HL Deb 30 January 1992 vol 534 cc1497-546

House again in Committee on Schedule 9.

Baroness Hollis of Heigham

moved Amendment No. 216: Page 112, line 42, leave out paragraph (b) and insert: ("(b) there is an appropriate amount of council tax benefit in the case of that person if he and all the other residents in the dwelling each have savings of less than £16,000 and all the other residents are in receipt of one or more of the following benefits— income support; retirement pension; disability working allowance; severe disablement allowance; invalid care allowance; unemployment benefit; invalidity benefit; family credit, and (c) the appropriate amount of council tax benefit for the purpose of paragraph (b) shall be 25 per cent,"). The noble Baroness said: Amendment No. 216 is a probing amendment. I say that because this is not where we would have wished to have started from. The amendment seeks to discuss the issue of second low income adult rebates. We suggest in the amendment a possible way forward which may contain flaws, as all other approaches—including the stepped benefit approach proposed by the Minister —appear to contain flaws. However, we hope that we may at least extract some further information from the Minister about the Government's thinking on the issue.

The amendment discusses the issue of second low income adult rebate. Under the Bill only the liable person who nominally pays the bill is eligible for a rebate. However, the bill will be a two-person bill where there is a second adult in the household. The question that we have explored in previous amendments is how to take into account in the final bill the fact that the liable person has a low income and there is a second adult with a very low income when only one of those two people, the liable person, can claim a rebate. Obviously, one cannot claim a rebate both for oneself and on behalf of someone else. That is why there are difficulties in the case of students. If a student can claim a discount, it is improbable, given the structure of the Bill, that he could also claim a rebate on the second person.

The Government have honourably recognised the problem in what have been termed their stepped discounts for the second adult. However, they have come up with an answer of amazing, and, in my view, unnecessary, complexity. I understand that the DSS has not been able to persuade any of the local authority associations that the scheme is workable and administratively feasible. If it is not feasible those who most need help will not have access to it.

Under the Government's scheme the second adult would generate a rebate, benefit or discount, call it what you will—let us call it a benefit—on the first adult's bill if the income of the second person was below £130 a week. Therefore, they would receive a 25 per cent. discount if the second person was on income support, a 15 per cent. discount if that person was on income support of up to £100, and a 7½ per cent. discount if the amount was between £100 and £130. At £131 there would be no such benefit.

The liable person cannot claim both a rebate for himself and a benefit discount for the second adult. He has to decide which is the more financially advantageous. That is a complex calculation. Therefore, I should like to ask the Minister some questions. I fully understand that the questions may need to be followed up by correspondence.

Given the non-dependent adult deductions, which are a further complexity, will the liable person have to offset in his own rebate a non-dependent adult deduction on the second person, whatever the income? If it is financially advantageous to claim benefit on the second person, does the liable person contribute a non-dependent adult deduction on his own which might wipe out that second person's benefit? Under £100 a week £1 comes off benefit; over £100 a week the amount is £2 a week. If that non-dependent deduction applies, the calculations will often become extremely complex.

I sought to make some calculations earlier today; I believe that they are right. Let us take a £400 headline bill. The first liable adult has a £75 income; the second adult also has £75. It may be two women friends in part-time jobs. On the headline bill of £400, the first adult receives a rebate of approximately £1; if it were on the second adult there would be a benefit of—

Lord Henley

Perhaps I may briefly interrupt. I am trying to be helpful. I noted a joint income between the two—I appreciate that it may not be relevant—of £150 a week. The noble Baroness refers to two friends on separate incomes sharing a house.

Baroness Hollis of Heigham

With incomes of £70 each.

Lord Henley

Therefore it is £140 a week.

Baroness Hollis of Heigham

I am sorry. The amount is £75 each. It is £150 a week. On a headline bill of £400 the first adult will have a rebate of approximately £1 on her income (if it were two women); if it relates to the second adult there would be a benefit of £1.20. However, if the non-dependent adult deduction came into play it would wipe it out on the first person and leave a small benefit on the second which would be below the minimum figure.

That is possibly the simplest example that I could find of a headline tax relating to two people with identical incomes. If one complicates the situation with different incomes and different non-dependent deductions the permutations become impossible to calculate without a personal computer.

None of the local authority associations believes that that system will work. This probing amendment —it may have flaws—seeks to offer a simpler method so that a household with two adults who are not spouses can calculate how best to get help for their bills. The best way to avoid calculations on separate incomes is to use the passport (if I may so call it) of benefit which avoids means testing, and simplifies the position. Some of the benefits are means tested. They therefore already presuppose low income. The three which are not means tested£retirement pension, invalidity care and invalidity benefit—in conjunction with the £16,000 ceiling on savings are a rough proxy for low income.

Given those facts, and those discounts, is there a problem? First, the position is clearly administratively simple and straightforward. A second adult who enjoys one of those benefits would automatically trigger a 25 per cent. discount on the bill. Income support, family credit and so on are related to poverty; therefore there need not be a problem. Retirement pension, invalidity care, and invalidity benefit conjoined with the £16,000 ceiling are a rough proxy. I accept that it is only a rough proxy. As a way to target help simply to those who are financially very poor, the amendment seems appropriate.

However£and this is a matter that the noble Lord indicated to us earlier£the amendment might produce the problem of more than 100 per cent. withdrawal and therefore marginal tax rates of over 100 per cent. Over supper I have considered some of the benefits and I have been wondering whether the Minister's comment was as applicable as he suggested. I am not persuaded that it is, but perhaps he will assist. So far as I can see, retirement pension, invalidity benefit and severe disablement allowances are long-term benefits. Therefore, the problem of income rising and a person therefore coming off benefit with a severe 25 per cent. cliff should not arise accept in very exceptional circumstances. That assumes that it remains conjoined with the £16,000 ceiling.

The next major benefit is unemployment benefit. If someone comes off that benefit, he goes into work. Normally one would expect there to be a sizeable improvement in his income so that although there was a 25 per cent. cliff it would be more than mopped up by an appropriate and proper increase in take-home pay. The problems that may exist appear to relate to income support and family credit. Family credit is adjusted only every six months, and six months after a change in circumstances. In practice a family could have experienced a substantial rise in income and have continued to enjoy the benefit of that mode of targeting income for six months longer. I accept that at that point they would come off the 25 per cent. discount on their second income. Nonetheless it would be six months later.

The other situation in which that might happen relates to family income support. However, given the earnings rule that a lone parent, for example, has only a £15 disregard, and the hours rule that after 16 hours work one is regarded as being in full-time work and not eligible for income support, there would have to be a rise of at least £30 or more in income for it to be worth anyone to come off income support into work. At that point the loss of the 25 per cent. discount would again be largely mopped up.

The only allowance where it is likely that the Minister's earlier comment would probably hold valid is in the disability working allowance where there might indeed be problems. That issue would have to be considered.

We have sought to put forward various amendments. The problem remains that there is a difficulty built into the bill regarding the second adult's low income for a two person household other than that of partners. We have tried splitting the bill and having individual rebates. I was assisted by what the Minister said earlier. Perhaps we can follow it through. However it does not look as though that is the way forward. Consideration was given to a proposal for joint and several liability which would apply in some cases. That may be a matter that we can pursue. If the Minister's earlier response is held to be valid and appropriate when it has been considered carefully, that will be a move forward.

The Minister has also produced a stepped benefit which clearly will not do. The local authority associations have unanimously said that they cannot make such a system work. We are therefore trying to find a way forward which meets the problem that we all identify, which is basically fair, which is possible to administer, and which is transparent for people so that they will claim it. With more complicated benefits such as family credit, there is a take-up rate of barely 50 per cent.

This is a probing amendment. It is another way of tackling the problem of the second low income adult in a two-person household. I welcome the Minster's response. I beg to move.

Lord Renfrew of Kaimsthorn

Perhaps I may make an observation before the Minister replies. I am not well versed in the social security system. The noble Baroness has indicated a number of significant difficulties.

I make the comment with some diffidence because I am sure that I do not perceive all the problems that apply. I am not entirely persuaded that the noble Baroness follows the logic of the Bill in the way that she has presented the amendment. As others said earlier, when one applies the logic of any Bill to specific cases with precision, complexities inevitably result. The noble Lord, Lord Jenkin of Roding, made that point well. I am sure that that is right. We must not expect matters to be over-simple.

However, at the same time it seems a coherent approach within the framework of the Bill that specific categories of persons are subject to discount, or generate discount, and that the notion of benefit relates to the income of individuals. I found that coherent. The noble Baroness indicates difficulties. I do not doubt that there will be complexities which may not be easy to resolve. I have found myself more rather than less confused by the noble Baroness's amendment. She seeks to apply benefit with regard to various categories. She has implicitly admitted in her remarks that some of those categories imply limited income.

Clearly if one is in a category which attracts income support, it means that one's income has been tested and is very limited. However, there are other categories about which that simply is not true. For instance, the fact that someone receives a retirement pension does not imply that the person has low income. It is possible for an individual who has savings of less than £16,000 to be in receipt of a retirement pension and a private pension. For example, a former director of a large company may have a substantial income. I realise that it is not helpful to refer to people who are well remunerated when we are focusing on the problem of people who are not well remunerated. However, the approach of solving the problem by means of categories cannot be right.

I believe that the right approach, which I am sure the noble Baroness seeks, is to ensure that people on low incomes are not liable to pay more council tax than is appropriate. I am sure that one sympathises with her approach but I am doubtful about the logic. Perhaps I may make a criticism and say that the difficulty is reflected in the manner in which the noble Baroness is able to interchange the words "discount" and "benefit" in her discourse. Therefore, within the logic of the Bill I found it difficult to understand what the noble Baroness was saying.

8.30 p.m.

Lord Henley

I am grateful that the noble Baroness made it clear that this is only a probing amendment. As I suggested before the Committee broke for dinner, it creates a poverty trap. I can assure the Committee that the Government have taken special care to ensure that our proposed system of second adult rebates is as fair and as simple as possible. We believe that the system we have devised strikes the correct balance between targeting help for those households where second adults are on the lowest incomes and, at the same time, responding to local authority associations' concerns to minimise the administrative complexity of the new scheme.

The noble Baroness said that all the local authority associations say that the scheme is unworkable. That is not the advice that I have been given. In discussions with officials they have certainly not said that the government proposals for second adult rebates are unworkable. In response to their concerns to minimise the complexity, we have simplified our proposals for the second adult rebates. They will now work on a similar basis to the non-dependant deduction. There will certainly be no need to canvass second adults for their personal details. The liable person will be able to supply any information that is required.

Under the proposed system of second adult rebates a person liable to pay the council tax will be eligible for a rebate of up to 25 per cent. of his bill in respect of second adults with low income who share his dwelling. A maximum 25 per cent. rebate will be awarded in respect of a second adult or second adults on income support. As the noble Baroness correctly said, lower levels of rebate will apply in respect of second adults with higher gross income levels. As my right honourable friend the Secretary of State for Social Security made clear on 28th November, second adults with a combined gross income of up to £100 a week but above income support levels will attract a 15 per cent. rebate, and those with a combined income of from £100 to £130 a week, a 7½ per cent. rebate. That is the £1 and £2 per week mentioned by the noble Baroness. Second adults with a combined income of more than £130 a week will not attract any second adult rebate.

The generous gross income thresholds we have set for second adult rebates will mean that a number of second adults with incomes above income support levels will attract a rebate. That will help people on low wages as well as people on benefit.

The noble Baroness proceeded to give an example which she said was the simplest she could offer in the time available. I was unable to note all that she said and therefore it may be better if I respond in detail by means of correspondence. However, I am prepared to say, and I accept, that in a small number of cases—we estimate no more than 10,000—a liable person may be entitled to both the second adult rebate and the council tax benefit in his own right. In those circumstances the local authority will be obliged to award whichever of the two entitlements is the greater. However, no one can receive both the second adult rebate and the main benefit at the same time. Information on the claim form should enable the local authority to make the calculation.

The amendment, which would introduce a savings limit of £16,000 for each resident in the household, would not be well targeted. It would work to the benefit of a number of people who cannot necessarily be said to be on low incomes. Entitlement to retirement pension is not related to incomes but depends solely on the satisfaction of appropriate contribution conditions. Receipt of retirement pension is not therefore in itself evidence of being on a low income. Similar arguments apply to other benefits, notably invalidity benefit. At the same time, oddly, the proposed list of benefits makes no mention of widow's benefits, including those paid specifically to widowed mothers with children. I make that point merely in passing because if the noble Baroness was going to include retirement pension she might have included them. But the same argument would apply.

The amendment is defective since it would create a poverty trap. As soon as a second adult moved off one of the prescribed lists of benefits the whole household would lose entitlement to any second adult rebate. For example, loss of invalid care allowance when caring ceased could easily trigger the loss of the second adult rebate. Thus the smallest gain in extra income could cost £100 a year in extra council tax.

I should like to examine the comments the noble Baroness made about the other benefits. I suspect that she was wrong about the disability working allowance because much of the working of that is very similar to family credit. To say that people automatically when leaving unemployment benefit are going to work is again not true. Obviously, a large number of long-term unemployed in particular are going off unemployment benefit and on to income support where the problems that the noble Baroness cited might apply.

