HL Deb 16 July 2003 vol 651 cc957-64

  1. (1) The National Assembly for Wales may for any financial year by regulations prescribe one or more classes of dwelling in Wales for the purposes of subsection (3) or (4) below.
  2. (2) A class of dwellings may be prescribed under subsection (1) above by reference to such factors as the Assembly sees fit and may, in particular, be prescribed by reference to—
    1. (a) the physical characteristics of dwellings, or
    2. (b) the fact that dwellings are unoccupied.
  3. (3) For any financial year for which a class of dwellings is prescribed for the purposes of this subsection, a billing authority in Wales may by determination provide in relation to all dwellings of that class in its area, or in such part of its area as it may specify in the determination, that the discount under section 11(2)(a) shall be such lesser percentage of at least 10 as it may so specify.
  4. (4) For any financial year for which a class of dwellings is prescribed for the purposes of this subsection, a billing authority in Wales may by determination provide in relation to all dwellings of that class in its area, or in such part of its area as it may specify in the determination—
    1. (a) that the discount under section 11(2)(a) above shall not apply, or
    2. (b) that the discount under that provision shall be such lesser percentage as it may so specify.
  5. (5) A billing authority may make a determination varying or revoking a determination under subsection (3) or (4) for a financial year, but only before the beginning of the year.
  6. (6) A billing authority which makes a determination under this section shall publish a notice of it in at least one newspaper circulating in its area and do so before the end of the period of 21 days beginning with the date of the determination.
  7. (7) Failure to comply with subsection (6) above shall not affect the validity of a determination."

  1. (3) Where immediately before the day on which subsection (2) comes into force regulations under section 12(1) of that Act are in force which apply in relation to a financial year beginning on or after that day, the regulations, so far as relating to such a financial year, shall on and after that day have effect as if—
    1. (a) they were made under section 12(1) of that Act as substituted by this section, and
    2. (b) each class of dwellings which they prescribe were prescribed for the purposes of section 12(4) of that Act as so substituted.
  2. (4) Where immediately before that day a determination under section 12(1) of that Act is in force which applies in relation to a financial year beginning on or after that day, the determination, so far as relating to such a financial year, shall on and after that day have effect as if made under section 12(4) of that Act, as substituted by this section, in relation to the whole of the area of the authority which made the determination.
    3. 958
  3. (5) In its application by virtue of subsection (4), a determination under section 12(1) of that Act shall have effect—
    1. (a) if it provided for section 12(2) of that Act to have effect in substitution for section 11(2)(a) of that Act, as if it provided for the discount under that provision to be twenty-five per cent.;
    2. (b) if it provided for section 12(3) of that Act to have effect in substitution for section 11(2)(a) of that Act, as if it provided for the discount under that provision not to apply."

The noble Lord said: My Lords, we heard a compelling story from my noble friend Lady Gale at Second Reading that there was real concern in Wales that if we passed Clause 76, Welsh authorities would have a less flexible power to change council tax discounts on second homes than we were proposing to give English authorities. My noble friend Lord Morgan spoke to amendments in Committee which sought to rectify that.

We have reflected carefully on what my noble friends said about two parts of the legislation and have concluded that we should move government amendments to give effect to their arguments. Amendment No. 68 is the principal amendment which would replace the existing provision in Wales and give the National Assembly for Wales the same ability as we are giving the Secretary of State to prescribe classes of dwellings where billing authorities can reduce or remove the nationally set discounts.

Subsections (3), (4) and (5) of the new Section 12 to be inserted into the Local Government Finance Act 1992 by Amendment No. 68 are transitional provisions. They preserve in force the effect of existing regulations prescribing classes of dwellings for which Welsh billing authorities can reduce the 50 per cent discount to 25 per cent or zero and preserve the effect of any existing determinations to reduce discounts made by Welsh authorities. While new Clause 76 will give Welsh authorities greater flexibility, these transitional provisions will ensure that those authorities are not forced to take new decisions if they would not have decided differently under the new powers.

The other amendments, with the exception of Amendment No. 82, are consequential on Amendment No. 68. A particular point to note is that Amendments Nos. 87, 89, 92 and 93 amend Clause 127 so that the National Assembly for Wales can choose when to commence these new powers in Wales. Amendment No. 82 is merely a consequential amendment on Clause 76 itself to ensure that in England, any reduction on the council tax liability under regulations made under Section 13 of the Local Government Finance Act 1992, such as reductions for disabilities, are additional to any discounts made under Section 11A inserted by Clause 76.

I hope that my remarks have made the position clear and I beg to move.

9.45 p.m.

Baroness Hanham

My Lords, I am absolutely fascinated by this entire new clause being introduced under Amendment No. 68. It is immaculate and that is all down to the parliamentary draftsmen. It just goes to show what an advantage it is to be in government rather than in opposition. One can lay one's hands on people who are able to undertake this marvellous work. It is too good to leave unremarked.

I am sorry that the noble Baroness, Lady Gale, is not in her place. As long as the Welsh authorities are not gaining any advantage over that being offered to those in the rest of the United Kingdom, although I suppose that we have to exclude Scotland, then probably we have no objection to this immaculate new clause. I thank the Minister for his explanation.

