Local Government Finance Bill
My Lords, this is a probing and, I hope, brief amendment. I apologise for the tardiness in laying it, but it was prompted by the statement of intent on information sharing and powers to tackle fraud —a statement which I found really useful. The problem with statements is that they answer lots of questions but sometimes throw up one that you had not thought of before, hence the amendment.
New Section 14B, inserted into the Local Government Finance Act 1992 by Clause 13, enables regulations to be made to describe a number of offences. It is proposed that they cover such matters as causing delay or obstruction, dishonest representations and false representations. The statement of intent explains the plan to introduce offences that are equivalent to those that currently exist in relation to council tax benefit and other benefits. However, paragraph 3.25 of the statement indicates that not all existing offences are to be replicated, only those that are deemed “necessary and proportionate”. Thus the probe is to ask which offences that currently apply are considered to be disproportionate and unnecessary in the new regime. I beg to move.
My Lords, my understanding was that this is a probing amendment, and I thank the noble Lord for confirming that it is. The effect of the amendment would be to remove the words “by a person” from new Section 14B(1) of the Local Government Finance Act.
Powers to investigate potential fraudulent claims for reductions in council tax liability and to prosecute and issue the appropriate penalties will be vital to local authorities to ensure the effective administration of schemes and the control of costs. As the Government made clear when they amended the Bill in the other place by introducing Clause 13 to insert new Sections 14A to 14D into the Local Government Finance Act 1992, we believe that it is important that existing investigatory powers in relation to local authorities offences and relevant penalties to tackle fraud under social security legislation are available to local authorities in relation to council tax.
In response to the consultation on localisation of council tax support last year, a majority of local authorities that responded said that they would need the same or similar powers for local schemes as they currently had to investigate and tackle fraud in council tax benefit claims. Therefore, it is necessary for the Government to provide authorities with the appropriate equivalent powers to be able to deal with fraudulent claims for a reduction in council tax liability.
New Section 14B specifically will allow the Secretary of State to create offences equivalent to those that currently apply. In particular, the Secretary of State may make regulations providing that it is an offence for a person to delay or obstruct an officer exercising his powers to require information or to refuse or fail to provide information when required.
Regulations may also create offences where, for instance, a false statement has been made in connection with a person’s council tax liability or a person has failed to notify a change in circumstances that affects their liability to pay council tax. This includes the ability to create equivalent offences both of dishonesty and of dishonestly and falsely making representations for council tax reductions. We will not be giving local authorities powers to enter premises, powers to conduct inquiries or to remove and copy documents from such premises. The powers we are giving requiring people to supply information and enter into arrangements under which access is permitted to relevant records will be sufficient for council tax purposes.
To be clear, we are not introducing new powers for local authorities through these provisions. We are simply ensuring that some of the powers they currently have in relation to council tax benefit are recreated for reduction schemes. Nor are we simply reintroducing all the existing powers for local authorities that they currently have to tackle council tax benefit fraud. Instead we have worked with local authorities to identify those powers and offences that will be needed for local schemes.
Regulations under new Sections 14A to 14D will be subject to affirmative procedures so that both Houses will be able to consider the appropriateness and proportionality of offences under the regulations. The noble Lord asked me specifically which current powers in relation to fraud we are not planning to recreate in these regulations. Perhaps I may go through the ones that we are not planning to reintroduce. The first is allowing the Secretary of State to authorise individuals to carry out investigations. Local authorities currently authorise the individuals carrying them out, and this power will remain. As for the Secretary of State’s power to require individuals to enter into agreements to supply electronic information, local authorities’ existing powers to require electronic information will be retained, so taking the Secretary of State out of those requirements. On powers of entry, we have made it clear that we will not reintroduce wide powers of entry. Local authorities will have powers to request relevant information which is proportionate to the needs of council tax reduction schemes. I hope that that answers the noble Lord’s question.
In the statement of intent, to which the noble Lord referred, published on 9 July, we set out exactly how we intend to use the powers under new Sections 14A to 14D to make regulations, making clear that these powers would relate only to reduction schemes. I am clear that the powers in the Bill are sensible measures to ensure that local authorities have the appropriate powers to investigate and prosecute fraud. I hope that the noble Lord will be reassured by what I have said.
My Lords, I am grateful to the noble Baroness for that response. We support and accept that local authorities should have powers that are necessary and proportionate for them to carry out their duties in tackling fraud. The noble Baroness itemised the current arrangements which are not to be carried forward. Frankly, I would like to read the record on that, but I believe that it deals satisfactorily with the purpose of this probe. I beg leave to withdraw the amendment.
My Lords, this is a probing amendment seeking reassurance from the Minister that the existing system will be retained by which disabled people who have made adaptations to their property do not find their property going up a band. It should stay in the band, or, in some cases, drop a band. I have no reason to think that the Government intend that this should change, but, given the discretion to local authorities, I would be grateful if the Minister would give us reassurance on that point.
My Lords, we speak in support of my noble friend’s amendment, which is a probing amendment, as she explained. I dug out some of the requirements for getting the benefit of the disabled band reduction scheme. It talks about,
“an additional bathroom or kitchen … a room (other than a bathroom, kitchen or toilet) required to meet the needs of the disabled person, and used predominantly by them … extra space inside the property to allow for the use of a wheelchair”.
“The room or the wheelchair must also be of major importance to the disabled person's well-being, due to the extent of their disability”.
I hope that that is still available in the system. Is there the potential for an inconsistency in government policy between supporting as we do the disabled band reduction scheme and the consequences of potential deemed under-occupation of social housing, which could lead to the withdrawal of housing benefit?
My Lords, with regard to the very last point, the noble Lord has a very neat habit of putting one last question to which nobody has a clue about the answer—and I have to tell him that he has done it again. If I may, we will write, because it involves an interaction between two bits of legislation. I do not think that I am equipped, and my team behind me look a bit blank. So perhaps I could write on that particular aspect, but I hope to be reassuring on the rest.
Amendment 93A seeks to ensure that any changes made by the Bill will not impact upon the disabled band reduction scheme. The scheme offers a reduced council tax bill, where a disabled person lives in a larger house than they would have needed if not disabled or where the living area for normal use has been reduced. The Council Tax (Reductions for Disabilities) Regulations 1992 set out the qualifying criteria for a reduction under this scheme. No part of the Bill has an impact upon the scheme, nor will any of the subsequent regulations that will be made. The Government regard this scheme as an important form of support to disabled people and have absolutely no wish to make any changes to it. Given that there is no question of any change, I invite the noble Baroness to withdraw this amendment.
I thank the Minister and my noble friend. I am very glad to hear that, and I am grateful that the Minister was able to give us the reassurance that we sought. With the permission of the Committee, I beg leave to withdraw the amendment.
This amendment will not be debated quite so fast or, I suspect, quite as supported in its intent. It is a probing amendment, and I am very sorry that the noble Earl, Lord Lytton, could not be here at this stage for these discussions, because I know that he supports the issue in general, although he might have particular concerns to raise. I know that he believes that this is something that we should discuss.
I favour council tax over local income tax, let alone the poll tax, because half the charge relates to property and half to a two-person family. The property band on which that half of council tax rests is determined by the 1991 valuations and hinges around the fulcrum of band D, to which I shall come back. The amendment does not try to introduce a new higher rate band I but asks instead that the Secretary of State explore that with local authorities and puts it on the agenda for discussion. That is all that it seeks to do. Why does it propose that? There are two very simple reasons—income and fairness. It would add to local authority income flows, although obviously the amount would vary sharply from place to place. It would be fairer, too. It is not reasonable that a £2 million property, let alone one worth £20 million, should be in the same council tax band as a property one-third or even one-tenth of its value.
When we debated the introduction of council tax to replace poll tax in the early 1990s—and I remember that well—I assumed, like others taking part in the debate, that all future Governments would seek regular revaluation, at something like every 10 years, with boundary reviews. My Government should have done it but did not do so. As the discrepancy from the 1991 evaluation has grown wider, it is less and less attractive to any Government to seek to revalue, even though they should. Obviously, you hear from the losers and not from the winners; as a result, council tax as currently structured can be increasingly regressive.
The unfairness grows. In Kensington—in W8, for example—the average property is worth £1.87 million. In Knightsbridge, Chelsea and Notting Hill, the average is around £1.4 million. In one street in Kensington Palace Gardens the average property value is over £22 million. So up to half of all properties—these figures come from the Times, which did not reveal whether they were mean or median figures—will be above that figure.
My Lords, I can give some support to the amendment moved by the noble Baroness, Lady Hollis. Like her, I am not a supporter of local income tax. I prefer council tax, which is essentially a property tax but indirectly related to income. A local income tax would primarily be a tax on work, and the case for asset taxation at a local level is strong. If we accept that, however, it follows that the real spread of asset values needs to be reflected in the council tax banding. On the question of a possible band I, the test for me is whether there would have been a band I had we known in 1991 that property values would change as they have. Had we known that in 1991, I think that we would have had a band I. For that reason and all those identified by the noble Baroness, I am in favour of a consultation to try to secure a further band.
My Lords, the Committee may recall that on Second Reading I mentioned revaluation of council tax, which is something that I have raised with Governments of all persuasions. Perhaps we should be buying a cake as it is the 21st anniversary of the current valuations—which, as my noble friend said, are totally out of date.
I agree with the noble Lord, Lord Shipley, that the council tax system is a property tax. Although I support it in principle, one of the problems with it is that it was introduced in a rush. It was brought in because there was such a panic about the poll tax and the need to get rid of it—so anything was better than the poll tax. Because of the rush the valuations were not done properly and a national scale was used. Some of the problems that my noble friend mentioned about the difference in values between areas of the country in 1991 were therefore reflecting the fact that, yes, in my authority the vast majority of properties are in band A and B. Band H is pretty irrelevant to us, and a band I would probably not be of much help either. That use of a national scale for valuing is the problem.
When my noble friend cited the areas from which substantial benefits would come with this measure it just illustrated to me the further geographical bias there has been in the housing market over the past 21 years. The fact is that the areas she quoted are all in the south and the south-east and have had economic prosperity during that period, which has pushed up house prices. In other parts of the country economic prosperity has not been on the same level. House prices have gone up for some of that period but in the past two or three years those prices have been going down in many parts of the country, including my own.
I would clearly therefore be interested in some kind of revaluation. What is missing from my noble friend’s amendment, if I may say so, is that it would have such a huge geographical bias in its outcome that we would have to have a different form of equalisation. Those areas in the north, the Midlands and so on, which would not benefit from this, would be in a much worse situation if all we did was to put the amendment through without following it up with some equalisation.
My Lords, my concern is about the people at the bottom of the heap and the changes in council tax benefit. I know that many colleagues who are in this Room also share that concern. I would be very interested in having the Minister look at what funds might be raised through this amendment and whether something could then be done about the 10% reduction in council tax benefit. As we know, that reduction will not affect pensioners and will therefore affect other households incredibly heavily and disproportionately. Maybe there is a small possibility here to prevent unbelievable hardship as a result of this cut to council tax benefit. We would then achieve less regression—both by the changes at the top end and by using that money to effect changes at the bottom. I would be grateful if the Minister would respond to that.
My Lords, like my noble friends Lady Hollis and Lord Smith and the noble Lord, Lord Shipley, I am not an advocate or supporter of local income tax. My noble friend Lady Hollis has, as ever, made a challenging case for the introduction of a new band, although her case is, in a sense, seeking a process of consultation. My noble friend is aware that, from this Front Bench, we are not yet able formally to support that proposition, although I note that she has occasionally trail-blazed an opinion and the party—or otherwise—has caught up with her later. There is obviously a range of issues here and my noble friend Lord Smith instanced some of the wider ramifications, such as the redistribution of revenues that might come from this. However, I am interested in the Minister's response on this and we should recognise that there are growing discrepancies and inequities in the current system, if for no other reason than the passage of time. This amendment raises a serious issue.
My Lords, I thank the noble Baroness for introducing this amendment and the others who have spoken. I do not think that she will be entirely surprised that I am not able to accept her amendment, but I will give the reasons.
Amendment 93B seeks to create an additional council tax band in England based on properties with a 1991 value above £420,000, as the noble Baroness explained, and with a 21 to nine multiplier based on the local band D amount. This Government, like the previous Government, have made no plans to change the banding structure on which the council tax system is based. We are absolutely clear that such a change would have major implications for local government finance, create additional bureaucracy and administrative costs and have significant distributional implications, to which I shall return. To create a new band, there would have to be a general revaluation, and the Government have been absolutely clear that there will be no revaluation in England during the lifetime of this Parliament. Indeed, the coalition Government—I nudge my noble friend Lord Shipley on this—made a clear pledge to Parliament not to undertake a council tax revaluation in this Parliament. A revaluation is unnecessary, expensive and time-consuming and will lead to higher council tax bills.
My Lords, I thank the Minister for her courteous reply and my noble friends and others for their support, qualified as it may be.
At the heart of this, which the Minister did not touch on, is that the current bands are based on 1991 valuations and that, since then, there has not been even growth. If there had been, nothing would have changed, because we would be in a zero-sum game, but because of uneven growth, in the south-east and London in particular, property values have raced away in comparison to others. There has been a huge increase in unearned wealth, including that of my house, compared to other places, which in no sense is making an appropriate and proper contribution to the local economy through the council tax levy. It is because of that growth of unevenness that the consensus around the Room—with the obvious exception of the Minister, who might agree in her heart that this is the right thing to do—is that council tax bands no longer fairly reflect property values in this country. The noble Lord, Lord Shipley, the noble Baroness, Lady Meacher, and others made this point, and they were absolutely right.
