Baroness Hanham
Main Page: Baroness Hanham (Conservative - Life peer)Local Government Finance Bill
Baroness Hanham Excerpts
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, I thank my noble friend for his brevity. I am not sure that I am going to be able to be enormously helpful to him. This takes me back a bit to the Localism Bill, when one thing that my noble friend had a go at was regulations and the amount of powers within a Bill. Amendment 104 would retain the power to prescribe requirements in regulations but would require the Secretary of State to consult with local authorities about the proposed requirements. If we did that, it could potentially delay changes to regulations. In July we published draft versions of the regulations that prescribe requirements, so we have given noble Lords and local authorities the opportunity to scrutinise and comment on them. An update was published on 7 September.
Lord McKenzie of Luton
My Lords, as regards Amendment 106, we have a deal of sympathy with the point raised by the noble Lord. My noble friend Lord Beecham thought that the referendum date was May, which in a sense just reinforces the point made by the noble Lord. I am aware that when we discussed it in Committee, the Minister said that the Government were not keen on in-year adjustments, which one can see as a general principle. However, it seems to me that a major point is being raised.
We are less comforted by Amendment 105. It depends on what is encompassed within the concept of procedure for preparing a CT scheme. One of the things that presumably needs to be addressed is the cut-off point between the existing council tax benefit arrangements and the new arrangements, particularly when people, if they are able, are making backdated claims. At the moment, someone can make a claim and it can be backdated. If you make a claim after 1 April and seek to get it backdated, you need something in place to settle those cut-off points. I do not know whether that is a procedure but you can certainly see the Secretary of State having some interest in those sorts of arrangements.
Certainly, Amendment 106 seems to make quite a powerful point. I might add that if the discovery of this £100 million and the transitional fund had happened a couple of months later than it has, that would be good cause for needing this flexibility as well.
Baroness Hanham
My Lords, Amendment 105 would remove the ability of the Government to make regulations about the process by which a council tax reduction scheme is prepared, such as requiring certain documents to be prepared, and the manner in which those documents are published. I should make clear that the Government’s intention was set out in the statement of intent published on Thursday 17 May. In that policy statement we stated our intention not to make regulations at this stage about the procedure for making a scheme, which still holds.
The rationale for not regulating is on the basis that local authorities already routinely consult on a range of issues, and additional prescription should not be required. In other words, they ought to know when they should need to consult.
I am pleased to note that at least 305 councils—or 94% of them—have already commenced their consultations on the schemes, during which vulnerable people will continue to receive protection. However, as with all aspects of policy, we will keep this under review. As the need to consult on schemes for local council tax support is a new requirement, it may become apparent that it is desirable to prescribe certain elements of the process in future years. Retaining this power ensures that, if necessary, we are able to take steps for future years to ensure that the consultation process is fair for the taxpayer.
The effect of Amendment 106 would be to remove the deadline of 31 January for making and revising schemes, and to remove the Secretary of State’s power to change that deadline by order. It is important to maintain the 31 January deadline to ensure that local schemes can be in place in time for April 2013 and that people continue to receive protection from the scheme. Allowing changes after this date would create uncertainty for the people who are benefiting from the scheme as they would face having their awards changed part way through the year. It would also create uncertainty for taxpayers generally, as reductions are reflected in the tax base on which council tax is levied; I do not think that this would be helpful.
When we discussed this amendment in Committee, my noble friend Lord Jenkin asked about the relationship between the setting of the scheme and council tax referendums. Indeed, this point has just been made again tonight. If I may, I will briefly repeat what I said in Committee:
“Local authorities will need to take account of the potential impact on council tax when designing their schemes. They will already know their provisional funding allocations, and the Government expect to have published the proposed referendum principles at the same time as the provisional local government finance settlement”,
and that information will be available. I confirm that any referendum that took place would have to take place in May, after the setting of the council tax should have taken place. In Committee, I went on to say:
“The need to consider the affordability of the proposed scheme and its impact on council tax is no different to taking decisions about the level of funding for other services and their potential impacts on council tax”.—[Official Report, 19/7/12; col. GC 171.]
Any authority that considers that it might breach the referendum principles must prepare a shadow budget setting out how it would carry on its services under a lower rate of council tax.
It is correct to say that it will not be possible for local authorities to go back and change their scheme if a referendum is triggered and a council tax increase vetoed, but it is absolutely right that we do not create unnecessary uncertainty for people in financial need about the amounts of support that they can claim. I hope that with that explanation the noble Lord might be willing to withdraw his amendment.
