Local Government Finance Bill

Baroness Hollis of Heigham Excerpts

Tuesday 10th July 2012 Grand Committee

Moved by

[Baroness Hollis of Heigham]

70A: Before Clause 9, insert the following new Clause—
“Council tax benefit
Nothing in this Act shall exclude council tax benefit from inclusion in universal credit.”

[Baroness Hollis of Heigham]

My Lords, we now move to the second part of the Bill, on council tax benefit. I hope that the noble Earl, Lord Attlee, and the rest of the Committee will forgive me if I am a little fuller on both this amendment and the next group to raise some of the wider issues.

Many of us will remember the poll tax. When it was adopted I was a local authority leader. We were sure that it would not survive because it was essentially unworkable as well as unfair. Within a few years, the selfsame Government that introduced it abolished it—after, however, considerable cost, distress and distraint, 5,000 people in prison and the loss of hundreds of thousands from the electoral register, from which we still suffer today. Many Conservative authorities thought the poll tax was great until they learned that it was not when trying to collect small sums of what was then called community charge from unwilling payers, with bailiffs trying to distrain parents’ goods because adult sons owed £3 or so a week. That was not acceptable. I do not know about other people but I needed Special Branch protection at the time as I sought to impose on my city what was an idiotic law.

The same thing is happening now because many Conservative authorities—though not Labour ones—think that council tax benefit localisation is a good idea, until they start to prepare schemes for consultation when they begin to find out that it is not. As they struggle to balance the claims of vulnerable people against, say, work incentives within a framework of local government cuts of 30%, they are changing their minds. I predict that within 10 years—i.e. two or three years of universal credit fully bedding in—council tax benefit will be absorbed back into universal credit where it firmly belongs. That is the purpose of this probing amendment. I just wish we were not wasting all this time and effort—here in Westminster but above all in local government—which could and should be spent instead on economic development and meeting housing and social care needs.

Why should CTB be within UC, as the original White Paper from the Department for Work and Pensions in 2010 proposed—apart from the fact that DWP lost out in the turf wars to DCLG? There are four main reasons. First, in my view, council tax benefit is a decent benefit because it is demand led within an even-handed, national framework. Now, it genuinely responds to local need because it pays more to councils that have more needy people in them. From April, it will not be a fair benefit. It will be cash-limited, cut and a lottery. What you get will depend on where you live. That may make it a local decision but it does not mean that it therefore better meets local need—quite the opposite.

Pensions are exempt so the more pensioners you have the larger the cut that falls on everyone else. As a result, in Norfolk some districts have a 16% cut on the working-age population and others 30%—nearly twice as much. Equalities legislation then requires that vulnerable groups be protected; to what degree will be explored in some of the amendments tabled by my noble friends Lady Sherlock and Lady Lister. That leaves only the working poor—about a fifth to a quarter of the council tax benefit population—to carry the cuts. Despite David Cameron’s scandalously ignorant assertions about welfare recipients, council tax benefit and housing benefit are in-work benefits as well, as my noble friend Lady Donaghy will show. In future, your council tax discount will depend not on your need but on the accident of everyone else’s need in a particular patch. That is not localism; that is rationing by queue.

Pensioners will be treated the same across the country. Why them and not disabled people, poor children, carers or troubled families—why should these face a postcode lottery? In fact, the Government have got it the wrong way round because in practical terms most pensioners’ circumstances are similar, stable and predictable, and an adequately financed local authority could therefore predict and carry that risk. Instead, a local authority carries the risk of a floating vulnerable population for which previously it could access national council tax benefit.

Give a hostel for ex-offenders planning permission, increasing the number of your vulnerable people, or give a retirement home planning permission, increasing the number of your pensioners, and in future you increase pressure on your discount system. Would you grant that permission? You would certainly have second thoughts. Nor can local authorities sensibly encourage a council tax benefit take-up campaign, as my noble friends Lady Lister and Lady Sherlock will explore, even though council tax benefit has one of the lowest percentages of eligible people claiming it: only around 60% of eligible pensioners and 55% of couples with children. If a local authority has that take-up campaign, it has to pay more or cut payments to existing claimants.