The Minister’s reply was twofold—Scylla and Charybdis, if you like—that on the one hand it is not possible to do a full revaluation; and on the other that you cannot possibly do a partial revaluation. I agree that the first, although desirable, is a major undertaking and would need a lot of preparation, but unless we are going to have 1991 valuations in 2091, at some point there will have to be a revaluation. The truth is that the more frequently you do it, the less acute are the losers and winners in the equation. My Government were equally to blame—no Government want to tackle it. But the point is that it is, bluntly, cowardice to walk away from this issue knowing that you could be bequeathing an even larger problem to the generation following you, as housing property values continue to develop in different proportions to their bands.
The Minister is worried about full revaluation. In an argument against full revaluation, she said that in Wales there were large movements with properties going up several bands. The point here is not the shock at properties going up several bands—is it not right that they should have done? Is that not right when the value of that property can be such that the owners of a property have enjoyed to some extent a more repressed contribution to council tax than they should have made if their property had been fully valued from day one? I believe that to be the case. If they are not paying their full share, other people have to pay more. It falls particularly on properties in the lower bands A and B; if you do not have enough higher band levies, it means that the band D reduces and properties below band D have to pay more to get the levy in.
The Minister went on to say that, given that a full revaluation is not possible, neither would it be possible to revalue only within band H. I agree that it is not the most desirable outcome, but I assure her that I have talked to three separate valuers on this, none of them as far as I know connected to each other, and they all assured me that it was entirely possible because they do it now. The point that I was trying to make was that, particularly if it was phased in over three years, the extra workload in reviewing band H properties would not be so great. We know where they are; there are only 60 in the entire city of Norwich. You could go round them in a week, so we are not talking about a major increment in workload here. If you spread the process over three years it would mean revaluing 20 properties a year in addition to the properties that are valued each year because they are new-build and those revalued each year to go up or down because of alterations made to them or to the environment. So as an addition to the workload it is relatively modest, though not insignificant. As a practical possibility they are doing this now with properties scattered across all the bands all the time. If they can do it to see whether a property in band D should go to band F or one in band F should go down to band E, and they can do it now with properties scattered across the full range of bands, they can certainly do it with the discrete number of band H properties that there are in most local authorities. So I simply do not accept the Minister’s statement that it could not be done.
This is fine as regards revaluations, but it takes no account at all of the people in the properties. Can you just imagine the number of appeals that there would be against this form of rebanding? The noble Baroness speaks as if it is just a matter of getting a revaluer to come and say, “We charged that last year, and this will be all right this year”, and it will go up and down. You cannot do that, because people who live in the properties are not going to allow a movement to take place if they do not think it is satisfactory.
I perfectly accept that there may well be appeals to valuations. There are appeals now, which is often why individual properties are revalued. That is a perfectly proper element of the process. But the Minister cannot persuade me that people in band H properties, worth £22 million on average in Kensington Palace Gardens, and on average—with equal numbers below and above—worth around £800,000 in Virginia Water, and so on, are going to be financially so embarrassed by their council tax going up by an additional two-ninths over what they pay, given the valuation of those properties. We are not talking about pensioners who are eligible for council tax discount on band C possibly going up to band D. We are talking about the very top and about people who have property worth millions, who will have an income commensurate with it. I am arguing that they should pay their way fairly because otherwise to a degree they are free-riding on the council tax levies of those who live in lower banded property.
As for the Minister’s point about the money and where it would go, I do not have a view about that. It would be a matter for consultation. It could stay within the individual borough, if that was thought appropriate; it could be used for redistribution across London, going from the wealthier boroughs to the Hackneys or Tower Hamlets. Or it could, as I would prefer, be taken account of in the equivalent of the equalisation and revenue support grants that go to local government. That would be the fairest way; in that way, some of the gain would go to places like Wigan or Hartlepool, which are severely hit by the current system because they have to levy much higher increments on bands A and B as a result.
I will not take this any further now. However, in answer to the first argument which the noble Baroness raised—that we cannot have revaluation across the board—I think that at some point some Government will have to have the courage to have those discussions and engage with local government. The longer you put it off, the worse the problem will be. As for the noble Baroness’s second argument—that it cannot be done on a partial basis—that is simply untrue according to the evidence available to me, although the Minister will have been advised differently. Her third argument is that it will come as an unfair and unreasonable shock to those who are occupying properties worth £5 million, £10 million or £15 million that they might pay a further two-ninths a year on their band D council-tax bill of perhaps £600. I do not think that that is a valid argument. None the less, with the support of the Committee, and with my grateful thanks for the discussion that we have had, I beg leave to withdraw the amendment.
My Lords, Amendment 94 proposes a new clause the aim of which is to protect individuals and families in financial need from having their essential belongings, and even their homes, seized by bailiffs executing a warrant for the repayment of debts. Very often, of course, those debts are unavoidable. Let us just think for a moment about the level of income that many of these people are on—I am sure that these income levels have been mentioned during Committee days 1 to 5, and I must apologise that I was not able to be with the Committee on those days. However, I think that this amendment is incredibly relevant because of the fact that many of these people have so little room for manoeuvre as they are on JSA of £71 a week for a couple or £54 a week for a single person. It is a tiny income.
Those of us who were involved in the debates on the Welfare Reform Act and appealed to the Government not to devolve council tax benefit to local authorities will be well aware of the disproportionate hardship being imposed on households which are already in financial hardship due to the welfare reforms. I know that that is, in one way, not relevant to this debate. However, it is incredibly relevant as a context for this discussion.
One of the major issues is the cross-cutting costs imposed on these very poor households by the disconnected policies of the DWP, the MoJ and the DCLG and the ensuing debts which might arise in relation to these three different departments. These debts then generate further costs so that one has not just the debt but the costs associated with the fact that one has been unable to pay one’s debt, creating yet further debts and leaving those households spiralling down to a point where they just cannot get themselves out of that rather deep hole.
One has only to think about the sorts of results we will see following implementation of the Welfare Reform Act. A household might be in a flat that is deemed too large or too expensive to receive full housing benefit. Perhaps the household will learn of this a little late or it will take them time to move to a cheaper, smaller flat, during which time the debts will mount. That is why I raise the point about levels of income. You just do not have any room for the debts mounting up as a result of these changes over which people have no control, and yet these changes have the most incredibly disproportionate impact on these people. Just imagine what would happen if you lost a piece of your rent and you had to take it—perhaps £8 a week—out of your £54. I cannot imagine living on £54 a week for housing benefit and all the other bits and pieces you get. As for the idea that you then lose a bit of that as well because you are in the wrong flat and have to move, what about the costs of moving and all the rest of it? It is unthinkable that these people will be able to cope at all.
My Lords, in adding my name to the amendment, I fully support everything that the noble Baroness, Lady Meacher, said, and I do not intend to repeat a single word of her speech.
I simply draw attention to subsection (d), which states that,
“the defaulter is experiencing financial hardship and is unable to pay the tax”.
Obviously, that raises the question: what is meant by financial hardship and how do you define it? Are there any indicators?
As has the noble Baroness, I draw attention to the work of the Zacchaeus 2000 Trust, which has worked for more than 40 years with benefit claimants and the most vulnerable people in society, and some recent research by Brighton University on indicators which the three departments could use. Of course, people will say that they are not very precise, but we believe that they are the best that can be done, emerging from people with real experience of what financial hardship means. Those people have put forward eight indicators which, I should point out, make no distinction between disabled and non-disabled because both suffer financial hardship.
First, hardship happens whenever incomes in work or unemployment are too low to cover necessary expenditure; and when such circumstances are beyond the control of its victims, it impacts with great severity on both the disabled and the not disabled. Secondly, necessary minimum expenditure includes food, fuel, water, clothing, transport, some personal necessities, rent, council tax, fines, insurance and pensions. Too often, as we know, choices have to be made between paying the rent, heating or eating.
Thirdly, necessary expenditure is increased by debts that include fines, courts, bailiff costs, liability order costs for council tax, payments of court orders, debt collectors, bank charges, the high interest to doorstep pay-day lenders and loan sharks, DWP overpayments, sanctions, civil penalties, caps and cuts. As your Lordships can see, there is quite a long list of possible debts that people at the bottom of the pile can incur before they know where they are. Fourthly, debts occur due to the innocent mistakes of both welfare claimants and officials in the delivery of welfare. People then borrow to eat or to pay bills or pay off other debts. A visit to a food bank is obvious evidence of hardship.
Fifthly, circumstances beyond the control of welfare claimants that lead to hardship include unexpected illness, divorce or separation from a partner who leaves when debts have not been paid, a serious accident in the family, a bereavement and funeral costs, a pay cut, redundancy and unemployment, flooding, and any accidents or theft for which the claimants cannot afford insurance. Sixthly, hardship leads to an inability to communicate with the authorities, courts and creditors, due to the lack of a landline phone and dependence on pay-as-you-go mobiles that run out of money when claimants run out of money—normally, on the basis of their experience, once a week.
Seventhly, as the noble Baroness pointed out, there are some very heart-rending cases of people running into huge debts because of mental health problems, or of such problems occurring because of all sorts of misunderstanding about the debt. The Royal College of Psychiatrists reports that 50% of people in debt have mental health problems. The figure is 50%, so, to put it the other way round, 25% of people with a diagnosed mental health condition are in debt. Those are startling figures.
The last indicator is that hardship exacerbates the risks of low birth-weight babies being born to women who are unable to afford a healthy diet before they conceive and while they are pregnant. As we know, the £71 a week jobseeker’s allowance is much too low to live on and, based on all sorts of very sound research, low birth-weight associated with foetal growth restriction is the strongest predictor of poor learning ability, school performance, behavioural disorders and crime.
Fraud is another area that results in hardship but I have not covered it because it is deliberate and should be rooted out. The circumstances of hardship that I have described happen because they are beyond the control of the victims. The purpose of describing these hardships, based upon the long experience of people working closely with those who are most vulnerable at the bottom of society—that is, welfare claimants and others on very low incomes—is to put them forward to assist the three departments involved in the hope that they might come together when drafting relevant laws, regulations and guidance and use some of these eight indicators to help them in that important task.
My Lords, I declare an interest as the chair of the Consumer Credit Counselling Service, the national debt advice charity that has helped over 1 million people with unmanageable debt problems in the past few years. I strongly support this amendment, which provides a simple solution to a long-standing problem: how to ensure that financially vulnerable people struggling to pay council tax arrears do not suffer undue costs, worry and hardship as a result of bailiff action to recover those arrears. Nearly 9% of those who received phone or online counselling from our charity this year had a council tax debt, which is up from 7% last year. For many of them, problems in paying council tax were part of a complicated and serious multiple debt problem. Our median user owes just over £17,000 to seven different creditors, including credit cards, personal loans and overdrafts.
These are hard times. All the experience that our charity has in giving debt advice shows that people facing severe financial difficulties need help and support to get their household finances back under control. We think that everybody who gets into debt should repay their borrowings over time. We are not into debt forgiveness, but with support they can get themselves out of debt and back into a good relationship with credit.
My Lords, I want to take this opportunity to ask the Minister a question. I do not want to add to the very important issues outlined by the noble Lords, but I am prompted by the speech of the noble Lord, Lord Stevenson, to ask what is happening to ensure that advice agencies are able to give the appropriate advice to people who may find themselves in the kind of debt described in this amendment to make sure that they avoid having enforcement action taken against them, or to get advice in dealing with it if it does happen. I am very conscious that there have been cuts to advice agencies nationally and locally and that social welfare law has been taken out of the scope of legal aid in its entirety. Given that and the speed with which this change is being introduced at the same time that the entire benefit system for working-age people is facing a revolution, what steps has the department taken to satisfy itself that advice agencies will be up to speed in time and will be sufficiently resourced to enable them to advise clients to make sure either that they do not face enforcement action or that they have somewhere to go for advice if it is applied to them wrongly?
To reinforce my noble friend’s point about advice agencies, my local Norwich CAB, whose income for the current year will be £1 million, will find a fall of £400,000, down to £600,000 next year, because every penny of the £400,000 it gets from the Lord Chancellor’s department is being withdrawn. As a result, people are not going to be able to use its services, staff will be laid off and the very issues that my noble friend has raised will impact on those who most need help.
My Lords, sadly, I have to accept that there are cases where local authorities have acted in an insensitive and inept manner in using bailiffs to pursue the debts of vulnerable people who owe council tax. However, I fear that local authorities are the victims too. They have no desire to be sending bailiffs to hound poor people to pay their debts.
The very worst aspect of this Bill is the expectation that councils will have to start collecting council tax from the very poorest households—the 20% or so of those of working age. They will be asked to find the money from their extremely low incomes, which have been provided mostly through benefit for other essential expenditure. The Bill means that councils are bound to face more arrears and more wasted expenditure in trying to extract small sums from poverty-struck people who simply do not have the money to pay. It is no fun for local authorities to be sending in the bailiffs when they feel that they must pursue these debts.
I support this amendment to protect vulnerable households from the heavy-handed action of unscrupulous bailiffs and I am grateful to the Zacchaeus 2000 Trust for bringing these matters to our attention today. However, the solution to the problem of these cases growing in number is to allow councils to avoid having to start taxing the poorest by giving councils the flexibility to raise the funds required by the Treasury in other ways—for example, as I suggested last week, through the painless reduction of the single person discount from 25% to 20%, on average. Councils are victims in this matter too.
