COUNCIL TAX REGULATION
CLAUSE 29 AND SCHEDULE 1: LIMITATION OF COUNCIL TAX
125. Clause 29 of the Bill inserts a new Chapter
IVA into Part I of the
Local Government Finance Act 1992. This new chapter provides for
the new reserve powers which replace the existing capping powers
set out in Chapter V which is repealed.
126. Section 52Z provides that the powers available
to the Secretary of State in England will be exercised by the
National Assembly in respect of Wales.
SECTION 52B: POWER TO DESIGNATE OR NOMINATE AUTHORITIES
127. Under section 52B, the Secretary of State
will decide if the budget requirement of a local authority for
the year under consideration is excessive. The Secretary of State
must determine a set of principles that will be used to decide
if the budget requirement is excessive, and this set of principles
must contain a comparison of the budget requirement for the year
under consideration with that of an earlier year. The Secretary
of State may also determine categories of authorities, taking
into account any information he thinks is relevant; any principles
applied to authorities must be the same for all authorities within
the category. If the Secretary of State does not determine categories
then the same set of principles must be used for all authorities.
128. The determination of principles and categories
is not subject to Parliamentary scrutiny. However, if an authority
is designatedwhich is the start of the process that leads
to cappingit will be able to challenge the maximum amount
set by the Secretary of State for its budget requirement. If a
local authority challenges the maximum amount set by the Secretary
of State or does not respond, he must lay an order setting out
the maximum amount or 'cap' which must be approved by resolution
of the House of Commons.
129. This is similar to the existing capping
legislation, whereby the capping criteria are not scrutinised
by Parliament, but if an authority is designated and it either
challenges or does not respond, an order setting out the cap must
be approved by resolution of the House of Commons.
SECTION 52C: ALTERNATIVE NOTIONAL AMOUNTS
130. Section 52C provides that the Secretary
of State may set a notional amount for the budget requirement
for an authority. This power may be used to set a notional amount
where there has been a change in an authority's function or boundary,
so that a valid comparison can be made with the budget requirement
for the year under consideration. It may also be used to set a
notional amount where there was no budget requirement set for
an earlier year. A similar power exists under current capping
legislation (section 55 of the 1992 Act).
131. If the Secretary of State does set an alternative
notional amount for an authority, he will do so in a report which
must be laid before the House of Commons and which is then subject
to the affirmative resolution procedure; the report should contain
whatever explanation the Secretary of State thinks desirable of
the calculation he has made.
SECTION 52D: DESIGNATION OR NOMINATION
132. Under section 52D, if the Secretary of State
has decided under section 52B that the budget requirement is excessive,
he may then designate or nominate the authority. The decision
whether to designate or nominate may in part depend on the amount
by which the budget requirement is excessive. Nomination would
be preferable to most authorities as they would not have to rebill
their taxpayers and would have time to plan any reductions in
133. The safeguards for this power are contained
in the procedures set out in the remainder of this new Chapter.
SECTION 52F: CHALLENGE OF MAXIMUM AMOUNT
134. Section 52E (designation) sets out the procedure
that must be followed if the Secretary of State designates an
authority for the year under consideration; it does not provide
delegated powers. However, section 52F sets out the procedure
if the local authority challenges the maximum amount. After the
Secretary of State has considered any information put forward
by the local authority, he can make an order setting out the maximum
amount for the budget requirement. This order must be approved
by resolution of the House of Commons. The local authority is
then informed of the maximum amount in a notice. Alternatively
the Secretary of State may nominate the authority under subsection
135. This section places limits on what amount
the Secretary of State may set as the maximum for the year; it
may not exceed an amount already calculated by the local authority,
but may be greater or smaller or the same as that already notified
by the Secretary of State under section 52E. He may also alter
the target amount for the year. This may be necessary if he alters
the maximum amount as future year designation is triggered if
the budget requirement is above the target.
SECTION 52H: NO CHALLENGE OR ACCEPTANCE
136. Section 52H provides that, if the local
authority neither challenges the maximum amount nor formally accepts
it, the maximum amount will be set out in an order which must
be approved by resolution of the House of Commons. The local authority
will then be informed of the maximum amount in a notice.
SECTIONS 52Q (CHALLENGE OF MAXIMUM AMOUNT) AND 52S
(NO CHALLENGE OR ACCEPTANCE)
137. The Secretary of State may choose to nominate
an authority, for which the procedures are set out in section
52L; he can then proceed under either section 52M (future year
designation) or section 52N (setting a notional budget requirement).
Section 52P sets out the procedure that will be followed if an
authority is designated again after it has been designated in
a previous year. There are no further delegated powers involved
in these procedures.
138. The safeguards for Parliamentary scrutiny
of these procedures are contained in sections 52Q and 52S, which
provide that if the local authority does not accept the maximum
amount set by the Secretary of State when designating for a following
year, he must lay an order setting out the maximum amount. This
order is subject to affirmative resolution in the House of Commons.
