Levelling Up, Housing and Communities Committee
Oral evidence: Council tax collection, HC 20
Monday 27 February 2023
Ordered by the House of Commons to be published on 27 February 2023.
Members present: Mr Clive Betts (Chair); Bob Blackman; Ian Byrne; Natalie Elphicke; Kate Hollern; Andrew Lewer; Mary Robinson; Mohammad Yasin.
Questions 54 - 118
Witnesses
I: Lee Rowley, Parliamentary Under-Secretary of State for Local Government and Building Safety; and Nico Heslop, Director of Local Government Finance, Department for Levelling Up, Housing and Communities.
Witnesses: Lee Rowley and Nico Heslop.
Q54 Chair: Welcome, everyone, to this afternoon’s session of the Levelling Up, Housing and Communities Committee. Our evidence session this afternoon is looking at council tax collection. That is how much tax is collected, how it is collected and what is not collected. We have with us this afternoon the Local Government Minister, who I will come over to in a minute to introduce the official who is with him.
To begin with I ask members of the Committee to put on record any interests that they may have that are directly relevant to the inquiry. I am a vice-president of the Local Government Association.
Mohammad Yasin: I am a member of the Local Government Association.
Ian Byrne: I employ a councillor in my office.
Kate Hollern: As do I.
Bob Blackman: I am a vice-president of the LGA and I employ councillors in my office.
Mrs Natalie Elphicke: I am a vice-president of the Local Government Association.
Mary Robinson: I employ a councillor in my office.
Andrew Lewer: I am a vice-president of the LGA.
Chair: That is it. Welcome, Minister, to answer our questions this afternoon. Could you introduce the official who is with you today?
Lee Rowley: I am the Local Government Minister, and this is Nico Heslop who is the director of Local Government Finance in the Department for Levelling Up, Housing and Communities.
Q55 Chair: Thank you, you are both welcome. So, council tax. We are talking about the collection of a tax that was formulated 30 years ago. It may have been the correct tax for the times then, but 30 years on is it still the right way to go about collecting people’s contributions to local council services?
Lee Rowley: That is an interesting question. Everybody will have different views on it; I am sure that this Committee will do. Even in my lifetime, we have gone to several different places in terms of contributions to local finance, of which some have been much more controversial than others. The general sense is that council tax, as every system is, is an imperfect system. It has its good points, its bad points, its flaws, and its good elements. However, at this current time, the Government are not proposing to make any significant changes. It is known and it is understood. I accept that there are elements of it that are up for debate but we are not proposing a wholesale reform, irrespective of a more philosophical discussion about whether it is the right or wrong thing for now.
Q56 Chair: We might come on and look at any work you might be doing to look at the long-term issue of council tax, which the Secretary of State mentioned to us in a recent session with him. We will come on to that at the end of our session today. However, you did mention flaws. What flaws do you see that you might want to correct?
Lee Rowley: That is in the eye of the beholder. We all have, from our constituency angle and from our constituency perspective, places where council tax perhaps does not work as well. There are certain cohorts where ideally in another world you would try to structure it in a different way. However, in general—because the job of government is not just about highlighting the problems, it is also about trying to work through how you put something together in aggregate that works for the vast majority of people—it is still a system that works relatively well. It is known and understood and something that has been in place now for most of our adult lives in terms of local government finance and it is not something that we are changing.
Are there things that can be amended? Of course. Are there fundamentally different systems that we could replace it with? Yes. In my postbag at the moment there is a campaign about a proportional property tax, which I get a lot of traffic on and respond to. However, nothing is perfect in this world and this is where we are. It is known and understood and there is no proposal to amend it at this time.
Q57 Chair: Council tax arrears have been going up in recent years. Is that something that concerns you and do you have any understanding in the Department about why that is happening?
Lee Rowley: Obviously when people do not pay, that is a concern both for the system as a whole and in trying to get under the skin of why people are not paying. Individual circumstances are important to understand and recognise. You will know, and I know that you know from the previous session that you held on this last year, that there is a particular question on Covid and what has happened over the last few years since 2019-20, where there has been a significant change in a number of councils about arrears. Equally, arrears have been an issue in previous years. They were making good progress in improving council tax collection rates pre-Covid and it has started to bounce back again.
We are in a place where we do not have sufficient data yet to know whether what we have seen in the last couple of years about enforcement and collection is the start of a trend or whether it is unique to Covid and whether it will start to correct itself back to a historic norm, which is a very high collection rate for council tax of 95% or above. Is that fair?
Nico Heslop: Yes.
Q58 Chair: Are you trying to do any analysis of the extent to which people are not paying because they cannot pay or they will not pay?
Lee Rowley: Council tax is locally collected, as you know, Chair. This policy area is largely devolved to individual councils, for reasons that I am sure we will debate over the course of this discussion. However, how the council tax process, the eligibility for support services and the enforcement approach are structured are all essentially determined by local government. While we always want information and collect information about arrears in general from individual councils and get good return rates for that, and while we always want to understand in more detail about what is going on, the primary driver—the primary people who should be getting under the skin in their local areas about why there are challenges and why the challenges are as variable as we see in the data, as imperfect as it is—is the individual councils themselves, who should decide what that means for how they structure future interventions and future frameworks and the like.
Q59 Chair: The Institute of Revenues, Rating and Valuation raised concerns about underfunding of local government putting pressure on that meant that council tax amounts were going up. In recent years, the spending power of councils has been more and more sustained by council tax increases, which have largely gone to fund increases in social care spending. Therefore, the public paying their council tax sees their council tax go up but often the services that most people get—the day-to-day services of street sweeping, buses, grass cutting and those things—are being reduced. Do you think that there is a sense of people saying, “I’m paying more, I’m getting less, why should I be paying for this extra service?”
Lee Rowley: Most people understand that council tax is for a broad range of services that are paid for alongside whatever grants or business rates and the like that also contribute to it in individual local areas. It varies between local areas between what the income is and where they get it from and where the budgets are covered from.
However, we all see it as constituency MPs—I see it in Derbyshire and I am sure you see it just over the border in Sheffield and the like. There is always a challenge to making sure that residents’ requirements are satisfied to the greatest extent possible while ensuring that core services that perhaps are not as clear, obvious or as known on the average street on a day-to-day basis are still supported and that the vital work of children’s services, adult services and all of those other elements are covered as well. I get the sense in my community that that is pretty understood.
This is a political point and I am not seeking to make a particularly political point but the Government have put in a significant amount of additional funding in the last year or so, after, I accept, a change in the other direction over the previous decade, for reasons that we all as politicians will debate at length. However, the funding from central government in that calculation is going in a more positive direction. Politicians will always discuss what the right amount is and people will come to different conclusions about that.
Q60 Bob Blackman: Have you assessed whether local authorities that have high elements of short-term private accommodation are worse at collecting the council tax or for example areas with large social housing are better at collecting council tax because it is all within their purview to do so? Has that been considered? Certainly if someone is on a six-month tenancy, unless authorities start the process of collecting and enforcing at an early stage, the likelihood is that the tenant will have disappeared and therefore the local authority is going to struggle to get the money.
