Lord Ahmad of Wimbledon
Main Page: Lord Ahmad of Wimbledon (Conservative - Life peer)Local Government Finance Bill
Lord Ahmad of Wimbledon Excerpts“( ) 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.”
Lord Ahmad of Wimbledon
My Lords, I shall speak first to Amendments 104A, 105A and 106B. These amendments are technical, ensuring that we, the Government, can deliver our policy to protect pensioners, enabling regulations to provide for a default scheme that largely replicates current council tax benefit, while at the same time providing reassurance to local authorities that their schemes can incorporate certain work-incentivising features of current council tax benefit, where they choose to do so. The amendments also allow such provisions to be applied in Wales.
Taken together, these amendments to Schedule 4 achieve this by ensuring that regulations prescribing requirements for schemes, prescribing the default scheme and providing for schemes in Wales may incorporate provisions equivalent to those that are, or indeed could be, provided for in or under sections of existing legislation relating to council tax benefit, with modifications. Specifically, I refer to Sections 32 to 34 of the Welfare Reform Act 2007.
The amendments will provide the Secretary of State, billing authorities and indeed Welsh Ministers with powers to draw up schemes that achieve largely the same effect as the council tax benefit system with respect to extended payments. Extended payments are a work incentive, included in both the default scheme regulations and prescribed requirements regulations. They allow for a person, for four weeks, to continue to have their council tax support calculated as if they were still in receipt of certain prescribed benefits when entitlement to those benefits ends.
These technical amendments will enable regulations prescribing the requirements for pensioner protection, and the default scheme, to make sure schemes can be constructed in a way broadly consistent with existing arrangements under council tax benefit for extended payments. In relation to local schemes, this will assist local authorities who wish their first scheme to work in a way very similar to the existing scheme.
These technical amendments will promote work incentives and ensure that the Government can give effect to their policy on protecting pensioners. They will also, under the default scheme, ensure that this type of reduction can be offered to low-income taxpayers in authorities that have failed to bring forward their own scheme in time. It also provides local authorities with the flexibility to incorporate extended payment features of the current system into their local schemes, where they choose to do so, and, I have mentioned previously, it provides for Welsh Ministers to do so in their own context.
I turn to Amendment 106ZA. This amendment is necessary to ensure that the Government’s intention to allow flexibility over the payments that must be made by authorities in regulations about funds, such as instalment of the precept, applies, as intended, only to payments relating to council tax receipts. As noble Lords will know, new paragraph 6 of Schedule 1A to the Local Government Finance Act 1992 enables billing authorities to vary the payments or instalments that are required to be made under the collection funds regulations enabling cash flow pressures to be shared with major precepting authorities, subject to their agreement. The intention is to assist with concerns over cash flow pressure that billing authorities may face if, for example, job losses in an area lead to an increase in the demand for council tax reductions. This power can be used only where the authorities concerned agree the approach. We do not plan to require local authorities to enter into any such agreement or to amend regulations about funds to prescribe the approach to reducing payments in year. However, we want to make it clear that this power enables authorities to vary the payments required to be made in regulations under Section 99 of the Local Government Finance Act 1988 about funds relating to council tax only. This is because the same regulation-making power in the Local Government Finance Act 1988 will also be used to make regulations in relation to the new business rates retention system.
As I mentioned at the start, these are technical amendments to ensure that the power in the Bill for major precepting and billing authorities to come to an agreement to vary payments or instalments applies, as intended, only to payments in relation to council tax. I trust that noble Lords will support these amendments.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Lord, Lord Ahmad, for explaining the government amendments. We have no particular issue with them. In respect of the extended payment arrangements, I understood the Minister to say that they would be the subject of local discretion. Is there anything in the requirements of the transitional funding pot that would encourage or discourage the use of these arrangements, or is it neutral?
Lord Ahmad of Wimbledon
If the noble Lord is referring to the new funding, there is not.
