Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014

Baroness Randerson Excerpts

Monday 24th March 2014 Grand Committee

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)]

My Lords, this order will enable billing authorities in Wales to continue to contract out certain additional functions relating to the administration and enforcement of council tax, following the making of new regulations in relation to council tax reduction schemes for 2014-15 onwards.

I will first provide a brief overview of the legislative background. The Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2012 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2012 introduced council tax reduction schemes in Wales for 2013-14. Schemes introduced under these regulations are now being successfully operated by local authorities as part of the council tax system.

However, as the 2012 regulations are limited to 2013-14 by virtue of a sunset clause agreed with opposition parties in the National Assembly for Wales, a new set of regulations has been brought forward to govern the operation of the council tax reduction schemes from 2014-15 onwards. These are the Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2013.

It is now therefore necessary to update the references within the numerous pieces of interrelated subordinate legislation to take into account the new set of regulations that will govern the operation of council tax reduction schemes in Wales from April 2014 onwards. This work includes making the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014. The purpose of the 2014 order is to enable billing authorities in Wales to continue to contract out certain additional functions relating to the administration and enforcement of council tax following the making of the 2013 regulations, which will operate from 2014-15 onwards.

This time last year the Committee approved the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013. The 2013 order enabled local authorities in Wales, under the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, to contract out functions connected with the administration and collection of council tax. We wish to ensure that local authorities in Wales continue to have the freedom to contract out these administrative functions. The order being considered today amends the 1996 contracting-out order for Wales by substituting references to the 2012 regulations with references to the 2013 regulations.

The 2014 order will enable local authorities to continue to contract out the following administrative functions: the issuing of council tax reduction decision letters; the payment of a reduction amount under certain circumstances where the billing authority is of the opinion that it would be appropriate; the serving of a penalty notice in connection with an offence committed with a reduction; and the repayment of an amount paid in connection with a penalty related to a local scheme that has been subsequently quashed.

Although this order does not expand on the provisions that are currently in place for the administration of council tax reduction schemes, if it is approved by noble Lords it will carry out an essential function by enabling local authorities in Wales to continue to choose how to deliver their local schemes, whether that is by using internal resources, external providers or a mixture of the two. It is important that we provide local authorities with the tools they need to deliver a cost-effective council tax system. I commend the order to the Grand Committee and I beg to move.

[Baroness Morgan of Ely (Lab)]

I thank the Minister for that explanation. It is probably worth dwelling on the fact that this is not just needed because of the sunset clause. We need to go back further than that and think about why this needed to be done in the first place. It was necessary because in 2012 the UK Government abolished council tax benefit as part of the coalition’s Welfare Reform Act 2012. The responsibility for replacement schemes was passed on to local authorities in England and to the devolved Governments in Scotland and Wales. However, when it was handed over, there was of course then a cut of 10% in the funding that had previously helped people pay their council tax.

The IFS warned that 320,000 council tax benefit recipients in Wales would lose, on average, £74 a year and that this would hit the poorest the hardest, as 80% of council tax benefit spending in Wales went to those households with the lowest incomes. Unlike in England, where the IFS says that this approach has left 2.5 million households worse off by an average of £160 a year and has resulted in 500,000 people receiving summonses for non-payment, the Welsh Assembly has thankfully stepped in to protect this entitlement for those 320,000 people in the poorest households through a council tax reduction scheme. As the Minister has described, councils in Wales need to be able to contract out council tax services, as they do other services. For that reason it is important that the draft order is passed as quickly as possible, and the Government have our support in that.

What we have seen this week is a concerted effort—the start of an attack—by the current Government, pointing out problems in Wales. We have seen Grant Shapps come to Wales talking about problems we have had there and a concerted effort by the Daily Mail and the Times. This is an example of Wales understanding the needs and problems of the people and standing side by side with the most vulnerable. I do not suppose we will see any coverage of that in our newspapers in the next few days.

[Baroness Randerson]

My Lords, I thank the noble Baroness for her support for this order. I would point out, in relation to her detailed comments, that my introduction referred to the 1996 scheme on which this is built. This is not a new system. It was introduced all that time ago and it has been adapted to the new council tax reduction schemes.

I make no apology for the fact that the Government have devolved responsibility for this to the Welsh Government. It is my view and that of the Government that this responsibility should lie with the Welsh Government and local authorities. It is right because council tax is levied by local authorities, and arrangements for reduction schemes should therefore also be made at that level.

In relation to the latter part of the noble Baroness’s comments, I would point out that fewer people are this year claiming for council tax reduction than in the previous year. In other words, fewer people are in the difficult circumstances that would ensure that they needed to make such a claim. That is part of the general series of symptoms of an upturn in the economy. The situation in Wales is getting very much better; some indicators suggest that it is doing so at an even faster rate than in the rest of the UK. Council tax is one of the areas of which the previous Labour Government lost control, and I make no apology at all to this Committee for the fact that the Government stepped in to take control. I commend the order to the Committee.

Motion agreed.