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Baroness Hamwee: Is it not the case, as a matter of practice, that an authority would not take that

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decision other than to have effect at the start of a financial year? There would be a problem with billing otherwise. It would be costly to bill halfway through the year. Given that, the most straightforward thing would be for it to go into the council tax demand, as part of the statement. My noble friend Lady Maddock and I have been muttering about that, and we assume that it would happen as a matter of routine. Even if the information were not absolutely clear, the authority would have to show the calculations.

I am unconvinced about the need to bother spending money on putting the information into local papers. It would be more proper to make sure that the information is clear in the council tax demand.

Lord Hanningfield: I support what the noble Baroness, Lady Hamwee, just said. In local authorities, we have a duty to send the council tax explanation out. The information could go in that. That might be better than what is suggested in the rather confused line in the Bill. It would be better if it went out with the annual demand.

Lord Rooker: Council tax bills vary depending on location, but a good deal of bumf comes with them. We hope that everyone would read the information. My officials tell me that the details would have to be on the bill. It would be done at the beginning of the year, not halfway through it. There is a presumption that the local authority would comply with subsection (6) in the same way as any other legal obligation. If the information is on the face of the council tax bill, that must satisfy the requirement. It is not an unreasonable expectation that people would read their bills and the accompanying explanatory material so that they can find out how the bill is made and the goodness that comes from putting money into the community kitty.

Lord Hanningfield: On the bill, there are various precepts according to where one lives. There may be a parish precept if one lives in a village. Alternatively, there may be a district precept, a police precept or a fire precept. The bill could give information on what this provision does. That would be the best approach. I think that we all see sense on this issue, so perhaps we could agree. I beg leave to withdraw the amendment today. I am sure that we can all see sense on the matter in future.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 164:


    Page 40, line 9, at end insert—


"( ) If a billing authority makes a determination under this section, it shall be disregarded for the purposes of distributing revenue support grant to receiving authorities under section 78 of the Local Government Finance Act 1988 (c. 41) (revenue support grant)."

The noble Lord said: We have discussed the matter already today, but my remarks should go on the record. The amendments would ensure that any increase in income that a local authority gained from taking up the powers was retained by that local authority to enable it to invest in meeting local needs.

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It is the only way to ensure that any increased powers of taxation at local level are met with accountability to the local electorate.

We also seek assurance that any increase in income to a local authority generated by disapplying council tax discounts would not be taken into account by the Government in the distribution to local authorities of the revenue grant or any other grant from central government. In other words, we seek assurance that an increase in council tax income on the basis of discretionary decisions taken by local authorities will not result in a decrease in government grants. Can the Minister assure us that local authorities and local services delivery would benefit from those freedoms?

While I am on the subject, it would also be helpful to have an assurance from the Minister that he will resist any attempts that the Treasury might make to take the opportunity to claw back the extra money in the system created by the provisions from the total funding of local authorities.

It is very important that the provisions are not seen as another attempt by the Government to load further pressure on the council tax. A clear assurance from the Minister on those points would be very helpful. I beg to move.

Baroness Maddock: My noble friend Lady Hamwee has attached her name to the amendments. We have long supported the Government in their attempt to change the council tax on second homes, particularly empty homes, on which I declared an interest earlier. I also declare an interest as a second home owner, which is somewhat alien to me, as I have not had a second home for long. I am not claiming discounts on it, as I thought that that would be too much for a housing spokesman to ask.

The Minister will not be surprised that I raise the issue that the Government believe that, if councils are allowed to retain the extra money they will get from taxing empty homes under the Bill, somehow they will use it in the wrong way. He wrote to me on the issue, and we have heard about it in other arenas. On the other hand, the Government have said publicly at conferences dealing with empty homes that they think councils should have empty property strategies and empty property officers. But if councils cannot use the extra money that they are getting from taxing empty homes, where is the money coming to fund such strategies and officers? It acts as a disincentive for councils to make such provision.

Through my work with the Empty Homes Agency, I know the valuable work that empty property officers do. One of the best examples that I remember was the empty property officer in south Somerset to whom I presented an award. The council had the sense to employ an estate agent—I hope that the noble Earl, Lord Caithness, will not take offence—who knew his way around the property world and was extremely successful in getting empty properties brought back into use. Of course, that was a small council. It costs money.

