Meeting of the Parliament 19 February 2015
The issues that we face with the poll tax were created by very particular historical circumstances, in which there were high levels of protest, disruption, deliberate non-payment and deliberate non-registration. That is what we are trying to address. I will come to the issue of council tax debt, because it is important that councils collect council tax and do so in a responsible way.
Had we taken a different approach in the bill, by, for example, making it illegal for local authorities to collect poll tax debt, it would have caused all kinds of difficulties. For example, if debtors had not been able to cancel repayment arrangements in time, councils could have found themselves breaking the law simply by receiving money. Alternatively, what if a civic-minded individual simply wanted to make a gratis payment out of the blue? We did not want to replace one uncertainty with another.
It is not only the basic poll tax debt that is being extinguished, but all the associated liabilities, including the interest charges and penalties that were imposed as part of the process of collecting the poll tax. With many such debts, as many money advisers will be aware, penalty can be heaped upon penalty and leave money still being repaid long after the principal has expired. Those paying off community charge debt up to 1 February include some of the poorest and most vulnerable people in society, who were unable to pay at the time and were paying small sums towards arrears every week.
Extinguishing this historical debt will let local authorities concentrate on breaking the cycle of debt, as some of them explained in their evidence to the Finance Committee. As we know, many councils gave up pursuing historical poll tax debt years ago. There are 10 councils that will not receive any money from the settlement, having indicated that they did not intend to undertake any further collection. I should point out that the council tax collection rate in every one of those councils is at or higher than the Scottish average for in-year council tax collection. Each of those councils made a choice for their locality that today we are making for the nation as a whole.
In the stage 1 debate, I reminded the Parliament of the singular unfairness of the poll tax, the history of which goes back for more than 1,000 years. Members might be disappointed to hear that I do not intend to go over that detail again. However—and I know that I should not have to say this—I repeat that this Government believes that people should pay the tax for which they are liable under the laws of the land. Even after the bill is passed, as I hope it will be, it will remain for each local authority to determine the most appropriate means of recovering council tax debts. The bill leaves people’s liability to pay council tax and local authorities’ duty to collect it unaffected, although the Government will, as always, expect local authorities to pursue debts in a way that is sympathetic to the debtor’s needs and circumstances.
The bill also leaves unaffected the long-standing law that debts can expire, as indeed most of the outstanding poll tax debt now almost certainly has. In 2013-14, the authorities that still collected community charge debt collected only £327,000, which was down from a total of £1.3 million just a few years before in 2009-10. Clearly the total collected has been declining every year. Moreover, I note that the collection rate for the community charge over its lifetime was 88.4 per cent, whereas the in-year collection rate for the council tax is 95.2 per cent, with, as I have said, the expectation that more than 97 per cent of council tax will be collected once follow-up measures are taken.
Over the past week, we have read reports of one council after another setting its budget. Let us be honest: that has not been done without controversy, debate and extensive discussion. For the first time, however, councils need not take any element of the community charge into account in setting their budgets. That is the case not only for the authorities that had willingly already stopped collecting the community charge, but for all authorities.
I thank everybody who, in partnership with local authorities, has been involved in making sure that this will happen and in dealing with the bill’s expedited timetable. With the co-operation of the parliamentary authorities and the local authorities, we have been able to expedite the bill to ensure that it can be in force for the start of the next financial year.
I move,
That the Parliament agrees that the Community Charge Debt (Scotland) Bill be passed.
16:10