Skip to main content

Council Tax

Volume 747: debated on Tuesday 9 July 2013


Asked By

To ask Her Majesty’s Government what assessment they have made of the impact on council tax arrears of the reduction in council tax benefit and the localisation of support for those in need.

My Lords, the design of local schemes and the assessment of their impact is the responsibility of local authorities. It is for authorities to design local council tax support schemes that will minimise the possibility of anyone falling into arrears on their council tax. Localisation gives local authorities the freedom to choose how to manage the funding reduction and they are best placed to understand their local priorities and the needs of their vulnerable residents. This reform enables them to take these local factors into account when deciding on levels of support.

I thank the Minister for that reply. Does she recognise the additional costs being borne by local authorities in seeking to collect council taxes from some of the lowest income and poorest communities in their areas for the very first time? These costs include setting the support scheme, counselling and advising, seeking to collect and even, in extremis, taking people to court. Would the Minister be willing to review, with the local authorities, what those costs actually are in the coming months so that there is agreement on the costs being borne by them in seeking to introduce that policy in their communities?

My Lords, local authorities were well aware of what the council tax support was going to be. They were also well aware that their schemes should take into account any additional costs which came about as a result of the council tax support scheme. As with everything else to do with local authorities, we will keep this under review but it would not qualify for any consideration under new burdens because council tax is always something that the council has had to deal with.

My Lords, does the Minister agree that one way of helping those on low incomes would be to increase the number of council tax bands at the top end, so that those who are wealthier pay more?

My Lords, my department and the Government have made it clear that they have no intention of rebanding council tax.

My Lords, because the Government have cut the funding for council tax benefit for local authorities by 10%, local authorities are having to charge people on benefit who have never paid council tax before. As a result, chief executives are estimating that up to 75% of those new payers will not pay. As it costs £10 to collect £2.50 a week, we are going to create a culture of non-compliance just like there was with the poll tax. Will the Minister please think again? It is a very foolish policy indeed.

My Lords, the matter is implemented now and the noble Baroness will be as aware as I am that the councils were all offered a transitional grant at the outset if they set a council tax support scheme which was not more than 8.5% from zero. A number of local authorities have done that. Nearly 200 took advantage of that transitional grant and if others had they would not be in the position which I think the noble Baroness is trying to describe.

My Lords, is the noble Baroness saying that the Government do not know whether or not council tax arrears have gone up? If she does know, will she tell the House, and if they have gone up, will she say what steps the Government will take to ensure that councils can get them down?

My Lords, council tax arrears for 2012-13 have gone down. The new support scheme that started in April 2013 has barely had an opportunity to get off the ground but clearly this is something that will be kept under review. However, as I said, if local authorities had done what we gave them the opportunity to do and taken the grant, they would not have to ask people to pay council tax that they could not perhaps afford.

What is the position if you are in arrears but have a spare room? What is being done by councils to encourage such people to let their spare room? Our council is setting up a way for anyone to discover where those rooms are. I keep meeting people who are being put out of where they are and are dying to rent a room but cannot find any of these council people with a spare room which I would have thought would suit both parties to agree that they can occupy.

My Lords, if the noble Baroness is referring to the extra rooms associated with the welfare reforms, I am sure there will be opportunities for local people who are affected by those to see whether they can take on a lodger as long as their subletting arrangements are sufficient for the local council.

My Lords, in light of the fact that 50% of councils have not taken up the transitional grant, will the Government apply the unallocated fund that they originally created to extend the transitional period to perhaps two years for those authorities which have taken up the offer? In that way, they could mitigate the problems that have been referred to by other noble Lords today.

My Lords, it was made clear from the outset that the transitional grant would be for one year and one year only. Therefore, I do not anticipate that the question asked by the noble Lord will be answered in a way that he would like.

My Lords, people are required to pay their council tax and I am sure that local authorities will make certain that they collect any arrears that are owed to them as necessary.

My Lords, would the Minister care to comment on the complaint from local authorities that the reductions are disproportionately heavy in areas such as the north of England and that it was therefore much harder for them to qualify for the transitional grant? Why do the Government keep favouring the south?

My Lords, that is not evident. Of course, local authorities in the north sometimes have more to deal with than those in the south but I do not think that there is any evidence that there is an overweighting. Local authorities, irrespective of where they are in the country, were perfectly able to adjust their schemes for council tax support to take account of the transitional relief had they wished to do so.