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Baroness Hanham: My Lords, I thank the Minister for that reassuring response. The problem that we foresaw, without appreciating the other regulations, is that people sometimes go into residential care for quite a long time and never actually return to their homes. It would clearly be inappropriate if decisions were taken to stop or reduce a discount in those circumstances. However, as I understand it, the Minister has said that, under class E regulations, those people are automatically exempt from council tax, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 67A:



"( ) Any additional revenues received by a local authority as a result of a determination under this section shall be retained by that authority and must be reinvested in housing or related environmental policies."

The noble Baroness said: My Lords, the amendment relates to the discount money that is raised from second homes and empty homes, including the extra discount that will be raised. It would ensure that any extra revenue received by local authorities as a result of changes to the regime for second homes and empty homes is retained by the local authority concerned and then ring-fenced to be spent on housing, or related environmental issues.

It is an eminently sensible amendment. The local authority will have, and be able to keep—certainly in respect of second homes—the revenue raised as a

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result of the reduction in the discount. Perhaps, the money from empty homes could be added to that. As things stand, it is expected that the money will be given to the Exchequer.

There is too much in the Bill that gives the Government what the Minister beguilingly but not always convincingly calls "reserve powers". Among those reserve powers are a range of powers to interfere with the finances of local authorities. It would be right to say that there is still an air of suspicion among local authorities about the Government's intentions. The amendment would remove any scintilla of doubt about what local authorities can do with the revenue raised from the discounts.

As a quid pro quo, we suggest that the authority should spend an amount equivalent to the extra revenue on housing. After all, second homes are typically common in areas where there are difficulties in finding affordable housing. Often, they are in areas where there are local people who should receive housing and where the money could be used to tackle environmental issues. As well as environmental projects, there are infrastructure projects that may open the way to more housing—reclamation of roads, transport improvements or landscaping to allow limited development in an otherwise sensitive area.

I believe that that represents a sensible balance. I hope that the Government will agree to the amendment. I beg to move.

Baroness Hamwee: My Lords, the proposal that the authority should retain the revenues has our complete support. However, I hesitate over the second part of the noble Baroness's amendment. We would support reinvestment in housing and spending on environmental projects, but we would not support the ring-fencing of moneys to do so. The Government have made a good deal of the fact that they are trying to reduce ring-fencing. We should not encourage them to go the other way.

Lord Rooker: My Lords, as I said, the prime purpose of Clause 76 is to introduce new Section 11A into the Local Government Finance Act 1992 to allow a billing authority to reduce or end the 50 per cent council tax discount for classes of unoccupied dwellings prescribed in regulations. Amendment 67A would ensure that any extra revenue raised would have to be spent on housing or related environmental policies.

Our policy is clear. I know that it is a bit of a mantra, but I must say that the Bill is about freedoms and flexibilities, de-regulation for local authorities—a bonfire of regulations—and more freedom for local authorities than they ever thought they would get. I repeat that because it is not an unimportant point, bearing in mind what the noble Baroness said in moving her amendment.

Last November, the Minister for Local Government and the Regions, Nick Raynsford, said that local authorities should retain the additional revenue generated by the reduction in the current 50 per cent discount on second homes but not when they reduced

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or removed the 50 per cent discount on long-term empty property. We do not think that we should tell authorities what they should do with the extra revenue which is generated from reducing the second homes discount. Seventy-two per cent of the respondents to our November 2001 consultation exercise agreed that there should be local retention with freedom to spend on local priorities. That 72 per cent, I hate to say—well, I am pleased to say in a way—included the Local Government Association Conservative Group. Its response dated 31st January 2002 stated:


    "Conservative attitudes towards local government must always presume 'freedoms' for local government—freedom from ring fenced funding and freedom to raise and spend income according to local needs".

We believe that local authorities should be free to choose whether they wish to have a lower council tax than otherwise would be the case or invest in services. If it is the latter, it is for elected local government to determine priorities. That is a fair point to make. While affordable housing may be a priority in one area, it may not always be the case. There are not many areas of the country where the need for affordable housing is not a high priority. I accept that. We think that it is right for local authorities to have that freedom and flexibility.

The money from empty homes is kept by local government at national level and redistributed. It is not kept by the Government. I make that absolutely clear because otherwise it gives a false impression to assume that it just goes into the Treasury and gets lost; it is redistributed.

Baroness Hamwee: My Lords, when the Minister says "redistributed", does that mean the money forms part of the revenue support grant?

Lord Rooker: My Lords, yes. The money is redistributed from central government to local government. I suppose that it would get lost in terms of tracking where it actually is, but it does not get lost completely. It is redistributed back to local government. Let us face it, I do not know what the figure is but some 70 to 80 per cent of local government expenditure is financed from central government. That is what the revenue support grant is all about. It is worth something like 30 billion—or more than 30 billion. It is a huge sum of money. This money would be part of that.

Baroness Hamwee: My Lords, not exactly, because clearly it will not be an additional sum. It is going to be incorporated into the revenue support grant and used to dent the amount of money that the Government have to provide. So it is not truly coming back to local government, it is coming back as part of the revenue settlement. As that is not really what I raised, I am extremely grateful to the Minister for having answered that. I am also pleased to have given him the opportunity to place on record what the Local Government Association Conservative Group thought. It is always refreshing that he should know the details of what is put forward. The Minister's eyes are everywhere, and that is such a good thing.

