Agenda item 2 is the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill at stage 1. This item is an opportunity for members to ask questions of Scottish Government officials on the delegated powers in the bill. I welcome from the Government Sam Baker, who is the policy manager in the housing supply division; Colin Brown, senior principal legal officer; and Marianne Cook, policy manager in the local government division.
Thank you very much for giving us the opportunity to give evidence today. Before we take questions, I will give a brief overview of the bill’s proposals that I hope some committee members find useful.
I am grateful to you for that introduction. We have a few questions, which is why you are here. James Dornan will lead our questioning.
The powers in sections 2(2) and 2(3) are expressed very widely to permit any variation of council tax amount. The policy intention as set out in the policy memorandum is not to confer powers on councils to have complete discretion over increases. Why are the powers to be conferred on the Scottish ministers and local authorities to increase the amount of council tax in respect of unoccupied properties therefore not limited by the specification of any maximum, or initial maximum, level of increase in section 2?
It is simply to give discretion for the implementation of the policy. The Scottish Government would be interested in views from this committee and, of course, from the subject committee on any maximum.
I suspect that I will hear the same answer to my second question, which follows on neatly from that.
You are right—I will give the same answer: to give flexibility in how the provisions operate. It is important to remember that there will be two levels of discretion. There will be what the Scottish Government decides is the area within which local authorities should be able to exercise powers, and there will be the ability of local authorities to exercise those powers in their areas in such manner as they see fit, albeit probably with caps and controls. Until there is experience of the operation of the provisions, it will not be easy to know exactly where local authorities might encounter difficulties in the exercise of the powers. Therefore, at this stage it seems desirable to have breadth to allow tailoring or amendment if, for example, particular concepts prove to be difficult in operation.
Given that the Government’s position is that 100 per cent of the standard rate will be the maximum, why cannot we have that as the initial maximum, with flexibility to change that at a future date?
That can be done through regulations and the detail can be changed if need be. If that limit went in the bill, any change would require primary legislation. The Scottish Government has attempted to set out how it intends to operate the provisions, because we accept that the bill is fairly sparse—it does not need to be more than that. It picks up on existing powers and adapts them. In relation to non-domestic rates, there are three rates of tax that apply to specified bands of property. I know that your question is not about non-domestic rates, but all that we need to do to implement the new scheme for them is to put into the existing regulations a power to vary the percentage and to adapt the classes to which something will apply. Therefore, we do not need much in the bill.
It is worth adding that the policy memorandum sets out our intentions based on a consultation that we did on the bill proposals at the end of last year and the start of this year. However, the Scottish Government will still need to consult on the regulations, so it is possible that there will be changes. For example, there might be a change to the minimum period before a council can impose an increase. We do not want to set that out firmly in primary legislation before we have considered the issue more closely.
If I interpreted Colin Brown correctly, he said that there is no change to existing powers. Are you suggesting that, one way or another, there is a power to increase council tax at present?
No. At present, the power is only to provide discounts. The big change that the bill makes is to substitute variation for discount, so that there is the potential to impose increases in council tax.
Does that not strike you and your colleagues—as it strikes me—as being one of those things that Parliaments get concerned about? The moment Government at any level tries to increase costs on the citizen is surely precisely the point at which Parliament says, “Maybe—but surely there must be a limit.”
In principle, there is a case for setting a maximum amount. However, the regulations are laid under the affirmative procedure: the Parliament will debate them, and will have to approve whatever ceiling is set.
I entirely accept that people will argue about the numbers, but it is not the numbers that worry me. If you said that you wanted a factor of 10, at least the Government would be setting a limit that Parliament could scrutinise and consider. Giving us no limit whatsoever seems to me to give us a problem in principle, which I suggest that the Government might want to solve.
We can certainly take that into account if the Subordinate Legislation Committee is concerned about it. We will want to hear what the Local Government and Regeneration Committee says on that point, but we can consider it further.
Thank you. The next question comes from Chic Brodie.
I have a couple of questions on the proportional distribution of tax rates under section 74 of the Local Government Finance Act 1992 and the consequences of any action that might be taken under section 2 of the bill.
