COMMUNITY CHARGE: TRANSITIONAL RELIEF SCHEME (Hansard, 15 February 1990)

§ Lord Reay

Over the next three years the community charge transitional relief scheme will reduce personal community charges for about 6 million people by £710 million during the changeover from domestic rates to the new system. Most chargepayers would pay no more than £3 per week more than they did in rates, where councils spend in line with the Government's assumptions.

My right honourable friend the Secretary of State for the Environment has today laid the Community Charge Transitional Relief Report (England), as required by these regulations, which sets out the assumed community charges for the purposes of the scheme: these are as announced on 11th January in connection with the Revenue Support Grant settlement for 1990/91. Copies of the report are being sent to local authorities and to the local authority associations.

Local authorities will be reimbursed in full for the income forgone as a result of the abatement of community charges. In addition, they will receive grant in respect of administrative costs.

When the community charge transitional relief scheme was announced my right honourable friend the Secretary of State for the Environment met the local authority associations and made it clear that authorities' reasonable costs incurred in preparing for and administering the scheme would be reimbursed in full. KPMG Peat Marwick McLintock, management consultants, were Commissioned to undertake an independent study of these costs. They have had discussions with 31 local authorities, software suppliers, and have met the local authority associations to discuss their views on the operation of the scheme and on methods for cost reimbursement. They have now submitted their 1532WA report, and copies of the recommendations and cost summary have been placed in the libraries of the Houses of Commons and Lords: copies of the complete report will be available shortly.

In the light of the report, we are today announcing detailed proposals for consultation with the local authority associations for the reimbursement of these costs. We propose that authorities' preparation costs for the scheme, largely for computer software and related expenditure, should be reimbursed in full on the basis of the actual expenditure incurred, as confirmed by the authority's auditor. The consultants' report estimates preparation costs to be about £7 million in total.

We propose that the general administrative costs which authorities will incur as a consequence of the scheme, in particular dealing with inquiries, should be reimbursed at a flat rate of 27p per chargepayer, with an allowance for higher costs in London. On this basis, the administrative costs grant would be about £9.5 million in total.

The report recommends that the cost of dealing with applications for elderly and disabled persons and the cost of issuing any second bills to chargepayers should be reimbursed on the basis of an amount per application and an amount per bill. I propose that applications should be reimbursed at a rate of £3 per chargepayer for each application made, including the cost of dealing with unsuccessful applications.

We continue to expect that wherever possible authorities should send out bills in good time reflecting entitlement to community charge benefit and transitional relief where appropriate. However, where bills are sent out without taking into account transitional relief, and second bills have to be issued, we propose that the cost of printing and postage for such bills should be reimbursed at a rate of 50p each. This would not apply where the second bill relates to a substitute charge.

The total cost of this package of grant aid to meet authorities' costs would be about £21 million. These proposals and a copy of recommendations and cost summary have been sent to the local authority associations for their comments before final decisions are made.