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

Lord Shipley Excerpts

Thursday 28th February 2013 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, this order will enable local authorities to implement localised council tax support from 1 April when council tax benefit is abolished. These changes are part of the Government’s wider policy of decentralisation. The order will amend the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, which allows local authorities, if they choose to do so, to contract out statutory services relating to the administration of local taxes which they would normally have to provide themselves: for example, the calculation of individual council tax liabilities and the serving of demand notices.

New administrative functions will be created when localised schemes are implemented. This order will add these new functions to those that can be contracted out already. The new functions are: the issuing of council tax reduction decision letters; the payment of reductions in certain circumstances where the billing authority is of the opinion that it would be appropriate; the serving of penalty notices in connection with a reduction; the repayment of an amount paid in connection with a penalty issued in connection with reductions under local schemes that has been subsequently quashed; and the calculation and collection of premiums on long-term empty dwellings.

The Council Tax Reduction Schemes (Detection of Fraud and Enforcement) (England) Regulations 2013 deal with the detection of fraud and enforcement mechanisms relating to local authority schemes. They provide local authorities with the means of protecting their reduction schemes from attempted fraud and deterring those who may be considering making a false claim.

These regulations are being put forward for approval using powers in Sections 14A, 14B and 14C of the Local Government Finance Act 1992, which were inserted by Section 14 of the Local Government Finance Act 2012. These powers allow for the creation of criminal offences, the creation of civil penalties that may be imposed by local authorities, and regulations providing powers to require information from individuals or organisations.

These powers are broad, and noble Lords and Members in the other place rightly sought assurances from the Government during the passage of the Bill on how the Government would seek to exercise them. A statement of intent, Localising Support for Council Tax: Information Sharing and Powers to Tackle Fraud, was published in July last year and committed the Government to bringing forward proportionate and measured proposals that would not go beyond the existing powers relating to council tax benefit, while replicating only the powers that were essential in the context of reduction schemes. These regulations are the result of that commitment, and I shall explain how that has been translated into specific provisions.

Regulation 2 sets out a number of definitions, but noble Lords may wish to note how we are defining a council tax offence for the purposes of subsequent regulations. A council tax offence is defined as any criminal offence committed in making an application for, or in the award of, a council tax reduction; or an offence committed for the purpose of facilitating the commission of such an offence; or any attempt or conspiracy to commit such an offence. It does not include offences committed for wider purposes related to council tax administration and enforcement, nor for other criminal offences committed against a local authority. Noble Lords may wish to bear this context in mind when examining later regulations that deal with requiring information and the creation of offences.

Regulation 3 provides for local authorities to authorise individuals to undertake investigations into council tax offences. The provisions are equivalent to those that are currently in place for local authorities to authorise investigations into housing benefit and council tax benefit cases. However, the regulation restricts how authorised officers may exercise their powers. They may do so only,

“for the purpose of preventing, detecting and securing evidence of the commission … of a council tax offence”.

This does not allow for powers to be exercised for routine checks on individuals or, more generally, to verify the content of applications.

Regulation 4 provides that authorised officers may require a person to supply information that is needed, again for the prevention, detection and securing of evidence of council tax offences. Where the person from whom information is to be required falls within the list of persons set out under paragraph (3), information may be required only in relation to a particular person, and where there are reasonable grounds for believing that the identified person, or a family member,

“has committed, is committing or intends to commit a council tax offence”.

The classes of people who may be required to provide information are equivalent to those who may be required to provide information for welfare benefit offences, with the removal of certain groups. For instance, we are not providing for officers to require information from telecommunication providers, since such requests should instead be exercised, monitored and reported on through legal avenues under the Regulation of Investigatory Powers Act and be subject to requirement for judicial approval and oversight.

Regulation 5 provides for electronic access to information to be provided to an authorised officer, where such arrangements can be made. Local authority investigators have similar powers to seek electronic access to information in relation to welfare benefit investigations. Under the regulations, the powers to require electronic access to information may be used only where the electronic records are likely to contain relevant information for the purpose of preventing, detecting and securing evidence of the commission of a council tax offence.

Regulation 6 provides that it will be a criminal offence intentionally to delay or obstruct an authorised officer when exercising their power to require information. It is also an offence to refuse or to fail, without reasonable excuse, to provide information or access to electronic records when required to do so. I hope noble Lords will accept that deliberately frustrating an investigation should itself be an offence. These offences are similar to those that exist in relation to delay or the obstruction of an officer in relation to a welfare benefit investigation.

