Council Tax (Very Sheltered Housing)
The final item of business is a members' business debate on motion S2M-3549, in the name of Alex Neil, on council tax and very sheltered housing. The debate will be concluded without any question being put.
Motion debated,
That the Parliament expresses astonishment and concern at the decision of the valuation boards in Renfrewshire and Lanarkshire to designate single rooms occupied by residents of very sheltered housing complexes, such as Abbeyfield Homes in Coatbridge, as being fully liable for council tax; furthermore notes that a review of this matter is currently being undertaken by the Scottish Executive; recognises that this injustice has to be rectified as a matter of urgency by redesignating each very sheltered housing complex as being liable for council tax as a whole rather than individual living units, and believes that any council tax payments made as a result of the current designation should be refunded.
This debate is about dealing with the consequences of a loophole in the Regulation of Care (Scotland) Act 2001, which has created a difficult consequence for a small number of residents of very sheltered housing accommodation, particularly in Renfrewshire and Lanarkshire. It was not the intention of the Executive or the Parliament in passing the 2001 act that the current situation should arise, which is why I am calling for the Executive and the Parliament to act now to rectify the situation.
The problem is this. Prior to the 2001 act, very sheltered accommodation complexes, such as those run by the Abbeyfield Society charity in Coatbridge and Airdrie, were treated for the purposes of local taxation as one individual unit with one council tax liability. Alternatively, in some cases they were treated as businesses, but, if so, they received the charitable rebate on business rates. Since the 2001 act was passed, however, the assessors for two valuation boards—those in Lanarkshire and Renfrewshire—have interpreted the act to mean that each resident of very sheltered housing accommodation is liable to pay council tax, so old people who are living in such complexes and who were paying a share of council tax are now liable for council tax in its entirety—they are being made a unit for council tax purposes.
Further investigation into how people living in a sheltered housing complex become a council-tax-payable unit reveals the reason to be that they can lock the door. Under the anomalous legislation, if they can lock the door, they are liable to pay the tax; if they cannot lock the door, they are not liable.
The 2001 act requires care homes to register with the Scottish Commission for the Regulation of Care. Care homes that register with the commission are treated for council tax purposes as one unit. However, very sheltered housing complexes are not care homes as defined in the act and so do not register with the commission—ergo, the assessors in Renfrewshire and Lanarkshire have deemed each person in them liable to pay full council tax.
Is it not the case that there is a concierge in those very sheltered housing complexes and that the concierge has the key to all the doors in the complex?
I know that the concierge in the complex in Coatbridge has the key to each unit. I suspect that that is the case in the other units as well. The complexes are a concierge-type service, but not a care-type service. That, apparently, is an important distinction.
The consequences for the elderly people in those complexes who are on full benefit are somewhat muted, because the net impact on their income and charges is pretty well nothing. The problem arises for those who are not in receipt of full council tax rebate, who must pay the council tax either partially or entirely themselves. Many of those people have worked hard all their days. They have saved and have put enough by in a superannuation scheme or occupational pension. Now they are being made liable for full council tax payment, although they occupy only a room and share the facilities in a sheltered housing complex.
The sudden change in the application of the council tax liability has not only created dire financial consequences for many old and very frail people, but caused enormous distress and anxiety to them. In some cases, that distress has adversely affected their health.
The executive secretary of the Abbeyfield Stewartry Society informs me that Dumfries and Galloway Council has not yet charged council tax to individual residents of the Abbeyfield homes in its area, but that the very threat that the council might do so increases stress on people at a time when they can ill afford that. Does Alex Neil agree with those comments?
Absolutely. It is fair to say that, had the Executive not commissioned a consultation and review of the matter, assessors throughout Scotland would already be imposing the same liability on the residents of very sheltered housing complexes in their areas as are being imposed in Lanarkshire and Renfrewshire.
The Executive carried out a consultation between July and October. I believe that it is genuinely trying to find a solution to the problem—I hope that the minister up will update us on that consultation and enlighten us on the Executive's proposed way forward.
The important point is that the situation has arisen as a result of our mistake as a Parliament in the drafting of the 2001 act. We should not penalise elderly people because of poor legislative drafting either by the Executive or by the Parliament. We should be big enough to admit that we made a mistake. We should now rectify that mistake by amending the law to close the loophole and to make sure that the liability to pay council tax is no longer imposed.