Lord Jenkin of Roding
On Amendment 106, I am very grateful for the support of the noble Lord, Lord McKenzie of Luton. He is quite right to say that the referendum has to happen in May—on the first Thursday in May in the financial year to which the increase relates. However, if the referendum succeeds in overturning the original rate of council tax that was to be levied and the local authority has to hold another one, it would have had to make any changes to the council tax relief scheme by the previous January, which means that it will not be able to make any adjustment to reflect the lower rate that it is now going to have to levy.
If it is the Government’s intention that if there is a referendum local authorities cannot change the council tax relief scheme after the result is known, that ought to be made clear. I do not think that it has been clear hitherto. Is my noble friend prepared to add a few words to what she has said? If she is saying that local authorities cannot change the scheme after a referendum, everybody will know where they stand. However, if they are to be allowed to change the scheme, the date of 31 January has to be moved. There has to be an option to choose something else. Will my noble friend go a little further and clarify that that is what the Government intend?
Baroness Hanham
My Lords, I can clarify the position and confirm it. It will not be possible for a local authority to change its scheme if a referendum is triggered; in other words, it would have to carry on with the scheme which it had put together and sort out the funding subsequently.
Lord Jenkin of Roding
My Lords, in the circumstances, obviously it would be sensible for me to withdraw the amendment but we may seek to clarify the position further. I want to read very carefully what my noble friend has said to clarify the position. I may bring forward an amendment at Third Reading to renew this discussion. In the mean time, I beg leave to withdraw the amendment.
Baroness Hanham
“( ) sections 32 to 34 of the Welfare Reform Act 2007 (benefit for persons taking up employment) so far as applying in relation to council tax benefit.”
Baroness Hanham
Baroness Hanham
My Lords, I shall start by answering the noble Lord, Lord Smith of Leigh, with regard to reserves. We have discussed this issue before and we have all accepted that local authorities need to have, and must have, reserves. The amendment is almost exactly the same as the one the noble Lord laid on a previous occasion and would make it explicit that local authorities are entitled to hold reserves to deal with any shortfalls.
I entirely agree that it is sensible for local authorities to consider what reserves they are going to budget for. We acknowledge that reserves can help local authorities to respond to unexpected and exceptional circumstances. Local authorities can build-up reserves for particular aspects and they can act as a support for budgets. However, individual authorities are already free to determine the level and use of reserves as part of their own overall financial risk management. It is a matter for individual authorities to consider taking into account their local priorities. 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. For that reason, I do not think that the amendment is necessary.
With regard to Amendment 106A, that would require the auditor to agree the level of reserves. As I explained when the previous amendment was tabled in Committee, that would not be appropriate because the auditor is meant to be independent and therefore should not give advice on reserves, although he can comment if he thinks they are not appropriate. Sometimes auditors ask what is going to be done with the reserves, but they do not direct how much should be held in order to help cover expenditure. I hope it is clear that there is nothing against reserves. From time to time it might be suggested that if they were too large, they could be used for something the local authority had not thought of, but that is good financial management anyway. I hope that the noble Lord will be able to accept that as the final answer. I have said the same thing twice, and I hope that it is sufficient.
Amendments 107C and 108 would both require the Government to provide additional funding in certain circumstances to support local authorities to deliver council tax reductions, and indeed the noble Baroness, Lady Hollis, drew attention to the situation where there might be a big change in circumstances as regards the amount of money being held by a local authority. Central government are not going to leap in and help out in those situations. The funding for council tax support is going to be formed as part of the baseline funding under the new local government finance systems, and as noble Lords know, that will not be changed until the reset. However, we recognise that there will be fluctuations in the demand for council tax support, and primarily we will be looking to billing authorities to work with their major precepting authorities to agree an approach to such management risks.
As noble Lords will be aware, mechanisms are in place to share the effects of a reduction in council tax collection rates between billing and major precepting authorities, and that will be the same for financial pressures that result from increases in demand for support so that it can be shared. We are also 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. It will be a partnership between the billing authorities and local authorities if the sort of pressure that is anticipated—it will not happen everywhere—comes to pass.
The noble Lord, Lord Shipley, asked about the data that have to be collected. Our expectation is that data requirements on local authorities will be very small and significantly less than those in relation to council tax benefit, which is the one where council tax support is coming from. We are working with local authorities to establish what data on the value of reductions offered under the scheme will be collected for both pensioner and working-age people, and we also want to make use of the information collected in the Family Resources Survey to support future policy evaluation. We do not expect too much data to be required.
