Official Report 177KB pdf
Okay comrades, let us restart. We welcome Angela Allen, head of revenues at Glasgow City Council, Mike Peterson, head of revenues at City of Edinburgh Council, Alan Traynor, head of revenues at Fife Council and Brenda Campbell, finance officer for COSLA. I understand that Mike Peterson will make some introductory remarks on behalf of the group.
Brenda Campbell will give a brief introduction and I will carry on from there.
I thank the committee for giving COSLA and individual local authorities the opportunity to give evidence—it is much appreciated. COSLA, Glasgow City Council and City of Edinburgh Council are making a joint submission today.
I will outline the problems that City of Edinburgh Council is experiencing, but similar problems exist throughout Scotland. In areas where there are large student populations, such as the cities, the difficulty of collecting council tax from liable students is causing councils concern and having considerable impact on collection performance.
The two proposals that are contained in the bill deal with the liability of students for council tax, but do not tackle the issues relating to the liability of the non-student.
Even with the proposed changes that are included in the bill, we thought it appropriate to highlight a scenario in which the student will remain liable for council tax payments. If the property is owned by the student, and he or she shares it with another adult who does not have any ownership status for that property, liability for payment of council tax will remain with the resident owner. We do not propose that there should be any change to that scenario.
Have you quantified the number of people or students who would be affected? You have to collect council tax, so I guess you must know how many people you are dealing with—or not dealing with, as the case may be.
Knowing the total number of students who are affected is quite difficult. We know the total number of students at university in Edinburgh, for example, but there is no record of those students who stay in the family home, because they are not liable for council tax. To give you some feel for the scale of the situation, there are usually between 6,000 and 7,000 properties in Edinburgh that are completely exempt from council tax because of student occupation. There are many other properties that are partially discounted because students live there, but it is difficult to differentiate between a student discount and a single person discount. We do not have the systems to identify those statistics in detail.
Has COSLA collated any statistics, in Edinburgh or across Scotland?
No, we have not, principally because, having contacted a couple of local authorities, we are aware that they do not have that information.
Allow me to illustrate how difficult that task is. As you know, council tax works on the basis that, if there are at least two people in a household, there is no question of any discounts. If we had a household with two non-students and two students in it, that would not affect the liability at present. Under the Data Protection Act 1984, we are not allowed to hold information about those students, because it is not relevant to the charge.
Interestingly, Mike Peterson made some of the points that the National Union of Students made—I am sure that that is a good thing. The NUS had a counter-proposal, which it called an apportioned discount scheme. I wondered whether you had seen that and had any comments. If not, it might be helpful if we gave you that information and you were to comment on it. It seems to be a fairly realistic alternative scheme and—from our point of view—at least worth considering.
We have had a quick glance—we only had sight of the scheme at lunch time today. There would be concerns about the whole ethos behind the council tax, which is basically a property tax, being adjusted for people staying in the property. The difficulty with the student proposals, as I understand them, is that the charge would be allocated pro rata within the property. Similar difficulties are already experienced with the council tax. For example, where two or three non-students share a property and one pays their share, we would pursue that person for the shares of the other couple of people who have not paid.
Remind me about the water and sewerage issue that was mentioned. As far as the council tax is concerned, the student is a non-person. Is it correct that students do not pay for water and sewerage either?
If the property is occupied entirely by students, it is exempt from the water and sewerage charge. Where students occupy a property with non-students, the students are disregarded. For example, if there were one non-student and one student, the council tax liability would be 75 per cent. The water and sewerage charge would be reduced by 25 per cent as well.
So the discount applies to water and sewerage.
That is right.
One of your examples was the case of a person on income support who was sharing with students. Would he pay 75 per cent of the nominal water and sewerage charge?
Yes. In a scenario with two students and someone on income support, the non-student would be entitled to council tax benefit, so the only charge would be the remaining water and sewerage charge. If a 25 per cent discount applied to that, the charge would be only 75 per cent. At the moment, all three—the students and the income support claimant—would be jointly and severally liable for that charge. Under the proposed arrangements, the income support person would be entirely liable. In attempting to resolve the student problem, the council is concerned whether there will be any knock-on effect on others, in relation to poverty.