On Question, amendment agreed to.

Baroness Hamwee moved Amendment No. 69: Page 41, line 6, at end insert— ( ) If a billing authority makes a determination under this section, it shall be disregarded for the purposes of distributing revenue support grant to receiving authorities under section 78 of the Local Government Finance Act 1988;c. 41) (revenue support grant).

The noble Baroness said: Lords, in moving Amendment No. 69 I shall speak also to Amendment No. 70. These amendments were debated in Grand Committee. The order of names to the amendment was different at that point. We do not intend to steal the thunder of the noble Baroness, Lady Hanham—she moved the amendments on the last occasion—but it is a matter about which we, the noble Baroness and the Local Government Association feel strongly.

The LGA has said that it is disappointed that the Government have decided that the money raised by removing the discount on long-term empty properties will be paid to the Secretary of State, although I note of course what the Minister has said about it being redistributed. The association considers that to be inconsistent with statements made previously. When they announced the welcome changes in this area, the Government had said that local communities would benefit from improvements in local services such as more affordable housing.

The LGA has made the very credible point that bringing long-term empty properties back into use can be a resource- intensive process. There is the question of tracing the owners of the property. Sometimes owners hold out for a long-term redevelopment opportunity and then hope to sell the property on for a large profit. If the additional council tax raised was retained at the local level without ring-fencing, it could be used to help councils develop and fund an active empty properties strategy to tackle the problem.

Of course the Government have recently provided guidance on empty properties in the form of a handbook entitled Empty Property: Unlocking the Potential. My noble friend Lady Maddock, who has had to leave, said that she wished she was half as skilled as the draftsmen who prepared Amendment No. 68, in which case she would have tabled an amendment to the effect that an authority could keep the money if it had in place a good empty homes strategy and perhaps an empty homes officer. She has asked me to pass on her plea that the Government might seriously consider bringing forward an amendment to that effect if they are unwilling to accept the broader issue.

When we debated the matter in Grand Committee, the Minister said that the Government want to persuade authorities to reduce or end the discount on long-term empty properties, on housing and planning grounds and not for financial reasons".—[Official Report, 16/6/03. col. GC21 5.)

We agree that that is inherently an important issue but, as the LGA explained, it is not inexpensive. The Government may not want to give local authorities a financial incentive but they should ensure that they are not providing a disincentive.

I note the Minister's comments about redistributing the money, but we are seeking freedom and flexibility in totality, not only part way. He referred to the money being difficult to track when it is redistributed. That is one of the issues. Although we may all refer to additionality, it is often very difficult to pin down and for people to see that it is there. I beg to move.

Baroness Hanham

My Lords, to some extent the discussion on these amendments was pre-empted by the debates on earlier amendments. The Minister's reply that this money will not be additional will cause concern. It was said rather as an aside, but we need to get into the open the fact that the money raised from the policy of no discounts on empty homes will go to the Exchequer. As the Minister said, it will be "repatriated" within the revenue support grant. In fact, it will not be repatriated; it will be dissected and sent back in little bits not necessarily relating to the amount raised in any particular area.

As the noble Baroness said, this will provide no incentive for local authorities to introduce an empty homes strategy. If a local authority can identify how much it is achieving by bringing empty homes back into use—which is what it will do if it does not have a discount—that will have a far greater effect than any money raised being swept off into the Treasury and then parcelled out as part of the revenue support grant.

Amendment No. 70 is extremely important to local authorities and the way in which they will set about dealing with their empty homes strategy. Many local authorities have empty properties for all kinds of reasons. Where people have been able to get in and get the empty property shifted, one of the sustainable communities proposals is that local authorities should be almost able to confiscate empty homes and get them back on to the market.

As it is obviously a clear policy of the Government that empty homes should not be allowed to sit and fester and prevent people living in them—it is not one with which we disagree—there will have to he other incentives.

I support both amendments to which my name is attached, as I did in Committee. I am concerned about the Minister's response that the money will not be additional. In our view the money should be left with the local authority that raises it and brings the homes back into the system.

Lord Bassam of Brighton

My Lords, Clause 76 inserts a new Section 11A into the Local Government Finance Act 1992 to allow a billing authority to reduce or end the 50 per cent council discount for classes of unoccupied dwellings prescribed in regulations. Amendments Nos. 69 and 70 seek, in slightly different ways, to ensure that any extra revenue raised would be kept by local authorities and disregarded for determining financial support for the authorities concerned.

I want to make a clear statement of government policy so that we can set out our view logically. We have said we will allow local authorities to retain the money from reducing the second homes discount but not from reducing or removing the long-term empty homes discount. We do not require any primary legislation to give effect to our policy.

For revenue support grant purposes, we will continue to calculate the tax base as if there were no determination in respect of second homes, prescribed as a class under Section 11A(3), inserted by Clause 76. In other words, we propose to calculate revenue support grant on the basis that the 50 per cent discount continues for second homes. And we will make no change in respect of long-term empty property, so that as the tax base goes up, this will automatically be reflected in the grant calculations.