Lee Rowley: I will let Nico comment on whether we have any data specifically on that. As a former councillor not far away from you back in the day, with a very high transient population—my ward in London had a 15% to 20% turnover every year—the information that I received when I was a councillor there, from Westminster, was that it was often very difficult. There were clear scenarios where it was a challenge to do that, so it would stand to reason, without the need for data, that an additional level of complexity with an additional level of turnover is a challenge.
I think that we see that urban areas tend to have a slightly lower collection rate, but the data itself is very variable. I looked before we came out—and we can talk about it as and when people want to—about how collection rates have changed and how arrears have changed on an individual council-by-council over the last few years. It is not that clear-cut. The correlation is not as strong as it could be. On your specific point about whether it is likely that in areas of high turnover, there will be more of a challenge, then yes.
Q61 Bob Blackman: The key point that I am getting to is that you do not have the data to compare local authority performance.
Lee Rowley: We do collect arrears by local authority.
Bob Blackman: But the reason for arrears may be different in different local authorities?
Nico Heslop: No, we do not.
Lee Rowley: We do not do a qualitative overlay on that, no.
Chair: Thank you. Moving on to enforcement, a contentious issue, Ian Byrne.
Q62 Ian Byrne: In evidence received by the Committee, the credit management company Lowell said its customers described bailiffs used by their councils to collect their council tax debt in the following terms: “arrogant, obnoxious, aggressive, forceful, threatening, Bully Boy, nasty, domineering, demanding, inconsiderate and lack of empathy”. In your assessment, how prevalent is this behaviour by enforcement agencies?
Lee Rowley: I hope not very. If it is, they should go through it. If that is the people’s experience, they should raise that to the councils that are employing them, because that is not acceptable. This is not a process that we want people to go into lightly because it is a process that is very difficult for all involved. It is not a particularly time or cost-effective process for the institution, for the organisation, and it is certainly not a place that you would want to go through as an individual citizen unless it was absolutely necessary. Of course, with only a framework, there needs to be a recognition that some people will not do the right thing and there has to be a process to deal with that. However, if bailiffs are doing the wrong thing, that should be called out to the relevant authorities that are employing them.
A few days ago I watched your previous hearing, which had representatives from enforcement agencies, and they were at pains, as you know, to say how much they have tried to improve customer service, how they have tried to improve handling and how they have tried to put multiple different processes in place.
Q63 Ian Byrne: You would expect that, wouldn’t you? You would expect that evidence, wouldn’t you? You would expect that. It is certainly not what I hear on the ground or what I see. You have devolved that down to local authorities but as a Government what responsibility do you have if the local authorities are failing? What can we do on a national level? What minimum standards should we be setting to make sure that local authorities are following best practice because some of them are not?
Lee Rowley: My mailbag does not contain a substantial level of the concern you are articulating. I am not saying that there is no problem or no issue. In any system where there are interventions, actions or actors, there will always be challenges. The important thing is to minimise that as much as you can and to have processes to both highlight it and deal with it.
The first thing is that local councils need to take action where they feel that that is not working. I would expect councils to do that. That is important if that is the case. Then there is work under way with the Enforcement Conduct Board that has now been created, which is putting in place better practice that is binding together a large portion of the industry within the standards that you are talking about, which is a positive step forward. I know that they have recruited a chair and a chief executive and put out some principles. If there are people out there watching who have concerns about the activities of bailiffs around the country, report them to the council, go through the Enforcement Conduct Board processes as it starts to bed in over the coming months and years ahead. Then please raise them to the council and to the Department where necessary.
However, we have to always go back to the point that this is effectively a decentralised model. The best way that you can fix problems is at the local area where the council needs to be told that its enforcement agency is not working.
Q64 Ian Byrne: Have you had conversations with the LGA about this? Have there been any conversations at that level?
Lee Rowley: I talk to the LGA regularly. This is not something that it has raised with me to date. Respecting the principles of subsidiarity and respecting the principles of localism, I cannot compel a local council about what to do here. We have a framework that is sufficient to highlight bad behaviour and good practice. If there are concerns, I would be very happy to hear them through the course of this process, and this report that you will be providing, and I am happy to look into it further. However, I have to say that four months in it is not something that has been highlighted to me extensively. If there is a problem I would like to understand it, but it is not something that has been highlighted to date.
Nico Heslop: I should add that the guidance that we put out in 2013-14 is very, very clear that local authorities should only work with enforcement agencies in an appropriate and proportionate way. The guidance that we have set and the guidance that we continue to set is very clear about that.
Q65 Ian Byrne: Is that getting adhered to, do you think?
Nico Heslop: As the Minister said, my team speaks to the LGA about a range of issues and this will of course be there, but we have not seen, as the Minister said, huge concerns raised. However, that is in no way to diminish any concerns there might be.
Q66 Ian Byrne: Following on from that, last year The Guardian reported on concerns raised about the employment model used by most bailiff firms where agents are self-employed workers who earn commission based on their caseload, rather than employees with a salary. It quoted a policy officer at StepChange, a debt advice charity, saying that this model drove “a lot of the bad practice”, whereby people turn to high-cost credit or loan sharks “just to get these people off their backs, pushing them into this spiral of debt”. Also, Citizen’s Advice argued that the use of bailiffs was not an effective means of collecting moneys owed, writing that for every £1 spent on bailiffs, councils get 27 pence back. For the best value for cash-strapped councils at the moment and to ensure a more humane approach, should there be a move away from the bailiffs to an in-house salaried staff model?
Lee Rowley: An in-house salaried staff model is still bailiffs; they are still people who knock on the door. I am not sure that they are enforcement—
Ian Byrne: You would have thought that they would take a more humane approach because they are under the auspices of the council.
Lee Rowley: The key question that I hear you asking is whether there is bad practice and, if there is, how do we resolve that? If it is bad practice, it does not matter whether it is bad practice in the public sector, the private sector, the third sector or whatever, it is bad practice. It is the responsibility of councils that are signing these contracts with enforcement agencies, which you or others may have concerns about, to recognise that they are potentially not making the right choices about how to enforce. That should be raised with the councils first so that they understand it and secondly so that they have the opportunity to make changes.
If they choose not to make changes, that is for them to justify or not to justify. However, we would expect, based on the guidance that has been issued by the Department previously, based on the support that we are providing for the Enforcement Conduct Board and so on, that these processes should have clear rules, compassion built into them for vulnerability and should be used only if absolutely necessary. If that is not occurring, speak to the local council and hold them to account in the usual manner as to why its contracts and processes are not working in the right way. Councils need to know and councils need to take action accordingly.
Nico Heslop: On the MOJ taking back control of goods, to your point about fee structures, one of the objectives of that was explicitly about designing the fee structures in a way that allowed recovery firms to get more at the compliance stage that is earlier on in the process and before they get to some of that behaviour. As we understand it, one of the first priorities for the Enforcement Conduct Board is getting a better handle on the collection of data across the sector to understand when in the recovery process debt is collected. Therefore, there are moves afoot to get a better understanding of that.
Chair: Moving on to look at the statutory regime for enforcement, Andrew.
Q67 Andrew Lewer: Thanks very much. You mentioned very welcome references to subsidiarity and, therefore, localism and principles within it, but there are quite a lot of statutory rules and regulations around council tax enforcement. What changes to the statutory regime for enforcement would you consider?
