Granny Flats: Council Tax (Hansard, 13 July 1995)

§ The Minister of State, Department for Education and Employment (Lord Henley)
My Lords, as I made clear in answering my noble friend Lady Gardner of Parkes on 26th June, we shall consider carefully this decision when the transcript becomes available. However, on present information there seems no need to amend the guidance which was issued to listing officers of the Valuation Office Agency.

§ Lord Boyd-Carpenter
My Lords, I thank my noble friend for that characteristically cautious reply. Is it the Government's intention not to allow the development of 1834 a rule that council tax is payable additionally where people public-spiritedly or generously accommodate their elderly relatives?

§ Lord Henley
My Lords, every case depends on its facts. One must look at the individual accommodation and decide whether it is a separate and self-contained unit and therefore liable for council tax. As to whether the overall burden on the individual family is increased, I dealt with that when I last answered this question. In many cases it is possible that by rating or assessing separately the two premises so that the main house has a reduced banding the liability for the other property will rest with the elderly relative living in it who might, if of few means, he entitled to benefit, and benefit at 100 per cent.

§ Lord Eatwell
My Lords, does the Minister recall that when we last discussed this matter on 26th June, I asked what would be the position in respect of capital gains tax given that the Inland Revenue defines granny flats as separate properties for the purposes of council tax? The noble Lord, Lord Henley, seemed to be rather confused about that at that time. Will he make it clearer for us? If the separate granny flat is not defined as part of the householder's principal residence, will it not be liable for capital gains tax? As well as paying council tax on the granny flat, the householder will have to pay capital gains tax—a Conservative double-whammy against the elderly?

§ Lord Henley
My Lords, as I made clear last time, the assessment as regards council tax has absolutely nothing to do with whether it is a separate property for the purposes of capital gains tax. Therefore, as on the last occasion, the noble Lord's question has nothing to do with the Question on the Order Paper.

§ Lord Molloy
My Lords, as vice-president of the Royal British Legion, the most honourable position I have ever had, I receive letters from many people who say that they are experiencing great difficulty finding over £1,000 a month which it costs to keep their elderly relatives, who fought in the 1914–18 war, in private nursing homes. I do not ask the Minister for an assurance but will he give me at least a hope that that situation will be examined so that we honour those men who were very severely wounded in the First World War? Their relatives cannot afford to keep them in those homes. I ask that something be done to acknowledge the contribution they made when they were young men fighting for their country.

§ Lord Henley
My Lords, the noble Lord speaks with his usual passion on behalf of those whom he represents and those to whom we owe so much. The Question on the Order Paper does not relate strictly to that matter but I shall pass on the remarks of the noble Lord to my appropriate colleagues.

§ Baroness Gardner of Parkes
My Lords, when I asked the Question on 26th June I told the noble Lord that there were newspaper reports which stated that to be self-contained, the unit or flat did not even need to have a toilet or other facilities. In reply the Minister said that he considered that those were rumours in the newspapers. Since that time has he had an opportunity 1835 to check whether that is correct and that a property cannot be ruled to be self-contained unless it is literally a property into which one may enter, close the door and live entirely separately?

§ Lord Henley
My Lords, as I believe I made clear to my noble friend on that occasion, we considered the press articles to be somewhat alarming and misleading. I want to make it quite clear that under the guidance issued by the Valuation Office Agency, separate bandings will apply only where a unit has all the necessary facilities; that is, living space, washing and cooking facilities and WC.

§ Lord Boyd-Carpenter
My Lords, can my noble friend the Minister indicate that the Government are watching carefully the outcome of similar cases? Can he also confirm that the Government are aware of a very real danger that duplication of council tax is to be the reward that people get for housing elderly relatives?

§ Lord Henley
My Lords, again, I believe I made it clear on the earlier occasion that if we felt there was a genuine disincentive to people to look after their elderly relatives, obviously that would be something we would look at. For the various reasons that I explained, I honestly do not believe that there is such a disincentive. However, if it was felt that there was, that would be something we would consider.

§ Lord Clark of Kempston
My Lords, as there will he more and more children looking after their elderly relatives in the future, does my noble friend the Minister agree that it would be folly, as regards the British taxpayer, to put any disincentive in the way of those children to accommodate them'? If the rules are wrong, let us change them.

§ Lord Henley
My Lords, as I said, I do not believe that the rules are wrong. My noble friend is right to point out that the demographic changes we are facing will become increasingly more difficult over the years. They will have a read-across not only as regards looking after elderly relatives hut also as regards pensions and the whole of the social security system.

§ The Countess of Mar
My Lords, is the Minister aware that many children take on the responsibility of their parents' bills—in other words, gas bills, electricity hills, and so on—and that if they were faced with a council tax bill they might not be aware that their parents would be entitled to benefits and that, therefore, the council tax could be disallowed? Can the Minister ensure that local authorities also send out facts about benefits with their demands?

§ Lord Henley
My Lords, I tried to make clear that, obviously, in appropriate cases, individuals would be entitled to benefit. I shall certainly ask colleagues in the Department of Social Security to look at the question to see whether it might be worth recommending local authorities to send out such advice to individuals.

§ Viscount Caldecote
My Lords, can my noble friend the Minister say whether the same rules apply to separate accommodation which is used for a carer looking after elderly people in the main house?

§ Lord Henley
No, my Lords, not without advice. However, I suspect that the answer would be that it does. In other words, if it were separate accommodation, it would be assessed separately. Nevertheless, I prefer to take advice on the matter and write to my noble friend.

§ Lord Stallard
My Lords, in answer to a previous question the Minister mentioned the disincentives to people to look after the elderly. Does the noble Lord consider that the imposition of VAT on services for the elderly—for example, on community care—is yet another disincentive for those who are struggling to remain in their own homes? Will he take that on board?

§ Lord Henley
My Lords, I believe that I am quite generous in the sort of questions that I allow. However, I believe that, again, the noble Lord's question goes far wider than that on the Order Paper.