Local Government Finance Bill

HL Deb 30 January 1992 vol 534 cc1428-80

3.50 p.m.

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

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

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

On Question, Motion agreed to.

House in Committee accordingly.

[The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES in the Chair.]

Schedule 7 agreed to.

Clause 100 [Abolition of community charges]:

Lord Mackie of Benshie

moved Amendment No. 207: Page 68, line 9, leave out subsection (1) and insert: ("(1) No person in England and Wales shall be subject to a community charge in respect of any day falling after 31st March 1993. (1A) No person in Scotland shall be subject to a community charge in respect of any day falling after 31st March 1992."). The noble Lord said: It would appear logical, on the surface, to end the poll tax in the same year in both Scotland and England. However, the difficulties in Scotland are far greater because the tax was imposed on the people of Scotland by a government whose complexion did not reflect any proper majority of opinion in Scotland. That factor has increased the difficulties and resentments. Not even the Government can maintain that the legislation was good, because they are now abolishing it.

The difficulties are many. The evils resulting from the cutting of services are many. I do not propose to go into them all. However, a concise and interesting statement from the Convention of Scottish Local Authorities gave interesting figures. No doubt the Minister has seen them. I should like to put them before the House.

First, it stated that the average poll tax has increased by 20 per cent. from £276 to £330. That is a tremendous increase when one considers that the services that people obtain for it are declining. The reason is succinctly stated. The grant settlement took no account of additional burdens placed on local authorities or shortfalls arising from non-payment of the poll tax. Obviously it is enormously important that the money comes in which funds the services which local authorities pay for themselves.

At the end of December 1991 £328 million remained unpaid in Scotland in respect of years one and two. In this current year £422 million—that is 51 per cent.—remains unpaid with only three months to go to the end of the financial year. In most cases people pay monthly. The figure should have been 25 per cent; it is 51 per cent. Therefore the shortfall will be enormous. The figures are alarming. We continue to press the Secretary of State to take immediate action to remove the requirements for students and those on income support. They account for a large part of the shortfall, and for very understandable reasons.

I hope and trust that the Minister reads that great organ of public opinion in Scotland the Sunday Post. It produced some interesting figures in a chart last Sunday. Scotland should have the tax abolished a year earlier than in England because the rise in non-payment is spectacular. Even in the Orkney Isles —which are a model of good citizenship—in the first year, at the beginning of December 2.5 per cent. of the poll tax remained unpaid; in the second year the figure was 6.6 per cent; in the third year, the current year, 30.2 per cent. is unpaid at this time. I do not know how any business can survive with such a cash flow deficiency.

The figures for other authorities are even worse. Strathclyde, the largest authority, began with non-payment at 15 per cent.; in the next year the figure was 26.7 per cent.; and this year the figure is 65.8 per cent. The figures from the Sunday Post relate closely to those from CoSLA. They indicate that in another year, bearing in mind that the poll tax is to be abolished, those alarming figures may rise to such an extent that there will be no income in certain cases. I agree that certain members of the Labour Party, but not the Labour Party leadership, instituted a campaign for non-payment. However, the Labour Party leadership has dissociated itself from that. I am afraid that the Scottish National Party is gravely at fault in that it has boosted that campaign. That is entirely wrong. It would make the collection of any form of tax much more difficult.

With such a state of affairs the Government will have to do something to assist Scottish local authorities next year. It is obvious from those figures that the problem will not go away. I suggest that the way forward is to abolish the tax this year and to fund the shortfall out of the general level of income tax until the new tax comes into operation. Otherwise we shall be in a terrible state. I hope that the Government do not take the matter lightly. Members of the Committee may be amused at the suggestion, but let me assure noble Lords that the tendency not to pay will land many people in grave trouble, in particular the Government. A big gesture might do them some good in Scotland although I doubt whether anything could really correct the mistakes that they have made and the low level of esteem to which the Tory Party has fallen. I beg to move.

Lord Boyd-Carpenter

This is the most extraordinary amendment that I can remember being moved even from that centre of eccentricity, the Liberal Benches. As I understand it, the noble Lord's argument is as follows. There has been a shortfall in the collection of this tax. In the year to which his amendment relates there may be a bigger shortfall. Therefore he does not propose to do anything about the shortfall but simply to make it universal by abolishing the tax altogether. He does that in the happy knowledge that he puts forward no other proposal whatever that could conceivably raise the necessary finance over the year in question.

The noble Lord observed that the shortfall should be put on the income tax. However, it may be noted outside the House that not only would the Labour Party, if it came to power, substantially increase the income tax, but it would be aided and abetted in that by the Liberals. It is therefore interesting that what was implicit, and is now explicit in the amendment and in the approach of the Liberal Party, is that one should make up for the loss of the old tax simply by increasing the rate of income tax. I shall not open up the general debate but, at a time of some degree of economic recession, increasing the rate of income tax would be plain crazy. Perhaps the best description of the amendment is that it is plain crazy.

4 p.m.

Baroness Gardner of Parkes

I wonder whether the noble Lord is suggesting increasing the income tax only in Scotland. When taxes were increased in various states in Australia there was mass migration from the states which had the unfavourable tax laws to the states which had more favourable tax laws. As result of the noble Lord's extra taxation only for people in Scotland in order to cover what has not been paid in the community charge, shall we have a huge influx of Scots?

Lord Hailsham of Saint Marylebone

Perhaps I may point out two difficulties in the way of the amendment. It states: No person in Scotland shall be subject to a community charge after a particular date. The noble Lord, Lord Mackie, may not know it but he is now in England. The amendment does not provide for a person who is registered in Scotland nor a person whose permanent residence is in Scotland. It states, "no person in Scotland". The noble Lord is not in Scotland and he will have to pay up by the other date. The contrary anomaly is also true.

Furthermore, it is rather rum that the suggestion should come from the Liberal Democrat Benches. For 300 years the other place has claimed a monopoly on changing the law on taxation. It has long been established—at any rate to its satisfaction—that that applies to local taxes. It is rather rum that the Liberal Democrats should now be going back on the attitude that they held in 1911.

The Earl of Balfour

I too wish to join in the debate in tearing the amendment apart. As I read it I am not certain what will happen in respect of the community water charge that exists in Scotland. At present that amounts to about £21 per head on the community charge. In addition, in order for the amendment to be supported in any way there would need to be different income taxes for England and for Scotland. That would be directly against the Treaty of the Union of Parliaments of 1707. I sincerely hope that Members of the Committee will throw it right out.

Lord Mackie of Benshie

Before the Minister replies perhaps I may correct a few misapprehensions which appear to have arisen. I certainly was not proposing that the tax should be raised in Scotland. I was proposing that the Government of this country—of Great Britain—should perhaps alleviate the distress that they have brought to a large area of local government as a result of their mistakes. They should acknowledge that by making up the deficiency of the income of those hard-pressed local governments before the introduction of the new system. I was not proposing that the income tax should be paid purely from Scotland. I was saying that the poll tax was imposed by a United Kingdom government. That system is now in a frightful mess and the Government are repealing their own legislation. Therefore, it appears logical that out of general taxation the mistake in Scotland should be paid for. It is a simple proposition.

The noble Lord, Lord Strathclyde, giggles and shakes, and I dare say that to him the matter is extremely amusing, but I am putting forward a most serious point in respect of Scotland and I am looking forward to hearing what he proposes to do about it. I hope that I have corrected the misapprehensions that appear to have arisen on other Benches.

Lord Jenkin of Roding

I believe that the noble Lord, Lord Mackie of Benshie, dug himself into an even bigger hole in his second intervention than he did in his first. He suggested that income tax should be raised throughout the country in order to let the Scots off paying the community charge. He did so on a broad view by saying, "Of course, it is not the people of England who will pay but the Government". I find that suggestion absolutely astonishing, coming from the noble Lord with his experience of business and great experience in this House and in another place.

The Government have no money, save that which they exact in taxation or by other means from the people of this country. Therefore, his second intervention actually meant, "Yes, the Scots should be let off paying their local tax but, oh no, it is not the Scots who will be paying the income tax instead; it is everybody else who will be paying it". That proposal is absolutely dotty.

I do not wish to anticipate future debates because a number of other amendments have been tabled. However, I am worried by the fact that every single time Members of the party opposite suggest that somehow people ought not to have to pay the community charge (which Parliament has required by legislation and which is on the statute book) they are giving aid and comfort to those who argue that it should not be paid.

I have no doubt that the noble Lord, Lord Mackie, will recognise that he must withdraw his amendment. I hope that before the debate is ended he will stand up unequivocally and without hesitation and say that if his amendment is not accepted by the Committee he will withdraw it and that, therefore, everybody who owes a community charge to their local authority should pay it. If he does not say that, he and his whole party will be tarnished with the stain of those who have been seeking to encourage people not to pay their taxes.

Lord Mackie of Benshie

Members of the Committee are having great amusement. If the noble Lord had listened to what I said he would know that I condemned outright the non-payment of tax and the people who advocate that. I did so right at the start of my speech. I dare say Members of the Committee are having great fun on this occasion. However, the problem will cause immense trouble next year and something must be done about it. The noble Lord knows as well as I that people pay their taxes but that the Government dispose of them. That is the whole point and that is what I said. I hope that we shall hear some sense from the Minister, although I doubt it.

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

When the noble Lord, Lord Mackie of Benshie, rose for a second time I was under the impression that he would gallantly withdraw his amendment before taking it any further. As my noble friends have said, it is clearly a ridiculous amendment. There will be a lacuna from April of this year until 1993, when the council tax comes in, during which British taxpayers will have to make up the shortfall in local authority spending. Furthermore—I am not sure whether this is the noble Lord's intention —they will have to make up for non-payment during the past few years. Is the noble Lord also proposing that there should be repayment to all those people in Scotland who have quite happily paid 100 per cent. of their community charge?

Lord Mackie of Benshie

The Minister's remark would have some point if I had meant that. What he does not realise is that the longer the community charge goes on the more the people who pay their taxes will have to pay for that. That is the point that I was making most strongly. I certainly do not suggest that the hundreds of millions of pounds owed should not be collected by every means in the power of government.

Lord Strathclyde

As my noble friend Lord Jenkin, said, the point of the amendment is to offer comfort to those people who have not paid and encourage them to continue withholding payment. Surely what should come from Parliament is a cry that non-payers will be followed all the way through the courts until they have paid, and that must include next year.

A piece of information that came from the noble Lord, Lord Mackie, at the beginning of his speech was that he obtains his evidence from the Sunday Post. That says a great deal about the Liberal Democrat research department.

I do not believe that there is anything I can usefully add to the debate. I sincerely hope that the noble Lord will withdraw his amendment and then we can get on with the other amendments.

Lord Mackie of Benshie

Does the Minister not intend to say anything about the rise in non-payment and the problems that that will cause for local authorities? Do the Government accept that?

Lord Strathclyde

The amendment in the name of the noble Lord, Lord Mackie, proposes to cancel the community charge from 31st March 1992. If he wants to have a debate about non-payment, he must table an amendment on that subject. Over the past four days in Committee we have been discussing the issue of non-payment—the noble Lord, Lord McIntosh, knows that as do the noble Baroness, Lady Hamwee, and other Members of the Committee.

Lord Stallard

The Minister did not refer to one of the salient points arising from the amendment; namely, that the Bill was introduced in Scotland 12 months before it was introduced in England. The other day I quoted what the Prime Minister said about being bounced into this position. He was upset about it and hoped that that mistake would not be made in future.

The tax was introduced in Scotland 12 months earlier. Surely it is common justice that it should also finish 12 months earlier. The people in Scotland will be saying that they have had to pay the tax for 12 months longer than people in England and, therefore, the tax should be abolished 12 months earlier so that there at least appears to be some form of justice. The Minister did not mention that, but I think that many people will do so.

Lord Jenkin of Roding

What does the noble Lord suggest should replace the community charge next year in Scotland?

Lord Stallard

That is not for me; that is a decision for the Government.

Baroness Phillips

I should like to follow up a point made by the Minister which rather frightened me. He said that there will be a lacuna. What will this tax be called during that year?

Lord Mackie of Benshie

A lacuna tax.

Baroness Phillips

I am not asking the noble Lord who moved the amendment, but I am asking the Minister. He used that word. It will apply in England, Wales and Scotland. We all remember how the Government introduced the poll tax at a cost of millions. They then had to scrap the community change—and my borough which is typical of all of them had to destroy all the forms—and spend millions of pounds in order to introduce a different tax. That must all be paid for by the unfortunate victims of this Government.

We are now told that a tax must be paid for a year, but is the Minister saying that that tax does not have a name? That does not only apply to Scotland; it will affect all of us.

Lord Strathclyde

We suggest that the community charge will be paid throughout the United Kingdom until March 1993. The noble Lord, Lord Mackie of Benshie, suggests that the community charge should cease in Scotland in March of this year. That will mean that from March 1992 to March 1993 there will be no form of local taxation in Scotland. He suggests that that must be paid for by the United Kingdom tax payer. That is not fair.

Lord Hughes

The Minister made two remarks which I do not believe will be helpful to the Tory Party in Scotland in the forthcoming election. First, he suggested that those who had paid the tax had done so happily. I paid the tax but I would not pretend that I paid it happily. I paid it because that was the law. Therefore, the suggestion that people paid the tax happily will not go down very well in Scotland.

Secondly, it will not be helpful to the Minister or the Tory Party in Scotland to attack statistics because they happen to be published in the Sunday Post. The Sunday Post did not make up the statistics, it merely published them. The noble Lord may not be the first to discover that to attack the Sunday Post is not necessarily a good political tactic.

Lord Strathclyde

I have no interest in attacking the Sunday Post. I was merely attacking the noble Lord, Lord Mackie of Benshie, for using the Sunday Post's statistics rather than those of the Liberal Democrat research department. I agree that nobody happily pays taxes. However, in that case, why is the main plank of Labour Party policy for the next election that there must be higher taxation?

4.15 p.m.

Lord Mackie of Benshie

The Government have given no reply as to what they intend to do about the situation so graphically illustrated by the Sunday Post. The Sunday Post takes its statistics, as we all do, from government sources. Those statistics were put in a simple form so that they could be easily understood. That is why I quoted them to the Minister.

In his reply the Minister has not seriously considered the situation that I was trying to bring to his attention. In Scotland, because the tax was imposed a year earlier, the rise in non-payment will cause severe problems next year for the local authorities. I gave figures to illustrate that. I understand that the Government have a tax which could be put in place. That could be expedited. I do not consider that the Minister has seriously considered his reply, which was trivial. Nevertheless, with regret, I will beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 207A not moved.]

Clause 100 agreed to.

Lord McIntosh of Haringey

moved Amendment No. 208: After Clause 100, insert the following new clause: ("Community charge benefits In subsection (10) of section 131 of the Social Security Contributions and Benefits Act 1992 (Community Charge Benefits) after "in his case" there shall be inserted "which in respect of any day falling after 31st March 1992, shall be up to 100 per cent of his liability for personal community charge contributions." "). The noble Lord said: In moving Amendment No. 208, I shall speak also to Amendments Nos. 210 and 211. The amendments are concerned with public expenditure but I hope that I shall be able to convince the noble and learned Lord, Lord Hailsham, that on this occasion what is proposed is a saving rather than an increase in public expenditure. Under those circumstances I hope that the noble and learned Lord may feel that another place would not consider that its privilege is being infringed.