Lee Rowley: I would be interested in the Committee’s view on this as part of your deliberations. I know that this was discussed with the councillor who came in front of you in the June session. My sense, but I am happy to take your view and keen to hear it, is that you have to set a framework. We have a minimum framework. You are supposed to issue a letter within X number of days, you are supposed to do this in Y number of days and so on. However, if a council wanted to derogate from that, they would be able to do that. They do not have to send a letter on day seven, they can send a letter on day 15 if they want to, they just cannot send a letter on day six, which is the minimum requirement.
My sense is that the framework is not systematically problematic as long as there is a recognition and an acknowledgement, which I know there is across local government, that this needs to be used sparingly, and carefully done in a sensitive way. However, if through your deliberations you are finding challenges, I am keen to understand what they are and think them through.
Q68 Andrew Lewer: There are three things particularly, one which you have touched on already, which is the required for a full year’s balance to be owed if a missed payment is not settled within seven days or within three reminder notices. However, from what you have just said, do you think that even within that there is enough flexibility not to have to remove that but to use it in a different way?
Lee Rowley: I will defer to Nico in a moment to make sure I am not misrepresenting it in any way. My understanding is that there is a level of minimum requirements that protect the payer from sharp practice by the council or its representatives in terms of going too early or starting too early or whatever. However, on exactly when the council spaces out those activities, it is essentially for the council to do.
However, at the other end of the discussion, you do hit on the point that this is not a debt like a credit card debt, whereby you can cap it off and pay it off over many years. This is a recurring requirement to pay. As I understand it, one of the reasons why it was set up historically was to make sure that there was a resolution in-year because if there was not a resolution in-year, if it came to that, all you would be doing is creating a new liability for a future year plus the future year’s liability after that.
Nico Heslop: That is absolutely right. As you have heard from some of the evidence, the council employee from Sussex said to you that for a number of councils, even though the full liability becomes payable, councils work with the vulnerable people in their area to develop payment plans and so on. It is not the case that it all becomes payable and people have to pay it all at once. There is flex for councils to take sensible and sensitive decisions.
Lee Rowley: But within that overall framework of still having to find a way by the end of the financial year, because there is more that is coming.
Q69 Andrew Lewer: Another one that has been suggested is removing the need for councils to obtain a liability order for enforcement activities, because of the bureaucratic hassle and individual application nature of that. Is that something that you would be interested in fleshing out?
Lee Rowley: I am interested in your views. I always want to make processes as efficient as they possibly can be. I recognise that even though it is a quick process there is quite a lot of that process that is required at the local court and things. The challenge is that you have to find somewhere in the process whereby you say that this is moving from an informal request to do this, to a compulsion to do so within a legal process. Whenever you start a legal process there has to be a point where you do that. If you think or you are aware or there are good suggestions about what the Department can consider for that over the long term, I am very happy to receive them.
Q70 Andrew Lewer: One would be batching them together, rather than doing each one individually, so that that the process has been followed but not with each individual cost to the council tax payer—doing them all in groups.
Lee Rowley: I am going slightly beyond my knowledge here as a non-legal person, but my understanding is that the reason why it is done at the moment—accepting your very valid challenge—is because as part of that due process, rule of law and those things, there has to be the ability for the individual action that is being taken at court to be objected to or to be highlighted by particular parties who have relevance to it, that, “That might not be right, or that isn’t me” or whatever. You would have to try to find a way of batching but still allowing the opportunity for an individual to comment if it was not the right thing or if something different needed to be done.
Q71 Andrew Lewer: Good, we may look into that a bit more. The one that is a bit controversial is the current option of imprisonment for those who do not pay their council tax. Is that something that should go, given that it has gone elsewhere? Particularly comparable is that it has been removed in Wales now. That option of imprisonment does not exist in Wales now. Is that something that the Department is interested in looking into or has it already looked into the impact on takings and debt collections without that sanction in Wales?
Lee Rowley: I will ask Nico Heslop to come in in a moment because I have only been around for four months. However, there are two things in response to that. One is a philosophical thing of where this starts and stops. Most people fall into camp A and do pay, or genuinely cannot pay. There is a small group of people who will not pay and the question for us as politicians and as civil society is what you do with people who wilfully will not pay. As I understand it, the definition is where you hardly ever get to court and hardly ever have to go down that process but that process is specifically for people who wilfully refuse to pay. If that is the case, should there be sanction for people who are not willing to engage in the normal acts of what a person has to do in a civilised society, which includes paying tax? I would like people to pay as little tax as possible, but where it is necessary, it is necessary. Therefore, I do not know if I am fully convinced about the need to step back from that.
On the second point, on a practical level, as I understand it, nobody has gone through this process since either 2018 or 2019 and there has been a significant reduction. There were negligible levels of out 20 million-odd households paying. Even 10 years ago, about 50 people entered these processes a year and in the last three or four years there have been zero. Either that means that councils are using their discretion, which demonstrates their flexibility and their willingness to think about how best to do this and about how not to use enforcement procedures, as they should do, or there is some general reduction in wilful non-payment. We are not sure what that will be but the practical implications of this are negligible and reducing. However, I am still probably of the view that there has to be some form of sanction for people who are wilfully refusing.
Nico Heslop: I agree with all that. Regarding the experience of Wales, it has been over a few years but the data about whether that has led to greater or fewer arrears emerging as a result is quite mixed at the moment. As the Minister was saying about local government, there has been quite a lot of fluctuation and there have been some years when the Welsh have had a similar percentage or proportion of arrears as us, some where it has been a bit lower and some where it has been a bit higher, so it is a little too early to say—
Q72 Andrew Lewer: You are saying that there is not enough to go on to establish cause and effect?
Nico Heslop: It is hard to say and, as the Minister mentioned, we have had two years of Covid, which undoubtedly had different impacts in different parts of the country. It is hard to draw anything too definitive.
Andrew Lewer: I do not think that anybody is suggesting that there should not be any sanction, it is just that particular sanction that is up for discussion. However, what you say about the context and volume in that regard is interesting. Thank you.
Chair: Looking at council tax support, Natalie.
Q73 Mrs Natalie Elphicke: Good afternoon. Could we move on to local council tax support schemes and could you update the Committee on what assessment has been made of the success of different local council tax support schemes since their introduction in 2013?
Lee Rowley: As you say, they came in in 2013 and there has been a significant amount of change since then. You can see individual councils making amendments—making changes over a number of years—and the variation in people moving away from the mean has increased over the course of a decade. That was presumably the point made by the former Secretary of State. It allowed different areas to make different decisions and allowed individual councils to structure that. In that sense, it is successful conceptually in that it has allowed it to be more tailored.
In terms of where the right balance is, Covid has created a whole series of challenges around that and there have been many additional support schemes that have come in alongside that. Therefore, our evidence base has been somewhat difficult to draw conclusions from in the last two or three financial years. However, on the general point of does it seem to be working, it does seem to be working and local authorities have the levers to pull where they need to pull them for the particular issues in their local area.
