Local Government Finance Bill Debate
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Earl of Lytton
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Local Government Finance Bill
Earl of Lytton Excerpts(11 years, 10 months ago)
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The Earl of Lytton
“Non-domestic rating, valuation, appeals, etc.
After the coming into force of this Act, any question as to the person or body liable to a charge to council tax or business rates shall be referred to the Valuation Tribunal and may be determined prior to any hearing by agreement with either the Valuation Office Agency or Billing Authority (or both) or (as the case may be) determined as part of any appeal into the level of banding or assessment as if it were an appeal against a non-domestic assessment.”
The Earl of Lytton
My Lords, we come here to a harlequin selection of amendments, which all primarily concern making the rating system—the tax base and the appeal system—better managed and organised. I can certainly relate to the point that was introduced to our deliberations by the amendment of the noble Lord, Lord Jenkin. Billing authorities should have a stake in and an involvement with the rating appeal system. This is the counterpoint to the fact that they are, by any standards, taking on additional duties and obligations in the collection of business rates.
As I have said, valuation is poorly managed and underresourced, which has implications for the durability of local government finance in terms of budgets and predictability. As I have mentioned, the computer systems need updating and unifying, although that point is not covered by an amendment at this juncture. As certain work migrates from the social services appeal tribunal to the valuation tribunal, there will be additional loads to prevent what is coming in from them and the existing backlog overloading the system.
In prefacing the individual amendments, I say that the Valuation Tribunal Service business plan does not adequately address the backlog, which is not entirely the Valuation Tribunal Service’s fault. The parties—there are always two—are frequently not ready to engage in the appeal. Part of the problem is the Valuation Office Agency’s lack of capacity to deal with the matter at that stage. If both parties could be persuaded to get their ducks in a row—for want of a better term—it would improve the whole situation a great deal. The current situation already throws up the problem of a large number of appeals. It is unfair on billing authorities, interferes with predictability and is unfair on ratepayers generally in this context. It will cause a rise in tensions and growing problems if it is not addressed.
There are abuses by the private sector. A number of firms make blanket appeals, which also clog up the system. I impress on the Committee that I do not see these amendments as either pro-business rate payer or pro-government agency or tribunal matters. It is just a question of getting, I hope, a dispassionate view on making the system better.
Some bad practices have crept in in response to those abuses by the private sector. I still think that the level of struck-out cases is of concern. I hope that it is not a caseload management tool as opposed to a realistic attempt to ensure a reasonable level of procedural compliance. This is about confidence and the objectivity with which rating lists and appeal systems are administered by both the Valuation Office Agency and the Valuation Tribunal Service. I regard this very much as a two-way street.
Noble Lords
The Earl of Lytton
My Lords, I aggregated these amendments together to try to deal with them as quickly as I could. They cover a number of different areas but I felt that it was right not to seek to group them individually or in smaller groups for the very purpose of discharging that obligation. While understanding what the noble Earl said and standing here chastised as appropriate, I am nearly at the end of what I wanted to say.
This particular amendment seeks to restore objectivity and professionalism—not that these individuals are lacking in professionalism but to make sure that the valuation body commands respect and continues to do so in future. That is quite an important point of principle. I have dealt with the question of falls in value following the antecedent valuation date, which just leaves me to deal with Amendments 70 and 95.
Amendment 70 relates to the way in which the Valuation Office Agency appears to be managing the appeals system. There seems to be an inclination to declare incoming proposals for alteration invalid, but not necessarily straight away. It is important that the validity of an appeal is decided at an early stage, in the same way as if a planning application were submitted that had to be decided upon at that juncture. It should not thereafter be possible for the validity to be impugned. Amendment 95 is linked to Amendment 70 and could be an alternative to it. I am going to sit down. I beg to move.
