Local Government Committee, 14 Nov 2000

Meeting date: Tuesday, November 14, 2000

Official Report 177KB pdf

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Education (Graduate Endowment and Student Support) (Scotland) Bill: Stage 1

Right, comrades, let us start. Today we are considering the Education (Graduate Endowment and Student Support) (Scotland) Bill, which is at stage 1 of its progress through Parliament. I remind members that we are considering the section that falls within the committee's remit, that is, section 3, which relates to the proposed changes in council tax legislation.

Members will be aware that the Enterprise and Lifelong Learning Committee is the lead committee on the bill. We have to make our report to that committee. Members will also be aware that the bill is about to be reintroduced in a redrafted form. It is understood that no changes to section 3 are planned, but we will not be able to finalise our report until we have considered the reintroduced bill.

Our first witnesses are from the National Union of Students. Mandy Telford is the president of NUS Scotland, Kenryck Lloyd Jones is the Scottish affairs officer of NUS Scotland and Lynne Davidson is a welfare adviser. They will make their presentations and the committee can then ask questions.

Thank you for inviting us to give evidence. I should add that Lynne Davidson is the welfare adviser at Strathclyde University Students Association and so has first-hand experience of dealing with student hardship problems.

We welcome the Scottish Executive's recognition that students continue to experience hardship under the council tax system. Since 1995, NUS Scotland has been seeking changes to that system along the lines suggested in our written submission, which outlines what we feel about the bill's proposals. We are happy to take questions on what we feel about the current legislation, what changes to that legislation we would like and how the bill will affect students. Lynne Davidson can also talk about her first-hand experience.

Do Lynne or Kenryck wish to say anything at this point?

We are happy to answer questions.

Before I ask members whether they have any questions, I remind them that, although I will accept a range of views, we need to focus the debate on council tax. I will not allow members to meander into discussion of wider aspects of the bill because, as I said, the bill is being redrafted. We must focus on questions that are relevant to section 3.

I have a general question. I read the submission and understood it, which is quite remarkable for me—it must have been written in very good English. However, much of your evidence is anecdotal. Do you have any independent report or review of the effects of the council tax arrangements on students?

I have statistics that are compiled by our office, but I do not know how much they will tell the committee, because even brief inquiries about, for example, council tax exemption forms are counted in the statistics. I can certainly give you information on typical cases.

Has there been an independent review?

Not that I am aware of.

Do you have any idea what proportion of students are affected?

I think that the numbers vary. We do not know the total number of those affected. We have asked local authorities whether they have figures, but they do not collect information on the number of students liable to pay council tax within their area, so it is difficult to get the statistics. We estimate that, for example, about 15 per cent of the population of Aberdeen are students. Edinburgh and Glasgow have a similar proportion of students, which is high. The question is then what proportion of students live with non-students. Of course, students' living circumstances change regularly, but we are talking about those living in private rented accommodation. I suggest that the private rented sector includes students and non-students in equal measure.

I just want to make sure that I have understood the nub of the argument. The explanatory notes to the bill state:

"The effect of the amendments is that the same amount will be recoverable in respect of the dwelling but students will no longer be jointly and severally liable for council tax and so will be excluded from those liable to pay."

In other words, where students live with non-students, although the students will not be liable to pay, the property will still be liable for council tax. There are two implications. Either the non-students would pay the whole amount or they would expect the students to make a contribution. Is that correct?

Yes.

In your submission, you mention the apportioned or personal discount system. I understand that you are saying that such a system would overcome these difficulties because the council tax would be brought down to a level that was proportionate to the number of non-students in the household, who would divide the council tax between them.

Yes.

Is there anything else that you want to say about your proposal? Have I missed something, or is that the nub of it?

Yes, that is the crux of our argument. Although the bill proposes to remove students from liability, in the real world, when the council tax bill comes in, students may still be expected to pay. It is unfair on the non-students that they are expected to pay the full council tax bill because they are sharing the flat with students. It is also unfair that students should be expected to pay, because they do not have the means to pay.

Although our proposal appears to reduce the council revenue—whereas the bill would make no difference to a council's revenue—in many cases the revenue from properties that contain both students and non-students is not being collected anyway. We have a large amount of anecdotal evidence, which I am sure that Lynne Davidson will expand on, to demonstrate that councils are not collecting the money because students seek to evade paying the bill.

