise as a result of the work of county court bailiffs.

In the area of the community charge or the council tax, local authorities may use their own bailiffs, or, as is often the case, private bailiffs. The rigorous controls that apply to county court bailiffs therefore do not exist. I am not arguing that distraint procedures are unnecessary, although, like most others, I find them deeply distasteful. I suggest that they should apply only where there is a capacity to pay or a wilful refusal to pay, with strict controls over what goods may be taken and what additional costs may fall on a household pressed by this process, and with tight controls over the behaviour of bailiffs to avoid the bullying, extortion and harassment which has too often given bailiffs a bad name.

Local authorities have sought to introduce a code of practice. Most councils do their best to ensure good standards and use private bailiffs as a last resort; nevertheless, the cases brought to our notice by the CAB have been full of horrifying tales. There are stories of bailiffs seizing essential goods. For example, they seized from a mother with an incontinent disabled daughter a washing machine which had been provided by a loan from the Social Fund which the mother still had to repay. She had somehow to find the resources to buy another washing machine. There have been accounts of bailiffs seizing goods of greater value than necessary to pay off the debt, and selling those goods at auctions, without reserve prices, and well below their value.

The 1990 report on private bailiffs compiled by the NCC tells of the case of a gold and diamond engagement ring which was taken to cover a debt of £140. It was sold for £14. The woman was still left with a debt of £107 after expenses were met and with no engagement ring. There are accounts of threatening behaviour. The woman who lost her engagement ring received a further visit from the bailiff to chase up the £107. He forced entry, although she was alone with her children, and improperly threatened her with the police if she did not settle the rest of the account on the spot. She borrowed money from her neighbours.

Even where repayments have been arranged bailiffs have refused to stop the execution of distress warrants. In addition, the CAB and the NCC report that bailiffs often add high charges which multiply the outstanding debt; for example, they have charged £70 for the visit of a van and so much a day for walk-in possession. That can easily double the debt and spiral down the indebtedness even further.

Voluntary codes of practice, as recommended by the Minister in another place, have been tried, are welcome, and are inadequate. I shall give an example. A Cheshire CAB reported that its local authority had a code of practice which included the provision that the bailiff must identify himself correctly and show some form of identification. However, the same CAB reports a case of where those same bailiffs bluffed their way into premises by saying that they were council employees. The same firm of bailiffs also breached common law by saying that they had taken walk-in possession by putting a blank inventory through the door. Eventually, the local authority was persuaded to strike that firm of bailiffs off its list, but after three months it was reinstated because its collection rates were so good. That is not surprising. That illustrates the problem which results from the local authority's position as landlord or debt-pursuer as opposed to that of protector of the well-being of all its citizens.

The amendment would do much to remedy the problem. It would ensure that bailiffs operating under magistrates' warrants would be subject to the same standards of professional behaviour as currently apply to county court bailiffs. It would prevent unsuitable people acting as bailiffs. They should be certificated and have their good character assessed. Secondly, the people upon whom distress is to be levied should be fully informed of their rights. The noble Lord, Lord Henderson, quoted the Citizen's Charter and no other behaviour should be accepted. People should be given the same notification as in the case of rents. Thirdly, as with rent distress, any such warrant should exempt essential household goods, clothing, bedding, furniture and household equipment essential for basic domestic needs. Families need those goods, and, as the noble Lord, Lord Mottistone, said, they would have to replace them at a higher cost, often with high interest rates which would push them further into debt.

Finally, the amendment would provide that the additional, and sometimes proper, costs surcharged by the bailiffs would he properly controlled, assessed and charged. We ask for the amendment to be accepted by the Government so that the provision is on the face of the Bill. The voluntary code of practice is inadequate and, where it has been tried, has broken down. If it is not on the face of the Bill, there is no sanction available in respect of those bailiffs who operate like bully-boys and flout the code. At its core, the amendment would professionalise the bailiff service operating from magistrates' courts as it currently professionalised that of county court bailiffs. I beg to move.

Earl Russell

I have one complaint only about the amendment: it is moved at least 400 years too late. The problem is long standing. The problems to which the noble Baroness, Lady Hollis of Heigham, drew attention have been with us for a long time. Recently I was reading the list of goods distrained from John Hampden's tenants for non-payment of ship money. They included large numbers of frying pans and family bundles. It used to be the law that people might not be distrained in the tools of their trade. The utility of that is obvious: if they are unable to work they cannot pay off debt. I am not clear whether that still is the law. If it is not, it should be. If it is, it needs reasserting.

I agree with the noble Baroness: the problem usually resides in the use of private bailiffs. Again, there have been recent examples in Brent. If I may be forgiven another little historical excursion, the moment the collection of ship money began to break down was when they stopped using the sheriff's bailiffs, and started using private bailiffs, who of course do not always know exactly what they are about.

The proposal to exempt prescribed goods from distress is an important one. The case mentioned by the noble Baroness of the washing machine which was being paid for by a loan from the Social Fund is one which suggests that the Government may have a direct as well as a public interest in some of the cases we are discussing.

