Local Government Finance Bill Debate
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Lord McKenzie of Luton
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Local Government Finance Bill
Lord McKenzie of Luton Excerpts(12 years, 4 months ago)
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Baroness Sherlock
My Lords, in the absence of my noble friend Lady Hollis, I move Amendment 79B and speak to Amendment 83 in my name. My noble friend asked that I convey her apologies to the Committee. When she tabled her amendments, she believed that they would come up last Thursday. When that sitting was cancelled, they were moved to today when, unfortunately, she is chairing a meeting of her housing association, so she asked that I make that clear and apologise to the Committee.
Amendment 79B is designed to make clear that when a local authority makes a council tax support scheme which takes income into account in determining entitlement to support, that income should include universal credit, not just earnings or other kinds of unearned income. I presume that the Minister will need little persuasion of the merits of such an approach, as her default scheme takes precisely that approach. My understanding is that the default scheme will take account of universal credit income with some deductions relating to income that is to meet housing and childcare costs.
Having read the Explanatory Notes, I wrestled for some time yesterday trying to work out why the default scheme would want to take account of income net of the child cost element of universal credit. Why would you deduct the element designed to meet the costs of children? My noble friend Lady Hollis and I had a debate for some time trying to work out what the Government might be thinking of by this. Having read the draft regulations themselves, I concluded that this was meant to be a reference to the childcare cost element of universal credit, which of course is completely distinct from the child cost element. Having talked to an official—I am very grateful to the Minister that her department gave me access to a member of the Bill team—that is still my understanding. It would be helpful if she could confirm that on the record for the benefit of those reading the report of our debate.
I ploughed through the 155 pages of regulations as best I could with my limited understanding, and on page 105 there is a list of the rates that should apply for the various elements of council tax support under the scheme. When I read them, I panicked slightly because they are not the current rates that apply to council tax benefit. They are constructed in the same way but they are different numbers. Again, my noble friend Lady Hollis and I spent some time trying to work out why that might be and, in the usual way of politicians, ranged through cock-up and conspiracy theories trying to work out what the Government might mean by that by the wonderful old-fashioned Kremlinological means. Was this a way of saving 10% in the scheme itself? Actually, my best answer is that it is probably a mistake and that they are last year’s rates rather than the current year’s rates. Again, it would be helpful if the Minister could confirm that the intention is to use the current year’s rates, which were published this January, rather than those for last year.
We know very little about universal credit and the new system, because in those 155 pages of draft regulations the only substantive reference to universal credit comes in chapter 3 of part 10, which addresses the question of income and capital when there is an award of universal credit. That chapter is only 389 words long, and that includes the title. Of course, it would be hard for it to contain much more because there is a great deal that we do not yet know about universal credit, so I do not blame the department for the fact that it does not have that detail yet, but that is a point to which I shall come back. At least universal credit income will be taken into account. The case for doing that for everybody is compelling. Has the Minister had the opportunity to read the IFS report, Reforming Council Tax Benefit? It is a 148-page report that has an entire chapter on integration with universal credit. The report notes that the universal credit system was intended to,
“simplify the benefit system by reducing the number of different benefits that claimants and administrators must contend with”.
As council tax benefit is,
“the means-tested benefit with the largest number of recipients”,
keeping it outside universal credit,
“and allowing it to vary … undermines this simplification”,
but we are where we are. The report goes on:
“Universal Credit is also intended to rationalise work incentives by replacing a jumble of overlapping means tests with a single one, ensuring that overall effective tax rates cannot rise too high. Again, separate means tests for council tax support could undermine this, with the potential to reintroduce some of the extremely weak work incentives that Universal Credit was supposed to eliminate”.
I shall translate that for simpletons like me. If council tax rebates carry on having a 20% withdrawal rate and if universal credit is not counted as income, the effective marginal tax rate for a basic rate taxpayer could go up to 89.8%. Furthermore, it would mean that,
“income from private pensions, contributory benefits and spousal maintenance would actually make some recipients worse off”—
more money coming in, less money left behind, which is really serious—
“unless these income sources were ignored when calculating council tax rebates, which would be expensive for local authorities”,
as well as complicated. The report continues:
“This arises because income from these sources will reduce Universal Credit entitlement on a pound-for pound basis”.