The information required about second adults' gross income for our proposals will be obtained from the liable householder, as is currently the case for non-dependent deductions in housing benefit. In addition, the income thresholds tie in with those that will apply for non-dependent deductions in housing benefit from next April and for council tax benefit from April 1993. Our proposed system of second adult rebates will, therefore, overcome most of the local authority associations' concerns about the administrative complexity of the scheme.

By contrast the amendment moved by the noble Baroness would require local authorities to administer a household resources test. Information would have to be furnished about the savings of each individual member living in the household. That could be burdensome to local authorities and to claimants; indeed, more cumbersome than the Government's proposals.

I certainly give the assurance that I shall look carefully at the specific examples the noble Baroness gave and I shall write to her at the appropriate time. I shall have a look through what she said about some of the different benefits she listed as trigger benefits and, if necessary, and if there is anything that I can add, I shall write to her on those matters. I hope that what I have said reassures the noble Baroness that we have achieved the right balance and that she will feel able to withdraw her amendment.

Baroness Hollis of Heigham

Perhaps I may ask the Minister a question before I respond. He gave a full answer but was not able to address the question of non-dependent adult deductions. Will he confirm my understanding that of either benefit—that is, the benefit on the first person or the second person low income discount or benefit—the non-dependent adult discount or deduction also comes into play on each of those?

Lord Henley

I am loath to respond at this moment because I am not quite sure that I have grasped entirely what the noble Baroness means. I shall be delighted to add that to the matters about which I was going to write to her; namely, the specific examples which she gave.

Baroness Hollis of Heigham

This is a probing amendment so I shall not seek a Division on this matter. Clearly we shall want to read what the Minister said about individual benefits. We want to check the points he made about invalid care allowance. I am not so confident about some of his other statements; for example, if one comes off unemployment benefit and goes on to income support, one would not lose 25 per cent. That is one example which he gave. He gave an example of a person who was unemployed becoming a pensioner. The stability of the situation would remain and therefore the cliff does not apply. The cliff only applies if one's circumstances change; for example, if one comes off any of those benefits to go to work.

Lord Henley

What I want to make clear about unemployment benefit is that the same applies to that as to income support. One can come off unemployment benefit to go on to income support but one does not have to come off unemployment benefit to go into work. The specific example that I am quite sure about, which I gave, is that of invalid care allowance. I should like the noble Baroness to look at that example which I gave.

Baroness Hollis of Heigham

The point about unemployment benefit becoming income support is that one continues to carry one's 25 per cent. discount and therefore the situation as envisaged by the noble Lord does not arise in that case.

I accept that we may be dealing with an inadequate way forward. When I moved the amendment, I tried to emphasise that we would not start from here. We have now tried to pursue three, four or five different routes. When considering the example of a bill based on two adults of which the first is on low income and the second is on very low income, the Government's response has been to go for what I call stepped benefit or stepped discount for the second person.

My fears about that are reconfirmed because I understand that the Housing Benefit Standing Committee and the Council Tax Benefit sub-group have both said that they consider that the revised proposals of the DSS are marginally better than the original ones but they are still not persuaded that it would be possible to track fluctuations in third-party incomes, revise benefit as and when necessary, and so on.

The views of the local authority associations have not changed. They believe that there is a problem and the Government's proposal is not administratively feasible. We have tried three or four other possibilities. We have suggested splitting the bill or splitting the rebate. We have suggested joint and several liability so that it is possible to switch, and so on. All the suggestions are to some degree flawed. At the end of the day, the only adequate response—and this is the view which my party takes—would be to have a more generous rebate system altogether. That would float people off the need to claim second adult low income discount or rebate.

I shall read what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.45 p.m.

Baroness Hollis of Heigham

moved Amendment No. 217: Page 113, line 12, at end insert ("calculated so that the applicable amount in the case of a person aged between 18 years and 24 years inclusive shall not be a lower amount than would apply to a person aged between 25 years and 59 years inclusive, solely on account of the age of the former person.").

The noble Baroness said: I shall speak also to Amendment No. 219. This amendment seeks to rectify an anomaly, and indeed an injustice, which we believe would occur if the provisions attached to the poll tax, which is a head tax, were carried through to the council tax, which is based largely on property. Before 1988, the level of benefit that people attracted depended solely on their income interlocked with the size of their rate liability. Age was not a factor taken into account. Housing benefit covered both rent and rate rebates.

April 1988 saw the implementation of the Social Security Act which introduced age-related benefits and a minimum 20 per cent. contribution towards rates as part of what I would call the softening-up process or, at any rate, moves towards the poll tax.

Young people who were householders aged under 25 in 1988 faced a double blow. Not only had they to pay the first 20 per cent. of their rates, as opposed to a rebate which covered the whole bill; but, secondly, their eligibility for rebate was reduced by virtue of their age. Therefore, a younger householder was hit twice over.

A year later came the poll tax. Under the poll tax almost all adults over the age of 18 faced an individual bill. I accept that at that time the concept of the householder had less relevance. When it came to rebates, single claimants, without children, aged between 18 and 24 were given a less generous rebate on the assumption, which was broadly true, that they were not householders. Therefore, they needed help only with individual bills and no premium on the grounds that they were not householders.

That was never entirely accurate. The CAB estimate that one-fifth of those aged under 25 were householders and they lost out. At least that argument was justified or appeared to be justified on the grounds that most young people claiming poll tax rebates would be living at home.

As the Social Services Committee has recently shown, that is increasingly not true. Only 43 per cent. of women and 63 per cent. of men still live with their parents by the time they are 21. By the age of 24 it seems likely, although I do not have the figures, that the majority of young people are no longer living with their parents.

Only some of those people will be householders. Some will be sharing with their friends. However, I am trying to draw a distinction between younger single people who are not householders and older single people who are. That was completely irrelevant as regards the poll tax. Now one bill will go to the liable householder, the same bill whatever his age. Whether he is 23 or 26 he will face identical costs and I suggest that income for income he should receive identical help.

Indeed, as the income of the 23 year-old is likely to be rather less than that of the 26 or 27 year-old, he is more rather than less in need of help. Therefore, a distinction which had some validity under the poll tax, because that was a head tax, is irrelevant and unfair as regards the council tax. In this instance, we should revert back to the situation which pertained before 1988 when the householder as such enjoyed the rebate appropriate to his income irrespective of age. I beg to move.

Lord Monson

Unlike an earlier Opposition amendment, I have no hesitation in supporting this one which, as the noble Baroness has pointed out, seeks to remedy an anomaly and an injustice.

I never understood the rationale or justification for heaping greater burdens upon those aged under 25 because, as the noble Baroness further pointed out, fewer and fewer people of that age are living with their parents. Even when they do, more often than not, when they are in work they are contributing towards household expenses. This amendment is wholly justified and I hope that it may be pressed to a Division if the Government resist it.

Lord Henderson of Brompton

I follow the noble Lord, Lord Monson, with some delight because, on this occasion, we are on the same side of the fence. I support the noble Baroness, and I am happy to do so. Furthermore, I am happy to have the support of the noble Lord, Lord Monson.

The truth is that in many ways I feel outgunned. That is partly because of the speed at which nearly everyone speaks. The noble Baroness, Lady Blatch, perhaps holds the record. But she is closely followed by the noble Baroness, Lady Hollis. Indeed, the noble Lord, Lord Henley, is not far behind. I am glad to follow a Member of the Committee who speaks more or less at the pace at which I speak. My view on this is supported by listening to the speeches of Winston Churchill, the Prime Minister during the war. His speech was exceedingly slow. It benefited from that slowness. I shall not try to compete with him. However, it would make it easier for us to understand these complexities if we did not go at such a gallop. That is a purely personal opinion.

I should like to reply to the noble Lord, Lord Jenkin of Roding, who properly drew my attention to the equation between fairness and complexity. I agree with him that with extremely complex legislation and when trying to be fair, one gets these absurd anomalies. This is yet another case of an absurd anomaly.

I do not apologise for taking time because this is yet another amendment which was not considered in the House of Commons. I do not know whether the noble Lord, Lord Jenkin, was in the House of Commons with Sir Gerald Nabarro. If so, he will remember the fun that he had with purchase tax. He may remember the extraordinary occasion when Sir Gerald asked about two different products being rated differently. He said, "What is the difference between a door-knocking nutcracker and a nut-cracking doorknocker?" The noble Lord nods his head and I am glad that he remembers the occasion. That is the state of play we have reached. We do not want to continue with such complexity so that other Sir Gerald Nabarros can make fun of the legislation. That is what will happen. The Bill is so complex that, if people are not annoyed by it, they will make fun of it. That is not how we wish our legislation to be viewed.

I support the amendment because the citizens advice bureaux support it, as always for good reason. They are not irresponsible organisations. They support amendments which illustrate the conditions they encounter in the field. They find that this kind of nonsense does not enhance people's ability to pay. It is that kind of common-sense approach which they come up with from the field, which I hope Ministers will take on board and try to improve on.

Ability to pay is important. It is no good—if I may revert to previous amendments—pursuing people who cannot pay. It is absurd to go into the tremendous complexities of judicial process, bailiffs and distraints and ultimately prison. All those are hopelessly costly and the whole exercise is counter-productive in social terms.

I regard the amendment as being important because unless it is accepted the Bill will not be understood by the 18 to 25 year-old people. I say no more than that. Everything has been said at a most impressive rate of words per minute by the noble Baroness, Lady Hollis. In my slow way I am asking the Government to be more sympathetic on this occasion to an amendment which seems to be more commonsensical than the kind of provision they propose. If they will kindly look at the legislation in that light, I shall be immensely relieved and pleased.

Baroness Seear

We on these Benches support the amendment. On the question of speed of speaking, it is a good idea to speak extremely fast when one is not clear of one's case. It makes it much more difficult for one's opponent to reply and that is sometimes worth remembering.

In regard to the amendment, the issue lies on the question of whether distinction should be made on the basis of age. It is up to the Government to establish that there is some logical reason why distinction should be made on the basis of age. If it is need with which we are concerned, what reason is there to suppose that all people in a specific age group have lesser needs than those in another age group? If distinctions need to be made it is difficult to see why they should be made on the basis of age, and we should like to hear from the Government what defence there is for that. If not, the amendment should be adopted. If distinctions must be made, they should be made on some other basis.

Lord Henley

Two issues arise on this point. As the noble Baroness says, there is the issue of age. I am afraid that on this point there is no agreement between us. I simply do not accept that it is wrong that there should be distinctions in benefit level on the basis of age. That has been central to our approach since the reforms of 1988, which were designed to direct available resources towards those groups most in need while making the benefit system easier to administer and understand. A straightforward distinction in benefit levels on the basis of age is central to that approach.

The amendment obviously goes to the heart of those changes introduced in April 1988. The majority of single people under 25 are non-householders with no independent liability for paying housing costs. Their average earning power is also lower than that of older people. That is why we apply a lower benefit rate for income support, housing benefit and community charge benefit purposes. We intend that the same rules should apply to council tax benefit. Many people under 25 will not be liable for the council tax because they live in the parental home. Others are couples and lone parents. For those groups there is no age divide above 18, in recognition of their independent status. Neither of those groups will therefore be affected by the lower rate of benefit for young single people.

The first point was whether or not it is right to have a distinction in benefit levels on the basis of age. There is obviously no agreement between us on that and there will not be. The matter has been argued on many occasions. The second point is whether or not those young people under 25 who are not single or lone parents and therefore not entitled to the over-25 rate, will be worse off. The effect of the rules is that all young people claiming community charge benefit and, from 1993, council tax benefit, will be left with at least their income support applicable amount to live on after paying their contribution towards local services. It is that applicable amount which is the appropriate amount at which one should look—the income support applicable amount.

As we have already said, we consider it right that that applicable amount should be lower for single people under 25 than for those aged 25 and over. Those young people who are lone parents or disabled benefit from the special premiums and higher earnings disregards which apply to those groups irrespective of age. The same is true for those who are couples under 25 years of age. Lastly, it is only fair to mention the cost of the amendment. As we discussed earlier this afternoon, this Chamber should always be aware of the cost of any amendment tabled. The cost of the proposal which, in all equity, would need to be extended to all income related benefits—that is, income support and housing benefit—would be £260 million at the 1991–92 benefit rates.

Baroness Hollis of Heigham

Will the Minister be kind enough to give us the figures just for this benefit?

Lord Henley

I cannot for the moment give figures simply for this benefit. I am sure that the noble Baroness will accept that in all equity, if we accepted the proposal for this benefit we could not leave off housing benefit, particularly as the noble Baroness mentioned the problems, as she saw them, with housing benefit and income support. In all equity one would have to extend it to all three. As I said, the cost would be around £260 million at 1991–92 benefit rates. I cannot therefore support the amendment and I hope that the noble Baroness will feel able to withdraw it.

Earl Russell

My noble kinsman has just said something rather interesting. He said that benefit levels for young people should be lower because their average earnings are lower. That principle goes rather too far. If one applies it generally its implications may be quite startling.

