Local Government Finance Bill

Baroness Hanham Excerpts

Thursday 19th July 2012 Grand Committee

[Lord McKenzie of Luton]

The noble Lord raises a point perhaps in jest, but there is a heck of a lot of detail in these regulations that is highly germane to some of the debates that we are going to have. To not have had the chance to review those regulations and plough through them in some depth before we were due to debate them is unfair. Just before I move on, I encourage the Minister to have a discussion with the noble Lord, Lord Freud, who, in relation to the Welfare Reform Bill, was very good at holding seminars and giving us good notice about the seminar meetings before the regulations saw the light of day. That is the more effective way in which to do it—and this is not just nitpicking. We are engaged in this process to challenge and press amendments, but we want to see what comes out of this system work as well as the Government do. On a number of occasions when we were looking at the Welfare Reform Bill, the input of my noble friends in particular made a difference and was recognised as having done so.

As my noble friend explained, the amendment refers to universal credit being included as income in devising council tax support schemes. It is really to highlight the potential interactions between universal credit and council tax support schemes and why they need to be addressed. The Minister will doubtless tell us that local authorities have to decide themselves, but my noble friend Lady Sherlock stated clearly why that should not be the case and why in this regard at least there should be a mandation on local authorities.

Since the amendment was crafted, we have had the benefit of some draft regulations, to which I refer, including the default scheme. My noble friend referred to the comments of the noble Earl, Lord Attlee, about simple systems. We now know that the default scheme has 155 pages of simplicity. As we on this side maintained in earlier debates, the creation of a fair benefit system is complex; the multiplicity of circumstances that have to be catered for are amply reflected in the draft default scheme. It is a measure of the challenge that local authorities will face. Whether local authorities that cannot carry the full cost of a local scheme start with the default scheme, as the noble Earl suggested that they might, or start from the bottom up, is obviously a matter for them. But the default scheme demonstrates the range of issues that local authorities will have to weigh and the potential scope of the evidence base on which they will need to consult to justify their schemes. Clearly, local authorities could import chunks of default schemes, particularly round the national boundaries of the scheme, into their local scheme. But this hardly makes it a local scheme. The default scheme sets out some information and how it will deal with recipients of universal credit; administratively, as my noble friend said, it will tap into the assessment of applicable amounts, income and capital, compiled for universal credit, and will modify them. The principle is that universal credit is taken into account as income but netted for any childcare and housing cost elements.

Some issues have already come from the draft regulations in the time that my noble friend has been able to spend on them. She has identified the confusion between child costs and childcare costs.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

I can confirm that; it might save the noble Lord another six lines of his speech. Childcare costs is correct.

[Lord McKenzie of Luton]

Yes, indeed—but the documentation that we had was confused on that matter, which is why the diligence that my noble friend brought to bear was important. Also there was the issue around the actual rates. Again, I agree with my noble friend that this is not to be overly critical of the team. These are complex matters usually dealt with by DWP officials whose whole life is around benefits. That is what drives them.

So far as housing costs are concerned, this potentially deals with the point that, absent such a change, anyone claiming the housing component of universal credit would see their council tax support significantly reduced or even eliminated.

So far as childcare costs are concerned, the IFS points out that in certain circumstances those previously on housing benefit will see their effective support for childcare costs reduced. I have not had a chance to look at that in depth in the regulations but perhaps the Minister can say whether that is the situation on the basis of the draft scheme that we have.

My noble friend rightly focused on the issue of work incentives and the marginal tax rates. Including universal credit in the default scheme as income would appear to avoid the very high overall withdrawal rates of 90%, higher for unearned income, which could be in excess of 100%. But a withdrawal rate of 81% rather than 90% for effective marginal tax rates is still high.

One way of avoiding that would be to avoid overlapping withdrawal of benefits, in particular for council tax support to be withdrawn by the time that universal credit is withdrawn. Can the Minister say what modelling around this issue, clearly on the basis of current understanding of allowances, income disregards and tapers, has been undertaken for the default scheme? What is the range of effective marginal tax rates that flow from the proposed scheme? Who is affected?

We also clearly support Amendment 83, which is to do with consultation. There is a timing issue around this. It is clear that more detail, possibly the final detail, of universal credit will not be known until October this year. Even then, that may not be the final detail. That is important for local authorities devising their schemes. We know that if local authorities are to hit the timeframe of having a council tax support scheme in place by January next year, they would have to be well under way with their consultation by then. Therefore, if further information comes through around universal credit, particularly given its significance over a number of areas, it must be right that local authorities have to consult again on that.

The Committee will see the difficulty with the timeframe. If local authorities are consulting now and in August, September and maybe October on their current understanding and if things change in October when more detail is known, the practical opportunities for them to consult again will be restricted, but it is important that they do. It brings us to an amendment in the name of the noble Lord, Lord Jenkin, that we will come to later and that seeks to remove the restriction on revised schemes having to be promulgated by January of the preceding year. Effectively, as I understand it, the current arrangement does not give any scope for in-year adjustment of a scheme when new information comes forward—whether that is in relation to universal credit or anything else.

However, we know for certain that more precise information about universal credit will come through later this year, but at a point in time when most councils will have already started—if not completed—their consultations on the scheme without that extra information. It is important that it is made clear to local authorities that they should consult around the consequences of universal credit when that detail is known. Somehow, in the timetable for these processes, we need to build in for them the scope to do that.

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[Baroness Hanham]

My Lords, I thank noble Lords for both those contributions. From the outset, I must say that I am surprised at the criticism that the noble Lord has levied across the Room on the timing of the draft regulations. The statement of intent has been out since May and it is quite indicative of what would happen. The draft regulations are in fact almost identical to those that currently support council tax benefit—there are probably 196 of those. I appreciate that the noble Lord finds the timing of this difficult but while I am sure it is necessary for us to discuss some aspects of those regulations here and to get the principles right, local authorities will already be well under way with what they are producing for their schemes.

[Lord McKenzie of Luton]

Can the noble Baroness then specify the extent to which the default regulations before us actually differ from the current detailed arrangements? Reference was made to the statement of intent—yes, but that is a very broad document and does not in itself set out any detail. It falls far short of the information you would need to devise an effective and important scheme.

[Baroness Hanham]

But even so, local authorities have been waiting for and expecting these regulations, and they have started off. Also, on consultation, they are now entitled to do less than the 12 weeks—that is in the Bill—so they can curtail or tailor their consultation to different timescales. Moreover, local authorities are far better equipped and far further on than noble Lords opposite are giving them credit for. I have spoken to quite a lot of local authorities, and if they do not already have their scheme in embryo they are all just about there and about to undertake the consultation. While I do not mean any discourtesy to this Committee about the regulations, the most important aspect of this now is that local authorities are getting on with what they are doing and while some may find some difficulties, most are making a good fist of it.

The noble Lord referred to my noble friend Lord Freud. He will appreciate that up until now it has not been entirely in our gift to have discussions since the regulations were published. I do not know the timing for this Bill when we come back but perhaps I can give the noble Lord an undertaking that if it is not considered in the first week, we will make arrangements to have the discussions he has asked for before we get to Report. We may find that helpful and even if there is a day, we will make sure that we do it on that day. I hope that is all right.

I have clarified to the noble Baroness that we were referring to childcare costs; she was quite right to say that. While I am picking up on her questions, before I read my reply, I should say that the universal credit rates are indeed last year’s and will be updated in November, which is in line with the normal uprating procedure in the Department for Work and Pensions for this year.

[Baroness Sherlock]

I want to be really sure that I understood that. Separate from the uprating, is it the intention that the rates will be the same as those that apply at the time? For example, if it were starting this year it would be the 2012-13 rates and if it were for next year it would be the 2013-14 rates, which is slightly separate from the uprating point.

[Baroness Hanham]

My understanding is that the rate will be this year’s, uprated. I hope that covers that point. I think the other question that the noble Baroness asked me was whether the very poor will still get the most. The answer is yes, because their income will still be very low, so this should work.

[Baroness Sherlock]

I am terribly grateful to the Minister for indulging me in this. These are the kinds of questions that I am wrestling with and that I therefore suspect others who read the record will be. It is not just about whether the very poorest will get the most but whether somebody on the equivalent of income support, for example, will get maximum council tax support under the default scheme. Will they get 100%?

[Baroness Hanham]

The answer to that is yes. Local authorities have been asked simply to take those who have council tax benefit already and those whose applications have been made already and to transfer them on to the new system.

The noble Lord, Lord McKenzie, asked about housing benefit costs. This relates to applicable amount and income so that it does not skew the award. We will be happy to write on this matter, which, judging by the noble Lord’s face, would be a very good thing. We are continuing to work with the Department for Work and Pensions to develop the treatment of universal credit as these regulations are finalised. There is still work to be done, but we will write to the noble Lord and give other Members of the Committee a copy of that letter, as we have done previously, so that, if we have to have discussions before the next stage, we will have the answers.

Let me read the replies that I have, as we need to put them on the record. Some of this will answer the questions that have been asked and some of it will not, but it will show what we thought the whole question was really about. Amendment 79B seeks to clarify that income from universal credit can be taken into account in determining eligibility for council tax reduction. We touched on this issue in the previous Committee session, when my noble friend Lord Attlee explained that, while local authorities would be free to take universal credit income into account as they saw fit in their local scheme, the Government would be prescribing how this income would be treated in the default scheme. I am pleased to confirm that the regulations are there—noble Lords have seen them.