Council tax benefit should be a social security entitlement, not a local authority handout. We accept this for housing benefit, that the cost of renting your home should be supported by national rules for housing benefit, even if they reflect regional costs. Why then should the property tax that that home generates, which runs alongside HB as a housing cost, not be treated similarly? Like HB, council tax benefit should be a national benefit, full stop.

If the first reason is that it produces a demographic lottery, the second reason is simplicity. By bringing all benefits together, universal credit was designed to be simple to understand: one means test, one taper, one benefit form, one set of back-dating rules, one interface point with staff, and one payment. Not any more—a second taper for CTB will now run below the UC taper. It will completely undermine the clarity of UC, especially as UC will have universal rules so people in similar circumstances get the same benefit wherever they live, but the new council tax discount scheme will have 200 to 300 different sets of rules, according to the predilections of the local authority as to the deserving and the undeserving poor. So a simple universal credit is now to be tweaked by 200 to 300 different local CTB schemes. Not only will it not be simple, what you are entitled to get will vary from place to place and, at the boundaries, from street to street. How will any individual know what they are entitled to, especially as funding for welfare advice is being cut by 75%?

Please do not tell me that local authorities are in the best position to assess these local needs. That is a piece of empty rhetorical sophistry. As far as CTB is concerned, there really are no local needs about which the local authority has particular, exclusive local information—not shared by other local authorities, denied to government—that should inform its local decisions. If Ministers believe that, perhaps they could give examples of local needs that are exclusive to one local authority. The example of closing down a factory will not do, because other factories closing down in other places will get the same support. Three examples will be enough: three examples of local need that will justify the localising of council tax benefit, such that it should be built into one council tax discount scheme but not into the next-door neighbour’s scheme because it is so essentially local.

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[Lord Tope]

My Lords, there are a rather large number of people here who must have been council leaders during the period of the poll tax—as, indeed, I was. I do not want to rehearse much of what has been said about that period except to say that, in my local authority a few years before the poll tax was introduced, we had 47 Conservative councillors and three Liberal Democrat councillors. By the time we had moved to the council tax, we had 47 Liberal Democrat councillors and four Conservatives. The five remaining Labour councillors were astonished to find themselves the principal opposition. So some good did come from the poll tax.

[Baroness Hollis of Heigham]

Only on the localist agenda.

[Lord Tope]

Only in a localist sense. It is fair to say that this issue has divided opinion throughout the country and, certainly, opinion within local government. When the Government’s proposals were first announced as the localisation of council tax benefit—council tax support, as it now is—many of my colleagues in local government were surprisingly enthusiastically supportive of it, perhaps because of the word “localisation”. That is a seductive word for many of us who would quite rightly describe ourselves as localists; I am very much one of those. I said in the Second Reading debate, and say again, that others including myself have thought throughout this that it properly belongs with universal credit. That is my personal view; it is not shared by all colleagues in my party. To be fair, it is not shared by all colleagues in any party. It divided local government. The Local Government Association still supports the localisation of council tax support in principle, with increasing reservations. On the other hand, London Councils, to which my authority belongs, has always opposed the move. Let us not pretend that there is one universal belief about all of this.

I cannot help feeling that today we are having a Second Reading debate that actually happened last year rather than in relation to this Bill. I know that this was much debated—and others here know much better than me; they experienced it—during the passage of the Welfare Reform Bill. The noble Baroness, Lady Hollis, is almost certainly right to say that it was an argument between the DWP and DCLG, the outcome of which we are here today to discuss. I feel now that we have to move on.