Lord Hailsham of Saint Marylebone

It makes not the slightest difference whether the expenditure increases or diminishes. The other place claims the monopoly on taxation and always objects to attempts by this Chamber to amend taxation whether it be local or national.

Lord McIntosh of Haringey

As the noble and learned Lord knows very well from his lengthy and distinguished experience, it has been the tradition of this Chamber to discuss such matters and cover them by the privileged amendment at the conclusion of the proceedings in the Chamber.

We are now dealing with a matter of enormous social and financial importance, not just for local authorities but above all for the poorest people in our society. We are dealing with a relatively recent provision, first made in 1988, and carried on in the poll tax, whereby those who in the past had been in receipt of what was then called supplementary benefit (now called income support) and had received 100 per cent. relief from their rates, had that relief restricted to 80 per cent.; so that, whatever their financial circumstances, they were required to pay 20 per cent. of the poll tax bill.

The fact that the Government have now agreed that, as regards the new council tax proposed in this legislation, the restriction to 80 per cent. relief will no longer apply and that we shall revert to the pre-1988 position, when 100 per cent. relief was provided, is extremely welcome. It is welcome also that the Government have announced that there will be no clawback as a result of the social security benefits which were raised to cover the 20 per cent. residual payment. All that shows signs of a welcome change of heart in government. We are making a modest request which I hope to justify from the facts; that is, that the Government should take the opportunity to introduce the change from 1st April this year rather than delay it until 1st April 1993.

As the Committee may recall, it was in 1986 with the Social Security Bill that the Government first proposed that there should be a restriction to 80 per cent. in relief granted to the poorest people. It was your Lordships' Chamber which rejected that provision and insisted on 100 per cent. relief. That was overturned by another place, using its undoubted privilege. Since that time there has been a history both of suffering among the poor and attempts by government to deal with at least part of that suffering by increasing the social security benefit cover.

I shall first deal with the issue of benefit cover because it is complex and deserves one or two minutes of the Committee's time. The provisions in the Local Government Finance Act 1988—the poll tax Act—provided that income support benefit should be increased to cover the 20 per cent. residual payment demanded of those who were in receipt of benefit. Unfortunately, even at that time there were problems because the amount was based not on actual poll tax but on estimated average poll tax throughout the country. That meant that the poor people living in areas with a higher poll tax would have to pay more and those living in areas with a lower poll tax would pay less. It is difficult to see the justification for that. It will be readily admitted that one is no more nor less deserving as a member of the poor according to the local authority area in which one lives. It is difficult to see how greater penalties can be justified for those in areas of higher poll tax.

The problem was exacerbated subsequent to 1988 when upratings of the benefit supposed to cover the 20 per cent. payment were raised according to the Rossi formula of the retail prices index minus housing costs. That was despite the fact that poll tax payments are included in housing costs. As the noble Lord, Lord Skelmersdale, reminded us at Second Reading, few people believed that the increase was sufficient and indeed by last year, he said, it was evident that it was not.

Lord Skelmersdale

If the noble Lord will allow me to intervene, at that time I went on to say "in some places", if my memory serves me correctly.

Lord McIntosh of Haringey

I do not recall that. If that is the case I shall certainly seek to correct what I said. I do not remember the noble Lord saying that.

Baroness Blatch

It may help the Committee to know precisely what the figures are. In all but six authorities the money that is made available is sufficient for those under 25 and for couples. The six authorities are Labour controlled. In all but two authorities—also Labour controlled—the amount is sufficient for the adult over 25.

Lord McIntosh of Haringey

I am interested in those figures because they conflict with the information available to me. It is true that single adults tend to benefit by an average of 8p a week, but my understanding is that single adults below the age of 25 and couples both lose on average throughout the country. I hold only the national figures; I do not have the advantage of figures for individual authorities.

However, that cannot be the essence of the Government's case. In recognition of that fact they have now conceded that from 1993 the 20 per cent. rule will not apply and there will be no clawback of income support payments. There can be no doubt that there are large numbers of cases of great suffering as a result of the 20 per cent. rule. The National Association of Citizens' Advice Bureaux produced many examples. I could quote enormous numbers but I shall restrict myself to two which strike me as particularly precise.

A citizens' advice bureau in the East Midlands reports the case of a single man in board and lodgings paying £55 per week. He receives £36.70 in income support and £25 in housing benefit. That leaves him with £6.70 to pay for all other expenditure including 20 per cent. of the poll tax. A citizens' advice bureau in Yorkshire reports the case of a long-term sick lady receiving £52.10 in income support and disability pension. Her fuel payments are £18.70 and the payment back of a loan from the social fund £3.67 leaving her with £29.73 a week to live on, out of which she must pay poll tax of £2 a week.

Those are the people in most need in our society. Whatever may be the truth in their cases regarding the benefit cover, the fact is that they are forced to go without food, shelter and warmth in order to make the 20 per cent. payment. The fundamental point we must pursue is that there is no benefit to the public purse. It is well recognised that 70 per cent. of poll tax defaulters are defaulting on the 20 per cent. payment; in other words, they are the ones who are most in need. It is also well recognised that the average cost of collecting the 20 per cent. residual payment is two-and-a-half times the receipts expected from that payment. The public purse therefore is actually paying out two-and-a-half times more than it receives in order to reclaim that small amount of money from those in most need in our society.

It is small wonder that the associations and organisations representing voluntary organisations —the National Council for Voluntary Organisations, the Child Poverty Action Group, the National Association of Citizens' Advice Bureaux and so on — support the amendment. It is not surprising that the local authority associations which have the responsibility of collecting the money—the Association of Metropolitan Authorities, the Association of London Authorities, the Association of District Councils (which is not Labour controlled) and the Convention of Scottish Local Authorities —support the amendment. The professionals also support the amendment; for example, the Chartered Institute of Public Finance and Accountancy, the IRRV, and the Society of London Treasurers. Above all, the Audit Commission, although it is not in a position to support or oppose any amendment, said in its response to the last consultation paper that there was one change which would assist authorities in their current collection arrangements and therefore indirectly facilitate the collection of the council tax—abolition of the 20 per cent. minimum payment from 1st April 1992.

Faced with universal opposition, and in the light of the welcome concessions which the Government have already made, I invite, first, the Minister—rather than the Committee —to recognise the justice of the case and agree to the amendment. I beg to move.

4.30 p.m.

Baroness Blatch

It is not my intention to do other than pose a single question to the noble Lord. Given that the financial year begins in eight weeks' time, can the noble Lord suggest how he thinks the scheme should be funded? Should it be from national taxation, by clawing back from income support or by giving local authorities discretion, in which case the cost would have to be levied on local taxpayers and would have to exist outside the capping regime?

Lord McIntosh of Haringey

In order to get that issue out of the way, what I am suggesting to the Committee is that the cost of collection is so much higher than receipts that no additional funding is required. Indeed, the public purse would benefit from acceptance of the amendment.

Baroness Blatch

The noble Lord is completely wrong in that sum. I suspect that local authorities would be decidedly unhappy if they were told to cover the cost, which is £500 million, simply by the money which is used in pursuing those responsible for non-payment.

Lord McIntosh of Haringey

That is not what they say.

Lord Jenkin of Roding

This amendment should be resisted. It begins with the proposition that the gross cost is probably of the order of £500 million. The noble Lord quoted only two cases. I concede that there may be other, particularly hard, cases and that the circumstances in which people find themselves mean that they have difficulty paying. That is not the point. The noble Lord proposes that everyone who would be paying 20 per cent., or whatever it is, should be let off next year, including a very large number who have paid and who would expect to pay in the last year of the community charge.

I cannot accept that the cost of collecting from those who will not or cannot pay—in the case of those who cannot pay, writing it off—exceeds the revenue that will come from the much larger number of people who will pay when they receive the demands. The sum involved is £500 million—half a billion pounds. I am not an expert on privilege, but I cannot help feeling that another place may have something to say about that if this amendment were to find its way into the Bill.

The noble Lord has not taken on board the point which my noble friend made in her first brief intervention. The fact is that everyone on income support received a significant addition to enable them to pay the charge. That was the point. It was put on the statute book by Parliament. We are now proposing something different for 1993 as regards the council tax.

It is worth putting the figures firmly on the record. The amounts paid in benefit in 1991–92, in order to enable the 20 per cent. to be met are as follows: for a single person under the age of 25, £1.31 per week; for a single person over 25 years of age, £1.48 per week, and for couples £2.62. In all but six local authorities the amount that people are expected to pay is less than the lower of the figures; namely, £1.31. The payment ranges from nought in the London Borough of Wandsworth to £1.30 in Elmbridge District Council. The six are Oxford where the amount is £1.32, which is 1p extra; Basildon, £1.37; Islington, £1.45; Bristol, £1.48; Haringey, £1.61 and Lambeth, £1.73. They are all Labour councils.

It is because a few Labour councils have chosen to make their charge high that some people are not receiving the full compensation which Parliament intended that they should get. I find it offensive that a Labour spokesman should say that not just the people in those boroughs and others who have found it particularly hard to pay but everyone should be let off in the final year at a cost of about £500 million. It does not lie in the mouth of the party opposite to argue that the costs of collection will be more than that. It is not true.

I repeat the point which I made previously. In the case of the community charge, those who seek to persuade their colleagues in this Chamber, in another place or outside, that certain groups should be let off are giving aid and comfort to those who say that they are therefore justified in not paying what the law requires. That is the effect of what the noble Lord is saying, whatever may be his intention. The clearest way in which this Committee can make it obvious that that is not what this Chamber intends, if the noble Lord chooses to put the amendment to a Division, is for the Committee to reject it firmly. The noble Lord should then make it clear from his position on the Front Bench—if Parliament, the Committee having rejected the amendment, passes the Bill still without the amendment—that everyone should pay.

The noble Lord becomes angry when people point out that many members of his party have been trying to encourage people not to pay the poll tax. He said that that does not apply to him or to those on the Front Bench. The noble Lord owes it to the public and the Chamber to make it clear to everyone that when Parliament says a tax has to be paid, then it is up to every democratic participant in the process to make it clear that that is the law and that the tax should be paid. That applies to everyone.

Lord McIntosh of Haringey

How often do I have to repeat that I am not making any statement about myself or my colleagues on the Front Bench? It is the Labour Party view that the law should be obeyed. We say that to anyone in this country whether members of the Labour or Conservative parties, the Liberal Democrats or none. While the law is in force it should be obeyed. That is our advice to every single payer in the country.

Perhaps I may respond to the particular point that the noble Lord and the Minister made concerning an earlier intervention. The noble Lord ignores the fact that the poll tax was reduced in April 1991 by the explicit device of increasing value added tax. That increase comes also from the incomes of the poorest people in our society. Therefore, in addition to the increases which they have to pay for the poll tax, as the Institute for Fiscal Studies shows, the bottom decile —that is to say, the bottom 10 per cent.—in our society are paying £40 a year extra in value added tax and the next lowest 10 per cent. are paying £52 a year. That is a direct result of the reduction in the poll tax which enables the noble Lord to make those claims.

Lord Jenkin of Roding

The noble Lord knows perfectly well that VAT enters into the calculation of the RPI. Therefore it enters into the substantial increases in the value of all social security payments under the law as it is generally applied. I do not believe that the noble Lord's argument is a very good one.

Lord McIntosh of Haringey

That has not happened. It takes 12 months for the change to come through and it has not happened for 1991–92.

Lord Elton

It is doubtless of very great interest to Members of the Committee to discuss the merits of this amendment. The discussion may illuminate very considerable weaknesses. I am entirely convinced by the arguments that I have heard on this side of the Chamber. However, Members of the Committee should not hold the discussion under a misapprehension concerning privilege. I thought that the blood pressure of the noble Lord, Lord McIntosh, might have been in danger if I had intervened in his reply to my noble and learned friend Lord Hailsham. From his long and great experience in this House, my noble and learned friend knows that we frequently deal with these matters and that they are covered by the privilege amendment at the end of our proceedings.

Members of the Committee should know that the privilege amendment refers to the procedure by which the privilege of the Crown is set aside where any part of legislation touches it. That is made by arrangement with the Crown and has nothing whatever to do with finance or the privilege of the other place. Privilege there concerns alterations in taxation. The judgment as to whether this matter is within or without that privilege is for the other place and not for us.

Lord McIntosh of Haringey

I accept that correction. I was wrong and the noble Lord is right. It is the tradition of this House that we discuss matters of taxation. If we pass amendments which are considered to be in breach of the privilege of another place, Mr. Speaker certifies to that effect and sends them back to us accordingly. It has not been the tradition that we do not discuss matters of taxation.

Lord Henderson of Brompton

Perhaps I may be allowed to intervene here because I think the Committee is being inadvertently misled by the noble Lord, Lord Elton, and also, if I dare say this, by the noble and learned Lord, Lord Hailsham of Saint Marylebone. I shall deal with the noble Lord, Lord Elton, first. He is confusing the consent of the Crown with a privilege amendment. What he was referring to is the consent of the Crown and not the privilege amendment. If I may make that distinction I think the Committee does not need to have regard to the utterance of the noble Lord, Lord Elton.

I agree with the noble and learned Lord, Lord Hailsham of Saint Marylebone, when he says that it is not a matter of money; it does not matter whether a proposal is being made that taxes should go up or down—not at all. But the House of Commons has different degrees of severity in which it asserts its privilege. Local taxation is in a lower category altogether than national taxation. Traditionally, the House of Commons has not objected to our discussing matters of local taxation, which is what this Bill is about. It is perfectly proper for us to send an amendment of this nature to the House of Commons, which can reject the amendment, if it wishes, and claim privilege. But the House of Commons will claim privilege for a Government amendment passed in this House. If privilege can be claimed for a Government amendment which perhaps increases taxation, or reduces it, it can also be claimed for an Opposition or a Private Member's amendment which goes to the House of Commons. The House of Commons will claim privilege for all of the amendments. However, having claimed privilege does not mean to say that what they have done is an intolerable breach of privilege. The noble Lord on the Front Bench is entirely entitled to move the amendment. If there was any doubt about that—that the House of Commons would consider this to be an intolerable breach of privilege—the Clerks would have brought it to the attention of the noble Lord and presumably he would not have moved it. But they have not done so. The amendment is on the Table; it is for us all to see; it has been vetted by the Clerks and nobody should therefore take exception to it.

Lord Hailsham of Saint Marylebone

Perhaps I may just intervene. I do not think that I was mistaken at all. If the noble Lord, whose opinion I usually respect, will look up the section entitled "Parliament" in the book in which I have previously declared a modest interest, he will find that there is no difference whatever in the nature of privilege as between local taxation and national taxation in this respect. I think he will find that that is so. But we shall not continue this discussion, it is peripheral to the actual point. I simply intervened in reply to a statement by the noble Lord, Lord McIntosh of Haringey, in which the noble Lord, Lord Henderson, happens to have agreed with me and not with him.