We believe that more money might be collected under the system that we have proposed. For example, there is anecdotal evidence that, where students and non-students live in the same property, only students' names are on the lease so that the property does not attract council tax. If students had no fear of stepping forward to admit that they lived with non-students who would pay their share, that could lead to less evasion and more revenue collection. That is an important point.

Can we hear in more detail some anecdotal examples?

Yes, there are plenty examples. I often get students making inquiries on how best to avoid liability for council tax payment. Students are now, thankfully, very aware that if they live with a non-student they could face a hefty bill. Students often come to my office and ask whether they are liable for the council tax bill that has been sent to them. When I tell them that they are, they ask what they should do. Some students whom I have seen have used their student loan to pay off the debt. Other students disappear.

Do more disappear than use their loan to pay off the debt?

I do not know whether I can answer that, because I see only students who seek my advice—I do not see every student. I imagine that most students would disappear, although I do not know whether I am correct in assuming that. This issue causes students a great deal of anxiety. I have come across students who have withdrawn from their course because of the implications of having such a hefty bill and its being passed on to sheriff officers.

I can understand that.

The submission indicated that the private rented sector is being distorted by the current system. Have you any evidence that that is the case?

As we have pointed out, students are now reluctant to share houses with non-students, and non-students are reluctant to share houses with students if they cannot pay their way. All the evidence of advisers such as Lynne Davidson is that when a council tax bill arrives through the letterbox, students and non-students start reassessing whether they should be living together. That is a clear distortion of the council tax system. It is a serious disincentive. If we consider the way in which incentives and disincentives work within the general economy, it is clear that it does not take a great financial incentive for people to change their living circumstances. Something as significant as a £2,000 council tax bill will result in a serious distortion of the private rented sector.

The only hard evidence that we have is that we are contacted regularly by students who tell us that they could not take up leases on certain properties because they would have had to pay council tax.

Does that mean that people in the private rented sector are less likely to want to rent to students? Does it affect the level of student rent?

No.

That would be the implication of saying that the private rented sector is distorted.

The reason that it is distorted is that properties may sit with one or two empty bedrooms because students or non-students will be turned away, depending on who occupies the other rooms. Although the property will continue to be rented, there may be empty rooms in the property. At the beginning of the year, students are often desperate for accommodation and will take anything. However, they will not remain in a property where they have to pay council tax; they will move out. Such things affect the supply and demand of accommodation for both students and non-students. That is the distortion to which we referred.

Do you have any evidence of the scale of that?

No. There is no way of collecting figures on such matters, apart from asking housing associations if they have any relevant statistics. However, I cannot imagine that housing associations collate such statistics—they are more interested in collecting the rent.

When students are looking for accommodation, not only do they consider whether accommodation is suitable in that it is dry, safe and carries a fair rent, but they consider the population of a flat to see whether anyone in the flat is working. That has implications for a student's sense of community. There are cultural and social advantages in sharing a flat with someone who is working or who has graduated. That is not happening at the moment, because students are rejecting flats in which rooms are occupied by working people.

Your submission proposes an amendment to the council tax regulations by introducing a personal discount scheme. Could you outline the main features of such a scheme and the advantage it holds over the Executive's proposed approach? What are the positive elements of your scheme?

The system for assisting people on low income in paying council tax is council tax benefit. Council tax benefit provides a means for those without a high income to contribute to the council tax bill. It means that people can pay their share. The proposals that have been announced mean that if a property receives a bill, there is no way in which students can contribute towards paying the bill. That is the significant disadvantage of the Executive's proposals.

Someone on an income of £8,000 would receive no help in paying the council tax bill, and if they shared a property with students, it is possible that they could end up with a bill of £1,500. That is an unrealistic burden on someone who earns £8,000 a year. It is unfair to expect students to have no way of contributing towards a bill for a property in which they live. The council tax benefit system is a reserved matter, and if that system is not to be used, we must consider how to reduce the bill to recognise the fact that people are living in the property who do not have the ability to pay their share of the bill.

The advantage of our scheme would be that students and non-students would not have to live in self-imposed ghettos.

Have you discussed with local authorities the practicalities of introducing such a scheme? I can see it becoming an administrative nightmare, particularly as students move around so frequently.