I support the amendment and I raise a particular concern about care leavers and care-experienced adults who might be impacted by this. Of course, many care-experienced adults will be in this group of the very poor who have had poor educational experience and may have experienced long-term unemployment. The Committee has heard about parents and families struggling to survive and not functioning very well. Statistics show that if one has been brought up in care and becomes a mother, one is far more likely to have one’s own child taken into care. I am worried that this is an additional burden on particularly vulnerable families that is unwelcome.
I understand that care leavers will be assisted to the age of 22 with regard to council benefit—I may have that wrong and would be grateful for any correction in that area—but one has to keep in mind that while most young people leave home at the age of 24 nowadays, 20% of care leavers will have left care at the age of 16. The statistics for the mental health of young people in care highlights that 40% have mental disorders, which compares with what may be 10% of young people in the general population. That is what one would expect because of the history of trauma before they enter care, the experience of being taken from their families and often, unfortunately, their having an unsatisfactory experience in the care system. This is one group within the groups we are discussing to which we should pay particular attention.
I would be grateful for clarification about the experience of care leavers. In the All-Party Parliamentary Group for Looked After Children and Care Leavers, I have certainly heard of young care leavers describing their difficulties in trying to manage their finances on leaving care, with their homes eventually breaking down and all sorts of adverse consequences arising from that. I support the amendment and I am grateful to the Zacchaeus 2000 Trust for drawing my attention to this issue. I look forward to the Minister’s response.
My Lords, noble Lords are absolutely right that poverty is on the increase. I talked to someone from my local advice agency who told me how in the past month the number of cases that he had been dealing with had gone up significantly. One of the growth industries in my area is payday lending. There are increasing numbers of lenders and people relying on them. Unfortunately, while the use of bailiffs by local authorities is regrettable it is unavoidable and necessary on some occasions. We need to make sure that we use them sensitively. As a result of this legislation, however, there will be more need to use bailiffs because we are putting a tax back on to those who are least able to pay.
I remind noble Lords, as I do on any occasion I can, that the nearest we had to this was in the poll tax era: we were putting a tax on the lowest paid then. There were two elements to the campaign against it. There was a “Can’t Pay, Won’t Pay” campaign, which was reflective of the reaction to it, and we got into a downward spiral where people were unable to pay. The cost to local authorities of collecting the poll tax was rising all the time and less money was coming in. There was greater use of the courts and bailiffs at that time, which was a good income for the courts and probably for bailiffs but not very good for local communities. Noble Lords may recall that the consequences were that pensioners were jailed in certain parts of the country because they had not paid the poll tax. The public reaction that followed meant that we lost the legislation.
My Lords, I find myself in happy agreement with the noble Lord, Lord Stevenson of Balmacara. People should pay their debts, and I imagine that the Minister will join me in looking at things that way too. It is a good basis for looking at this amendment. However, I support the amendment, particularly because of my view of what local authorities are getting up to.
Where errors have been made by officials, most particularly, it is completely immoral to turn on the recipient family, couple or individual and expect them to deal with what can be an enormous debt, about which they have no knowledge whatever. It is not their fault. We need to be careful about saying that in all circumstances people should pay their debts.
My Lords, I think that the noble Baroness misunderstands me. I was picking up on what the noble Lord, Lord Stevenson, said and the way in which he described that this should be done. I am not trying to address myself to the particular circumstances of that part of the amendment. I support the amendment, by and large, but I am looking at it from this point of view: when I read this, I see an instrument for getting local authorities to behave better than they do and to pay more attention to their duty of care to the people to whom they are charging council tax.
About 3 million liability orders are issued in respect of council tax each year. Councils charge an average of about £100 a time for this, which is £300 million a year that councils are charging for liability orders. This charge is supposed to be based on the cost to councils of getting the liability orders and the magistrates’ court orders together. It is totally out of proportion to that cost. It is high time that the Government did a little audit to check out what one or two councils are charging and to see whether those costs are real.
It is no good, particularly when you are looking at charging money to people who often do not have it, to proceed in the same way as councils do with motorists: we all know that those charges have nothing to do with the costs of providing services, that they are completely out of proportion and that the councils are running them as a profit centre. I gather from the hornets’ nest that the Royal Borough of Kensington and Chelsea continues to do that, which is certainly my experience from being on the wrong end of their fines. Parking has become a major profit centre for some boroughs, and I can understand why they consider that people who have cars have money to be got. However, that should not be their attitude to those who find themselves unable to pay council tax.
What the noble Lord is saying is important. As we are in Committee, can he give the Committee any detailed information of the actual cost to a local authority and the alternative charge given in addition to the debt to be recovered from the individual, so that we have some evidence that local authorities are to some extent profiteering from their bailiff actions?
My Lords, is the process of getting a liability order, which costs £100, really 10 hours’ work for somebody? That is ridiculous. It is something that is done in bulk; the requests are sent to the magistrates’ court in bulk and signed off in bulk. Doubtless the council can argue that there are associated costs, but if it is spending £100 a time on these things it is being grossly inefficient. It should be able to do the business for £20 a head; that would be a fair estimate of what it should cost a council, if run well, to get a liability order, rather than the £100 that they charge. There is nothing that I am aware of in the legislation requiring them to be slower about it than that, but because there is no statutory limit on these things it has become a practice to charge a large amount.
The other destructive thing that councils are doing is that when somebody falls behind for a month or two with council tax payments, they say that they will not accept instalment payments any more—the whole lot is due. That is daft. As the noble Lord, Lord Stevenson, was saying, the right way in which to deal with these things is to agree proper staged payments. To withdraw that and put the debtor through the whole business of bailiffs and additional charges, in order to come out at the other end with some kind of agreed staged payment, is ridiculous. It is a great injustice to the person who has fallen behind with paying the council tax, particularly if they find themselves in positions of hardship rather than just forgetfulness.
Councils should be taking a more sensible and rational attitude to this. They should look at the citizens who they have charge of and say that if those people are in difficulty, they will work with the sort of organisations that the noble Lord, Lord Stevenson, represents to enable them to pay their bills over a sensible period or to otherwise get out of the difficulties in which they find themselves. It should not be necessary immediately—without question and without thinking—to go to the bailiffs. I can encourage the noble Lord, Lord Stevenson, because I think that we will get bailiff legislation and reform. I saw the Minister a few days ago and have committed to give a half-hour speech on the subject in November. I am seriously optimistic that I will have something to say when we get there, but it has been a long road. I quite agree with the noble Lord.
However, councils are the employers of bailiffs and it is terribly important that when they employ them they have a care for the people whose—
Nobody wants to see bad practice, but I have not experienced councils behaving in that way in my time as a local councillor. Using bailiffs was the last, not the first, thing you did. I am perfectly willing to believe that there may be bad councils in this field or that one or two cases may be badly handled. Obviously, that may well be the case. If there has been impropriety in that way at all it should obviously be remedied, but I hope that if the noble Lord is coming back with that argument he will back it up with some information and not just broad assertions about how local authorities behave. I do not recognise his description of that. Certainly, before I sent in any bailiffs we would have gone through hoops to see whether we could have gradual repayments or otherwise help those people through their hardship, perhaps by getting them into a debt counselling agency. To send in bailiffs and make that person homeless is the last thing that a housing authority wants, because then it would have to send them to a B and B.
My Lords, my experience of this comes entirely from the bailiff end of things and in particular from the complaints that people make when the bailiffs come through. The complaints are not necessarily about the bailiffs but about the process that has led to them finding the bailiffs at the door. The level of liability or of the charges is a matter of public record, as is their volume. The policy of councils to make the whole debt due immediately if there is a failure over a couple of months to pay instalments is there on council websites. Both of them are fundamental injustices. The council may be good-hearted in the way that it deals with things. I do not have data on which councils are good or bad; I am merely looking at the overall practice, and I am conscious of the level of complaint and anguish that reaches those who deal with complaints against bailiffs, which is where my understanding comes from.
However, coming back to the basic figures, if you charge £100 for a liability order, it seems to me that you are grossly overcharging, and if you say on your website, as councils do, that if you miss a couple of payments the whole lot is due, that is a fundamentally mistaken way to deal with debt. I therefore like this amendment because I read it as putting some of the onus back on councils, which is where it should be.
I thank the noble Lord for setting that out. However, I really cannot accept the two points that he is making, certainly as they apply to my council. First, the cost may well be averaging £100 but that is because of the care that local authorities take in individual cases. They are not simply sending huge numbers of debts to courts or getting orders. Each case has to be looked at properly to make sure of it.
The noble Lord’s second point is, in a sense, a misunderstanding. Essentially, there is a contract between a local resident and the council to pay the council tax. The council says it will withdraw that contract only if the payment has not been received and the resident has not informed the council of a change in their circumstances. If residents come back to councils—certainly to mine—to explain their circumstances, we negotiate a new form of payment. If we did not have that provision, people would simply not inform the council and they would not pay on time—and the costs would be even higher than they are.
My Lords, I am very pleased that the noble Baroness, Lady Hollis, and the noble Lord, Lord Smith, have intervened here because I was growing increasingly concerned that the noble Lord, Lord Lucas, seemed to be suggesting that all councils act in this way. They do not. It is not in their own interests to do it that way and it simply does not happen. I think we can all accept that mistakes are made and that things happen that probably should not. Sometimes, mistakes are made but they are usually at official level because it is the officials who deal with these issues. Sometimes the reason is poor communication, on both sides, but to suggest that sending in the bailiffs is the first action of any local authority is, frankly, nonsense. It is almost always—and certainly should be—the very last action.
Let us remind ourselves that local authorities have a fiduciary duty in respect of all their taxpayers to try to recover debts that are legitimately owed to them. They have been put under even greater pressure in recent years by central government and the amount of attention that is paid to reports from the Audit Commission on council tax collection rates. We have touched on that a few times in this Committee and on the expectation, which is reasonable, that collection rates will fall as a result of the legislation that we are debating. However, to suggest that the use of bailiffs is a first resort by most, or possibly all, local authorities is simply not the case. Like others, I should be interested to hear of substantiated cases of bad practice. I am sure that they occur but I doubt that they occur quite as often as we might read in certain national newspapers. I am quite certain that they are the exception.
I had wanted to start by saying how grateful I am to the noble Baroness, Lady Meacher, for moving this amendment. I am not certain that the amendment needs to be made to the Bill but we certainly needed it in order to have this very important debate. When the Minister responds in a minute, I am sure she will agree with that, but I also hope that at the very least she will agree to take back the issue and consider how it can be best addressed, whether through legislation or through action that is already under way. Nevertheless, it is an important issue.
My Lords, we support the amendment. It seems that our debate has had various strands to it, including the issue of governance for bailiffs. My noble friend Lord Stevenson talked about the three fundamentals that are missing—the balance of incentives, no independent oversight and no process for those in financial difficulties. Part of that theme is the need to support people who get into debt and to help them to make their payments, as well as the importance of effective advice being at hand. With regard to the challenges that are being felt now, my noble friend Lady Hollis instanced what is happening to the CAB in her area, and my noble friend Lady Sherlock asked the Minister about the assessment that is being made of available support.
However, one strong strand has been the importance of this issue, because it focuses on dealing with poverty. As the noble Lord, Lord Tope, said, everything that is going on—the economic situation that the country and much of the world faces, as well as specific policies, including those that we are debating in this Bill—has a cumulative effect on people. We heard from the noble Baroness, Lady Meacher, and the noble and right reverend Lord, Lord Harries, about financial hardship and why it is of increasing importance in the circumstances in which we find ourselves.
The noble Lord, Lord Best, made the point that in some ways local authorities are victims of the current circumstances. They have to deal with the effects of this Bill and other legislation, particularly cuts in council tax benefit or support. We know and have debated the consequences of that. I recognise the hand of the Reverend Paul Nicholson and the Zacchaeus 2000 Trust in all this, and he should be congratulated on his continued efforts. As a Minister, I always shuddered a bit when a briefing came through from the Reverend Nicholson; I still do.
This amendment focuses on the enforcement procedures, particularly the relationships between bailiffs and councils, and it calls on contractual arrangements between bailiff companies to allow—why not require?—the bailiffs to return a warrant to the council for reconsideration when certain circumstances arise. We support the thrust of the amendment. I do not know whether we need to unpick some legal issues here in order to differentiate between bailiffs appointed by the court and enforcement agents acting under contract to the local authority—that is, whether the return and possible amendment of the warrant is just an issue between the council and the agent. Doubtless the Minister will be able to help us on that.
We have all heard horror stories about the actions of some bailiffs towards vulnerable people, including the very poignant case explained by the noble Baroness, Lady Meacher. In the National Standards for Enforcement Agents there seems to be no problem in setting out who is considered to be vulnerable; perhaps the Lord Chancellor’s Department will be able to assist the DCLG in this regard. I am sure that we all find some of the instances we have heard about completely unacceptable. The amendment refers to the National Standards for Enforcement Agents, a document issued by the Ministry of Justice, but, as my noble friend said, it is really just a rerun of something that happened in 2002 and the problem is that it is not mandatory. I wonder whether we should at least require all local authorities to contract only with those who explicitly adhere to those standards, although they may not be binding.
The standards explicitly refer to vulnerable situations requiring enforcement agents and creditors—the councils —to recognise that they each have a role in ensuring that the vulnerable and socially excluded are protected and that the recovery process includes procedures agreed between the agent and the creditor about how such situations are dealt with. The document states:
“The appropriate use of discretion is essential in every case and no amount of guidance could cover every situation, therefore the agent has a duty to contact the creditor and report the circumstances in situations where there is … a potential cause for concern”.