The average earnings of women are lower than the average earnings of men. If that is a reason for discrimination in benefit levels, there ought to be lower benefit levels for women. The earnings of black people are on average lower than the earnings of white people. If that is a reason for lower levels of benefit, the Government ought to be paying lower levels of benefit to black people, which may give rise to a certain amount of comment. Again, the average earnings of people with disabilities are lower than the general average. Is that being put forward as a reason for paying them lower levels of benefit. If not, why not? If the cases are different, how are they different?

My noble kinsman also argued that most younger people are not householders. Here again we have a determined Government belief that all young people live at home. That is a case against which there is a rapidly growing body of evidence which might, in the end, get through. My noble kinsman also argued that if we accept the case for council tax benefit we should also accept it for other benefits. I accept quite freely that most Members of the Committee who have spoken to this amendment would like to see that principle extended to other benefits. However, it is perfectly logical and possible to apply it to this benefit and not to others because this benefit is designed to meet one particular need. That is another reason why I find it very curious that it is so directly attached to average earnings. If it is meant to meet a specific need, and that specific need is identical regardless of age, why should not the benefit be also identical?

9 p.m.

Lord Henley

My noble kinsman makes a ridiculous point. As always, he tries to take his logic to some rather peculiar logical conclusion, the whereabouts of which we are not quite sure. He completely ignores any idea such as the incentive to work. I stick by what I said. I do not believe that there is any movement that we can make. If we follow my noble kinsman's logic to its logical conclusion on that matter, why then does he say that we do not have to follow the logic that one would have to follow, in accepting this amendment, in terms of moving on to the other income-related benefits such as income support and housing benefit? My noble kinsman cannot have it both ways. I know perfectly well that if the Government concede this amendment it would not be a matter of a year, a few months or a week, but at the next stage of the Bill that my noble kinsman would table an amendment to try to extend the provision to income support and housing benefit. He knows that perfectly well.

Earl Russell

My noble kinsman knows that I have done that before and that I will do it again, whether or not the Government accept this amendment.

Baroness Hollis of Heigham

That was great fun! Perhaps I may respond to a couple of points that the Minister made. To some extent I am following on the points made by the noble Earl, Lord Russell. As regards costs and the figure of £260 million, I accept that there is a logical connection between abolishing the age disadvantage if it is done for council tax benefit and doing it for housing benefit. I can accept that logic. That is because both are household benefits and they go to the householder. In contrast, income support goes to the individual whether that person is living within a household, with parents or with friends. There is a perfectly clear distinction between personal benefits and what I call household benefits —that is to say, benefits to which someone might have a householder premium attached. I again invite the noble Lord to tell us the difference in cost between those two figures. That is a very basic distinction in the social security perspective.

Lord Henley

As I said, I cannot give the figures which the noble Baroness requires. I have said in all equity that I did not see how we could extend it to one provision without extending it to the other. The cost is £260 million per annum.

Baroness Hollis of Heigham

Does the Minister accept that income support is a personal benefit and that the benefit that we are talking about is a council tax benefit? I concede that housing benefit is a household benefit. Does the Minister accept that there is a logical distinction between the two? I shall be very surprised if he cannot.

The more worrying point was the statement picked up by the noble Earl. The Minister's argument was that an individual under 25 years of age should have a lower income than somebody over 25. Because they have a lower income, he said, they should have lower income support in order to protect the work incentive. Therefore, says the Minister, they should have a lower council tax benefit. I see the argument about work incentive, but in return the Minister should see the argument about poverty. He has made my case for me.

We are talking about two liable householders; 22 or 23 years of age on the one hand, and 26 or 27 years of age on the other. They have identical costs, the same rent, the same council tax, the same water rates and the same fuel bills. However, according to the Minister, the 22 or 23 year-old will have a lower income with which to meet those costs so he already experiences a greater strain. Then, to add insult to injury, the noble Lord intends that he should also receive less help and less rebate in meeting those costs.

Lord Henley

The noble Baroness completely misunderstands me. I made it quite clear in both examples that she gave that those persons would be left with the applicable amount. Where we are at issue —it is a matter on which there is obviously no agreement—is whether there should be lower rates of income support for those over 25 years of age or under 25 years of age.

Baroness Hollis of Heigham

I entirely agree. Can the Minister tell me where my logic is wrong? We have a 23 year-old and a 26 year-old with the same costs. They have the same costs; the same housing and water rates and so forth. I was startled to hear the Minister say—and I quote his own words—that the younger person will have a lower income so less capacity to meet the same costs. Most people would consider that to be a reason for increasing the eligibility for rebate and increasing the rates so that that person is in the same position to meet his or her costs as the older person. On the contrary, the Minister said that that is an argument for giving young householders reduced help to meet their needs because they start off with reduced income to meet the same costs.

On arguments of equity or fairness I believe that the Government's position is less defensible on this issue than anything, except perhaps the student nurses, that we have heard all night. It is too late to seek the opinion of the Committee, but we shall return to this matter. I hope we shall be able to persuade more noble Lords that the Minister's argument is not only not equitable, but that it is profoundly and deeply inequitable to the young householder.

Baroness Gardner of Parkes

I believe that there is a difference between income and disposable income. Many of the people who have been targeting the young in the past have considered that a younger person who might have less income might have more actual free disposable income because he has fewer commitments in terms of family and so on. That is a matter which should not be overlooked.

Baroness Hollis of Heigham

The noble Baroness is right. We are speaking about two single people without families. Into income support and the benefits structure are built premiums for lone parents, families and the like, including people with children. While the noble Baroness is entirely right, in practice that situation is already covered by social security. We are comparing like with like. The only difference is two years with lower income, same costs and lower rebates. That is what the Minister has presented to us and that is his position.

Lord Henley

Again, the noble Baroness is deliberately trying to misunderstand me. I said that two people on income support would both be left with their appropriate applicable amount for the age they are, whether they are over or under 25 years of age.

Baroness Hollis of Heigham

That is right.

Lord Henley

That might mean that they have different amounts of disposable cash. I was trying to say that that is what we are trying to do in the income support system. We have different rates for the over 25s and the under 25s.

Lady Hollis of Heigham

That is entirely right. The point is that the Minister seems to think that that is appropriate and we do not; and merely to tell us that it is appropriate, therefore it is appropriate, is not an answer to an argument. I do understand what the Minister is saying, but it is the Minister, if I may say so, who is going round in loops on his argument. Given the lateness of the hour, I shall not press the matter. Nonetheless, we shall come back to it at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hamwee

moved Amendment No. 217A: Page 113, line 12, at end insert: ("and in determining any amount of council tax benefit under this subsection, no deduction shall be made in respect of any person who is a non-dependant").

The noble Baroness said: In moving this amendment I shall speak also to Amendment No. 217C. This is another probing amendment which has regard to the suggestion of the removal of deductions made from claimants' council tax benefit when there are so-called non-dependants in the household. Non-dependant deductions are reductions of certain housing-related benefits to take account of contributions which are assumed—and I stress the word "assumed"—to be made by non-dependants, such as grown up children or elderly relatives, who are living in the same accommodation. The deductions are made from housing benefit and from income support paid in respect of housing costs. To give a parallel example, they are not made from mortgage interest tax relief. They are not made from poll tax benefit, for obvious reasons, because the non-dependants are themselves liable to pay the poll tax.

We understand that when the council tax benefit replaces poll tax benefit the Government intend to restore non-dependant deductions. The non-dependant deduction is opposed by many agencies who are concerned with alleviating the problems faced by people on low incomes. It is right that we should spend a moment looking at why that is and asking the Government to defend the position.

Non-dependant deductions cause hardship because there is a contribution to be made by the non-dependant. The amounts may not sound like a lot of money, but they can be significant to people who are on low incomes. But more than that, the non-dependant is under no obligation to pay the claimant for council tax benefit, so that the shortfall impacts on the claimant. The point is that the unfairness, the difficulties and the hardship are caused to the claimant. I say that there is no legal obligation, but those concerned may feel that there is a moral obligation. However, that is a little difficult to legislate for.

The deduction can also add to the arrears problems. Where the non-dependant is not making the contribution to the claimant and the claimant is finding difficulty in meeting the difference then arrears start to mount up and the position is exacerbated. There is also the point raised by the agencies who question the situation as to housing policy implications. Do not these deductions discourage people from sharing accommodation? It must be a good thing to make optimal use of housing stock. Finally, but certainly not least, they militate against the care-in-the-community policy by making it harder for claimants to accommodate, for example, frail, elderly relatives.

The negative features of this are unfair on a claimant who may be on a very low income, where the non-dependant is not making up the shortfall, but the deduction is still imposed. Take, for example, a woman with a grown-up son living with her who earns, say, £135 a week and she is on income support. The son is not willing to make a contribution to the rent or to council tax but she is not willing to throw him out. No doubt we have all met many similar examples and can understand why a mother would not feel able to take the very severe step of chucking out a member of her family over this. At 1992 housing levels and proposed council tax deduction rates that mother will have to live at £20 a week below income support level.

That is only a hypothetical example, but it must strike many chords of reality. The amendment is supported by RADAR which, of course, accepts that not all disabled people are affected by the presence of non-dependants. However, it fears that the new rule will penalise disabled people who do not receive attendance allowance but live with somebody and that someone may be a relative or a lodger who is working more than 16 hours a week. That takes us back to the point raised earlier with regard to the changes in the hours rules. Currently, a carer can be disregarded in assessing the claimant's grant contribution if they work less than 24 hours, but the 24 is to be dropped to 16 and that may lead to more disabled people paying the higher grant contribution if the carer works in that band between 16 and 24 hours.

I come back to the unenforceable nature of the non-dependent contribution. This is not a weakness of the system. I will not go down the road that may have been suggested earlier of wondering aloud whether the abolition of the rules should extend to other areas of social security. But is it not a retrograde step to restore it to local government taxation? I beg to move.

9.15 p.m.

Lord Henley

I feel quite nostalgic. It is almost like discussing the Social Security Bill again. I think of the last Social Security Bill where we totted up the cost of the amendments as they came in. I suspect that we are already approaching the billion pound mark on the amendments put forward today.

Baroness Hollis of Heigham

I am sure that the Minister will agree that most of the amendments that have been rejected by the Government or Members opposite have been mutually exclusive. They should not be added. That may be a result of some of the complexities of Tory Government political statements at the moment.

Lord Henley

They are not all mutually exclusive. At any rate, just for the record, it would be useful if the Committee were informed that this one adds another £60 billion to the bill.

Baroness Hollis of Heigham


Lord Henley

I am sorry, £60 million.

Baroness Hollis of Heigham

You see, you are doing it again.

Lord Henley

I cannot read my Ms from my Bs. The noble Baroness argues that there should be no non-dependent deductions in council tax benefit. I think I should explain that non-dependent deductions have been part of the benefit scheme, quite rightly, for a long time. We consider it right in principle to assume, in calculating a liable person's entitlement to council tax benefit, that adult non-dependants sharing the dwelling are making some contribution to the council tax bill. Similar rules apply in other income related benefits, including housing benefit, and so on. Under domestic rates non-dependent deductions were made in the rate rebate scheme.

I should however add that the level of nondependent deductions in council tax benefit will be quite modest. I do not think it unreasonable to expect a contribution of £1 a week for non-dependants with incomes of up to £100 a week, and £2 a week for non-dependants will higher incomes. The lower rate deduction of £1 a week will apply in respect of those non-dependants who are not in full-time work. Therefore, most pensioner non-dependants, who are not receiving income support, will be assumed to be contributing only £1 a week to the council tax bill.

The noble Baroness may also be interested in the Government's decision that the £1 and £2 deduction rates will apply in April 1993. Under the rates, non-dependent deductions were £3 a week for the first year of the reformed scheme, 1988–1989. That was a higher rate than we are proposing for the council tax.

The higher rate non-dependent deduction of £2 a week will be broadly equivalent to 25 per cent. of the average weekly council tax bill. This ties in well with the 25 per cent. personal discounts and 25 per cent. maximum second adult rebate. We have also taken care to ensure that the system of non-dependent deductions fits also with the proposals for discounts under Schedule 1 to the Bill. I can reassure the Committee that there will be no non-dependent deductions made in respect of people on income support or people such as students, who fail to be disregarded for the purposes of status discounts. Finally, since the noble Baroness mentioned RADAR, the Government have taken care, in framing their proposals, to protect the position of disabled people who are non-dependants. Both disability living allowance and residual attendance allowance will be disregarded in calculating the non-dependant's gross income. Disabled non-dependants will not be expected to use benefits designed to help with the extra costs of disability to contribute to the council tax. I hope, therefore, that the noble Baroness will feel able to withdraw her amendment.

Lord Tordoff

The noble Lord is doing a big totting up sum of the vast sums of money that would be caused by the amendments put forward by the Opposition. What he should bear in mind is that the amendments put forward today are to eliminate the cost to the poorest members of our community. What the noble Lord is saying is that these large costs should be borne by the poorest members of the community because the richer members of the community cannot afford it and need tax reductions.

Lord Henley

That is not strictly speaking true. The attempt to abolish the 20 per cent. in the community charge benefit, which my noble friend dealt with, certainly would have cost double. In making the point, I was merely recalling with nostalgia former social security Bills and totting up the number of amendments, moved, in a thoroughly responsible manner, by the noble Lord's party and noble Lords opposite. It is worth reminding the Committee of what would be the cost to the Government and the taxpayer.