The reality is, whatever our dire predictions may be—and I have to say dire predictions that it will be “just like the poll tax” are exaggerated; I cannot know that, nor can anyone else here, but I do not think it will be that bad—it will pose some real difficulties for local authorities. We have heard mention already of the difficulties experienced under poll tax, and in other situations, by local authorities having to attempt to collect relatively small debts, particularly from people who have not previously been paying council tax, and for whom paying it is not the norm or part of the culture. Whether or not these predictions are exaggerated, only time will tell. I think they possibly are but then I joined the Liberal Party in the 1960s—I am an optimist. We wait to see.

As we say so often, we are where we are. This is what is going to happen, and what we need to do today and in future proceedings on this Bill is to see how we can mitigate the very worst effects of what is proposed in it and the accompanying regulations. It was inevitable that we were going to have this Second Reading-style debate now, but we need to move on and accept that, whether we like it or not, we have to implement what is to come in the best way possible. I hope and believe that we will have a constructive debate on how we are going to achieve that.

One of the worst aspects of all of this is actually calling it the localisation of council tax support. Frankly, I do not believe it is localisation; it is passing a scheme to local administration. It is the worst of all worlds. I am sorry to say this to my noble friends: it is not localisation, it is not moving to local authorities the right to determine the schemes for themselves; it is passing them a very prescribed scheme, together with a £500 million reduction. We will not debate the need for that reduction today; I think there are better ways of achieving that, but again that is what is going to happen and this is the way it is to be done.

There is extremely qualified support from me for what my Government are trying to do. I have to speak honestly about that but I hope that from now on we can discuss how we can make it better—or, if Members opposite prefer, less bad.

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[Earl Attlee]

My Lords, making councils financially responsible for providing support creates stronger incentives for them to get people back into work. This reinforces the positive benefits of driving economic growth in their areas, provided through the retained business rates system. Furthermore, if the claimant count can be reduced, it may be that the local authority can devise more generous council tax benefit schemes.

Localising support for council tax is intended to deliver a 10% saving on the council tax benefit bill and is an important contribution to the Government’s vital programme of deficit reduction. This saving will need to be delivered. However, localisation gives local authorities a significant degree of control over how the 10% reduction in expenditure is to be achieved, enabling them to balance local priorities and their own financial circumstances as they see fit. After all, not all local authorities have the same mix of claimants, and I am sure that noble Lords are not suggesting that central government should dictate to each local authority how its scheme should work.

[Baroness Hollis of Heigham]

My Lords, perhaps the Minister will come on to this later, in which case I will shut up, but can he give me three examples of local authority decision-making exclusive to a small district council that would not be shared by its neighbour?

[Earl Attlee]

My Lords, I may well have to write to the noble Baroness on that point.

[Baroness Hollis of Heigham]

My Lords, if the Minister cannot give even one example of the core thesis that this is all about localism, it is very clear, if I may say so, that the department has not either consulted properly or done its homework.

[Earl Attlee]

My Lords, I am quite confident that my department has done its homework, but inspiration may arrive.

Local government has previously expressed concerns about ensuring the ongoing direct payment of council tax support funding to councils if it is integrated with universal credit. Localisation ensures that funding is allocated directly to local authorities. We recognise the importance of helping local authorities to develop and administer schemes that support universal credit. In answer to the noble Baroness, Lady Sherlock, it will not be in the interest of local authorities to establish schemes that fail to provide positive work incentives and which risk locking residents into low aspiration and poverty. Universal credit will not be sabotaged, as was suggested by the noble Baroness, Lady Hollis.

The noble Baroness, Lady Sherlock—and many other noble Lords—asked me how universal credit income will be taken into account in local council tax support. I will respond to this point in more detail in relation to Amendment 79B. It might be helpful, however, if I made a few points now. In relation to its own local share, it will be up to a local authority to decide how, if at all, universal credit income is to be taken into account for working-age claimants. In relation to the default scheme that will come into effect if a local authority fails to adopt a scheme by the deadline of 31 January, universal credit will be taken into account in the following ways: either the income assessed under universal credit, with some adjustments, is less than a defined minimum income amount, in which case the claimant will receive a 100% rebate; or their income exceeds this amount and a means test is applied. In both cases, the assessment will use, with some adjustments, data from the universal credit assessment of the income needed to live on. I will explain these points in more detail when we get to the relevant amendment.