We have heard a great deal about local authorities keeping the money from charging more council tax on empty homes. But we are concerned that this would create what is probably best described as a perverse incentive to keep property empty. A local authority would retain the resources only if the property continued to be unoccupied, and so success by its empty homes service in getting domestic property back into use would effectively reduce the amount of income it would get. That does not seem sensible. We have said on a number of occasions that we think the decision to change the discount on long-term empty property should be taken on housing grounds and not because it raises more money for the authority.

Further to Amendment No. 68, in Wales, billing authorities have for a number of years been able to reduce from 50 per cent to 25 per cent the discount for classes of dwellings prescribed under Section 12 of the Local Government Finance Act 1992. Amendment No. 68 has extended to Welsh authorities the discretion conferred by Clause 76 on English authorities, as I explained earlier.

Amendment No. 69 would require the National Assembly for Wales to treat the dwellings as if they were still subject to the 50 per cent discount. At present, where Welsh billing authorities reduce the 50 per cent discount to 25 per cent or zero under Section 12 of the Local Government Finance Act 1992, this is taken into account to reduce Welsh authorities' relative shares of revenue support grant. Arguably, Amendment No. 69 runs contrary to the devolution settlement in so far as revenue support grant is a matter devolved to the National Assembly for Wales.

I hope that the explanation addresses the issue that the noble Baroness raised about empty properties. Like her, the Government want to ensure that empty properties are brought back into use. However, she has to address the issue of the potential for the perverse incentive to keep properties empty.

As a former local authority leader responsible for housing, I think any good local authority, regardless of financial benefits, should have in place a sound strategy—they are obliged, I think, to do so—to deal with bringing empty homes back into use. We all support that; I know that noble Lords and Baronesses on the Benches opposite have supported various schemes to ensure that empty properties are brought back into use. That was the spirit behind much of the legislation to deregulate the private rented sector. I know, too, that the "above the shop" schemes for bringing flats back into use and many other empty homes strategies have all-party support.

I do not think these amendments are the appropriate way in which to deal with the issue. Pursuing the issue in the way in which these amendments seek to do could have a perverse impact. I cannot believe that the amendments would have quite the dramatic impact in that policy area that has been claimed for them this evening.

Lord Hanningfield

My Lords, before the Minister sits down, surely this is against the spirit of the legislation to allow more freedom for local authorities when it comes to raising council tax. One is assuming the worst about local authorities—one is assuming they will want to pursue a perverse course. We all want to make certain that empty homes are reoccupied unless the people who own them want to keep them empty.

Surely we are still acting against the spirit of the Bill in allowing local authorities to have more flexibility in the latter. If the money that is raised in this regard is taken into account in the grant calculations, that takes away the freedom that we thought we were giving local authorities. I am still not clear about the Government's policy with regard to the percentage of council tax that local authorities raise that they are allowed to keep.

Lord Bassam of Brighton

My Lords, I know that the noble Lord has listened carefully throughout the debates that we had on Second Reading, in Grand Committee and on Report. I have made it clear, and certainly the noble Lord, Lord Rooker, has made it very clear, that we are in this piece of legislation going through an extensive deregulatory process. The noble Lord seems to be conflating two issues. Is he having a go at the Bill for not being deregulatory enough, or is he having a go at the particular provision and claiming that it is not helping with respect to bringing empty homes into use? What argument is he seeking to rely on?

I believe that we are being deregulatory in general. The noble Lord should think about the strange nature of the amendment that we are discussing and its potential perversity. He ought to read Hansard very carefully. I heard what was said about the LGA being unhappy but probably on reflection, when it thinks about the way in which these matters might work, it may well see the strength of our argument.

Lord Hanningfield

My Lords, it is a consistent theme throughout the legislation that freedom is given but then part of it is taken away. It is a theme that I have tried to illustrate during the course of our debates.

Baroness Hamwee

My Lords, I wrote down the word "spirit" just before the noble Lord, Lord Hanningfield, referred to the spirit of the Bill. I do not think that it is inconsistent to run both arguments.

I wish to make it clear that of course we support bringing empty properties back into use for their own sake. I said that I agreed that that was inherently important when I introduced the amendments we are discussing. The noble Lord, Lord Bassam, said that the amendments would not have quite the dramatic impact that we might think. If so, I cannot resist the temptation to ask what he is worried about.

I turn to the issue of a perverse incentive. Housing is rather like a set of dominoes in that if stock is scarce, that has a knock-on effect along the line. At some point further along that line, a local authority will become involved with the needs of people who might have been housed if there were more housing in use. I suspect that the cost of providing housing is a good deal higher for a local authority than the rates that it might get through the mechanism we are discussing. Therefore, I do not buy the perverse incentive argument. However, I shall be interested to see what the LGA has to say when it has read the debate this evening. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 70 not moved.]

Lord Rooker

My Lords, I beg to move that further consideration on Report be now adjourned.

Moved accordingly and, on Question, Motion agreed to.

House adjourned at four minutes past ten o'clock.