In relation to the publication of statistics, the Department for Work and Pensions has conducted a consultation on proposals to cease publication of the annual Income Related Benefits: Estimates of Take-up. The consultation closed on 4 October, and a response will be published in due course. No doubt the noble Baroness knows about it. If she does not, she should ask me and I will make sure that she gets to see it. There were a number of options in the consultation paper. The DWP is not going to cease any data collection, just the calculation of estimated take-up rates—which was the point made by the noble Lord, Lord Beecham—and the data source is and will continue to be available, so it will be possible to do the calculations later.
Noble Lords asked about pressures on budgets. I hope that I have answered that. On the question of promotion, it will be up to local councils to make sure that they get people coming for council tax support. The noble Lord, Lord Beecham, is correct that one of the things we understood to be holding people back from applying for benefits was the name, so “council tax support” will we hope make them more interested in doing it. Once again, local authorities will have to manage their budgets in order to deal with that.
I hope that with those explanations, the noble Lord will be willing to withdraw his amendment.
Lord Smith of Leigh
My Lords, I thank the Minister for her response. I am not sure that I take it as an assurance that she recognises that we need to hold more balances now as a result of the Bill that we are currently enacting. She might not carve her name in history like her predecessor Lord Bellwin, but until we get the “Hanham reserves” to support this, I will accept what she has said.
I thank the noble Lords who supported me on Amendment 107B: the noble Lord, Lord Shipley, and my noble friend Lady Hollis, who raised the issue of the economic shock and the impact that could have on council tax benefit. I remind noble Lords that that will have an impact the other way as well because it will probably affect the business rate collection, so local authorities will be squeezed in both having to pay out more council tax benefit and receiving less business support.
I sincerely regret that the Government have now confirmed that the real value of any contribution they make to the council tax support scheme is going to fall significantly over time. None of us really understands what that will be, it depends on the changes that happen over a period of time, but we need to say before we start that it will bring instability into the system. I regret that, but I beg leave to withdraw Amendment 106A.
Baroness Hanham
“( ) sections 32 to 34 of the Welfare Reform Act 2007 (benefit for persons taking up employment) so far as applying in relation to council tax benefit.”
Baroness Hanham
My Lords, I thank the noble Lord for all the information he provided. I turn again to the position that local authorities will make up their own schemes, work out their budgets and decide within the mechanism of what they have got what they need to do. We have already said that they have the flexibility within those budgets to decide what they do to make the council tax support work. Considering putting this back for three years would not give any stability at all to this whole process.
Baroness Hanham
I am sorry; that is quite right. I hope and expect that, by that stage, things will be well settled down and we will have moved on substantially so that that is not necessary. The Government will resist the amendment.
Lord Beecham
My Lords, in the absence of any indication of positive support from the Government or anywhere else in the House, and given the lateness of the hour and the relatively small number of Members, however talented, that we have around us, I feel obliged—very reluctantly—to withdraw the amendment.
Baroness Hanham
“(9) In determining whether a dwelling is a long-term empty dwelling, no account is to be taken of any one or more periods of not more than 6 weeks during which either of the conditions in subsection (8)(a) and (b) is not met (or neither of them is met).
(10) The Secretary of State may by regulations substitute a different period (of not less than 6 weeks) for the period which is for the time being specified in subsection (9).””
Baroness Hanham
My Lords, I have written to the noble Lord, Lord Beecham, who raised the question of when an empty home was an empty home, and whether it was based on whether it had furniture in it. The situation is that the six weeks will matter regardless of whether it has furniture in it. It will end up in the same situation and local authorities can make their decisions on the basis that the home is empty.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Baroness for sending us a letter on this in advance of our discussions today. We are happy with the proposition included in the amendment. I think that we had an amendment in Committee that may have prompted the thought but, on reflection, perhaps it was not precisely on point. This amendment is precisely on point and intended to stop-up a loophole. We support it.
Baroness Hanham
My Lords, perhaps I might address the two strands of this amendment. First, the level of discounts and the empty homes premium will be a matter for local authorities to determine annually. I do not think it is the role of the Secretary of State to pre-empt the decisions of a local authority, and the high volume of changes among individual council tax payers throughout the year, by speculating on the amount of income that they could raise through their discounts and any premium.