The Government have published guidance on how local schemes can support improved work incentives, and we are working with the Department for Work and Pensions to enable data from universal credit to be shared with local authorities for the administration of local schemes. The noble Baroness, Lady Lister, and the noble Lord, Lord McKenzie, talked about calculations on universal credit. The noble Baroness helpfully read out a Written Answer on whether the calculations can take into account universal credit income. As the noble Baroness will be aware, the second half of that Written Answer explained that the default scheme will take account of universal credit income. We will be publishing draft regulations setting out that approach shortly.

Amendment 83, in the names of the noble Baronesses, Lady Hollis and Lady Sherlock, would extend the requirement for local authorities to consult on schemes under the current benefit structure or universal credit. At present, council tax benefit is centrally prescribed, with very limited local authority discretion, and it is not clear what purpose a requirement to consult would serve. We are clear that council tax will not form part of universal credit in future.

Members of both Houses, and from both sides of the House, have expressed their support for the principle of localisation. We trust local government to administer the key services that make a crucial difference to the lives of the most vulnerable in society. It is right that we trust it to take greater responsibility for the administration of local taxation in relation to those groups. Obviously I have not been able to answer every point asked of me, but I will write and place a copy in the Library.

[Earl Attlee]

My Lords, I believe it will be possible for a local authority to do both, but of course I will write in greater detail.

[Baroness Hollis of Heigham]

Will the noble Earl tell us who he would take money from, who currently receives CTB?

[Earl Attlee]

My Lords, that is a matter of detail for local authorities to work out.

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[Baroness Hollis of Heigham]

My Lords, one of the things that struck me about this debate was that we had 10 speakers, apart from the Minister, of whom seven are either current or former local government leaders. Do you know what? Not one of us said that we were a vice-president of the Local Government Association and, given that the LGA has very unfortunately been expressing support for localisation, it may wish to rethink its views. It is clear that those views have no support whatever in the Grand Committee from people who actually know what they are talking about and have been there and done that through all sorts of structures, discounts, rebates, cuts and the like. There is indeed a broad alliance when local authority leaders of all political complexions—from London boroughs, southern districts, northern districts and northern unitaries—all express and share a set of common concerns. I am completely baffled as to why the DCLG, which used to be the DoE—a department that I much loved and respected, particularly when I was sort of fighting it in the 1990s—is not listening to this. It was noticeable that although the noble Earl responded with his usual courtesy and clarity, which we have come to expect from him on the Floor of the House, to the questions being asked, answers came there none.

My noble friends Lady Sherlock and Lady Lister emphasised the problems regarding where the cuts should fall. The Minister was pressed on that. I cannot believe that he came into this debate without a note on his file saying how this issue should be responded to by local government, but apparently he did not have one. He said, “We will have to think about that”, as though it was a brand new question, and that he will write to us. I am slightly dismayed by the quality of support that that may suggest the Minister is experiencing.

Secondly, we also asked him what issues might count as local needs that were distinctive to a particular local authority and not shared. Given that this is a debate about localisation, I should have thought he could have offered us an answer. That question was asked more than an hour and a quarter ago. There has therefore been plenty of time for a note to come over his shoulder from officials responsible for the Bill giving three examples of local need that were so distinctive to each local authority that, as a result, it was appropriate that they should devise a council tax discount scheme. Not one example has come through and been offered in an hour and a quarter. Again, that suggests that there is no evidence for this, and that no thought was given to it by the department. I am taken aback by that. Until recently I rated the department very highly. This is no criticism of the Ministers who do their formidable best on the Floor of the House.

My noble friends commented on the impact on claimants. Former and current council leaders commented on the impact on local authorities, and in particular on the issues of collection and trying to make judgments between pensioners, who are protected, vulnerable people who should be protected, and work incentives that should be protected—and then finding that the totality probably exceeds the money that is available. Again, the Minister gave us no guidance.