Lord Tordoff

I repeat that the noble Lord is saying that it would be better if these costs were borne by the poorer section of the community rather than by the taxpayer at large.

Lord Jenkin of Roding

The debates that we have listened to today are a standard and very important part of the parliamentary process. Whether one is considering the taxation system, the local tax system or the social security system, it is in a permanent state of tension. It is quite right that it should be.

There are those who constantly seek improvement of benefits in order to alleviate what are perceived to be particular hardships. There are those at the other end, always represented by the Government, who have to seek to put the whole matter in balance. When I was Secretary of State for Social Services, it was never for one moment thought, however many improvements one was able to make in benefits for the disabled, that one was ever going to put RADAR or any of the other bodies out of business. On the contrary, the fact that they recognised that the Government would make some improvement in benefits or, as this Government have done, produce a number of wholly new benefits, merely gave them a springboard from which to move on to other perceived shortcomings in the system.

We have all done what my noble friend has done. We have totted up all the costs and said that the total comes to £60 billion. I realise that his figure was a different one. One is always entitled, particularly when moving amendments to tax Bills, to say, "Well, if you do not give me this, let me try this one and if you don't give me that I shall move an amendment for this one," and then to add them all up. There is a lack of reality about it.

But that is not in any way to deny the validity of the process. Bodies such as the citizens advice bureaux, the Child Poverty Action Group, disability groups and so on, perform an enormously valuable service. To the parties opposite I say only that the every word of such bodies is not to be taken as gospel. They are pushing at the boundaries. In this amendment they are pushing at the boundary of the dependent householder contribution. Perfectly legitimately, they always have.

Every time that this subject comes up there are the same arguments as those produced by the noble Baroness, Lady Hamwee. She gave the impression that it was all coming as a blinding revelation. We have heard it all before. Up comes something to do with assessing benefits for householders. So they pull the paper out of the pigeonhole, change "housing benefit", and call it "council tax" or whatever. The issue is presented as though it is absolutely splendid and new, and the argument is put forward that something has to be done because of the poor people who are suffering great hardship. But it is not new. It is probing the boundaries.

It is the job of those in government to seek those points where inaction is indefensible and where one has to move and those—the often much larger number of cases—where one must say, "We have done all this before. We have been over it. We understand the strength of the case but we do not think it is justified."

I neither quarrel with the cases made by the party opposite nor feel that it is necessary for them all to be added up. It is a very important part of the process. If we are here until all hours of the night I do not begrudge it. It is the way in which the system works but these matters are not to be treated as gospel.

Earl Russell

I think we are well inside the boundaries. Before dealing at length with the subject, I trust that my noble kinsman will forgive me for taking one minute to thank him for regulations recently published ending the non-dependent deduction for prisoners. It is a step in the right direction and maybe there will be one or two more.

My first case for this amendment is that the deductions with which we are dealing have the effect of contradicting government policy. My noble kinsman has argued many times from the Dispatch Box that young people ought to live at home. On these Benches we have not always been happy with the measures taken to induce them to do so. However, we believe that they have the right to do so when it is agreeable to them and their parents and that they should not be unduly discouraged from it. The non-dependent deduction has the effect sometimes of discouraging young people from living at home. A case was reported by a citizens advice bureau in London. A son on income support moved in with his mother. She therefore had an amount deducted from her housing benefit but he could not claim the housing benefit because he was living with a close relative. The mother was forced to evict him so that her full housing benefit could be restored.

Lord Henley

We are not discussing housing benefit. We are discussing council tax benefit. In council tax benefit, as I understand it, for a son on income support there would be no non-dependent deduction.

Earl Russell

It is certainly my understanding that there are non-dependent deductions going on and that they do affect people living at home.

Lord Henley

Certainly there are non-dependent deductions. I have not denied that. What I am saying is that the example given by my noble kinsman in relation to housing benefit is not relevant to what we are discussing today, which is council tax benefit. For the young man on income support there would be no non-dependent deduction.

Earl Russell

The point I was making is that we are dealing with a disincentive effect. That effect is the same in the two cases even if it is capable of applying to more than one benefit.

The case, along with a number of others, also has the effect of answering the point the Minister made about costs. The Minister took his costs gross. He usually does. But to consider the gross costs only is about as misleading as assuming one can spend one's gross income. No measure is cost free. In the case that I cited the son was evicted. The Government end up having to find funds for two amounts of housing benefit, not for one.

It is not only the young who are affected by non-dependent deductions. A case was reported by a citizens advice bureau in Essex of a client who brought her mother to live with her family rather than have her in a residential home. I know that my noble kinsman knows all about the cost of residential homes. It is considerable, as he has said so many times, so obviously that could have saved the Government some money. But the mother was 30p over the level of entitlement to income support and the client's housing benefit was reduced as a result. I do not know whether that will lead to the same consequence as the first case I quoted, but if it does it will let the Government in for a great deal of extra expense. I think that my noble kinsman ought to count his costs net before he is so confident.

Lord Henley

I shall look very carefully at the examples given by my noble kinsman. But I find it very surprising—I go back to social security Bills—that my noble kinsman objects to my use of gross costs. But for some weird, wonderful and odd reason, every time my noble kinsman puts forward an amendment or speaks in support of one that I claim has gross costs, surprise, surprise, surprise, it is always going to save the taxpayer vast, vast, sums of money. I simply do not believe it.

Earl Russell

That is in part because I do not put forward ones that do not.

Baroness Hamwee

I am sorry that what has been raised by this amendment is not new. The comment has been made that there is nothing innovative in the amendment. But to me that is precisely the sadness of the situation—old ground is having to be retrod. My noble friend Lord Tordoff was right. The cost is the cost that will be paid by the people who can least afford it by definition, because this affects their council tax benefit. If it is to be around 25 per cent. of the average of a council tax bill, that speaks for itself.

I shall read what the Minister has said, particularly with regard to disablement, and not press the matter further tonight. I must end by commenting on the question of totting up benefits. I understand the temptation to do so. Had earlier amendments been accepted we would not at this stage be further down the Marshalled List with lower preferences. The noble Lord is tempting me—I am surprised that no one else has come in on this—to wonder aloud on the cost of the poll tax. Members of the Committee do not need reminding of that. It was millions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 p.m.

Lord Henley

moved Amendment No. 217B: Page 113, line 20, leave out from ("which") to ("to") in line 22 and insert:

  1. ("(a) the appropriate maximum council tax benefit;
  2. (b) the alternative maximum council tax benefit, are").
The noble Lord said: I should like to speak also to Amendments Nos. 218A, 220A, 225ZA and 225ZB.

These are technical amendments which tidy up the wording of Schedule 9 in a number of places, and make further provision in Clause 117 for council tax benefit regulations in the period before the social security consolidated legislation is commenced on 1st July 1992. For example, Amendment No. 218A corrects a reference to the "main" condition for council tax benefit which will be inserted in Clause 132(7) of the Social Security Contributions and Benefits Bill by Schedule 9 to the Bill.

Amendments Nos. 225ZA and 225ZB, which amend Clause 117, are also technical. They will ensure that social security regulations for council tax benefit can be laid in draft, debated by both Houses of Parliament, and made, before the consolidated social security legislation is commenced on 1st July 1992. The amendments cover provisions in Schedule 9 to the Bill, like those that provide for second adult rebates, for which there was no parallel under the community charge. The upshot of the amendments is that my right honourable friend the Secretary of State for Social Security can use powers in the Social Security Act 1986, as substituted by the amendments, to make the benefit regulations before the consolidated social security legislation is commenced on 1st July this year. They will therefore ensure that local authorities will be able to receive the final version of the council tax benefit regulations as soon as possible. It will make their job easier, and I commend the amendments to the Committee. I beg to move.

On Question, amendment agreed to.

[Amendment No. 217C not moved.]

Baroness Hamwee

moved Amendment No. 218: Page 113, line 25, at end insert: ("(12) In subsection (1) of section 5 of the Social Security Administration Act 1992 (regulations about claims for and payment of benefit), at the end of paragraph (b), there shall be added the words "and such treatment of a claim shall not give rise to a lower rate of council tax benefit subsidy under section 140 below than would otherwise be the case." ").

The noble Baroness said: The amendment which is grouped with Amendment No. 220 relates to the removal of the existing subsidy penalty and is designed to encourage local authorities to provide backdated benefit where a claimant can show good cause for a late claim. The "good cause" principle is one which raises the issue of natural justice. It exists in social security law to allow justice to be done in individual cases where, for example, an applicant was misled by incorrect official advice and so delayed the claim. The provision is not lenient. Ignorance does not count as a good cause. The burden of proof lies upon the claimant.

The effect of the provision is to penalise local authorities if they use their powers to backdate in those circumstances. To say that that is a breach of natural justice is making a strong accusation, but I do not believe that it is entirely inappropriate.

The amendment is a further amendment supported by RADAR. That may make Members of the Committee nostalgic yet again. RADAR points out the special problems faced by people with disabilities. A person with a disability is likely to have a special difficulty in completing and submitting a claim. Such a person may not be able to go out of his home unaccompanied, and may have to rely upon someone else to obtain the form and help process the claim. The enforcement of a subsidy penalty is likely to act as a strong disincentive to local authorities which would otherwise like to assist a person in such circumstances. Were it not for the penalty, they could choose to use their powers to award backdated benefit. Claimants with disabilities and other people in these circumstances will be penalised. Those who have failed to act on time because of their health will suffer stress and anxiety simply because of that problem.

RADAR gives an example of a woman who explained the damaging consequences of the ordeal. She suffers from myasthenia gravis. Having known someone who suffered from that unpleasant and distressing illness, I can well understand what she says. Although she became ill in September 1984, she did not put in a claim for attendance allowance until almost three years later. It was not until two years after that, after repeated appeals, that she was finally granted backdated payment. She mentions the disruption, frustration and stress this caused her at a time when she was unwell and how it affected her condition.

I suggest that to penalise people for the enormous complexities of the schemes to be introduced supposedly for people's benefit—and we have heard a great deal about the complexities of the proposals—is unfair. I beg to move.

The Earl of Balfour

I hope that the noble Baroness, Lady Hamwee, has been referring to Amendment No. 220 which is grouped with her Amendment No. 218. I say that with respect to her, because Amendment No. 218 is seriously defective. If anything, the first line of the amendment should read: Page 114, after line 15, insert—".

If her amendment were to be accepted, the reference in the last line to Section 140 would be to the Social Security Contributions and Benefits Bill. I am quite certain that the noble Baroness did not intend that. Most of what she suggests is included in Amendment No. 220. I do not wish to pour cold water on the proposal, but I must point out the difficulty.

Baroness Hollis of Heigham

I am afraid I support Amendment No. 218, defective or not. I also wish to speak to Amendment No. 220 which is grouped with it. As the noble Baroness, Lady Hamwee, said, the amendments would remove the loss of subsidy where local authorities are penalised if they grant a backdated claim or benefit where a claimant has shown good cause. As she said, backdating benefit up to 52 weeks is a well established practice in social security legislation for a full range of benefits and good causes. For example, it happens with inaccurate official advice, illiteracy or where someone goes to hospital.

This morning I spoke to the officer responsible for handling backdated claims in my authority. He noted that in the past year he had received a number of applications on grounds that someone had ME. As he said, the last thing on one's mind in that case is sorting out one's benefit.

However, the difference is that the other benefits such as UB, sickness benefit, invalidity benefit, income support and family credit, with the exception of housing benefit, are handled by the DSS. The agency distributing the money is also the agency funding it. Therefore claims against the DSS carry no penalty for the agency distributing the money or the resource. However, as regards council tax benefit, the local authority is itself penalised if it funds a late or backdated claim because at the moment local authorities get 95 per cent.—it should, of course, be 7.5 per cent. —of their rebates funded by the DoE. The rest of the council taxpayers pay the remaining 5 per cent. However, if a local authority accepts a late or backdated claim, only 25 per cent. of it is reimbursed by the DoE and the rest of it falls on local taxpayers. Therefore local taxpayers are not only asked to contribute to the poverty of their area, but they are also asked to contribute to a compassionate response —I hope I may refer to it in that way—to a backdated claim. Given that only 25 per cent. is reimbursed, why should a local authority ever want to agree to such a claim when 75 per cent. of the cost of that claim will be offset on to other local taxpayers?

It cannot be good social policy to build in a disincentive to local authorities to handle sympathetically late claims in this way. As I have said, this provision does not apply to other benefits as the DSS is the agency, but it applies in this case because the local authority is the agency. We ask that central government should fully reimburse local authorities to the 95 per cent. limit. In that case local authorities would judge the issue of backdating on the merit of the claim and not with an eye over their shoulder to the effect on other council taxpayers. If there is a worry that local authorities would not properly scrutinise such late claims—I do not know whether the Minister might wish to advance that view—that can be caught through audit procedures, exactly as at present. That would be the right and proper way to proceed. I hope we are dealing with a small number of cases. Nevertheless, those claims to late benefit might be disregarded by the local authority because of the financial implications for other council taxpayers. I hope the Government are minded to mend this anomaly.