We have not had full discussions with local authorities, because only NUS Scotland has proposed the scheme. We are aware that local authorities would not like any system that would add to their administrative burdens. However, at the end of the day, we are concerned with creating a system that is fair, not necessarily one that is administratively simple. It might be possible for the council tax benefit system to also operate on an apportioned system. Instead of discounting a proportion of the bill, the system would pay the money for the proportion for which each individual is assessed as being liable. The same analysis would be used as that used under the council tax benefit system, but instead of paying the bill, the scheme would reduce the bill by the same amount for each student.

My point is that students move more often than the rest of the population. I know students who move almost weekly. How would councils address the practicalities of that?

That is a problem with the council tax—populations move regularly. If someone who lives in a student-only property graduates, the property becomes liable, but if that person moves away, the property becomes exempt again. Those problems are inherent in the council tax. Given that framework, we are trying to ensure that students do not suffer.

I apologise for my late arrival. I was detained at another meeting. I would like to clarify the apportioned student discount that is set out on page 9 of your submission. It says that

"the student's apportionment would be calculated as one fifth of the total, reducing the bill by £300",

meaning that a £1,500 bill would go down to £1,200, but that all the residents, including the student, would be expected to pay that sum jointly. Is that the case?

The system is joint and several liability. We recognise that there are problems in removing people from joint and several liability, especially for one aspect of a property when they will remain jointly and severally liable for other aspects. We are not necessarily opposed in principle to the statement that students could be removed from joint and several liability.

We welcome the recognition that students have difficulty under the current system. An apportioned discount would reduce the need to look specifically at joint and several liability when they will remain jointly and severally liable for, for example, the rent, the water and sewerage costs and the gas, electricity and phone bills, depending on how many names are on those bills.

If there was £300 left to pay, it would be fair to say that if the working person were the person left with that apportionment, you might expect that working person to pay it. However, that would still be up to all the residents in a jointly and severally liable scheme. We are not saying that everything must remain jointly and severally liable, but we do not think that it would be a big issue if those bills were affordable.

You argue that although students would benefit from the proposed scheme, they would find it harder to get flats because it would be less attractive to share with students. Is that part of your argument?

Everybody would be reluctant to share a property with somebody who was not legally liable or able to contribute to their fair share of the costs of living in that property. We do not think that that would be good for students in local communities. We are concerned about students in local communities rather than thinking about full-time students in isolation.

I can see the point that you are making in your submission. One possible pitfall is that under this scheme it might be possible for parents of students to avoid their own council tax liabilities by adding their son's or daughter's name to the title of their house. That would reduce their council tax liability. If there were such a loophole, some people may try to exploit it.

That would be the case only if the students were sharing their house with their parents and they were all jointly and severally liable. That would be unlikely. There is a hierarchy of liability for council tax. It begins with owner-occupiers: they are the people who are found liable. The parents of most students are owner-occupiers whose children merely live in the property so they would not be liable for the bill, nor would the bill be reduced in view of their liability because they would not be liable. It would only occur in a situation in which sudents shared a flat with their parents. That is not common, so it is not a serious issue.

I wondered whether it would be possible for people to cynically manipulate this by adding their son's or daughter's name to the title deeds of the house and effectively giving them a share in the house.

We are dealing with rented property. It is a different case for those who own and live in the property. The legislation points out that it would not necessarily cover owner-occupiers who are students.

If parents live with their student son or daughter in rented accommodation and your scheme was adopted, the council tax would be reduced by a third or a quarter, or whatever the proportion happens to be. That would be an incentive for parents to encourage their offspring to stay at home when they were studying.

It is rare for people to share a flat, jointly and severally liable, with their parents, where the situation is, "You pay your share of the rent, I will pay my share and we will have an equal share in the property." If that were the case, it would be no different to a situation in which they lived with someone else or in which they did not live with their parents and were individual adults in their own right who claimed council tax benefit.

If two adults renting their accommodation together have a £1,500 council tax bill, they have to pay the whole bill. Correct me if I am wrong, but you are suggesting that if they lived with a son or daughter, then, because it would be assumed that the child would be liable for a third of the council tax, the bill would be reduced by a third. That is what is suggested by the scenarios in your submission. The second scenario says:

"Where more than one student lived with a non-student, each student would receive an apportioned discount for their share of the bill. Two students would both receive an apportioned discount of £300 each".