The Minister’s main argument—he ran only one—was that because local authorities set council tax, it is appropriate for them to be responsible for the council tax discount scheme as a way of increasing financial accountability. There was of course the odd gesture towards to getting people into work. I will deal with the first argument, which is a complete myth. The noble Earl will be aware—and the noble Baroness, Lady Hanham, will certainly know—that until business rates are more appropriately returned to local authorities, something like 85% of local authorities’ spend will come from central government rather than council tax. Council tax raises just 15% of revenue. After that, two-tier authorities—the local authorities that the noble Lord, Lord Greaves, and I talked about—raise about 15% of that 15%. They are the billing authorities and they raise about 1.5% of the spend. Will the noble Earl explain how being responsible for 1.5% of revenue justifies being responsible for the billing structure of the whole of the two-tier structure? There is no local accountability there. There is no biting down. The most that it will affect is that proportion of local spend that goes to the billing authority—unless they start gaming the system, which many of us will be tempted to do.

The myth that was paraded time and again with the poll tax and then the council tax was that somehow making local authorities responsible for this would press down intelligently on spending. This cannot apply where most local government spending is rightly supported by central government, and billing authorities, particularly in two-tier authorities that cover more than half the country, are responsible for only 15% of that 15%. It does not work. It is simply a myth. It is easily parroted but it does not have any validity.

Secondly, the noble Earl said that this would be an incentive for local authorities to get people into work. I estimate that to do this, the average authority would have to find some £2 million to get people into work. Given that every day the Government see unemployment figures rising, how do they expect a local authority to have the resources or the capacity to make such a difference that it would feed back into its council tax discount scheme and its council tax levy? Talk about Scientology; this belongs to the planet of the Thetans.

Finally, the Minister challenged the idea that UC would be sabotaged by this. He did not answer any of the detailed questions put by my noble friends Lady Lister and Lady Sherlock, and by others on our Front Bench. He merely asserted that UC would not be sabotaged. However, asserting a statement does not make it true. I am sure that the Minister will come back with more in-depth replies when we return to this and similar issues when we debate later amendments.

It would not have been appropriate, but if he had sat in on our debates on welfare reform, he would have seen the hours we spent trying to design a system that would encourage people into work in a supportive and constructive way. Now this has come in like an Exocet and we are left wondering why we spent so much time when the people responsible for this part of the Bill seem to know so little about what went on in the debates on what became the Welfare Reform Act. How can you seek to sabotage, frankly, what should be your flagship scheme for the sake of £500 million in cuts when, on the delay in the fuel levy, Chloe Smith said on “Newsnight” that there were plenty of other savings in the department that she could have used but could not cite any in particular? I am completely baffled.

I will withdraw the amendment. We need to get on to the next group, which is about the cuts. I hope that the Minister asks his staff what questions he can expect to be put to him by Members around this Room today, and gets thoroughly briefed so that he can answer them as we would all expect that he would wish to do. I beg leave to withdraw the amendment.

Amendment 70A withdrawn.

Moved by

[Baroness Hollis of Heigham]

71: Before Clause 9, insert the following new Clause—
“Grants: minimum amounts
Any grant payable to a local authority in England in support of a council tax reduction scheme shall not be less than the amount required to meet the costs of a scheme prescribed for the purposes of paragraph 4 of Schedule 1A to the LGFA 1992, or the amount of council tax benefit subsidy for that local authority in respect of the year beginning 1 April 2012.”

[Baroness Hollis of Heigham]

My Lords, this follows on from the previous amendment and some of the arguments have already been anticipated. There is no point in having localisation unless local schemes seek to differ from the current national scheme. Most authorities, as far as I am aware, would not have touched the existing scheme if it remained demand-led and fully financed. Why would they? To cut CTB locally when it is financed from a demand-led national scheme would simply take money out of your local economy. The first question to the Minister is—again, he has some time to get an answer—what is wrong with the current CTB system? I understand the need to make cuts, but what is wrong with it? Do the Government want a localisation agenda?