Lord Henley

I am not sure I can go that far, but I hope I can be somewhat more conciliatory than I have been on some of the earlier amendments. I do not know whether the advice my noble friend gave to the two noble Baronesses is correct on whether or not these two amendments are defective. However I leave it to the two noble Baronesses to make up their own minds on that matter. I am sure they will take note of what my noble friend said and will, presumably, withdraw their amendments at the end of this debate.

I remind the Committee that social security benefits have to be claimed. I include those that are administered by people other than my department. Entitlement to social security benefits depends on the satisfaction by the claimant of appropriate qualifying conditions, whatever they may be. Claims can be backdated, for example where a claimant can show good cause for not having claimed at the correct time. This has been mentioned. However, because of the administrative implications, there is generally—as has been stated—a 52-week limitation on backdated claims. The question of whether good cause exists in any individual case is a matter for local authorities to determine in the case of these benefits. My own department, the Department of Social Security, has supplied authorities with detailed guidance for them to follow based on the department's own practices in administering other social security benefits. We certainly expect that they would follow that guidance.

I now turn to the subsidy arrangements. Under the current subsidy arrangements for community charge benefit, as the noble Baroness has said local authorities receive 95 per cent. subsidy for the bulk of their benefit expenditure and lower rates of subsidy within certain incentive areas, of which backdating is one. The rate of subsidy paid on backdated amounts is, as the noble Baroness correctly said, 25 per cent. An amount equivalent to some 5.5 per cent. of total benefit expenditure is also taken into account in the local government settlement; the additional 0.5 per cent. is in recognition of some unavoidable expenditure within the incentive areas.

The incentive areas were first introduced into benefit subsidy arrangements in April of 1988. They are designed to encourage local authorities to use their judgment carefully in the areas where they have most control over their expenditure. In the particular case of backdating, we would expect local authorities to consider carefully all the available information in reaching a decision as to, for example, good cause. If full subsidy were automatically paid on all backdated awards, there would be less incentive for authorities to exercise care when taking such decisions. We believe such incentives are sensible and necessary measures.

The incentive areas are a core feature of current subsidy arrangements. They are, however—and this is why I said that I wished to be conciliatory—currently under review. With the full co-operation and participation of the local authority associations, a special working group has been formed with the Department of Social Security to review the arrangements. Officials from the Department of the Environment also attend the group. We are well aware of the views expressed by the associations on the particular issue of subsidy in backdated cases and these will receive full attention during the course of the working group's deliberations.

We have not yet decided on the complete subsidy arrangements for council tax benefit. However, they are likely to be based broadly on current arrangements for community charge benefit. We shall take into account the findings of the incentive area working group, which should have completed its discussion by the spring of 1992.

Without in any way wishing to be rude to either noble Baroness, now is not the moment to debate the individual elements of the subsidy arrangements which are to apply for 1993–94, the first year of the council tax, particularly as we are awaiting the findings of the working group.

In the light of the assurance that matters are still under discussion and we have not yet decided on the complete subsidy arrangements, I hope that the noble Baronesses might feel able to withdraw their amendments.

9.45 p.m.

Baroness Hamwee

If a working group is studying the issue it would be premature to press the amendment. I hope that I am right in thinking that the Minister was confining his remarks to that rather narrow area rather than, as he seemed to be, suggesting that we should not look at the whole issue. Schedule 9 is complex. Moreover, because of the guillotine it did not receive consideration in the other place. That is why we are having to spend a long time on it.

I believe that the amendment is in the right place. It adds another subsection—subsection (12). The subsection referred to is subsection (11) of the new Section 131 of the Social Security Contributions and Benefits Act 1992. I am not surprised at the difficulty in pinning these details down.

I shall await with interest what the working group has to say.

Baroness Hollis of Heigham

Before the noble Baroness withdraws her amendment, perhaps I may ask the Minister a question. In his response to the two related amendments, he said that one of the arguments for having a very significantly lower rate of reimbursement to local authorities through subsidy —namely not 95 per cent. but only 25 per cent.—was to encourage them to scrutinise claims more diligently. That is an argument. But surely he would not suggest that they do not scrutinise diligently those for which they receive a 95 per cent. subsidy. Does he not agree that the disparity between those figures far outweighs any propriety in terms of the incidence of fraud and the like and provides a very real disincentive to local authorities to take seriously the claimant's arguments for backdating?

Lord Henley

I am afraid that I do not accept what the noble Baroness said. They are two very different matters and there is justification for having two different levels of subsidy.

Baroness Hamwee

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Henley

moved Amendment No. 218A: Page 113, line 33, leave out sub-paragraph (3) and insert: ("( ) In subsection (7) of that section, for the word "first", in both places where it occurs, there shall be substituted the word "main". ( ) In subsection (9) of that section, for paragraph (b) there shall be substituted the following paragraph— (b) references to the main condition are references to the condition mentioned in section 131(3) above.""). The noble Lord said: I spoke to this amendment earlier. I beg to move. On Question, amendment agreed to.

[Amendments Nos. 219 and 220 not moved.]

Lord Henley

moved Amendment No. 220A: Page 114, leave out lines 25 to 33 and insert ("for the words from "provision" to "shall not apply" there shall be substituted the words "provision in relation to council tax benefit that prescribed provisions shall apply instead of prescribed provisions of Part I or II of the Local Government Finance Act 1992, or that prescribed provisions of either of those Parts shall not apply". (3) For subsection (3) of that section there shall be substituted the following subsection— (3) References in subsection (2) above to either of the Parts there mentioned include references to regulations made under the Part concerned.""). The noble Lord said: I spoke to this amendment with Amendment No. 217B. I beg to move.

On Question, amendment agreed to.

[Amendment No. 221 had been withdrawn from the Marshalled List.]

Schedule 9, as amended, agreed to.

Clause 103 agreed to.

Lord McIntosh of Haringey

moved Amendment No. 221A: After Clause 103, insert the following new clause: ("Rate appeal refunds .—(1) In this section— (a) "relevant rates" means the aggregate of

  1. (i) any rates which a rating authority within the meaning of the General Rate Act 1967 has repaid under section 79(2) (a) of that Act in respect of any period of rate prior to 1st April 1990 in consequence of any relevant alteration; and
  2. (ii) any rates which a rating authority has refunded under section 9(1) (a) of the General Rate Act 1967 in consequence of a relevant alteration.
(b) "a relevant alteration" means any alteration made in a valuation list by virtue of sections 71 to 78 of that Act after 1st April 1990. (2) In the chargeable financial year commencing 1st April 1992 a charging authority shall be entitled to deduct and retain from the amount (the provisional amount) which it is liable to pay to the Secretary of State for that year under paragraph 5(4) of Schedule 8 to the 1988 Act an amount equal to relevant rates repaid by it prior to 1st April 1993 in consequence of any relevant alteration. (3) In any subsequent chargeable financial year a charging authority shall be entitled to deduct and retain from the amount (the provisional amount) which it is liable to pay to the Secretary of State for that year under paragraph 5(4) of Schedule 8 to the 1988 Act an amount equal to the relevant rates repaid by it during that financial year in consequence of any relevant alteration. (4) For each chargeable financial year from 1st April 1992, the Secretary of State shall credit to the account kept by him under Part 1 of Schedule 8 to the 1988 Act a sum received from the Treasury equal to the aggregate of the amounts deducted and retained by charging authorities during such year pursuant to subsections (2) and (3) of this section."). The noble Lord said: The amendment refers to a rather extraordinary state of affairs which has arisen in recent months but refers back to the payment of the non-domestic rate in respect of 1989–90 and earlier years. What has become apparent from the proceedings of the valuation tribunals and valuation courts is that many appeals have been allowed subject to the end of the old rating system. They bring substantial bills to the local authorities involved. In most cases the local authorities themselves are involved, but in London, and in particular in inner London where the bills arrived after the demise of the Inner London Education Authority, they have become the responsibility of the London Residuary Body. That body, according to the director of finance, will propose at its meeting next month to impose a charge of between £35 million and £40 million on London boroughs.

When it became clear that something was going very badly wrong as regards the effect of the appeal procedures on the old rating system, the Association of Metropolitan Authorities wrote in September to the Minster of State for the Department of the Environment suggesting that there should be some special treatment to help the authorities to deal with those sums which they had not budgeted for and which would become part of their reckonable expenditure against their standard spending assessment. The Minster of State pointed out quite reasonably that it would be unfair to authorities which were fortunate enough not to have such appeals if it were to become a charge on the general rate fund. However, he failed to suggest any realistic alternative. He stated that under certain limited circumstances it might be possible for those authorities to capitalise their obligation under the rating appeals. He did not indicate any capital approval for such capitalisations. It would have to come out of existing capital approvals.

We do not say through the amendment that the Government nationally should take responsibility for that obligation. As the Minister of State rightly said, that would be unfair to the other authorities. However, there is no evidence that the authorities concerned could have anticipated that they would he involved in such expenditure or could have budgeted for it. As recently as the last quarter of last year the London Residuary Body expected to have a surplus on its education account which it could use to the benefit of London boroughs. It was as surprised as anyone else to find that the implications of the late rating appeals meant that the balance was very much the other way round and that considerable amounts of money would have to be demanded from the London boroughs.

In tabling the amendment we are proposing that there should be the possibility of capitalising these obligations but that capital allowances should be made. This is a complicated amendment. The amounts due should be able to be set against the other capital receipts and other capital which has been frozen for other reasons. Although in the end the authorities will be financing these rate appeals and they will not be transferred to any other people, the blow will at any rate be softened.

Lord Strathclyde

The noble Lord, Lord McIntosh, was right in saying that this is a complicated amendment. On the other hand, he has explained extremely well what is at the base of it, in particular the adjustments to make up for past years of non-domestic rates.

These adjustments are not new. They were a constant feature of the old rating system and authorities would normally have planned for them. At the last year of the old system it would have been appropriate to make provision in the accounts for that year for the estimated costs of late rating adjustments expected to arise in future years. It is recognised that it would have been prudent and proper practice to do so. We understand that many authorities did just this. In such cases these refunds now will have no effect on budgets or charges.

But we have recognised that in certain cases the costs associated with these late rating adjustments will affect budgets and charges, and the circumstances may be such as to warrant special assistance for the authorities concerned. We have said that where authorities are now facing budgeting difficulties, perhaps because the scale of the adjustments is greater than could have been foreseen, we are prepared to consider granting a direction enabling the authority to capitalise the costs associated with these adjustments. And, in the case of inner London, we have said that we would be prepared to grant such directions to the boroughs enabling them to capitalise that part of the London Residuary Body levy which is attributable to these costs, since the boroughs are now facing an increase in the LRB levy because full provision for these costs was not made in the final accounts of the Inner London Education Authority.

We consider that the action we have taken is appropriate. It means that the costs remain to be borne locally. The noble Lord's amendment would mean that the national taxpayer picked up the bill. We believe that this would not be the right course. In essence, the authorities have received amounts from ratepayers which in a sense were overstated. The authorities are now having to refund certain of these amounts. The amounts involved will depend in large part on the authorities' own decisions about the level of their rates for the years concerned.

Late rating adjustments is a local issue and it is right to deal with it locally. Given the action that we have already taken to enable authorities locally to deal with this issue, I hope that the noble Lord will not consider it necessary to pursue this amendment.

Lord Jenkin of Roding

Perhaps I may ask my noble friend a question. I have heard rumblings of unhappiness in the London Residuary Body as a result of what has emerged. I understood my noble friend to say that the London boroughs concerned had recognised that such difficulties would exist and had made provision for the possibility that they might have to make substantial repayments, but that in the case of ILEA no such provision was made. Was that the distinction that my noble friend was drawing?

10 p.m.

Lord Strathclyde

My noble friend is right.

Lord Jenkin of Roding

One is bound to comment that that is another indication of the inadequacy of that public authority. If the boroughs knew that they would have to do that, why did ILEA not know? Because ILEA has now been abolished and all this has come to light, the poor, wretched borough charge payers will have to pay the difference because of ILEA's incompetence. Is that not what it amounts to?

Lord McIntosh of Haringey

By no means, no. ILEA has been abolished and therefore was not in a position to learn about what has happened since its abolition. Since that time there have been a number of court cases which have affected the valuation made and have allowed appeals which could not have been anticipated.

The particular case to which I wish to refer is the case of Addis v. Clement in which the courts found that the proximity of businesses to enterprise zones warranted a reduction in rateable values because of rate reliefs available in enterprise zones. Another case, the Chetnik case, has a bearing on the amount. The point about those cases is that they happened since the demise of ILEA. No amount of prescience could have allowed ILEA to make provision in advance.

Lord Jenkin of Roding

The noble Lord will know from his legal practice that where companies are facing litigation or the possibility of litigation, their auditors will advise them to make provision. I suspect that the London Borough of Newham and the London Borough of Tower Hamlets, which faced exactly the same problem in relation to their revenues, appear to have thought it wise to make provision. However, ILEA, because apres moi le déeluge, never thought that it would have to do that. The chickens are now coming home to roost and the wretched London ratepayers must pay.

Lord McIntosh of Haringey

I believe that Members of the Committee will observe that the Minister did not make that charge. In fact, the London Borough of Newham has the worst single provision to make—approximately £5 million. Therefore, that example does not stand up, even in those terms. The Minister's reply was conciliatory, and the little bit of electioneering which the noble Lord, Lord Jenkin, thought it appropriate to go in for is entirely irrelevant. I know nothing from my legal practice because I am not a lawyer. I yield to the noble Lord in that respect but in this case, I believe he has his facts wrong.