I should clarify that part of the submission. Those scenarios relate to circumstances in which all the tenants are jointly and severally liable. In a property in which a student lives with their parents, their parents will have the liability for that property, not the student. In those circumstances, the parents would be on the title deeds and they, not the students, would be identified as the tenants.

And there would be no apportionment in such an instance.

That is correct. The system involves a hierarchy of liability. The council tax operates in a system that begins with owner-occupiers, who are followed by resident tenants—the people who, in effect, are renting the property. They are followed by people who are subletting the property. Within that system, there is no more room to evade liability than in any other. It is quite simple.

Not many students have their parents for flatmates. There is no way in which that situation would arise unless—

They could be living at home with their parents who are council tenants.

No. The parents will either be owner-occupiers or the resident tenants. The student in such a situation would be neither of those things and would have no liability in that situation anyway. The bill would be for their parents. I am not sure whether my explanation helps anybody.

I am a little upset that we are going to such tangential extremes because of the issue of student penury. I cannot get away from the thought that, as Kenny Gibson and Bristow Muldoon suggested, had I been a conspiring parent instead of one who bore most of the burden of putting my children through university, we could probably have organised a joint ownership of the house that we lived in, as they lived with me while attending university.

As I pointed out earlier, if you are the owner-occupier, the scheme would not apply.

Equally, then, had we gone into a tenanted property—which was not an option that we considered but which was feasible—we could have arranged to have a joint tenancy between the father, the mother and the children.

That would be exactly the same as the situation that exists under the council tax benefit system, would it not?

I do not know. I am not an expert.

If people who are on a low income are treated as independent adults, which they are under the council tax benefit system, exactly the same situation applies. However, I do not think that many people are claiming council tax benefit while living with their parents. We have to decide whether a distinction should be made in relation to students who are living as adults in an equal relationship with their parents. At what point do we say, "That's not right"?

I must stress that in 99.9 per cent of cases students do not share properties with their parents on an equal basis. In any other circumstances, such people would be covered by the system, so it seems wrong to discriminate when students live with their parents on an equal basis. Having said that, such issues are negligible distractions from the situation that students are suffering from. I do not think that many people will benefit from the scheme that is proposed.

I said that I regretted the fact that we had been talking about these issues on the basis of student poverty.

I was going to ask about the situation of owner-occupiers, but you clarified that at the end of your statement. However, I am concerned that there might be similar anomalies for part-time students. What sort of incentives—or disincentives—would there be in your scheme for those who may either be studying part-time and working part-time or studying part-time and not working?

The scheme that we propose is for full-time students, because they are excluded from council tax benefit. Depending on their income, part-time students would receive, or be entitled to claim, the benefit. We are not talking about any definition of students other than that which is used in council tax legislation.

Your scenarios seemed to deal with full-time students, but would it have any bearing on the situation if all the students were part-time?

If all were part-time, they would receive income support or jobseeker's allowance, or they would be in employment. They would have wages from employment to pay the council tax bill or they would receive council tax benefit. That scenario would not apply to them.

If there are no more questions, I thank the witnesses for their presentation and for coming along today. It has been helpful and has clarified some matters that were raised in the paper.

We welcome Paul Dowsland, who is a money advice worker from Aberdeen citizens advice bureau. The usual procedure is that witnesses speak to the committee for a few minutes, after which we ask questions.

My evidence is more anecdotal than statistical. I start with my personal experience, which is what brought me to a citizens advice bureau in the first place. I graduated in 1994; that autumn I moved in with my girlfriend and three others who needed people with whom to share a flat. All, including my girlfriend, were students. Before I moved in, I sought advice from an independent youth and student advice centre, because I had heard rumours about the council tax. I was advised wrongly by that centre that there would be no problem.

I moved in and, after a couple of months, the council tax bill arrived. My co-tenants were absolutely furious. We investigated the matter and found that the bill was correct. We each ended up paying £105 that none of us could afford. That is what brought me to the CAB in the first place and I have come across similar cases in the years since then. The first was the case of a woman who moved in with her partner and student friends after she graduated. She believed that students were exempt from payment of council tax and applied for council tax benefit, thinking that there would be no problem. She was horrified to discover that her friends were liable for an £800 council tax bill and was terrified about explaining that to them.