I think that it would be helpful to explain paragraph 2(2) of new Schedule 1A of the Local Government Finance Act 1992. This is an illustrative provision, intended to show that local authorities can define the classes of person entitled to reductions by reference to such matters as a person’s income and capital and the income and capital of any other person who is resident in the dwelling. The many precise types of income that may be taken into account in relation to council tax benefit are, as the noble Baroness will know, currently listed in regulations. The draft default scheme regulations confirm that this will still be the case in future and, in relation to the default scheme, make it clear that universal credit will be among the types of income to be taken into account. Of course it is right that references to specific benefit incomes should be in regulations given the extent of the detail involved.

The noble Baroness may be seeking assurance on the way in which universal credit income will be able to be taken into account in calculating future awards under the default scheme—that is exactly what she was doing. Perhaps I could try to reassure her further than I have been able to do so far. Universal credit is a working-age benefit and it will normally fall to local authorities to design how income from this award will be taken into account in local schemes for working-age claimants. However, paragraph 4 of new Schedule 1A of the Local Government Finance Act 1992 requires the Secretary of State to make regulations providing for a default scheme. This will come into effect for any authority that has not made a scheme by 31 January 2013 and is to be in place for the financial year 2013-14.

As the noble Baroness will know, there are pathfinders for universal credit, which will commence in April 2013, and the migration to universal credit will commence in October 2013, so it is right that the default scheme should make provision for the treatment of universal credit income, although it will not be relevant to start with. The regulations for the default scheme set out how we intend to treat universal credit income under that scheme. As I said, we will continue to work with the Department for Work and Pensions on the detailed approach. However, we believe that this provides a clear general indication of how we intend to take universal credit income into account in the default scheme. The draft regulations explain that a person in receipt of universal credit will have a means test applied.

Previously, applicants of three benefits being replaced by universal credit—income-based jobseeker’s allowance, income-related employment and support allowance, and income support—would automatically have received 100% council tax benefit. However, universal credit will not distinguish, in the way that those benefits did, between those who are in work, and those who are out of work. This is an important part of the Government’s welfare reform agenda, ensuring that the return to work does not result in benefits dramatically dropping away, so that work pays and is seen to pay.

Claimants will be means-tested, using and appropriately modifying the assessment of income made for the purposes of universal credit. Broadly speaking, after the application of this means test, those who currently get 100% support will continue to do so. Those with a higher income will have their support tapered, as at present. So effectively, there will not be much difference. I can confirm that, in this case, universal credit income itself will also be taken into account, as I have said.

An individual in receipt of universal credit will already have undergone a complex Department for Work and Pensions assessment of income. It is proposed that, to reduce bureaucracy and red tape, this universal credit income assessment should be reused in the means test for council tax reduction, with certain appropriate adjustments for the calculation of council tax reductions; for example, the council tax reduction income disregards will be applied.

It is also envisaged that the DWP universal credit assessment of what the person needs to live on will be used in the means test in the form of the universal credit maximum award, again with some proposed adjustments to take off the housing element, which is disregarded under the existing council tax benefit system. That matter was raised by the noble Lord opposite. Final figures will not be required to finalise the default scheme regulations, as these refer to elements of universal credit award and calculation, rather than specific amounts.

I have answers to some questions that the noble Baroness asked me, but I should never have too many pieces of paper; they are a disaster. Our stated aim is that the default scheme should be as close as possible to the existing council tax benefit scheme. I can confirm that we are also pursuing this policy by looking to achieve, through our regulations, equivalence between the applicable amount in council tax benefit and maximum award in universal credit. It is already well known that the elements that make up the universal credit maximum amount and the elements that make up the council tax benefit applicable amount will have some broad equivalence. We continue to work closely with the DWP on this as well.

Clearly, the exact rates for each element of the universal credit maximum amount have not yet been finalised. The Department for Work and Pensions explanatory memorandum for the Social Security Advisory Committee, published in June, states that at paragraph 42. Should it, ultimately, be the case that the rates awarded to an element were different in universal credit, it would be a simple matter for us to adjust that by topping up the relevant element of the maximum amount so that it was equivalent to the council tax reduction applicable amount. That would still relieve local authorities of a considerable additional administrative burden in which they would otherwise be involved.

The draft default scheme regulations make clear the Government’s intention that local authorities in their schemes should be able to count universal credit income as a type of income to determine who is in a class. It is not necessary to amend paragraph 2(2) of new Schedule 1A to refer to universal credit, as authorities may already take this into account when determining the class of person entitled to a reduction under a scheme. Furthermore, it is not practical. If we were to refer specifically to universal credit in this provision, we might also need to refer to other individual benefits and types of income that may be taken into account. That would entail introducing references to myriad other types of income on the face of the Bill.

Amendment 83 would extend the requirement for local authorities to consult on their schemes so that they were required to do so under the current benefit structure or under universal credit. At present, council tax benefit is centrally prescribed. It is not clear to me what purpose a requirement for authorities to consult on a centrally prescribed set of requirements would serve. We have been clear that council tax support will not form part of universal credit in future, so a requirement to consult on schemes under that structure similarly does not seem needed.

The noble Baroness may be seeking to make clear that the consultation should explicitly seek views on the interaction between their proposed scheme and other current benefits, or the interaction between the scheme and universal credit. This is very sensible, but it does not require regulation. Local authorities are already required to consult on their schemes; we have been clear that we do not intend to prescribe how this consultation should operate, as local authorities routinely consult on matters and have settled policies and procedures, which we expect they will continue to follow.

I recognise that there is a great degree of interest from Members in this Room about how local schemes will take universal credit into account. I hope that some of the responses that I have given will provide greater clarity on that. We can perhaps discuss that before Report and have a proper session on it.

Local authorities’ schemes will be subject to consultation and authorities will need to be prepared to defend their schemes. Members in both Houses and from both sides of the House have expressed their support for the principle of localisation. We trust local government to administer the key services that will make a crucial difference to people’s lives in relation to benefits.

I hope that with that plethora of explanation, the noble Baroness will feel able to withdraw her amendment.

[Lord Greaves]

I may be the only person in this Committee who has not completely understood everything that has been said. If that is the case, I apologise. My noble friend the Minister seemed to say twice that under the default scheme people of working age who currently get 100% council tax benefit would continue to get the 100% reduction under the new scheme. Is that what she said? Under the default scheme, where is it proposed that that should be paid for, given that there is a 10% cut across board that does not apply to pensioners—and therefore it might be up to 20%? Then there are vulnerable people. If in addition to that people who currently get 100% council tax benefit continue to get that 100% reduction, will the cost of that fall on the remaining people of working age who are means-tested and get part council tax benefit, or does the council tax benefit assume that the council finds the money in some other way?

[Baroness Hanham]

I think that the last point that the noble Lord made is the right one. We have been at pains to point out that council tax support will come into the general business rates retention scheme support. The local authority will have to make its decision based on its entire income as to how it funds and creates support for council tax benefit. It is not restricted only to the amount of council tax benefit support related solely to that, which will come from the benefit system.

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[Lord McKenzie of Luton]

Perhaps I could follow up on two points. I do not think that the Minister dealt with the question of consultation and timing. On a couple of occasions, the expression was used, “We continue to work on the detail of universal credit with the DWP”, and that is fine and we understand. But if when that detail emerges it has consequences for the schemes that local authorities are proposing, how will that fit into the timeframe? They are consulting now, they have to have a scheme in place by January, they have to engage with upper-tier authorities first and have two rounds of consultations. If they have done that on the current understanding of the default scheme as adjusted and of universal credit but the detail changes in a way that might be significant, how can they feed that into their final schemes?

Is it not right that, as proposed, you get a chance every year to change your scheme but you have to have that done by January in the preceding year? As a practical matter, the timing does not seem to fit, does it? If in October you get a raft of new information and presumably there is support for a further round of consultation on that, it will make it impossible to meet those deadlines—or extremely difficult. If authorities are consulting now to try to get the thing done in time, the timeframe becomes pretty impossible, does it not? That was one question—the need to go again on consultation because of new information.

The broader issue about being able to change the scheme in-year is one that we will come on to in a later amendment, but what work has been done by the Government either by the DWP or CLG about the interrelation of tapers on the basis of the information that we have at the moment—the applicable amounts and income amounts in the default scheme and what we know about the components of universal credit? How do those tapers currently correlate? Do we have much of an overlap, if any, between the withdrawal of the council tax support taper before you get to that position on universal credit? What is the crossover? What evidence do the Government have and what work have they done to try to evaluate that? That is also key to effective tax rates and therefore work incentives.

[Baroness Hanham]

My Lords, I am not sure whether the noble Lord would expect me to answer his last point, which was about modelling, today. That has largely been done by the DWP, and it would be more effective if I wrote to the noble Lord giving details of that and did not try to muddle my way through today. We ought to do it properly.

On the question of consultation and the scheme that local authorities are working on, I said very clearly that the current council tax benefit scheme is almost transferable into the one that they will have to operate from January. People who are already receiving council tax benefits and those in the pipeline will automatically be put in, so they will not require any more work done on that. As far as consultation is concerned, I have also dealt with this. The consultation does not have to be 12 weeks. Equally, say if you just have one consultation going out for your scheme, that will be back before the 12 weeks are up. Where there is a precepting authority involved, this is going to have to be a joint scheme and one would expect discussions to take place, or to have taken place, before the scheme was put out for consultation. It should be something that goes smoothly and seamlessly between the two.

We are satisfied that the work that has been done, the way this has been translated and transferred, and the amount of information that is available is absolutely sufficient for local authorities to be working up their schemes now.