I do not support what the Minister could have done, but the he could, for example, simply have frozen the benefit levels for a year and got some of this money back if that was his problem. The reason that schemes were changed was not because they will reflect different local priorities—as we said, the Minister could not find us three examples—but to deliver the 10% cuts.

Local authorities are waking up to the fact that they have been conned. They favour localisation in the sense of more local decision-making, as I do. They do not want the cuts, yet without the cuts there is no point in localising. The Government want all three groups protected: pensioners, vulnerable people on passported benefits and people on work incentives. That is effectively the entire population to be protected, yet we are supposed to make cuts.

The Government’s consultation guidance paper suggests four approaches for local authorities facing the cuts agenda. First, they might make good the shortfall by getting more people into work. As I say, I estimate that there would have to be economic growth of £2 million a year in the average city. “If only they tried hard enough,” the Government seem to think. Well, given the Government’s own experience with the national economy, all I can say to them is, “Get real”.

Secondly, the local authority can cut services in addition to the 30% cuts that they are already experiencing. As if. Thirdly, it can find compensating revenue for removing the discounts on second and empty homes. My noble friend Lord Smith raised this question. This was the answer given by Andrew Stunell to my right honourable friend John Healey in another place: that Rotherham and Barnsley could pay for their cuts by scrapping their discounts.

Let me spend a little time on this, even though it is the subject of Clauses 10 and 11, because it seems to be the Government’s favourite reply. I have spent many happy hours trying to correlate second-home discounts, short-term empty properties, long-term empty properties, CTB claimants, local authority 10% cuts, households below average earnings and the family household survey, and trying to work all those figures across. Leaving aside London, as far as I can see, four sets of local authorities emerge from those correlations as being able to find additional revenue locally. First, there are the wealthy or pretty places with abundant second homes—as my noble friend said, they are not necessarily in Wigan. Cornwall has lots of second homes because it is a pretty place. Chichester, Chester, Wokingham and so on will have abundant supplies of people with wealthy income and low numbers of claimants. The Financial Times ran a piece back in May on what is so special about Wokingham, which has only 4% of its expenditure going on council tax benefits, whereas in places like Wigan the figure is 15% and more of the population are claiming these benefits.

We should remind ourselves that, even where there is a pretty place, in two-tier authorities such as North Norfolk they will only get 15% of the discount. The rest will go to the county council for redistribution elsewhere, possibly 40 miles away, so there is no relationship to localism at all.

The second group of local authorities, other than the pretty and the wealthy, is those that are relatively flourishing as far as I can tell in the southern half of the country. They may or may not have some second homes but they have a buoyant housing market—as illustrated by the fact that they have a high number of properties that sell within six months and very few properties standing empty after 12 months. Two such authorities, as far as I can tell from reading across the stats, are Brighton and Hove, and also Reading. They could presumably remove discounts on all empty properties to perhaps cover their cuts if that was their choice.

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[Lord Smith of Leigh]

My Lords, in principle I support the localisation of council tax benefit, but I do not support this scheme at all. It will have impacts, and my noble friend Lady Hollis has raised them clearly. She talked about the regional in-fighting that we will have. Certainly, we believe that it will be worse in the area that I represent and many other parts of the country—worse, even than the poll tax. When the poll tax was in place, it was relatively easy for me; I was only chairman of finance. When somebody came to me and complained about the poll tax, I could always say, “The Tories have introduced the poll tax”. We swept all the Tories off the council; it was very easy. But now, when they say, “What are you doing with my council tax benefit support?”, at the end of the day I will have to devise a scheme. That will be down to me.

[Baroness Hollis of Heigham]

It has been done to you.

