Hansard

I am pleased to speak on behalf of the Finance Committee in the debate.

The bill provides for an end to the collection of community charge, or poll tax, debts in Scotland and will do so with effect from Sunday as a result of the anticipatory provision contained in section 1.

As lead committee, the Finance Committee sought written and oral evidence on the bill. The committee thanks those organisations and individuals who took time to let us know their views.

The committee’s scrutiny focused on a number of issues, including voter registration, the possible impact on council tax collection and the financial settlement to be provided in connection with the bill. I will address each of those in turn before concluding on the issue of engagement and consultation.

Last October, the former First Minister announced that the Government intended to legislate for an end to the collection of community charge debts. The announcement was made following media reports about the plans of some local authorities for its collection. The reports suggested that the increase in voter registration preceding the referendum would allow individuals with outstanding debt to be identified and arrangements put in place for the collection of that debt.

As the cabinet secretary has said, he explained to the committee that the Government was

“concerned that an appetite has been expressed amongst certain local authority leaders”

for information to be used in that way. However, in its evidence, Glasgow City Council said that its figures did not suggest that the expansion of voter registration could be attributed to the re-engagement of people with outstanding poll tax debts. The committee has asked the Government to provide further details of the local authorities that are using or which intend to use electoral register information in this way.

Evidence that was received highlighted the potential for the bill to have “unintended consequences” or create “avoidable risk” in relation to council tax collection, and those concerns related to a perception that similar debts might also be forgiven in the future. East Ayrshire Council, for example, referred to its concern about

“The risk of losing ... income as a consequence of a misplaced public perception”.

When we put those concerns to the cabinet secretary, he made the clear assertion that the council tax remained a live tax, and he saw no similarities with council tax collection in the provisions in the bill.

However, although that position is clear, views seem to differ between COSLA and the Scottish Government on the response should collection of council tax become more challenging. COSLA indicated its understanding that there would be negotiation on the way forward and that local authorities would look for support from the Scottish Government. In contrast, the cabinet secretary said that the Scottish Government would not underwrite reduced collection as

“The collection of council tax is the responsibility of local government”.—[Official Report, Finance Committee, 14 January 2015; c 24, 35.]

The headline figure for outstanding community charge debt in Scotland is, as we know, £425 million, while the financial settlement with regard to the bill is £869,000. In our scrutiny, we sought to understand how the settlement figure had been arrived at and to clarify what portion of the headline figure could be collected, given that, last year, only £327,000—or less than 0.1 per cent—was collected. Obviously, in the 22 years since the poll tax was abolished, many of those to whom debts might apply will have died, emigrated or moved away, so the sum available to collect, albeit unknown, will be considerably smaller than the headline figure.

The bill’s financial memorandum states:

“recovery of much of this debt is now prevented both by practical considerations and by the law of prescription.”

A 20-year prescription period applies to community charge debts, and two conditions need to be met before a debt can be prescribed. First, no claim must have been made by the creditor in court and, secondly, the debtor must not have acknowledged the debt. We sought to understand how one could assess whether community charge debts had been prescribed or not. Dundee City Council explained that it depended on whether there had been contact and the date of the warrant. Given that the community charge ceased to have effect more than 20 years ago, it was also noted that local authorities might have rewarranted the debt.

It is understood that the assessment on which the financial settlement was agreed was based only on the value of debt that could be recovered under existing arrangements, and no account was taken of informal or sporadic payments. The committee understands that the agreed settlement figure is therefore not a full reflection of the total revenue that will be forgone as a result of the bill, but most local authorities that provided evidence are content that it is a fair reflection of what would be forgone in relation to existing repayment arrangements. Indeed, 10 local authorities have already ceased collection of their own volition, and Falkirk Council has not collected anything in the past 12 years, despite having a book debt of more than £5 million. Nevertheless, it would have assisted the committee had more detailed analysis of the financial settlement been available, and we have asked why this information was not requested from local authorities.

Another issue in relation to the collection of outstanding debts was the cost of collection compared with the sums collected. The cabinet secretary stated that

“we can easily see a point at which the costs”

incurred would be greater than the value of the revenue being collected. However, no collection costs were provided, and it is unclear to the committee what evidence the Government used in reaching its conclusion.

Finally, the bill has proceeded rapidly through the stage 1 process; indeed, this debate comes less than two months after the bill’s introduction. A strong theme in the evidence was the speed at which the bill was brought forward and what that meant for consultation opportunities. No formal consultation was undertaken. The Scottish Government stated that that was a result of the limited period that was available for the bill’s development. That said, the Government worked with COSLA on the bill’s provisions, and in a letter to the committee, the cabinet secretary noted that the topics that were discussed included mechanisms for collecting community charge debt; the question whether debts had been sold off to private collectors; and the anticipatory provision to enable the bill to have effect from 1 February.

Asked about discussions between its representatives and Scottish ministers, COSLA summarised by saying that

“the conversation to reach an agreement and come up with a settlement”—[Official Report, Finance Committee, 14 January 2015; c 21, 15.]

was very brief.

Everyone in this chamber welcomed the high level of engagement and participation that we saw last year and we hope that it continues. Although the committee understood the Government’s wish to introduce this bill quickly, we make clear our expectation that consultation and opportunities for engagement should take place before primary legislation is introduced.

The committee supports the general principles of the bill.