My final plea is this: there is a second injustice that needs to be rectified. It is unfair that only the residents of Renfrewshire and Lanarkshire have had to pay the full council tax for this period. I hope that, when the Executive comes forward with proposals, those will include a commitment to provide a full refund of the additional council tax payment that the people in Lanarkshire and Renfrewshire have had to make. That is a fair, just and humane way in which to tackle the problem.
Before I make my speech, I apologise to Alex Neil and the chamber for the fact that, due to a long-standing constituency commitment, I will have to leave before the conclusion of tonight's debate.
I am pleased to be able to debate this matter in the Parliament. As some members may know, I have raised the issue consistently with the minister over the past few months. I am glad that Alex Neil's comments tonight have been more consensual. I was not able to support the motion, because of the "astonishment" that it asks the Parliament to express at the decision of Lanarkshire valuation board. The board is only implementing the law as it stands. As Alex Neil rightly pointed out, it is the law that is wrong. We made that law, and we must ensure that the Scottish Executive addresses the issue now. That is why it is vital that the Executive take effective action to remedy the problem.
I share the concerns of my constituents in the Abbeyfield home in Airdrie, who are understandably bewildered that the introduction of the Regulation of Care (Scotland) Act 2001—which was designed to improve care standards—should lead them to face a new and substantial financial burden. One of my constituents now has a council tax bill of £93 per month for her one-room accommodation, whereas before she paid nothing. In my view, that is clearly an unfair rise in her expenses. I cannot believe that it was ever the intention of the Executive or the Parliament for that to happen when the 2001 act was passed.
I call on the Scottish Executive to implement option 2 in its consultation document. I know that that is the preferred option of Abbeyfield Scotland. Abbeyfield has made a strong argument, saying that the residents of an Abbeyfield home live, in effect, as a family, with a shared kitchen, dining area and sitting room. Instead of each of the individuals in the home being charged, the home should be liable to one set of charges.
I know that there is some concern that Abbeyfield residents will be asked to pay council tax for previous years. Strangely enough, I have no problem with the principle of paying back money owed—it is just that in this case it is the wrong way round. I believe that those Abbeyfield residents who have already paid council tax should have it repaid to them. I have made that clear to the minister in numerous communications.
It is vital that the Executive move swiftly to resolve the situation and to remove the stress and uncertainty that Abbeyfield residents are enduring. I first lodged parliamentary questions on the matter in June; it is now time for the Executive to act.
I call on the minister to give my constituents and the residents of other Abbeyfield homes in Lanarkshire and Renfrewshire the Christmas present that they deserve. The minister should use the information that was gathered during the consultation period to amend the current legislation, so that this unfair charge can be removed and my constituents can be allowed to enjoy a merry and worry-free Christmas.
I would like first to comment on the consultation document, which is badly flawed. When the Executive sends out a consultation document, it should be checked for accuracy. Point 5.2 of the document states:
"It could be argued that any person who is living in their own independent dwelling should pay towards the costs of local authority services, just like any other citizen."
Who, in the name of goodness, believes that in the real world every other citizen pays council tax? Forty per cent of the electorate pay council tax. People have to be home owners to pay council tax. If they are the husband or wife of a home owner, they do not pay council tax; a child or adult living in the same home does not pay council tax. The document, which is supposed to be a consultation document, is flawed to begin with.
The document has some good bits, however. I congratulate Karen Whitefield on the explicit and forthright manner in which she put the case for doing away with the tax and going with option 2. I would like to thank Alex Neil for securing the debate. Thank goodness that somebody nailed the anomaly. I hope that the minister will get it sorted.
Point 5.1 of the consultation document states:
"The change in Care legislation was not intended to include additional individuals within the council tax system."
That is more accurate than the other bit of fallacious rubbish that talks about
"just like any other citizen."
Council tax is the most unfair method of raising funds for local councils—60 per cent of people in every council area do not pay council tax. The sooner we get back to having a local income tax, which is the correct way of raising such funds, the better.
I could say many things about the document, but I have a train to catch, and I intend to catch it by being as brief as possible. I thank again Alex Neil, for bringing his point to the chamber, and Karen Whitefield, who put her point across very well. Someone should get two of the belt for saying
"just like any other citizen."
I agree with many of the concerns that have been expressed so far, and I am pleased that we are debating the matter. I have been concerned about the issue since it was brought to my attention in April last year, when I took up a constituency case on it. I have been liaising with numerous agencies to resolve the situation, so I was pleased when the Executive recognised the need for investigation by instigating the consultation over the summer months.
