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Lord Monkswell: My Lords, the Government stated that home owners who are unemployed and therefore cannot meet their mortgage obligations will receive government support after nine months. The Jobseekers Bill provides unemployment benefit for six months only. Thereafter those people who remain unemployed will have to obtain income support. If a householder does not wish to trust the insurance company and decides to save money against the possibility of unemployment, what will his situation be if his savings effectively take him above income support rules? Under the Government's new proposals in the Jobseekers Bill, he will not receive income support for those three months between the end of unemployment benefit and the receipt of income support after nine months.
Lord Mackay of Ardbrecknish: My Lords, under the Government's proposals we would expect new borrowers to cover themselves for the first nine months. In the case illustrated by the noble Lord, there would be unemployment benefit for the first six months and then three months of the equivalent of income support, although the terms have changed. Thereafter the income support mortgage interest will trigger in if necessary. However, the noble Lord makes a valid point. People may not be eligible for income support because they have savings, their partner works, their spouse works or something else like that. That is why I said that two-thirds of people who own their own homes are not eligible for income support if they become unemployed; hence the need to encourage insurance cover.
Baroness Gardner of Parkes: My Lords, I thank my noble friend for that reply. However, it seems to conflict with the reports in the papers which state that self-contained accommodation need not contain a toilet or a bathroom. Will he confirm that that is the position?
Is the Minister aware that for carers who have an elderly relative living in such accommodation that may cause great hardship? Under the council tax measures, could some rebate be offered to such people? Those carers save community services and therefore council costs.
Lord Henley: My Lords, I believe that some of the reports were somewhat alarmist in terms of the impression they gave. Whether the granny flat or annexe is a separate property would be a question of fact. It would depend on whether all the necessary facilitiesliving space, washing and cooking facilities, WC and so onare separate. As I said in my original Answer, that is why we issued guidance in 1990. Since then we have had of the order of 2,000 appeals, most of which have been settled; only about 150 have been the subject of valuation tribunal decisions and only 14 of those have had to be taken to the courts to be resolved. I believe, therefore, that it would be unnecessary to issue further guidance.
As regards the second part of my noble friend's question, if an individual grannyhe or she grannyis living in a separate flat and has a low income, there would be an entitlement to council tax benefit which would help with the separate tax that that annexe or flat commanded.
Lord Boyd-Carpenter: My Lords, does not the decision of the court cast a doubt on the situation? If elderly relatives are accommodated by a householder, may that not expose the householder to a double dose of the council tax? Given that it is a court decision, is it not also a fact that clear guidance by the Government may not suffice to remove the problem?
Lord Henley: My Lords, as I said, we wish to see a transcript of the decision before we make any further comments. However, we believe that the reports were somewhat alarmist. Perhaps I may correct one further point which my noble friend made. Obviously the flat would not attract a double whammy of council tax to the home owner. In the case of the second property, if it were deemed to be a second property, it would be the occupant of the second propertythe grannywho would be liable for benefit. As I made clear, if he or she were on a low income, there would be the possibility of council tax benefit up to 100 per cent.
Lord Eatwell: My Lords, can the Minister tell us what is the relationship between the statement which he made just now that there is no need to amend the guidance and the statement made by Mr. David Curry on 19th June that he was demanding an urgent report into the High Court ruling? Does the proposition which the Minister has just put forward derive from the report which Mr. Curry demanded? Alternatively, are we still awaiting that report? Furthermore, is not the difficulty which is being created even greater than that noticed by the noble Baroness? If a granny flat is deemed a separate property, would it now attract capital gains tax when the property is sold since it would no longer be an integral part of the principal private residence of the householder?
Lord Henley: My Lords, as regards the first point, my honourable friend was quite rightly reacting to the press reports and he wished to know what was going on. As I made quite clear, we wish to see the transcript of the case before we make any further judgment. So there is no validity in the point which the noble Lord was attempting to make.
As regards his second point about capital gains tax, the matter would be treated separately as to whether, in relation to rating law or, in this case, council tax law, the two properties were separate.
Lord Henley: My Lords, I do not know whether it is official, perhaps it will make it into the Oxford Dictionary as a result of my use of it at the Dispatch Box. I was trying to make clear to my noble friend and the House that the expression "granny flat" or "granny annex" would cover such accommodation as my noble friend might move to.
Lord Eatwell: My Lords, I am sorry that the Minister did not make himself clear or perhaps I did not understand his answer. Did Mr. Curry ask for a report? Was a report made? Can that report be made available to the House so that it can be considered as an urgent and important matter affecting the care of many elderly persons?
Lord Henley: My Lords, my honourable friend saw the reports of the case in the press. He quite rightly expressed a degree of concernas anyone wouldas a result of the alarmist reports. He therefore asked his officials in the department to report to him on those matters. As I made clear, we shall look at the transcript of the case when it is available and, if necessary, then react.
Baroness Gardner of Parkes: My Lords, does the Minister think that the decision might be a great disincentive to people who would have considered providing a place for elderly relatives in their home? Does my noble friend believe that it is important that the Government should review the situation to ascertain what action is required?
Lord Henley: My Lords, I accept that my noble friend might think that on some occasions it could act as a disincentive. I do not believe that that is the case. To start with, there is the possibility that the creation of the annexe as a separate unit will reduce the banding on the main unit and therefore reduce the bill on it. As I made clear earlier, liability for the bill on the annexe falls to the person living in it and there might be 100 per cent. relief on it. Further, the individual would have paid full council tax on a possibly larger property before moving into the annexe. I do not believe that there is the disincentive that my noble friend suggested. However, if the decision created a disincentive, it would be quite right that we should look at it again and possibly make appropriate amendments.