“(3A) Where—
(a) regulations under this section specify a sum as a penalty (or a minimum or maximum penalty), and(b) it appears to the Treasury that there has been a change in the value of money since those regulations were made or (as the case may be) the last occasion when an order under this subsection was made,the Treasury may by order substitute for that sum such other sum as appears to them to be justified by the change.(3B) An order under subsection (3A) does not apply in relation to any act done or omission which began before the date on which the order comes into force.”
Lord Ahmad of Wimbledon
My Lords, this series of amendments is necessary to provide a route of appeal to a valuation tribunal in England or Wales against any penalties that may be created in regulations under the powers provided in this Bill. Moreover, it gives Her Majesty’s Treasury the power to increase the level of any such penalties in line with inflation. Minor amendments are also being made to enable provision to be made for new penalties to be collected and enforced in the same way as existing penalties under the council tax system. These amendments make no assumptions about the penalties themselves or the offences that may be imposed as an alternative to prosecution, as these have yet to be determined. These amendments seek to ensure that, when such penalties are created in regulations, be it by Welsh Ministers or by the Secretary of State, with Parliament’s approval through the affirmative procedure, there is an available route of appeal.
The amendments also ensure that where there is a change in the value of money, the amount of any penalties may be varied by order made by the Treasury, subject to the negative resolution procedure, without requiring the affirmative procedure to make the necessary regulations. This is consistent with the procedure for increasing the existing penalties that authorities may impose in relation to council tax under Schedule 3 to the Local Government Finance Act 1992. This ensures that where a decision is taken to increase these penalties in line with inflation, any new penalties may be increased by the same order.
Amendment 107E provides that the creation of any new penalties would not impact on the well established system of penalties within the council tax system.
Amendment 107F amends existing powers to make regulations to deal with a situation where a person dies and was liable to pay a penalty, so that provision may also be made in relation to any new penalties created in regulations under new Section 14C.
Amendment 107G provides a clear route of appeal against the new civil penalties that may be imposed by local authorities under regulations made under new Section 14C. Where regulations allow for the imposition of a penalty as an alternative to prosecution, the amendment enables a person to appeal the amount of that penalty. This would be to the Valuation Tribunal for England for penalties affecting English authorities, while such penalties as the Welsh Ministers may decide to create would have a route of appeal to the Valuation Tribunal for Wales.
These amendments seek to make technical changes to ensure that any penalty regime that may accompany these schemes works alongside and mirrors the existing council tax penalty regime. I must admit that this exhausting list of penalties conjures up pictures of football. However, I shall not talk about this at such a late hour. With all the penalty explanations that I have given, I ask noble Lords to support Amendments 107D to 107G.
Lord McKenzie of Luton
My Lords, I thank the Minister for his explanation of these amendments, with which I do not believe we have a problem. I was slightly intrigued by references to the Treasury being able to act where there has been a change in the value of money. Amendment 107D states that,
“the Treasury may by order substitute for that sum such other sum as appears to them to be justified by the change”.
I had a joke about the value of the pound in your pocket, but I think the Minister is too young for that.
From what the Minister said, this simply replicates existing arrangements that are in the system somewhere. The thought of the Treasury being able to roam at will and take a view on changes in the value of money, and therefore being able to bring forward changes to the level of penalties by order, was a bit of a concern. The amendment does not say anything about the regularity with which that can be done. On the basis of the wording, it seems that it can be done at any time; it is not once a year or uprated by other issues. Indeed, when it comes to changes that appear justified to the Treasury, we all know that what the Treasury thinks is justified is not necessarily anything that we will be comfortable with. However, I will not press this matter. If the Minister says that this simply replicates existing arrangements, I am happy with that—or not unhappy.
Lord Ahmad of Wimbledon
I confirm that it is in line with council tax. I am sure that Her Majesty’s Treasury has enough to do without sending people roaming around the country.