SECTION 52X: CALCULATIONS TO BE NET OF PRECEPTS
139. Section 52X provides that, for the purposes
of this Chapter, the budget requirement of a billing authority
should be net of local precepts, as should the target amount and
maximum amount set by the Secretary of State. However, the Secretary
of State may, by order, provide that local precepts be included.
This allows the Secretary of State to ensure that local authorities
do not simply pass functions to local precepting authorities in
order to avoid budgetary controls. An order under this section
will be subject to the negative resolution procedure in the House
of Commons. This is similar to the approach in subsections 54(6)
and (7) in the 1992 Act.
SECTION 52Y: INFORMATION FOR PURPOSES OF CHAPTER
140. Section 52Y requires local authorities to
provide the Secretary of State with their budget requirement and
any local precepts seven days after the budget requirement has
been set. This information is needed by the Secretary of State
to decide whether or not it is excessive. The Secretary of State
may also require a local authority to provide other information
required for the purpose of deciding whether to exercise his powers
under this chapter.
SECTION 52Z: SEPARATE ADMINISTRATION IN ENGLAND AND
141. Under section 52Z, the National Assembly
for Wales will exercise the powers in Wales which in England will
be exercised by the Secretary of State. Section 52Z further modifies
Chapter IVA of the 1992 Act to
provide that Parliamentary procedure will not apply to Assembly
Orders under sections 52F, 52H, 52Q, 52S, and 52X above. Instead,
the Assembly's subordinate legislative procedures, set out in
sections 64-68 of the Government of Wales Act 1998 and its Standing
Orders, will apply. The Committee has already considered these
procedures in its scrutiny of this Act during its passage through
Parliament, concluding that "the proposed mechanism for scrutiny,
which, save in cases of urgency, always requires both a costbenefit
appraisal and the affirmative procedure, is suitably rigorous".
(18th Report, 1997-98, column 14).
CLAUSE 30: MAJOR PRECEPTING AUTHORITIES: FURTHER
142. Clause 30 relates to the council tax benefit
subsidy limitation scheme.
143. Under this scheme, where an authority's
budget requirement is excessive, it must make a contribution to
the additional council tax benefit costs that arise. The Local
Authorities (Alteration of Requisite Calculations) (England) Regulations
1999 (SI 1999/228) changed the tax-setting equations set out in
sections 33 and 44 of the Local Government Finance Act 1992 so
that the basic amount of council tax is increased to cover the
contribution to the costs of additional council tax benefit where
an authority exceeds the guideline. A draft of these Regulations
were published at the time of the announcement of the provisional
1999/2000 Local Government Finance Settlement and the scheme debated
at that point. The final Regulations were made following the announcement
of the final Settlement. They are subject to negative resolution
in both Houses; they were prayed against in the House of Commons
and a debate took place on 10 March. A copy of the Regulations
is attached. The Welsh equivalent are the Local Authorities (Alteration
of Requisite Calculations) (Wales) Regulations (SI 1999/296).
144. In relation to billing authorities, the
scheme works through the combined effects of the Requisite Calculations
Regulations and directions which relate to transfers between the
general and collection funds.
145. Clause 30 provides that, if the amount calculated
by a major precepting authority as its budget requirement is excessive
in accordance with criteria published by the Secretary of State,
it must make payments to billing authorities to which it issues
a precept. In Wales the powers of the Secretary of State will
be exercised by the National Assembly for Wales. This provision
is necessary to require precepting authorities to pay an amount
to billing authorities to compensate for the loss of subsidy resulting
from the excessive budget requirement of the preceptor.
146. The Schedule to the Requisite Calculations
Regulations contains the equivalent both of the criteria for excessiveness
(paragraph 1(1)) and the calculation of the amount of the payment.
It is considered that the criteria of excessiveness under subsection
30(2) need not be set out in a statutory instrument as they will
be included in the Requisite Calculations Regulations.
147. Regulations under subsection 30(5) will
set out the calculation of the amount (also in the Requisite Calculations
Regulations) as well as the time of payment and other details
set out in that subsection. These regulations will be subject
to negative procedure.
148. The Local Authorities (Funds) (England)
Regulations 1992 (SI 1992/2428 as amended) contain provisions
for payments by a billing authority to a preceptor, including
provisions for the timing of payments and for interest. These
regulations are made under powers which include section 99 of
the Local Government Finance Act 1988, and are subject to negative
procedure by virtue of section 143(3). The Department sees the
new Regulations as serving a similar purpose, so that similar
formalities seem appropriate. The Local Authorities (Precepts)
(Wales) Regulations 1995 (SI 1995/2562) have a similar function
in Wales. They are made under a different statute, but are also
subject to the negative resolution procedure.