Q74 Mrs Natalie Elphicke: Can I dig down a bit more into that? Recognising local accountability, there has been evidence presented to us of great variation. It has been described to us as a lottery in terms of that local adjustment. Within the context of the Government’s role in responding, and being mindful of these different consequences for people who might be on universal credit, in different income groups, pensioners and so on, do you think that the information that you have is adequate to allow the Government to fulfil their assessment of the impact between national and local at the moment on the relative taxation and relief from it?
Lee Rowley: It is challenging to answer that question because when you get into discussions of postcode lotteries—I am not trying to be difficult or caricature you or anything like that—the reality is that if you allow local areas to make decisions, you have to accept variation. If you accept variation, you accept variation both for good reasons and for less good reasons and it is for individual electors and voter bases to make decisions about whether that is the right thing or the wrong thing. It is the same when you apply a principle of complete equity—I know that I am taking your point to its extreme, and I am not suggesting you are making this point—you would not allow variations in council tax. The difference between Westminster, Wandsworth and Sutton or whoever, is quite high on the scale.
From the perspective of the Department, we accept there is variation in the amount of council tax that is levied and the amount that the support schemes offer, of which, you are right, there are great varieties. There is a significant variety between still shadowing what was the case in 2013, all the way up to in some places a significant minimum payment of council tax, for example, in some shire authorities and unitary authorities.
Therefore, it is difficult to make an assessment, but you would flip that and say that, on an individual basis, if an individual has an issue that should be picked up through the welfare and benefits systems, it should be picked up through universal credit, which is dynamic and tries to account for this. You would hope that on an individual level, there is another part of the system that deals with that while still adhering to the principle of localism in terms of what the level of council tax is and what support scheme you put in around it.
Q75 Mrs Natalie Elphicke: Are you comfortable that there is adequate information and joining up between those two parts at an individual level?
Lee Rowley: Maybe Nico can give the official’s view. I do not know what a definition of comfortable is, without getting into existential or philosophical or whatever.
Q76 Mrs Natalie Elphicke: Do you think that there is adequate information to understand what the impact is on a local individual level that you have described in how it relates to the other parts of the national benefits system?
Lee Rowley: We will all have political views about universal credit and benefits and welfare, but I think systemically the system picks up where there are issues and difficulties and takes into account council tax and council tax support schemes. Yes, I would hope that is the case. Do I think that I can structure an evaluation metric within the Department—I am not sure that you are asking this question—about whether I think the individual support scheme is right? I am not sure I would because ultimately that is a decision of the local area and they stand or fall on it based on the usual processes. From an official’s perspective?
Nico Heslop: That is right. In the last two years, local authorities have probably got to know their populations in a way that they have not had to before, particularly over Covid and the number of support schemes that the Minister has previously referenced. Local authorities have a good understanding of their local circumstances. We may come on to it later but there are some pilots ongoing to try to do exactly some of the things that you are suggesting about joining up information that local authorities hold with both HMRC and some of the data held in universal credit.
A general observation from some of the evidence that you have been provided with previously and when we speak to local authorities is that the better the data they can get about their people, the better they can respond and target, so data is a key thing to carry on encouraging people to build. We have seen lots of good examples of that and highlighted a number in our guidance in 2021.
Q77 Mrs Natalie Elphicke: On that balance between the schemes, is there a case to return to a national scheme of council tax benefit in light of what you have said on the assessment and do you have any thoughts about Wales, as we touched on a few moments ago, on its council tax reduction policy?
Lee Rowley: We are not proposing to move back to a national scheme. There is a conceptual question there and an operational question, but at this time we think that the process has sufficient flexibility and that the system has sufficient flexibility in it to work. As per the underlying principles of levelling up and the like, we want to devolve where we can because people tend—I am telling you something that you already know. People tend to be able to make better decisions the closer they are to the places the decisions affect. Therefore, it is not something that we are proposing. I am always very happy to receive views and feedback about how people think things should be structured.
Mrs Natalie Elphicke: Any thoughts on Wales?
Nico Heslop: It has effectively mirrored the scheme that was in place. I do not particularly comment on the decision that it has taken, because that is a decision that it has taken, and the Government decided to take a different route in 2013-14. Back to the arrears data and stuff, there is no obvious correlation that we can see between anything that Wales has decided to do differently that has impacted the collection data or stuff like that.
Q78 Chair: Coming back to the reference to universal credit, where you said that council tax does not pick up everyone’s particular circumstances in terms of the support offered through the council tax support, but that that is a matter for universal credit. However, in terms of universal credit, where assessments are done there it does not take into account how much people pay in council tax, does it?
Lee Rowley: Sorry, maybe I was not clear. I was trying to say that individual areas set their own council tax levels and the amount of support that will be allocated to particular cohorts of the population. Then as a whole, universal credit will look at income into households and the like, which will allow consideration to be given about whether there is eligibility for welfare and benefits through that process.
Q79 Chair: Yes, but people’s eligibility for benefits does not take any account of how much they pay in council tax, does it?
Lee Rowley: It depends on how the support system works and all the rest of it.
Chair: But it does not, does it? The council tax support scheme is fixed and people’s eligibility for benefits is not affected by how much council tax support is provided.
Lee Rowley: Sorry, maybe I am not being clear. Forgive me if I misunderstood the question. I was simply trying to say on the broader prospectus of making sure that people who need support can receive support, there is the benefits and welfare system that does that, with appropriate consideration of the like as a result.
Chair: It still does not take council tax into account.
Lee Rowley: Understood.
Chair: Moving on, you mentioned the best practice guidance before. Mohammad.
Q80 Mohammad Yasin: Eighteen months ago your Department published best practice for local authorities on collecting council tax. How are you monitoring take-up of best practice and have you seen any changes in practice?
Lee Rowley: Some of the answers that I have given already on difficulties over the last couple of years and so on do need to apply in that instance. When LUHC published that, it was published in the middle of Covid, so there will have been some accommodation and some knowledge of where Covid was, but obviously Covid continued. Therefore, it is very difficult to draw conclusions from the last couple of years. We need further information, further data and further time to be able to do that, as frustrating as that may be. However, it is the reality because Covid was such an extraordinary event within all of our lives.
However, best practice is about highlighting where things work well. The Department is not creating some form of significant monitoring process for a decision that was made nearly a decade ago to allow local councils to determine how to approach it appropriately.
Q81 Mohammad Yasin: What feedback are you getting from the local authorities on best practice guidance?
Lee Rowley: Forgive me, but I think that is the wrong way to ask the question. We are trying to assist local councils to understand where things went well. It is then their choice about whether or not they use it, they include it, they do not include it, whether it works in their local area. I am not expecting to receive lots of information about where a council should be doing X but is doing Y, because that is ultimately for local councillors to make a decision on. Both of us were local councillors in our time. I expect our old colleagues to be able to make those decisions in the appropriate way for Bedford or North East Derbyshire or wherever.
Q82 Mohammad Yasin: You are saying that nobody is monitoring this good practice guidance?
Lee Rowley: That is not the purpose of best practice guidance. The purpose of best practice guidance is to say, “Good stuff is happening, you may be interested in that”.
Q83 Mohammad Yasin: Is there still feedback that the Department is getting from the local authorities?
Lee Rowley: I get feedback all the time. I talk to the Local Government Association all the time.
Mohammad Yasin: That is my question.