Lord True
My Lords, the noble Earl has raised a number of issues and I know that my noble friend will respond. That will be important because as business rates take the burden over the coming years these issues will become matters of considerable controversy and potentially democratic controversy. Knowing the noble Earl’s expertise and the courtesy of my noble friend, I am sure that these matters will be discussed further over this summer. I hope that in her response she will not necessarily rule out the idea of at least exploring these proposals. It may be that the Government have the necessary powers that the noble Earl is referring to in Amendment 96 to make adjustments in the system. But if that is not the case, it is a matter that we ought to consider further because this area will bear further examination. Indeed, I referred to an incident in my borough, which demonstrated the problems that can arise.
I am not going to tempt the noble Earl to his feet immediately, but perhaps when he replies to the Minister’s response he will say how he envisages in Amendment 70ZC this concept of a decline in market value being a reason, rather than a proximate event, to occasion appeals and change. I am not absolutely certain as to how he envisages that would be triggered. Would it be triggered by each individual land holder? You could have whole series of appeals in the light of a general trend in market decline. The noble Earl nods, so I think that that is the case. If that doctrine is to be imported into law, for some of the reasons that the noble Earl set out, some mechanism might be needed for collective action in those circumstances, otherwise it could be another reason for a proliferation of appeals that might come out of the works.
I listened with great interest to what the noble Earl said and I hope that we can be assured we will have the flexibility to address some of these issues as they arise over the next few years.
The Earl of Lytton
My Lords, I thank all noble Lords who have spoken to this group of rather technical and impenetrable amendments. I am heartened by the interest that all noble Lords have taken in them. I am afraid that I do not have an answer to the point just raised by the noble Lord, Lord McKenzie, on the central rating list. I just do not know how that applies but I am sure I know a man who does and will endeavour to find an answer.
The noble Lord, Lord True, raised a point about collective action by non-domestic rate payers, so as not to have a plethora of individual cases. There is a tendency to do that anyway because they can, for example, share a surveyor’s or adviser’s fee. There is a valid point—just as with central rating lists, when local authorities might be asked to be grouped together, perhaps ratepayers could be made to group together when they have a common cause. At the moment there is no provision for that to be insisted upon, although it is certainly a point.
The noble Lord, Lord McKenzie, talked about a report on how the system is coping. Indeed that would probably be a helpful outcome of all this and, as the noble Baroness said, there is a lot of dialogue going on and I would not want to underplay that in any way, but perhaps it could be more overt. Part of the message, in so far as there is a message, is not getting through in the way that it might.
Briefly, on the question of petrol filling stations, I will send round a report that I have received from Barber Wadlow, which gives a considerable amount of background information. I have it in electronic form, and will circulate it for the benefit of noble Lords rather than discussing it at this juncture.
On the annual return, an issue raised by the noble Lord, Lord McKenzie, I did use the word “simple” and I hope that it will now allow the box to be ticked with regard to the extent of the premise, never mind issues of valuation. At least that was a common element between the ratepayer and the Valuation Office Agency.
I turn to the points made by the Minister. She condensed this area into four main themes, which was a far more coherent method of answering my rather incoherent raising of these matters than I was able to achieve in doing so. I thank her for that, and particularly for the commitment that she evidently showed towards the critical and pivotal role of the Valuation Office Agency, and for the fact that its resourcing, performance, integrity and impartiality must remain. I know that not many former colleagues of mine are still in post because I have been out for a long time, but many people in that august organisation will very much welcome what the Minister said. I accept that if my proposal stands in the way of reporting to government, it would not be an acceptable outcome. I noted her point about the powers to make regulations, and I am grateful for that. Perhaps that may be a subject for further discussion.
On the question of abuses by agents putting in blanket appeals—and it is a clear abuse—one of the problems is that some of those firms are not recognised members of RICS or the IRRV. That is one of the difficulties about catching up with them. Such firms may employ individuals who are members, but very often the firm itself may not be accredited. Therefore, the opportunities for the professional bodies to bring these people to book are limited. In reality, that is not the subject of one of my amendments, but it was mentioned to me and I am grateful to the noble Baroness for addressing that point. I think the way forward is a further big conversation on this with the noble Baroness and her officials. I hope that I can perhaps get some of the principal professionals along, perhaps to a meeting but at any rate involved in the dialogue which we clearly need. That might help to curtail the amount of paperwork that would otherwise be flying around here, there and everywhere.
