Lord Jenkin of Roding
Main Page: Lord Jenkin of Roding (Conservative - Life peer)Local Government Finance Bill
Lord Jenkin of Roding Excerpts
Lord Jenkin of Roding
“(8A) Before making regulations under sub-paragraph (8), the Secretary of State must consult with local authorities regarding any proposed requirements for schemes.”
Lord Jenkin of Roding
My Lords, I have come back especially to move this amendment, which requires the Government to consult with local authorities before they make regulations. It is a probing amendment, but I am concerned that there appears to be absolutely no limit on what the Government can require and what regulations they can make. In these circumstances, it seems that an obligation to consult is absolutely essential. Apart from anything else, it rather undermines the Government’s stated aims for,
“a policy of decentralisation that will give local authorities increased financial freedoms”.
Yet here we are with the Government still prescribing in detail exactly what local authorities can do. This is unnecessary and mildly demeaning to local authorities. I hope that the Government might think again and possibly even accept this amendment. It simply requires the Government to consult. I am sure that my noble friend will tell me that they are going to do that anyway. Well, let us have it in the Bill. I beg to move.
Lord Jenkin of Roding
I understand what my noble friend is saying. This was a London Councils amendment and I should have declared an interest as one of its joint presidents. London Councils was hoping that perhaps this might have gone into the Bill but, given what my noble friend said, I beg leave to withdraw the amendment.
Lord Jenkin of Roding
Lord Jenkin of Roding
I shall speak also to Amendment 106. I was caught by surprise when the noble Lord, Lord Smith of Leigh, did not move his amendment, or I would have spoken to all three of my amendments together.
Amendment 105 is very straightforward. I do not understand the need for the sub-paragraph that I want to take out. It gives the Secretary of State power to make regulations about the procedure for preparing a local scheme for council tax reliefs. The Government seem determined to get right down into minute detail controlling local authorities. I wonder why this is necessary. When rereading the Hansard report of when I moved this in Committee, I found that my noble friend said that the amendment would,
“remove the default scheme from the Bill altogether”.—[Official Report, 19/7/12; col. GC 176.]
None of us can begin to understand why that should be so. This is nothing whatever to do with the default scheme. It is simply a question of the Government wanting to have regulations to tell local authorities the procedure for introducing a scheme or an amendment. I do not understand that.
Amendment 106 is slightly more complex and may take me a moment or two longer. The sub-paragraphs on page 62 of the Bill require local authorities wanting to make revisions to the local scheme or to replace it to do so by 31 January in the preceding year. This is another amendment that I moved in Grand Committee. We were trying to understand whether the Government had considered the impact of the proposed legislation on the local authority budget and council tax setting process, particularly when there is a procedure under the Localism Act whereby an excessive increase in council tax can be the subject of a referendum.
In response, at col. GC 171 of the Official Report on 19 July, my noble friend suggested that the authorities will need to take their funding levels into account when designing local schemes. Those advising on this believe that this response simply does not reflect fully the conflict of timing between the two requirements and the impact on local authority financial freedom. By putting in a limit of 31 January, the current provisions would prevent an authority revising its local scheme after that date, even though it was necessary to reflect potential new financial realities on the outcome of a local referendum. Again, this seems to be a further and rather undesirable way of controlling local authority decisions.
I am sure that my noble friend will take the point that if you have a power in the Localism Act for the referendum, and the referendum overturns the council’s original proposal, the local authority would have to make a fresh assessment of levying council tax. I do not see how they can do that by 31 January because it would take two or three months for the referendum to come to fruition and for the result to be known. Perhaps between now and Third Reading my noble friend might look at that again in the light of the combination of having to revise the scheme and then being faced with the consequences of a referendum.
If the referendum is lost, there would be nothing to worry about and the original budget and council tax would stand. But if the referendum is successful, as I understand it, the council would have to renew it and make a new one that complies with the requirements that will follow from the referendum. I hope that my noble friend may be able to offer some comfort on that. I beg to move.
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.