Lord Henderson of Brompton

I do apologise. I want to answer the noble and learned Lord. He is entirely right that the edition of Halsbury bears his distinguished name; but the article to which he refers in Halsbury was, in fact, written by me.

Lord Hailsham of Saint Marylebone

In that case it is a pity that the noble Lord is not more consistent.

Lord Henderson of Brompton

The Act is very consistent. I have some anxiety because if the Committee follows the advice of the noble and learned Lord, Lord Hailsham, it will be diminishing its privileges. It is the duty of us all to uphold the privileges of this Chamber. If the noble and learned Lord's advice is followed then there will be a severe contraction of our privileges and that would be greatly detrimental to the privileges and freedom of this place. I ask the Committee to accept my view rather than his.

Lord Elton

We started this small debate with an utterance that the noble Lord, Lord Henderson, said that the Committee might not take note of. I hope that the Committee takes note of my regret at having got it wrong in the first instance and my great illumination of what has transpired thereafter.

Lord Boyd-Carpenter

I always listen to the noble Lord, Lord Henderson of Brompton, on these subjects with very great respect. I am sure we are grateful to him for the degree of clarification which he has given us on the issue of privilege.

I do not propose to address myself in any detail to that question of privilege. However, the general effect on relations between the two Houses is very much dependent on the quantum of money involved. The other place is apt to be reasonably tolerant when we increase public expenditure, by way of amendment, by a moderate amount or when we impose liabilities on the citizen by moderate amounts. But it is apt to look very critically when proposals are made which will involve large increases, particularly large increases in taxation. The common sense attitude which this Chamber has adopted over a good many years has been to adopt lines of moderation where questions of public expenditure are directly involved. Relations between the two Houses have benefited because we have shown good sense in that respect and another place has shown, I must say, a very considerable degree of tolerance.

That brings me to my criticism of the speech of the noble Lord, Lord McIntosh of Haringey. The noble Lord did not mention the cost of his amendment. Indeed, he went further. He was at least suggesting —and I think if he looks at Hansard tomorrow he will see that this is the impression created—that because of the enormous saving which he thought there would be in collection costs it really would not net-cost the taxpayer anything. That is what he was suggesting. With respect, that is a very irresponsible suggestion. There seems to be little doubt that the nominal cost, at any rate, of an amendment of this sort, so the Minister has told us, is £500 million a year. To suggest that that considerable sum would be swallowed up in activities in collection—from quite a small minority of those liable for these charges, because the great majority still pay sensibly; I will not risk being criticised for saying happily—and to suggest that the collection costs of this particular impost were anywhere near £500 million is quite absurd. It is wrong for the noble Lord, Lord McIntosh of Haringey, to propose an amendment of this kind during which he declines to name any sum which he alleges it is going to cost.

If a change in matters affecting revenue or expenditure is being recommended to the Committee, it surely is the first condition that a fair and honest estimate should be given of what it will cost. Those of us who have been in government or parliamentary life know that most of the issues about which we are concerned have to be determined by the degree of cost. There are heaps of admirable improvements, which we should all like to see made, but which we do not make because the cost would be excessive. Equally, where there is an improvement which can be made at an economical level, or at a low price, then the arguments for making it are that much stronger and are apt to get wider support.

So we are left here with the position that the noble Lord is asking the Committee to approve a proposition which he declines to cost, but which there is every reason to believe would have a very high cost indeed. That seems to me a conclusive argument for rejecting it.

Earl Russell

I always listen with pleasure and with interest to the noble Lord, Lord Boyd-Carpenter. I agree with him entirely that in any amendment before this Committee we must always consider the issue of cost. I think, though, that perhaps he may have slightly and inadvertently misled the Committee when he said that we do not take up issues of very large costs. The noble Lord will remember the amendments on child benefits which were carried here and in due course the will of this place, in effect, prevailed.

Lord Boyd-Carpenter

Would the noble Earl allow me to intervene? I think the noble Earl misunderstood me. I said that we had a general practice of trying to confine increases in expenditure that we authorise to moderate figures. I did not say, and would not say, that we have not occasionally departed from that, and that we have not occasionally erred and have not finally therefore had to apologise. But we have not done it often, and it is not something to be recommended to be done frequently.

Earl Russell

I am grateful to the noble Lord for that clarification, which in effect makes my point. On that occasion we prevail. As regards the cost of this amendment I do not think that the position is as the noble Lord described. I am sure that the noble Lord knows the figures offered by the Audit Commission: every £6 collected from 20 per cent. payers costs £15 to collect.

The noble Lord censured the noble Lord, Lord McIntosh of Haringey, for not putting forward further figures. As I understand it those are the only specific figures available to us. They are from an entirely reputable source, which ought to command confidence on all sides of the Committee.

Baroness Blatch

I am most grateful to the noble Earl for giving way. It might help the noble Earl if he would respond to what was being considered. Like with like was not being considered by the Audit Commission. I agree with the noble Earl that it is a reputable organisation. The Audit Commission suggested that 20 per cent. charge payers contributed just £6 a year net to the public purse against collection costs of £15.

The calculation was based on a thoroughly misleading comparison. It looked at the amount they were asked to pay, about £71 on average, minus the amount added to their income support. There is no validity whatever in comparing this notional amount with the collection costs. The other thing is that the Audit Commission took into account the clawing back of income support in its calculations.

Earl Russell

Clearly I cannot respond instantly to that. I have not got the figures on which it was based, and so far as I know they have not been made public. If the Government would wish to make them public I am sure that we would consider them with the care they deserve.

Whether those figures were misleading must surely be a matter of opinion. In advancing an opinion here the Government are clearly an interested party. So far as I can see the Audit Commission is not an interested party. Its only interest was in finding out the truth of the matter. Therefore, until I can see detailed figures behind what the noble Baroness said, I shall continue to believe that what the Audit Commission said is likely to be the truth of the matter.

The Government are shortly going to want to persuade people that they have abandoned the poll tax and they have put their mistake right. If they are to do that they have to understand what mistake they have made. In this context it is worth remembering that, so far as I can discover, in the past 1,000 years there have been only two attempts to levy a tax that applied to everybody. I refer to the two poll taxes levied by King Richard II which, as the Committee knows, came to a bad end. The Government have been attempting to do something which has never previously succeeded, which does not seem to be succeeding on this occasion, and which is involving a large amount of effort and a large amount of the time of the courts, which have enough to do.

The noble Lord, Lord Jenkin of Roding, asked—and I think he was asking everybody—for an admission that so long as it is the law people ought to pay. I first made that admission—and I think the noble Lord was in his place when I did so—on the Second Reading of the Local Government Finance Bill 1988. I last made it about three weeks ago in a letter to my local paper. In return I asked the chairman of my council finance committee for a reciprocal admission. I shall ask the noble Lord, Lord Jenkin of Roding, for the same reciprocal admission: that people cannot be required to pay what they have not got.

That is the hub of the whole argument. We have had a lot of debate in this House—I am sure that my noble kinsman remembers some of it well—on the adequacy of income support levels. The Family Welfare Association and the National Children's Home, to quote only two reputable bodies, have expressed a great deal of doubt about whether they are sufficient to get an adequate diet. That is the kind of situation in which we talk about people being unable to pay.

Reputable organisations send cases to us of people who say that the reason that they have not paid is that they cannot otherwise get their children enough to eat. I have spoken in this House so many times about the levels of finance available to students that I shall not occupy the Committee further with that now, but the same problem obtains there. If people do not have the money they cannot pay it, and you can wear yourself out trying to get it and it will not profit you anything.

Lord Monson

If the noble Lord, Lord McIntosh, were proposing that the discounts for people on low incomes should be extended further up the income scale I would have no hesitation in supporting him. As I pointed out a year or two ago by way of illustration, a single person under 25 living in Oxford and earning as little as £94 a week would have to pay fully 10 per cent. of his or her gross income by way of poll tax, £9.40 a week, because he was not eligible for discount. I think that is shocking. However, this afternoon we are not talking about sums as great as £9.40 a week. We are talking about, on average, £1 or £1.20 a week, and that is a totally different matter. Surely the remedy for people in the extreme hardship cases that the noble Earl cited is not to absolve them from paying a pound or so a week out of the money they have left, but to raise the level of income support.

The purpose of the 20 per cent. rule, as I understand it—perhaps the hidden purpose—is not so much to raise revenue as to establish the principle of no representation without taxation. In other words, to discourage people from being tempted to vote for extravagant, high-spending local authorities, secure in the knowledge that even if they cast a vote for people with an extravagant programme and, in consequence, the community charge doubled or even trebled, they themselves would not have to pay a single penny out of their own pocket.

Baroness Seear

The noble Lord cannot really have meant to say that he believed in the principle of no representation without taxation? Is he really saying that people below the level at which they pay income tax should not be able to vote? That is what his message seemed to say. Is that what the noble Lord really meant?

Lord Monson

The noble Baroness has fallen into the trap of forgetting about indirect taxation. Everybody pays indirect taxation. Even if they do not drive a car, drink or smoke they still pay VAT. Consequently at national level everybody pays taxation of some kind even if it is not direct taxation.

Contrary to the assertion of the noble Lord, Lord McIntosh, the public purse would benefit, albeit indirectly rather than directly, by retention of the 20 per cent. rule—I am sorry that it does not apply to the new tax, but there we are—because it will make less probable the election of extravagant local authorities.

The Earl of Balfour

I feel that we are going slightly astray here in respect of this amendment. We must remember that income support was purposely increased to allow for, or to cover, a person's poll tax liability. We all dislike taxation, I must accept that, but one thing we must never forget is that there are those who can pay and will not pay, and they must not be put into the same bracket as those who cannot pay.

As regards those of us who are less well off, there still needs to be instilled some kind of discipline. If we accept this amendment as it is it will be the thin end of the wedge. Next they will ask for an additional discount on their rent bill, electricity bill and gas bill.

It sometimes happens that families on income support, with child benefit and various other social security benefits, instead of feeding the children, supply themselves with drink at the local pub. That is no excuse. I do not believe that this is the kind of amendment which should be supported. So far as I can gather, and I am sure that the figures given by my noble friend the Minister are correct, it will indeed cost about £500 million. That is not on.

5 p.m.

Lord Marlesford

I totally understand why the Labour Party—and others—puts forward this amendment. It has always quite consistently opposed the poll tax. I also understand why it puts forward amendments which would cost quite considerable sums of public money. It has no responsibility for the construction of the national Budget. It is very easy to say that it believes this or that and the financial consequences do not matter. However, I should have been extremely unhappy had the Government shown any signs of accepting these amendments. We all know that the poll tax is being replaced by a better tax and remarkably quickly, if I may say so. I have been extremely impressed by the speed with which my right honourable friend the Secretary of State for the Environment put together what is clearly a much better tax. It is a tax which, I venture to suggest, the Labour Party would be unlikely to repeal should it come to power.

It would be quite wrong for the present Government to betray their attention to public finance and to risk being accused of political opportunism —one might almost say electioneering—by giving a nice, easy concession to people in this last year of the poll tax. Therefore, I strongly support the Government in opposing this amendment as well as a number of others.

Baroness Hamwee

I am grateful to my noble friend for reminding the Committee that this debate covers the macro-economics of the situation, but that it is not just about that. It is also about a large number of individuals who, we are told by the organisations whose job it is to assist them, are not just the can-pay-won't-pay brigade to which the noble Earl, Lord Balfour, referred. It includes very many people who genuinely cannot pay. Those people will not only find themselves a year further on in debt should the 20 per cent. rule not be abolished, but will have in addition to the debt the distress of legal proceedings. I do not believe that they lightly take on that situation. It behoves us to consider them as well as the total financial situation.

The noble Lord, Lord McIntosh, referred to the Audit Commission and I listened with interest to the Minister's comments on that topic. But it is not by any means the only organisation which vociferously advocates the abolition of the 20 per cent. minimum. So do all the local authority organisations which have an interest in achieving a high rate of tax collection and income generation, as well as the professional organisations, including CIPFA, which say that the one measure which would most successfully smooth the introduction of the new tax would be the abolition of that rule.

When we come to finalise our views on this matter, I hope that as well as the overall costs or savings, we can take account of the individual positions of the people who are affected.

The Earl of Onslow

I arrived slightly late for this debate, for which I apologise. I should like to ask one question and one question only. It appears that to give up that 20 per cent. would cost £500 million. If the collection costs are larger than the giving-away costs, it ought to be given away; if we make a bob or two on it, we ought to collect the money, because the principles of representation without taxation, the accountability of local authorities, and not allowing people to get away with it do matter. However, if the cost of collecting the money—in view of people not paying, running away and being pursued—will be more than that £500 million, it seems sensible to cut one's losses and run.

Baroness Phillips

I should like to make a small point before we finally leave the record on this amendment. I thought it very sad that the noble Earl mentioned people who would take a benefit and then use it—I understood him to say—on drinking and smoking. I wondered if he was going to return to the old argument of coals in the bath and people not using their flats properly. Those people will always be with us, but they constitute a very small number. I know a lot of people who need benefits. I am not so fortunate as some Members. I live in a London borough where real life is lived and there is nothing remote about it. Some of the people who need benefits hesitate a long time before they try to obtain any benefit. They are proud people who do not want what they call charity. It would be very wrong for this House to leave on the record the impression that we are talking about people who take all the magnificent benefits and just squander them. I do not know how many drinks they would manage to buy with an extra £2 a week. I should think not many. It would be shameful to imply such a thing.

The noble Lord who has just spoken referred several times to the Labour Party. I have been a Member of this Chamber for 26 years. When I first came it was the custom and practice (which I hope will not change) to refer to the statements of "the Government" and "the Opposition". This Chamber is turning into an election arena in which any statements that come from this side of the Chamber come from the Labour Party. We are all Members of the Opposition. Let us return to some of the well-behaved habits that we used to have or we shall degenerate into the same state as the other place, which would be unfortunate.

Baroness Blatch

The Committee must bear in mind when considering these amendments that we are just eight weeks away from the beginning of a financial year, eight weeks before all these changes will have to be effected, whatever the changes are to be, wherever the money is to come from and however that is to be decided. It will be beyond the end of this month before the Bill receives Royal Assent.

The cost of this amendment will be £500 million. The nature of those not paying is worth considering. There is a substantial can-pay-won't-pay brigade. I must say to the noble Lord opposite that, despite all his protestations, considerable numbers of the Parliamentary Labour Party have fuelled and supported that campaign. An even larger number of local Labour councillors have also supported the campaign of can-pay-won't-pay.

I have the names of 25 Parliamentary Labour Members of Parliament who gave their full support and backing to the All Britain Anti-Poll Tax Federation's national demonstration, when they said in January 1990 that they sincerely hoped and believed that it would be the launching pad for mass non-payment of the poll tax. The noble Lord doth protest too much on this issue. I am afraid that his protestations are simply weakened in the face of all the evidence.