[Baroness Sherlock]

At the risk of prolonging this, I wish to respond briefly. Although it is true that if a local authority were to implement the default scheme as it is now and to find the saving elsewhere then, on the basis of the assurances the noble Baroness has given the Committee today, individuals at the bottom would find themselves unaffected, but that will only be the case if the authority is able to find the money. A number of authorities clearly may decide not to do that, and they will have to make changes. Therefore, nobody can be assured from today that they will be protected from changes. I do not think the Minister is in a position to give that assurance. If she is, I invite her to intervene on me now and give it. I am delighted to pause.

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[Baroness Hanham]

We are able to give that assurance because means-testing will be carried out so that people who have already been means-tested are going to transfer without any hitch or halt.

[Baroness Sherlock]

I am so sorry; this really is not false modesty on my part. If the authority I live in—and this is just for the sake of argument—decided it could not afford the default scheme and it took on another scheme then obviously the Minister is not in a position to give that assurance, is she? Or is she, even in those circumstances?

[Baroness Hanham]

If it takes on the default scheme, it takes it on exactly. If it has to use a completely different scheme, it would have to consult on it and indeed it might not be able to give exactly the same benefits.

[Baroness Lister of Burtersett]

I am sorry to prolong this, but I am getting a bit confused—well, not really, because I was confused to begin with. If there were a modified version of the default scheme, would that still count as the default? I think my noble friend is saying that some authorities will not be able to afford the default scheme as it stands because the 10% cut has got to come from somewhere, so if they take it out of the default scheme, would that still be called the default scheme modified or would it be considered a different scheme, which they would have to consult on?

[Baroness Hanham]

The default scheme is the default scheme, and the default scheme comes into operation in two ways. One is that the local authority does not have a scheme by the time we get around to 31 January next year, in which case the default scheme would be imposed. The second is that it can choose to use the default scheme as its scheme, and that will then still be the same. If it then does not have enough resources, it has to make the judgment as to where it gets those resources from. As I already explained to the noble Lord, Lord Greaves, that would not necessarily come just from the council tax support; it would come from its wider budget and whole programme.

[Lord Greaves]

My Lords, I think I understand this now and I am certainly beginning to look at this whole scheme in an entirely different light. My understanding in the discussions we had in previous meetings of this Grand Committee was that lots of authorities would be operating on the basis that everybody of working age would be means-tested and would end up paying something. We discussed at great length two or three Committees ago that this would result in a lot of people only paying very small amounts of money—£1 a week, and so on—and the difficulty of collecting this. I know one thing definitely and have been told another. I definitely know that my own authority is looking at a scheme that involves all council tax payers paying something, and I am told that that is typical of the schemes being looked at, certainly by councils in our part of the world.

We might find out in the next few weeks, but a large number of authorities will probably be surprised to learn that the default scheme involves 100% benefit or reduction for people who get it at the moment. The schemes that are being looked at in many cases at the moment do not involve that, which will mean that the authorities then have to look at where they will find the money from. On my previous intervention, the Minister said that the money would not just come out of the council tax reduction money that comes from the Government. We understand that; it is being cut by 10%. It is not being cut for pensioners or vulnerable people as defined in each area, and if it is not being cut for people who are already on 100% reductions that is another burden on somebody else. It either comes from the rest of the working-age population, whether in benefit or otherwise, who will be means-tested, or, as the Minister rightly said, it has to come from general council resources.

Some of us will have to make these decisions, such as the noble Lord, Lord Smith of Leigh, who is not here today, and we do not have those extra resources. We are desperately looking at ways of reducing our councils’ spending overall to comply with whatever grant settlement we get next year, and it is simply not going to be possible to say, “Here’s another burden that we’ll just take into general resources”. I do not believe that a lot of authorities will give 100% benefits to people who get them at the moment, and that is a major worry.

[Baroness Hanham]

My Lords, we are still on the default scheme. If the council is required to adopt the default scheme, the benefits remain at 100%. If it takes on the default scheme as a local scheme, it will make its own adjustments to whatever it believes that it can do. If it sets up its own scheme, the 100% will only come about for a limited number of people on very low income, and it can then taper it up and down depending on people’s income because they will be means-tested at that stage. I am trying to make it clear that the default scheme is the legal backstop for local authorities that do not have one on 31 January. They do not have to adopt it, but they can as their own local scheme. I hope that I have contributed as much as possible on this matter.

[Lord Beecham]

I hope not, because I am afraid that I have another question. Assuming that, as the noble Baroness says, the scheme operates as a default scheme—assuming that people have not been able to consult and do not have their own schemes, so the default scheme is in position—the 100% people will remain at 100%. To what extent does the default scheme provide for other categories of people whose benefits would, presumably, therefore have to be adjusted? Is there flexibility within the default scheme—I confess that I have not ploughed through it—to see the impact on other people, or would there be a requirement to provide the current proportion of benefit to those people? If so, the financial problems to which the noble Lord, Lord Greaves, referred would be compounded.

[Baroness Hanham]

My Lords, if the default scheme is taken on as the main scheme and not a legal backdrop—

[Lord Beecham]

No; as a legal backdrop scheme.

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[Baroness Hanham]

I understand that the situation is as it would have been had the council not been changing. The default scheme is the current scheme—the current council tax benefit scheme. That will simply transfer and people will be treated the same way for a year unless it is reset the following year. If it is the local scheme, it does that itself; then it can make decisions about the amount that is reduced for council tax benefit.

[Baroness Sherlock]

My Lords, I am glad that we have cleared that up. My understanding, therefore, so that we are all clear, is that local authorities have two choices. They either adopt or have imposed on them the default scheme or they create a scheme of their own devising, which may or may not bear some relationship to the structure of the default scheme.

The amendment is actually targeted at the second group of authorities. I have probably confused things by asking some questions so that I could better understand the default scheme, but in fact the amendment is targeted at those authorities that either do not choose to adopt the default scheme or on which it is not imposed. This amendment is aimed at those authorities that devise their own schemes and it was intending to say that they should be required to take universal credit income into account in any means test that they go on to apply to determine entitlement on the basis of income.

The case for that is very strong. Nothing that has been said today in any way diminishes it. It is in fact strengthened, if anything, by the intervention of the noble Lord, Lord Greaves. There is a real danger that in attempting to square the kind of circles that have been described, an authority will devise a scheme without having a full understanding of the consequences on either individual incomes for universal credit or of the national position in terms of what the Government want to do. That is problematic.

The Minister’s argument, finally, that it would not be practical to name universal credit because one could name lots of other benefits simply does not hold water. In fact, the purpose of this is not about the individuals who are on it: it is about the national policy conference. The reason I am asking this specifically is to enable the Government to make judgments about universal credit—a single integrated benefit for people of working age—to be able to do the things that, at some considerable length during the passage of the Welfare Reform Bill, we were told universal credit would do. The amendment simply seeks to enable that policy aim to be realised. The case is very strong.

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That is certainly necessary and very much a priority if any of us in local government are to be able to do the job of assisting people who desperately need it by tackling the problems of poverty and its associated issues, which in turn impose huge costs on the public purse. Let us not forget that this leads to greater expenditure on health and the other benefits that might accrue because of poverty of lifestyles, education and the like. It is actually an investment, not a simple expenditure, to support people in the enjoyment of a reasonable income that meets their needs. I hope, in that sense, that the noble Baroness will be sympathetic and engage with her ministerial colleagues.

[Baroness Hanham]

My Lords, this has been an interesting discussion. The trouble is that it has been negatived to some extent by the fact that there are already duties on local authorities, as described. With regard to Amendment 80, local authorities already have a duty to consult persons whom they consider likely to have an interest in their schemes under paragraph 3(1)(c) of new Schedule 1A to the Local Government Finance Act 1992. That is inserted in the Bill by Schedule 4, so that is already there. I do not think we can start setting out on the face of the Bill all those people and organisations to whom local authorities might want to put their proposals, so the amendment is not necessary. I do not say that it is not a sensible point; it is, but it is not necessary.

Of course, local authorities will have to consider carefully the number of potential applicants when they design the scheme, so that they have a sound basis for their financial planning. However, I do not think, and I know that it will not be accepted, that creating a requirement for local authorities to do so would be particularly helpful. To create an additional requirement would duplicate what should already be standard good practice in their financial management.

The amendment also requires authorities to publish as part of the scheme the steps that they will take to ensure that people are informed of their entitlement and what assistance they will offer. The noble Lord, Lord Shipley, spoke in favour of that. Sub-paragraphs (1) and (5) of paragraph 2 of new Schedule 1A to the Local Government Finance Act 1992 already require authorities to set out the classes of person who are entitled to a reduction and the procedure for making an application. That seems to cover more or less what the amendment is about.

In fact, local authorities will want to ensure that those who are eligible for support claim what they need to, so that they avoid going into arrears with their council tax, which would not help them or indeed the local authorities. Again, to stipulate how local authorities should do that is to put an unnecessary requirement on them when they are already responsible for the administration of council tax generally and the provisions that already exist.

We are absolutely clear—and let me make this very clear today—that people should claim what they are entitled to. It is absolutely true that not all eligible pensioners or people who are eligible for benefits take them up, and there are a number of reasons for that that I am sure noble Lords could explain. One of the reasons is the stigma attached to council tax benefits. Some people say that they do not particularly want their personal circumstances divulged, however beneficial it would be for them, and not everybody knows how to tackle what is sometimes quite a complicated system, although I accept that there are many organisations available to help them. Under the Bill, those organisations will be available to take claimants through the system, and they will. There is no barrier to people making a claim.