That is the essence of what this amendment seeks to achieve, but there is also an issue about how councils play their part and this is also implicit in the amendment.
We have discussed council tax support schemes. In many cases, the cut in support for schemes, effectively of the order of 20%, will leave poor people having to pay council tax when they were previously exempt. Even a few pounds a week could push those existing at the margins over the edge, especially when coupled with the other cuts that they have to endure. Given the reminder that local authorities have had from central government about their responsibilities regarding equalities duties, homelessness provisions and the Child Poverty Act, this places a special onus on local authorities to ensure that life is not made even more intolerable by insensitive and inappropriate enforcement processes. We welcome the content of these amendments.
My Lords, I thank the noble Baroness for introducing this amendment. There has been wide discussion, as I rather expected, and I acknowledge the part played by the trust of the Reverend Paul Nicolson and the work it does in support of people who end up in serious debt. I also note what has been said about many people in serious debt having mental health issues. I agree that these are all matters that ought to be taken into account by local authorities, and doing so is very much part of their work. As for the advice agencies, the noble Baroness, Lady Sherlock, will know that this is a matter for local authorities. The funding, apart from the Lord Chancellor’s funding, by and large comes from local authorities and therefore it is in their own interest to ensure that people have proper advice.
The discussion, as I would have expected, has gone widely into the problems that bring in bailiffs, but it is the bailiffs on whom we are concentrating today. That is what the amendment is about, although I understand that it has triggered much concern about the general situation. Unfortunately, it does not quite do the trick. The noble Baroness probably did not think that it did but that it was another opportunity to have this discussion and bring the matter to wider attention again. It does not work for local government because, essentially, it is not properly worded. It requires authorities to include procedures in their contracts with bailiff companies covering the enforcement of council tax. These would allow the bailiffs to refer the decision to take enforcement action to an authority for reconsideration where there are concerns about the debtor’s liability or their ability to pay. I agree with the noble Lord that that should just be part of the practice: that if bailiffs find something wrong, they should automatically take that into account.
I should explain that the amendment does not accurately reflect the way that bailiffs are authorised to take enforcement action in respect of council tax, because no warrant issued by the local authority is involved in the process. Under the Council Tax (Administration and Enforcement) Regulations 1992, bailiffs can be used to recover unpaid council tax—that is, levy distress—only where a magistrates’ court has made a liability order. That was the point made by my noble friend Lord Lucas.
The local authority is allowed to apply for only reasonable costs, and those are capped at £70. There will be further costs only after distress from the bailiffs is levied. I agree with the noble Lord, Lord Smith, that a great deal of work is involved before schedules are produced before the court—I used to deal with them frequently, and magistrates do not just wipe them through; a lot of questions are asked.
That was a slight diversion. I am keenly aware that the use of bailiffs to enforce unpaid council tax is an emotive and sensitive issue—we have heard about many of the reasons why today—particularly when used against vulnerable people. Many disquieting examples have been given this afternoon of where that is happening. The Government believe that the use of bailiffs should be a last resort. I think that most local authorities believe that and that everything else should be done before they say that it must go to the bailiffs. It follows that we do not believe that they should be commissioned disproportionately; they should be a last resort. Councils should take direct responsibility for ensuring that bailiffs abide by acceptable practices. No one can be content with people working on their or the courts’ behalf who do not act reasonably, courteously and sensitively.
However, whether enforcement action is justified is a matter for local authorities and, finally, the courts, having taken account of all the relevant information on a case-by-case basis. Of course it is the local authority’s responsibility to ensure that it is taken only after all the procedures and all efforts have been made to have the matter dealt with in another way.
Although the Government have no plans to make changes to the enforcement regime for council tax, which is what we are talking about in particular, as my noble friend Lord Lucas mentioned, we are looking at bailiff reform. There is a wide perception across the country and across government that it is not working absolutely brilliantly. I say to the noble Lord, Lord McKenzie, that we are talking about the bailiff service, not the enforcement service.
The Ministry of Justice consultation, Transforming Bailiff Action, which was mentioned by the noble Lord, Lord Stevenson, closed on 14 May. It looked at how the Government—that is, going across government —can provide more protection against aggressive bailiffs and encourage more flexibility in their use, including the need for more care in how the bailiffs go about their business. One reason why the amendment is not appropriate to this Bill is that the issue goes across government. The use of bailiffs is a responsibility of the Ministry of Justice; then we get to the Department for Work and Pensions, and then we come back to the DCLG. It is extremely important that this does not just get logged in one department; it must be addressed across the piece. The noble Baroness, Lady Meacher, knows that because she said so. She knows that the amendment is not appropriate, but I do not go over her will to see this matter debated—it is very sensible.
My Lords, I should say to the noble Baroness, Lady Hollis, that I will indeed do what I can to provide her with some evidence. I should be grateful if either she or the noble Lord, Lord Tope, or anyone else who was belabouring me for being beastly to councils could point out to me where on a council’s website there are references to the sort of behaviour which they say goes on as a matter of routine. I have just looked at some; I looked in vain at Norwich, and at several others, and they all lay out the bare bones of the charges and the bailiffs and say nothing about finding your way into the care of the noble Lord, Lord Stevenson of Balmacara, or other ways in which to deal with the problems that you may have. It is not there on their websites. I cannot say that I have seen them all, but I have looked at half a dozen in the course of the winding up. I would be very grateful if those who have belaboured me could show me where on the websites of the councils with which they have involvement this sort of attitude to people who fail to pay their council tax is demonstrated. I hope that we shall manage to make some progress at Report in this direction, because it seems that there is considerable scope for not only bailiffs but councils behaving better to take care of the vulnerable but also effectively and efficiently recover council tax while causing a minimum of distress on the way. I am delighted to hear that things are better than I had understood, but I would love to see some evidence.
My Lords, I thank the many noble Lords who have spoken in this debate so powerfully and helpfully. I must also thank the Zacchaeus 2000 Trust and the reverend Paul Nicholson, who has been behind all this.
Important points were made in this debate, albeit that, as I mentioned in our meeting with the Minister, this is a probing amendment raised in the context of the DWP and the MoJ. The point was to bring to Ministers’ notice the relationship between the three departments and the similar issues that apply, whatever words one might use. I certainly agree that the amendment does not deal with all the problems. I particularly endorse the point made by the noble Lord, Lord Stevenson, that we need a regulatory or licensing system. Ten years ago, when I was chairman of the Security Industry Authority, I pressed hard, as far as I could at that stage, for such a regulatory system for bailiffs. Often they say it takes 10 years before an idea comes to fruition, so this is about time for the regulation of bailiffs. I am sure that it was raised 20 years ago, and, no doubt, 30 years ago, but there we go. It is certainly time that that was done.
I also very strongly support what was said about advice agencies. It is in no one’s interest that advice agencies are being cut back now. I appeal to the Minister to do anything that she can to ring-fence or support local advice agencies and prevent the totally destructive withdrawal of funds from those bodies. Of course, as the noble Lord, Lord Smith, said, local authorities need to collect the money, but they seem to be spending an awful lot of money on trying to do so, which again is self-destructive.
I understand the Minister’s comments, but we need this looked at across the three key departments—there may be others—to see whether sensible regulations can be drawn up. As has been said, guidance is fine, but it is not mandatory. We would like mandatory provisions within regulations that cover the collection of debts from those families and individuals who are in financial hardship and where some injustice is being done.
Having said all that, and hoping that we will have further discussions with the department and its officials, I beg leave to withdraw the amendment.
My Lords, the amendment will enable regulations to be made about how information supplied to billing authorities by Her Majesty’s Revenue and Customs and the Department for Work and Pensions may be used as evidence in an appeal to the Valuation Tribunal.
As noble Lords know, data-sharing will be an important way to maximise convenience and reduce complexity for applicants, while helping to reduce administrative costs. It will reduce the need for applicants to have repeatedly to provide the same information and evidence to various public sector bodies.
Section 131 of the Welfare Reform Act 2012 provides for the sharing of information relating to social security benefits and welfare services with a qualifying person for prescribed purposes relating to welfare services or council tax. That will enable data held by the Department for Work and Pensions about current benefits and, in future, universal credit, to be provided to English and Welsh billing authorities and Scottish local authorities for the administration of local council tax reduction schemes. With the move to universal credit and the sharing of real-time income information, an increasing amount of the information that the Department for Work and Pensions will use to calculate entitlement will originate with and be owned by Her Majesty’s Revenue and Customs. Amendments made in the other place introduced new paragraphs 15A and 15B to the Local Government Finance Act 1992. They will allow for information held by HMRC to be shared for prescribed purposes relating to council tax.
Amendment 96ZA makes an amendment to paragraph 8(3)(ea) of Schedule 11 to the Local Government Finance Act 1988. This currently provides that regulations may be made about the use of evidence at the valuation tribunal, including, in particular, the use as evidence of information supplied under specified legislation. This amendment adds to the list of specified legislation, to ensure that regulations may also be made about the use as evidence of information supplied by HM Revenue and Customs under new paragraphs 15A and 15B in Schedule 2 to the Local Government Finance Act 1992 and the Department for Work and Pensions under Section 131 of the Welfare Reform Act 2012 for purposes relating to council tax. The amendment is being made to allow regulations also to be made on how information supplied to a billing authority by HM Revenue and Customs and by the Department for Work and Pensions for council tax purposes may subsequently be used as evidence in any appeal in relation to an applicant’s council tax liability. With that explanation, I beg to move.
Amendments 96A, 98, 99, 100, 102 and 103 insert a new clause to allow Her Majesty’s Revenue and Customs to supply information for prescribed purposes relating to rates to the Department of Finance and Personnel in Northern Ireland and the Northern Ireland Housing Executive. They provide for offences relating to the misuse of that information and make consequential amendments to Clause 19 of the Bill. Amendments are also made to Clause 17 to provide that any consequential changes to an Act of the Scottish Parliament, an Act or measure of the National Assembly for Wales and Northern Ireland legislation will be subject to affirmative resolution procedure. Consequential amendments are also made to Clause 19 to provide that this new clause extends to Northern Ireland and Clause 17 extends to England and Wales, Scotland and Northern Ireland.
Data-sharing will be an important way of maximising convenience and reducing complexity for claimants, while also helping to minimise administrative costs. It will reduce the need for individuals to repeatedly have to provide the same information and evidence to various public sector bodies. From April next year, in a similar way to the council tax reduction schemes introduced by this Bill, the current system of supporting households with rates payments in Northern Ireland will be taken out of the social security system and become a relief funded from the Northern Ireland block grant. The primary purpose of the new clause is to allow the supply of HMRC information to the appropriate bodies to assess rates support for vulnerable households in Northern Ireland.
Proposed new subsection (1) of Amendment 96A will allow HMRC to supply information held for the purposes of its functions to a “qualifying person”. Proposed new subsection (2) in Amendment 96A defines qualifying persons as DFP and NIHE, as well as anyone authorised to exercise any function of those bodies, and to service providers for purposes relating to rates. I will find out what those abbreviations mean and come back to noble Lords.
My Lords, this is totally clear to us and we are very happy to support the amendment.
I am grateful and I beg to move the amendment.
My Lords, I can hardly hope to match that performance, but I shall do my humble best. I rise to move Amendment 97 in the name of my noble friend Lady Lister of Burtersett, to which my name is also attached. My noble friend apologises to the Committee for her absence today. She is receiving an honorary degree, which could not be readily rearranged, so, disappointed as she is—particularly, I think, to have missed that last amendment—she has asked me to do my best to share with the Committee the points she would have wished to make. I acknowledge her considerable expertise and any errors that creep in are entirely my own.
In April 2013, local authorities will have to deal with the transfer of responsibility not just for council tax benefit but also for the discretionary Social Fund, described by charities as a lifeline for some of the poorest and most marginalised people in society. Through a system of community care grants and crisis loans, as noble Lords will know, the discretionary Social Fund provides vital cash assistance to some of the most vulnerable members of the community. Community care grants help people on out-of-work benefits to remain in or set up their own home and to retain their independence. These may be, for example, young people leaving a children’s home or foster care; people with chronic health conditions or disabilities who need aids or adaptations in order to allow them to live in the community; or women who have fled domestic violence. Crisis loans are interest-free loans payable when they are the only way of preventing serious damage or serious risk to health or safety as a consequence of an emergency or a disaster.
The Welfare Reform Act 2012 abolishes these provisions with no guarantee that local authorities will pick up the pieces using the money allocated to them. The first part of Amendment 97 is designed to ensure that the money transferred to local authorities is used for the purposes intended. Experience suggests that without a clear legal obligation, there is no way of ensuring that the money allocated to local authorities will be spent in the way that the Government and Parliament intend. This is not a criticism of local authorities, but simply a realistic appraisal that, in the current climate, many local authorities are struggling to meet their statutory functions in the face of budget cuts to which the Bill adds. Research by the Joseph Rowntree Foundation indicates that:
“It cannot be assumed that the needs of disadvantaged residents and communities will inevitably be to the fore as councils manage budget reductions”.
This pot of money, transferred to local authorities to meet the needs of some of the most disadvantaged residents, could be very tempting.
The experience of Supporting People, a fund designed to help vulnerable groups, is not very encouraging. Since the ring fence was removed, overall spending on Supporting People has been cut by over 10 percentage points more than the settlement received by local authorities for that purpose would require; and that is an existing budget—how much greater will the temptation be with a new budget? The fieldwork done by the Department for Work and Pensions with local authorities shows some interesting things. While some authorities were unenthusiastic about any ring-fencing, a number were,
“concerned that without a ringfence ... funding would quickly become amalgamated into existing budgets and as a result its identity, visibility and purpose would be lost. A second concern was that councillors or directorate heads”—
none present, I am sure—
“would redirect the funding to plug gaps in other budgets”.