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The main burden is that the 50 per cent raised on second homes should be kept by the local authority. If it wants to spend it on housing or on related environmental issues it is entitled to do so. In that case, I shall leave it to the good sense of local government to decide what it wants to do. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton moved Amendment No. 68:


    Page 41, line 6, at end insert—


"(2) For section 12 of that Act (discounts: special provision for Wales) there is substituted—
"12 DISCOUNTS: SPECIAL PROVISION FOR WALES
(1) The National Assembly for Wales may for any financial year by regulations prescribe one or more classes of dwelling in Wales for the purposes of subsection (3) or (4) below.
(2) A class of dwellings may be prescribed under subsection (1) above by reference to such factors as the Assembly sees fit and may, in particular, be prescribed by reference to—
(a) the physical characteristics of dwellings, or
(b) the fact that dwellings are unoccupied.
(3) For any financial year for which a class of dwellings is prescribed for the purposes of this subsection, a billing authority in Wales may by determination provide in relation to all dwellings of that class in its area, or in such part of its area as it may specify in the determination, that the discount under section 11(2)(a) shall be such lesser percentage of at least 10 as it may so specify.
(4) For any financial year for which a class of dwellings is prescribed for the purposes of this subsection, a billing authority in Wales may by determination provide in relation to all dwellings of that class in its area, or in such part of its area as it may specify in the determination—
(a) that the discount under section 11(2)(a) above shall not apply, or
(b) that the discount under that provision shall be such lesser percentage as it may so specify.
(5) A billing authority may make a determination varying or revoking a determination under subsection (3) or (4) for a financial year, but only before the beginning of the year.
(6) A billing authority which makes a determination under this section shall publish a notice of it in at least one newspaper circulating in its area and do so before the end of the period of 21 days beginning with the date of the determination.
(7) Failure to comply with subsection (6) above shall not affect the validity of a determination."
(3) Where immediately before the day on which subsection (2) comes into force regulations under section 12(1) of that Act are in force which apply in relation to a financial year beginning on or after that day, the regulations, so far as relating to such a financial year, shall on and after that day have effect as if—
(a) they were made under section 12(1) of that Act as substituted by this section, and
(b) each class of dwellings which they prescribe were prescribed for the purposes of section 12(4) of that Act as so substituted.
(4) Where immediately before that day a determination under section 12(1) of that Act is in force which applies in relation to a financial year beginning on or after that day, the determination, so far as relating to such a financial year, shall on and after that day have effect as if made under section 12(4) of that Act, as substituted by this section, in relation to the whole of the area of the authority which made the determination.

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(5) In its application by virtue of subsection (4), a determination under section 12(1) of that Act shall have effect—
(a) if it provided for section 12(2) of that Act to have effect in substitution for section 11(2)(a) of that Act, as if it provided for the discount under that provision to be twenty-five per cent.;
(b) if it provided for section 12(3) of that Act to have effect in substitution for section 11(2)(a) of that Act, as if it provided for the discount under that provision not to apply."

The noble Lord said: My Lords, we heard a compelling story from my noble friend Lady Gale at Second Reading that there was real concern in Wales that if we passed Clause 76, Welsh authorities would have a less flexible power to change council tax discounts on second homes than we were proposing to give English authorities. My noble friend Lord Morgan spoke to amendments in Committee which sought to rectify that.

We have reflected carefully on what my noble friends said about two parts of the legislation and have concluded that we should move government amendments to give effect to their arguments. Amendment No. 68 is the principal amendment which would replace the existing provision in Wales and give the National Assembly for Wales the same ability as we are giving the Secretary of State to prescribe classes of dwellings where billing authorities can reduce or remove the nationally set discounts.

Subsections (3), (4) and (5) of the new Section 12 to be inserted into the Local Government Finance Act 1992 by Amendment No. 68 are transitional provisions. They preserve in force the effect of existing regulations prescribing classes of dwellings for which Welsh billing authorities can reduce the 50 per cent discount to 25 per cent or zero and preserve the effect of any existing determinations to reduce discounts made by Welsh authorities. While new Clause 76 will give Welsh authorities greater flexibility, these transitional provisions will ensure that those authorities are not forced to take new decisions if they would not have decided differently under the new powers.

The other amendments, with the exception of Amendment No. 82, are consequential on Amendment No. 68. A particular point to note is that Amendments Nos. 87, 89, 92 and 93 amend Clause 127 so that the National Assembly for Wales can choose when to commence these new powers in Wales. Amendment No. 82 is merely a consequential amendment on Clause 76 itself to ensure that in England, any reduction on the council tax liability under regulations made under Section 13 of the Local Government Finance Act 1992, such as reductions for disabilities, are additional to any discounts made under Section 11A inserted by Clause 76.

I hope that my remarks have made the position clear and I beg to move.

9.45 p.m.

Baroness Hanham: My Lords, I am absolutely fascinated by this entire new clause being introduced under Amendment No. 68. It is immaculate and that is all down to the parliamentary draftsmen. It just goes

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to show what an advantage it is to be in government rather than in opposition. One can lay one's hands on people who are able to undertake this marvellous work. It is too good to leave unremarked.

I am sorry that the noble Baroness, Lady Gale, is not in her place. As long as the Welsh authorities are not gaining any advantage over that being offered to those in the rest of the United Kingdom, although I suppose that we have to exclude Scotland, then probably we have no objection to this immaculate new clause. I thank the Minister for his explanation.

On Question, amendment agreed to.


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