As it designs its scheme, the local authority will have to take into account the fact that it may not have all the claimants available to it to start with. Part of the reason for putting this scheme of business rates retention and council tax benefits into the hands of local authorities is that it is expected and hoped that local authorities will continue to encourage enterprise and business, as many local authorities do at the moment, to get people out of benefits and into employment. We hope there will be a balancing act between those who need and are entitled to benefits and those who are perhaps just working their way through them on a temporary basis. However, how its scheme takes care of that is a judgment for the local authority.

When I was speaking earlier, I pointed out a fact that is relevant here: between 1997-98 and 2009-10, council tax benefits doubled. We are not talking about insignificant sums of money but about huge sums of money. We are trying to ensure that we get unemployment down so that those benefits are not required in the same way, but the 10%—

[Lord Greaves]

I am again seeking information as I do not know as much about this as other members of the Committee. When the Minister says that council tax benefit doubled over that period, is that before or after taking account of inflation? It obviously makes a great deal of difference.

[Baroness Hanham]

My Lords, it is after taking account of inflation, so it is a very substantial increase. The 10% saving across the piece in the council tax benefit scheme is making a small contribution to help tackle the deficit.

Localising support for council tax increases financial accountability and helps to make local authorities fully responsible for decisions over council tax levels. They now have a requirement to make sure that that is transparent to people who are claiming it and to people who are helping with it.

Amendment 81 would not only prevent a reduction in funding to local authorities. It could, in fact, lead to an increase in government expenditure because it would require the Secretary of State to provide funds to cover all eligible claimants under a new local scheme, however the scheme had been designed. One of the things that would be quite difficult to work out is how many people are eligible for the benefit if they do not apply for it. The amendment is simply not credible or affordable. The saving scored in the spending review has to be delivered, and local authorities are charged with finding ways to deliver that.

It may be helpful if I tell noble Lords what they already know: local authorities will receive the same amount of money this year to support council tax benefits as they received last year, minus 10%. That will be fixed for seven years until the next business rates reset. Meanwhile, if they can get the number of council tax benefit claims down, if they can get people into employment, if they can make a scheme that goes across the whole of their business front, then from now on they will know how much they will get. It is extremely helpful to them because they can always work within those parameters.

[Lord McKenzie of Luton]

Will the noble Baroness clarify, with reference to this year and last year, precisely which years we are talking about?

[Baroness Hanham]

It is 90% each year for seven years, and that will start in 2013-14. It is based on the estimate for 2013-14.

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[Lord McKenzie of Luton]

My Lords, I do not propose to detain the Committee long on this amendment, although it is influenced by the discussion we have just had about seven-year fixed resources. It deals with situations where the Secretary of State has agreed that an in-year payment is to be made under the safety net provisions of the business rate protection scheme. Such payments are to be made under regulations to be promulgated by the Secretary of State. The amendment requires that a payment on account under the safety net provisions should also be a trigger for consideration of additional funding under the council tax support arrangements. The point is obvious. As we have discussed before, the localisation of council tax support switches risk from central government to local authorities. That requires local authorities to estimate the effect of their local discount schemes, including take-up, on their band D equivalent numbers.

The challenges that that presents to local authorities in budgeting have already been discussed. In most instances, a significant, possibly catastrophic, reduction in the business rate base will have other consequences, which are likely to include employment—or, more likely, unemployment—consequences. Redundancies will place strain on the benefit system and certainly on any local council tax support scheme. Some of those events may be predictable, but some will not. They may be the result of decisions taken continents away. Some councils may be able to take the strain; others may not. All that the amendment would provide is a process which triggers consideration of additional funding being made available in-year to support unpredictable claims on council tax support schemes. I beg to move.

[Baroness Hanham]

As the noble Lord said, this amendment is shorter than some others and would expand the scope of the business rate safety net into the council tax support scheme, so that there would effectively be a safety net for benefit, as there is for the business rate. The provisions we have made for the business rate safety net will ensure that no council’s retained rate income falls by more than a set percentage below its baseline funding. Business rates provide a significant revenue stream for local authorities, and unexpected volatility of rates could have a significant impact on an authority’s budget, so it is right that we make that safety net available.

However, revenue from business rates is of a different order of magnitude from the cost of council tax support. In 2010-11, the contribution of business rates to the pool—that is, the net yield after allowances for collection costs—was more than four times the cost of council tax benefit expenditure. During the passage of the Bill, comments have been made about the impact of a large local employer closing down—the noble Lord used that as his example—on business rate revenue and demand for council tax support. There is a distinction between the two. Although there is a clear, direct link between the closure of a business and a reduction in business rate revenue, the impact is likely to be more complex in relation to demand for council tax support. To take one example, employees may not be residents of the borough or the council area; they may come from a much wider area, in which case that will affect other local authorities instead.

Councils have greater control over their council tax support scheme than over business rates, although they are encouraged to make sure that those increase. They will be able to design their scheme to reflect their local circumstances and, particularly, to work with their major precepting authorities to agree an approach to managing risk. Authorities will be able to plan and manage council tax reductions carefully, just as they already do for many other vital local services. Mechanisms are already in place to share the effects of a reduction in council tax collection rates between billing and major precepting authorities. They will enable financial pressures which result from increases in demand for support to be shared. In addition, we are making provision in the Bill to enable billing authorities to arrange with major precepting authorities to vary the amount of precept to be paid in-year to reflect any shortfall in council tax receipts. This could help to protect billing authorities from financial pressure in-year, until they manage to get the matter sorted out.

I hope that with those remarks the noble Lord will feel able to withdraw his amendment.

[Lord McKenzie of Luton]

I thank the Minister for her reply. Of course, I will withdraw the amendment as we are in Grand Committee. I accept entirely that the arrangements require an approach to managing risk and that, particularly in the early years, they will be new challenges for local authorities. They always have to manage risk, but the particular risks that come with the business rate retention and council tax support schemes are new and additional risks.

The Minister said that local authorities had greater control over their council tax support schemes. I accept that point, but they do not have that in-year control. One point that we will discuss at a later stage is the ability of the local authority to change and revise its council tax rebate scheme. My understanding is that it cannot do that in-year. If it can, I would be interested to know that. Even if it could, that would not necessarily help with the problem that we are trying to focus on here, when you have a catastrophic situation and a closure leads to big reductions in local employment. I accept entirely the point that it would not just be people in a particular locality; big factories, so far as they still exist, are likely to draw in labour from a number of authorities. In Luton about a decade ago when the Vauxhall car plant closed we saw what impact that had on the local economy. It would have had an impact on the council’s finances under these new arrangements. Having said that, I think that there is only so much merit in pressing the case and, for the time being, I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, this has been a good debate. We heard a very powerful speech from the noble Lord, Lord Best. We have acknowledged in this Committee, on the Welfare Reform Bill and other committees his principled and powerful leadership on a range of important issues but I am sorry to say that we cannot travel the whole of the journey that he outlined for us today on this particular occasion.

I will come to Amendment 93ZA shortly, but our starting point is different. Although we have supported localism across a whole range of areas, our position on council tax support or council tax benefit is that it should be part of universal credit. If that is not possible, it should be a national scheme. That is the right way to structure it. Therefore, anything that moves us away from that position creates difficulty for us.

If Amendment 82 is carried, it would not only deal with the issue of removing the powers in relation to pensioners, there is a whole range of other issues that it would cover. We should look at the draft regulations, which we now have, which cover things such as temporary absence from the UK, persons treated as not being in GB, persons subject to immigration control and a whole raft of things which if central government do not put down the rules, would be pretty nigh impossible for local authorities to deal with consistently. Whatever improvements there may have been for pensioners, we do not want to diminish their current living standards. We are talking about those on council tax benefit: we are not talking about rich pensioners so far as this is concerned.

Amendment 82A in the name of the noble Lord, Lord Jenkin, is simply about consulting. It seems entirely reasonable: one could never really object to a process requiring consultation. The noble Lord, Lord Jenkin, also spoke to Amendment 88B. When I referred to it earlier, I had a slightly different take on it. His particular point is its interrelation with potential council tax referendums and how that timing works. Like the noble Lord, I would be interested to understand the Minister’s response on that. But there is another issue, which we touched on earlier. If you need to fix a local council tax support scheme in-year because you realise that something is going wrong—because you do not have the data right or you have the wrong amounts—what is the process for being able to change that in-year rather than having to wait for a year and change the scheme in January to operate in the subsequent year? That is a problem.

On Amendment 88D, if we are talking about transition provisions between council tax benefit and localised council tax support, there must be a role for the Secretary of State or for those currently responsible for the benefit system. Part of it would be how you would deal with back-dated claims—for example what happens across the dividing line? That cannot just be left to the individual decisions of local authorities. Surely, central government is entitled to have a say in that because it impacts on their bit of the council tax benefit system.

We had a preview of Amendment 93ZA from the noble Lord, Lord Best, on Monday. As we know, the discount is currently set at 25% in legislation, but with a power for the Secretary of State to change the percentage. It is not one of those things currently subject to local discretion. The origins of the policy set out in the helpful note provided by the Lords Library—and endorsed by my noble friend Lady Hollis, who was involved in creating the legislation at the time—explains that council tax consists of two elements: 50% being a property element and 50% a personal element. The personal element assumes two adults resident in a property. In circumstances where only one is present, a 25% discount is given. That is how it is derived.