[Lord Smith of Leigh]

It has been done to me. What options would we have in designing such a scheme? I have shared with my colleagues some of the initial thoughts that we have had in Wigan; we have not got quite as far as announcing what they will be. We will unfortunately not raise the money from the empty homes thing, so we will have to make some anticipation of where the costs will come from. Will they come from council taxpayers? I do not think so. I agree entirely with the noble Lord, Lord Greaves, we are not going to ask for an increase in council tax above the minimum amount that the Government will allow us to have in order to put money into council tax benefit. A referendum on that is certainly doomed to defeat. We will never try that. Will we make cuts in services to put more money into the council tax support scheme? That is an option but as my noble friend Lady Hollis mentioned, the impact of such a policy will be on the same group of individuals who should benefit. They are the people who need and rely on many of the council’s services that are already facing £66 million of cuts over the next few years. Where am I going to find the extra £2 million or so to pay for this? Or we could have to have a scheme that pays lowers benefits than the current scheme. That is very difficult because the people upon whom this will impact are the working poor. They are the ones who will really suffer from this—if we discount some of the vulnerable groups we will talk about in future amendments. I fear for some of the political consequences. The noble Lord, Lord Greaves, and I know of the kind of campaigning done by certain political parties, including the BNP, about people who are downtrodden. They say, “No one thinks about you. Here you are, you are poor and you live in these difficult communities”. Such parties could campaign on those issues.

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[Earl Attlee]

My Lords, I thank the noble Baroness, Lady Hollis, for the explanation of her amendments. The noble Baroness first asked me what was wrong with the CTB scheme. The answer is that there is no incentive on the local authority to reduce the claimant count.

[Baroness Hollis of Heigham]

Sorry, I could not hear that.

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[Earl Attlee]

My Lords, there is an incentive for local authorities to encourage businesses which tend to pay higher salaries into their area. One of the complaints about the localisation of business rates is that it encourages retail outlets which tend not to pay very high wages. If a local authority can encourage higher paying businesses into its area, it will be able to reduce the expenditure on council tax benefits.

[Baroness Hollis of Heigham]

I then have two questions, if the Minister will allow me. First, why does he think that local authorities are not doing that now? Has he any evidence that local authorities are not seeking to encourage high-paying employers with high-tech skills into their patch? Secondly, that will almost always mean poaching them from somewhere else. As the Government knows, there is very little opportunity nationally for fresh economic growth beyond that. What advice would he give to local authorities to poach businesses from other areas?

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[Earl Attlee]

My Lords, on the activities of local authorities to encourage businesses to come to their areas, of course local authorities do that now—I fully accept that—but they will do even more because they have a greater incentive. The noble Baroness quite properly made the point about poaching. It was a good point. Actually, we need to encourage businesses to locate in the UK and not in either another European state or further afield. It is not a question of poaching from next door necessarily, but if the local authority adjacent to you is less business friendly, you might find that businesses will locate in your area.

[Baroness Hollis of Heigham]

My Lords, are we saying that a district council will have the resources to send someone to Brussels to seek the relocation from Europe of a firm that may be willing to move a branch to a rural district in Norfolk? Forgive me, but get real.

[Earl Attlee]

My Lords, I am real, thank you very much.

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[Lord McKenzie of Luton]

The Minister may wish to cast his mind back to the Pensions Bill, which we debated a couple of yours ago, and the representations that were made by the Royal British Legion, for example. It wanted a change to the name of council tax benefit because it believed that elderly people in particular were dissuaded from taking it up. They saw it as a benefit and that was something with which they were uncomfortable.

[Baroness Hollis of Heigham]

They wanted it to be called a council tax rebate.

[Lord McKenzie of Luton]

The nature of this arrangement could cause more people to claim without a campaign for take-up. Why on earth would we want to build any problem into the scheme that would dissuade councils or anyone else from encouraging people to take up their rights?

[Baroness Hollis of Heigham]

Particularly pensioners.

[Lord Tope]

My Lords, I said in the previous debate that simply changing the name from council tax benefit to council tax support is likely to increase the number of people who feel able to claim support, having, for whatever reason, felt uncomfortable about claiming benefit. That change alone, which was not produced by local authorities, in intended to increase take-up.