Lee Rowley: But there is no quantification of that because that was not the purpose. When LUHC wrote that at the beginning, that was not the purpose of what we were trying to do. We were trying to highlight where things work but it is ultimately people’s decision as to whether they use that or not.
Q84 Mohammad Yasin: Is there any best practice guidance that has been given to local authorities regarding the ability of the repayment plans and the council support schemes to those in arrears?
Lee Rowley: There are the publications that have come out. Local authorities have responsibilities in their local areas to make sure that the policies that they put in place work, work effectively for their areas and take into account all the things that we were talking about since the beginning of the session. However, in terms of how local authorities would do that, that is ultimately for local councils to make sure their processes work, it is for local councils to make sure that the people who they may or may not outsource it to do it in the right way, as you would expect.
Q85 Mohammad Yasin: If something comes in and you notice or the Department notices that some councils are not advising those people who are in arrears in terms of availability of rate payments and the council tax relief schemes, what would you do?
Lee Rowley: It is for councils to make decisions about how they structure their support schemes and it is for councils to decide how to advertise that. Of course, from my perspective, from the Government perspective, we want those to be utilised, we want those to be taken up, we want those to be successful but either I believe in localism or I do not. If I believe in localism, the principle of believing in localism is that you allow people to do things and you do not stand over them all the time. They are allowed and permitted to do it, whether it is in this area or another policy area or wherever.
Nico Heslop: I would add that all of the guidance in 2013 and 2021 highlighted the things that you are talking about, about having clear communications to people, about councils developing supportive recovery techniques. If you spoke to any council, the first message that they would give to anyone who was having difficulty with their council tax bill is, “Don’t wait for any letter. Approach us as soon as possible”, because, as you say, there are a range of schemes and councils have their local council tax support and there are a range of national schemes still ongoing to support people. Therefore, the No. 1 message is to approach your council. The guidance that previous Ministers have set out is very, very clear on that. The evidence that you took from a couple of local authorities in June was that they were very clear on that point as well.
Q86 Mohammad Yasin: Do you think that any of the guidance should be placed on a statutory footing?
Lee Rowley: Not at this stage.
Mohammad Yasin: You do not.
Lee Rowley: I think that there is sufficient flexibility within the system as a whole to support those who absolutely need support, who are vulnerable, who are unable to pay temporarily or who need accommodation, while still ensuring that there is a framework that allows the high collection rates that are important to fund the public services that we all want to continue. I am not personally convinced that there needs to be a move to statute in this instance. I would be interested in the Committee’s views in the final report on the matter, but that is not an area where at least at the moment that should be a priority. I want a flexible system that works well in all of the scenarios where it can.
Q87 Mohammad Yasin: For my final question, and you have touched on this already, in your view is there too much variation between local authorities in collection activities?
Lee Rowley: It is important that local authorities maximise collection because that gives them the resources to be able to deliver the services that everybody wants. In challenging times everybody needs councils that can deliver the services that are needed for the communities. Council tax collection rates are historically pretty high, were increasing pre-Covid, and have come back according to the very limited dataset that we have post-Covid.
I know that I am probably sounding like a broken record on this, but if we go back to that principle that this was decentralised and devolved 10 years ago, the primary decision and the primary deciding people are the people on the front, the councillors who make decisions about what they do, how they do it and when they do it.
Q88 Mohammad Yasin: I was asking your view on variations between different local authorities. What is your view?
Lee Rowley: If I accept the principle of localism, which I do, accept variation. You cannot have one and not the other. Politicians should not wander around saying, “We want localism but we want absolutely everything to be the same”. I am not suggesting that you are doing so, but sometimes that is something that—localism requires variability. We have to accept that as a principle; otherwise, we do not have localism, we have full centralisation. That comes with a whole other set of consequences that we may or may not want to debate.
Q89 Kate Hollern: Very quickly, can you provide us with some examples of best practice? Have you seen an area that you think is particularly good?
Lee Rowley: There are some good examples in the 2021 guidance. When the councillor from Southwark came, I listened to her talk—maybe in answer to questions from you, Kate—about how she was trying to pull together different organisations around Southwark so that she understood what was going on. She was also trying to work together with them to understand all of the relevant parts of the data around the person within the council, taking a whole-council approach. That sounds like what I would have been asking if I were in her place as a cabinet member for finance—I was not a cabinet member for finance, but if I had been—when I was in local government. That basic level of do we have the right level of sensitivity here, yes or no? Are we making sure that the policies that we are putting together as an institution are being executed on the ground? That is to Ian’s point about making sure that there is no poor behaviour out there or that we are minimising poor behaviour. Then, are we pulling together as much data about individual circumstances as we possibly can that will help that process?
Then, because of the pilots that Nico was talking about, half a dozen or so or whatever it is, where they are pulling together not just data within the council but also data from the DWP and data from elsewhere, that sounds like the place that you would help councils would go over the coming years because the more you understand circumstances the more you can respond to the challenges that people may have temporarily.
Q90 Kate Hollern: Unusually, I agree with you. Data share and support are important. Coming back to Ian’s point, some of the bailiff situations, it has similarities to the prepayment meters, doesn’t it? It is important to share that and gather the data. Thank you for that.
Chair: When Oflog is finally up and running, would you expect it to do something and not merely publish the arrears figures for individual authorities but to try to start grouping them in families so that you can have a better understanding of what is happening at similar authorities? Comparing Newcastle with North Devon or Manchester with Maidenhead is not necessarily the best way to go about things.
Lee Rowley: Yes, in principle. The devil is always in the detail. On Oflog, we have said that initially we will look at five areas. We started talking about this last week with the sector. Adult social care will be one and reserves will be another and so on. We are asking the sectors to suggest some of the five as well. We want to try to use those as the initial cohort to have some of these conversations—what is the appropriate level of comparison, what do you publish, how do you publish it and so on. Then when we move on to the next level, the next group of data, the next set of subjects, this may be a set of subjects to add. I would be interested if you have strong views on that as part of your report.
You are absolutely right, Chair, that there is—I am a big fan of transparency. You want to put the data in one place for people to be able to understand, interpret and see, but you also have to try to ensure that there are appropriate comparisons within that. There will be a challenge within that discussion about Oflog, about what is an appropriate comparison, because everybody is going to have different views about that, which we will have to work through.
Q91 Chair: That is fair. With the data, there are dangers when data is available in raw form. In many areas of local government, it is not comparable.
Lee Rowley: Exactly. The idea of Oflog is to put data in one place to make it useable for authorities, central government and people as a whole. Over time this is trying to bring together and synthesise lots of different views, so it is going to be a challenge to make that as usable and as interpretative as it can be.
Chair: We are moving on to data and IT.
Q92 Mary Robinson: We have started to cover quite a few of the points. We have spoken about the pilots and their effectiveness. Further to that, what changes to data-sharing and IT systems do you think are needed to improve council tax collection rates and practices? What more can be done?
Lee Rowley: Nico, do you have a view on that? Nico will be able to explain better but phase 1 of these pilots has been done and phase 2 is underway, if I am correct.
Nico Heslop: That is right.
Lee Rowley: We would want to see what comes out of that but the principles behind them sound great. It is about how quickly we can get through them and how we think through how we systemise them.