It is just such fears that this amendment is designed to allay.
Both the present and the previous Social Fund Commissioner have expressed similar anxieties. The potential consequences have been spelt out by organisations such as Citizens Advice and Family Action: greater reliance on over-stretched charities, on food banks and on high-cost lenders, as the Joint Committee on Human Rights also warned in its report on the Welfare Reform Bill. Otherwise, people must simply go without, with potential risk to health or safety. I am sure that other noble Lords have similar experiences but I know that the food bank in Durham, which my church supports, is seeing demand rise faster than we could ever have imagined, and that is before the Social Fund is abolished. Therefore, I dread to think what is coming down the track towards us next.
During the passage of the Welfare Reform Bill, the noble Lords, Lord Freud and Lord de Mauley, made clear their commitment to ensuring that the money is spent on and reaches the vulnerable people for whom it is intended. I know that they have gone to some length to try to make sure that this happens by stipulating that the money will be part of a special revenue grant, accompanied by a detailed settlement letter, the details of which we eagerly await. When can we expect that settlement letter?
Ministers may wish to resist this attempt to underwrite the Government’s own objectives in law, perhaps on the grounds that it might stifle innovation or that councils might prefer to invest the money in existing services for vulnerable people. I would never want to stifle innovation, but there is no reason why the amendment should do so. However, investing in existing services, even where these support vulnerable people, may well not be enough.
In his latest annual report, the Social Fund Commissioner warned that the fund’s casework experience suggests that many social fund applicants are not known at all to other agencies such as social services. Citizens Advice has advised its bureaux that entitlement to social services is often set at a very high threshold, which could exclude many of those currently eligible for help under the Social Fund. In other words, they are not necessarily the same people. It believes that it is crucial that there continues to be a last resort source of cash for people who currently apply for crisis loans to meet basic needs, such as fuel, following a disaster or emergency. A recent study from the Child Poverty Action Group of how London local authorities are preparing to deliver the new responsibilities found no authority planning to provide any cash support, although some had not entirely ruled it out.
Proposed new subsection (2) in Amendment 97 addresses a concern raised by a number of charities that local authorities might be tempted to impose a local or residence condition as a way of rationing assistance—in other words, that they might confine help to people who already have a local connection. However, many people who currently qualify for help from the Social Fund are just the people who are least likely to have an existing local connection—for example, women who have fled domestic violence, young people who have left care and others who have left institutional care, or homeless people. Again, this issue has been highlighted by the London authorities study by the CPAG. Its report notes:
“A key issue emerged around local connection rules. Charities ... expressed fears that if applicants to local schemes are asked to prove a local connection, families who have had to move, such as those who have experienced domestic violence, or those leaving prison, may find themselves with no way of accessing support”.
“emphasised the need for an integrated approach”.
The report pointed out that,
“the issue of local connection presents collective action problems; if one local authority chooses to apply local connection rules and others do not, those who do not are likely to see an unsustainable increase in demand for their schemes'”.
The report expresses a preference for no local connection tests so that those who cross authority boundaries can access support, and it calls for a strategic steer from government. This amendment would go slightly further than a strategic steer but not as far as preventing any local connection rules at all. It would simply require local authorities to make grants in accordance with guidance about such rules, and that such guidance should ensure that local connection rules are not applied to the vulnerable groups listed in the amendment.
In the House of Commons, when questioned on this matter, the Secretary of State for Work and Pensions assured Members that local authorities had a “moral duty” in this area. I welcome this recognition of a moral duty, but I encourage the Minister cosndier how which she can make sure that that moral duty is fulfilled. The CPAG study picked up concern among local authorities that the reduction in funding for crisis loans to 2005-06 levels will leave them unable to meet considerable amounts of need, so the temptation to use local connection rules as a rationing device could be overwhelming for some of them. Clear guidance on this issue would also be in line with the Social Fund Commissioner’s emphasis on the need for guidelines that,
“set parameters for local discretion”,
so as to,
“achieve some broad consistency of purpose and approach”.
If the Minister cannot accept the amendment, can she at least reassure the Committee that she will consider the case for guidance on local connection in the settlement letter in the way that I described? However, I hope that that will not be necessary and that the Government will accept the amendment. It would cost no money but would provide some protection for some of the most vulnerable members of the community and ensure that the money voted by Parliament was used for the purposes intended.
My Lords, I strongly support the amendment moved so powerfully by my noble friend Lady Sherlock. I want to add two further points to the admirable way in which she raised the concerns that I think we all share. The first was the implication for social workers and the second is the implication for certain local authorities. I will glare at the noble Lord, Lord Tope, when we come to the second point as he will guess where I am going on that.
On the implications for social workers, they are being asked to undertake a role that is not consistent with their current responsibilities. Their work towards helping children with occasional financial support is based on Section 17 of the Children Act 1987, under which they are expected to intervene when children’s health and development is seriously at risk. That may involve issues of abuse or when children need to go into grandparents’ care, and so on. It was never intended to meet basic needs of relieving poverty, providing family housing or accommodation for children separately from the parents unless it was necessary to promote and safeguard their welfare. As a result of the Social Fund—whether ring-fenced or otherwise—going over to local government, social workers will be asked to do two additional things as well as trying to deliver the purposes of Section 17 of the 1987 Act.
First, it is feared that local authorities will not inevitably budget for sufficient funds. Money might run out in January, which is always a problem with cash-capped grants, or the amount will be so low that the Section 17 work will be drawn on, which will diminish the work that we are currently doing to help children who face abuse. Secondly, and more worryingly, social work time will be taken up with assessing whether a child whose parents cannot meet their basic needs is being neglected or is in need according to the Section 17 definition. They will be saying no frequently as poverty alone, or lack of accommodation, does not fit the Section 17 definition. That was taken away from child protection and other work with families with complex needs. It will create friction with families that they are trying to help, as they will frequently have to say that they do not fit the legal criteria and will appear heartless.
Asking local authorities to now be the gateway to cash handouts for cookers, tables and chairs, bedding, and so on, is inconsistent with the role that social workers actually have, which is trying to help families to develop. The same will apply equally to local authorities and council tax benefit. There is a real problem for council social workers. Although I cannot speak for the British Association of Social Workers and do not have its views, social workers I have talked to, including eminent professors of social work, are deeply concerned about what they regard as the deforming and warping of the role of social workers. They will now be guardians of the gateway to cash handouts in a way they have not been before and do not wish to be now.
My second problem is the implication for two-tier authorities. Providing social services is a county function and housing is a district council function. They are splintered because of the two-tier structure that we have in this country. Social services will have discretionary Social Fund moneys, often for claimants for whom they have not previously worked, across a county-wide area—40 miles by 60 miles, perhaps, or with a million people living in it. They will have to make judgments about who to help with a limited budget that is not ring-fenced and which may be used for child protection or social care for the elderly, which has increasing dominance and a higher priority in most county council budgets—and perfectly reasonably so.
Housing authorities, of course, have responsibility for discretionary housing. My authority in Norwich has enough to support 50 families. In the previous year it ran out in November. Some of those families in distress will be the same families; some of them will be dealt with by county council social workers and the Social Fund, and many of the same families will possibly be dealt with by the local authorities at the district level, handling the housing discretionary payments. They are often likely to be the same families in the future. For unitary authorities, I hope that there will be a cohesive service as they should be able to manage the local connection issues. For cities such as mine where we are stuck against our will in a two-tier system, it will not be easy to handle. There will be costly duplication and even more profound problems about the localisation issue; the county might be helping people who live in one district where they have a local connection whose housing needs may be experienced in a different district. The same family may get help simultaneously from welfare rights people at district level as well as social services at county level.
As the measure stands, it is a mess. As noble Lords will know, if they know about two-tier authorities, I cannot see how it can work, when you have county council social workers trying to dish out cash hand payments to a proportion of 1 million people at county council level while simultaneously the district authority is responsible for discretionary housing payments which may have been engendered by the same crisis and is supposed to maintain a separate fund, also not ring-fenced. This is costly and it is duplication. At the very least it should be ring-fenced; at the very least there should be issues of guidance—and, at the very least, central government should require county social services to work closely with district authorities to try to overcome what this Government in a previous incarnation splintered—I refer to housing from social services—which affects the most vulnerable people in our communities.
My Lords, we have just heard a compelling and comprehensive case from and on behalf of my noble friends, with which I wholly agree. As my noble friend Lady Sherlock said, it does not cost any money and it would provide some protection for some of the most vulnerable members of our community. If we could unite around this issue, it would be a good way in which to conclude our Committee deliberations.
The proposal concerning local connection rules is at the very least something that the Government should accept. They are prepared to give central direction to protect pensioners whom they see as vulnerable when it comes to council tax support schemes, so why do we not have some central guidance to protect those fleeing domestic violence, those leaving care, the homeless and those leaving institutional care? My noble friend Lady Sherlock quoted assurances received from Ministers during the passage of the Welfare Reform Bill to the effect that funding for what was the Social Fund, now transferred to local authorities will be part of a special revenue grant accompanied by a detailed settlement letter. Can the Minister deal specifically with the inquiry made by my noble friend on that point? We know that there will be a revenue support grant for the first couple of years of the business rate retention scheme, but the position after this is a little opaque. In any event, can the Minister confirm that the funding in question will be provided by central government in addition to the central share of the business rate, on top of the central share?
We know that councils will try to do the right thing for those who most need their support, but life has been made incredibly difficult for them by prior cuts, the cuts in this Bill and more cuts to come. In all the near impossible judgments that councils will have to make, we can provide just a small voice for those who might otherwise not be heard. I support my noble friend’s amendment.
My Lords, this has been a short but interesting debate. I thank the noble Baroness for raising this on behalf of the noble Baroness, Lady Lister, and I should say how delighted we are about her honorary degree. I hope that it is in something associated with what we are doing here—but, if not, it is none the less a great achievement.
Amendment 97 relates to the Social Fund. As the noble Baroness said, this is provided for in the Welfare Reform Act, for which the Department for Work and Pensions is responsible. It states that:
“Any grant paid to local authorities under section 70 of the Welfare Reform Act 2012 … shall be expended by the local authority only for said purposes”,
“Any such grants will be made under the guidance of the Secretary of State with regard to the application of any ‘local connection rules’ … so that any such rule does not apply to”,
various categories of vulnerable people.
Proposed new subsection (1) of the amendment may be based on a confusion, as Section 70 of the Welfare Reform Act 2012 relates to the winding up of the Social Fund and transfer of money into the consolidated fund, rather than the transfer of money to local authorities. However, I believe that the intention behind the amendment is to guarantee that grants allocated to local authorities for local welfare provision, following the abolition of community care grants and crisis loans from April 2013, are used for the purpose intended.
I reassure the Committee that the settlement letter to which the noble Baroness referred will accompany that funding. I am not yet sure when that letter is due, but I will make inquiries and let her know. The settlement letter will set out what the funding is to be used for, the underlying principles and the outcome that must be achieved—although not the method that should be used to achieve it. It will state that the funding is to concentrate resources on those facing the greatest difficulty in managing their income and to enable a more flexible response to unavoidable need.
How will social workers who have never dealt with those families know? There may be a million people in the area. How will they know which of the 100, 200 or 300 families might need and be entitled to help under what used to be the Social Fund?
My Lords, that is something that the settlement letter will make clear and local authorities will have to make clear to their social workers how they are to administer it. That comes with any legislation: people have to take up the baton and carry out what is asked of them.
So the Minister accepts that, in addition to child protection work, social care and all the rest of it, there is to be a new tranche of social work activity at a time when they are very hard pressed to do what they currently have to. They will have to be the gateway or the monitor of the cash handouts under the Social Fund.
My Lords, the applications will be made to the local authority, which will presumably decide whether they are warranted or not.
The letter will make explicit that the funding is make new provision for when community care grants and general living expenses—crisis loans—are abolished. It will explain what community care grants are awarded for and why the crisis loans were awarded. Without curtailing the freedom of local authorities to tailor provision, the settlement letter will ensure that the money intended for vulnerable people goes to them. In addition, the Department for Work and Pensions plans to conduct a review in 2014-15 of a cross-section of local authorities to ask them to report on how they have used the funding for the new local provision. That will be aided by the fact that the funding is through a separate, identifiable grant.
I assure noble Lords that the Government are committed to ensuring that the funding goes to help the most vulnerable. That is why we have put the provisions in place. I therefore urge noble Lords to conclude that the amendment is not required to meet that aim.
Before the Minister sits down—
I have another five or six pages here.
In that case, I shall not be so impatient.
Directing local authorities to use funding in a particular way would go against one of the fundamental principles of this reform. The policy gives local authorities the freedom to deliver for the public rather than central government and to do what is right for people in their area. We think it important to resist any attempts to curtail those freedoms or dampen down local innovation, so I urge that the proposed new subsection (1) in the amendment be rejected.
I turn to proposed new subsection (2). It is intended to ensure that certain particularly vulnerable groups are not rendered ineligible for support on the basis of a test for local residence or connections. The Department for Work and Pensions has discussed that issue with local authorities—who, of course, are already familiar with it. It is not an issue limited to the Social Fund, as local authorities already deal with boundary issues in the delivery of other services, such as housing the homeless.
