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Lord Rooker: I have listened carefully to the comments made by my noble friend. The new power we propose for the English authorities provides greater flexibility than the current power, which the Welsh authorities have. Therefore, I am happy to agree to take away this set of amendments in the hope that I can return to this on Report, to see whether we can be positively helpful to our colleagues in the Welsh Assembly and give the Wales authorities the greater flexibility we are planning for England. In the light of that, I hope that the amendments will be withdrawn. I am extremely grateful for the issue being raised and shall return to this on Report.

Lord Morgan: I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 155:

The noble Lord said: The purpose of Amendment No. 155 is to seek clarification from Ministers on the working of this clause. Clause 76 enables the Secretary of State to prescribe classes of dwelling to apply for council tax discounts in accordance with,

    "such factors as the Secretary of State sees fit".

Reference is then made to two particular factors. However, it is clear from the wording of the Bill that these are simply illustrative. The Bill does not limit the Secretary of State's scope to those two factors.

If the examples cited in the Bill are, indeed, simply illustrative, one wonders what their purpose is other than to signal the intention of Ministers. Elsewhere, as we have gone through the Bill Ministers have been content to signal their intention orally rather than through illustrative provisions, so it is not clear to me why in this case there needs to be a different approach.

Putting that to one side, however, the substantive issue is that we should like reassurance that the factors that the Secretary of State thinks fit are comprehensively depicted by the regulations under subsection (1), and that no other factors can be introduced by the Secretary of State without parliamentary scrutiny. The Minister will appreciate that, as later amendments demonstrate, there is a great deal of detail about how the provisions are framed. It is important that they benefit from further parliamentary scrutiny. I beg to move.

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6.15 p.m.

Lord Bassam of Brighton: Last November, we announced our intention to give billing authorities the freedom to reduce the current 50 per cent council tax discount on second homes and to reduce or remove the current 50 per cent discount for long-term empty properties. We have made our draft regulations available to your Lordships' House, and we plan to consult on them later in the year.

The draft regulations set out classes of second homes and long-term empty property. Where necessary, appropriate definitions are included, as in relation, for example, to "job-related dwelling" and "unoccupied". We do not see how setting out factors in the regulations will help particularly. Our policy is clear enough, and we shall consult on the regulations to give effect to the policy once we have the necessary primary powers. We think it nonsense to say that requiring the expansion of the regulations in the way that the noble Lord suggests will add anything.

I appreciate that that does not satisfy the point that the noble Lord raises, but the consultation will be there. We think that the system will work well enough and be able to provide sufficient clarity, given how the regulations are drafted and the explanations that go with them.

Lord Hanningfield: I thank the Minister for that answer. It is illustrative of the fact that a lot of the Bill—what regulations decide and what the Secretary of State should decide—should be looked at in terms of parliamentary scrutiny. Obviously, we have only just begun to scrutinise the regulations thoroughly, as we only received them recently. I accept what the Minister says at the moment, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 155A not moved.]

Lord Hanningfield moved Amendment No. 156:

    Page 39, line 31, leave out from first "area" to end.

The noble Lord said: The Bill currently allows local authorities to reduce the discount for council tax on second and empty homes further in some parts of an area than in others, so long as the discount remains at least 10 per cent of the full tax. That seems unnecessarily divisive and complicated.

We are, of course, in favour of local flexibility and of providing local authorities with the power to respond to the local needs of their communities. We believe that providing a power to disapply discounts provides that flexibility. However, in principle we would be cautious about going down the route of differential levels of council tax for the same class of dwellings in an authority. We think that people in a local authority area will find such differential charging hard to understand.

For any tax regime it is important that there be confidence in its fairness. Transparency is something that generates that confidence. The provisions are in danger of damaging that transparency and that confidence. At a time when council tax is coming

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under intense scrutiny, we believe that the Government should be wary of introducing measures likely to lead to confusion and a lack of understanding. I beg to move.