Finally, the issue of bailiffs' fees has again been with us for centuries. For anyone to be able to fix and enforce, without consent, his own level of charges at his own discretion is not a free market transaction, it is something with a dangerous resemblance to extortion and ought to be controlled.

7.30 p.m.

Lord Henderson of Brompton

I wish to say only a brief word because so much of the ground has been covered by the noble Baroness, Lady Hollis of Heigham. As so often happens, the noble Earl, Lord Russell, gave us a welcome tutorial and took us back to the 17th century. It was particularly agreeable that he talked about Hampden and ship money. It almost made me wish to describe the noble Baroness, Lady Hollis of Heigham, as our "village Hampden" because she spoke so well and eloquently on the subject.

I reiterate the importance to the Government of looking at the amendment sympathetically and through the spectacles of the Citizen's Charter. On 12th July 1991, speaking in the House of Commons, Mr. Robert Key said at col. 1293: It is important that the activities of bailiffs are subject to fair but stringent controls". That gives me hope that the Government will consider the amendment sympathetically. He also stated: Bailiffs are a feature of life in this country. I shall be talking to representatives of the citizens advice bureaux about their worries regarding bailiffs to see whether I can encourage them to talk directly to the bailiffs about those issues".—[Official Report, Commons, Standing Committee A, 27/11/91; col. 549.] That is all very well, but citizens advice bureaux do not have the authority of the Government. They already talk to the bailiffs, but it is not much use their complaining to bailiffs, some of whom are fairly rough and ready and who have the freedom to act in the way that the noble Baroness, Lady Hollis, described.

Thus, although the citizens advice bureaux—who are the real village Hampdens—do their best out there in the country, they do not have the authority which is needed from central government. The situation cannot go on for much longer.

The chairman of the National Consumer Council felt strongly on the subject. As so much emphasis is being placed on consumers' rights, the words of that lady should be well and truly heeded by the Government. We cannot allow bailiffs to act in this way without direction. The first step is to assimilate the kind of conduct which they are subject to in the courts to other areas where bailiffs are used.

Lord Henley

My noble kinsman said that the amendment came 400 years too late. I can only say that I rather wish it had been dealt with 400 years ago and then I should not be dealing with it tonight. The amendment put by the noble Baroness, "our village Hampden", as the noble Lord, Lord Henderson, called her, seeks to provide for the prescription of the operation of distress and further controls on bailiffs, as they operate in the field. I sympathise and the Government sympathise with the problems that some debtors encounter in their dealings with certain bailiffs. I accept that in some cases bailiffs are clearly working outside the law. However, I must stress that there are remedies available in such cases. I do not believe that to change the law on bailiffs because of what one might call "a few bad apples" would be acceptable in the Bill for two main reasons.

First, distress is used in areas other than local taxation. There are statutory provisions which have been interpreted by the courts. It would not be right for legislation dealing just with the council tax on this occasion to deal with the procedures for distress which may be used in many other areas.

Secondly, as regards local taxation, there are codes of practice although I know that our village Hampden takes very little note of them. They are issued by local authorities to the bailiffs whom they employ to provide adequate safeguards for the debtors as regards the methods of operation and the goods to be seized. I should say in passing that in the distressing —perhaps "distressing" is the wrong word to use—in the appalling examples which the noble Baroness gave, there are remedies in such circumstances—for example, appeals to the magistrates—which the individual can pursue.

Guidance about what such codes might include is given in a practice note issued by the Department of the Environment and it has recently been revised by the Institute of Revenues, Rating and Valuation. Similar guidance will be issued for the council tax.

Turning to the costs of distress for council tax, these can only be recovered in an amount fixed by regulations or determined in accordance with rules set out in regulations. The Bill also provides for regulations stating that any person may appeal to a magistrates' court if he is aggrieved by the levy or the attempted levy. We intend to provide for this in regulations.

One must stress that there is a distinction between magistrates' courts and the county courts; the magistrates' courts do not have their own bailiffs to be used in the way that county courts do. The important point to remember is that the question of the use of bailiffs goes far wider than the Bill and it would not be right to make changes as to how they should work in regard to the council tax, but not in other ways. The whole subject might be looked at in other ways, but not under this Bill.

I hope that what I said on the earlier amendments tabled by the noble Lord, Lord Henderson, will be enough to show that I am prepared to consider further examination of the amendments. However, it would not be right to take the suggestion of control on bailiffs any further on this occasion under this Bill. I hope, therefore, that the noble Baroness will feel able to withdraw her amendment.

Lord Henderson of Brompton

Will the noble Lord consider that we might have to wait another 300 years before anything is done, if every government department has to be consulted about the use of bailiffs? Something has already been done piecemeal under the provisions of the courts. If another provision on bailiffs concerning distress on failure to pay local taxation were added, it would be one more step forward. This is the way in which traditionally we operate. It would be good if this extra step were taken under the Bill and it could gradually be extended in other Bills as the opportunity arises. I beg the noble Lord to consider that course of action rather than our having to wait for every government department to have its say.