The Regulation of Care (Scotland) Act 2001 brought many positive improvements and changes to the social care sector. It has been recognised that the act strengthened service provision. The type of sheltered housing that we are talking about is provided by not-for-profit organisations such as Abbeyfield and has been reclassified as a housing support service under the terms of the act and, subsequently, removed from some valuation rolls. That is an extremely unfortunate but unintended by-product of the legislation. Indeed, the minister and the Executive have stated that the change in care legislation was never intended to include additional individuals in the council tax system or to increase the local taxation liability of homes such as those run by Abbeyfield. We have a clear responsibility to remedy that mistake. In fact, it would be extremely poor parliamentary practice to ignore the negative impact of that unintended legislative consequence on vulnerable people or to allow those negative consequences to continue.
In my constituency, Abbeyfield Coatbridge operates a home with 10 single rooms. Each resident has their own en suite facility, while all other areas are communal spaces. Since the legislation was enacted, it was decided that each room should be classed as a single dwelling and taxed accordingly. Frankly, as we heard earlier, that beggars belief. These are rooms, not dwelling-houses. The decision is unfair, unacceptable and has placed a considerable financial burden on a number of residents. Indeed, Abbeyfield has suggested that its newest resident might be liable for a council tax bill equivalent to the sum that she paid previously in her council house. The position is particularly flawed given that the majority of students are exempt from council tax. They live in similar circumstances, perhaps in halls of residence or houses in multiple occupation, and I am sure that they have locks on their doors. I do not see a precedent among other people who live in that type of shared accommodation for making the kind of financial demands that are being made. Young professionals and single people who share houses pay a single council tax bill, regardless of house size or resources.
In response to the Executive's consultation, Abbeyfield Coatbridge has requested that its house be reclassified as a non-domestic subject and brought back into the non-domestic rating regime. I support that position and hope that the Executive will rule in favour of that. Between its opening in 1994 and its reclassification in 2004, the house was included in the non-domestic rating regime because of its charitable status. Given that the system worked well during those years, that it was acceptable to residents and that the house was never intended to be considered for change under the Regulation of Care (Scotland) Act 2001, I hope that the Executive will see sense and return the house to that system.
The other option that is set out in the consultation, which is advocated by Alex Neil in his motion and by other members, is that local authorities should bill the organisation for the entire property and the cost should be shared among the residents, who would, I presume, pay less than they do currently. However, as my constituents point out in their response, some residents are eligible for exemptions and council tax rebates, so any increase in rent that resulted from taxation of the whole property could be unfair and work to their detriment. Nevertheless, although I support and prefer option 1, option 2 would at least be an improvement on the current system for the majority of residents. Whatever option is chosen—and I hope that it is chosen soon—the reimbursement of the tax that my constituents have paid under the flawed system is vital and must happen.
I urge the Executive to make its decision as soon as possible. Abbeyfield and other such housing providers do sterling work in providing for our older citizens and we are likely to rely on them increasingly as our population ages. It is important that we allow them to focus on that job instead of having to undertake lengthy court battles in defence of their already vulnerable residents because of a mistake. Let us have action to rectify the situation.
I commend Alex Neil for securing the debate and for his clear summary of the issues. To most of us who are coming to the matter afresh, this is a relatively complex subject—a fact that was made clear in the consultation document. Alex Neil did a fantastic job of making the issues as clear as possible regarding certain aspects of the legislation. This is an important subject that has caused a lot of the most elderly and vulnerable people in society a great deal of worry, and it continues to do so. I hope that the minister will be able to offer those people some hope and to reassure us that the Executive is both willing to act and will act soon.
It is worrying that the levying of council tax on very sheltered housing has happened not because of an explicit policy decision that we have had the opportunity to debate and vote on, but because of confusion about the correct application of the law. It raises serious issues about the drafting and parliamentary scrutiny of legislation. Mistakes happen but, frankly, this should not have happened. We need to look carefully at how the issue was missed during the drafting process.
The most sensible way of dealing with the problem—I recognise that there are other options—would be to remove very sheltered accommodation from the council tax net and to reinstate what most people thought was the law. That does not seem an unreasonable way in which to tackle the problem. We have heard about the need for a decision to be made quickly. In response to a parliamentary question, the minister assured Karen Whitefield:
"we will seek to reach a conclusion as early as possible".—[Official Report, Written Answers, 1 August 2005; S2W-17771.]