Lord Rooker: I fully understand the points that the noble Lord makes, but I hope that I shall be able to satisfy him that there are good reasons why the Bill is drafted as it is. The clause has been drafted so as to allow a billing authority to have different levels of discount in different parts of its area. The amendment would remove that flexibility and require an "all or nothing" approach. We included the flexibility for a good reason. Local authority areas are not homogenous. For example, there may be a particular issue with second homes or long-term empty property in only one part of the district. That is why we believe that the billing authority should be able to choose how it uses the new power.

Last November, the local government Minister, Nick Raynsford, announced that we intend to allow local authorities to retain the additional revenue generated by the reduction in the current 50 per cent discount on second homes. We decided that it was important that the second-home owners had an incentive to tell their local authority that the home was a second home, so that local authorities would know how much extra income was being generated. That is why we propose that the local authority should offer a minimum 10 per cent discount. Taken together, Amendments Nos. 157, 158 and 159 would mean that we would lose the ability to insist on that minimum. In turn that would make it difficult for the local authority to identify the extra revenue, which would undermine the policy of allowing the local retention of the extra income.

I fully accept the noble Lord's points, but the measure is a way for us to identify the extra income that local authorities could generate, which they would be able to keep themselves. I hope that he will find that explanation satisfactory.

Baroness Hanham: I want to pursue that particular matter. It is good to know that local authorities can retain the additional income, but will it be truly additional? Will it be swept up in the revenue support grant discussions, or is it on top of all that? Is it a separate sum of money that can be used for some community purpose?

Lord Rooker: I plead guilty to not knowing. It would be unfair were the income to be swept up in the rate support grant, but I do not know about the future formulas for that. It is intended that the change shall be advantageous to local authorities. I do not think that it would be swept up—I hope that it would not be—so the answer has to be no.

Oh! Here is where we find out. The income is genuinely additional to the revenue support grant. I knew that the Government would not want to cheat local authorities. I knew that we genuinely wanted to work in partnership, and that it was intended that extra revenue be generated. To be able to identify that, we need the incentive for the second-home owner to

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come forward and say, "It's a second home; I claim my 10 per cent". Therefore, it can be worked out from where the extra income is generated.

Lord Hanningfield: I thank the Minister for that answer. We welcome the extra flexibility that local authorities have. I shall not repeat my point about some confusion being caused, and we welcome the assurance that local authorities will be able to keep the money rather than having it taken away from them in their rate or revenue support grant settlement. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 157 to 159 not moved.]

Lord Hanningfield moved Amendment No. 160:

    Page 39, line 40, at end insert—

"( ) No dwelling may be prescribed by the Secretary of State under subsection (1) above on the ground that it is unoccupied if the owner or occupier is a sick or disabled person who is resident in a hospital, hospice, residential care home or nursing home.
( ) No discount may be removed from a mentally or physically disabled person under this section on the ground that a dwelling is unoccupied if it is unoccupied by reason of long-term illness or infirmity."

The noble Lord said: The amendment is part of a series comprising Amendments Nos. 160, 161 and 162. As I said earlier, we have looked at the draft regulations and some matters are covered. However, I should still like to explore some of them with the Minister. Clause 76 accords the Secretary of State wide-ranging powers to classify types of dwelling according to physical characteristics or the fact that a dwelling may be unoccupied. Have the details of how that might work in practice been left to regulations? We are concerned about a number of provisions, and I should be grateful for clarification.

For example, we are concerned that the clause will leave certain groups of people vulnerable to increased tax that they cannot afford, for services that they do not use. In several places, the Bill and the draft regulations are not clear on whether particular classes of individuals will be caught. We are concerned about elderly people who have taken up occupancy in a care home, for example, and individuals in residential care with a long-term illness. Having read the draft regulations, we do not feel assured that those individuals will not fall within the scope of provisions designed to capture unoccupied dwellings. Will the Government give us some assurance that those individuals will not become victims of increased taxation?

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