My advice to the Minister is that when in a hole, one should stop digging. We are getting a bit stuck here. I have heard it said by Ministers—although never in this House—that it is necessary to give local authorities an incentive to get more people back to work. I find that both patronising and deeply offensive. Some local authorities are better able to do it and have better circumstances in which to do it. However, I cannot believe that there is a local authority anywhere in the country that would say it has no incentive and does not want to get its local people back into work. Performance may differ greatly but I am sure that the intention is the same. Therefore, we are a bit stuck on this. It is an unanswerable question—as the noble Baroness well knew when she asked it. Perhaps we should spare the Minister his suffering and move on with the rest of the debate.

[Earl Attlee]

My Lords, on this point, not all eligible pensioners take up their council tax benefit. A number of factors affect the take-up rate. One is the stigma attached to the word “benefit”. That is why the Royal British Legion campaigned for a change in 2009. However, it is just one factor affecting take-up. There are many others, including the complexity of making a claim, people’s confusion about whether they are entitled to it and their aversion to disclosing information in answer to questions that they feel are intrusive. The noble Baroness, Lady Hollis, is nodding in agreement. In estimating future demand, local authorities will want to consider all these factors together.

[Baroness Hollis of Heigham]

How will they pay for it?

[Earl Attlee]

My Lords, I need to make progress.

--- Later in debate ---

[Earl Attlee]

My Lords, we would all love to have a fully funded council tax benefit scheme.

[Baroness Hollis of Heigham]

We have one—and it is just fine.

--- Later in debate ---

[Earl Attlee]

My Lords, I will accept that, but we also know why we have gone into a double-dip recession, which is not our responsibility.

The default scheme is intended as a legal back-stop, a safety net to ensure that those in financial need can continue to receive support. To fund a default scheme fully, as Amendment 71 would require, would send a message that local authorities do not need to take responsibility for developing a local scheme. It would make delivering the saving—which was called for in the spending review—impossible. Local authorities do not need to wait for the default scheme. Pragmatic councils are pushing ahead with the job at hand. Local authorities are starting to think through how to manage the reduction to best reflect local priorities: Harrow, Brent and Chiltern councils are already consulting on the design of their schemes.

Amendment 75 seems to be intended to prevent local authorities from designing a scheme to help deliver a saving. This does not seem responsible. It is right that local authorities have the flexibility to decide how to manage a reduction in funding, reflecting the circumstances of their area. Constraining their ability to do this prevents them from taking sensible local decisions about their priorities and what is affordable.

At the end of our debate on the last group of amendments the noble Baroness, Lady Hollis, accused me of not answering some of her more technical questions—questions that, I suggest, even my noble friend Lady Hanham would find taxing, so it is not surprising that I cannot answer them. Of course I listen to the Committee’s concerns very carefully and I will discuss the technical points with my excellent team of officials. I do not accept that there is any weakness in the team behind me. Any weakness lies with me because I am not an expert in local government. However, I will try to serve the Committee as best I can.

[Baroness Hollis of Heigham]

My Lords, I thank the Minister for that reply. No criticism is made ad hominem of either the officials or the Ministers. However, when we are talking about localisation and cuts and we ask on whom the cuts should fall, it is not unreasonable to expect an answer other than merely, “That is for the local authority to decide”. When we ask who is getting too much council tax benefit, it is not unreasonable for us to expect the Minister to be able to tell us. When we ask which three needs might be genuinely local and not shared by other authorities, it is not unreasonable to expect an answer. They are pretty obvious questions on policy, and not technical at all.

A number of people have intervened on the Minister and we have engaged in the arguments. I simply cannot engage with his basic position that it is all right to increase the cuts that will fall on poor people in poorer areas, and to call this increasing local accountability. However, at this time of night, I beg leave to withdraw the amendment.

Amendment 71 withdrawn.