Colin Brown can confirm this, but the bill as it is currently drafted and the existing legislation, which is the Local Government in Scotland Act 2003, allow for changes in discounts in comparison with the standard council tax rates for the relevant band.
Are you saying that section 74 stands, and that the bill will have no impact? Are no further provisions required with regard to the discounting arrangements?
Section 74 gives the start point for the calculation. It establishes liability for a property of a certain size, and various adaptations in the bill will cut in from there, including the discounts under the 1992 act or—if Parliament approves the new variations—under the 2003 act.
Do you think that the requirements in section 2 will undermine in any way the proportionate distribution of the bands in the 1992 act?
No.
No, they would vary the amount that someone pays, but the starting amount that someone pays will remain the amount for that valuation band. That might be adapted for all sorts of reasons. For example, I believe that a disability-adapted property in which a disabled person lives is classed one band lower than it would otherwise be. As Sam Baker mentioned, if a property is a single-occupancy property, a single-occupant discount would apply within that band, which means that a person in that property might pay less than a person who is living in a lower-banded property.
I hope that it is the finishing point of the calculation as well.
I think that the process works adequately at present, because it simply works as an existing discount would. However, I am happy to take a further look at the drafting and double check that that is indeed the case.
Our advice is that the 1992 act accounts for discounts specifically, but perhaps not for increases. There might be a drafting issue.
The office of the Scottish parliamentary counsel and I checked all references to discount in the 1992 act in drafting the legislation. There were some that we felt did not need to change; there was only one, I think, that needed to change and has been changed. However, I take the point and will have another look at the legislation.
We would be grateful for that, thank you.
In your earlier exchange with the convener, you discussed the proposed expansion of the powers to enable the increase in payments in respect of unoccupied properties without any limit in the bill. You mentioned that you feel that the level of scrutiny that is provided by the affirmative procedure is appropriate. However, given the wide power that is anticipated and the fact that such a rise could have huge financial effects on the people affected, do you think that there is a case for the proposal to be dealt with using a super-affirmative procedure?
I do not think that a greater degree of scrutiny is required. The Scottish Government will consult on regulations before it makes them. Indeed, there will be a statutory obligation to consult the Convention of Scottish Local Authorities and such other bodies as ministers think appropriate.
Okay, thank you.
The witnesses will be aware that, following the Finance Committee’s discussion of the financial memorandum to the bill, there was some criticism of the fact that the Scottish Government appears to have taken account of only 12 properties that may be unoccupied and which are its direct responsibility. It has been brought to your attention that there are a whole host of non-departmental public bodies that have unoccupied properties that have not been taken account of in the financial memorandum or the bill. If bodies such as health boards and Scottish Enterprise are to be taken into account in relation to charges, will the bill have to be redrafted, or will subordinate legislation be required? Do the Government’s provisions to permit assessment mean that such situations are already covered in the bill?
The aim of the bill is twofold. On the business rates side, the aim is to raise revenue, and the measure will raise £18 million. The other aim is to encourage owners of empty properties to bring them back into use, regardless of whether ownership is in the public or private sector.
That does not include long-term empty homes. I do not have the financial memorandum with me, but I think that we identified a small number of empty homes owned by the Scottish Government and its agencies, as well as empty commercial properties.
Given that the financial memorandum only takes account of the properties that are directly owned by the Scottish Government, my question is, in essence, whether everything else is covered by the bill, or whether there is a requirement for more powers or for subordinate legislation to catch the other properties that you are now looking to take account of.
We always knew that there would be an impact on the public sector, so there are no plans to redraft the bill to exclude it.
The financial memorandum covers the whole costs to businesses and individuals in relation to council tax and empty property relief changes. The memorandum might not individually list the sector, such as local authority or NHS board, but it provides the total level of cost.
Are you saying that the bill covers everything, but the financial memorandum just forgot to take account of the health service, Scottish Enterprise and others?
I think that the memorandum acknowledges that public sector properties will be taken into account. We just did not break the information down to the level of each of the 32 councils and each NHS board. The memorandum acknowledged that there would be a cost to the local government estate, for example.
As there are no further questions to the panel, I thank colleagues. I briefly suspend the meeting to allow witnesses to changeover.