The noble Lord argues for the setting of the percentage to be devolved to local government, particularly the billing authorities, consistent with the Government’s localism agenda and the provisions to them of powers to settle discounts for empty properties and second homes. Any change from the 25% discount might be argued to undermine the integrity of the council tax system, although in the context of broader things this might not be the most important issue. If the starting integrity of the system is to change, should that be done on an ad hoc basis at local level or does the responsibility rest with the Secretary of State? At local level, there is no opportunity to redistribute on the basis of need the extra revenue that change in the discount would engender.

Noble Lords have, as we have, referred to the IFS report, which analysed the proposition of a reduction of the discount to 17.5% but with pensioners being protected—and seemingly no other vulnerable groups being protected. It is not a proposal: it is simply an example of how it might work on the basis that the change would garner revenues that in total would match the 10% cut that the Government seek to impose. But that is not distributed evenly between local authorities. It would raise, for example, 14% in London and almost as much in the south-east, but only 8.5% in the north-east. On the IFS example, 20% of people in the poorest income decile would lose out. The big losers would be single people and lone parents in work.

So there are issues about going down this path, and those issues would be exacerbated and much less comprehensively addressed if done on an ad hoc basis at individual local authority level. We have not had the opportunity to study the distribution analysis of the noble Lord’s proposition, which we should clearly do before Report.

There may be a case for the Government to address the appropriateness of this relief and if they are to do so, to see how the revenues might be redistributed on the basis of need. But any change to that has to be done at national level. Dealt with at individual local authority level, it could certainly generate inconsistencies and distributional effects that we would not, overall, be comfortable with. I am afraid that on this particular amendment we are not able to follow the noble Lord.

[Baroness Hanham]

My Lords, I thank all noble Lords who have taken part from all sides in debate on the amendment. I hope that I will be able to provide some reassurance as we go through that all is not quite as terrible as has been put forward.

Before discussing the detail of these amendments, it might be helpful for me to set out the Government’s intentions in relation to regulations. On regulations in general, it is not our intention to prescribe closely the operation of local schemes in relation to working-age claimants. The Government have said that local authorities should have flexibility in relation to their local schemes. That is why very few elements of schemes in relation to working-age claimants are intended to be prescribed and any that are will be largely administrative.

The Government have been clear from the outset that we intend to protect pensioners from any reduction in support as a result of this reform, and support for that has been expressed on both sides of the House. This policy will be given effect through regulations. I confirm that low-income pensioners will be protected.

The default scheme, which we will discuss in detail when we come to group 38, is intended as a legal backstop to ensure that local authorities cannot avoid their duties to bring forward a scheme and so fail to offer any support to those in financial need in their area. That will be prescribed in regulations.

The Government also intend that, in line with wider government policy and existing council tax benefit arrangements, non-EEA nationals who have leave to enter or remain are subject to a prohibition on accessing public funds, and those nationals who are inactive or do not satisfy the habitual residence test will be treated as not being in Great Britain and will not have an entitlement to council tax reduction. We think that this is important to avoid cost pressures on local authorities, and will give effect to it in regulations.

As noble Lords will be aware, we have published statements of intent setting out what we intend to provide in regulations, and have published draft regulations for the default scheme and prescribed requirements, so there can be no doubt as to our plans.

I turn to the amendments. Amendment 82 would remove the ability of the Secretary of State to prescribe requirements for schemes by regulations under paragraph 2(8) of new Schedule 1A. The Bill provides that the Secretary of State may prescribe, in regulations,

“other requirements for schemes”.

As has been referred to many times, the Government have published a detailed statement of intent on regulations. That explains that this power will be used by the Secretary of State to impose requirements on authorities to make provision in their schemes for people of pension credit age—those who are referred to as pensioners—to exclude certain people of limited immigration status from schemes, and to put in place any key administrative requirements for all schemes.

The Government have made it clear that they intend to use prescription to retain, for pensioners, the criteria and allowances currently in place for council tax benefit. The Government have been clear that pensioners who have worked hard all their lives and have had no opportunity to increase their income, should not experience a reduction in support as a result of the introduction of this reform. The Government will achieve protection of pensioners by prescribing a rules-based scheme in regulations. As at present, that will be means-tested, so the amount of support will be based on individual circumstances and changes of circumstance will also be taken into account.

In protecting pensioners and giving consideration to the design of their local scheme, billing authorities will, of course, have choices about how they manage the reduction in funding under the reform. They will be able to choose whether to pass the reduction on to council tax payers, use flexibilities over council tax, or manage the reduction within their budgets.

The Government also intend that, in line with wider government policy and existing council tax benefit arrangements, people from abroad not currently eligible to apply for council tax benefit for the reasons I outlined before will not be able to apply for council tax reductions.

Finally, the Government set out in their statement of intent that they also intend to prescribe for all schemes a small number of administrative regulations and powers currently provided for under social security legislation and which will need to be provided for in future under the regulations we bring forward for council tax support—for example, the requirements for applicants to provide adequate information to local authorities in support of their claims.

The recent publication of draft regulations covering the default scheme and prescribed requirements, including requirements for pensioners, should put beyond doubt the Government’s intention in relation to prescribed requirements and the operation of the default scheme.

I therefore see no benefit in Amendment 82, which would leave low-income pensioners vulnerable to increased council tax bills. Persons currently unable to claim council tax benefit can benefit from local council tax reduction schemes, and mean that local authorities would not be required to put the effective arrangements in place for administering such schemes.

My noble friend Lord Jenkin referred to consultation. Amendment 82A would require the Government to consult on regulations prescribing requirements for schemes.

I recognise the importance of external scrutiny of our plans for the detailed framework by which local authorities will be required to operate their schemes. That is why, on 17 May, the Government published the statements of intent for the key regulations to deliver that policy and further statements of intent on data sharing and fraud on 9 July. They provide an opportunity for us to engage with local authorities on the detail of our plans before draft regulations are brought forward, and provide them with the key information that they need to develop those schemes. That will provide further clarity on the content of the regulations and enable local authorities and other professional groups to scrutinise them while in draft form. It will also make clear how we intend to use the key regulation-making powers in the Bill, while it is subject to consideration in this House.

Given the publication of statements of intent and draft regulations, there is no need for the additional requirement to consult local authorities that Amendment 82A would impose.

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[Baroness Lister of Burtersett]

My Lords, perhaps I may crave the Committee’s indulgence and go back to an issue that we discussed at our last meeting. Although this is not technically about the default scheme, it is about vulnerable people and about carers. The Minister very kindly wrote to my noble friend Lord McKenzie and copied the letter to other members of the Committee. It responded to our concerns about carers not being mentioned as a vulnerable group. In her letter, the Minister said,

“The guidance we have published on the statutory requirements in relation to vulnerable groups does not refer to carers”—

as we said—

“but as was made clear in the discussion, it is not intended to be exhaustive”.

The guidance talks about disabled people, duties under the Child Poverty Act, homelessness, and even the Armed Forces covenant. When local authorities have ticked all those boxes, and when they have addressed the requirement on them to take account of work incentives, very few local authorities will say, “Hang on, let's see if there are any other vulnerable groups that we should be thinking about”, and turn their attention to carers.

I ask the Minister to take this away, not to put it on the face of the Bill, but perhaps the department would consider reissuing the guidance so that it specifically mentions carers among vulnerable groups. I have not heard the Minister say anything to suggest that she does not think that carers are a vulnerable group. So if the Government accept that carers are a vulnerable group, and as we do not have concern for any other vulnerable groups that are not mentioned in the guidance, is there any reason why they could not be put in the guidance? My fear is that, yet again, carers will be overlooked.

[Baroness Hanham]

My Lords, I thank my noble friend Lord Jenkin and the noble Lord, Lord McKenzie, for their amendments and the noble Baroness, Lady Lister, for Amendment 88, which stands in her name and that of the noble Baroness, Lady Sherlock.

It might be helpful, once again, to explain the Government’s intention in relation to the default scheme. I have done this a couple of times already today. The Bill provides that a default scheme should come into effect only where a billing authority fails to adopt a scheme before 31 January 2013. This is intended as a safeguard, to ensure that where a local authority fails to adopt a scheme by the deadline, there is still provision for people in financial need in that authority’s area to receive support with their council tax.

This scheme will be provided for in regulations and the Government have been clear that this default scheme should retain the criteria and allowances currently in place for council tax benefit. To this end, the Government have published a detailed statement of intent, setting out how they expect to provide for the default scheme in regulations, and confirming that the intention is to recreate, as far as possible, the current council tax benefit system in operation. Monday’s publication of draft regulations covering the default scheme should put beyond doubt our intentions in relation to the operation of the scheme.

These regulations also give an indication of how the default scheme will deal with claimants on universal credit, which we were discussing earlier. Regulations will need to take account of these claimants, but because of changes in the underlying calculation of the universal credit award, there may be some possible changes in the level of council tax support for those moving to universal credit. This is as a consequence of wider changes to benefits and the design of universal credit, and not a direct consequence of localisation. It is not intended that the default scheme will provide for any reductions in support where there is no change in circumstances; for example, which might be because someone has moved from an existing benefit to universal credit. Local authorities will still need to manage the 10% reduction in funding and there will therefore be a strong financial incentive for local authorities to avoid the imposition of a default scheme, as this will limit their ability to adjust awards to manage the funding reduction.

Amendment 83ZA would remove the default scheme from the Bill altogether. For the reasons I have explained, the amendment cannot be accepted. The default scheme is designed to be a safeguard to ensure that where a local authority fails to adopt a scheme by the deadline, there is still provision for people in financial need in that authority’s area to receive support for their council tax. That safeguard needs to remain in place.

Amendments 87 and 88 are intended to guarantee that under the default scheme there will be no reduction in the level of support for working-age persons and to put in place transitional protection for the persons whose support is reduced under the terms of the default scheme. Amendment 84 seeks similar protection for vulnerable groups.

