Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013

Lord Rowlands Excerpts

Tuesday 12th March 2013 Grand Committee

[Lord Wigley]

Perhaps I may ask for clarification on a couple of points by the noble Baroness. First, am I right in saying that the interpretation of this order is the provision of greater powers of privatisation for local authorities if they choose to use them? Is that the implication—services that would otherwise be in-house in local authorities can be undertaken by private companies on their behalf?

Secondly, I refer to Article 2 on,

“Amendment of the Local Authorities (Contracting Out of Tax, Billing, Collection and Enforcement Functions) Order 1996”.

In subsection (2), there is reference to,

“the Detection of Fraud Regulations”.

Are these regulations that have already been made? Are they made by the Assembly or here? Is there already a statutory instrument in effect on that, or are we awaiting something to be confirmed?

[Lord Rowlands]

I wish to ask two questions. First, how much contracting out has been carried out since the 1996 order was introduced? What percentage of local authorities have already contracted out in this field? The Minister referred to my next point. One should perhaps be concerned that we are handing over information on the personal financial matters of individuals and families to a variety of different organisations which might have potential conflicts of interest as opposed to a local authority, which will not, because it is a statutory body. The Minister talked about safeguards and data protection but if you diversify and decentralise in the manner in which this order hopes and expects, how will the individual be safe in the knowledge that his or her finances cannot be abused in any way? At least when the local authority has this information, it is a statutory body and therefore is obviously accountable in every sense of the word. How will that accountability be enforced across a range of other organisations or companies that will be delivering these services?

[Baroness Gale]

My Lords, I thank the Minister for placing this order before us today. As she has outlined, its purpose is to amend the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996. From April 2013, council tax benefit will be abolished and council tax reduction schemes will be introduced in Wales under the Local Government Finance Act 2012. In future, instead of receiving council tax benefit, low-income families will receive a reduction in their council tax. Currently, local authorities can contract out of administering the collection of council tax. The order we are debating is required to ensure that the new administrative functions are part of the council tax reduction scheme and can also be contracted out if local councils wish to do so. Those functions include such things as sending out decision letters and serving penalty notices. The noble Lord, Lord Wigley, and my noble friend Lord Rowlands asked some very interesting questions on those issues and I look forward to the Minister’s reply to them.

The drafting of the order is relatively uncontroversial but it is unfortunate that we have it at all. It comes about as a result of the Government’s decision to abolish council tax benefit. They are scrapping the national benefit and passing responsibility for it to local authorities in England and to the Welsh and Scottish Governments, and cutting funding by 10%. We accept that the Welsh Government have responsibility for the details of any schemes and are fully involved in setting up these details. The principle of getting rid of council tax benefit dismays us very much. In England, we see people on low incomes being asked to pay sums of money that they simply cannot afford. Most councils have had no option but to pass on some of the cuts. As a result, many low-income households currently exempt from council tax will have to pay it for the first time. Typically, they will have to pay between £96 and £225 a year. In Wales, a 10% cut would amount to an annual cut of some £74 per council tax benefit claimant. I wonder whether the Government fully understand the impact this will have on low-income families. Government Ministers have praised the freeze on council tax, which may, indeed, be welcomed by those on modest and high incomes. However, the removal of council tax benefit from those on the lowest incomes means an increase in what they will have to pay.

The Government say that pensioners must be protected from the cuts, which means that others face larger cuts, depending on the number of pensioners in a local authority. If councils also try to protect other vulnerable groups, such as disabled people or carers, the cuts enforced on working families will be even more severe. Because of the number of pensioners the average reduction across local authorities will work out at some 16%. In January the Welsh Minister for Social Justice and Local Government, Carl Sergeant, announced a £22 million support package to continue offering the full council tax discounts in Wales, and under prudent financial management the Welsh Government have been able to fund their proposals out of their reserves.

