Lord McKenzie of Luton
To ask Her Majesty’s Government how they propose to assess the impact of council tax support schemes on vulnerable groups and on work incentives.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, the best councils are using local council tax support schemes to help get people back into work. They are increasing work incentives while protecting the vulnerable. An independent review of the schemes will be carried out, as required by the Local Government Finance Act 2012.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for that reply. Is evidence not emerging already from the Joseph Rowntree Foundation and Citizens Advice, and through FoI requests, about the misery that these arrangements are causing, by deliberate acts of government such as the transfer of responsibilities—underfunded from day one—and continuing cuts to the ongoing budgets of councils? Is it not the case that, in the current year, some 2.3 million people in low-income families will pay an average of £149 more a year in council tax than they would have under the council tax benefit system? This year, a further 70,000 families will have their support cut for the first time and nearly 400,000 disabled people will see their council tax increase. All this is fuelling a debt crisis and is a job creation programme for bailiffs. How is this contributing to the creation of a fairer society?
Baroness Stowell of Beeston
My Lords, I notice that the noble Lord did not inform your Lordships that council tax bills more than doubled under his Government, as did spending on council tax benefit, rising to more than £4 billion, which equated to £180 for every household. Action was therefore essential. We have cut council tax bills and changed the benefit system for council tax so that people are supported properly in their local areas by their local authorities, which are responsible for setting and collecting council tax. Those authorities now have a vested interest in supporting local people back into work. The latest unemployment figures show how our overall approach to the economy is working.
Baroness Eaton (Con)
My Lords, as welfare spending spiralled out of control under the previous Labour Government, could the Minister inform the House how much money this Government have saved?
Baroness Stowell of Beeston
This particular programme saved £414 million last year.
Lord Brooke of Alverthorpe (Lab)
As the Government try to minimise the gap that is being created between the wealthy and those at the other end, how can they justify people having a council tax freeze—people such as myself and others in this Chamber who could quite easily pay the appropriate amount without a freeze?
Baroness Stowell of Beeston
As the noble Lord knows, council tax is set by local authorities, and local authorities should be trying to reduce the burden of council tax on all local taxpayers and increase the quality of their services. That is what many are doing and that is a good thing.
Lord Tope (LD)
My Lords, what evaluation has been done on the scope for renationalising council tax support as part of universal credit, including the costs and benefits of incentives to work?
Baroness Stowell of Beeston
My Lords, we think the approach that we are taking on the local council tax scheme is the right one because we are allowing local authorities to have a vested interest in supporting local people back into work. In Manchester, for example, they are doing some innovative work and ensuring that by helping people back into work they benefit from the collection of extra taxes.
Baroness Armstrong of Hill Top (Lab)
My Lords, does the Minister recognise that there are some areas of the country, such as the one I come from, where there is no increase in employment—or at least no decrease in unemployment—and where councils know that the greatest cuts are yet to come? Next year and the year after the election will see every local authority having to find much greater cuts. In areas such as mine, there are still vulnerable people, who, whatever the local authority or charities are doing, are finding it difficult to access work. What is going to happen to them?
Baroness Stowell of Beeston
My Lords, I understand that certain parts of the country have faced greater challenges than others. Individual local authorities have much greater capacity to raise revenue through their tax-collecting regimes. Certainly, local authorities are starting to build up reserves at a rate that is quite staggering. They are now collectively sitting on £19 billion. I would therefore urge local authorities to look to what measures they can take before requiring further money from central government.
Baroness Hollis of Heigham (Lab)
My Lords, is the Minister aware that the same families who are being hit by the new council tax scheme and are having to contribute 20% or even 40% to their council tax, where in the past, because they were disabled, they did not, are very often the same families who are also being hit by the bedroom tax? They are being hit twice over. Is the Minister aware that the Resolution Foundation has now told us that more than 870,000 families are spending more than 50% of their disposable income in debt repayments, and a further 3 million are paying more than a quarter of their disposable income in debt repayments? How is she addressing that problem of inequality and the quagmire of debt?
Baroness Stowell of Beeston
In the context of this scheme, it is important for me to make clear to the House that when we went from a national scheme to the one that is operated now by local authorities, all councils applied the same approach to how they would support those who are vulnerable. A good proportion of them, about 43%, have actually offered additional protection to vulnerable groups. The most important thing I would say to the noble Baroness is that we have to have a strong economy that creates jobs, and that is what we are doing and that is the priority that we are focusing on.