My Lords, that pertains to district councils. The Government are assuming that they are dealing with unitary authorities that therefore have a body of experience, but half the country is in a two-tier structure and they are asking social workers to do what they have never done, whereas all the expertise is at district level. It would be much more sensible if the money had been aligned and it was for district councils to allow for the discretionary housing payment.
The noble Baroness makes her point. I cannot comment any further on that.
Local authorities already have many duties to provide assistance to vulnerable people under existing legislation and frequently co-operate with other local authorities in doing so. For example, there are differences in what they will be asked to do. A London local authority might be dealing with a large transient population, while a local authority on the south coast of England might be dealing with an older population. That is one of the reasons why each local authority will need to have flexibility to design its own scheme to meet its appropriate requirements.
Furthermore, we will encourage local authorities to link support across boundaries. This already happens in places such as Wandsworth, Hammersmith and Fulham, and Kensington and Chelsea, which already work together to provide joint services. This is done across the country where they may not link up in quite the same way as this group, but they are already working together. The groups referred to in proposed new subsection (2), including young homeless people, those fleeing domestic violence, young people leaving care and people returning to the community from institutional or residential care, already receive assistance from local authorities and central government. Local authorities have, for example, a number of existing responsibilities in relation to the provision of emergency and longer-term accommodation. They have particular responsibilities in respect of those with a priority need, such as those who are vulnerable because of age, mental illness or disability and those with dependent children.
Section 199 of the Housing Act 1996 sets out what constitutes a local connection in relation to people who are homeless. There is also statutory guidance for local authorities from the Department for Communities and Local Government to which local authorities must have regard. The effect is that people initially receive help from the local authority to which they apply whether or not they have a local connection. However, those with a local connection to another area may be referred there, unless they are at risk of violence if they return. A local authority which houses someone would be in a good position to provide help through the new local provision, for example, with furnishing the accommodation that it arranges. I gather that the noble Baroness, Lady Hollis, does not agree with that.
My Lords, the Minister makes my point for me. How much easier it would be if housing and social services were aligned.
This is an example of how the new local provision will allow local authorities to deliver a more comprehensive service as they can use the new provision alongside already existing support. As regards young people leaving local authority care, local authorities have a duty to safeguard and promote the welfare of a child, and have duties until the child is 21. Local authorities also have duties to support disabled people or those who are destitute. They must make arrangements for promoting the welfare of those with a disability or mental disorder, including the welfare needs of people leaving hospital, having received in-patient care for a mental disorder.
The National Health Service and Community Care Act 1990 requires local authorities to prepare a plan for the provision of community care services in consultation with relevant bodies and to assess the needs of people who may be in need. Local authorities are therefore already required by multiple legislative duties to provide support to the most vulnerable. I think that one would accept that they have a moral duty to do so. They will be able to use this experience to deliver the new local provision, so there is no need for local connection eligibility rules to be published. They already have duties to the most vulnerable and are familiar with dealing with boundary issues. I also remind the Committee that the new local provision is not the only support that will be available. There will also be a national payments-on-account scheme to replace budgeting loans and crisis loans for alignment. This will cover need that arises as a result of the benefit system, such as a change in circumstances or a delay in receiving benefit. It will also enable those on the lowest incomes to access interest-free advances of their universal credit as budgeting advances.
In conclusion, the safeguards to which I have referred will ensure that money intended for vulnerable people goes to them. The most discretionary support will be better tailored so that they receive what they need when it is delivered locally. The new local provision and the national provision of payments on account will complement each other. Taken as a whole they will provide more effective and better targeted support. I hope that with that long explanation the noble Baroness will withdraw her amendment.
Before the noble Baroness sits down, may I ask two questions? I will respond to her points in a moment. First, is there any requirement that some or all of this provision by local authorities should be in cash? Secondly, I understood her to be saying that the letter of settlement would specify the purpose to which the money should be applied and the outcomes to be expected.
During the passage of the Welfare Reform Bill there was a detailed debate in the Chamber in which the late and much lamented Lord Newton of Braintree asked the Minister what would happen if the local authority were to take the money and spend it on something totally different, such as a road or a swimming pool. This became a matter of some debate. In the end I finally got up and pressed the noble Lord, Lord De Mauley, myself and asked, what would happen if a local authority spent the money on a swimming pool? His response was:
“My Lords, the local authority will not spend the money on a swimming pool”.—[Official Report, 17/1/12; col. 475.]
So I put the question now to the Minister: what would happen, what action would the Government take, if a local authority spent the money on a swimming pool or a road?
If the noble Lord, Lord De Mauley, said that it was not going to happen, it will not happen.
A very nice try on the Minister’s part and stylishly done, but one of the reasons I am so glad that she is here is that, during that point we were very conscious that this is a matter of what local authorities do themselves and how they make a choice is a matter in which the DCLG has particular expertise. I would not expect the noble Lord, Lord De Mauley, to have the level of expertise in local authority behaviour that I know the Minister has. Surely, she can do better than that.
The noble Lady is not going to get better than that. I have had a huge number of detailed questions about the Social Fund. They are all the responsibility of the Department for Work and Pensions, by and large, until those things are formally announced and we can see how they are going to work. We will ensure that noble Lords and the noble Baroness receive any further information that there is.
My Lords, I am sorry to intervene, but there is an aspect of this which I do not think has been touched on and that is that there is a new burdens aspect, not in respect of the transfer of the money, but in the cost of administering delivery of the scheme. Presumably, the cost at the moment is borne by the DWP. That cost will have to be met, in one way or another, by the local authorities now actually administering the scheme. Have the DWP or the Department for Communities and Local Government costed that aspect, and will it provide the resources for local authorities under the new burdens doctrine?
The answer to the noble Lord’s question is yes. The Government have said that any new burdens will be funded and the amount of the new burden will be based on what the Department for Work and Pensions currently spends to administer these parts of the Social Fund.
Will the noble Baroness say a little more about this settlement letter? I am trying to envisage the settlement letter in the context of business rate retention schemes and revenue support grants, but will she say whether the funding stream for this purpose is going to be additional and will not come from the central share of business rates, which accrue to Government and then go back? Is it going to be funding on top of that?
This is funding being moved from one area to another, so is it additional? I suppose the answer is probably yes, because it is coming from the Department for Work and Pensions into the Department for Communities and Local Government. Is it additional in terms of revenue support grant? I think the answer is probably yes, because it is within the funding of the local authority but expected to be used for the Social Fund purpose. As for the settlement letter, it will include the detail. I do not know, I am afraid, what the settlement letter will be. I suspect that there are a lot of people in the DWP who do not know either, but I have told noble Lords that as soon as we know when it is being issued and what it contains, we will let them know.
I thank the Minister for the information she has given me today. I confess that I am disappointed, partly by her belief that I was asking questions of enormous detail. I really only asked two questions at the end. One was, will somebody have to give money out in cash? The second was, what will the Government do if they do not spend it in the way that they are asked to spend it?
They do not seem to be matters of detail: they are important matters about how the scheme will work and whether the Government will be able to do what the Minister, as well as the noble Lords, Lord De Mauley and Lord Freud, have pledged, which is to make sure that the money goes to the purposes to which Parliament intended.
I also do not find the case persuasive that local authorities have a range of other statutory duties already relating to vulnerable people. They already have all those duties and yet successive Governments of different persuasions have found it necessary none the less to have a Social Fund that people could go to, as a last resort, to get some cash for crisis situations. I see nothing in what the Minister said to suggest that that need has somehow disappeared. I therefore find it impossible to understand why the existence of those duties in other areas precludes the need for access to a last resort scheme of cash in the way that successive Governments have seen the need for.
The kinds of things that are bought in requirement at the moment will not all be picked up in the way that the Minister described through budgeting schemes or in dealing with late benefit payments. Those are specifically to deal with particular circumstances in cash. The fact that CPAG found that, so far, no London authorities were intending to give cash suggests grave cause for concern about what will happen to those vulnerable people when that happens.
I now have some information. I would be grateful if the Minister could write to me before the next stage because this is something that we will have to consider carefully at Report. I will go back and look carefully at her remarks, but Lord Newton of Braintree made it clear during the passage of the Welfare Reform Bill that he intended to come back at Report. I so wish that he were here to do that. However, the noble Baroness, Lady Lister, whose work has gone on behind all of this and I will do all that we can on his behalf. Given that this is Grand Committee, I beg leave to withdraw the amendment.
Committee (6th Day)
Clause 13 : Regulations about powers to require information, offences and penalties
93ZE: Clause 13, page 10, line 7, leave out “by a person”
Amendment 93ZE withdrawn.
Clause 13 agreed.
93A: After Clause 13, insert the following new Clause—
“Council tax reduction: disabled people
Nothing in this Act shall affect the current eligibility of disabled people to receive a reduction in their council tax liability through the disabled band reduction scheme.”
Amendment 93A withdrawn.
93B: After Clause 13, insert the following new Clause—
“Additional council tax band
The Secretary of State shall consult with local authorities for the introduction of an additional higher band of council tax —“I”— in England, for dwellings with a 1991 property value of £420,000, at a tax rate relative to Band D of 21/9; or its 2013 equivalent.”
Towns in boroughs outside London—Virginia Water, Beaconsfield, Cobham, Keston, Esher, Chalfont St Giles and Richmond and so on in Surrey or Buckinghamshire —have similar valuable property, yet, because the householders of these properties are paying council tax on the 1991 valuation, and although the band D levy is therefore low because of the stretch of properties above band D, householders in London properties on bands A, B and C are still effectively subsidising the very wealthy.
When Wales introduced a band I in 2004 as part of a full revaluation, about a third of the band H properties moved up into band I. In my own authority, Norwich, 20 of our 67 band H properties might move up into a new higher band. In a Written Question I asked the Minister what additional revenues this might generate for local government overall, thus affecting the government equalisation grants, but I was told that that could not be calculated. I have done a back-of-the-envelope calculation myself, but the Minister argued that he could not calculate it because it would require a full revaluation. I agree that that would be desirable but is it essential? I doubt it. In England, there are 132,000 band H properties. If the Wales percentages held and a third moved up into band I, that would be 45,000 properties paying an additional two-ninths-worth above and beyond their current levy—that is, bringing in something like £1.5 million.
Obviously for most local authorities in the north and the Midlands, the income gain would be very modest, but for the rest of the country, including the eastern region, the south-west and the south-east, as well as London, it could be a useful increment at a time when we are talking about removing discounts. In certain London boroughs, the income generated could be fairly substantial and would either allow those local authorities to reduce their band D levy to the gain of lower bands and poorer claimants or allow government to redistribute financial support to other, more needy areas of the country.
As I said, the DCLG said that it could not calculate the revenues that would result because such a move would require a wholesale revaluation. I challenge that. Having talked to various valuers, including the noble Earl, Lord Lytton, who I am very sorry is not in his place, it does not seem to me that it is essential, although it would be desirable.
In a full revaluation, the ratios below and above band D—the fulcrum point in the system, in my view—should also be considered. I remind noble Lords that if band D is one and band C is eight-ninths of it, band B is seven-ninths of it and band A six-ninths of it—a one-ninth drop for every band below the fulcrum point. Above band D, band E is 11-ninths—two-ninths above—band F 13-ninths, band G 15-ninths, and band H is two. In other words, the ratio of bands A, B and C to band D is one-ninth; above band D it is two-ninths. Of course, the higher bands cover a wider span of property values but that still means that larger properties in higher bands have a more generous ratio to band D than smaller ones in lower bands. In other words, a householder in a band H property will pay a maximum of three times the council tax of someone in a band A property—three times the amount covers the full range in the council tax banding system—although the property may be worth 10 times as much. I believe that that is unfair.
The second point concerns income, and I hope that my noble friend from Wigan will wish to come in on this. In the north-east, half the properties are in band A and only 3% or 4% are in bands F and G. Band H is statistically insignificant in consequence. Therefore, the band D levy is usually well above the English average of £1,420 a year. In London, almost the reverse is true. Perhaps 3% or 4% of properties are in band A and nearly 20% are in bands F, G and H. Consequently, at April 2012 in Westminster and Wandsworth the band D level—the fulcrum point—is £685 a year. Hartlepool’s band D stands at £1,671—that is, 250% higher. Although the property values at the top have not grown evenly but in some cases have risen exponentially, they are still regarded for council tax purposes as though the increase in the capital value had never occurred. The north and the Midlands have on average between 1,400 and 6,500 band H properties in their regions. The east has 12,500, the south-east has 34,000 and London has 59,000. In London, of course, the disparities are even more striking. I have quoted figures from the Times in evidence.
Every year local valuers value new property. Since 2002 in England alone, between 120,000 and 170,000 properties have been completed each year. Anything between those two figures can come on to the market depending on the state of housebuilding. Every year on resale, when the local authority has sent statutory information notices about alterations that have received planning consent, and so on, to the valuation office, existing houses are revalued at the point of sale. Substantial works may push them up a band. Other properties may be split into flats, or two flats may become one property. A shop may become a house or a new road may be built nearby. There are 195,000 such valuations on average a year because of alterations. Some go up and some go down. It means that valuers in England deal with revaluing about 300,000 to 400,000 new valuations in England every year both on new properties and alterations to existing properties.