Income support has been uprated and despite all that the noble Earl, Lord Russell, said, in the current year precisely £1.31 has been paid into income support for single adults under 25; precisely £1.48 has been paid in for single adults over 25; and £2.62 for all couples. As I have already said in one intervention, for the people with £1.31 and couples with £2.62 that represents a community charge of £339 and includes all local authorities bar six—six Labour controlled authorities: Oxford, Basildon, Islington, Bristol, Haringey and Lambeth. For the single adults over 25, it includes all authorities bar two: Haringey and Lambeth. They have the wherewithal, pound for pound, penny for penny, to pay what they are required to pay and have an obligation to pay.

The only way in which this amendment could be accepted by the Committee would be for the Government to give them the money twice. It is simply not possible. That money either has to be clawed back or the money must be paid twice.

Already we know that those figures will be up-rated for the coming year to £1.40 for single adults under 25, £1.58 for those over 25 and £2.80 for couples. The average yield for people paying the 20 per cent. is only 80p. The noble Lord, Lord Monson, was absolutely right when he referred to it being a relatively modest sum. No one on these Benches or on any Benches is pretending that it is not difficult for people at the bottom end of the income scale, but in couching this legislation the Government recognised that in full. Therefore by this method the very people about whom the noble Lord is concerned in the amendment are rebated up to the full 100 per cent. What is being suggested here is that taxpayers should fund 120 per cent. of that bill.

We must not forget those who do pay. They are the ones who are bearing the burden of those who will not pay. Let us think about those who do not pay. The can-pay-won't-pay brigade are among those who have the money from the taxpayer at large—not the Government—but choose not to use it for these purposes. The campaign for non-payment has been quite disgraceful. The noble Lord, Lord McIntosh, referred specifically to the £140 reduction scheme. It is worth pointing out to all Members of the Committee that when the reduction scheme was put into effect not one penny was clawed back from income support. The benefit of the reduction scheme was left within income support. Are Members of the Committee opposite suggesting that because it is rather difficult to pursue people who will not pay, and especially those who wilfully will not pay, we should simply admonish them, let them off the hook and then levy the bill on all those innocent people who do pay? What a principle! What about the burden of non-payment on those who do obey the law and do pay their dues?

The noble Earl, Lord Russell, referred to the Audit Commission's point and it is worth mentioning again. The Audit Commission suggested that in 1990 20 per cent. charge payers contributed £6 a year net to the public purse compared with collection costs of £15. Those figures are based on thoroughly misleading comparisons. The commission looked at the amount that they were asked to pay—about £71 on average —minus the amount added to their income support. There is no validity whatever in comparing this notional amount with the collection costs. The real comparison is between the actual amount paid, which is £71, and the collection costs. Incidentally, the collection costs were about £12.50 in 1991 and not £15. Therefore the net revenue was nearly £60. The fact is that it would cost about £440 million to increase the benefit rate to 100 per cent. in the current financial year, and about £500 million in the coming year. We cannot lightly take that amount and say that it will be paid by someone but not be specific. The Audit Commission comparisons assume that the amount added to income related benefits to help people meet the 20 per cent. contribution would be clawed back in 1992–93. That would cost benefit recipients about £680 million in lost income support. Is that really what the noble Lord is suggesting?

The noble Lord also referred to students. In 1990–91, the first year of the community charge, the student grant was increased from £2,155 to £2,685, an increase of 25 per cent., which included an increase in grant and the loan facility. The cost to a student—

Earl Russell

The noble Baroness must know, because we have exchanged words on this many times, that she has left out the loss of social security benefits.

Baroness Blatch

The increase of 25 per cent. was to take that into account, and of course it included the community charge. The bill to students for that charge is on average 80p per week.

My noble friend Lord Onslow asked about the cost of pursuing non-payers. The principle of pursuing non payers is an important one. I have to tell him that the cost is £500 million to local authorities for the whole administration, from registration right through to pursuit of non-payment. That is the whole cost. There would be a significant benefit to taxpayers if the amendment were rejected, and a considerable loss to taxpayers if it were accepted.

The noble Baroness, Lady Hamwee, did not make it clear that she supports the amendment but it does not surprise me that the Liberal Democrat Benches and Labour Benches have gathered forces on this issue. They have gathered forces on so many Bills in this Chamber that it is difficult to determine a distinction.

There are three options before the Committee if the amendment is accepted; first, that we must claw back income support to the tune of £500 million; secondly, that the Exchequer must take taxpayers' money and fund it to the tune of £500 million; or thirdly, and more perversely, that we allow local government the discretion to operate outside of spending limits to remit 20 per cent. of payment and to levy the cost on the already burdened local charge payer who does pay. Which is it to be? I hope that the amendment will be rejected.

Lord Pitt of Hampstead

Will the noble Baroness tell me how much one penny on income tax brings in?

5.15 p.m.

Baroness Blatch

That has nothing to do with the amendment. If the noble Lord is suggesting putting a penny on income tax in the eight weeks we have between now and the beginning of the financial year in order to fund this, I suggest that he brings forward an amendment at Report stage. We shall then deal with it.

Lord Pitt of Hampstead

I was not suggesting that. I was merely trying to get the noble Baroness to make the comparison.

Lord McIntosh of Haringey

In moving this amendment, I said that I was appealing to the Government and not just to those who have particular interest in poverty issues. I did so because this amendment is a good deal more rational and administratively sensible than has been generally recognised in the course of this debate. It departs so little from the Government's own policy that I am surprised that there should have been quite the ferocity—misplaced ferocity I may say—in debate that there has been.

Perhaps I may first put on one side the whole issue of the can-pay-won't-pay brigade. We are not in any way supporting the can-pay-won't-pay brigade. This amendment has nothing to do with any can-pay-won't-pay brigade. This amendment is concerned only with those on income support, the bottom 20 to 25 per cent. of our population. Anyone who thinks that arguments about deliberate non-payment of the poll tax have anything to do with the amendment cannot have read the amendment or listened to any of the arguments.

Lord Stoddart of Swindon

Is my noble friend aware that in my former constituency of Swindon Labour councillors courageously resisted all attempts by the can-pay-won't-pay brigade, very often at considerable risk to their persons? Does that not constitute on the part of those people a high regard for the law—and indeed for a law with which they themselves profoundly disagreed?

Lord McIntosh of Haringey

I am grateful to my noble friend. The experience in Swindon that he describes has been repeated all over the country. Labour councillors who have supported laws with which they do not agree have been subject to physical and mental harassment from those who pursue the view that the way to deal with this matter is to disobey the law. That is not and never has been our view. However, that is not the subject of this amendment.

The Earl of Onslow

On this issue some of us have taken almost the same position as the noble Lord. However, it has been my impression that the Labour Party has been muted in its assertion that the law should be obeyed, whereas some of its wings have been very vigorous in saying that it should not be obeyed. That is very much to the point.

Lord McIntosh of Haringey

The impression that the noble Earl has gained is incorrect. I have been here throughout the Committee proceedings, and I have been faced with a number of Members opposite who have been here for part of those proceedings and who continue to repeat the totally untrue allegations that the Labour Party is in favour of breaking the law. I have been directly accused of it by a Minister of the Crown no less.

A noble Lord

Who?

Lord McIntosh of Haringey

The noble Lord, Lord Strathclyde, who said that I knew more about law breaking than he did. That is the not the subject of the amendment. The amendment has nothing to do with those who can pay and will not pay. The amendment has to do with the poorest people in our society whose plight has already been recognised by the Government. The point that I tried to make at the beginning, which has not been understood by the Government, is that I am praising the Government.

Baroness Blatch

The noble Lord—

Lord McIntosh of Haringey

Perhaps the Minister will allow me to finish. I am praising the Government for recognising that 100 per cent. rebates from 1993 are right. I am praising the Government for saying that when they introduce those 100 per cent. rebates in 1993 they will not clawback the income support payments that have been made. Those are admirable things that the Government have done. All we are asking in the amendment is that the Government should pursue the logic of those decisions into 1992. We are doing that on humanitarian grounds because those are the people who have been suffering, and are suffering in addition from the increase in VAT. It is sensible also on administrative grounds in that, as the Audit Commission has said—this is the first time I have heard a government agency attacked with such ferocity from the Government Front Bench—that in 1990–91, although the net return was £6 a head, the cost of collection was £15 a head. It is a very expensive tax which produces a small net amount from the poorest people in our society.

I suggest that the right thing would be for those people to say to the Government, "Thank you for recognising the principle, and thank you for proposing to introduce it from 1993. Why not go that step further and introduce it from 1992?"

Baroness Blatch

Before the noble Lord sits down —I am grateful to him for giving way—I said that the Audit Commission took into account the clawing back of the income support. That is not part of the amendment and nor is it suggested that it should be. The noble Lord has skilfully not told the Committee how the provision will be funded. If we are to take the amendment seriously, just eight weeks from the beginning of the financial year, it is important that the Committee should know from where the money will come.

Finally, it is true that unwittingly—there are numerous examples all over the country—many people who would have paid have been tempted not to pay by the spurious mouthings —if I can put it that way—of the campaign for non-payment. The noble Lord ignores some real evidence that parliamentary and council Labour Party members have been active in that non-payment campaign.

Lord McIntosh of Haringey

This continued repetition of inaccurate, unworthy and irrelevant allegations against Labour councillors and Members of Parliament is becoming almost intolerable. It is clear that the vast majority of Labour councillors on councils all over the country who have supported the law have been subject to physical and mental harassment. My noble friend Lady Hollis has been in that position. She had to have police protection against such people, and yet we are the ones who are accused of being law-breakers.

I find it almost intolerable that we should be expected to listen to such a charge which Ministers, in their hearts, know is not true. The Labour Party does not and never has supported law-breaking. Labour Party members, spokesmen, councillors and Members of Parliament have been subjected to abuse for upholding the rule of law. If Ministers had been in that position, they would not be saying what they now are saying.

Let me return again, if I may, to the amendment. It has nothing to do with the matters Ministers have chosen to raise in argument. The amendment takes the principle which the Government have conceded, and it brings it forward one year for humanitarian and common sense reasons. The figures the Audit Commission gave were for collection costs in 1990–91. It is obvious from all we know about non-payment that those collection costs will have increased in 1991–92, and they will increase still further in 1992–93.

I suggest, as the noble Earl, Lord Onslow, rightly said, that there comes a point where the cost of collecting small amounts of money from a few people is no longer worth the candle—I believe that that was his phrase. It is unjust, it is irrational, and it conflicts with the Government's own recognition of the ultimate rightness of our case. I ask for the Committee's opinion on the amendment.

Baroness Blatch

Before the—

Lord McIntosh of Haringey

I have come to a conclusion. I cannot continue to be interrupted by that kind of intervention.

5.26 p.m.

On Question, Whether the said amendment (No. 208) shall be agreed to?

Their Lordships divided: Contents, 92; Not-Contents, 130.

Division No. 1
CONTENTS
Acton, L.	Dormand of Easington, L.
Addington, L. [Teller.]	Ewart-Biggs, B.
Airedale, L.	Falkender, B.
Ardwick, L.	Gallacher, L. [Teller.]
Aylestone, L.	Galpern, L.
Beaumont of Whitley, L.	Gladwyn, L.
Birk, B.	Greene of Harrow Weald, L.
Blackstone, B.	Grey, E.
Bonham-Carter, L.	Hamwee, B.
Boston of Faversham, L.	Hatch of Lusby, L.
Bottomley, L.	Henderson of Brompton, L.
Broadbridge, L.	Hilton of Eggardon, B.
Bruce of Donington, L.	Hirshfield, L.
Callaghan of Cardiff, L.	Hollis of Heigham, B.
Carmichael of Kelvingrove, L.	Holme of Cheltenham, L.
Castle of Blackburn, B.	Houghton of Sowerby, L.
Cledwyn of Penrhos, L.	Hughes, L.
Cocks of Hartcliffe, L.	Irvine of Lairg, L.
Dainton, L.	Jay, L.
Darcy (de Knayth), B.	Jeger, B.
Dean of Beswick, L.	Judd, L.
Diamond, L.	Kagan, L.
Donaldson of Kingsbridge, L.	Kennet, L.
Donoughue, L.	Kilbracken, L.

Listowel, E.	Redesdale, L.
Llewelyn-Davies of Hastoe, B.	Richard, L.
Lockwood, B.	Ritchie of Dundee, L.
Longford, E.	Robson of Kiddington, B.
Lovell-Davis, L.	Rochester, L.
McCarthy, L.	Russell, E.
McIntosh of Haringey, L.	Seear, B.
Mackie of Benshie, L.	Serota, B.
McNair, L.	Shackleton, L.
Mallalieu, B.	Shaughnessy, L.
Mayhew, L.	Stedman, B.
Milner of Leeds, L.	Stoddart of Swindon, L.
Morris of Castle Morris, L.	Strabolgi, L.
Morris of Kenwood, L.	Thurlow, L.
Mulley, L.	Tordoff, L.
Murray of Epping Forest, L.	Underhill, L.
Ogmore, L.	Wallace of Coslany, L.
Peston, L.	Walpole, L.
Phillips, B.	Warnock, B.
Pitt of Hampstead, L.	White, B.
Prys-Davies, L.	Wigoder, L.
Rea, L.	William of Elvel, L.
NOT-CONTENTS
Abinger, L.	HolmPatrick, L.
Alexander of Tunis, E.	Hood, V.
Alexander of Weedon, L.	Hooper, B.
Arran, E.	Howe, E.
Astor, V.	Hylton-foster, B.
Auckland, L.	Jenkin of Roding, L.
Balfour, E.	Kimball, L.
Beloff, L.	Kitchener, E.
Belstead, L.	Knollys, V.
Bessborough, E.	Lindsey and Abingdon, E.
Blakenham, V.	Lloyd of Hampstead, L.
Blatch, B.	Lloyd-George of Dwyfor, E.
Boardman, L.	Long, V.
Borthwick, L.	Lucas of Chilworth, L.
Boyd-Carpenter, L.	Lyell, L.
Brabazon of Tara, L.	Mackay of Ardbrecknish, L.
Brigstocke, B.	Mackay of Clasfern, L.
Brougham and Vaux, L.	Macleod of Borve, B.
Buccleuch and Queensberry, D.	Manchester, D.
Butterworth, L.	Mancroft, L.
Caithness, E.	Marlesford, L.
Caldecote, V.	Merrivale, L.
Campbell of Alloway, L.	Mersey, V.
Carnegy of Lour, B.	Milverton, L.
Carnock, L.	Monson, L.
Carr of Hadley, L.	Montagu of Beaulieu, L.
Cavendish of Furness, L.	Morris, L.
Charteris of Amisfield, L.	Mottistone, L.
Cockfield, L.	Mowbray and Stourton, L.
Colnbrook, L.	Moyne, L.
Colwyn, L.	Munster, E.
Constantine of Stanmore, L.	Nelson, E.
Cork and Orrery, E.	Nelson of Stafford, L.
Cross, V.	Norfolk, D.
Cullen of Ashbourne, L.	O'Cathain, B.
Cumberlege, B.	O'Hagan, L.
Dacre of Glanton, L.	Onslow, E.
De L'Isle, V.	Orkney, E.
Denton of Wakefield, B.	Orr-Ewing, L.
Digby, L.	Oxfuird, V.
Elton, L.	Park of Monmouth, B.
Erne, E.	Pender, L.
Faithfull, B.	Pennock, L.
Ferrers, E.	Peyton of Yeovil, L.
Forte, L.	Rankeillour, L.
Fortescue, E.	Reading, M.
Gainsborough, E.	Reay, L.
Gardner of Parkes, B.	Renfrew of Kaimsthorn, L.
Geddes, L.	Renton, L.
Gowrie, E.	Rodney, L.
Haddington, E.	Saltoun of Abernethy, Ly.
Hailsham of Saint Marylebone,	Sandford, L.
L.	Selborne, E.
Hanson, L.	Shannon, E.
Henley, L.	Shrewsbury, E.
Hesketh, L. [Teller.]	Skelmersdale, L.