I apologise for getting to this level of detail, but I am trying to illustrate the consequences of not taking universal credit into account as income.
There is no simple way out of the challenge faced by local authorities. Some authorities will decide that they have to devise their own schemes to avoid having to find the money to pay for the 10% saving by next year. The noble Earl, Lord Attlee, gave them some advice during our last sitting, on Monday, saying that local authorities,
“could opt to use the default scheme, but perhaps with some amendment to secure some easy savings. Local authorities could choose to develop a more sophisticated scheme later, but that is a choice that they will have to make … However, if a local authority wants to have a complex scheme, it can have one in later years, and it can go for a simple scheme perhaps based on the default scheme in year one”.—[Official Report, 16/7/12; cols. GC 15-17.]
A simple scheme based on the default scheme of 155 pages of draft regulations would be quite difficult. More complicated still is that any means-tested system is basically a complicated ecosystem.
Although I am teasing the Minister, I do not blame the department at all for having 155 pages of regulations. It is impossible to devise simple means tests that work well; that is why there are 155 pages, and they are based on the regulations for comparable benefits at the moment. If a council were to try to find an easy way forward, the reality is that its most likely step would be, for example, simply cutting 20% off the top of the applicable amount that goes to everyone or the maximum amount, but it may not fully understand the consequences of doing that distributionally across incomes or different types of activity. It is very complicated.
As the IFS notes, it would be simpler for local authorities to have an independent taper from that used for universal credit, but to do so would be worse for effective marginal tax rates. The key question is, “Why should we not leave it up to local authorities to decide how they will individually treat universal credit income?”. The answer is that one of the Government’s main arguments for the upheaval involved in creating universal credit is that it would reduce the very high marginal tax rates faced by some working claimants, so there is a clear risk that council tax rebates will undermine one of the main advantages of universal credit, namely the elimination of those high effective marginal tax rates.
In other words, it is a policy question. Think for a moment about the impact that this could have on the noble Lord, Lord Freud, the DWP Minister. If the Government cannot determine how universal credit income interacts with the taper on the various council tax support systems, it is impossible for central government to determine the effects of changes it makes to its own universal credit systems. The noble Lord, Lord Freud, could make a decision to do something that is more generous and has a particular effect, but when he pulls that lever he will not know what will move in the various parts of the country that have devised their own schemes. That is simply a bad policy outcome given the billions of pounds of public money being spent on universal credit. It is clear that the Committee should agree to this amendment and direct councils to take universal credit income into account.
I turn now briefly to Amendment 83, which would require a local authority to consult not just on the scheme it proposes under the current social security system but, at the appropriate time, on the scheme in the world of universal credit. The reason is very simple. There is a whole series of decisions that a local authority will have to take, even if it sought to devise a scheme that mirrored as closely as possible in the universal credit era that obtains in the current tax credits and benefit system. Simply maintaining the status quo is not possible, as the department has already discovered, because universal credit replaces a range of tax credits and benefits for working-age adults that are currently treated differently for council tax benefit purposes. For example, tax credits count as income, but income support does not, and nor does jobseeker’s allowance or income-based employment and support allowance. In universal credit, if one half of a couple is under state pension age, the whole household is treated as that, as my noble friend Lady Hollis reminded the Committee last week, but that is different from the current situation. Somebody on income support, JSA or income-related ESA is automatically passported on to maximum council tax benefit. That will not be possible in future. If universal credit income is taken into account without making corresponding adjustments to the means test, as the IFS noted:
“It could be impossible even for those with no private income at all to be entitled to maximum rebate”.
In other words, once a local authority has its own scheme in place, when universal credit comes in, it will be impossible, even for those in the current system, to know for sure what will happen to their entitlements unless there is an additional consultation and more information is made available. Indeed, although I had a very helpful conversation with an official earlier, which has moved me along in understanding this, I am not completely clear about what will happen to somebody in the default scheme. Will the Minister take this opportunity to tell us on the record? The Explanatory Notes to the draft regulations for the default scheme state:
“Applicants with an award of Universal Credit may still receive 100 per cent support under this system”.