In another case, a couple sought advice before the start of term—he had graduated and she was still a student. They had contacted the council for advice on moving in and had been surprised by what they were told, so they checked the information with the CAB. The council's advice made no sense to them and when we explained to them that their co-tenants would be liable for council tax, they left the office astonished. During the interview they discussed whether they could afford to live together or whether they would have to live apart and where they would live, because they could not move in with the student friends with whom they had agreed to share a house. On at least two other occasions—possibly more—while I have been in Aberdeen, volunteers have asked me to clarify similar cases. They were as surprised as the clients to discover what the current rules are.

I also have some information on the level of student debt, but I will leave that for now. I have covered council tax, on which I was asked to give evidence.

In its 1995 report, Citizens Advice Scotland stated that the current legislation on students and council tax

"did not fit well with student life . . . as many young people choose to live together and move in and out of accommodation"

and that

"as students moved in and out of academic life this causes tortuous calculations as well as resentment from the student residents."

Earlier we heard about the fact that students avoid council tax, if they are liable for it, by moving around. Would you say that that description of student life is still accurate? We heard that students would not move into a flat if they knew that someone in that flat would be liable to pay council tax if they moved in. Is that happening in Aberdeen?

There are cases of people having to reconsider whether they can move in to flats. By presenting the difficulty over council tax to students, we increase student hardship in situations where people have to fill an extra room or face paying extra rent.

In your normal line of duty, what percentage of the people who come to you are students? Do they constitute a large proportion of the total? Of the students who come to you, how many seek advice on council tax problems, rather than other problems?

Citizens Advice Scotland's statistics are compiled in such a way as to make it impossible to identify the economic status of clients. Aberdeen citizens advice bureau uses PG debt 6—a computer programme—for debt case management, which is not standard to all CABs. I use that program to identify cases in which a student is the main contact in a complex multiple-debt case that is severe enough to require on-going case management. I cannot use it to identify cases in which the student is the partner of the main contact. Between January and October 2000, we have had 10 instances of students being the main contact in a multiple-debt case, out of a total of 430 cases. That works out at 2.3 per cent.

Can you say whether those debt problems are linked to council tax, rather than to other factors?

Other factors would certainly be involved in those cases. We are dealing with multiple debts.

Do you have an indication of the number of part-time students who find themselves in such a position?

I am afraid that I do not have any information on that.

So, you cannot separate out full-time from part-time students.

No.

How do you view the Scottish Executive's proposals? How might they address some of the problems that you have highlighted?

The proposal to amend council tax provisions is good. It would remove a barrier to people moving around and finding extra tenants.

Are there any more questions?

In your experience, do many students share accommodation with non-students?

They do not, on the whole, but as I said earlier, there are examples of that.

Is a flat more often purely a student flat or a non-student flat.

On the whole, that is the case. However, students often have non-student friends, who it might be helpful to bring in to a flat to help with the rent.

By and large, do full-time students have worse problems than part-time students, or vice versa?

The debt cases that I have come across have involved full-time students. Full-time students are also having to work—in one case 12 hours a week—to supplement their income. I have also come across two nursing students, one of whom was considering dropping out of nursing because of debt problems, and one who did drop out partly because of debt problems.

Do you think that part-time students do not have a problem, or is it merely that—for whatever reason—they do not bring their problems to the CAB?

I have to speculate about that, but my guess is that part-time students have more flexibility to find work that would help them to overcome financial difficulties. That, however, is merely my opinion.

The NUS said that the rented sector is being distorted substantially by this issue. Is that something that you have encountered? Is that a serious disincentive, for example, to landlords who wish to offer accommodation for rent or to people who are employed and who wish to share with students? Are citizens advice bureaux aware that that is a problem?

Do you mean in respect of council tax?

Yes.

Yes, it is a serious disincentive to students who want to move in to flats with employed people and, possibly, to people who want to rent out rooms.

There are no more questions, Paul. Thank you for coming along.

Comrades, the people from the councils are not here—if Kenny Gibson and Sylvia Jackson stopped talking they would hear me—so I propose that we move on to the rest of the agenda. It would not be appropriate to take a comfort break now, but if we finish the rest of the agenda and those witnesses are still not here, we will take a break and finish the meeting when they arrive.