Soulsby of Swaffham Prior, L.	Trumpington, B.
Stockton, E.	Ullswater, V.
Strathclyde, L.	Vivian, L.
Strathmore and Kinghorne, E.	Waddington, L.
[Teller.]	Westbury, L.
Swinfen, L.	White of of Hull, L.
Terrington, L.	Wilberforce, L.
Teviot, L.	Wyatt of Weeford, L.
Thomas of Gwydir, L.	Young, B.
Trefgarne, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.35 p.m.

[Amendment No. 208A had been withdrawn from the Marshalled List.]

Clause 101 agreed to.

Baroness Robson of Kiddington

moved Amendment No. 209: Before Clause 102, insert the following new clause: ("Definition of student nurse For the purposes of this Act, or any regulation made under any section of this Act, the term "student nurse" shall be taken to mean any person undertaking a full time course of nursing education which would enable such a person to qualify for registration under the terms of the Nurses, Midwives and Health Visitors Act 1979."). The noble Baroness said: I move this amendment in the names of my noble friend Lady Hamwee, the noble Lord, Lord Ennals, and myself.

The aim of the amendment is to ensure that all nursing students are treated equally under the Local Government Finance Bill. The Committee will remember that under the community charge legislation regulations defining the term "student" distinguish between nursing students pursuing the Project 2000 course who are in receipt of a bursary and those students who are pursuing conventional nursing courses financed by means of a training allowance.

The incomes of both groups of nursing students are broadly similar, but under the community charge legislation, Project 2000 students pay 20 per cent. of the tax while other students pay 100 per cent. I am sure that the Committee will remember that during the passage of the Bill concerning the community charge, I moved a similar amendment to this one. With the help of noble Lords from all sides of the House it was passed. Sadly, it was overturned in the other place.

On Tuesday the Minister referred to a draft order which was put in the Library relating to the definition of "student". I made it my business to study the provisions. So far as I understand it, under them student nurses on the old type of training will be entitled to a rebate. That is how I read the provisions. I may be wrong, but I was satisfied and pleased about it.

However, another anomaly appears to be created in this Bill. I understand that the Government intend to exempt students if they occupy a dwelling inhabited only by students, and that student nurses pursuing the Project 2000 course of education will be included in such an exemption. The majority of nursing students outside Project 2000 will be excluded from that exemption. Thus, yet again we are creating an anomaly between the two types of student. I find this completely incomprehensible. When I raised the issue some years ago under the Bill dealing with the community charge, the progress of change in nursing education had not reached as far as it has today. It is now true that in Scotland and Wales all student nurses will take part in Project 2000 education by the end of 1992, but some will be pursuing their education as the former type of student nurse.

In England, Project 2000 is also well advanced, but not as advanced as in Scotland and Wales. It seems to me that with so few years to go, it would not be an enormous concession by the Government and I hope that the Minister will see her way to accepting that student nurses are student nurses, irrespective of the course they pursue. We are talking about a situation that will apply for only a few more years. It will not be long before every student nurse takes part in Project 2000. I hope the Minister will accept this amendment.

There is another reason too for accepting this amendment. Its provisions would aid the collection of the 20 per cent. of the tax to be collected in these circumstances. Collecting the tax from students in general will not be all that easy because exempt households are those that comprise students only. Local authorities will have to check carefully that there are no other people living in those houses. If we do not change the rules and allow nursing students who are not on Project 2000 to qualify for the exemption, local authority collection officers will have to differentiate between nursing students pursuing different types of nursing courses, even though they may study at the same institution and obtain the same qualification at the end of their studies. It will be especially difficult to levy the tax where nursing students on different courses are sharing the same accommodation. My amendment simplifies the position. However, I hope it will be accepted purely on the grounds of fairness. I beg to move.

Lord Henderson of Brompton

I thank the noble Baroness for bringing this matter to the attention of the Committee. I need not expatiate on her comprehensive introduction of the subject. Like the noble Baroness, I too was puzzled by this matter. I could not see any argument for differentiating between two classes of nurse. I shall say no more than that at the moment as I wish to discover what the rationale for that provision is. I have tried as hard as I can to discover that, but I have been unsuccessful. I shall be interested to hear what the noble Baroness has to say and I shall reserve any further comment until then.

Baroness Hollis of Heigham

We on this side of the Chamber wish to associate ourselves with the amendment moved by the noble Baroness, Lady Robson. I take the example of two student nurses, one of them bringing in £96 a week and the other £97 a week. One of them is treated as invisible and the other, though eligible for rebate, earns too much to obtain any rebate and therefore pays the full council tax bill. That situation cannot be fair. I hope the Minister will accept that there is an anomaly here that needs to be addressed.

5.45 p.m.

Baroness Blatch

Schedule 1 provides for student nurses and certain other trainees and apprentices to be eligible for personal discounts, so that they will not add to the personal element of the council tax bill. This recognises that such trainees are usually on a low income. Paragraph 4 of the schedule provides for full definitions of the people to get discounts to be set out in an order. We intend that the term student nurse will include all those on courses leading to registration under the Nurses, Midwives and Health Visitors Act, with the exception of nurses following the programme known as Project 2000.

Project 2000 is a pioneering nursing education scheme which integrates classroom theory and practical nursing experience more closely than traditional nursing training. I know I do not have to explain to the noble Baroness, Lady Robson, the qualifications for Project 2000 courses. There has been lengthy discussion in another place about the different treatment of what I will call traditional student nurses and Project 2000 student nurses. Let me make the position quite clear.

All student nurses (whether or not on Project 2000) will be eligible for a personal discount so that they will not be counted for the personal element of the tax. So if a student nurse lives with one parent, or a single landlord, the bill will still be only 75 per cent., the same as that for a single person household. If a student nurse lives alone, he or she will only be liable for the property element of the bill. But if there are two other adults in the household, then a full bill will apply whether or not the student nurse is living there. We shall have a system of rebates to help those on low incomes meet their bills. Project 2000 nurses, and other full-time students, will not generally be eligible for these rebates. For that reason we decided that student hostels, and houses or flats where all the adult residents are students, should be exempt from the tax. Traditional student nurses, if they are householders, may have difficulty meeting their bill. But they may be eligible for council tax rebates of up to 100 per cent. depending on their circumstances. For this reason they have not been included in the exemption arrangements which apply to students. I know the noble Baroness is inviting me to include them in the exemption arrangements.

In summary, the different treatment of the two groups of student nurses arises from their differing entitlements to benefit and other support. I should point out that they are paid differently. Project 2000 nurses are paid by the bursary method, while traditional nurses are salaried. I would say to the noble Baroness, Lady Hollis, that if nurses come above the income level that qualifies for rebate, the amount of community charge they pay at present—or the amount of council tax as it will be in the coming year—will not be particularly burdensome on the small number of nurses affected. We are talking now about a residual number of nurses. Even if all of the nurses who fell into this category were to be counted, about 60 per cent. will be on Project 2000 soon. We are talking about the 40 per cent. who are left. Of that 40 per cent., many will be living in circumstances where they will not add to a tax bill. We are talking about that element of the 40 per cent. who may be living in a mixed household where they will have to pay a proportion of the tax that relates to property.

Our proposals for both groups are generous and will mean that most student nurses will pay considerably less under the council tax than they presently do under the community charge. We believe the amendment is not necessary and I hope the noble Baroness will feel considerable concessions have been made and she will not press the amendment.

Lord Henderson of Brompton

Before the noble Baroness replies, I wish to ask the Government what the cost of removing the anomaly would be. What would be the cost of accepting the provisions of the amendment that would iron out the anomaly?

The Minister has carefully explained the basis on which the anomaly has arisen. I suppose there is some sense in that; but it is a complicated matter. It would be complicated even for an expert to understand let alone nurses who are trying to understand other complications than the complications in this Bill. If the concession we are discussing would be fairly cheap to implement, cannot the Minister get rid of the complication and iron out this anomaly? That would give a sense of fairness to nurses and we would all be satisfied. At the moment, the nurses are not satisfied with the position. They find it difficult to understand why people within the same profession who are earning much the same incomes are charged different amounts of tax.

Baroness Hollis of Heigham

Before the noble Baroness replies, I hope I may make a few points. I understand the logic behind the principle that nurses are moving from the status of employees to the status of students. Therefore a transitional period is involved in which the benefits are being adjusted accordingly. But given that we are discussing a diminishing number —this follows up the point made by the noble Lord, Lord Henderson —will the Minister tell us the cost of removing the anomaly? At what point in time, 1996 or 1997—I suspect it is the latter—will all nurses be on Project 2000? We are talking about a small number of nurses and a sharply reducing number. Consequently the cost of ironing out the anomaly would be a temporary one. I hope the Minister can help us on that matter.

Baroness Blatch

There are two responses to the two points that have been made by the noble Lord and the noble Baroness. It is impossible to make a definite announcement in this case. One has to know the specific living arrangements of a nurse. One has to know whether a nurse is living with parents and what kind of accommodation a nurse is living in. We are comparing all nurse households with all student households. A student living in a mixed household —that is of mixed adults and students—must meet a proportion of the property tax. We are specifically comparing all student households with all nurse households. The amendment seeks to apply the term "student nurse" to the traditionally trained nurses and to nurses belonging to the Project 2000 scheme.

I have made the distinction between the way in which the two sets of nurses are paid. One set of nurses is paid by bursary and the other by salary. Nurses on the conventional, traditional courses are paid more than nurses on Project 2000 courses. I wonder what logic there is for differentiating between a nurse on a traditional nursing course and any other member of the population who is paid a similar salary but receives absolutely no concession whatever. Such a person may be a shop assistant, a cleaner or a junior clerk. Why should someone receive that extra help simply because he or she is a nurse?

The Government have recognised the special category of student nurses in relation to the new arrangements for Project 2000. I believe that it is a considerable concession. The noble Baroness asked me when those nurses would have progressed through the system. I am not able to give that information but of course I shall obtain the information and I shall write to the noble Baroness.

Baroness Robson of Kiddington

I am not happy with the reply that the noble Baroness has given. I cannot see the logic in comparing student nurses with other professions. I have compared one group of student nurses with another category of student nurses. I cannot see why they should be treated differently. The difference in income between the two is minimal, if any. I had figures from the Royal College of Nursing but unfortunately I must have left them in the Library.

This type of anomaly creates a dreadful feeling of frustration and anger among the nurses who are treated differently from Project 2000 nurses. We all want to encourage the nursing profession. Nurses do a wonderful job for us and they all do the same job. I believe that they should be treated the same, irrespective of the type of course that they undertake.

The Minister did not refer at all to the problem of the collecting agency. How is the local authority to know what the position is if three students on Project 2000 courses and two students from the ordinary nursing education establishment share a house? That will be a student house in the case of the Project 2000 students, but I presume that it becomes a non-student house if it also houses two students from an ordinary nursing course. The system makes no sense.

Quite apart from being unfair and difficult to enforce the situation is impossible. I sincerely hope that Members of the Committee will support me on this occasion, just as they did in the case of the community charge. I should like to test the opinion of the Committee.

Baroness Blatch

I should be grateful if the noble Baroness would give way. I am most grateful to her. I understand that there is a substantial difference between the position of nurses receiving a bursary under Project 2000 and nurses being paid salaries under the traditional nursing schemes. The figures can be presented in a number of ways, but the highest community charge in the country will produce a difference of only £9. The average difference is only £5 a week. If there is a difference of more than £5 or £9 that difference is well matched to meeting payment of the community charge.

I understand all the arguments which the noble Baroness has put forward about nurses. However, they are not doing the same job. Project 2000, which does not use nurses in the traditional way, has been fought for for a very long time. Project 2000 is much more of a study-based course in which the students are used much less as general nurses on wards. That was very welcome to the nurses. One is not comparing like with like.

I understand that there is one presentation of the figures which makes them look very similar. However, in practice there is a difference, which matches the liability for payment of the community charge.

Baroness Robson of Kiddington

Perhaps I may give the figures, which I have now found, and on which I based my statement. Employees who work a 37½ hour week receive £96.83 weekly income after tax and deductions. The Project 2000 student, who works only a 45-week term, receives £96 a week. The degree course student, who works a 30-week term, receives £94.83. Those figures have been provided by the Royal College of Nurses.

Baroness Blatch

I know that the noble Baroness intends to press the amendment and this will be my last intervention. I believe that we must come back to the point because my information is that those figures presented in that way do not produce the difference in practice. If I am wrong I shall apologise to the Committee, but I believe that I should write to both noble Baronesses following the debate.

Baroness Robson of Kiddington

Irrespective of the difference, if there is any, I hope that the Committee will once again support an amendment designed to treat student nurses equally. I commend the amendment to the Committee.

5.55 p.m.

On Question, Whether the said amendment (No. 209) shall be agreed to?

Their Lordships divided: Contents, 78; Not-Contents, 87.

Division No. 2
CONTENTS
Acton, L.	Donoughue, L.
Addington, L.	Dormand of Easington, L.
Ailesbury, M.	Ewart-Biggs, B.
Airedale, L.	Falkender, B.
Ardwick, L.	Gallacher, L. [Teller.]
Auckland, L.	Galpern, L.
Aylestone, L.	Gladwyn, L.
Beaumont of Whitley, L.	Greene of Harrow Weald, L.
Birk, B.	Grey, E.
Blackstone, B.	Hamwee, B. [Teller.]
Boston of Faversham, L.	Hatch of Lusby, L.
Bottomley, L.	Henderson of Brompton, L.
Broadbridge, L.	Hilton of Eggardon, B.
Carmichael of Kelvingrove, L.	Hollis of Heigham, B.
Cledwyn of Penrhos, L.	Holme of Cheltenham, L.
Cocks of Hartcliffe, L.	Hughes, L.
Craigavon, V.	Hylton-Foster, B.
Darcy (de Knayth), B.	Irvine of Lairg, L.
Dean of Beswick, L.	Jay, L.