Perhaps I may ask the Minister one question about what he said and about what Mr. Portillo said in his letter to the chairman of the ADA. He said that under those circumstances the Government: would be prepared to consider granting any request from the authority for a direction under section 40(6) of the Local Government and Housing Act 1989 allowing it to capitalise the cost of the refunds". Would the authority be given the necessary credit approvals to do so?

Lord Strathclyde

Those local authorities experiencing budgeting difficulties as a result of the payments can and do apply to the Secretary of State for permission to capitalise expenditure. Such capitalisation of the expenditure counts against credit approvals. However, they can and do apply for supplementary approvals and Ministers are currently considering those applications.

Lord McIntosh of Haringey

That is a pending reply rather than a full reply. It means that although I propose to withdraw the amendment, we may have to return to this matter at a later stage. Will the considerations which Ministers are now giving be concluded before Report stage?

Lord Strathclyde

I cannot confirm that.

Lord McIntosh of Haringey

In that case, we may well have to return to this matter on Report because there is a considerable injustice here. This matter will not simply go away. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 104 [Grants to voluntary organisations]:

Baroness Hamwee

moved Amendment No. 222: Page 69, line 16, leave out from ("before") to end of line 18 and insert ("January 31st").

The noble Baroness said: Amendment No. 222 returns to the subject of voluntary organisations. Clause 104 provides for a new subsection to be added to the Local Government Act 1985 and follows on the unhappy events experienced under that Act.

The clause allows the Secretary of State, by order, to set a date by which Section 48 schemes are to budget and to allow the Secretary of State to intervene in default of a budget being set by that date. The amendment proposes that a specific date be inserted in the legislation. The date I suggest is 31st January, though I shall come back to that in a moment.

The thrust of the amendment is to provide certainty on the face of the Local Government Act as it will be amended, rather than leaving the date to be a matter for further order. In that way voluntary organisations will know, from when this legislation is passed, what that long stop date will be.

I understand that local authorities may find the 31st January a little difficult. I hope that with the new tax we will be able to move to a regime where there is certainty earlier than there has been under the poll tax arrangements, and local authorities can set their budgets at an earlier date. With the moving goal-posts and late information to which we have all become so accustomed that we have all but ceased to complain —it has become almost a fact of life in local authorities—setting a budget by the end of January is perhaps an impossibility. However, Amendment No. 222 is a probing amendment in the sense that I should like to hear from the Government why it is thought to be inappropriate to provide a specific date. It may be that we can then return to the date itself. I beg to move.

Earl Howe

A similar amendment has already been fully debated in another place. I will, however, attempt to offer the Committee further reassurance of our intentions in this matter by recapping on the points made in another place.

As the noble Baroness rightly said, Clause 104 is designed to ensure that where local authorities operate a joint scheme to fund the voluntary sector, a timely decision is reached on the budget well in advance of each financial year. It will allow the Secretary of State to set a date by order after which, if authorities in a scheme fail to agree upon a budget, the previous year's level will be deemed to apply. The amendment would place on the face of the Bill the date by which the local authorities must set their budgets to ensure that expenditure is not deemed to be the same as in the previous year.

Perhaps I may first say that I do not disagree with the date suggested by the noble Baroness. The advice received from those most closely involved with the London boroughs grants scheme and the local authority associations supports the noble Baroness's choice of 31st January as a suitable date, and that would certainly be our first choice. However, we will, as is usual, be consulting on the detail of any order that is made under the new power before a final decision is made. To place a rigid deadline on the face of the Bill not only removes the right of those most directly involved to be consulted on the date but also would serve to reduce the flexibility and effectiveness of the measure for several reasons.

There are certain variables that will need to be taken into account when we come to set a date under the new power. We will need to balance the requirements of the voluntary sector against those of the constituent authorities. Voluntary organisations —quite understandably—need to have some idea at a fairly early stage of the levels of funding that will become available for their forward planning; on the other hand, local authorities require time to weigh up the merits of the various demands upon their resources. Those are factors that could vary from year to year. What may seem to be an appropriate deadline in 1991 may be unsuitable in subsequent years. By putting a date on the face of the Bill we would be restricting our flexibility to change that date other than by primary legislation.

It is also necessary to take into account those Section 48 schemes which are operating quite satisfactorily in some of the metropolitan counties. We see no reason at present why this new device should be applied to them also. This is not to say however that it would not be applied if the need should arise. If that should become the case, Clause 104 as it stands does not inhibit the scope for the Secretary of State to set by order a date which is quite specific to each scheme. If the date were actually in the Act itself we might find that we could not provide those local authorities concerned with a deadline appropriate to the circumstances of their scheme. In short, the device which was designed to aid the budget-setting process would instead be hindering it.

I would therefore urge Members of the Committee to see that there are very real advantages in maintaining the flexibility of this provision. I hope that the noble Baroness will feel able to reconsider in the light of the thinking which I have outlined.

Baroness Gardner of Parkes

Can the Minister tell us whether under these regulations there will be a possibility of imposing some improved conditions on the London boroughs' grants? For funding to be joined it should mean that the body being funded is working in several boroughs. At the moment there is a great deal of dissatisfaction. Two boroughs are enough to ensure that funding can be received. That is often very much to the disadvantage of a great number of other boroughs which do not benefit at all. Within the London boroughs great consideration has been given as to whether three or even four boroughs should be using the services of a particular body for it to be jointly funded, as opposed to the local authority directly funding anything that falls within its own borough.

Earl Howe

My noble friend has raised a very good point. I wish to take that point away with me for my honourable friend the Minister responsible for local government to consider.

Lord McIntosh of Haringey

That has nothing to do with the amendment, which is about the efficacy of any scheme. In any event, the noble Baroness is reverting to the difficulty which, as she knows, we had with the GLC in deciding what are local needs and those which we used to call "sub-regional needs". That does not affect the date for budgeting.

Baroness Gardner of Parkes

The reason why it affects the date is because that has been one of the most difficult and delaying factors.

Baroness Hamwee

I shall be very happy to have a debate about a strategic government for London. That is a matter which has been raised in the comments made by the noble Baroness, Lady Gardner of Parkes. I suspect that other Members of the Committee would not feel that that suggestion gave me any Brownie points at this time of night. I take the point that the noble Earl made. The underlying thrust is for certainty that the date will be early. I do not dispute the validity of consulting with those who are concerned. Perhaps I can use this matter as an opportunity for saying that consultation can move ahead. Whatever is said, they then know the situation. That would satisfy a great many people. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hamwee

moved Amendment No. 223: Page 69, line 23, at end insert: ("(2) Where it appears to the Secretary of State that on the day of making an order under this section the general level of prices is greater than at the time that approval was given or was deemed to have been given in the previous financial year he shall increase the total expenditure by a percentage by which the general level of prices is greater than it was at the time that approval was given or deemed to have been given in the previous financial year.").

The noble Baroness said: This amendment relates to the same clause of the Bill. The clause is an attempt to stabilise the funding arrangements for voluntary organisations. As currently drafted, the Secretary of State can set a budget which will be pegged to the previous year's absolute expenditure. It is a matter of common sense—perhaps it is even more pointed than that—to voluntary organisations whose absolute expenditure is very frequently at the absolute minimum. They are acutely conscious of the real cuts which result when an inflation-linked budget is not agreed for the following year. This amendment is to make provision for the Secretary of State to increase the scheme's budget by the amount of inflation in order that the scheme for one year can be an accurate reflection of it in the previous year. I beg to move.

Earl Russell

This is an important amendment which my noble friend has tabled. We regularly have public spending and local authority grants arranged in terms of forecast inflation. I can recall a question put down by the noble Lord, Lord Donoughue, the first year the poll tax was in operation, asking what inflation figure had been calculated in making the revenue support grant. At the third attempt the noble Lord, Lord Hesketh, was induced to answer "3.8 per cent.". The actual figure of inflation at that time was 8 per cent. That was a considerable difference and was not, in fact, level funding in real terms.

If my noble friend's amendment were on the books Ministers would be saved a great deal of time and effort arguing that this is level in real terms and having the exchanges of "Oh no it isn't", and "Oh yes it is". The amendment would save us a lot of trouble and I hope that the Government will consider it.

Earl Howe

As I have already said, the purpose of Clause 104 is very clear. It addresses the problem that has arisen, in London particularly, over setting the annual budget for the joint schemes which provide funding for London or metropolitan county-wide voluntary organisations. The clause, therefore, provides a mechanism to ensure the timely setting of the annual budget for such schemes, and no more.

Quite rightly the clause does not put the onus on the Secretary of State to decide what a scheme's level of expenditure should be. The decision remains with the local authorities themselves. If they wish to adjust expenditure so that it takes into account any general rise in costs from the previous year then it is for them to agree that during the course of their budget-making process. For example, in London this year, the boroughs have already agreed the budget for their 1992–93 scheme at a level which is some 4 per cent. above last year's expenditure; and that is much in line with inflation.

Had Clause 104 been in place it would not have fettered the boroughs' discretion as far as setting a budget that takes account of inflation was concerned. If, however, they had been unable to reach agreement by the deadline set, and the livelihood of the organisations which they support had been endangered, then the mechanism in Clause 104 would have provided a safety net for the voluntary sector.

I do not see it as the Secretary of State's role, in the absence of a decision by local authorities themselves, to set spending levels that are higher than were agreed for a previous year. However, if local authorities themselves can justify increased expenditure that is a matter for them to decide. Clause 104 does not alter that position.

Given that explanation and assurance I would hope that the noble Baroness will feel able to withdraw this amendment.

Baroness Hamwee

The point of this amendment is to ensure that the budget is the same in real terms as the previous year; not to provide a higher budget but one which in spending power is the same as for the previous year. It is perhaps a little late to pursue this matter. I am sorry to hear the response because it is not suggesting anything more than the noble Earl has described. However, I will at this hour beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 104 agreed to.

Lord Henderson of Brompton

moved Amendment No. 224: After Clause 104, insert the following new clause: ("Funding for independent advice agencies .—(1) Section 142 of the Local Government Act 1972 (provision of information etc) shall be amended as follows. (2) There shall be inserted after subsection (2)— (2A) A local authority shall provide such financial assistance as is necessary to ensure reasonable provision by independent advice agencies to individuals of—

  1. (a) information and advice concerning those individuals' rights and obligations; and
  2. (b) assistance, either by the making or receiving of communications or by providing representation to or before any person or body in asserting those rights or fulfilling those obligations.
(2B) In subsection (2A) above an "independent advice agency" shall be defined in regulations. (2C) After consultations with such persons as he thinks fit, the Secretary of State may by order issue guidance as to the meaning of reasonable provision in subsection (2A) above. (2D) The Secretary of State shall after consultations with the local Government Commission designate local authorities for the purposes of subsection (2A)." "). The noble Lord said: I regret that this amendment has come on at such a late hour, but it is worth putting before the Committee so that I shall have the answers of the Front Bench on the record. Perhaps we can then pursue the matter at a later stage.

This amendment is a new clause and it is designed to provide statutory provision for the voluntary bodies that advise citizens; that is, not only the citizens advice bureaux but also the National Consumer Council, the law centres and the Law Society. All these voluntary bodies are totally non-party political and serve the community with a corps of professionals; a vast number of unpaid voluntary advisers who give an unparalleled service to the nation at unparalleled value because of the voluntary effort. It is the cheapest form of advice that can possibly be available to citizens. It must help central government and local government enormously when their citizens' problems are being sorted out in this efficient and cheap way.

I illustrate the problems from the point of view of the citizens advice bureaux. The service has over 1,000 bureaux and extensions. It handles over 7 million inquiries a year. It is active in all the main important spheres that affect all of us, and often it is the most impoverished of our people who need the help most over employment, debt, and of course, the community charge and social security.

The citizens advice bureaux are financed by grants from local authorities. There are some central grants, but primarily they are financed by grants from local authorities. Therefore, they are immensely dependent for their core funding on local government. The quality and coverage of the bureaux reflect, of course, the funding. If they are not adequately funded then inevitably their services have to contract. There is a sorry tale of contraction already, and the purpose of this amendment is to see that that is put into retreat and that the funding will be sufficient for adequate advice locally.

Some local authorities have had to reduce funding as a result of charge capping. That will not be a surprise to anyone. But it means that local advice to citizens has been reduced, and sometimes extinguished. Over the past year the loss is the equivalent of some 20 or 25 full-time posts. That affects a large number of voluntary people who rely on the core of the salaried posts. At least three bureaux have closed, or are about to close, and several more are to reduce their services drastically because they are already overloaded.

Some people think—and the citizens advice bureaux are with them—that the demand for their services is going to grow. Certainly there is growth in consumer debt, and I suppose that is a function of the recession. Until the recession goes into an upturn that is going to grow, and the citizens advice bureaux and others will not be able to cope with the growth of consumer debt. I say this—and it is important—because, of course, their work is demand led. They would not be asking for more money unless they found themselves incapable of meeting the demand.