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The Government are being perverse. They support publicly that type of work, yet they will not allow local authorities to have the money. I will continue to press the issue until the end of the passage of the Bill.

Lord Bassam of Brighton: The amendments have value, in that they seek to ensure that local authorities are not penalised for the way in which they collect the extra revenue. We announced last November that we intended to allow local authorities to retain the additional revenue generated by the reduction in the current 50 per cent discount on second homes. We also said that we would ensure that revenue support grant would not be reduced if local authorities decided to reduce the discount for second homes. That answers the point that worried the noble Lord, Lord Hanningfield. Going further with the revenue support grant, we will continue to calculate the tax base as if there were no determination in respect of second homes, prescribed as a class under new Section 11A(3), which is inserted by Clause 76. In other words, we propose to calculate revenue support grant on the basis that the 50 per cent discount continues for second homes. There is no need to amend primary legislation to bring that about.

In the case of long-term empty property, we intend to give authorities the power to reduce or remove the current 50 per cent discount, but do not wish them to be able to retain the additional revenue. That is because we want to ensure that local authorities decide to reduce or end the discount on long-term empty properties on housing and planning grounds and not for financial reasons. It is right to seek to protect owners of long-term empty properties who are on low incomes or in areas where the property market is such that it is difficult to sell their property from facing an increased tax burden on grounds other than housing need.

I hope that satisfies the points raised by the noble Lord, Lord Hanningfield. I hope that the noble Baroness, Lady Maddock, takes some comfort from what I say, as well.

Baroness Maddock: I cannot say that I do, really. It is perverse to think that local authorities will use the provision in the way described by the Minister, given the housing and homeless strategies that we will discuss later. Many of the empty properties that are brought back into use are used by local authorities to house people with housing needs. There have been plenty of such schemes. I do not understand the Government's thinking, and I do not believe that it is logical.

Lord Hanningfield: I thank the Minister, who may have half-satisfied us. We shall return to some of the housing issues later on. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 165 and 165A not moved.]

Clause 76 agreed to.

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7 p.m.

Clause 77 [Billing authority's power to reduce amount of tax payable]:

Lord Hanningfield moved Amendment No. 166:


    Page 40, line 20, leave out "in relation to particular cases or"

The noble Lord said: I have to say that, although I am a supporter of maximising the discretion and freedom of local authorities, I was extremely surprised to see a provision in the Bill to enable local authorities to reduce the amount of tax payable by particular individuals.

That seems, in principle, fundamentally inequitable. I am surprised that a Labour government support the concept of treating individuals differently from one another for tax purposes. Whatever the intention of the provision, does the Minister not recognise that, in practice, the articulate rather than the needy are likely to benefit? Those with the time and ability to argue their case coherently are likely to reap the rewards of the provision.

From a local authority perspective, there is the potential for the system to be truly a nightmare. We have heard a lot today about what might be difficult for local authorities. There is no doubt that if those powers were put on the statute book, local authorities would receive many requests from individuals to have their council tax reduced. It would create an enormous burden on local authorities just to process the paperwork—much more than some of the other areas discussed today. Furthermore, when reductions have been made for some individuals, there will inevitably be questions about why exceptions were made in those cases. The potential expense for local authorities in dealing with that could be considerable. I urge the Minister to think again about whether this is the best way to achieve these ends.

I would be grateful for guidance on the practical dimension to the arrangement. As the Minister will know, in two-tier areas the billing authority is the district council. The power rests with it despite the fact that, on average, roughly 90 per cent of the council tax bill that it will reduce pays for county council expenditure. That is why we have two tiers and we do not have regional government all over the country. I presume that, under these provisions, for a district council to make reductions in a council tax bill there will be a recalculation of the council tax base and a corresponding adjustment upwards to revenue support grant. I assume that that is the case.

My worry is that it will be difficult and expensive administratively where we are talking about individual discounts. Operating many individual discounts could, unless there was a compensatory recalculation of the tax base, have a significant impact on a county council that had no responsibility for, or influence

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over, those decisions. For the reasons that I have set out, I urge the Minister to think carefully about whether the power is really necessary. I beg to move.


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