I agree with the intention behind the amendments, but the Government already fully intend that the default scheme will retain the current criteria and allowances and do not intend there to be any change in the level of award where an individual’s circumstances are unchanged. In May, the Government published a detailed statement of intent on the default scheme, explaining that this will closely follow existing council tax benefit regulations, so the amendments are unnecessary.

The noble Baroness asked whether the statutory guidance would include carers. I think that is probably not necessary. The difficulty is that once you include carers, you have to include a whole lot of other people, which reduces the discretion.

[Baroness Lister of Burtersett]

The point is that a whole lot of other people are already in the guidance that has already been issued. I am not sure whether it is statutory, but I worry that so many other groups are mentioned. I know that the list is not exclusive, but carers should be in the list because if they are not, they will be overlooked. I am not asking for any change in the statute or for the noble Baroness to give an answer now but for her to take it away to consider whether the department could reissue the guidance so that it explicitly mentions carers.

[Baroness Hanham]

I am very happy to look to see what the guidance actually includes and whether that would up with us trailing a huge long list, but I will do that before our next sitting and let the noble Baroness know in advance.

[Baroness Lister of Burtersett]

Thank you very much.

[Lord McKenzie of Luton]

Before the noble Lord withdraws his amendment—I would not wish to keep him from his celebration and we pass on our best wishes to him for it—I note that, again, the Government refuse to give any practical help to local authorities on the issue of vulnerable people. We know why that is, as they are leaving local authorities high and dry to make those difficult decisions, not wanting to take any responsibility themselves. That will be a continuing theme of the Bill, and I am sure that we will return to it.

[Baroness Hanham]

My Lords, I cannot let that go unchallenged. It has been clear from the outset of the discussion on the Bill that the intention is to give local authorities the maximum flexibility to decide how they want the scheme to operate. The noble Lord may not agree with that, but it is not the intention of the Government not to give support but to ensure that local authorities manage their own affairs.

[Lord McKenzie of Luton]

In a sense, the noble Baroness is saying that the Government are imposing on local authorities the judgment on whether to help vulnerable people at the expense of slightly less vulnerable people. If the Government are imposing such decisions, they should take responsibility for making those judgments.

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[Lord Beecham]

My Lords, this should be a fairly short debate. Given the limited time for consultation, particularly the limited period between now and the end date of January by which schemes have to be approved, the risk exists that some councils—particularly those in shire county areas, to which my noble friend Lady Hollis has referred fairly frequently throughout the Committee—will have difficulty in conducting a full consultation process. The Government have indicated that the normal three-month period may be reduced. However, in any event we will have a summer month—well, a month—when people are likely to be away. August is almost upon us, and that is not a good time to engage in proper or full consultation with the range of individuals, organisations and precepting authorities that will be required, particularly in the shire county areas.

Given the proliferation of schemes we are likely to see, there is therefore a danger that when people begin to compare one with another, as they no doubt eventually will, there may be a challenge to some authorities’ schemes. That will perhaps be in good part because the local authority has not been able to consult as fully as it would have wished or would be expected to do. Since that would be a consequence of this government-imposed timetable, particularly its start and end dates, it seems only reasonable in that event—providing that a court would be satisfied that it is a question of the externally imposed timetable, rather than any culpability on the part of the local authority—for the Secretary of State to reimburse the local authority for any costs.

I hope that this is an academic point and will not materialise in practice. It may be that the Bill is not necessarily the place for it. However, I seek some assurance from the Government that if an authority is caught out in these circumstances, they would look sympathetically at its plight and seek to make good any cost to the authority incurred otherwise than by its own neglect. That is because any additional costs will ultimately fall not upon the council but upon the very council tax payers for whom these benefits—or discounts, as they will become—are intended in the first place. That would be reasonable; there should not be many cases, but there may be some. It would be hard on an authority for its council tax payers to have to bear that cost, particularly in the shire districts that have to consult with a number of precepting authorities, including their county. I hope that the Minister will look at that position sympathetically, not necessarily in the form of legislation, as this is a probing amendment, but by way of a policy stance.

[Baroness Hanham]

My Lords, I thank the noble Lord for his explanation of this amendment. Paragraph 3(1) of new Schedule 1A to the 1992 Act requires local authorities to consult with their major precepting authorities, publish a draft scheme and consult on that scheme with,

“such other persons as it considers are likely to have an interest”,

in its operation of that scheme before they make it. The amendment seeks to require the Government to indemnify a local authority for costs associated with any legal challenge made to it in respect of a failure fully to comply with the requirements if that failure was because of any delay in the sub-paragraph coming into force or the late issuing of guidance or regulations. The Government have taken—and will be taking—steps to ensure that no local authority is in a position where it cannot comply with the requirements in Paragraph 3(1).

Let me clearly reiterate that local authorities have been aware of this policy and its proposed implementation for some time. The policy was first announced in the spending review of 2010. In August 2011, we published a consultation on this policy, followed by a government response alongside the draft Bill in December 2011. Since then, we have provided information and funding to help local authorities design their schemes.

On Report in the other place, the Government amended the Bill to allow for consultation on a scheme to take place before the Bill receives Royal Assent and the provision comes into force. Paragraph 3(2) of new Schedule 1A means this should not be a barrier to local authorities proceeding. The Government have published detailed statements of intent for the key sets of regulations and draft regulations for the two key areas, the default scheme and the prescribed requirements, including requirements for pensioners, while the Bill is still in this House. Since then we have provided information, tools and funding to help local authorities design their schemes. The Government have already published the guidance they promised on existing local authority responsibilities in relation to vulnerable groups and promoting work incentives. The Government have issued a funding consultation setting out provisional funding allocations for all authorities. We have also provided a free online calculator to help local authorities analyse the potential impacts of their proposed schemes, and we have announced and paid out £30 million of initial funding to help meet the costs of planning and analysing draft schemes.

It does not seem to me that there are any grounds for the noble Lord’s amendment, since local authorities already have the detailed information they need to design and consult on a scheme and need not be constrained by the timescale for primary or secondary legislation coming into force to comply with the requirements on them to consult. With this explanation, I hope the noble Lord will feel able to withdraw his amendment.

[Lord Beecham]

One basic premise underlies the Minister’s assertions, which is that the Bill will pass in its present form. I think that is a somewhat premature conclusion. Changes could be made. We are not yet at Report stage, let alone at Third Reading or Royal Assent, and authorities are being asked to proceed with these schemes in advance of the completion of the legislation. If the Government had accepted, as they should have done, the proposal to delay implementation, particularly in respect of this aspect of the Bill, there would not be a problem. There would be ample time to consult properly and, indeed, to prepare schemes thoroughly.

As for the information that is supplied, I have here two of the three documents that were published last Friday—I can just about hold them—entitled Draft Council Tax Reduction Scheme (Prescribed Requirements) Regulations. If authorities had been consulting before now—there were, no doubt, in general terms—they are going to have to go back and wade through this document, which is not 150 pages, but only 87 pages, coupled with the Explanatory Notes which, at first glance, explain very little. That is before the default scheme, which we discussed earlier this afternoon. I do not have a copy of that at the moment, but I think it is the 150-page document that the Minister said is very clear and apparently does not much change the existing scheme. I do not know whether that is the case because I have not seen the document. It would be interesting to know whether the Explanatory Notes refer to any changes between the existing scheme and the current scheme because if it was just the existing scheme, it would presumably not be necessary to publish anything. People would just be referred to existing schemes, so I am assuming there must be changes, otherwise it would not require the publication of anything very much.

The Minister referred to the consultation requirement. In fact, as my noble friend Lord McKenzie implied earlier, there are two consultations because you have to consult the precepting authorities first. In county areas, there is the shire county and there may also be a police authority. Sometimes it is part of the county council, and sometimes it is not. If we take the Thames valley, for example, there would be a precepting authority for policing covering a number of counties, so the districts in those areas will have to consult it as a precepting authority and perhaps also a separate fire authority. I am not sure about other areas, but in metropolitan areas, there will also be a passenger transport authority as well as the police and fire authorities, so there will be at least three precepting authorities to consult. District councils will presumably want to consult each other, if only because of the relationship with the precepting authorities. This is not a simple process. It is to be conducted not only in advance of legislation, but in a hurry.

It may be all right on the night, but if it is not, it is not likely to be the fault of authorities, particularly small authorities with limited resources. That has not happened. As the Opposition, all we are asking for is an understanding on the part of the Government if things go wrong in terms of a judicial review and that, if it can be established that the authority is not at fault, but simply has not been able to manage this complex process, then they will meet the costs. The noble Baroness has pointed out, perfectly fairly, that £30 million has been provided to help local authorities through the process. I do not think we are looking at anything like that amount in the event of a few charges by way of judicial review. The noble Baroness is not giving any ground tonight. I hope she will look at this again before Report stage and consult with colleagues and perhaps with the Local Government Association as well, which I do not think has expressed a view about this, but which may do well to consider its position. The LGA will no doubt help its member authorities, but these are not straightforward, simple matters. As I say, the whole thing rests on an assumption that may yet prove to be unfounded, that the Bill will pass in its present form.

[Baroness Hanham]

My Lords, before the noble Lord makes a decision about his amendment, it might be helpful to remind the Committee that when we were talking about the amendment of the noble Lord, Lord McKenzie, earlier, we said that we would write to him and set out the very few differences that there are in these regulations. I am advised that the annex to the Explanatory Notes sets out those limited number of changes and the relationships between the two lots.