Nico Heslop: It is linked to the powers taken in the Digital Economy Act. We have done pilots with 73 local authorities. It is about joining up the data between DWP, HMRC and local authorities. By this summer some of that data will become available. On what is going to happen next, there is no statutory undertaking needed to make some of this data sharing possible. If a local authority is interested in better sharing of data, which as we have discussed already seems to be one of the key things to getting an effective collection rate, and a sensitive collection rate, they can undertake that by approaching the Cabinet Office. We would like to see more of that, and if there are any specific lessons from the pilots we will take them ahead with Cabinet Office.
Q93 Mary Robinson: When will we get some feedback on these pilots?
Lee Rowley: I understand that they are going to be publishing some data this summer.
Q94 Mary Robinson: Do you agree with stakeholders who believe that publishing in-year collection rates acts as a perverse incentive for councils to pursue short-term collection methods instead of affordable repayment plans? Are there other ways of reporting collection rates that you would consider?
Lee Rowley: My personal view is that sunshine is a good thing. As for when we collect it and how we collect it, I would tend, within reason, to collect as much as is useful, with obviously a decision about where to do that, and then try to collect in a useful frequency. I am not in a space on a personal level, unless there is a clear rationale to do so—I am happy to hear views if that is the case—where we start creating moratoriums on putting data out there simply for other reasons. I would prefer more data to be out there than not.
The second part of your question goes back to the discussion we were having with Andrew, which is that this is not a debt in the sense of a single purchase that needs to be paid off. It is a recurring requirement to pay and however we structure policy here we have to make sure that we are not, in trying to be compassionate for those people who are having challenges at a point in their lives, which we should be, inadvertently then creating a problem later down the line because lots of lots of debts build up that we should have tried to work out how to resolve in a timelier fashion.
Q95 Mary Robinson: Of course, the best way to avoid problems with collection is to avoid arrears in the first place. We heard from Dukes Bailiffs, an enforcement agency, that wrote that the roll-out of universal credit was “detrimental to the take up of council tax support”, and explained that, “Many UC claimants do not submit a separate claim for council tax support, thinking that this will be done automatically for them”, and recommending that, “Any UC claim should automatically trigger a referral to the LA for assessment of eligibility for council tax support”. Is that joined-up thinking going on?
Lee Rowley: There are always opportunities to improve joined-up thinking across government. That may be a recommendation that the Committee might want to consider and I would be very happy to talk to my colleagues in DWP about the best way in which we can interact in this area.
Chair: Moving on to prevention and vulnerable residents.
Q96 Ian Byrne: Is Government, central or local, doing enough to prevent people from falling into arrears in the first place?
Lee Rowley: Collection rates are about 95% and have been for a number of years; 94% or 95%. On that basis, you would hope that there is not some massive systemic issue. Do we have to create processes that recognise challenges, difficulties and temporary issues within people’s lives? Yes, but all within the boundaries of what we were talking, which is about how taxation is a necessary part of a civilised society and we have to structure a recognition of that within the system.
Q97 Ian Byrne: I am very interested today—I do not know if you have seen it—in a report from the Joseph Rowntree Foundation, saying that universal credit is £85 a week but the bare essentials are £120 a week. Is it the responsibility of the Government, in your opinion, to ensure that that payment is made so that we can give people enough money to stop them from falling into debt? If that research is true, you do not have a hope in hell, do you, of staying out of debt?
Lee Rowley: I have not seen the research, forgive me, so I cannot comment on the individual research. I have interacted as a constituency MP with the Joseph Rowntree Foundation. It is a campaigning organisation as well as one that makes a great positive contribution to our understanding of this area. There is always a difficulty in social policy and benefits, welfare policy and cost of living policy to be able to speak about it in the macro, to understand general trends and general challenges and so on, but also recognising the micro—individual circumstances, individuals' approaches and the like. That is a difficult one and one that probably should be better addressed to my colleagues in the welfare Department who look at this in more detail than we do. However, you are right that there is an interaction between support schemes like the one that we have been talking about, but that is probably a DWP question.
Q98 Ian Byrne: I thought that you would say that but I thought that I would take a punt while I had you before me when we are talking about this.
Is Government, central or local, doing enough to support vulnerable residents who have council tax debt? Maybe that ties into what Mary was talking about as well. Is there enough information so that people have that at their fingertips, that they know that there is help out there, that you touched on before, Nico? Are we doing enough as a Government—or are you doing enough as a Government, should I say—to ensure that people have that information?
Lee Rowley: There is probably always more that can be done on information, but there is always the challenge of how you get things out to people who need it, hard-to-reach communities and hard-to-reach groups. However, if I step back for a moment, having said in parts of this session that Covid is a real challenge to understanding what is going on, for your question Covid probably has demonstrated that the system, both in isolation—this bit of the system and the system as a whole—has responded to a very, very difficult time. We have seen arrears grow but that also is a recognition that councils accept that there are temporary periods where people cannot pay and so on, or at least in part. I would hope that as imperfect as it is, the last couple of years have demonstrated that the system is flexible and can accommodate challenge when it comes.
Q99 Ian Byrne: The last question is about ethical debt collection trials. We know Fulham, Barking, Dagenham and Bristol have gone on various trials on ethical debt collection. Do you know anything about that? Have you assessed it as a Department and is it something that you would consider rolling out if you do have the assessments?
Lee Rowley: I have spoken a little bit about the Hammersmith and Fulham example. I do not claim to know a huge amount about it but we have spoken in the Department about it. How do I put this? I would gently push back on the terminology, without getting into a big debate about semantics, because it is the job of a civilised society to make sure that the processes that it puts in place create a framework that makes sure that it is clear what the expectation is on the part of the system but also takes into account the individual circumstances the city is in.
I am not sure that I accept the inference that the description of the system as a whole is contrary to the title here, but if I accept the principle of localism, I accept the principle that people will do things differently. It is for Hammersmith and Fulham to decide what is the most appropriate in Hammersmith Broadway as opposed to what—
Q100 Ian Byrne: You have been using that argument quite a lot to devolve it down to local governments but as a Government, if best practice is happening in councils, isn’t it your job to highlight that to other councils and say that this is something that they should consider rolling out?
Lee Rowley: That is why we published the 2021 document.
Q101 Ian Byrne: Does that have ethical debt collection schemes within it?
Lee Rowley: No, because I have just said to you that I have not taken a view on ethical debt collection because I do not necessarily agree with the concept, the description of the concept.
Nico Heslop: The 2021 guidelines have a lot of examples of councils doing stuff before getting to the debt collection stage and, even when they get to the debt collection stage, doing things differently. As we understand it about the Hammersmith, Westminster and Fulham example, that is sort of what they are doing there. The 2021 guidance highlights examples like that.
Q102 Ian Byrne: Are they getting monitored and assessed for their effectiveness?
Lee Rowley: No. We have already—
Ian Byrne: No, so it is solely down to the local individual council if it wishes to adopt that model.
Lee Rowley: Yes, because that is local.
Ian Byrne: And you do not have a view on it.
Lee Rowley: Of course as a politician I always have views about lots of things, but if I respect the principle of this settlement that was agreed in 2013—
Ian Byrne: So the Department does not have a view? Not you, because Ministers come and go, but does the Department have a view on it?