Regulation 7 provides that it will be a criminal offence to make a false representation or to provide or allow to be provided information that is known to be false in order to gain a reduction.

Regulation 8 makes provision, similar to that currently in force for council tax benefit, that a failure to notify a relevant change in circumstances would be an offence. The regulation also makes it an offence knowingly to cause or to allow another person to fail to notify a change in circumstances affecting their entitlement to a reduction.

Regulation 9 deals with offences that may be committed by a body corporate and the ability to prosecute the officers themselves if the offence was due to their actions or omissions.

Regulation 10 deals with the legal timescales for prosecutions.

Regulation 11 provides that a local authority may offer to impose a penalty on a person rather than prosecute them through the courts. In the face of sufficient evidence to prosecute, the person may wish to avoid a criminal sentence and voluntarily accept a financial penalty. In return, the local authority can avoid the need to prepare a legal case and the time and resources involved. Any such agreement would be subject to a cooling-off period and may be offered only when there is sufficient evidence to institute proceedings, so that there is no question of any person with a legitimate defence being pressured or forced into accepting a penalty against their will.

Regulations 12 and 13 extend the existing system of financial penalties that local authorities may impose for council tax discounts, so that similar penalties may be imposed in relation to council tax reductions.

An authority may impose a £70 penalty on a person when they are negligent in providing information or notifying a change in circumstances that lead to them receiving a reduction beyond their entitlement. These are for non-criminal actions and are at the discretion of the local authority. If a person has been charged with an offence or issued with a penalty as an alternative to prosecution, a penalty may not be imposed. There is no question of penalties being imposed under these two regulations when a person has been charged with an offence and a prosecution subsequently fails or lacks sufficient evidence.

In conclusion, these regulations in large part reflect the provisions that are currently in place for the internal administration and enforcement of council tax benefit. If approved, they will carry out two essential functions. They will enable local authorities to deliver their local schemes, whether using internal resources, external providers or a mixture of both, as well as providing a proportionate but robust system of enforcement powers to combat attempted fraud and seek information from organisations that can assist in bringing offenders to book.

Localising council tax reduction delivers on three of the Government’s key priorities: devolving power and control over local matters from the centre; reforming the welfare system to make work pay; and reducing the deficit. It is important that we provide authorities with what they need to deliver a cost-effective council tax system and to combat attempts to defraud them and honest local taxpayers. Together, this is what these statutory instruments will do, and I commend them to the Committee.

[Lord Shipley]

My Lords, first, I declare my interest as a vice-president of the Local Government Association. I shall comment on this one and on the next, too, so I need speak only once.

I have a desire for a reassurance that in all the contracting out of existing functions of local authorities, whether they have been previously contracted out or may be in future, exactly the same standards will apply on matters concerning data protection and in the duties, obligations and service standards of those to whom work is contracted out. I am thinking in particular of the role of bailiffs and what standards of service they will be required to work to. There has been a discussion and things have been done about this in the past year or two, but I seek the Minister’s assurance that exactly those same standards, or perhaps even better standards, will apply in future.

[Baroness Smith of Basildon]

My Lords, I am grateful to the noble Lord, Lord Shipley, for speaking before me, because it has reminded me to say that I am also a vice-president of the Local Government Association, which I may have forgotten otherwise. The points that he made are ones that I would also have wished to make, and I will not repeat them. I refer particularly to the point on bailiffs, which was very well made, and I look forward to hearing the response from the Minister. I will come back to the freedom of information point.

I thank the Minister for her explanation, as it was good to have such a detailed explanation of the instruments. It answered a couple of the questions that I have, although I have others. Obviously, we support measures that would prevent fraud, detect it and take action against it, and any system of enforcement should be effective and fair. We entirely concur with those principles. My questions are on points of clarity, because I was not 100% clear. Legislation can sometimes be opaque, and it would be helpful to have some more information.

As the noble Lord, Lord Shipley, was saying, when services are contracted out, particularly in this case, very detailed confidential financial information can be provided to a private company or organisation. I understand that under data protection legislation, the responsibility would remain with the local authority, but would the DCLG give any guidance to local authorities on how they may enforce their responsibilities to organisations to which they have contracted out those services? What redress would remain available to an individual who felt that their confidentiality had been breached in any way? Would that remain a matter for the local authority, or would responsibility lie with the company that held the information and had inadvertently or wrongly released it?