“Calculation of billing authority’s council tax base
(1) In section 34 of the LGFA 1992 (calculations to be made in setting council tax: additional calculations where special item relates to part only of billing authority’s area), after subsection (4) insert—
“(5) Regulations under subsection (4) that apply to billing authorities in England may contain different rules for the purposes of calculating item TP in relation to different kinds of special item.”
(2) In section 45 of the LGFA 1992 (calculations to be made in setting council tax: additional calculations where special item relates to part only of major precepting authority’s area), after subsection (5) insert—
“(5A) Regulations under subsection (4) that apply to authorities in England may contain different rules for the purposes of calculating item TP in relation to different kinds of special item.
(5B) Regulations under subsection (4) that make provision by virtue of subsection (5A) may make consequential amendments to this Act.””
Lord Ahmad of Wimbledon
This amendment is necessary as part of the Government’s policy for providing funding certainty for parish and town councils. As noble Lords will be aware, the funding arrangements consultation was published in May. It set out the Government’s policy that billing authorities and town and parish councils should work together to manage the impact of localising council tax on town and parish budgets and the levels of band D council tax for parish residents.
Noble Lords will be aware that in response to that consultation some concerns have been raised by town and parish councils that the approach set out in the consultation would not provide enough certainty over funding. We have listened to those concerns, which is why in August we published a further consultation setting out proposals for providing that level of certainty. In short, we are proposing amending secondary legislation to allow the calculation of the tax base for town and parish areas to be calculated excluding council tax support reductions. The effect will be to maintain the status quo for town and parish councils and their residents.
The amendment to the Bill is a technical amendment to ensure that the proposals for town and parish council areas in respect of parish precepts do not need to be applied to all other special items for part of a billing authority or major precepting authority area. Noble Lords will also be aware that the Government have recently consulted on the proposals for providing certainty for town and parish councils, and part of that consultation is to seek views on how other special items, such as waste and transport levies, should be treated.
This amendment will enable the council tax base to be calculated differently, depending on which special item is being considered. For example, if there is good reason why the council tax base for all other special items should be calculated with council tax support reductions included, the current legislation would not allow us to deliver that without also applying the same rules to the calculation of the council tax base for parish precepts. We may therefore be unable to provide the certainty town and parish councils so desire.
I recommend this amendment as it is a sensible way of ensuring that we can provide certainty for town and parish councils without automatically forcing the same rules to apply to the calculation of the tax base for other special items. With this explanation, I trust that noble Lords will support this amendment
Lord McKenzie of Luton
My Lords, I am grateful to the Minister for his explanation of this amendment. I would like to read the record and ponder a bit, but I accept what he says. This is not an issue of contention for us. Perhaps he will recap. I believe he said there was an updated consultation in August with town and parish councils about working together with billing authorities. He will correct me if I am wrong. If that is right, will he say when the Government’s response—if that is not the Government’s response—is likely to be ready?
Lord Ahmad of Wimbledon
My Lords, in moving Amendment 109A, I will speak also to Amendment 109B. Both are minor amendments. They would remove the requirement for two months to elapse between Royal Assent being given to the Bill and the date on which provisions allowing for HMRC information to be supplied to local authorities in England, Scotland and Wales for purposes relating to council tax, and to the relevant Northern Ireland departments for purposes relating to rates, come into force.
As noble Lords will I am sure be aware, local authorities in England will have the freedom to design their own schemes for working-age people. It is very likely that most, probably all, local authorities will choose to take into account income and tax credit information, information which originates with Her Majesty’s Revenue and Customs, as well as information pertaining to entitlement to benefits, in determining the level of support they wish to provide to applicants under their schemes.
As currently drafted, the provisions in the Bill containing the power for HMRC to share information with local authorities will come into force only two months after Royal Assent is given. These amendments are a sensible measure to take, allowing for information sharing to begin two months earlier than currently provided for, which will give greater certainty to local authorities as they design and implement their schemes regarding the information they will have and the purposes for which they may use it. I trust that with this brief explanation your Lordships’ House will support these amendments.