Jeger, B.	Pitt of Hampstead, L.
Kagan, L.	Prys-Davies, L.
Kennet, L.	Rea, L.
Kilbracken, L.	Redesdale, L.
Listowel, E.	Richard, L.
Llewelyn-Davies of Hastoe, B.	Ritchie of Dundee, L.
Lockwood, B.	Robson of Kiddington, B.
Longford, E.	Rochester, L.
Lovell-Davis, L.	Russell, E.
Macaulay of Bragar, L.	Saltoun of Abernethy, Ly.
McIntosh of Haringey, L.	Seear, B.
Mayhew, L.	Serota, B.
Milner of Leeds, L.	Stedman, B.
Milverton, L.	Stoddart of Swindon, L.
Morris of Castle Morris, L.	Tordoff, L.
Morris of Kenwood, L.	Underhill, L.
Northbourne, L.	Walpole, L.
Ogmore, L.	White, B.
Peston, L.	Williams of Elvel, L.
Phillips, B.	Wise, L.
NOT-CONTENTS
Abinger, L.	Lindsey and Abingdon, E.
Arran, E.	Lloyd of Hampstead, L.
Ashbourne, L.	Long, V.
Astor, V.	Lucas of Chilworth, L.
Balfour, E.	Lyell, L.
Belstead, L.	Mackay of Ardbrecknish, L.
Bessborough, E.	Mackay of Clashfern, L.
Blatch, B.	Macleod of Borve, B.
Boardman, L.	Mancroft, L.
Borthwick, L.	Marlesford, L.
Boyd-Carpenter, L.	Merrivale, L.
Brabazon of Tara, L.	Mersey, V.
Brigstocke, B.	Morris, L.
Brougham and Vaux, L.	Mottistone, L.
Caithness, E.	Mowbray and Stourton, L.
Caldecote, V.	Munster, E.
Campbell of Alloway, L.	Nelson, E.
Carnegy of Lour, B.	Nelson of Stafford, L.
Carnock, L.	O'Hagan, L.
Cavendish of Furness, L.	Onslow, E.
Colnbrook, L.	Orkney, E.
Constantine of Stanmore, L.	Orr-Ewing, L.
Cork and Orrery, E.	Oxfuird, V.
Cross, V.	Pennock, L.
Dacre of Glanton, L.	Peyton of Yeovil, L.
Denton of Wakefield, B.	Rankeillour, L.
Elton, L.	Reay, L.
Erne, E.	Renfrew of Kaimsthorn, L.
Ferrers, E.	Renton, L.
Fraser of Carmyllie, L.	Rodney, L.
Gainsborough, E.	Shrewsbury, E.
Geddes, L.	Skelmersdale, L.
Haddington, E.	Stockton, E.
Hailsham of Saint Marylebone,	Strathclyde, L.
L.	Strathmore and Kinghorne, E.
Henley, L.	[Teller.]
Hesketh, L. [Teller.]	Swinfen, L.
HolmPatrick, L.	Terrington, L.
Hooper, B.	Thomas of Gwydir, L.
Howe, E.	Trefgarne, L.
Jenkin of Roding, L.	Trumpington, B.
Kenilworth, L.	Ullswater, V.
Kimball, L.	Waddington, L.
Kitchener, E.	Wyatt of Weeford, L.
Knollys, V.

Resolved in the negative, and amendment disagreed to accordingly.

6.3 p.m

[Amendment No. 210 not moved.]

Clause 102 agreed to.

Schedule 9 [Social Security: Council Tax Benefit]:

[Amendment No. 211 not moved.]

Baroness Hollis of Heigham

moved Amendment No. 212: Page 112, line 17, after ("liable") insert ("or jointly and severally liable under sections 6 or 9 of the Local Government Finance Act 1992"). The noble Baroness said: Let me seek to describe a scenario to the Committee with regard to the council tax. Let us consider a household with two adults. I do not refer to spouses but to mother and son, brother and sister, two friends or indeed two casual flat sharers. That household of two adults stands equal in the hierarchy of liability. In other words, they are joint owners or, more likely, co-tenants. They share joint and several liability for the bill. Only one of the two is the liable householder who receives the bill. Only one bill is sent out. Only the liable householder can claim a rebate on his income. The bill is based on two adults; they are jointly and severally liable for it; it is sent to only one of them who alone is eligible to claim rebate.

Several amendments relate to the problem of one adult with a low income living with a second adult, such as I have described, on a low income faced with a two-person bill. I accept that there is no easy way to deal with that problem of second adult poverty within the council tax Bill as structured without a more generous rebate scheme. Last week we put forward an amendment which provided that the bill should be split between those who were jointly and severally liable, with several bills being sent out. Each adult receiving part of the bill would be eligible for rebate on that part of the bill. We believed that it was a simple scheme and, so far as we could tell, broadly financially neutral. However, we had no support from Government Members opposite.

I pay credit to the Minister for seeking to come to terms with the problem. He has offered what I may call stepped discounts or benefits on the second income. It is a gallant response but it throws up a number of problems that we shall discuss in later amendments.

A third method which we shall discuss in Amendment No. 216 offers a passport approach. It has the merit of simplicity. A second person who is on one of those listed benefits will receive a rebate of 25 per cent. There is a crude approximation with incomes. That is a simple, straightforward method without some of the anomalies presented by the Minister's scheme.

The amendment proposes a fourth method of dealing with the problem of two adults who are not cohabiting, but who are equally liable for the bill, only one of them being the liable householder and where there is the problem of poverty in the household. It does not propose splitting the bill but suggests that where there is joint and several liability either of the jointly and severally liable parties should be eligible to claim rebate on the full bill. I refer to co-owners or co-tenants. That would leave in place the Government's assumption that there should be one bill and one rebate and that only one liable person may claim it. But it enables all the parties who are severally and jointly liable to choose among themselves who claims the rebate.

Let me cite a case history. A 50 year-old single parent mother whose income is just above rebate level lives with a 30 year-old physically disabled son on income support. They are joint tenants of the council flat but the bill is in her name. She would not be eligible for rebate. The amendment ensures that whichever of them was entitled to the higher rebate, including the son, could be and would be the claimant. I argue that where there is joint and several liability for the bill, irrespective of who is the liable householder, there should be joint and several liability for rebate. It would mean that where someone found themselves responsible for unpaid bills, he or she would be eligible as of right for backdated benefit. It overcomes some of the problems of backdating.

We all recognise that it is a complicated and technical problem. I am sorry to have to deal with technicalities in this way. However, we believe that there are better ways to deal with the problem than the stepped benefits process that the Minister offered on the second low-income adult income. We believe that splitting the bill in this way by allowing all parties to be jointly and severally liable for rebate, as well as for the bill would be a fairer, more equitable and simpler way forward. I beg to move.

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

It is probably helpful if I intervene at this early stage. I may be the only one who needs to intervene because I do not believe that we are that far apart. I think it will help if I say that we shall get to the second adult rebate on one of the later amendments put forward by the noble Baroness. Perhaps we can deal at the moment with the sort of examples she is talking about: two people live in a house together who are not what would be defined in social security law as a couple. In other words it could be mother and son or brother and sister; it could be people sharing the house as perfectly equal tenants. Obviously we accept —this exists in other benefit fields in the case of housing benefit—that not all joint owners will be couples. One has to cater for the people who do simply share a property and are then jointly and severally liable to pay the council tax under Clause 6.

We consider that how benefit is to be awarded in these circumstances is a matter for regulations and not for the face of the Bill. We will continue, and we are having at the moment detailed discussions with the local authority associations.

I have to say that our initial preference is to follow the current housing benefit arrangements for the treatment of people who are jointly responsible for the payment of rent and to award benefit on the basis of apportioned liability. That would mean that in, for example, the case cited by the noble Baroness, where the mother was above income support levels and above the level of any council tax benefit, the son who was below income support levels would be entitled to claim what amounted to his share, but not the entire 100 per cent. One would have to say that as a matter of fact the likely apportionment between the two would be 50/50. He would be allowed to claim for his 50 per cent. of what was owing and his mother would be liable for the rest.

I think that this procedure would prevent the possibility of abuse where, for example, one joint tenant shared a house with exactly the same level of status as another joint tenant on a high income and was able to claim benefit for the full council tax liability without regard to the income of the other joint tenant. I think that the noble Baroness would accept that that would be the wrong way to go about it. Therefore, we shall continue our discussions with the local authority associations. Our preference is to follow the housing benefit arrangements, which I am sure the noble Baroness knows well. That will allow for fair treatment of all concerned and will prevent the abuse that I have suggested could possibly appear if one allowed one individual to pay 100 per cent.

Baroness Hollis of Heigham

I thank the Minister for that helpful and conciliatory reply which we shall study. I take on board the problems with a group of jointly and severally liable tenants deciding among themselves who had the lowest income and who claimed on behalf of all of them in order to maximise rebates. I can understand that the Government might find that situation problematic. However, he gave an instance in response to my example of a mother and a physically disabled son. Can he explain the difference between the two examples and say how far away he is from apportioning the bill between the people and allowing each of those parties to claim rebate on their eligible portion? That provision was in a previous amendment that I moved, which would have met the same problem. From what the Minister has said it appears that he may be moving towards us, possibly through regulations. In that case we should be happy to encourage him in his discussions.

Lord Henley

I remember the previous amendment, but the case was somewhat different. We were talking about the practicality from the point of view of the local authority. We leave the joint and several liability and therefore both are liable. The authority can pursue both, although obviously it will act reasonably. I stressed that guidance will be issued to the authority. In terms of the benefit, which is something different—although, in the case of the council tax, housing benefit is something that they go through the local authority to claim rather than through social security—all we are saying is that they can claim what would be presumed to be their share of that bill.

Baroness Hollis of Heigham

I shall not press the matter. I thank the Minister for his reply but we shall wish to tease out some of its implications. I shall return to this issue, although not necessarily with this amendment, on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.15 p.m.

Baroness Hollis of Heigham

moved Amendment No. 213: Page 112, line 18, after ("resident") insert ("including residents who are undertaking a full time course of education or are student nurses").

The noble Baroness said: In moving this amendment I shall speak also to Amendment No. 214. We return to the subject that we discussed earlier and on which there was a close Division in Committee. I refer to the problem of students and of certain student nurses. Because students receive grants they are not eligible for benefits. They have been taken out of the social security system; housing benefit, council tax benefit or whatever. That is why, understandably and appropriately, government have made them invisible for the purposes of the council tax—in other words, they receive a 25 per cent. discount—and if they live in an all-student household the dwelling itself is exempt.

I wish to suggest that two problems arise from that approach and I shall welcome the Minister's response to them. First, the Bill assumes that all students, who by definition of being a student are debarred from benefit, receive a grant or, in the case of student nurses, a bursary. Many do so, but in my experience as a university teacher most have only a proportion of their grant made up by parents who are themselves financially struggling.

Other students are undertaking courses in respect of which grant is discretionary. One thinks of music students, some art and drama students and the like. Others are mature students for whom grant may also be discretionary, especially if they have already had a previous year of local authority support. However, even with the full grant and loan student grants are inadequate, as those of us in the university world know. However, students have also lost their rights to benefits. If they are receiving even less than the present full level of grant plus loan their position is parlous indeed. I hope that the Minister will help us in that area.

The second difficulty is that often a student may be liable for the council tax but without access to rebates to help to pay it. The problem that we are picking up—as we did in the previous amendment and others—is that we have a liable householder, which is one concept; joint and several liability, which is another concept; eligibility for discounts, which is another concept; and eligibility for rebates, which is another concept. All four dimensions are mapped in all kinds of fiendishly complicated ways. In the process anomalies are thrown up, some of which we are trying to explore in Committee.

Perhaps I may give two examples of the second difficulty; that of being liable for tax but without access to rebates to help pay it. I give the example of a husband who is a mature student and perhaps an owner-occupier. His wife is at home with small children. He is the householder and either the owner or the tenant. Because he is invisible the household faces a 75 per cent. bill. However, as he is the liable householder the bill comes to him. Can she, may she, will she, is she entitled to negotiate a rebate claim for both of them? I think that probably she can, but I hope that the Minister will tell us.

Perhaps I may give a second example of an owner-occupier or a tenant living on his own. He becomes a mature student. After a few months a brother moves in with him. Because the brother moves into his house that dwelling moves from being completely exempt to attracting a 75 per cent. bill. That is so because he remains invisible but the brother brings with him a 75 per cent. bill. The student is liable but cannot claim a rebate. The brother cannot claim because he is not liable at all and, therefore, he is not co-equal in the hierarchy of liability. Who then pays the bill and with what moneys does he do so?

The amendment would take care of such anomalies. They are increasingly frequent given the changes in higher education which students drop into and out of through the process of modularity and the problems of grant. The amendment would ensure that students have access to rebates when they inhabit a dwelling which attracts a council tax bill. The amendment applies equally to student nurses on Project 2000 who are treated as students and who, therefore, are exempted from the social security system but may also be excluded from rebates. We are arguing that it is only fair that if students enter the council tax system by paying part shares of the household bill they should also have entry into the rebate scheme. I beg to move.

Lord Henderson of Brompton

The National Association of Citizens Advice Bureaux supports the amendment and the similar Amendment, No. 214, standing in my name. As the noble Baroness has covered the ground so thoroughly I need say very little. The amendment overlaps with that on which we recently divided. I was sorry that the noble Baroness felt it necessary to divide the Committee because I had thought it possible between now and Report to reach an understanding on the anomaly in the case of the nurses. I do not understand why the Government seem to be so keen on disaffecting the most intelligent people in the country—the young students of the day. The nurses will be dismayed by the Government's conclusion as will their mothers, fathers, sisters and brothers. That is a large number of people.

The intelligentsia of the country—the university and polytechnic students—and their families are wondering why on earth the Government are making these extraordinary anomalies. They all say, "We simply cannot be bothered to puzzle this out. We are studying something else. We are not studying the Local Government Finance Bill." It is quite difficult to study in any event. They will ask why they should be put in different categories because of where they live. They will say that it is absurd.

Do Ministers really want all those intelligent people and their families to say what an ass the Government are to produce such anomalies? That is what will happen.

With student numbers growing, half will have to live in non-student accommodation. There will be no choice. There is not enough accommodation and because of that—not through choice—they must live in non-student accommodation and thereby find themselves penalised. What is the logic behind that? How many friends will the Government gather by imposing such a condition? I do not understand it.

What is more, it is flatly contrary to the Prime Minister's Citizen's Charter. One of the principal features of the charter is to increase choice. This provision achieves exactly the opposite. The Government will force students to remain in student accommodation because they cannot afford accommodation that is available elsewhere. How does that square with the Citizen's Charter?

On the last occasion I asked that question it was not answered by the Minister—the same Minister who will reply to this debate. I should like to know specifically how the Minister reconciles this provision with the Citizen's Charter. I should very much like to know the answer to that question.

Baroness Seear

I support the amendment. I wish to raise only one additional point because the rest of the points have been made so clearly. Students include graduate students. Graduate students have been particularly badly treated by the benefit scheme which the Government have provided for them. Graduate students represent the cream of students. They are the people whom we expect to be the leaders of academia and elsewhere in the future. If we make life difficult for them, we shall impoverish ourselves seriously in the years to come.

Baroness Hamwee

I should like to add one comment to what was said by the noble Lord, Lord Henderson of Brompton. I was talking about the Bill to a trainee solicitor in my firm a couple of days ago. She comes from Scotland but trained in Birmingham. She started her training at the time of the introduction of the poll tax in Scotland. She described to me the problems that she had experienced and how her colleagues in Birmingham could not understand what all the fuss was about. That sort of confusion, anxiety and irritation with the Government—not to speak of hardship —could occur in just the way that the noble Lord, Lord Henderson, has pointed out.

