My Lords, this order will allow local authorities in Wales to make arrangements for an external provider to undertake some of the new administrative functions created by the introduction of council tax reduction schemes from 1 April when council tax benefit is abolished. These changes are part of the Government’s wider policy of decentralisation.
I will provide a little more detail on the contracting out order. It will amend the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996. Currently under the 1996 order, local authorities in Wales can contract out functions connected with the administration and collection of council tax—for example, the calculation of an individual’s council tax liability or the serving of demand notices. Local authorities in Wales can also currently
contract out the operation of the council tax benefit system under the Contracting Out (Functions of Local Authorities: Income-Related Benefits Order) 2002 if they choose to do so—arrangements that will cease once council tax benefit is abolished.
While some of the new administrative functions related to the introduction of council tax reduction schemes are already covered by the 1996 contracting out order, such as the processing of applications, some are not. To ensure that local authorities in Wales have the freedom to contract out all the new administrative functions, this order amends the 1996 contracting out order for Wales to add the following new administrative functions: first, the issuing of council tax reduction decision letters; secondly, the payment of a reduction amount under certain circumstances where the billing authority is of the opinion that it would be appropriate; thirdly, the serving of a penalty notice in connection with an offence committed with a reduction; and, fourthly, the repayment of amount paid in connection with a penalty under a local scheme—a penalty that has been subsequently quashed.
Because the abolition of council tax benefit also means that local authorities in Wales will no longer be able to rely on their current investigatory and enforcement powers for social security benefits, Welsh Ministers are making regulations to provide local authorities with replacement powers to tackle fraud in relation to council tax reduction schemes. These regulations will introduce new penalties, the collection of which has also been included as a function that could be contracted out under the 2013 order. Local authorities that choose to contract out functions will be expected to monitor the services delivered by their contractors. We expect the decisions taken by the contractor to be of the same standard as that of a local authority officer and subject to the same levels of confidentiality and data protection.
Local taxpayers’ rights will not be affected by this legislation. The same rights of appeal to the local authority and to the Valuation Tribunal for Wales will remain. While this order does not expand on the current provisions for the administration of council tax reduction schemes, it will carry out an essential function by enabling local authorities in Wales to choose how to deliver their local schemes, whether by using internal resources, external providers or a mixture of both. It is important that we provide local authorities with the tools they need to deliver a cost-effective council tax system. I commend this order to the Committee.