This is done all the time, so it would not be very laborious to visit the much smaller number of band H properties in addition to see whether they should be placed in the higher band I. The total number of band H properties is pretty much the same as the yearly fluctuations now in the valuation loads that valuation officers have to respond to. Spread over, say, three years the workload would be relatively modest. Having talked to several valuers, I am assured that it would be perfectly straightforward to do this, given the current fluctuations in the workload. It would allow at the very least a reduction in the relative levy for the lower band properties within any billing and precepting authority. If it were significant in some London boroughs, as I think it would be, it could generate resources for redistribution elsewhere in London to the poorer boroughs or beyond. Of course I would much prefer a full revaluation, but, until that happy day, discussion about a new higher-based band I would produce income and increase the fairness of what has become a regressive banding system. I beg to move.
It is worth noting here that Labour’s 2005 council tax revaluation and rebanding in Wales, to which the noble Baroness referred, which introduced a new council tax band I, took three years to implement from the legislation being introduced in November 2002 to the first tax bills being issued in March 2005. Four times as many properties moved up one or more bands as moved down, and many jumped up several bands, meaning large tax increases. The technical reforms that the Government are introducing through the Bill will provide authorities with additional flexibility on charges on empty homes and second homes. These will help to ensure that everyone makes a fair contribution to local services.
I shall deal with the question of revaluation of one band, which I think that the noble Baroness was suggesting. Whatever anyone has said to her, it is almost impossible to assess one group of properties across hundreds of authorities in England. That would be complex and difficult. It was hard enough when it was done originally, but it would be very difficult to get that done in a way that was fair and comparable—not regional banding, which I think the noble Lord, Lord Smith, was veering towards. Anyway, it would require major consultation before it was undertaken. The rigorous assessment of one group of properties could call into question the validity of those in all other bands.
The noble Baroness is very beguiling, as I know from numerous occasions, and I admire her industry in going through the research to find the number of properties, but it is really not easy or something that we have any commitment to do. As for what the noble Baroness, Lady Meacher, said, it would take so long that it would have no effect on what she is talking about at the moment.
We cannot support this. It is not supported from the opposition Front Bench and I do not think that it will find favour anywhere else in the country, especially if it involved a further equalisation scheme, as the noble Lord, Lord Smith, suggested that it would. It has too many ramifications, and I am therefore unable to accept the amendment.
Amendment 93B withdrawn.
Clause 14 agreed.
94: After Clause 14, insert the following new Clause—
“Enforcement of council tax
Councils shall include procedures in their contracts with bailiff companies covering the enforcement of council tax which allows for the return of a warrant by the bailiffs to the councils for reconsideration when—(a) there is a mistake in the decision to issue the warrant in the first place;(b) the warrant was imposed by the local authority before the relevant facts of the case were known;(c) the circumstances of the defaulter have changed since the warrant was issued by the local authority;(d) the defaulter is experiencing financial hardship and is unable to pay the tax; and(e) the circumstances of the defaulter fall within the circumstances of “vulnerable situations” on page 9 of the National Standards for Enforcement Agents issued by the Ministry of Justice in 2012.”
The amendment was drafted by the Reverend Paul Nicholson, and I am very pleased that he is here today. I think that we owe him a debt of gratitude for all the work that he does with these incredibly financially pressed households. The amendment sets out the circumstances which would give rise to a warrant being returned to a council. They include, for example, where,
“the warrant was imposed by the local authority before the relevant facts … were known”.
Can noble Lords imagine a warrant being issued and somebody’s furniture being taken away when the authority simply did not have the information it needed? A further possibility is, as I have said, that,
“the defaulter is experiencing financial hardship”,
and simply does not have the wherewithal to pay the debt. Three other relevant circumstances are referred to in the amendment and I am going to mention them because it seems to me so obvious that warrants should be returned in these circumstances. For example, if,
“there is a mistake in the decision to issue the warrant in the first place”,
how on earth can that warrant not be returned to the local authority? Another is that,
“the circumstances of the defaulter have changed since the warrant was issued”.
Perhaps the person became disabled or had to bring home a disabled baby with all sorts of costs involved. The fifth example in the amendment is if,
“the circumstances of the defaulter fall within the circumstances of ‘vulnerable situations’ on page 9 of the National Standards for Enforcement Agents issued by the Ministry of Justice in 2012”.
I shall come back to that particular point—sideways perhaps—in due course.
I want to focus for a minute on the financial hardship grounds for the return of a warrant. The Zacchaeus 2000 Trust has provided a very helpful definition of financial hardship, which I think the noble and right reverend Lord, Lord Harries, will refer to in order to have the definition on the record of the House. In my view, laws, regulations and guidance issued by any government department should take account of that definition. Our position is that the Wednesbury principles must be applied in connection with executions of warrants in relation to council tax and of course in relation to these other departments too. As your Lordships know, the Wednesbury principles require that a decision-making body must act reasonably. I do not think that any of us can disagree with that. If a local authority issues a warrant to seize the assets of a household which is in financial hardship and which cannot pay a debt, that local authority will be acting in a Wednesbury unreasonable way or contrary to the Wednesbury principles.
These matters have been raised with the DWP and the MoJ, and Ministers have taken on board their importance. Perhaps I may quote the Minister, the noble Lord, Lord Freud, who at the Report stage of the Welfare Reform Bill on 25 January endorsed the importance of jobcentre decision-makers getting the facts of financial hardship right. He concluded:
“Decision-makers clearly have a general duty under public law to make decisions in accordance with the Wednesbury principles”.—[Official Report, 25/1/12; col. 1062.]
All we are doing here is to try to get these principles spread across the departments involved in these very sensitive matters.
Peers, supported by the Reverend Paul Nicholson and the Zacchaeus 2000 Trust, raised the importance of the Wednesbury principles during the passage of the Legal Aid, Sentencing and Punishment of Offenders Bill. Again, the Government accepted the principle of the relevant amendment, enabling bailiffs to return to the courts for reconsideration warrants for disproportionate fines of people in financial hardship. The Government tabled their own amendment in response to the original amendment inspired by the Reverend Paul Nicholson, and on Report on the LASPO Bill the noble Baroness, Lady Northover, said:
“In practice … when bailiffs come across hardship as defined in the guidance they should not execute the warrant”,
but should return it to the court. She also referred to issues reiterated in Amendment 94 to this Bill. For example, she said:
“If … the fine was imposed because the full facts were not made clear to the court, or they had changed, the provision in the Bill could apply”.—[Official Report, 20/3/12; col. 800.].
Again, all the items listed in our amendment are very important. If they are not applied, that suggests that a decision is likely to be Wednesbury unreasonable. I hope that your Lordships will focus, in particular, on the paragraph referring to financial hardship, although to say that one is more important than the other is, frankly, somewhat difficult to do.
As someone who has worked in mental health services for about a quarter of a century, I want to mention one case which illustrates the appalling distress that can be caused by debts which are absolutely not the fault of the claimant and the mental health consequences that can ensue.
A lone father, who I will refer to as Jo, aged 40, reared three boys while receiving unemployment benefit. He had no job for 20 years and was desperate to work. Finally, he got a job for £10 an hour. At first, the council said that he could keep his housing and council tax benefits, but then it decided that it had made a mistake and debited his rent and council tax accounts by £2,000. He is threatened with eviction and the bailiffs are sent in. To make matters worse, Her Majesty’s Revenue and Customs gives Jo £2,000 in tax credits and then realises that it has made a mistake and seeks the return of the payment. Jo then has a nervous breakdown. Who would not? I would. He is committed to hospital for three weeks. I worked out that that must cost about £6,600. He loses his job and is back on benefits. How many more thousands of pounds does that cost? Jo slips into overdraft and the bank is after him for immediate payment of £854. All those sums must seem like cloud-cuckoo-land to someone on such a tiny income.
Thankfully, Jo had the support of the Zacchaeus Trust and is now back on his feet, but anyone who did not have a huge amount of support would just go in and out of hospital and be in our mental health services for many years. The children would be in care. The costs are unimaginable. If I may say so, the noble Baroness really needs to take this issue away and think about it. Also, the authorities will have breached the Wednesbury principles and be open to judicial review.
Our amendment, along the same principles accepted by the DWP and the MoJ, is intended to ensure a common understanding of financial hardship in the three departments creating the debts. We also want a common enforcement procedure for council tax arrears, fines, court and bailiff costs and debts owed to the DWP which will take account of the separate onslaught of the three departments on vulnerable individuals attempting to survive against the leviathan. The Government should reflect on the unrest caused by the poll tax in the 1990s. We are in similarly poverty-stricken times today, and we need to be very careful not to repeat the same mistakes made then.
I end with a quotation from the guidance on National Standards for Enforcement Agents, published by the Lord Chancellor’s Department in April 2002:
“Enforcement agents/agencies and creditors must recognise that they each have a role in ensuring that the vulnerable and socially excluded are protected and that the recovery process includes procedures agreed between the agent/agency and creditor about how such situations should be dealt with”.
Similar guidance is needed across the three departments involved in debt collection. I sincerely hope that the Minister will accept the principles of the amendment and, ideally, will bring back a government amendment reflecting the key points of this one at Report. I beg to move.
The current enforcement regime for council tax does very little to help. Of the 24 million or so council tax accounts raised by local authorities in 2010-11, more than 6%—some 1.4 million—were passed on to bailiffs for enforcement. In some cases, this enforcement is done in-house by bailiffs employed directly, but generally cases are passed by local authorities to private bailiff firms which make their income mainly from the fees they are able to charge households that have fallen behind with council tax. In some cases, bailiff fees can substantially increase the size of the debt—a double whammy for struggling households.
We quite understand that we need a system of council tax enforcement that is effective, but it must also be fair. Problems with the practices of private bailiff firms collecting council tax and other debts have been a matter of public concern for some time. In 2000, Citizens Advice published a report highlighting the often serious problems that CAB clients experience with the conduct of private bailiff firms. In 2003 the then Government published a White Paper on effective civil enforcement that also recognised the problems with private bailiffs and highlighted,
“overwhelming support for increased regulation”,
of the private bailiff sector and concluded that,
“the indiscriminate or inappropriate use of distress is unacceptable: many debtors are in vulnerable situations and some simply cannot afford to pay”.
Sadly, that remains the position today. We, like other debt advice charities, continue to see cases where people in severe financial difficulties are suffering additional stress and hardship as a result of unfair and aggressive and sometimes illegal practices by private bailiffs. What has happened to the coalition agreement commitment to,
“provide more protection against aggressive bailiffs”?
The recent Ministry of Justice consultation, Transforming Bailiff Action, addressed this issue, but it is far from clear that the policy proposals developed by the Ministry of Justice will do the job that the Government need to do here. First, the Government reissued the voluntary National Standards for Enforcement Agents in January. In doing so, the Minister, Jonathan Djanogly, set out his determination to,
“bring an end to the rogue behaviour that can make people’s lives a misery”.
That statement of intent is welcome and the National Standards for Enforcement Agents document contains some important points, not least the need for bailiffs to go back to the creditor where the debtor appears to be in one of the vulnerable situations mentioned in this amendment. These standards are not new; they were originally published in 2002 and the reissued version adds no new protections. It is clear that these voluntary standards have not been effective in preventing bad practice by bailiffs over the past 10 years, so there is no reason to believe that the reissued version will do any better now.
The second pillar rests on implementing the reform and consolidation of existing bailiff law set out in the Tribunals, Courts and Enforcement Act 2007. The recent Ministry of Justice consultation included draft regulations that were on the whole welcomed by debt advice charities as a step forward. This included an important statement that the Government would not be seeking to further extend powers of forcible entry at this time. The regulations also provide that bailiffs should not enter premises or take control of goods where only a child or vulnerable person is present. The draft regulations would certainly help here, provided that the definition of vulnerable is not so narrow as to vitiate the whole initiative. If the Government would include financial vulnerability in the definition of vulnerable persons, it would offer more support and protection to people facing hardship, serious debt problems or both.
Thirdly, there is the creation of a new fee structure that would apply to council tax and other debts enforced by private bailiffs. It is argued that the current fee structure is too complex and provides unscrupulous bailiffs with the opportunity to charge excessive and illegal fees. The experience of some of our clients certainly confirms this as a problem. While the new fee structure will certainly be clearer it does not fully remove incentives for bailiffs to escalate enforcement and may actually result in some vulnerable households facing higher bailiff fees for council tax debt in some circumstances. The missing part of this jigsaw is oversight. There is no single body tasked and empowered to ensure that both individual firms and bailiffs behave in the right way across the piece.
The fourth pillar needing reform is the current certification system for private bailiffs. This is a court-based licensing system that is supposed to provide the oversight of bailiffs who enforce council tax and other debts. However, the Government’s recognition of ongoing conduct issues already highlights how the existing certification system has failed to get to grips with long-standing problems in this sector.
The Government have not yet set out detailed plans for these reforms and there is a genuine concern that tinkering with a failed system will only result in further failures. Indeed, in this respect, oversight of the private bailiff sector is a very long way indeed behind the closely related activity of debt collection. Debt collection firms acting to recover consumer credit agreements are currently required to hold a consumer credit licence issued by the Office of Fair Trading. Indeed, the Financial Services Bill currently passing through your Lordships’ House proposes to strengthen consumer protection by bringing debt collection into the FiSMA regime. Private bailiffs have more power than debt collectors and bad practice by bailiffs can cause more serious detriment to financially vulnerable households. The Government are not currently addressing the need to strengthen oversight. This seems a glaring inconsistency and raises questions as to whether the level of protection being proposed will be adequate.
So, in essence, our concern is that the Government’s current proposals will not deal adequately with the three fundamental issues that underpin problems with the private bailiff sector. These are: that the balance of incentives is not yet sufficiently weighted to promote good behaviour and sensible decisions on the ground; that the lack of independent oversight allows too much space for bad practice to continue and puts too much emphasis on consumer complaints as a main driver in change; and that there is no procedure available to ensure that people in financial difficulties can stop enforcement action by agreeing affordable and sustainable repayment terms, a process which, after all, is used routinely by debt charities in all other sectors and which works.