The consultation closed on 2 September, which is about three months ago. I hope that rapid progress is being made. So far, we do not even have an analysis of the responses, which the minister has said will need to precede any conclusion.
In a subsequent parliamentary answer, the minister told me:
"Those who responded … expressed differing views".—[Official Report, Written Answers, 15 November 2005; S2W-19935.]
I accept that—it would be standard in any consultation—but it is not a particularly good reason for not reaching a conclusion more swiftly.
What we need from the Executive—whichever way it falls on the issue—is some clarity for councils and residents on the tax status of very sheltered accommodation. At the moment, there is uncertainty about the correct treatment; there is inconsistency, as Alex Neil mentioned; and there is a great deal of worry among people who live in very sheltered accommodation. As Alex Fergusson said, that worry exists not just among those who are subject to council tax, but among those who fear that, at some point, the council in their area might apply the tax to them as well.
The issue is serious: people in very sheltered housing who have been charged council tax face a financial disadvantage—in some cases a severe financial disadvantage; those who have not have hanging over their heads the possibility that they might be hit by a tax bill for which they have not budgeted and which they might not be able to afford.
I accept that there are technical difficulties in resolving the issue. I do not agree entirely with John Swinburne about the quality of the consultation document, which I thought laid out the options relatively clearly. Any option that the Executive chooses will have difficulties, but the Executive does not normally shy away from dealing with complex legislation, so I hope it will deal with the issue as soon as possible.
My main request is for clarity from the minister. If he cannot give a commitment on which option the Executive is likely to choose or a commitment to remove these homes from the council tax net, it would be helpful if he at least gave a commitment to publish the Executive's proposals, perhaps before the parliamentary recess.
I congratulate Alex Neil on securing the debate, which is on a niche issue that is important nonetheless. As I speak late on in the debate, most of the wise and informed words have already been said and I suspect that I will not add many more.
I have taken great interest in what members have said, particularly Elaine Smith's comments about the precedent of students in multiple occupancy homes or shared accommodation who have keys to their doors. It seems to be a strange legal interpretation that a different rule applies to people in very sheltered accommodation, who are in a similar situation. I am bewildered by the law on that point.
I am grateful for the clarification of the distinction between very sheltered accommodation, in which people have a room with shared facilities, and sheltered accommodation, in which people are in separate flats, even though a warden may be in situ. I concur with the point that unnecessary distress has been caused to many vulnerable elderly people and to the many people who feel that they may now be in the pipeline to pay council tax. I do not point the blame at the assessors, who applied the law as they thought appropriate, although I have in the past raised the issue of whether it should be the law.
To be frank, the problem is the law of unintended consequences. I hate to state it again, but the old saying is, "Legislate in haste and litigate at leisure." I agree with Derek Brownlee that the Executive tends to push through legislation without giving the Parliament a proper chance to consider what may happen down the line. We have just passed the Housing (Scotland) Bill and other bills that will impact greatly on people's lives. Perhaps we should build into our legislation a clause that allows us to review and amend it without going through the formal primary legislation amendment procedure that may be necessary in the case that we are discussing. Subject to any other legal finding, I do not see how the Executive can change the present situation other than by changing the law that is the source of the problem.
Given that I am left the scraps of the debate—although I by no means complain about that—I seek your permission, Presiding Officer, to broaden out my comments.
You may presume the tolerance of the chair, to a certain extent.
I am obliged. The issue that I want to raise is not too far off the mark and is connected to the debate.
Many pensioners, including those in very sheltered accommodation, do not claim their council tax benefit—a third of those who are entitled to it simply do not claim it, which compounds the problem. Single pensioners have a pension of £82 a week. A third of eligible people do not claim the pension credit that takes them to £132 if they are married. On top of that, they do not claim their council tax benefit and they may suffer from fuel poverty.
We know the choices pensioners make: the first bill they pay is for rent and council tax; the second is for food; the final bill is for fuel, so they will have to cut back on that. The issue that we are discussing compounds the existing poverty among our pensioner population. I am most obliged to you, Presiding Officer, for giving me leeway to make that point.
I ask the minister to clarify whether the solution is to amend the primary legislation; to issue guidance on interpretation—although I doubt whether that can be done; or to challenge the basis on which the assessors, in good faith, reached their conclusions, given the precedent that was established with regard to students in houses in multiple occupation. Indeed, I think that that nails the argument. I will be pleased to hear what the minister says.