I am concerned about some of the information that you have given us, such as the fact that it is impossible—for data protection and other reasons—to gauge the impact on local authorities of the Executive's proposals. In considering something like this, it is always difficult to come to the right solution if one does not know whether the proposals will have a positive, negative or indeed neutral effect on revenue.
The proposal relates only to students who occupy with non-students. There would be no change in the arrangements for properties that are entirely occupied by students.
I accept that.
The impact on local authority finance depends on how successful the local authority will be in extracting the money from the non-students. No change is proposed to the charge; the change is to who is liable for paying it. The issue is how successful councils are at the moment in extracting money from the student part of the property; the proposal should have little impact on councils if all the money comes from non-students, who will have the liability in future.
I understand that. That is why I said initially that the proposal could be positive, negative or fiscally neutral. Brenda Campbell said that, under Scottish Executive proposals, there could be significant improvements in the collection process. Is that because there are considerable difficulties in obtaining money in these circumstances at the moment? Do you have an idea of how many students pay the council tax that they are supposed to pay through joint several liability? Is it rare?
It is difficult to know because, although names appear on the bill to show who is liable, one cannot tell who makes the payment into the account. Council tax is a property-based charge, so one bill goes out to one property. If two or three liable persons in that property make payments, all the payments go into one account. If there were three liable people in a property and one did not pay, we do not send out two reminders. The recovery is for the account for that property, so we cannot trace the source of a payment coming into an account from several liable people.
The gist of that response answered the question that I was going to ask.
What is the liability of part-time students for council tax? Do councils interpret the regulations in the same way? That is probably a question for Brenda Campbell.
I will rely on one of my colleagues to answer that question.
When we interpret whether someone is liable, non-liable or qualifies for exemption as a student, the regulations stipulate how many hours of study their course requires and how many hours they do each day and each week. The majority of students in Glasgow, for example, study full time.
The definition of students is contained in the legislation and is precise. It is up to councils to interpret that legislation. There is an appeals process. We expect authorities to implement the legislation similarly. The same legislation exists for all and allows for little discretion, as it is precise.
Can you outline the administrative changes that an individual authority will have to make in order to implement the proposed changes? Will that cause you administrative problems? Will the changes be difficult, or will you be able to fit them into the system?
We do not see the change as a major difficulty in terms of our software solutions; it would just be a question of who we were going to pursue. The students would still be recorded if appropriate because of the fact that they were being disregarded. The information would still be there and the system would have to change only in so far as it would be the non-students who got the final notice and went on to the summary warrant, whereas at the moment all liable people go on to the summary warrant. We would not envisage a significant software solution to implement the proposed changes.
Given what you have said, I take it that the set-up does not inform you whether the person on a summary warrant is a student. Is there a difference between students and other people who do not pay their council tax?
Liable people go to summary warrant where the account for the property has not been paid. That would happen whatever the mix of people. The people could be on income support, they could be working people or they could be extremely well off—we cannot tell from the information that we have. All we know is that there are liable people. Liable people progress to summary warrant and they all get a final notice. If the students were no longer liable, they would not go to summary warrant.
There seem to be no more questions, so I thank our witnesses.
We are pleased to have the opportunity to appear before the committee today. I have only a few brief introductory remarks to make. The Education (Graduate Endowment and Student Support) (Scotland) Bill provides a useful opportunity to remove what we see as a long-standing anomaly, which can result in students becoming liable for council tax.
There seems to be a broad consensus among members of the committee that the Executive's proposal to deal with this anomaly is welcome.
We consider that in such a case the position of the non-student would be no different from that of any other council tax payer who was not a student. The non-student would be entitled to the same benefits as any other council tax payer. They would not be disadvantaged in comparison with any other council tax payer.
When the NUS was giving evidence, we spoke about owner-occupiers and part-time students. What would be their status under the proposed changes?
I am not sure what you mean by the effect of the changes on owner-occupiers. If they have another non-student tenant, liability rests with the owner-occupier, regardless of whether they are a student, because it is assumed that they would be receiving rent from the non-student tenant to cover part of the liability.
I assume that you are aware of the NUS's proposal for a discount scheme. Why do you think that that might not work?