These are probing amendments, there to elicit a response. I will certainly think very carefully on what the Minister said and the implications of that. I will not press the amendments at this stage. I just reserve my position: I may need to return to a number of the points later in our proceedings but we will see what the outcome is of our further dialogue outside the formal procedures of the House. With that, I beg leave to withdraw the amendment.
The Earl of Lytton
My Lords, briefly, I stand guilty as charged in the sense that I made my maiden speech in this House during the passage of the Local Government Finance Act 1988, which introduced the poll tax. I said at the time that it was unfair and unlikely to work, but I was a greenhorn and my comments were probably not well informed.
I will follow on from what the noble Lord, Lord Beecham, said. The constraints that will fall on council tax payers, and in particular on those in receipt of relief, will of necessity enable those who are so advised to mount an appeal against their banding. In circumstances where the bandings are 21 years old, there will be every opportunity for a challenge to be successful on account of the age of the tax base. It was for that reason that I tabled my earlier amendment on the transfer of the loan to the valuation tribunal.
Dealing with the personal circumstances of individual claimants who are partly supported by benefits will not be quick. It will not be easy to dispose of such cases in a short time. The risk is that the system will become clogged by appeals that will take an inherently long time to resolve because they will have to delve into the details of individuals’ financial circumstances. We will debate an amendment tabled by the noble Baroness, Lady Hanham, which will probably assist us. None the less, the policy will produce a significant load on the system unless it is better resourced.
I make no comment on whether the process is destined to work. This goes into areas of local government finance that are beyond my ken. However, I warn against the inevitable transfer and the unforeseen consequence of what may happen in the wider domain of appeals.
Lord McKenzie of Luton
My Lords, the amendments in this group seek to include support for council tax as part of the universal credit. We support them all. My noble friend Lady Hollis made a typically powerful presentation, and the amendments were spoken to in a supportive way by almost every noble Lord, including my noble friends Lady Sherlock, Lady Lister and Lord Smith, and the noble Lord, Lord Greaves. The noble Lord, Lord Tope, expressed a degree of equivocation. The noble Lord, Lord True, issued the caveat that we should be careful about amendments that we had yet to debate.
Including council tax as part of universal credit is not a new position. We argued strenuously during the passage of the Welfare Reform Act that this was where it belonged, and we know that Ministers in the DWP agree. The Government’s arguments in favour of localising council tax support are that it can be varied across the country in accordance with local need; and, because the costs will fall on local councils, there is an incentive to promote employment so that people are floated off benefits. My noble friend Lady Hollis destroyed that argument pretty powerfully. Of course, the Government are pursuing two policies—one of supposed localisation and one of cuts. That is what makes these things particularly challenging. The incentive effect depends on how these cuts are to be applied since means-testing support for council tax more aggressively leads to weaker work incentives than reducing support for all claimants. As the IFS put it:
“Reforms that save the full 10% typically involve reducing support for those currently entitled to maximum CTB—those on the lowest incomes. And those options that do protect the poorest claimants either fail to generate large savings, or significantly weaken work incentives”.
That is why my noble friend Lady Sherlock pointedly asked: how, at one time, do you both help the poor and make people better off in work? That was the commitment made by the Government. How will they do it on this basis? Issues around work incentives for localised schemes are not straightforward and must be considered in the context of universal credit as well.
As my noble friend Lady Hollis made clear, we have supported the concept of universal credit—not every aspect of its proposed implementation, including payment frequency, second earners and wallet-and-purse issues, but the fundamental architecture. It is a structure that, as my noble friend explained, clearly simplifies the benefit system and provides a common taper which, together with income disregards, will make work pay and give clear incentives to work. It encompasses tax credits as well as benefits and is an “in and out of work” benefit. It is the natural home for council tax benefit and it is understood that this was the original intention. However, it would be good to have on the record the point in time at which the Government’s position on this changed and why.