Lord Henley

As the Committee will be well aware, the Government have taken steps to accommodate the particular needs of full-time students under the council tax. I simply do not accept, as the noble Lord, Lord Henderson, seems to suggest, that the treatment of students in regard to this Bill and other provisions is in any way in conflict with the ideas behind the Citizen's Charter.

We all know that student halls of residence, hostels and dwellings where all the adult residents are students will be exempt from the council tax. I accept, as the noble Lord, Lord Henderson, said, that a large number of students do not live in halls of residence, in college or whatever, but I believe that the noble Lord will accept that a large number of students, when they share houses and flats, tend to live as students all together. It must be stressed that those houses will be exempt from the council tax. The house will be invisible because it is entirely a student residence. Consequently, we can say—and for some reason the noble Lord, Lord Henderson, seems to think that this is anti-student and attacking the future intelligentsia of the country—many students will not be liable to pay any tax at all.

The intention of Amendments Nos. 213 and 214, to which the noble Lord, Lord Henderson, spoke, is to give entitlement to council tax benefit to the minority of students who will remain liable to pay tax. I shall have to go back over old ground to remind the Committee that we do not believe that full-time students—and this has been argued many times both here and in another place—should generally look to social security benefits for support. The Government's view is that students should look to the educational maintenance system for support. However, exceptions are made for certain vulnerable groups, including students who are lone parents or disabled and student couples with dependent children, who are all entitled to claim income support and housing benefit. It is intended that they will be able to claim council tax benefit if they are liable to pay the tax.

Perhaps I may deal with the specific examples which the noble Baroness, Lady Hollis, cited. Her first example was that of a husband and wife where the husband was a student. Obviously, in that residence, the unit would only be liable for 75 per cent. tax. The noble Baroness asked whether the wife could claim all that. If she is not working and their income is below the appropriate income support level in whatever class they happen to be—whether disabled, non-disabled and so on—the wife could claim the full 75 per cent. tax.

In the second example, we have the student house, which is exempt, and the brother living on his own as a student. His brother moves in with him. I hope he charges him something but that is neither here nor there and we will leave that for another day. First, there is a house with no bill at all and then we have a house that goes from nothing to 75 per cent. for which, as the noble Baroness put it, the student brother, in that he is higher up in the hierarchy, will be liable. The student will then be able to claim the second adult rebate if the second adult in that house is on a low income.

Baroness Hollis of Heigham

Does the Minister not agree that that would only be the case if the second person's income was below £130? Between £100 and £130, the figure would be 7.5 per cent. In other words, the student would be faced with anything between 85 per cent. and 90 per cent. of the bill for which he would still be unable to claim a rebate.

Lord Henley

If he is on a low income, he can claim the second adult rebate which will bring him down to 50 per cent. I will take advice on that. My understanding is that he could claim the second adult rebate if he was on a low income, that second adult rebate taking off the further 25 per cent.

The third case which the noble Baroness raised related to those students receiving less than their full grant. I go back to what I said earlier about it being the Government's view that students should look to the educational maintenance system for support. When we removed benefit entitlement from students, those changes were not made, as has been said before, in isolation. They coincided with the additional resources in the form of student loans and the access funds, which were made available through the educational maintenance system in 1990–91. In the current academic year the full year loan facility plus the grant is more than 30 per cent. higher than the grant in 1989–90 and, as I mentioned, there are also the access funds available to provide means for discretionary help to students who face particular financial difficulty. I cannot deal with those students whose parents do not make up the portion of grant to which they are entitled. It would be wrong that the social security system should provide the perverse incentive to parents not to pay their share of the grant.

Perhaps I can go back to the second adult rebate. It is only 25 per cent. if the second adult is on income support. There is no help if the second adult has an income of more than £130. That seems to be perfectly legitimate. If the second adult has an income greater than £130 a week, as with all our rules on non-dependency, even the noble Baroness cannot think it unreasonable that in that case he should pay something towards his student brother when living in his student brother's house.

I hope that I have dealt with all the points raised by the noble Baroness and the noble Lord, Lord Henderson. I hope that the noble Baroness will feel able to withdraw the amendment. I entirely accept that she and others may not agree with the Government's view on support for students and the lack of support in the social security benefit system. However, this is neither the time nor place to make changes to that. We are confident that it is right that it is the educational maintenance system to which they should look for support.

6.30 p.m.

Baroness Seear

Whatever the noble Lord has done, he must agree that he has not dealt with the problems of graduate students. He will remember that graduate students cannot obtain loans and their whole position of maintenance is much more acute. They are a necessary and important group which will be and are in real difficulty.

Lord Henley

I apologise to the noble Baroness. I hope that she will accept that postgraduate awards are higher than those for undergraduates and cover the whole of the academic year. Obviously they will continue to be up-rated in the future. Again, those students have access to their own specific postgraduate access fund. The assessed figure is £6 million, which is proportionately higher than that available for undergraduates.

Lord Wise

Perhaps I may ask my noble friend a question, purely for clarification. I must admit to being rather bewildered by all the figures being bandied around. In the case of four students living together in one household and for some reason or other one no longer remains a student, I understand that the household then becomes liable for tax. Can the Minister say, assuming the fourth person remains living at the house, what rate of tax the remaining three students will have to pay?

Lord Henley

This was a point brought out at an earlier stage some days ago. I believe it was my noble kinsman who asked whether that one person coming in-a non-student coming into a house—would bring the plague with him. In fact on that occasion he would bring the liability to that house. Thereafter there would be a 75 per cent. liability for that house on the basis that there is one person in it and three who are to some extent invisible.

Lord Henderson of Brompton

That case would impose some hardship on the students. If there were five living in a house and one left, and the remaining four could not find another student to replace the one who left, the four would have to pay the rent for the accommodation which could accommodate five. They would therefore be penalised.

Lord Henley

The noble Lord puts it in that way and says that they would have to pay the entire rent for the fifth if they could not find another student. They could always take on a non-student. Obviously, they would lose a smaller amount than paying the entire rent for the fifth person who had been lost.

Lord Henderson of Brompton

The noble Lord admits that they would lose.

Lord Henley

The Government have never denied the concept that if a house ceases to be an all-student house, then some liability will attach to that residence.

Lord Henderson of Brompton

It is a pity that students who have lots to do and ought to be concentrating on their work should have to concentrate on minutiae of this sort, but there it is.

I was not saying that the Government were attacking students; I never said that. I said that they were tending to antagonise—or I would add, after the intervention of the noble Lord, Lord Wise, bewilder them. I would not suggest that they were bamboozling or attacking them, but bewildering them and antagonising them by subjecting them to a long list which they do not understand. That is the position.

It is surely that kind of situation which the social charter is designed to eliminate. A matter of choice of course is essential. In fact the noble Lord says that he does not agree that the Bill diminishes choice. I have given one or two examples to indicate that it does. But actually making life clearer for the citizen seems to be entirely contrary to the effect—I would not say the purpose—of the Bill. It is making life more complicated and difficult. Simple adjustments would make it much easier and more in accordance with the Citizen's Charter. All I am asking is to make the legislation easier for the citizen to understand. Officials should be more easily understood. It is that for which I ask.

These small amendments which we bring to the notice of the Government were not considered or argued in another place. It is therefore fair that we raise them today. It is also fair to say that the right honourable gentleman the Prime Minister had not until recently reinforced and expanded the Citizen's Charter, as he did the other day. Now that he has brought it to our attention, it is legitimate for us to ask noble Lords on the Front Bench to match the legislation that is currently going through Parliament with the requirements of the Citizen's Charter. It is legitimate for the Committee to request the Ministers on the Front Bench opposite to justify their refusal of our amendments with reference to the Citizen's Charter.

Lord Henley

The noble Lord is right to constantly mention the Citizen's Charter. We must agree—the noble Lord would be the first —that anything to do with the social security system is necessarily complicated and must always be fairly complicated. There are few benefits that are totally and utterly simple to understand. The few that there are tend to be universal benefits. The minute any benefit has to be income related, rules of a fairly complicated nature must be brought in.

In the Bill we have kept the rules as simple as possible in regard to the various discounts and rebates in the form of council tax benefits. I take the noble Lord's point that we should always try to make them as simple as possible. The amendments on this occasion do not bring any improvement of the sort the noble Lord is seeking so as to make life easier to understand for students or for that matter anyone else.

Lord Jenkin of Roding

Perhaps I can make one brief point. Listening to the noble Lord, Lord Henderson, seeking a greater simplicity in the system and asking that it should be more readily understandable, my mind went back to the many years in which I found myself in another place debating successive Finance Bills, and also the years when I was part of what was then the Department of Health and Social Security, debating social security legislation. One was always faced with the same conflict: one cannot be both simple and fair. Life is too complicated. One of the reasons we are debating the Bill is because in making the community charge simple it was widely felt not to be fair. Therefore the council tax, specifically the clauses and schedules which deal with the rebates, the discounts and the invisible taxpayers, will inevitably be more complicated because it is trying to be more fair. The noble Lord, Lord Henderson, cannot have it both ways. There is a basic truth in the point and we must recognise that.

One should perhaps say that it is a new tax and in many respects it is based on new principles both in terms of the liability for the tax and the reliefs from it. The Citizen's Charter suggests that every effort should be made by all those in the public service—those who deal with the administration and the reliefs, who produce the literature which will be read and understood by the people —to make the position as clear and simple as possible.

We are talking about students and fairly intelligent citizens. They should be able to understand what the matter is about. To hope that one will achieve simplicity in administration and a kind of fairness between all the different interests, levels of income, different occupations and situations in which people find themselves, is, with great respect to the noble Lord, Lord Henderson, crying for the moon.

Lord McIntosh of Haringey

The noble Lord seems to suggest that there is a conflict between being simple and being fair. I agree with that. If he believes that the poll tax was simple then I cannot think where he has been for the past five years. That was a tax which succeeded in being both complex—incomprehensible sometimes—and unfair.

Lord Jenkin of Roding

That is not right. At least there was no question of trying to relate it to income above a certain level, which has been the burden of the complaint. Of course there were rebates. As it is now to be based partly on property and partly per head, it is an attempt to be fairer, but it is bound to make the issue more complicated. That is my only point. Therefore, the literature and the explanations will need to be that much clearer for people to be able to understand.

Baroness Gardner of Parkes

When we discussed this Bill at an earlier stage, my noble friend Lord Renfrew asked a question. I remember saying that I understood that there would be a certain amount of tax attaching to the property. I was told that I was wrong. I was told that if they were all students there would not be any council tax at all. It is right that something should have been attached to a property. It would have avoided all the complications of any one person bringing everything with him. If there had been a certain element attached to the property in the first instance, the matter would have been that much more simple. I am sure that the students who would benefit would not like that at all. I am sure that my view will be popular not with students, but with a great many other people.

How does one determine whether a person is a student? I ask that question because in my years spent sitting in magistrates' courts we constantly had cases of people who had enrolled themselves as students, but who had never attended a single course. They were usually working illegally, but they were officially and technically students. How will one ensure that such people are not receiving rebates and benefits when they are not bone fide students at all? That situation may be open to abuse. That is another reason why I would have liked to have seen some provision attached to the property.

The Earl of Onslow

Suddenly, joy has come! If my wife and I enrol as mature students shall we get away without paying any tax at all? That is a lovely idea.

Lord Henley

It is unlikely that my noble friend and his wife will be able to avoid tax. There will be a definition of "student" in the regulations. That definition has been discussed before, but I do not believe that now is the opportune moment to try to redefine "student" at this stage of the Bill.

Earl Russell

The noble Baroness, Lady Gardner of Parkes, raises a fair point. Normally one can ask the institution to certify that a person is a student. It will be able to say. The certification procedure for the student loan in some cases creates a document which I hope will be acceptable and which may save some of the administrative complexity.

Lord Henley

That is correct.

Baroness Hollis of Heigham

I sat down after the first four minutes. I did not realise that this matter would run in the useful way in which it has. The noble Lord, Lord Jenkin of Roding, posed a logical choice between being fair and being simple. I suggest to the Committee that we on this side have offered three other ways in which one can be both fair and simple.

The Government have rejected all of those suggestions. I am now able to offer a fourth suggestion which follows up the point made by the noble Baroness, Lady Gardner of Parkes. If a property was liable and a student was eligible for a 100 per cent. rebate, which is the position which my party advocates, then the problems would disappear and we would not be faced with the present dilemmas.

The reason why the matter is complicated is not that there is a complex balance between fair and being simple. The matter is complicated because as regards this tax the Benches Opposite have insisted on building a discount structure onto a rebate structure. That will then be cross-cut by a second person low income adult discount or benefit; also cross-cut are the non-dependent reductions. When all those factors are put into play there is a complexity which we on this side of the Committee argue is unnecessary. The important point is that these measures will deter people from getting help with their council tax to which they are entitled because the system will not be sufficiently transparent either to them or to the officers in city halls who are trying to administer it.

I apologise for pressing this matter. I am unsure of the position following the helpful and conciliatory response of the Minister. We still need clarification from him concerning the second adult rebate. I hope that he will give it to us. My understanding is that a student who is liable cannot claim the rebate because students as such cannot claim it. It is only the liable householder who can claim the rebate whether on his income or that of the second person. My understanding also is that students as such are ineligible to claim anything on anybody because they are outside the social security system. Can the Minister tell us how the illustration which he gave will work in practice?

I have some doubt about the matter, but I shall be delighted to learn that I am wrong. If I am right it means that at best the student's brother, whom I mentioned earlier, earning between £100 and £105 per week-in other words, about £2.50 per hour, which is extremely low paywould only bring with him a discount of 7.5 per cent. on a 75 per cent. bill. Therefore the liable student would still be facing a bill of 70 per cent. with the second person in the household having an income of only about £101 to £102. That is low pay by any standards. Perhaps the Minister can help on those points.

6.45 p.m.

Lord Henley

The noble Baroness knows quite well that there will be other people on pay levels which are well above income support, if they are single people, who will not be eligible for council tax benefit. As I have said, in the example she gave the 25 per cent. second adult rebate is available only if the second adult is on income support. I then said that there is no help at all if the second adult had an income of more than £130. I see nothing wrong with people whose income is above income support rates paying some council tax as we shall discuss in the next amendment when we start discussing the taper.

Baroness Hollis of Heigham

The whole point was that that person would not be paying the council tax. The person paying is the liable householder who will be the student.

Lord Henley

We have never denied that some students will be liable for council tax. If there is someone living with them who can make a contribution to the rent, council tax or whatever, it is perfectly fair to assume that there will be some contribution from that person.

Baroness Hollis of Heigham

The Minister may wish to reflect on his answer. As I understand it, in the example I gave the student cannot have a second discount rebate because the student is already getting a discount and therefore outside the social security system. I hope that the Minister is right—in other words, that my reading of the Bill is incorrect. That would produce a more generous system for students in that situation. The Minister may wish to review his statement. Obviously, we must pursue this matter and return to it later. The Minister has not presented the position as it is understood on the face of the Bill. However, with the leave of the Committee, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 214 not moved.]