[Lord Beecham]

I beg leave to withdraw the amendment, while hoping that we return to the matter.

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[Lord McKenzie of Luton]

My Lords, perhaps I can move the amendment on behalf of my noble friend Lord Smith of Leigh. He did not provide me with a script, but I believe I understand what was in his mind when he crafted the amendment. This is a relatively straightforward issue. It requires that:

“Both billing and precepting authorities shall be entitled to hold such balances to deal with shortfalls in council tax receipts as agreed with their auditors”.

We have touched on this at various stages of our discussions. We have touched on the fact that both the business rate retention scheme and the council tax support scheme will make budgeting that more complex for local authorities. They will be challenged with new issues around the level of balances and what reserves should be held against them for contingencies that might flow. I imagine that if the provisions are agreed with auditors, that would be validation enough, but in moving the amendment I am interested to hear what the Minister puts on the record in this regard. This issue is important to a number of local authorities.

[Baroness Hanham]

My Lords, I thank the noble Lord for moving this amendment on behalf of his noble friend. I agree with him that local authorities will want to consider what sensible provisions they should make to manage their finances generally. Frankly, I do not think that the amendment is needed.

Individual authorities already decide what reserves they are going to budget for, and would be free to decide to hold reserves for the purpose of easing council tax benefit if they needed to. Determining the level and use of reserves is a matter for individual authorities, as part of their overall financial and risk management. There is no prescriptive national guidance on the minimum or maximum level of reserves, either as an absolute amount or as a percentage of the budget.

Reserves can help authorities to respond to unexpected situations, and give them room for manoeuvre on their finances, including helping to protect key front-line services. All authorities should keep sufficient reserves so that they have a financial cushion to meet sudden unexpected costs. What is sufficient should be determined by the authority themselves, in relation to their overall budgets and their individual circumstances.

Amendment 88C also requires the auditor to agree the level of reserves. I do not think that that would be appropriate, because that could prejudice the independence of the auditor, who might wish to comment later on the level of reserves. I do not think that the auditor could give a blessing to a certain amount of reserves before any auditing was done.

The overall level of reserves is agreed by the authority at the start of the financial year. Under Section 25 of the Local Government Act 2003, the chief financial officer is required to make a formal report to the authority on the budget and adequacy of the reserves. Although I am very grateful to the noble Lord for raising this issue, I do not think that the amendment is needed, or that the proposal that the auditor should agree the reserves would work legally.

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Moved by

[Baroness Hanham]

88E: Schedule 4, page 66, line 19, at end insert—
“LGFA 19881A In Part 1 of Schedule 11 to the LGFA 1988 (the Valuation Tribunal for England), after paragraph A18 insert—
“Power for member of First-tier Tribunal to act as member of the Tribunal A18A (1) A member of the First-tier Tribunal (an “FTT member”) may act as a member of the Valuation Tribunal for England.
(2) An FTT member may only act as a member of the Tribunal—
(a) at the request of the President and with the approval of the Senior President of Tribunals,(b) in relation to an appeal that relates, in whole or in part, to a council tax reduction scheme made or having effect as if made by a billing authority in England, and(c) if the FTT member is not disqualified from being, or acting as, a member of the Tribunal.(3) A request under sub-paragraph (2)(a)—
(a) may relate to a particular appeal or to appeals of a particular kind,(b) may be made only if the President thinks that FTT members are likely to have particular expertise that is relevant to the determination of the appeal, or to appeals of the kind, to which it relates.(4) An approval under sub-paragraph (2)(a) may relate to a particular appeal or to appeals of a particular kind.
(5) The President may withdraw a request at any time; and an FTT member acting as a Tribunal member in response to a request must cease to do so if it is withdrawn.
(6) References in this Schedule and in regulations made under paragraph A19 to a member of the Tribunal include an FTT member acting as a member of the Tribunal.
(7) But sub-paragraph (6) does not apply—
(a) to paragraph A7, A8, A9, A10 or A12 (which make provision about the appointment and removal of, numbers of, and payments to, members of the Tribunal);(b) to regulations under paragraph A19, if and to extent that the regulations provide that it does not apply.(8) The Valuation Tribunal Service may make payments to the Lord Chancellor in respect of the expenditure incurred by the Lord Chancellor in paying remuneration, allowances or expenses to an FTT member whilst acting as a member of the Tribunal.
(9) In this paragraph—
(a) references to an appeal include a review by the Tribunal of a decision made by it on an appeal,(b) “council tax reduction scheme” has the same meaning as in Part 1 of the Local Government Finance Act 1992 (see section 13A(9) of that Act).””

[Baroness Hanham]

My Lords, these amendments enable First-tier Tribunal judges and other members to sit as members of the Valuation Tribunal for England when requested to do so by the president of the tribunal for England, when that request is approved by the Senior President of Tribunals. That is so that the expertise of First-tier Tribunal members, who currently hear appeals relating to council tax benefit, can be utilised in determining appeals on decisions made on council tax reduction schemes—something which the noble Earl, Lord Lytton, was keen to see cleared up.

The Government are clear that there will be a single appeals process for unresolved disputes on claims for council tax support by a body independent of the local authority. The majority of those who expressed an opinion on the matter in the consultation document and at engagement events support that view.

The Department for Communities and Local Government has agreed with the valuation tribunal and the Ministry of Justice to enable members of the First-tier Tribunal to sit as members of the Valuation Tribunal for England when requested to do so.

When determining a person’s entitlement to a reduction under a scheme, a billing authority may need to carry out a detailed assessment of a person’s means. That may be necessary to comply with the regulations prescribing reductions for persons in receipt of pension credit, if the default scheme is in place, or if a billing authority’s own scheme includes a means-tested element. It is therefore important that the valuation tribunal can access the right expertise in considering appeals which relate to means-testing. The amendments allow the valuation tribunal to be supplemented by members of the First-tier Tribunal for this purpose.

Amendment 88E inserts a new paragraph A18A into Part 1 of Schedule 11 to the Local Government Finance 1988 Act to allow a member of the First-tier Tribunal to act as member of the Valuation Tribunal for England. Paragraph A18A(2) places conditions on when a First-tier Tribunal member may act as a member of the Valuation Tribunal for England. It may only be at the request of the president of the Valuation Tribunal for England and with the approval of the Senior President of Tribunals in relation to an appeal that relates, in whole or in part, to a council tax reduction scheme, and if the First-tier Tribunal member is not disqualified from being or acting as a member of the Valuation Tribunal for England.

Paragraph A18A(3) imposes conditions on whether requests may be imposed for a First-tier Tribunal member to act as a member of the Valuation Tribunal for England. Such a request may relate to a particular appeal or to appeals of a particular kind and may be made only if the president of the Valuation Tribunal for England considers that members of the First-tier Tribunal are likely to have relevant expertise. Paragraph A18A(4) allows the Senior President of Tribunals to approve a First-tier Tribunal member acting as a member of the Valuation Tribunal for England for a particular appeal or for appeals of a particular kind. Paragraph A18A(5) allows the president of the Valuation Tribunal for England to withdraw his request at any time, and requires a First-tier Tribunal member acting as a Valuation Tribunal for England member to cease to do so if the request is withdrawn.

Paragraph A18A(6) provides that references in Schedule 11 of the Local Government Finance Act 1988, and in regulations made under paragraph A19 of that schedule, to a member of the tribunal include a member of the First-tier Tribunal acting as a member of the tribunal. Paragraph A18A(7) makes certain exceptions to when references to a member of the tribunal includes a member of the First-tier Tribunal acting as a member of the tribunal, specifically paragraphs A7 to A10 and A12, which make provision about the appointment and removal of, numbers of, and payments to members of the Valuation Tribunal for England. These do not need to apply to acting members of the Valuation Tribunal for England because they will continue to hold office on the terms and conditions under which they were appointed to the First-tier Tribunal.

Paragraph A18A(8) empowers the Valuation Tribunal Service, the body that provides administrative support to the Valuation Tribunal for England, to make payments to the Lord Chancellor in respect of the expenditure incurred by the Lord Chancellor, in paying a First-tier Tribunal member remuneration, allowances or expenses, while acting as a member of the Valuation Tribunal for England. Further work is being undertaken with the valuation tribunal and Her Majesty’s Courts and Tribunals Service to determine the most efficient approach to administering payments to First-tier Tribunal members. This amendment ensures that the Valuation Tribunal Service has the power to make these payments, should it be concluded that this be the most efficient approach.

Amendments 88F to 88H make consequential amendments to the Local Government Act 2003, which are needed as a result of new paragraph A18A(8). With these explanations, I hope that noble Lords will feel able to approve these amendments.

[The Earl of Lytton]

My Lords, I welcome in general the amendment and will not detain the House very long. It follows what I have been espousing earlier in our debates—namely, the streamlining and consolidation of the appeals process. However, I have two questions for the Minister. As I have not given prior notice of either question, I would fully understand if she would prefer to reserve her position and write to me later. First, will the benefit hearings element, which will now be transferred to the Valuation Tribunal Service, be hybridised with assessment appeals? My concern has always been that once the benefit comes under question and there is an appeal on the question of benefit, it is only a minor step for an advisory service to advise a benefit claimant or potential benefit claimant to appeal also the assessment, or possibly the liability. The question is how are they going to be dealt with, when previously they would have gone to the tribunal for the benefit element and the question of the assessment—in other words the banding—would have been dealt with through the valuation tribunal. If they are going to be consolidated in some way, will they be completely aggregated together or will the benefit element have its own listing and programme? The reason I ask this particular point is because my understanding is that there is a considerable backlog of listings for the valuation tribunal, so the risk is that moving the benefits cases may exacerbate what is already an unsatisfactory situation. How they are managed will be critical.