Lord Henley

I am sorry that the noble Lord takes such a pessimistic view. I do not think that I can go further; I do not believe that the Bill would be the right place in which to do so. The noble Lord suggested that one step could be built on later, but it would not be right that bailiffs operating from magistrates' courts should come under one form of control in this case and another in other matters. Whether the whole subject of bailiffs and their control could be considered more generally is another matter, but this Bill is not the place to do so.

Lord Mottistone

I must say that my noble friend is being terribly stuffy again. This is an important point which ought to be tackled. The stories which the noble Baroness gave us were only some of those produced by the citizens' advice bureaux. The Government ought to say that they will take the suggestion away, even if they do not introduce provisions in this Bill. They should be able to do that in the way that the noble Lord, Lord Henderson, suggested. Although I do not believe that it would be wise for the noble Baroness to press this amendment to a Division, I hope she will stay on the attack on this matter. I hope that she will obtain advice on inserting a measure in the Bill as regards control of private bailiffs.

Lord Henley

It is entirely up to the noble Baroness to decide whether to press this amendment to a Division. That is not for me to decide. However, I do not believe this Bill is a suitable place to make changes to the control of bailiffs in a single field. One might then be left with the problem of a bailiff pursuing, as it were, two different debts—one relating to the council tax and the other relating to something else —and having to operate under different rules. I accept there are some bad apples. I believe those were the very words I used earlier. Some bailiffs are not following the correct procedures and some are working outside the law. However, remedies are available in such cases. I can go no further than that. I cannot accept the argument that we can take one step forward with regard to bailiffs in this Bill.

Baroness Hollis of Heigham

I thank the noble Lord, Lord Mottistone, the noble Earl, Lord Russell, and the noble Lord, Lord Henderson, for their extremely helpful comments. They share the concern that has been expressed not just in this Chamber but also outside that some bailiffs behave notoriously badly. I accept the Minister was entirely conciliatory in his tone and that he appreciated that a problem exists. However, I had hoped that he would have been able to give us more of an indication that this matter could be approached in a step by step fashion.

I hope I may adopt the terminology that has been used in the debate. The Minister has acknowledged there are some bad apples. That is true also of mini-cab drivers, the police or any profession. The Independent has, for example, written about the bad practices of certain local authorities. However, that is not an argument for standing aside. In this amendment we seek to bring bad practice—that may be exemplified only by a few people, although I suspect the problem is bigger than that—up to professional standards.

The Minister made three points. On behalf of this side of the Committee, I cannot accept any of them. First, he said it would be wrong to deal in isolation with only one area of magistrates' bailiffs' work. However, people who are in debt with their council tax may often—though this is not always the case—have problems in paying their housing rent. I understand that housing rent payments are pursued by the county courts with county court bailiffs, who operate to high standards. Therefore a person who is in debt with his council tax and with his housing rent may receive visits from one set of bailiffs who are acting to high professional standards and other visits from magistrates courts' bailiffs who are operating under a magistrates' warrant. The latter bailiffs may not be acting to high professional standards.

This Bill deals with one of the two prime sources of finance for a local authority, the council tax. Therefore I believe it is entirely proper to seek to brigade the behaviour of private bailiffs operating under the authority of magistrates' courts with the behaviour of county court bailiffs who seek to pursue rent debts. Often the same defaulters are involved in both cases. The two major debts which are most likely to threaten a person with homelessness and imprisonment should, I believe, be brought into line as regards the treatment of defaulters by bailiffs. In that way defaulting citizens, to whom the Citizen's Charter is addressed, would receive similar treatment from similar officials seeking the repayment of similar debts.

Secondly, the noble Lord, Lord Henley, pointed out that individuals can appeal to magistrates if bailiffs behave improperly. The Minister is correct in an abstract sense. However, such an appeal presumes a degree of self-confidence and competence on the part of the person making the appeal. By definition, those people who are in default of their council tax are least likely to make such appeals. By definition, those people are inadequate as regards handling their money and they probably face a multiplicity of debts. They may be bullied by a bailiff into paying off the debt he is pursuing, thereupon defaulting on all the other regular payments they are required to meet.

Thirdly, the Minister seemed to believe that a voluntary code of practice was adequate and would meet the needs that have been identified. My own local authority has voluntary codes of practice. Its councillors are extremely careful to monitor the behaviour of bailiffs. Nonetheless we receive regular and repeated complaints, not just from injured individuals but from citizens advice bureaux, churches and other such bodies. Even where the most active local authorities operate the most careful scrutiny, bad practice continues to occur. Therefore the voluntary approach has failed and a statutory response must take its place. I accept this is not the time to press the amendment, but if the Minister is not willing to help us on this matter we shall return to it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe

I beg to move that the House do now resume. I suggest that the Committee stage does not resume before 8.45 p.m.

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

House resumed.