As Mike Peterson said earlier, we first saw the scheme last night. My first impression is that it would be extremely difficult to operate. The example given by the NUS involved a council tax bill of £1,500 on a property in which four students and one non-student were resident. The suggestion was that £300 should be apportioned to each person, discounting the students so that the non-student was left with a council tax bill of £300. It would not be a property-related charge. That would be extremely difficult to administer. One can imagine that if one student left, the non-student might then be charged £375. If a second student left, the non-student would be charged £500. If a new student moved in, the rate would go back down.
I welcome the fact that the Executive is tackling the issue. As a long-standing Edinburgh councillor, I know that the matter has long been a sore point. I would like to press you on the point that Bristow Muldoon raised. In example 2, which the Executive provided, three students and one non-student share a property, and the non-student earns slightly more than the level that qualifies for benefits. The non-student must pay £985, which is a whacking bill. It might be difficult or impossible to do anything about that, but by being fair to students—which is a good thing—you are being pretty tough on non-students living with students. Is there no ingenious way of reducing the impact of that?
On the face of it, we expect people sharing flats or premises to make their own arrangements for apportioning rent and council tax. We are trying to remove the anomaly that leaves students with the liability, especially as they are disregarded in the initial calculation. As I said, we feel that that leaves the non-student in no different a position from that of any other non-student council tax payer. If that person were hard pushed financially, council tax benefit, income support and other assistance would be available to them.
So the lesson is not to live with students.
And not to be low paid.
The Executive and the NUS have both made proposals. One would discourage people from sharing with students, and the other would encourage people to rent only to students. As Donald Gorrie suggested, I hope that we can find a happy medium.
We would have to consider any case as it arose. We mentioned that a resident owner who was a student would become liable on sharing a property with a non-student. My reaction to hearing about that loophole was that it would fall into the same category, and so would not be a loophole.
So, you do not believe that such a situation is relevant or is likely to come up much?
I might be missing something, but I do not think so.
I would like to quantify the issue for my own sake. Under the present system, a non-student who shares with a student must pay X factor. Under the new system, the non-student would pay Y factor—in other words, the amount would increase, which would impact on the non-student. Are the difficult circumstances about which you talked the ones that we are creating now by increasing the liability on one individual? We must ensure that we do not create such difficult circumstances.
The total charge on the property is unchanged. In the example that you just gave, liability is simply being shifted in a particular direction. As Ainslie McLaughlin said, that does not necessarily change the payment arrangements in the property. The key point is that the student will not leave university or other study with a debt hanging over them for which they will be pursued.
However, they might be pursued by the tenant at the time when they are trying to fix up accommodation to secure the very money that we are saying they should not be paying in the first place. Someone who may need that money—who may be on the threshold—might need to pursue the student to gain that money from them in another way. Before a student can get the accommodation, they might need to come and pay their council tax to the person in residence. Is that not correct? Is that what you are suggesting?
To be honest, I am not sure what you are saying.
You were alluding to the idea that there might be a private arrangement. In other words, that burden on a second person might be shifted back on to the student, under a private arrangement.
Any private arrangements are up to the individuals involved. For example, one person would have their name on the electricity bill, but all the residents would probably contribute to the bill.
I am suggesting that, today, a student pays a certain amount and a second person pays another figure. However, if we change the legislation, by next week, the second person will have double the liability.
Yes. The second person would be totally liable for the whole year.
You seem to be indicating that, although the bill includes a section on council tax, there could be private arrangements whereby you would be asking the students for the same contribution that you might have been getting previously. Is that correct?
No. We are not asking students privately for a contribution. We are simply speculating on what we think will actually happen in the rental market. People who share flats probably share all the costs, from electricity bills to rent to council tax.
I put it to you that if that is the case, the bill does not make much progress. We are simply back to square one.
We are removing the likelihood of students leaving tuition with a debt hanging over them for which they could be pursued by the council.
You will appreciate that we are focusing on section 3 of the bill. However, could you give us an overview of the reasons why the bill is being redrafted and could you confirm that section 3 will not be affected by that redrafting?
On 1 November, ministers signalled their intention to submit a revised draft of the bill, which would take account of several things. However, the key principles of the bill will not change and the section dealing with council tax is completely unaffected.
Thank you.
I prefer the latter.
If members have any particular points, they should raise them with me or Eugene and we will include them in the draft report. Are we agreed?
I thank members for the attention that they paid at today's meeting.
Meeting closed at 15:50.
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