§ Mr. Alfred Morris
To ask the Secretary of State for the Environment (1) what estimate he has made of the total cost to charities, which were formerly exempt from local taxes on residential care homes, of the imposition of council tax;
(2) what effect the imposition of council tax on charities with residential care homes will have on modifying residential care accommodation in line with the Government's community care principles; and if he will make a statement;
(3) what representations the Joint Parliamentary Under-Secretary of State has had from the Charities Tax Reform Group about the effect of imposing council tax on charitable residential care accommodation; what reply is being sent; what action he is taking; and if he will make a statement.
§ Mr. Robin Squire
I have received a letter from the charities tax reform group which follows up a meeting and correspondence I have had with one of their members. My replies have explained that the council tax is a tax paid by residents, whether directly or through their landlords. There is no reason why one group of residents should be advantaged simply because their landlord is a charity. Instead we are targeting help by reference to the circumstances of residents, through the discount, disabled reduction, council tax benefit and transitional relief systems.
We have been particularly concerned to ensure that residents of residential care homes—whether or not run by charities—should not face unreasonable council tax 289W burdens. Many homes will receive a one-band reduction in respect of features required for their disabled residents. Care homes without resident staff will not pay the personal element of the tax, which will mean a 50 per cent. discount. And many care homes will qualify for substantial amounts of transitional relief. My right hon. Friend the Secretary of State for Social Security took account of the costs of the council tax in his uprating of benefits for care home residents, which will take effect on 1 April. Such benefits were generally increased by more than the rate of inflation.
Because we do not know the circumstances of each individual care home, including the council tax band into which it falls, we cannot estimate the total amount of council tax which they will pay. But a care home in the highest band receiving a reduction for disability and a 50 per cent. discount might pay about £9 per week, even without the transitional reduction scheme. With that scheme the cost might he as little as £3.25 a week. Care homes in lower bands would pay even less. These amounts equate to a few tens of pence per resident.
Care home residents, like those in the community, will be asked to make a contribution to the costs of local authority services from which they benefit. I believe that these contributions are eminently reasonable; because of the structure of the tax, they are likely to be rather smaller than those made by people living in the community.