Baroness Hamwee

moved Amendment No. 215: Page 112, line 35, after ("percentage") insert (,"which shall not be greater than 10 per cent.").

The noble Baroness said: This amendment is grouped with Amendment No. 215A. The noble Lord, Lord Henley, said that we are now moving on to the question of the taper. The amendment standing in my name gives a figure of 10 per cent. and the amendment in the name of the noble Baroness, Lady Hollis of Heigham, gives a figure of 15 per cent.

The issue is that of the reduction of the rate at which council tax benefit is withdrawn as income rises. I hope that as part of his answer the Minister will be able to help us with the costs involved. Harking back to a debate earlier, I have no wish to fling money at a problem without being informed by the Minister—I am sure that he will be aware of what we are talking about.

I raise the issue because the question of the taper is of considerable concern to many groups of people. It is right that it should be debated and it is easier to do so on a specific figure. In line with other means-tested benefits the council tax benefit will be withdrawn as the income of the claimant rises above an applicable amount. The taper for the community charge benefit is 15 per cent. so that for every extra pound earned above the applicable amount, after tax and national insurance, the claimant loses 15 pence in community charge benefit. There are other tapers applying to other benefits. For housing benefit the taper is 65 per cent. and for family credit it is 70 per cent. The cumulative impact of the tapers where a household is receiving all three can equate to a marginal tax rate, if I can put it that way, of 96 pence in the pound. I say that so none of us shall be in any doubt as to the reality of the figures and how they impact on the individuals concerned.

The Government have told us that along with the 100 per cent. rebates to be available under the council tax the taper will be raised to 20 per cent. I understand that the view from the Government is that that will have a broadly similar effect to the 15 per cent. taper on 80 per cent. rebates. That, of course, ignores the impact that the steeper taper will have on people whose income increases. The accumulative impact of the tapers for the various benefits is a major disincentive to low paid workers to take on more paid work. That is something that must be of concern. The impact of the taper also means that people who are on contributory benefits, such as pensions, can find that an increase in their benefit is practically wiped out by a reduction in other means-tested benefits.

This amendment is supported by the National Association of Citizens Advice Bureaux which gives an example of a client whose occupational pension was increased by £2 a month. As a result her community charge benefit and housing benefit were reduced by 40 pence a week; that is, £2 a month increase, 40 pence a week reduction. The amendment is also supported by the Royal Association for Disability and Rehabilitation, which is concerned that disabled people incur additional costs because of their disability and may have less disposable income than similar households on the same level of income but without a disabled person. A taper based on an excess income figure takes no account of that expenditure. So the question arises of increased hardship for disabled people.

This is a significant issue for people who are disabled. Perhaps I could beg their pardon, because I do not like to refer to them as "the disabled" or "disabled people"—they are people who are also disabled. They are likely to be on lower earnings than other households.

RADAR also gives an example of a pensioner with a poll tax of £8 a week; on a pension of £58.50, her excess income was £5.10p. These are 1991/92 figures. Her current community charge benefit is £5.64—80 per cent. of the charge, less 15 pence in the pound of the so-called excess income. The proposed council tax benefit with a 20 pence taper and 100 per cent. of the charge would be £6.40p. However, if the taper remained at 15 pence the council tax benefit would be £7.24p. If the taper went to 20 pence at the same time as the 100 per cent. rebate she would see a gain of 76 pence. If the taper remained at 15 per cent. she would gain £1.60p. In effect, the increase in taper is losing her the additional benefit of 84 pence a week. If the taper was at 10 per cent. the benefit would be £7.49p.

As I said, the Government have indicated that a starting point of 100 per cent. benefit with 20 per cent. taper will leave people more or less where they were when the figures were 80 per cent. with a 15 per cent. taper. That may be so, but the reduction of the taper to 10 per cent., as in my amendment, would be more consistent with anxieties that I am sure we all share about incentives to work. None of us wants to be associated with a system which is a disincentive to people to work, for social reasons as well as economic reasons. For that reason and on that basis, I beg to move.

Baroness Hollis of Heigham

I should like to speak to Amendment No. 215A which is grouped with Amendment No. 215 and therefore, in that sense, speak to both amendments. We on these Benches would support a taper of 15 per cent. now and 10 per cent. as soon as resources permit. So in spirit we are behind the noble Baroness, Lady Hamwee.

Given that the single person discount will cost some £780 million—which is throwing money at a problem which does not exist and certainly at many people who have no financial need for it—and given that the best figures we have from the DSS of improving the taper, or reducing its harshness by reducing it from 20 pence in the pound to 15 pence in the pound, it is estimated to cost some £60 million as opposed to the single person discount of £780 million, then even a modest targetting of discounts to those who need them would release more than enough resources within the DoE's own allocation for revenue support grant to cover a more generous rebate scheme. So it is clear that we are not actually talking about cost because that amount in the discount scheme could be recycled. The party opposite is throwing £780 million, through a discount scheme, at people many of whom are so affluent that they would never need access to any social security system. That, indeed, is wasting public money.

Why are we supporting this amendment? First, it would increase help to those who most need it. Secondly, in the process it would reduce the need to turn to the complexity of the interlocking, second adult, low income deductions, and the rest of the fiendishly complicated structure that Ministers opposite have devised. Thirdly, as the noble Baroness, Lady Hamwee, said it would soften the cliffs of the poverty trap.

On the first point, that it would help those who most need it, as the noble Baroness has already said, the Government are abolishing the minimum 20 per cent. contribution and while not clawing it back through deductions from social security they are clawing part of it back immediately in a more severe taper on benefit. Instead of losing 15 pence for every pound over the basic needs allowance where income rises, 20 pence in benefit will be lost.

We obviously welcome the fact that income support and associated benefits will not be clawed back. However, there has been considerable research from the Institute of Fiscal Studies and from the professional groups that have researched this matter to suggest that income support since 1985 has not risen properly to cover the full costs of the poll tax and its associated costs, including the water rates; and that the updating of 1985, projected forward to 1988, will result in people getting some 50 pence less than they otherwise would. We have also seen that the flat rate reduction in council tax will be paid for by a rise in VAT, which will cost those in the lowest groups another 52 pence or so. It will take a good year before that is recycled through the RPI into benefit rate. We see water rates rising by 25 per cent. or more a year and they are not within the Rossi Index. So for all of these reasons—

Lord Henley

If the noble Baroness will take that back she will find that water is now included in the revised Rossi that was used in our most recent uprating.

7 p.m.

Baroness Hollis of Heigham

It is now in Rossi. It has not been since 1988. The point I am trying to establish is that by keeping the basic 20 per cent. locked in and not clawing it back through social security is not a generous addition. It merely restores benefits to the level they would have been back in 1987 and 1988 but for the changes that the Government have since made. That is the point we are trying to establish. We welcome the Minister's de facto recognition of this, and all credit to his department for recognising that the figures need to be floated up to this level to restore them to their proper values.

In that case, why increase the taper from 15p in the pound to 20p, which immediately makes the rebate scheme less generous and makes it run out, as the noble Baroness said, at a lower income level? The implication of that is that you are funding the rebate scheme within the rebate scheme. In other words, the barely poor are losing benefit to help the very poor, while the better off among us contribute very little indeed.

The first point is that of justice within those seeking benefit. The second point is that a more generous rebate scheme would float people off—if I can use a phrase from the days of the noble Baroness, Lady Castle—some of the interlocking complexities of the second adult low income discount. That would save huge administrative problems for the local authorities, and the need for each individual householder to possess their own personal calculator or computer in order to determine under which stream or thread of benefit they would be better off.

Thirdly, is the cliffs of the poverty trap. If you take a low-paid family, a tenant with children getting family credit, add the withdrawal costs of taper of family credit, the withdrawal costs of taper of council tax, the withdrawal costs of taper of housing benefit, let alone national insurance contributions and income tax, and that low-paid family is paying a marginal tax rate of 97p in the pound. I find it shameful that the better off among us need ample pay rises and a 40 per cent. maximum tax regime in order to work harder, and the poorest among us need benefits which have fallen behind earnings in real terms and a tax regime of 97p in the pound in order to encourage them into work.

In a recent Parliamentary Answer in November 1991—and I should like the Minister's comment on this—some 50,000 families with children faced a marginal tax rate under these interlocking benefits of over 90p in the pound. As the noble Baroness said, this is a major disincentive to work, and it sucks such families down into the swamp of poverty and dependency on means-tested benefits. It does not need to be like this. We want pathways out of poverty, and this amendment is a modest start.

Earl Russell

I should like to ask my noble kinsman to clarify a little the effect of the current changes in the definition of part-time work from 24 to 16 hours on the problem of council tax taper. This is something for which I know there is transitional protection. One of the key points about this is that one of the effects of the change will be to take a number of people out of income support and on to family credit and housing benefit. The income may superficially increase. That could create a steeper council tax taper. I should like to know whether account will be taken in that of the loss of help with mortgages for those who come off income support, which is one of the real points of hardship in that change. If that is not taken into account in the calculation of income for the council tax taper, then it is going to bite much more severely than it is meant to.

In general the Conservative Party has always been ready to talk about incentives. It is aware of them at the top of the scale, and it is aware of them—sometimes perhaps perversely—at the bottom of the scale. But if the point is valid it is valid in between. I should have thought that it was particularly valid for people stuck on low wages, wondering whether there is ever going to be any chance of bettering themselves, and I would not have thought it would be a good idea to give them the message in that way.

Lord Henley

The noble Baroness, Lady Hollis, asked for some softening of the cliffs of the so-called poverty trap, and talked about the high deduction rates that we have always admitted can happen at the top up to, as the noble Baroness put it, some 97 per cent. That is a bit rich from the noble Baroness, whose next amendment, Amendment No. 216, actually creates a poverty trap where some people would be worse off for each pound that they received. We shall get to that amendment at some time after dinner and the noble Baroness can discuss it then. But I can assure her that there will be examples where people will be worse off for each pound that they receive. In this, as with all other benefits, there might be high deduction rates—I do not call them high tax deduction rates—but for every pound they receive, people will at least be better off.

The other point I should like to deal with before I come to the amendment itself was raised by the noble Baroness, Lady Hamwee. I thought she would have known this as she was moving an amendment on these matters. She asked just how much such an amendment as hers would cost, suggesting a taper of 10 per cent., and that of the noble Baroness, Lady Hollis, of some 15 per cent. In fact, the noble Baroness, Lady Hollis, has tabled a Question for Written Answer on this subject. I must apologise for the fact that it has not yet been answered, but I presume that it would not be in breach of any parliamentary privilege if I announced the figures that I shall be giving in the Written Answer. Current expenditure would be some £170 million higher if we took Lady Hamwee's amendment, and some £60 million higher if we took the 15 per cent. taper that the noble Baroness, Lady Hollis, suggests. Claimants for rebates will be entitled to rebates of up to 100 per cent. maximum benefit, which will also help those taxpayers with incomes above income support levels.

At this point I should deal briefly with the question of the disabled. I think the noble Baroness, Lady Hamwee, referred to this, and said that they would be far worse off. One must always remember the generous system of premiums in the income support system. That means that those who are disabled and on low incomes and in receipt of those premiums will be entitled to a 100 per cent. council tax benefit at a much higher income than, say, a single person or the couple, just as the couple with children will be entitled to the 100 per cent. council tax benefit at a much higher income according to the number and age of their children than the couple without children.

All claimants, including those who will not have to pay any council tax, will gain from the Government's decision not to claw-back from 1993 any of the amounts included to help pay the 20 per cent. contribution towards the community charge. This decision will mean that, from April 1993, income-related benefits will, at 1992–93 prices, be some £680 million more than would have been required merely to compensate for inflation since 1989. This is a significant sum by any standards. It is clear evidence of the Government's continuing commitment to maintain, and indeed improve, the position of those on low incomes and on income support.

The benefit taper needs to be considered in this context, and taking all these decisions together the higher taper means that, under the council tax, benefit entitlement will extend to people with broadly the same levels of income as were helped by the community charge benefit.

As I have said, if we took the amendment of the noble Baroness, Lady Hamwee, it would have entailed higher expenditure of some £170 million, and if it was the amendment of the noble Baroness, Lady Hollis, some extra £60 million.

The Government considered the structure of the new rebate system very carefully. Like other income-related benefits, council tax benefit will have to be reduced as income rises above income support levels. It is common ground that when income rises above income support levels benefit has to be reduced gradually. To stop benefit precipitately would have an adverse effect on work incentives. The benefit taper therefore ensures that an increase in income above income support levels does not lead to an equivalent cut in council tax benefit. On the Government's proposals, if the claimant's weekly income is £10 in excess of his or her applicable amount, that will lead to a reduction in the level of council tax benefit of only £2 a week. Under the amendments before the Committee, the excess income would be reduced by £1.50 or £1 a week.

In choosing the benefit taper at 20 per cent., I should point out that that is the level that existed under the rebate scheme. The Government have struck a balance between providing greater help for people with income at or above income support levels, ensuring that they will receive even more substantial help under the new benefits system, while those with higher incomes receive less.

My noble kinsman asked a question about the coming change in income support regulations and change in part-time work from 24 hours to 16. My understanding is that this would have no effect on council tax benefit. My noble friend then asked a question about the change in entitlement to help with mortgage payments as one moved from income support to family credit. That goes slightly wide of the amendment with which we are dealing at the moment. Certainly, it is something that we shall deal with when those regulations come before this Chamber. If I am able to do so, I shall write to my noble kinsman before then on that point.

We have always accepted that the taper can produce high deduction rates on occasions. I admit that that must always be the case. But it must always be the case that people will still be better off. There is no benefit trap at all. The noble Baroness's amendment, Amendment No. 216, which, as I said, we shall come to later, would impose such a poverty trap and leave people worse off.

With those considerations in mind and bearing in mind the cost of the two amendments, I hope that the amendment will be withdrawn.

Baroness Hamwee

Before the noble Lord sits down, perhaps he will confirm that I heard him correctly when he said that there would be no benefit trap at all.

Lord Henley

I can envisage deduction rates, as the noble Baroness, Lady Hollis, put it, of some 97 per cent. I cannot at the moment envisage what is suggested. It might be possible, and I should certainly have to look at it, but there is not the gross poverty trap that we shall see when we reach Amendment No. 216. It is possible. Certainly, I shall be prepared to write to the noble Baroness if I am wrong. It is possible that there might be some extreme cases when someone could be worse off. I cannot envisage any, but if it were the case with a 20 per cent. taper, I suspect that the same could be true of lower tapers. I personally do not believe that it could happen, but if I am wrong I shall write to the noble Baroness.

Baroness Hamwee

I am grateful to the Minister for that reply. I knew that the question put by the noble Baroness, Lady Hollis, had not received a formal answer and I hoped in a tactful way to extract one. It is helpful to the House to have had it.

I note what the Minister said. I must make one point, however. He said that the deduction rates were not high tax deduction rates. In a technical sense, they may not be, but I believe that the people affected by them regard them in precisely that way. I shall study what the Minister said. I thank him for his answer and look forward to his letter, if one is to come and he has considered further the last point. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 215A not moved.]

Baroness Blatch

My Lords, I beg to move that the House do now resume.

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

House resumed.