My second question relates to paragraph (8) of the insertion, relating to the valuation tribunal service making payments to the Lord Chancellor. That is fine, but can the Minister confirm that the Valuation Tribunal Service will be given additional financial resources commensurate with the costs it incurs in dealing with what would otherwise have been benefits tribunal cases, which have been transferred to it? I hope that the Minister will be able to clarify both those points.

[Baroness Hanham]

My Lords, those questions are quite detailed and if the noble Lord will forgive me, I shall write to him with the answers, as I think he suggested, and make sure that the Members of the Committee receive copies.

[The Earl of Lytton]

I would be very happy with that.

--- Later in debate ---

Moved by

[Baroness Hanham]

88F: Schedule 4, page 67, line 5, at end insert—
“6A The Local Government Act 2003 is amended as follows.”

--- Later in debate ---

[Baroness Lister of Burtersett]

My Lords, I take a rather different position, as the noble Lord would probably expect. Some of us here are refugees from the Welfare Reform Bill, which sat for what felt like many years, but certainly for many months. One of the few things that we achieved on that Bill, partly in response to amendments from the noble Lord, Lord Best, was a commitment to monitor various aspects of the changes.

That is important, regardless of what the noble Lord has just said. We are making a big change to the basic safety net by removing it from being a national benefit to being a local one. At the very least, we need to know as a Parliament what impact that is having on some of the poorest people in our communities. I am sure that the Minister will do this, but I cannot believe that the Government have no plans whatever to collect some form of information so that we know what effect it will have, especially if the DWP take-up statistics are now in doubt.

If we can achieve nothing else in this Committee, it would be good if we could achieve some commitment to monitoring the impact of what is a very significant change. My noble friend Lady Hollis has explained very well why it is such a significant change to our income maintenance provisions.

[Baroness Hanham]

My Lords, I thank noble Lords for their contributions. It will not be entirely a surprise when I say that I support my noble friend Lord Deben’s general emphasis on this issue.

Paragraph 7 of new Schedule 1A to the Local Government Finance Act 1992 is inserted by Schedule 4 to the Bill and enables the Secretary of State to require authorities to supply specified information to the Secretary of State. The Government, in their equality impact assessment of this reform, made it clear that the powers could be used to collect information to support future evaluation of the policy.

Council tax support will become part of the council tax system that we have been through today. The Government already collect key data for the council tax system, including data on exemptions and discounts. We are currently working with other government departments and local government to determine the necessary data that will be required in future as part of the council tax system, or through other mechanisms, to monitor the policy and how best to collect this. To ensure proper scrutiny, new requests for data from local government will need approval by the single data list gateway group, which has been established by this Government to consider and challenge new data requirements from local government.

Amendment 92 requires a report on the impact of work incentives. To do so would place another administrative burden on local authorities. The purpose of the policy is not to make local authorities report to the Government on work incentives; rather it is to encourage local authorities to get people back into work. It will not be in the interest of local authorities to lock their residents into poverty and low aspirations. They will want to design schemes which support claimants into work, and the department has issued guidance helping local authorities to understand the importance of work incentives and how they can design schemes which support the objectives of universal credit.

The second part of Amendment 93ZB would require the Government to adjust funding allocations to reflect any changes in the number of eligible claimants. The amendment does not make it clear whether this is funding from within the council tax support scheme or additional funding from outside. Funding for council tax support will be included as a fixed allocation within the business rate retention scheme. Councils will have the responsibility and flexibility to deal with these on a local level. Councils, in designing their schemes, will need to consider the risk of variation in demand. In relation to in-year fluctuations in demand, mechanisms are already in place to enable billing authorities and major precepting authorities to enter into arrangements. This will enable financial pressures as a result of unexpected increases to be shared.

The Government do not think that it will be necessary or helpful for local authorities to be asked to provide that a report be published in Parliament. There are transparency requirements on local authorities to make sure that all of what they do is understood and made clear and, where possible, put on the internet. We think that that will be sufficient to ensure that there is wide knowledge of what each local authority is doing.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for that reply and the noble Lord, Lord Shipley, for his support. The noble Lord made the point that two years may be more appropriate than three, and I think that we would happily take that on board when we approach the subsequent stage.

My noble friend Lady Lister dealt with a point made by the noble Lord, Lord Deben, about the significance of the change that we have here. About 5 million people are in receipt of council tax benefit at the moment, and those people—the most disadvantaged and poorest in our community—are the ones who are going to be subject to this new system. Our intention is not to limit the localising process, although we do not like it, this is simply about the Government understanding the consequences of their policies. From what the Minister said, it seems that there are potential requirements on authorities to provide a range of information anyway, so that provision does not seem to be limiting the Government’s thirst for localism. The impact on work incentives is crucial. It is a major plank of the Government’s policy, not only on the business rate retention scheme but to the council tax support scheme. The whole thing is designed and driven by trying to get more people into work. There are issues about where the jobs are going to come from and how that is going to work, but it must be of interest to the Government to know how that part of its policy will work in practice. I cannot see why it would not be.

We will return to this issue on Report. It is important that there is a transparent process back to Parliament. It does not negate what local authorities will do or limit the powers or scope that they have under the Bill. All it asks for is a report by the Secretary of State back to Parliament to evaluate how it is working in practice and whether it is delivering what the Government believe that it will—and what we, for our part, are sceptical about. Given that and given the hour, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, Amendment 93ZBA is a narrow and technical amendment. It relates to long-term empty dwellings and the power given to local authorities to terminate entitlement to discounts and increase council tax by up to 50% of the applicable rate, so councils will have the power to charge up to 150% of council tax provided that the property has been unoccupied and substantially unfurnished for more than two years. It is accepted that the term “substantially unfurnished” is not specifically defined anywhere in legislation and has been the subject of case law. Clause 11(9) appears to treat property as unoccupied despite short interim periods when it was occupied. However, such intermittent occupancy might imply that the property was not substantially unfurnished during that period, so it would cease to be a long-term empty property. That would seem to negate the purpose of Clause 11(9), so the amendment seeks to ensure that any concomitant period when the property was not substantially unfurnished is equally ignored. I beg to move.

[Baroness Hanham]

My Lords, this short amendment specifies that in determining whether a property has been unfurnished for any period of six weeks or less during which it was furnished should also be disregarded. Clause 11 sets out that a dwelling is classified as long-term empty and subject to a premium if it has been unoccupied and substantially unfurnished for a continuous period of two years. Any period of six weeks or less during which the dwelling was occupied is disregarded. The amendment would add a second consideration of time to the application of the period by requiring a billing authority to take into account any periods during which the dwelling was furnished. This would add an unnecessary level of complication to the administration of the empty homes premium. It would potentially require billing authorities to monitor the interplay of periods of occupation and furnishing of a dwelling. Clear criteria for the scheme and ease of administration are highly desirable for billing authorities and, perhaps more importantly, council tax payers to know where they are.

[Lord Deben]

I am mystified about why the Government have not merely given local authorities the power to make these decisions as they wish. I do not understand why we still want to control them on these matters. If this would add complication, why do we not get rid of the complication that is here already and say that local authorities can make up their own minds?

[Baroness Hanham]

I think my noble friend was unfortunately not here during the earlier stages when we went through this point in some detail. I resisted those amendments. I hear what my noble friend says, but that is not the situation. I hope the noble Lord, Lord McKenzie of Luton, is willing to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I do not want to prolong this but I am not sure whether we are at cross purposes. The amendment was meant to be helpful and quite narrow. If the legislation is saying that despite the fact that the dwelling is occupied, it is treated for certain periods as being unoccupied—it is understood why that would be the case—the problem with that is that when it is actually occupied, is there not a greater risk that it will be treated as being not substantially unfurnished, because it would need to be furnished for somebody to occupy it? All this amendment tries to do is to ask: when you disregard that period of occupation, why not also assume it to be “substantially unfurnished”? Unless you do that, in a sense you negate in large measure the effect of subsection (9). It may be that the Minister wishes to take it away but that was the only purpose of this amendment. It is not meant to otherwise complicate it or create other difficulties, or to disrupt and undermine the localism agenda. It is a very narrow point.

[Baroness Hanham]

My Lords, I think I need to come back to the noble Lord.

[Lord McKenzie of Luton]

I thank the Minister for that and look forward to the reply in due course. In the mean time, I beg leave to withdraw the amendment.

--- Later in debate ---

Moved by

[Baroness Hanham]

93ZC: Clause 12, page 9, line 5, leave out subsection (2) and insert—
“(2) This section comes into force on such day as the Secretary of State may by order made by statutory instrument appoint.”

[Baroness Hanham]

My Lords, this minor government amendment allows the Secretary of State to commence the provisions of Clause 12 by order, rather than having them come into force automatically on 1 April 2013. The Government remain committed to the principle that mortgagees in possession of a dwelling should be liable for council tax but are proposing this amendment for practical reasons. As stated in their response to consultation on this reform, the Government do not intend to implement this provision until discussions have taken place with the mortgage lenders sector, leading to satisfactory and workable administrative arrangements. These discussions are being pursued and the Government intend to implement the provisions as soon as practical. However, I move this amendment and hope it is accepted.

[Lord McKenzie of Luton]

My Lords, we clearly do not disagree with this amendment but I note a certain timing discretion given in respect of these circumstances that is not allowed to local authorities for the big challenges that they have, but that is a debate for another time.