They are finding that the demand is growing. Of course, it grew with the poll tax. However, the poll tax is on its way out and the Government hope—and I am sure the citizens advice bureaux hope—that the demands for elucidation of that Act and advice on it will decrease. We do not know whether that will be so with the coming of the council tax, but demand certainly will not diminish. There will be at least the same demand and the funding from the councils is not sufficient to meet current demand; and, as I say, it is demand led. I could give instances all over the country, from London to Wales and up in the North, but I shall not do so.

The citizens advice bureaux are strong supporters of the concept of the Citizen's Charter—so am I—but they feel that if the Citizen's Charter is to become effective, a very large number of extra inquiries will be made to the bureaux. In anticipation of that increase in demand, there is a very strong case for proper funding. Because most of the funding has traditionally been provided locally, they feel—I feel very strongly with them—that there should be some central provision which enjoins local authorities to fund them. One aspect of this matter is that, if they provide their services—as they do—equally throughout the country, in accordance with demand, it would be most unfair if good councils properly fund them and bad councils do not. So there is a strong case for a central direction to local authorities to fund them uniformly.

In conclusion, I stress not only the cost-effectiveness of this service but its real value for money. The unpaid help is organised in a way which is unparalleled in other countries. It is used by the citizens because it is visibly and clearly independent of the state. They know that they will not get advice from those in authority; they will get advice which could be given to them by any expert, if they had enough money to pay for it. Instead they can freely approach the citizens advice bureaux at the grass roots, just around the corner, and know that they have a friend. That is most important to all citizens, whether well funded or near the bottom of the heap. Although the hour is late, I commend the amendment for the consideration of the Committee and the Government. I beg to move.

Lord McIntosh of Haringey

On the basis that this is a probing amendment, I welcome it as an opportunity to pay tribute to the work of the citizens advice bureaux, and indeed—assuming that the amendment, by referring to independent advice agencies, is not confined to the citizens advice bureaux —to the many other independent advice agencies which exist, notably the neighbourhood law centres, which I take it will come under the scope of this clause.

I am bound to say that I have difficulty with an amendment which provides that the Secretary of State shall lay down the way in which councils shall fund voluntary organisations of this kind. Perhaps the noble Lord could tell us whether the network of citizens advice bureaux is a universal network. I know that years ago, when I was better informed about the London Borough of Haringey, we took a deliberate decision—not in any disrespect to the CAB—that we would have a paid for and funded advice service available at a large number of council offices; that is, they would be housed in places to which people came when they needed advice. We took quite exceptional steps to make sure that the advice was independent of the council services and could therefore be critical of council services. So we did not have a CAB in Haringey. I do not know where the clause would leave a borough such as Haringey which made other provision than through an independent advice service.

It may be that the difficulty is overcome by the funding of neighbourhood law centres, which would be covered by this clause. However, I am very nervous indeed about the idea of the Secretary of State defining in detail the way in which a local authority should be obliged to fund agencies of this kind. After all, the financial pressures on local authorities are great. They are threatened by capping and they have an increasing number of statutory duties. They have to make judgments themselves about the way in which they want to see these services funded.

10.30 p.m.

Baroness Gardner of Parkes

The amendment is well intentioned, but I am strongly opposed to it. I support the idea that independent advice should be available. I think very highly of the citizens advice bureaux and what they do. The noble Lord, Lord McIntosh, is correct to say that they are not everywhere. However, they do not suit everywhere. In some parts of Westminster, for example, neighbourhood aid centres became the vogue and the citizens advice bureau had to close because it was no longer needed. In other parts, however, the citizens advice bureaux are hugely successful. In Paddington, there are neighbourhood law centres.

I agree with the noble Lord, Lord McIntosh, about local authority resistance to being told what to do with their money. The local authority must have the freedom to determine where it spends its money. The noble Lord, Lord Henderson, is correct. An enormous amount of work is done without charge. Local authorities fund and continue to fund the voluntary organisations because those organisations supplement in terms of time and money—some raise funds as well —the work done by local authorities. It means that a small amount of council money goes a long way in providing a service. If, on the other hand, local authorities discover that they are obliged to give the money but that people are doing nothing more than the councils would like to do themselves, many councils will prefer to do it themselves.

Every year the London Boroughs Grant Committee funds an enormous number of general advice bodies. More than 90 groups are funded at a cost of £4.4 million a year. The committee provides funds under the headings: general bodies, legal and advice centres, youth rights and justice, gay and lesbian groups, women's groups, prisoner support and so on. In addition, 86 ethnic minority and specialist groups are funded at a cost of £2.5 million. The money is certainly being given and given on a large scale. The citizens advice bureaux are also listed.

The terms "such financial assistance" and "reasonable provision" are too open. Who will decide what is "reasonable provision"? What is "such financial assistance?" Fashions, needs and styles of advice change. As the noble Lord, Lord Henderson, said, bad debts are currently a problem. Financial counselling and debt counselling are important at the moment, yet one hopes that when times improve the need for such counselling will shrink. One should not embody in stone who will get a grant or what service will continue to be needed and demanded. The flexibility of voluntary organisations is marvellous. The local authorities are aware of that and are aware of the good value provided by voluntary organisations. They will continue to fund them but they should not be compelled in this way. I oppose the amendment.

Earl Russell

The noble Baroness made some points to which we should pay attention but perhaps she made a little heavy weather of them. It is not, after all, the purpose of the amendment to direct local authorities to any single organisation. The central point of the amendment is the word "independent". That is the necessary point. Where that does not exist there is a genuine risk of a conflict of interests, and even if there is not a genuine risk of a conflict of interest there is sometimes a perception and a fear of a conflict of interest. There is a quality about independent advice which makes it quite valuable. I am well aware of the need for it because I am finding in the course of my teaching that an increasing proportion of my time goes on giving advice about questions such as poll tax liability, child support, occupation of the matrimonial home and so on.

To my shame, I confess that sometimes, even when I have sat through the whole of a Bill in this Chamber, I do not remember the precise purport of the individual subsections. I have to send the students to someone else for independent advice. It is often the citizens advice bureaux. I have never had anyone let down by them. Often, as the noble Lord, Lord McIntosh of Haringey, said, the independent advice is given by the neighbourhood law centre. One way or another, such people have to obtain advice.

No one has as yet mentioned the second part of the amendment, which provides for representation at social security tribunals. It is an important part of the amendment. We far too readily assume that people dealing with the social security system understand it. That is an optimistic assumption. The bulk of information one needs to know to keep up with the social security system is enormous. Even we here in the Chamber are often like Mr. Macmillan planning a railway journey with the aid of last year's Bradshaw.

I am sure that for a great deal of the time most of us tend to remember income support as last year's amounts and not this year's amounts. That part of the amendment also meets a real need.

The problem of funds is a real and acute one which has been mentioned already. In my local high road, the CAB has recently had a notice on the door saying that its hours of opening have been sharply reduced because of cuts in funding. The value of the CAB is recognised everywhere—by the Labour MP at his surgery on one side of the high road and by the Conservative MP on the other. They need it too. Being a Member of Parliament does not enable one to know everything. It does not make one an encyclopedia. Members of Parliament too need points of reference.

The pressure on local authority funding has been mentioned. It cannot have escaped the Government's attention how often people press for something to be made a duty of the local authority. At present local authorities have a power to fund advice centres; they do not have a duty. There is an increasingly widespread perception that what is not a duty does not get done. The point made about bad councils not doing something while good councils do strikes me as one of considerable importance. It is, after all, the actions of bad councils which mostly put people in the position where they need advice. There is a real problem here. The amendment is an attempt to address it. I hope that it will be regarded with sympathy.

Lord Jenkin of Roding

The noble Earl struck upon a point that was going through my mind about the value to Members of Parliament of bodies such as citizens advice bureaux. Those of us who had surgeries recognise the multitude of problems that can arise. If there is a good CAB, people learn that they probably obtain better advice there than they do in the MP's surgery. MPs generally end up with matters where intervention is required. They do not provide a general advice agency.

I yield to no one in my admiration of the CABs. Often they provide a highly skilled, impartial and uncritical advice service. The philosophy which has increasingly characterised CABs is that of not criticising the manner of life of those who, for instance, complain about being in debt while puffing at a cigarette. The reaction of most people would be to think how silly that was. They would tell them to stop smoking. If the CABs did that people would not go to them. One must accept the clients as they are. The more one thinks about it, the more one realises how wise that attitude is. I, too, share the misgivings that have been expressed about the amendment for the reasons already given.

I do not think the duty should be imposed in this way on local authorities, not least because there are a variety of advice centres throughout the country, particularly in our cities. I have recently been seeking to help Network for the Handicapped, which is a legal advice centre for handicapped people, telling them how they can best pursue their rights and needs through the statutory and voluntary agencies. I am not sure where the centre would come in this proposal. It is in more than one local authority, outside as well as in London. Therefore it does not receive help from the London Boroughs Association.

The amendment concentrates on the bodies within a local authority area. But what happens to those outside? There must be a limit. One body may say, "We're so important that we ought to be funded". But there are others equally deserving which might be left out. While totally sympathising with the objective and having enormous admiration for the advice centres, I too have hesitation in supporting the new clause.

Lord Wise

My noble friend Lady Gardner and the noble Lord, Lord McIntosh, spoke of the London boroughs. The evidence of the CABs has shown that the need for advice and information is widespread throughout the country, not least in the rural areas. Being a countryman, I am worried about them. I feel that if, for any reason, local authorities have to reduce their funding to the independent advice bureaux, the rural areas get a smaller slice of the cake. It would be sad if, purely through lack of funding, the rural areas are not served by their local bureaux. The only way to safeguard them is, as the noble Lord, Lord Henderson, said, to impose a statutory duty on local authorities to provide adequate funding.

10.45 p.m.

Baroness Blatch

This amendment would require local authorities to provide such financial assistance as is necessary—however that may be described—to ensure that independent advice agencies—again however they can be described—are able to provide information and advice about individuals' rights and assistance in asserting those rights. In other words it would cover not only the provision of information about such matters as, for example, the application of the Equal Opportunities Act to a person's situation, but also support and advocacy for that person if he or she needs to assert those rights before any court or tribunal.

In particular, here we are talking mainly about citizens advice bureaux. I think it right then that I should declare my own credentials in this area. As my noble friends may be aware, not only was I a member of the citizens advice bureau for 10 years in my own area, but for six of those years I served as its chairman —I say "chairman", not "chair"—I was also a member of the Eastern Area Policy Group of the National Association of Citizens Advice Bureaux during that period. This amendment is therefore of particular interest to me. I agree, the association is a first class organisation and it has always saddened me that some local authorities went for a full, paid professional service when citizens advice bureaux in their own area were doing a good, highly professional job in a voluntary capacity.

However, it is not only in my personal capacity that I would acknowledge the importance of such advice centres. I speak as a member of a government who have been consistently enthusiastic about the CAB movement and its achievements. As the Committee will be aware CABs rely very heavily on volunteer involvement. This means that CABs represent excellent value for money, but it also means that it is crucial that the Government should provide a substantial level of grant aid.

This Government's funding of NACAB has, in fact, been very generous. Since 1979 that grant money has increased from £1.7 million to £10.5 million. Local authorities' funding for local citizens advice bureaux has also increased significantly.

We have not only demonstrated our commitment to the principle of advice services for the individual by maintaining a high level of funding for citizens advice bureaux. We legislated in 1989 to clarify the position of local authority funding of such agencies. Local authorities are, of course, key players in the finances of CABs and we wished to make it quite clear that local authorities were able to give such support. Thus Section 142 of the Local Government Act 1972 was amended.

This amendment would, however, take the power in Section 142 one step further by making it a duty for local authorities to provide that support. I cannot accept that it would be right for the Government to dictate to local authorities how they must use their resources. Each local authority has different demands on its finite resources. Local circumstances must dictate to a local authority where its priorities lie. Admirable though the work of a CAB may be, in some areas it may be some quite different type of voluntary organisation that requires local authority support more badly. It cannot be for central Government to require the local authority under those circumstances to fund a CAB, where the other organisation is clearly more in need. I am not pretending that these are easy decisions for local authorities to make, but it would be invidious for them to be made by those who are not involved at the grass roots. In fact local authorities have a good record of support for CABs; they have increased their core funding in England and Wales to £27.5 million in 1990–91. That is some £4 million more than the previous year and represents a 17 per cent. increase.

There is scope, too, for all local bureaux to follow the innovatory examples of other bureaux in negotiating longer-term contracts with their local authorities to reduce uncertainty from year to year over funding levels. My own local authority has established a three-year programme for its local citizens advice bureaux. Alternatively, local bureaux might consider working jointly with the local authority while retaining their independence and identity. Independence is important for citizens advice bureaux. We should also not forget some of the imaginative schemes that CABs have been developing in partnership with the private sector. I am thinking here, for example, of the involvement with the finance sector and major retailers on money and debt advice services.

The noble Lord, Lord Henderson of Brompton, made reference to inquiries being on the increase. It is clear that inquiries on taxation—I think the noble Lord mentioned taxation—and debt counselling in particular have certainly increased substantially between 1989–90 and 1990–91. But this is offset by large decreases in other areas of inquiry. Overall, the level of inquiries has not shown such a sharp increase. Inquiries on tax and duties only make up some 5.4 per cent. of the total number of inquiries which increased over the same period by just 2.1 per cent.