First, I acknowledge the concerns that members have expressed on this issue and sympathise with individuals faced with a council tax bill that they would not have previously received. I realise that such a situation might have caused confusion.
Before I go into the detail of our position, I want also to acknowledge the efforts members have made to raise the issue on their constituents' behalf. Elaine Smith, Karen Whitefield and Alex Neil have all written to me and my predecessors on this matter. I am sure that those who are affected will appreciate the genuine efforts that they have made.
As members know, following talks with key players on the right way forward, we recently issued a consultation. That consultation has now closed and we have been carefully considering the responses and the issues that they have raised.
I understand that some assessors have delayed making any changes in the taxation regime for the homes in question pending the findings of our consultation. As Alex Neil pointed out, that accounts for the differences in valuation practice across the valuation board areas.
However, as the Minister for Finance and Public Service Reform said in this Parliament, the issues are not straightforward. Indeed, Christine Grahame acknowledged that in her speech. For a start, the housing support service sector has expressed a different point of view on the matter and I am rather disappointed that no clear view on the right course of action emerged from the consultation.
Rushing into a decision without thinking through all the factors would be irresponsible and would not help the individuals we are discussing. It is imperative that whatever solution we devise to address the situation is fair, practical and appropriate for those who have been caught in it.
I appreciate that one of the protocols at work is that the minister is not allowed to share the legal advice that he has received. However, I presume that the Executive has taken senior counsel on the assessors' findings and decisions.
I am about to discuss the position with regard to the Regulation of Care (Scotland) Act 2001, which Christine Grahame alluded to in her speech.
Many factors are at play here. A housing support service enables people to live with dignity in their own home and to have a basic level of independence that most of us take for granted. Confusion seems to have arisen over the individuals we are talking about. They are not residents of care homes. Care homes lie within the non-domestic rating system and their residents are not charged local taxes.
Prior to the passing of the Regulation of Care (Scotland) Act 2001, there was uncertainty over the definition of a care home, but we now have a very clear definition: all homes are registered as providing either a "care home service" or providing a "housing support service" and are approved by the Commission for the Regulation of Care to ensure consistency of approach. The greater transparency of that system has brought this particular issue to our attention.
The types of homes that are under discussion are similar to standard sheltered homes, which have always properly sat within the council tax system. Unlike residents in care homes, residents in those homes—and in the ones under discussion—have tenancy agreements, which allow individuals to increase the amount of money they receive. In care homes, residents receive £16.50 a week, whereas those who live independently in their own homes receive £56 a week. However, as Alex Neil pointed out, that amount is subject to means testing. As a result, those who receive support are unaffected by the changes, whereas those who do not receive support are caught out by them. Having a tenancy agreement also allows individuals in receipt of the service to access benefits, which ensures that those who require financial assistance have access to it.
Because the council tax system will appear complex and even bewildering to many individuals in this situation, housing support service providers are required, as part of their responsibilities, to ensure that their clients receive proper advice about the benefits to which they are entitled. I acknowledge that that does not deal with the question that Alex Neil and others have raised about people who have a nest-egg and therefore do not receive such entitlements.
I understand that the majority of individuals who live in these homes will have no council tax liability as they will qualify either for a full council tax exemption or for council tax benefit. The devolved Government of Scotland is committed to finding the right solution, which must be equitable and fair, but I stress that it is important that we get the matter right.
I accept that it is important that the Executive take time to get the right solution, but the consultation has been finished for two months. Until such time as the Executive makes a decision, can the Executive at least request that the assessors and valuation boards in Renfrewshire and Lanarkshire adopt a position similar to that of other assessors? Can the enforcement of liability be suspended until a final decision on the matter has been reached?
I will take Mr Neil's suggestion away and give it some consideration.
In the meantime, I have asked for assurances that providers have the necessary information to advise their clients on the benefits to which they are entitled. I have also asked officials to look at how we can co-ordinate that work to ensure that everyone who is entitled to benefits receives the maximum benefits that are available to them.
From the consultation responses we received, it is clear that there is no agreement on the most appropriate way forward that will not result in further anomalies and compound the current situation. Therefore, we have asked officials to undertake further work to identify the correct way forward. We will announce to Parliament what that solution is as soon as that work is completed.
Meeting closed at 17:46.