It has been a difficult time for the Welsh Government. They have had to balance an enormous number of cuts and manage them while facing a difficult budgetary situation. Towards the end of the winter they were able to see the effects on households of other welfare benefit cuts. They knew that they were perhaps not going to have so many payments for such things as severe winter weather. They were in a position to use that money for council tax discount. However, that prompts the question as to whether it can continue to be used in the future. It will certainly not be easy and councils are aware of the pressures on them.

Given that the Government are going ahead with the change, the Welsh Government and Welsh local authorities need the regulations in place as soon as possible. We will not oppose these regulations tonight.

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[Baroness Randerson]

The noble Lord makes an interesting point. It is something that we have come across on a fairly regular basis, that responsibilities are split in a way that is sometimes not obvious and sometimes surprising.

I move on now to the points made by the noble Lord, Lord Rowlands, who asked if there is more contracting-out now. I simply point out that this has always happened—for example, currently only three of the 22 local authorities in Wales have in-house bailiffs. Contracting-out on billing and bailiff services is very common. But a great deal of work has been done by the Welsh Government and by individual local authorities to have codes of conduct and best practice examples to ensure that bailiff services are run by improving standards over the years. A great deal of progress has been made on those issues.

[Lord Rowlands]

I apologise for interrupting the Minister again. I can understand the situation with bailiffs, but my feeling would be that a bailiff would not receive detailed personal information of the individual’s financial circumstances in the same way as some of the other services that are contracted out. That would give the external provider direct access to people’s personal finances, in a way that a bailiff probably would not have.

[Baroness Randerson]

I believe that external services will have no more access than they have had in the past, but they will continue to have an obligation to treat that material as confidential and deal with it in a responsible manner. Local authorities will continue to have—this is not new—a responsibility to ensure that any organisation or individual whom they appoint as a contractor to work on their behalf operates to the highest standards, and maintains confidentiality of personal data. To address here the remarks of the noble Baroness, Lady Gale, as a very keen advocate of local authorities and someone who believes fervently in local government—and I am very proud of our local government system throughout Britain—I believe that councils are raising council tax, which is the tax that funds a lot of their spending. It is right that they have responsibility for the whole of the functions associated with the raising of that tax. It is important that we have confidence to delegate power to local authorities throughout Britain in order to enable them to raise tax and spend it as efficiently and practically as possible.

Finally, I turn to the remarks made by the noble Baroness, Lady Gale.

[Lord Rowlands]

If some of these services are contracted out to an external provider and an individual feels that he or she has a grievance at the way that services are being administered, to whom does the individual appeal? If the local authority were doing it, it would be the Local Government Ombudsman. If, for example, an external provider committed a potential act of maladministration, could the individual go to the local ombudsman for redress of the grievance against the external provider?

[Baroness Randerson]

They will continue to appeal in the normal manner, the way in which they have been appealing since the establishment of council tax. The appeal will be to the valuation tribunal in the normal manner.

The noble Baroness, Lady Gale, expressed concern about the ending of council tax benefit. I do not believe it is an issue of concern in principle that council tax reductions will be done by councils rather than through the benefits system. I think it is very sensible to unite the reductions in council tax for those of limited means with the organisation that levies the tax in the first place. It is part of the Government’s policies of decentralisation and trusting local authorities. In this case, the Welsh Government have made a central scheme, and there are certain limited exceptions that local authorities can make decisions upon, but there is a largely standard scheme throughout Wales.

The concern that the noble Baroness expressed related to people who she believes will not receive the council tax reduction in future. I assure her that throughout Wales, if you are entitled to council tax benefit now, you will be entitled to a council tax reduction in future because the Welsh Government chose to supplement the funding being provided.

I hope that I have addressed all the points that noble Lords have raised. I am now in a position to answer the question asked by the noble Lord, Lord Wigley, about the Explanatory Memorandum. This order adds new administrative functions to the 1996 order which relate to council tax reduction schemes, but under the Contracting Out (Functions of Local Authorities: Income-Related Benefits) Order 2002 local authorities could in the past have carried out those functions for council tax benefit.

It may be useful if I review the record and check that I have answered all questions fully. I will pay particular attention to the point raised by the noble Lord, Lord Wigley, about additional functions. I commend the order to the Committee.