Lee Rowley: The Department’s position is that this is localised.
Q103 Chair: Is there a gap between what the law says councils should do and some of the best practice that you are seeing in local authorities?
Lee Rowley: Yes, of course there is a gap. For example, if you take the discussion that we had with Andrew Lewer at the top of the session whereby the law sets down a set of requirements about when you can and cannot send letters, it says you cannot send a letter until seven days after they are due to pay; that is the basic, but it is not necessarily best practice. There is obviously a difference between best practice and minimum levels.
Q104 Chair: Is there no role in government for highlighting particular best practice? It seems that you are passing on examples of practice, but in saying “best practice”, you are surely taking a view as a Government about what is good practice and which councils are doing things right.
Lee Rowley: Let me explain that principle. If the Government do nothing, the Government are criticised for doing nothing. If the Government take a view but do not force everybody to do it, which gets you out of localism the Government get criticised for being too centralising and all the rest of it.
I presume my predecessors were trying to respect the principles behind this, which people in this room will have different views about, that it is primarily the responsibility of individual councils to make the decisions about what they do or do not do in their localities, while also giving the opportunity to highlight where things are perceived to be working well, but may not work well in other geographies and other localities and other circumstances.
I get your point, but the Government will be criticised wherever they come down and I think it is not unreasonable for the Government to say, “This is primarily locally led, but we have seen some stuff which may be useful for you which you should consider, but it does not necessarily mean that we will hold a clipboard above you to see whether you do it or not.”
Nico Heslop: There are three or four themes though. There is a theme in the guidance around clear communication at all stages, but particularly before the enforcement sector gets involved. There is something about having what we term “supportive recovery techniques”, which has a large scope and there are examples there. There is something about the way that local authorities work with the recovery agents and there are some really good examples we have highlighted of teams being co-located and the sharing of data. There is a final theme about trying to get the best understanding of data. Those are three or four themes that we highlight, and we have put some examples in there as the Minister says.
Q105 Mary Robinson: Ultimately, the rationale for collecting data—and we want to see more joined-up data so that we can get some reasoning from it—is to make some judgements on effectiveness. If we talk about localism, I would say the prime reason one would be that people who live in a local area can see how effectively their council is performing. It may be that that is something that would be suitable for part of the audit function. Is that a possibility, or are these elements currently being examined locally through the audit function? Should there be a criteria?
Lee Rowley: I hope that the scrutiny processes within councils are doing that. That seems like a prime area for scrutiny. It would be their choice about frequency and depth, but it seems like an obvious place that an overview and scrutiny committee would look at periodically. Are there particular requirements within audit?
Nico Heslop: I am not aware but we can check and confirm.
Lee Rowley: As the Chair indicated, without suggesting that this will be the case, there is the potential over time. The purpose of Oflog is to think about where it is proportionately useful for Oflog to come in and shine light on individual parts of government. This may or may not be an area that can be considered helpful.
Q106 Mary Robinson: Of course, if there were more local authority comparative data, then people in a local authority area would be able to look at that and judge their local authority against others.
Lee Rowley: Yes. It is fair to say that that data is available already. I was looking at it just before we came out. There are time series going back to 2014, 2015, for the collection rates and the arrears levels of all individual local councils and aggregated up for types of councils—shire, district, unitaries and so on. There is a lot of variation in there. In outer London, at least one council’s raw arrears level has fallen over the last couple of years, whereas others have massively increased. There are individual circumstances and I go back to the Chair’s point about how to interpret the data, but the data is available to some extent.
Q107 Chair: Moving onto the Enforcement Conduct Board, this was an idea developed in 2020, but we are in 2023 now and the chief executive has only just been appointed. It has not moved very quickly, has it?
Lee Rowley: Forgive me, I do not have all of the backstory of the ECB but I do hope that it is showing progress. I do not necessarily disagree with the point you are making and I hope it can make more progress and it can be useful in this regard, because it is important that where there is bad practice we are rooting it out through those kinds of processes.
Q108 Chair: When I met the chair, one of the points she made was that we are still going begging to the people in the industry for the funding to police the industry. I think she was suggesting that perhaps we need it to be put on the statutory basis and for the Government to say that the payments to fund the ECB will be requirements rather than wishes.
Lee Rowley: Let us see what comes of the programme. As you say, a chief executive is now either in post or about to come into post.
Nico Heslop: In post.
Lee Rowley: The chair is in post.
Nico Heslop: The board is up and running.
Lee Rowley: I do not necessarily disagree with the underlying point, is this the right structure? I think that we probably need more information from the ECB about whether it is working which will take—
Nico Heslop: I believe we have committed to undertake a review of it within two years to exactly answer that question about whether it needs to be put on the statutory footing. The evidence you received in June from the industry suggested that the vast majority of the industry are on board with it, but the Government have been clear that they will look at it and, if necessary, put it on a statutory footing.
Q109 Chair: When will the review be complete?
Nico Heslop: Not for a couple of years because it has only just been set up, as you know. I do not know when the clock starts, but it is not for a couple of years.
Lee Rowley: I would be happy to come back in writing with a quarter or a date when we would do that.
Q110 Chair: Okay. The chair reasonably said that it is very difficult to appoint staff when you cannot be certain you have the money to pay them. That has been one of the issues. I think around £600,000 was supposed to be the funding coming forward, but only about two-thirds of that has been committed.
Lee Rowley: That would be a good indication to the Government that the industry may not be policing itself in the right way.
Nico Heslop: We can pick up with the MOJ.
Q111 Chair: It might be an indication to the industry now that if they do not come forward with voluntary payments as they should be, the Government might take that into account when looking at whether it should be on a statutory basis.
Lee Rowley: There are choices. Industry has agency. My colleagues in the MOJ are partly responsible for this so I have to take into account their views, but the intention here is to make progress. I hope the industry will make progress with the ECB, otherwise conclusions may be drawn.
Chair: Okay. I think we want to monitor that because, as you say, it is right that the industry works in a proper way and adopts proper and good practices, and should be held to account if it does not. Finally, moving on to council tax reform.
Q112 Kate Hollern: On 21 November, the Secretary of State told us that you, Minister, have been looking at council tax reforms at the request of the Chancellor. What objectives are you working towards and what timescales will you set?
Lee Rowley: As the Secretary of State said, I am looking at this area. I would be grateful for your views as a Committee knowing more about this area than I do.
My first job as a Minister was to try to ensure that local government finance settlement landed in a way that worked for local councils. The primary focus of my first few months in post has been making sure that the LGFS got through all the processes, the consultations and the legislation that we required to pass.
Alongside that, I have been familiarising myself. Local government finance is fiendishly complicated. I am not sure that after eight years as a councillor in 2015 I fully understood it, and I am now coming back to understanding that. There is a lot of work internally to bring me back up to speed.
I know you will be keen to understand more and I want to take this steadily and carefully. I think that the most I can say at the moment is that the Secretary of State has asked me to look at this and I am looking at this. This is going to be an area of focus over the coming months.