Keeping council tax benefit outside universal credit, with the prospect of dozens if not hundreds of local schemes, undermines that simplification. It potentially undermines the rationalisation of work incentives, with the prospect of overlapping taper rates. These are not just theoretical matters. The Government have promulgated a default scheme that will be imposed on local councils that do not introduce a local scheme by next January. How does this default scheme sit alongside universal credit? In particular, how is universal credit to be treated for the purposes of the default scheme? My noble friend Lady Lister referred to an answer given to my honourable friend Stephen Timms in another place: it is up to local councils to decide how they do this. However, we are dealing here with a scheme that the Government have promulgated and that they will impose on local councils. Therefore, the Government must know how they will treat universal credit in that default scheme—that is the scheme that they are promoting.
At present, tax credits are taken into account as income for council tax benefit. Income-related benefits, such as JSA, IB and ESA, are not and passport individuals on to maximum council tax benefit. Universal credit substitutes for benefits and tax credits, so how will it be treated in the default scheme? Will the Minister also tell us how overlaps in tapers between universal credit and the default scheme are to be avoided, if they are? These are not just points of interest; they are fundamental to the operation of the scheme that the Government will impose in just a few months’ time. The logical route in all this is to follow my noble friend’s prescription and include council tax benefit as part of universal credit from the start. We do not doubt that this is where it will end up eventually.
My noble friend Lady Hollis made the point that the proposition advanced by the Government means that take-up campaigns will be deterred. With a number of noble Lords, she talked about the collection of small amounts and the difficulty that that will create. My noble friend Lord Smith and a number of noble Lords referred back to the poll tax and all that that entailed, particularly the point that young people disappeared from the system. We cannot allow that to happen again. My noble friend and the noble Lord, Lord Greaves, referred to the difficulty in budgeting that the proposed system will bring forward. I understand that there are not many second homes in Wigan and we do not have too many in Luton either.
The Earl of Lytton
“Electronic communication
The Secretary of State shall by regulation provide for the use of electronic means to communicate information regarding the level of a council tax demand.”
The Earl of Lytton
My Lords, I beg for a little light relief in moving this amendment. I assure the Minister that I will not tax his patience by bringing a bit of speed-dating to our deliberations.
My understanding is that regulations currently provide for all information relating to a demand for council tax to be in hard copy. In these electronic times it seems to me that at least some council tax payers would welcome an e-mail version and the provision of certain supporting data on a website, for which a link can be supplied. Speaking for myself, with all manner of legally important documents being served electronically these days, I would welcome the reduction in paperwork. I realise that there may be legal issues relating to electronic service of certain types of document, but where possible and convenient to the council tax payer, I should have thought that an electronic option would be desirable. That is all that my amendment seeks to provide. Coincidentally, it may reduce the weight of postmen’s bags in March. I simply ask that noble Lords indicate their agreement in the customary manner by saying, “Hear, hear!”. I beg to move.
Earl Attlee
My Lords, I thank the noble Earl for the explanation of his amendment. It would require the Secretary of State to create regulations providing for the use of electronic council tax billing. However, billing authorities already have powers under Regulation 2 of the Council Tax (Administration and Enforcement) Regulations 1992 to serve council tax bills electronically, as long as it is by agreement with individual council tax payers. The Government believe that this is a sensible arrangement.
Clause 14 makes provision for the costly supporting information that goes with council tax bills to be provided electronically. However, regulations will state that hard copy must be provided if a bill payer requests it. The Government consulted on this measure and it was strongly supported by respondents. Relieving authorities of the duty to provide the information in hard copy may encourage the take-up of electronic billing, because all parts of the process can be paperless, if the taxpayer so chooses.
However, given that billing authorities already have the powers to send bills electronically, I do not see any need for the amendment and invite the noble Earl to withdraw it.
The Earl of Lytton
My Lords, I thank the Minister for that. I did not know that there was already a power and I am surprised to hear it, given that there appears to be a rather small uptake. I am heartened by what he had to say. I entirely agree with his sentiments. If the powers are there, let them be used, and perhaps his department could encourage greater use of them among billing authorities in the interests of economy and speed. I happily beg leave to withdraw the amendment.