“May” is good; “will” would be better. The Explanatory Notes also state that use will be made of income and other assessments. My understanding from the notes and the conversation is that in the default scheme the means test made by the Secretary of State for universal credit purposes will be taken across, certain deductions will be made for housing and childcare allowance and it will then be applied. For simplicity, will the Minister tell the Committee whether, if somebody is on income support, JSA or ESA and is passported on to maximum council tax benefit, when the new system comes in under the default scheme, that person will still get the maximum 100% council tax support, assuming no complicated changes of circumstances or other unknown factors? Simply person for person, will the very poorest still get the most?
This is an issue for all kinds of councils, especially those that do not use the default scheme or that want to make the 10% saving because they may want to use thresholds but they—and certainly the population—will not know what the consequences will be. Local authorities should simply be told that they must consult again under the universal credit regime. It is particularly an issue given, as I understand it—and I think we come back to this on a later amendment—that authorities may not amend their scheme in-year but must determine it some way ahead, when they may not know how universal credit is going to work in practice. Finally, when the Government are consulting they could take the opportunity of combining it with a take-up campaign, if they can afford it, of course. I beg to move.
Lord McKenzie of Luton
My Lords, I shall start on a somewhat disagreeable note, which is to register our protest about the tardiness of the regulations that we now have before us, to which my noble friend Lady Sherlock referred. They were published on Monday, and there was some challenge to get hard copies so that we could work on them on journeys and when away from screens. It is unacceptable, particularly bearing in mind the point my noble friend made that it was quite possible that this amendment would have been taken earlier before we had seen the regulations or known what was published on that day. At least we have the chance now to get into them before Report. The scope of the regulations is profound indeed, and we should at least have had last weekend to review them in some depth. I am grateful to my noble friend Lady Sherlock; it is clear that she has done so from the presentation that she just made.
Lord Greaves
I wonder if the noble Lord shares my alarm at the announcement by the noble Baroness that looking at the regulations had made her head hurt, and whether that is something that those of us who have not yet had the chance to look at them have in store.
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.
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.
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 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.
“( ) Where the Secretary of State has agreed to make a payment on account in accordance with paragraph 26 of Schedule 7B, consideration shall also be given to the provision of additional funds for the council tax discount scheme.”
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.
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.
Lord Palmer of Childs Hill
My Lords, this particular amendment finds me echoing the words of the noble Lord, Lord Jenkin of Roding, that the Secretary of State is being required to get involved in minutiae. If one looks at the five regulations in paragraph 3(5), one almost finds that local authorities are being required to photocopy both sides of every piece of paper, put first-class stamps on everything and so on, and this is mollycoddling of the greatest degree. If we are talking about localism, the idea that the Secretary of State can suggest to any local authority that they should do things in this manner tends to assume that it is made up of idiots who cannot run anything. That really is the opposite of localism.
This is little more than a probing amendment, as the noble Lord, Lord Jenkin of Roding, said, but one that goes very much to the heart of localism and the Secretary of State’s tendency to get involved to a completely unnecessary degree.
Lord McKenzie of Luton
My Lords, Amendments 84 and 87 stand in my name, but I shall first address the issues in Amendment 83ZA, which has just been spoken to. It goes without saying that I support Amendment 88 in the name of my noble friend Lady Sherlock.
As far as Amendment 83ZA is concerned, we are not enamoured of the Secretary of State having a raft of central powers, but we have to balance this against our concerns about a fragmented system. With the prospect of hundreds of different authorities adopting hundreds of different schemes, all with different criteria, some standardisation of approach has merit. For example, the form and content of documents to be produced raises the question of what distributional analysis should be included and what the requirements should be for a general impact assessment and indeed an equality impact assessment. Having some central guidance on these matters may help to head off problems of potential judicial review for some councils.
Amendments 84 and 87 continue the theme of the default scheme which, as we have discussed, has now been produced in all its glory—all 155 pages of it. Despite its lateness, it has moved us on. It has been difficult in the time available comprehensively to absorb its content and to read across the existing council tax benefit provisions, and we have an outstanding question to the Minister from our earlier amendment about where the default scheme has not been able to replicate existing arrangements. However, given that Amendment 84 is just a probing amendment, I am content to proceed on the basis that any discrepancies or differences are minimal, and that the first part of the amendment has been addressed.