Our local government finance settlement has landed. My objective is to understand if there are areas which need to be reviewed, and I want to do that. That is all within the framework that has been announced, that we are prioritising stability over change because that is what local councils have asked for. We have agreed that we are not doing the Fair Funding Review in this Parliament. You would hope that Ministers have the inquisitiveness to want to find out more about their portfolios and suggest solutions which may improve things for everybody, which is what I am trying to do.
Q113 Kate Hollern: Yes. So you do not really have any objectives apart from reforming the system, but you are hoping to bring something, probably this year?
Lee Rowley: At this stage, all I can say is that a couple of weeks out from the local government finance settlement, I am still in familiarising myself with the territory. I am still trying to get into the detail. I am somebody who really likes the detail and want to understand it. I am trying to understand formulae which have been put together a decade ago and then things that have been put on top of them and all the rest of it. I am trying to understand it to the extent I can.
I will happily come back to the Committee in the future to talk about that in more detail, but the Secretary of State has been clear, “Go and have a look at this”. I am starting to have a look at it. I do not think I can draw any conclusions about what I am doing or the timelines on that at this stage, but I am happy to come back later in the year and talk about it.
Q114 Kate Hollern: Okay. I recognise that it is early days and there is such a lot going on. However, in your early thoughts, will reforms include re-evaluation of property and consideration of additional council tax bands? I think the current system has been in place for about 30 years, so what are your early thoughts about the options—additional council bands, re-evaluation of properties?
Lee Rowley: You are pushing me and I am going to swerve like a good politician. I do try to answer questions directly. I hope you can see that. The reality is that I need to get more into the detail, I need to understand it and I am within a framework where we are prioritising stability. We are not here debating council tax versus proportionate property tax. We have said that we are not changing fundamentals in this Parliament, so it is a case of working with Nico Heslop and his team to understand, to work it out and to go from there. I would not want to set hares running. I would not want to say that all manner of things are coming because I need to work through this in a consistent and calm way. I think you probably need to give it a bit more time and I will happily come back if you want to have me.
Q115 Kate Hollern: Okay, but for the sake of stability, because there appears to be an over-reliance by councils on council tax, how can we reduce that reliance? It is messy and council tax brings in different levels for different authorities per property and it does not lead to stability. How would you reduce reliance on council tax to make it fairer and more standard for councils up and down the country? What would your options be on that?
Lee Rowley: It is a difficult one. It is one that Governments of all colours have grappled with for many years. The Labour party was fundamentally challenged with how to raise council tax. Over the course of the 13 years it was in office, it went in one direction, but the Conservative party and coalitions have chosen to do a different thing. We will all take views about what was right and what was wrong.
It is an incredibly difficult area to get right. There is an interaction between different major funding streams and grants, of which there are both strings and no strings in certain parts of local government. Then you have business rates and council tax, and they interact very differently in different places. Then there are general philosophical questions about how big the state should be, what it should provide and so on.
Unfortunately, I cannot answer that, other than to say I am trying to understand in more detail, as a good Minister should do. Within the framework set out by the Secretary of State, I am trying to see what is happening here and whether there are opportunities for change in the medium term or in the future. I can come back in due course to talk more about it.
Nico Heslop: It is worth adding that over the last three spending review periods, the level of grant relative to revenue raised through tax has significantly increased. In the local government finance settlement the Minister just referenced, we put an additional up to £5 billion, of which £3 billion was directly through grant, with the rest being made available if councils take decisions on council tax. We have put significantly more grant into the system over the last three spending-review periods.
Q116 Kate Hollern: There has been such a big cut over the last 12 years, so we need to recognise that. The grants are a bit like a beauty contest, with bidding and getting support, particularly for councils who draw in less per property on the council tax. You spoke about different political parties over the years, and you are right. Everybody struggled with council tax. However, we need to recognise that in the last few years that there is a bigger burden with the precepts for adult social care, police and so on.
We recognise there is a problem. We know council tax is not ideal, but we seem to be putting more burden on councils and council tax payers. It needs an alternative that will ensure fairness, particularly when we talk about levelling up. For example, Blackpool draws in much less per property than Sussex or Essex. If this is really about levelling up, council tax in itself could actually be part of the problem holding areas back. We are getting more burden passed from the Government to council tax payers and we are heading for some serious problems in some very sensitive areas such as adult social care, so it needs a big think.
I know you have an open mind and you are working towards a framework, but I think that we need to establish the advantages and disadvantages of council tax on areas and what we can do to make the situation better. I accept that it is early days for you, but I would be keen to have an update on your thoughts about council tax collection and the over-reliance of councils on council tax to make sure we improve services for people, because that is exactly what it is about.
Lee Rowley: Your last point is absolutely right. We do want local government to work. Almost all of us have been councillors and we know how important it is to make local government work and the importance to our localities.
I will say a couple of things to reiterate Nico Heslop’s point about how we have put more money in in this recent settlement and the previous settlement which increases revenue grants. We always debate how, where, how much, and so on, but that has been done.
Within the revenue side of the settlement, although it is an extremely complicated system, most of that system relies upon some assessment of need underneath. In the instance where there is greater need, greater deprivation and so on, it should be that on the revenue side—as you are determining revenue support grants, other issues, and so on—there is a recognition of that in terms of the grants that come from central government to local government. It is always imperfect. Every area has wealthier areas and less affluent areas, but there is always a recognition of need on the revenue side.
On the capital side, which you referenced, obviously there has been an approach in recent years about bidding, pots and things like that. The Secretary of State has agreed to reflect on that, so I hope we will hear more on that.
Q117 Kate Hollern: Even on your support grants, councils cannot rely on a 12-month grant bid. Councils need stability. They need to be sure of the income that is coming in.
Lee Rowley: I totally agree. We have said, as I know the Labour party has said as well, that we want to move to longer-term settlements in areas like this. We are nearly halfway through an SR period. For the remainder of the SR period, we have tried to say for the coming financial year, “here you go”, which has now been done. There has been a general consensus in the sector that it has moved in a better direction. Then for the financial year of 2024-25, which is coming, we have already set out some high-level principles that should allow people to plan in more detail than they have been able to do previously. Over the course of the year, we will try to fill in more of those gaps early so that people are not waiting until November or December for information, as has been the case in previous years. We are trying to move in that direction, but it will take time.
Q118 Chair: One final tempting question. The Secretary of State was very clear that he regarded council tax as regressive. In the framework that he has set you, is one of the elements you are looking at about how to make council tax, or however money is raised for local government, less regressive?
Lee Rowley: Chair, we will look at everything. I do not want to leave you with an inaccurate view of what I am doing. The Secretary of State has set parameters for me to look at within a framework of stability and not changing fundamentals in this Parliament, and I am seeking to do that. I will then go back to him and we will make announcements as appropriate and necessary.
I was pleased in the recent local government finance settlement to be able to respond to some of the points that were raised during that consultation period to try to increase the rural services delivery grant and so on. This will be a combination of looking at where there is the ability to both put in place tweaks and then there is a broader set of questions of what we want this system to look like in the future. I have to go back to the mandate that has been set, which is that fundamental change will not be in the short-term.
Chair: Right. Thank you, Minister, very much indeed for coming to answer our questions today and you have posed a number of challenges for us which I hope we will respond to when we produce our report on our inquiry. Thank you very much. That brings us to the end of our public proceedings for today.