The last point is, perhaps, crucial to understanding the problems that people in financial difficulties have with private bailiffs collecting council tax and other debts. Consider, by way of contrast, the situation in which a person with a county court judgment faces bailiff action to enforce that debt. They can make a relatively straightforward application to the county court to have their warrant suspended on payment terms or stayed where they are unable to make any payment at the discretion of the court. Financially vulnerable people have no such right to ask for the protection of the court when they are facing bailiff action in respect of council tax debts. Citizens Advice has reported a number of examples of progressive-minded councils which work with debt advice agencies and take accounts back from bailiffs when it is clearly right to do so. There is nothing in the current law or the package of reforms proposed by the MoJ that can compel a local authority to stop bailiff action in these circumstances.
I urge the Government to look at the package of bailiff reforms again and consider how debt advice can be placed at the centre as a key component of the protection that should be available for financially vulnerable households. It is time to make a step change in the help and support available for people who struggle with unmanageable debt. This is why the amendment tabled by the noble Baroness, Lady Meacher, is so important. It addresses a key problem in a very straightforward way. The amendment will not deal with all the problems with private bailiffs, but it will make a difference. On that basis I strongly urge the Government to consider accepting it.
As the noble Lord, Lord Best, said, local authorities are in a dilemma because it is up to us to maximise our collections. If we do not, the costs of that are not neutral: they go on to services. Many of the services that local authorities provide are needed by the poorest members of the community, so in that sense we have a dilemma. We are pursuing them for money that they cannot easily pay and, at the same time, reducing services that they greatly need.
Two really important things come out of this to me, as a local councillor. First, councils need to get the assessments accurate first time. Maybe we should make it a requirement of the Bill to ensure that it is done properly, because clearly it can have terrible consequences on people if it is wrong. The second is to give proper welfare advice. It is incumbent on councils to fund welfare advice. One of the services that I have kept going is welfare advice because it is needed more and more. We have kept the funding to our local agency and it is doing a very good job. We are also funding more credit unions to help people get out of the financial mess that the noble and right reverend Lord, Lord Harries, mentioned. To avoid the consequences of the poll tax era and the subsequent rejection of the legislation, we need to consider this kind of amendment very seriously.
During Second Reading, I expressed concern about the cumulative impact not just of this legislation but of all the measures that have been taking place through welfare reform and other legislation, as well as what is happening as a result of the economic crisis generally. I wonder what authoritative work is being done, whether inside or outside government, to try to assess what is going to be—I say “going to be” because the worst is yet to come—the cumulative impact on the poorer members of our society. This measure, we know, will add to that impact.
One of the many important points to have been made is that people who find themselves in such a position should have early and easy access to, and should be encouraged to access, the best debt advice. In my experience, local authorities will be only too keen to encourage that and to try to support people and families who find themselves in that position—certainly, to a degree, by arranging payments by instalment or by whatever means is possible over whatever period is appropriate. However, we also know from experience of debt collection that leaving the matter only makes it worse. Early action—by which I mean early supportive and sympathetic action—is absolutely essential in effective debt collection, not just for the local authority, which has its fiduciary duty, but perhaps even more importantly for those who incur the debts.
We all accept that local authorities make mistakes, for whatever reason. Of course there will be instances, alluded to in the amendment, when there is no debt at all because a mistake has been made. I want to believe that what is set out in the amendment is what happens already with the vast majority of—I hope, all—local authorities, but I am sure that the noble Baroness who moved the amendment knows of many occasions when that has not occurred. However, this best practice should certainly be adopted by all local authorities. Whether or not it is set out in legislation, it is certainly the practice that should be followed in the best interests not only of the local authorities but of those who find themselves in financial difficulties, particularly through no fault of their own and more particularly when no debt has been incurred because a mistake has been made within the local authority. Therefore, I very much welcome the amendment and the debate that it has enabled us to have.
The responses to Transforming Bailiff Action are being considered and agreed, and a Whitehall approach will come forward in due course. The noble Baroness’s amendment refers also to the National Standards for Enforcement Agents document issued by the Ministry of Justice, and particularly page 9. The noble Lord, Lord Stevenson, also referred to it. The document provides useful advice on handling vulnerable cases; although I recognise that it is not legally binding, we would expect the enforcement services and creditors in taking any form of action to adhere to it when undertaking enforcement visits. However, I have heard the general concern that has been expressed about this and will make sure that that particular concern is put into the discussions on the way forward.
My department and I are very clear that there is something behind this amendment. I hear very clearly what has been said. The debate today will be passed to the Ministry of Justice as well, so that it knows what has been said. I thank everyone who has spoken from their hearts as well as on practical issues and ask the noble Baroness to withdraw her amendment on the basis that it is not appropriate in this legislation.
Amendment 94 withdrawn.
Amendments 95 and 96 not moved.
Clause 15: Power for HMRC to supply information for purposes of council tax
96ZA: Clause 15, page 17, line 7, at end insert—
“( ) In Schedule 11 to the LGFA 1988, in paragraph 8(3)(ea) (regulations about procedure before tribunals)—
(a) for sub-paragraph (iv) substitute—“(iv) paragraph 15A or 15B of Schedule 2 to the 1992 Act or regulations under that Schedule;”,(b) omit the “or” following that sub-paragraph, and(c) after “1996” insert “or of information supplied under section 131 of the Welfare Reform Act 2012 for purposes relating to council tax;”.”
Amendment 96ZA agreed.
Clause 15, as amended, agreed.
96A: After Clause 15, insert the following new Clause—
“Power for HMRC to supply information for purposes of rates in Northern Ireland
(1) A Revenue and Customs official may supply information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs to a qualifying person for prescribed purposes relating to rates.
(2) The following are qualifying persons—
(a) the Department of Finance and Personnel in Northern Ireland (“DFP”);(b) the Northern Ireland Housing Executive (“NIHE”);(c) a person authorised to exercise any function of DFP or NIHE relating to rates;(d) a person providing services to DFP or NIHE relating to rates.(3) Information supplied under this section may be used for another prescribed purpose relating to rates.
(4) Information supplied under this section may be supplied to another qualifying person for a prescribed purpose relating to rates (whether or not that is a purpose for which it was supplied).
(5) A person to whom subsection (6) applies is guilty of an offence if the person discloses without lawful authority any information—
(a) which comes to the person by virtue of this section, and(b) which relates to a particular person.(6) This subsection applies to—
(a) a qualifying person other than DFP;(b) a person who is or has been a director, member of the committee of management, manager, secretary or other similar officer of a qualifying person;(c) a person who is or has been an employee of a qualifying person.(7) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine, or both;(b) on summary conviction, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum, or both. (8) It is not an offence under this section—
(a) to disclose information in the form of a summary or collection of information so framed as not to enable information relating to any particular person to be identified from it;(b) to disclose information which has previously been disclosed to the public with lawful authority.(9) It is a defence for a person (“D”) charged with an offence under this section to prove that at the time of the alleged offence—
(a) D believed that D was making the disclosure in question with lawful authority and had no reasonable cause to believe otherwise, or(b) D believed that the information in question had previously been disclosed to the public with lawful authority and had no reasonable cause to believe otherwise.(10) For the purposes of this section, “lawful authority” has the meaning given by section 117 of the Social Security Administration (Northern Ireland) Act 1992.
(11) In this section—
“Revenue and Customs official”, “the Revenue and Customs” and “function of the Revenue and Customs” have the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005;
“rates” has the same meaning as in the Rates (Northern Ireland) Order 1977 (S.I. 1977/2157 (N.I.28));
“prescribed” means prescribed by regulations made by DFP.
(12) Regulations under this section must not be made except with the consent of the Commissioners for Her Majesty’s Revenue and Customs.
(13) The power to make regulations under this section is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I.12)).
(14) Regulations under this section are to be the subject to negative resolution (within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954).
(15) This section comes into force at the end of the period of 2 months beginning with the day on which this Act is passed.”
Proposed new subsections (3) and (4) in Amendment 96A will allow the information supplied to be used for another prescribed purpose relating to rates and for the information to be supplied to another qualifying person for a purpose relating to rates, whether or not that purpose was the one for which it was supplied. This could involve the sharing of information between the two organisations that are responsible for administering rates support in Northern Ireland. The provisions would also enable those organisations to use the information for the purposes of improving awareness and take up of rate support more generally. Without this legal gateway, Her Majesty’s Revenue and Customs will not be able to provide the information needed for the provision of rate relief. This would increase both complexity for claimants and administrative costs.
It is of course important that this information is treated with care. That is why I propose new subsections (5) and (6) in Amendment 96A to create offences in relation to disclosing Her Majesty’s Revenue and Customs information provided to Department of Finance and Personnel in Northern Ireland and the Northern Ireland Housing Executive without lawful authority. These provide that someone will be guilty of an offence if they disclose without lawful authority any information that relates to a particular person which they obtain from Her Majesty’s Revenue and Customs.
Proposed new subsections (7), (8) and (9) in Amendment 96A specify that a person guilty of such an offence is liable to imprisonment of up to two years or a fine, or both. It makes it clear, however, that disclosing information in the form of an anonymised summary or collection of information, or information that has previously been legitimately disclosed, is not an offence. These offences, and penalties, are similar to those in Section 132 of the Welfare Reform Act 2012 and Clause 15D of the Local Government Finance Bill.
Proposed new subsection (10) in Amendment 96A provides that the definition of lawful authority is to have the same meaning given by Section 117 of the Social Security Administration (Northern Ireland) Act 1992. This is the same definition as in Section 123 of the Social Security Administration Act 1992, which is used in this Bill and in the Welfare Reform Act 2012.
These amendments provide Her Majesty’s Revenue and Customs and the public with an assurance that information supplied to the Department for Finance and Personnel in Northern Ireland and the Northern Ireland Housing Executive for administering rates, which can be personal and private, will be treated in the strictest of confidence and will be disclosed to others only in a limited range of circumstances and for purposes relating to rates.
Proposed new subsection (11) in Amendment 96A allows, in this section, any references to,
“‘Revenue and Customs official’, ‘the Revenue and Customs’ and ‘function of the Revenue and Customs’ have the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005 … ‘rates’ has the same meaning as in the Rates (Northern Ireland) Order 1977”,
and “prescribed” to mean prescribed by regulations made by the Department for Finance and Personnel in Northern Ireland. I have only another six sections to go.
Proposed new subsections (12), (13) and (14) in Amendment 96A require that these regulations can be made only with the consent of the commissioners for Her Majesty’s Revenue and Customs. Regulations under this section may be made in accordance with the Statutory Rules (Northern Ireland) Order 1979. These regulations are subject to negative resolution.
Proposed new subsection (15) in Amendment 96A provides that this section will come into force at the end of the period of two months—which is about when I will finish talking about it—beginning with the day on which this Act is passed. Amendments 100 to 103 make consequential amendments to the Bill as a result of this new clause including amendments to Clause 19 to provide that this new clause and Clause 17 extend to Northern Ireland.
Finally, Amendments 98 and 99 amend Clause 17 to provide that any order made under Clause 17(2) making consequential changes to Acts of the Scottish Parliament, Acts or Measures of the National Assembly for Wales or Northern Ireland legislation will be subject to affirmative resolution procedure.
With these explanations, I await the noble Lord’s comments.
Amendment 96A agreed.
97: Before Clause 16, insert the following new Clause—
“Grants paid under section 70 of the Welfare Reform Act 2012
(1) Any grant paid to local authorities under section 70 of the Welfare Reform Act 2012 (social fund) shall be expended by the local authority only for said purposes.
(2) Any such grants will be made under the guidance of the Secretary of State with regard to the application of any “local connection rules” including so that any such rule does not apply to—
(a) people who have fled domestic violence; (b) young people who have left local authority care;(c) people who are homeless, or who have been homeless within the last 12 months;(d) people who have left institutional or residential care, including a hospital, prison or young offenders’ institution.”
Amendment 97 withdrawn.
Clause 16 agreed.
Clause 17: Power to make transitional, consequential etc provision
Amendments 98 and 99
98: Clause 17, page 17, line 27, leave out “an Act” and insert “any of the following”
99: Clause 17, page 17, line 28, at end insert “—
( ) an Act of Parliament;( ) an Act of the Scottish Parliament;( ) an Act or Measure of the National Assembly for Wales;( ) Northern Ireland legislation as defined in section 24 of the Interpretation Act 1978.”
Amendments 98 and 99 agreed.
Clause 17, as amended, agreed.
Clause 18 agreed.
Clause 19: Extent and short title
Amendments 100 to 102
100: Clause 19, page 18, line 2, leave out “subsection (2)” and insert “subsections (2) and (2A)”
101: Clause 19, page 18, line 3, leave out “Sections 15 and 17 extend” and insert “Section 15 extends”
102: Clause 19, page 18, line 3, at end insert—
“(2A) Sections (Power for HMRC to supply information for purposes of rates in Northern Ireland) and 17 extend to England and Wales, Scotland and Northern Ireland.”
Amendments 100 to 102 agreed.
Clause 19, as amended, agreed.
In the Title
103: In the Title, line 2, after “tax;” insert “to make provision about the supply of information for purposes relating to rates in Northern Ireland;”
Amendment 103 agreed.
Bill reported with amendments.
Committee adjourned at 6.14 pm.