Council Tax: Charitable Care Homes (Hansard, 8 February 1993)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde)
My Lords, yes, the Government have received a number of letters about the council tax from proprietors of charitable care homes.

§ Baroness Fisher of Rednal
My Lords, although I thank the Minister for that Answer, I would have enjoyed it more had he told me the Government's reply to the charities. Is he aware that this will be an added burden on charities? Could he give the House the relevant definitions? I understand that "care homes" which are run by charities will receive council tax relief from the local authorities. That applies if they are "care homes". However, if they are "dwellings", they will not get the relief. What is the difference between a "care home" and a "dwelling"?

§ Lord Strathclyde
My Lords, the noble Baroness asks about the difference between homes that are rated under non-domestic rates, for which there is a proportion of relief, and those residential care homes which people live in and where they are charged the council tax, for which the personal element of the tax is taken away. Otherwise, the property aspect of that tax is paid for.

§ Lord Rix
My Lords, does the Minister accept that it is not the most valuable use of local authority resources to have one part of a local authority compute and charge the council tax and, in effect, to have another part of the same authority collect and pay for that council tax from its social services department?

§ Lord Strathclyde
My Lords, yes, but that is true for a whole range of government expenditure. A lot of money seems to go round in circles, but ultimately it is always the taxpayer who bears the burden.

§ Lord Stallard
My Lords, does the Minister accept that houses in multiple occupation have always posed problems for rating and valuation purposes? Does he also accept that, under the poll tax, many people who had contributed hitherto to the rates found themselves paying community charge for the first time, but without any reduction in the rate? Does he accept that, because of the increase in the number of houses in multiple occupation in the past 10 or 15 years, many 418 thousands of people will be in similar circumstances when it comes to the council tax and that it will cause more problems than the poll tax? Is he aware of that, and what is he going to do about it?

§ Lord Strathclyde
My Lords, we changed the poll tax to the council tax because of some perceived problems. We believe that the council tax now receives support across parties and within the community at large. Of course, we shall find out after 1st April.

§ Baroness Hollis of Heigham
My Lords, residential care homes were exempt under the rates and exempt under the poll tax, but will now have to pay under the council tax. May I invite the Minister to consider a comparison with second homes which paid a full charge under the rates and a double charge under the poll tax but which will have their bills halved under the council tax? Does the Minister think it fair that second homes should have their taxes halved while residential care homes for the frail and elderly should pay taxes for the first time?

§ Lord Strathclyde
My Lords, it was never the original intention of rating legislation to exempt residential care homes, but a subsequent court case exposed a legislative flaw. The community charge was, of course, a personal tax and it was right at that stage to exclude those who lived in residential care accommodation. The council tax is partly a tax on property and partly a tax on people. Residential care homes drop a band because they have extra bathrooms to deal with the disabled, and the personal charge is exempted. Therefore, a home with patients will pay only 50 per cent.

§ Baroness Fisher of Rednal
My Lords, is the Minister aware that Scotland operates altogether a different policy from that in England? Why does Scotland classify such homes differently from the English system with the result that such homes are benefiting from the 80 per cent. discount on the rateable value?

§ Lord Strathclyde
My Lords, the noble Baroness will know—and I am very much aware—that many things are done differently between Scotland and England. That reflects the way in which Parliament has decided to do its business.

§ Baroness Hollis of Heigham
My Lords, in answer to my previous question, the Minister explained that the reason that residential homes would pay was because the council tax is a mixture of a personal tax and a property tax. Does he agree that under the personal tax (the poll tax) residential homes were exempt and that under the property tax (the rates) residential homes were exempt; so that when we have a mixed tax (a personal and a property tax) can he tell us why such homes should pay?

§ Lord Strathclyde
My Lords, I explained to the noble Baroness that the original intention of the rates was that those homes should pay, but that because of a legislative flaw that was changed. The proof of that is to be found in Hansard of that period and contemporary DoE guidance. I feel that the 419 Government have gone a long way towards treating people who live in homes equally to those who live outside and suffer from similar disabilities.

§ The Countess of Mar
My Lords, is it not the case that some residential care homes are owned by charities and some by private individuals? While I have every sympathy with the charities, it would be difficult for local authorities to have to assess one on its charitable basis and another on its profit-making basis.

§ Lord Strathclyde
My Lords, the noble Countess is correct. We are looking to treat people in the same circumstances equally, whether they are in the local authority, the private or the voluntary sector.

§ Lord Williams of Elvel
My Lords, has the Minister heard of the programme called Care in the Community? If he has heard of that programme, does he understand that housing associations, which are asked to bear a large part of the burden of providing residential accommodation for those covered by Care in the Community, feel themselves seriously disadvantaged by the operation of the council tax? Indeed, many housing associations are at this moment complaining to his department about the extra cost that that will involve. Is it not time for the Minister's department to rethink this matter?

§ Lord Strathclyde
My Lords, we are talking about residential homes, not housing associations.