Turning to the second strand, I am unclear whether this was the noble Lord’s intention but my officials advise that the drafting of the amendment could force a general redistribution of resources against unspecified criteria, rather than a more specific redistribution of resources raised by the various discounts and premiums. This picks up on the point that the noble Lord, Lord McKenzie, was making. The Government have been consistently clear that they wish local authorities to have discretion over the level of, and keep the receipts from, the empty homes premium. They will not want to intervene actively to redistribute revenue support grant in any way that would run counter to the direction of the new government policy on business rates retention, which seeks to end the begging-bowl approach to local government finance. The business rates retention scheme, which effectively works in with this, will be created by this Bill and will create a direct link between the business rates collected and local authority income. It also gives the local authority the ability to help people into employment and with the council tax support scheme. However, the sort of equalisation that the noble Lord is looking for will not be available in the way that he seeks.
Lord Beecham
I certainly endorse what the noble Lord, Lord Tope, said and support the thrust of the noble Baroness’s amendments. The first is a matter essentially for the local authorities. The second impinges on the role of bailiffs. We had a discussion in the Committee stage of the Crime and Courts Bill when I moved an amendment urging the Government to produce a regulatory system for bailiffs, about which there had been a great deal of controversy. The previous Government had passed the Tribunals, Courts and Enforcement Act 2007 which envisaged a code of practice dealing with a whole range of issues, some of which were touched on in the noble Baroness’s Amendment 109ZB.
We were informed in the Committee stage of the Crime and Courts Bill that the consultation period that the Government had initiated about that whole area was ending on 14 May and that conclusions would be reached in the autumn. Well, we are in the autumn—we avoided having a summer in the mean time—and it would be interesting to know how things are going in that respect, although I do not expect the noble Baroness the Minister to know offhand. It seems to me, and it might seem to the noble Baroness, Lady Meacher, that it would be sensible to draw the two discussions together, because certainly as far as the role of bailiffs is concerned, clearly critical to Amendment 109ZB, there are also wider implications. I believe that the noble Baroness, Lady Northover, was dealing with this matter, but I think that she may have moved on and it is probably the noble Lord, Lord Taylor, who now has the remit for this. It would be helpful if the Minister could consult with whoever is now dealing with this matter to see what is happening on that front so that we can have a clear indication of the Government’s thinking—I hope before Third Reading, which does not leave a lot of time—so that the noble Baroness might have an opportunity, if necessary, to press something on that occasion. Therefore it would be helpful if the Minister would indicate that she would be prepared to take this issue back, looking at it with the other department and letting noble Lords know how the land lies in respect of bailiffs and enforcement measures generally, but in particular in relation to council tax.
Baroness Hanham
My Lords, I thank the noble Baroness for moving this amendment. Again, we had some discussion about it in Committee. I have some sympathy about the way in which these enforcements are carried out and the fact that, as the noble Baroness said, sometimes they may simply not be known about.
Again, this is a matter for local authorities. They have to recognise that they have to treat this issue sympathetically, pragmatically and sensibly. I know that it is felt that they do not always do that. I do not think that it is a government direction to do that but—I notice the expression on the noble Baroness’s face—I do think that we can do something in terms of guidance on how they go about this. I will combine, if I may, the two points about guidance because the noble Lord, Lord Beecham, raised the question of the MoJ consultations. We know that those have been concluded, and we also know that there has not yet been a result from them because we have been pressing to see whether we could get anything for today. The MoJ is looking at the question of bailiffs very widely, and we need to look at it from the point of view of enforcement of council tax issues.
I would like to suggest to the noble Baroness that we issue guidance from the DCLG, and that she and her advisers have an opportunity to talk to us about how that guidance should be set up and what should be included. I do not guarantee that we will take it all on board but I think that there is much experience around there that would be helpful. Once the MoJ comes to a conclusion and gets its guidance sorted out, we can pull these together so that there is a comprehensive document. Given that I understand the noble Baroness’s concerns and that we will respond in this way, I hope that she will be willing to withdraw her amendment.
Baroness Meacher
I thank the Minister very much for that understanding and good response. I very much welcome the fact that the consultation on the regulation of bailiffs has been concluded. I was arguing for that 20 years ago. People always say that it takes 10 years—or is it 20 years?—for a good idea to come to fruition. I am pleased that the department will issue guidance and would welcome the opportunity to talk about it. With those assurances, I am happy to withdraw the amendment.