That being so, we are seeking from the Government their view of the protection that their scheme provides to vulnerable people. What, on the basis of 155 pages of regulations, is included in the default scheme for vulnerable people and how does the default scheme address their needs? In this age of austerity, we presume that the Government would not sanction any scheme that provides superfluous or excessive relief, so we are simply asking them to spell out how they are providing for vulnerable people in the default scheme and which aspects of the scheme provide particular support for which groups. Given that the Government have made judgments about who should be protected by the default scheme, they should have a view about who should be considered under local schemes. The amendment does not require any local authority to follow the Government’s view on this; they can exercise their own judgments, but should be able to do so armed with the knowledge of why the Government have made certain decisions.
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.
Lord Jenkin of Roding
The whole Committee will be grateful to my noble friend for her careful answer to the points made in the debate. We shall want to read carefully what she has said and, if so advised, to return to the matter later. Before I withdraw the amendment, perhaps I may say that I am about to withdraw myself. I have to make preparations to get off to celebrate my diamond wedding in Scotland. I hope that I may be forgiven. With that, I beg leave to withdraw the amendment.
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.
“(4) 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.”
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.
Lord McKenzie of Luton
I thank the noble Baroness for her reply. I did not—although I can see that one could—read the amendment to say that the auditor had to be part of the process of agreeing reserves rather than taking a view in due course, as it would on the totality of the accounts, but the point is well made.
The amendment may, in part, have been prompted by concerns—real or imagined—that the Secretary of State has his eye on local authority balances and on putting down a marker that, in the new era into which local authorities are moving, it should be recognised that appropriate balances should be permitted, not challenged and viewed by the Secretary of State as a means of chopping back other resources. However, what the noble Baroness said has been helpful, and I beg leave to withdraw the amendment.
“Report on effects of provisions
At a date no later than three years from the implementation of this Act, the Secretary of State shall prepare a report detailing the effect of these provisions on—(a) the number of people receiving or eligible to receive council tax support in each local authority, including the number in employment, the number actively seeking work, and the number of pensionable age;(b) the costs incurred by each authority in running the scheme, including the cost of appeals; and(c) the impact on work incentives.”
Lord McKenzie of Luton
My Lords, I beg to move Amendment 92 on behalf of my noble friend Lady Sherlock and speak to Amendment 93ZB, which effectively covers the same ground. Amendment 92 would require the Secretary of State to report on the effect of these provisions within three years of their implementation and specifically to report on three aspects of these changes.
First, it would require the Secretary of State to prepare a report on take-up of council tax support in each local authority, detailing eligibility and take-up, including figures for those who are in work, actively seeking work and pensioners. This information will be crucial in enabling an assessment of what impact the changes have had on eligibility, support by different groups and, crucially, take-up. As the noble Lord, Lord Shipley, reminded us so powerfully earlier, there is a potential disincentive for local authorities to encourage higher take-up because they would have to absorb the cost of any increased take-up as the funding will no longer be demand-related and will come not from DEL but AME.
The amendment would also require the Secretary of State to report on two other aspects: the costs incurred by each authority in running the scheme and the impact on work incentives. That is simply good governance. We are having robust debates here about the likely effect of these changes. We fear these changes could damage incentives; while the noble Earl, Lord Attlee, has opined that they would have the opposite effect by incentivising local authorities to encourage their residents into high-paying jobs. Some noble Lords believe take-up may fall; others that it may rise and be expensive. Either way, the Government are confident that that will not be a problem.
This report will answer three questions and many more. We can simply reconvene in 2015-16, if we are still here, and find out who is right. More importantly, policy-makers of the future will learn lessons and, if necessary, a future Government can make changes to legislation in this area. The Minister may say that this is unnecessary, that the Secretary of State will collect this information anyway, but we have heard from my noble friend Lady Lister today that even the DWP proposes to stop collecting take-up statistics. Certainly, we want to return to press that issue. I submit that the need is clear. Government should gather this information and Parliament has the right to see it. I beg to move.
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.
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 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.
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.
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.