We have heard a great deal about closures of CABs. We only have hearsay evidence that CABs have been closing. Out of 1,346 outlets, including 712 main bureaux, three have closed of which two are in London and one in the North-East. The noble Earl is quite wrong. He said that the provision would not mean that local authorities would have to fund specific organisations. I am afraid that it will be prescribed in regulations by the Secretary of State who shall and who shall not be funded. Adequate funding will be prescribed too. I am afraid that the noble Earl is quite wrong. The prescription will come from the centre to the local authorities. The assertion that good authorities fund and bad authorities do not is no argument for compulsion. I would argue that compelling local authorities to fund their advice centres would be counter-productive. There is a healthy and buoyant relationship between local authorities and their advice centres, and particularly between local authorities and CABs.

Another important thing that local authorities do which is an important part of their work in terms of value for money, effectiveness and economic service is audit checks on their voluntary sectors. It is important that if a voluntary organisation is found wanting and is not making good use of that grant in aid, it should be dealt with in a managerial way so that funding can be withdrawn or modified, or the voluntary organisation can be counselled by the local authority on how it will use grant aid in the future.

I believe that I have already mentioned that Haringey has resorted to paying full-time professionals rather than using the sound services of a professional standard that the voluntary sector provides. I believe that that is not the way to obtain the best value for money. To compel authorities in that way is quite wrong and I hope that the amendment will be withdrawn.

Lord Henderson of Brompton

I thank all Members of the Committee who have taken part in the debate, which I consider to have been very constructive. I should like to begin by saying how extremely fortunate the people in the noble Baroness's area were to have enjoyed the benefit of her advice through their local citizens advice bureau. They must be sorely lacking it now.

I have received with interest all the criticisms which have been made from one side of the Chamber or another, which were accompanied by paeons of praise for the citizens advice bureaux. I said at the outset that the amendment was not concerned solely with citizens advice bureaux but with advice-giving bodies, and that includes neighbourhood law centres.

Like the noble Lord, Lord McIntosh of Haringey, I also have misgivings about central government compulsion of local authorities in this regard. However, I am very glad to have raised the debate because the discussion has been so constructive. Nevertheless, I was puzzled that there was a great deal of destructive criticism in that it was the general opinion, quite rightly, that the amendment would not do. However, there was very little constructive criticism in the sense that we did not hear what citizens advice bureaux can do in the face of capping which results in their funding being diminished.

The figures which the noble Baroness, Lady Blatch, mentioned did not differ greatly from mine. Some citizens advice bureaux are about to close, although I may inadvertently have given the impression that they had closed. They are on the brink of closure but have been rescued from closure and are merely existing. I used the citizens advice bureaux to illustrate the straits in which such advisory bodies find themselves. Their services are demand-led and where there is no demand they cease to exist. I do not claim that a citizens advice bureau or any other advisory body should have a God-given right to exist anywhere, but in general such organisations ought to be supported. I am asking the Committee for constructive ideas as to how they should be supported.

The noble Earl, Lord Russell, said that it is often the case that the worst boroughs have the worst services. That is largely because the boroughs do not fund the services. That is the problem which faces us: how are we to provide good advisory services in the areas which are worst served? If only for that reason I am very happy to have heard the views of the Committee and I shall be happy to collect further views, not only from Members of the Committee but also from the Government. I fully acknowledge that the Government are good friends of the citizens advice bureaux. If the Government can help us towards better funding of such advisory bodies I shall be most grateful.

In my view the amendment suffers from the fact that if central government directed local authorities to make payments to the advisory organisations the independence of that advice might well be questioned.

Is a noble Lord making a gesture? A noble Lord appeared to make a gesture, which I did not understand.

Baroness Blatch

I am grateful to the noble Lord. We cannot go beyond 11 o'clock this evening. There is business in the House tomorrow. There are still three amendments on the Marshalled List to consider. It would be very nice if we could consider them this evening.

Lord Henderson of Brompton

I agree. I thank the noble Baroness for that intervention. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hamwee

moved Amendment No. 224A: Page 69, line 33, leave out ("two") and insert ("twelve"). The noble Baroness said: It is an amendment to Clause 105 which is the new provision affecting councillors who are in arrears in paying their poll tax. That requires them to disclose the fact, disqualifies them from voting and imposes penalties.

First, I make it entirely clear that we on these Benches do not condone non-payment of the poll tax. We do not condone any breaking of the law. However, I query whether non-payment for as little as two months is likely to be the wilful default that this section is aimed at. It cannot be entirely unfamiliar to Members of the Committee that some bills are not paid when they should be. Two months is not that long a period. I can envisage that many people simply by overlooking the matter will be caught by the provision. It may be a matter of regret that they fail to pay within two months. However, the penalties that are imposed are harsh. I suggest that they are an overreaction to the problem. The amendment extends the period of two months to 12 months. I beg to move.

Lord Renfrew of Kaimsthorn

There has been a great deal to be said on most of the amendments that we have heard today. They have been sympathetically debated. I find it difficult to say anything in favour of the amendment. I have awaited with high curiosity the arguments in its favour.

We have experienced a background—it is not implied in the amendment—of wilful non-payment of poll tax bills by members of local authorities and even advocacy of non-payment of poll tax bills by members of local authorities. One cannot escape that background in considering the matter. If everyone is sensitive to that, they will give priority to payment of their council tax bills so that they do not fall into arrears on the matter.

Nor are the penalties unduly savage in a personal sense. They do not involve immediate incarceration. They simply involve the non-ability to participate effectively at meetings involving calculation of council tax or related matters, or the exercise of functions under Schedules 2 to 4. There is no reference to Schedule 9. If I were amending the Bill, I would include Schedule 9 too.

I believe that it is an amendment which goes against recent experience. I should be sorry if it found support. In view of the helpful remarks which noble Lords opposite, including the noble Lord, Lord McIntosh of Haringey, have made on the general issue, I hope that they will speak against the amendment.

Lord McIntosh of Haringey

The amendment does not oppose Clause 104. It simply states that two months is a ridiculously short time. People can fall behind in payment for two months by being in hospital, being away, or for many reasons. I support the amendment purely on practical grounds.

Lord Strathclyde

It is not a vindictive provision. First, after declaring that they are in arrears those non-paying councillors will still be able to speak at meetings. They can still represent their electorate. Secondly, if proceedings are taken against them for not declaring their arrears, they will not be liable to be fined if they can prove that they did not know they were in arrears, for instance, if they were in hospital, or the bank failed to honour a standing order. Thirdly, in exceptional cases they will also still be able to apply for the Secretary of State's dispensation to vote.

If we carry the amendment it would mean that councillors in arrears could vote on all issues, including financial issues, throughout the year during which they were not paying their tax. I cannot believe that that is the intention of the noble Baroness.

Baroness Hamwee

I am sorry that the spirit in which I moved the amendment was not clear to the noble Lord, Lord Renfrew. I am grateful to the Minister for reminding me of another situation; that a bank may, by mistake, fail to honour a standing order or that direct debit arrangements may go wrong.

I am simply posing an over-reaction to a situation which I do not condone or support. The motives behind the amendment I shall leave to be judged by those in the wider world. Non-payment is not to be encouraged. However, the penalty and the provision should always be in balance with the bill that is being addressed. I think that this provision is severely out of balance. However, as it is now precisely eleven o'clock I had better beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Clause 105 agreed to.

11 p.m.

Lord McIntosh of Haringey

moved Amendment No. 224B: After Clause 105 insert the following new Clause ("Void properties of housing associations .—(1) Any property shall be an exempt dwelling for the purposes of section 4(2) to this Act if, notwithstanding that it is not of a class prescribed by order by the Secretary of State under that subsection, it falls within subsection (2) below. (2) A property shall be a property to which subsection (1) above applies if any of the following criteria applies—

  1. (a) it is unoccupied property which requires major repair works, other than structural repair works, to render it habitable, including unoccupied property with respect to which less than six months have elapsed since the day on which such repair works were substantially completed; or
  2. (b) it is unoccupied property which is awaiting sale of the freehold or leasehold interest to an individual; or
  3. (c) it is property which is furnished and awaiting letting and which has been unoccupied for less than 6 months;
and if, in the case of a property falling within paragraphs (a) or (b) above, it is owned by a registered housing association or, in the case of a property falling within paragraph (c) above, it is owned by such an association or a public sector landlord within the meaning of section 80 of the Housing Act 1985"). The noble Lord said: This is a complex amendment on which I should make a 12-minute speech, but I shall not. The draft council tax exempt dwellings order is most complex. It has classes from A to N of dwellings which may be considered to be exempt from the point of view of council tax. This amendment seeks to extend those classes in a very minor way in order to ensure that they cover the conditions of properties of registered housing associations. Paragraph (c) covers other public sector landlords within the meaning of the 1985 Housing Act.

We seek to extend class A to include eligible repair works which are not structural. In class C we seek to extend the six-month unoccupied period to include unoccupied property awaiting the sale of the freehold or leasehold interest to an individual. Again in class C we seek to remove the substantially unfurnished criterion and extend it to property which is furnished and awaiting letting and which has been unoccupied for less than six months.

They are minor changes, but they make the draft order fit in better with the needs and conditions in particular of registered housing associations. I beg to move.

Lord Strathclyde

The Government intend to exempt unoccupied dwellings undergoing structural repair until six months after the repairs are completed, providing that they remain unoccupied. The amendment refers to major repairs other than structural repairs. The noble Lord may have a point here; I promise that we shall consider it carefully as we prepare the exemption regulations. I believe that this is a matter better dealt with in regulations than on the face of the Bill.

The second class of dwelling is unoccupied property owned by a housing association awaiting sale. On the assumption that such property would be unfurnished it would be exempt under the Government's proposals for six months. Again the Government's proposed exemption is not restricted to dwellings owned by housing associations. I think that it is reasonable to impose a maximum period for which the exemption should apply; once the six months have elapsed I would expect many of the properties concerned to have been sold.

The final exemption is one for furnished dwellings owned by housing associations and public sector landlords which are unoccupied awaiting letting. The Government propose to exempt such dwellings only if they are owned by charitable bodies. Other housing associations and public sector landlords will be treated in the same way as private landlords: council tax will be payable, but there will be a 50 per cent. discount because the property is empty. I do not believe that there is very much between us. I hope that the noble Lord will accept what I have said.

Lord McIntosh of Haringey

I agree that it is better that this matter should be dealt with by regulation. I am grateful for what the Minister said about paragraph (a). I am not sure that I understand what he said as regards paragraph (b). I am sorry that he did not feel able to go further as regards paragraph (c) because I do not see why housing associations should be treated differently from other charities. After all, many housing associations are registered charities. I am sure that the housing association movement will read the Minister's reply with care. If necessary, we shall return to this matter at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 106 to 111 agreed to.

Clause 112 [Orders and regulations]:

[Amendment No. 225 not moved.]

Clause 112 agreed to.

Clauses 113 to 116 agreed to.

Clause 117 [Savings and transitional provisions]:

Baroness Blatch

moved Amendment No. 225ZA: Page 79, line 10, leave out paragraphs (a) and (b) and insert ("this Act and the repealed enactments shall have effect as if—

  1. (a) any reference in this Act to those Acts were a reference to those enactments;
  2. (b) any reference in this Act (except paragraph 4 of Schedule 9) to either of those Acts, or to any provision of those Acts, were a reference to the corresponding provisions or provision of those enactments;
  3. (c) subsections (1) to (7) of the section set out in paragraph 4 of Schedule 9 to this Act were substituted for subsections (8A), (8AA) and (8B) to (8F), and subsection (11) of that section were substituted for subsections (8G) and (8H), of section 20 of the Social Security Act 1986; and
  4. (d) subsections (8) and (9) of the section so set out were substituted for subsections (5A) and (5B), and paragraphs (a) and (b) of subsection (10) of that section were substituted for paragraph (c) of subsection (6), of section 21 of that Act.
( ) The provisions of any regulations or orders relating to council tax benefit which—
  1. (a) are made before the commencement of the Social Security Acts; and
  2. (b) are expressed to come into force after that commencement,
may refer to any relevant provisions of those Acts rather than to the corresponding provisions of the repealed enactments."). On Question, amendment agreed to.

Baroness Blatch

moved Amendment No. 225ZB Page 79, line 17, after ("above") insert: (""the repealed enactments" means the enactments repealed by the Social Security (Consequential Provisions) Act 1992;").

On Question, amendment agreed to.

Clause 117, as amended, agreed to.

Clause 118 [Short title, commencement and extent]:

Earl Howe

moved Amendment No. 225A: Page 79, line 28, after ("87,"), insert ("90A,")

The noble Earl said: In speaking to this amendment, I shall speak also to the substantive Amendment No. 228C. These minor amendments would ensure that Caldey Island would now also be included within the district of South Pembrokeshire for council tax. While it may have been interesting to save the community charge from total extinction in one corner of the British Isles, it is appropriate that Caldey Island should be included within the scope of the tax. I beg to move.

On Question, amendment agreed to.

Clause 118, as amended, agreed to.

The Earl of Strathmore and Kinghorne

I beg to move that the House do now resume.

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

House resumed.

House adjourned at eight minutes past eleven o'clock.