Local Government Finance Bill
Baroness Hollis of Heigham Excerpts(12 years, 5 months ago)
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Baroness Hollis of Heigham
Local authorities’ experiences are very different around the country. For example, if you are a smaller council and you are a district authority, which has to have two stages of consultation, you cannot make the deadline work. The latest information I had from Norfolk was that one local authority had a different supplier from the other six. The other six had their supplier coming through with their package only in the third to fourth week in June. They will probably have to spend four to five weeks cutting and slicing the stats to see what the implications will be for different permutations of the discount scheme, which will take them until the end of July. August, to some extent, is a fairly dead month. Once they have come up with the scheme, possibly in early September, it then has to go to consultation with the precepting authority, the county council, which will take perhaps a month, given that it has a committee cycle of six weeks or sometimes longer. That comes back to the district council, which has to amend its scheme. By this time it is the middle of October.
After the scheme is amended, which may take until the end of October, it goes out for consultation perhaps in November. Three months’ consultation takes it into February. It is a pity that it has to go into the financial estimates in December. In other words, it cannot be done if the district council is squeezed, through no fault of its own, on the one hand by software suppliers not producing the package until late June and on the other by having to have two rounds of consultation—perfectly reasonably—with the county council above all as well as 12 weeks with the public. I do not see how the deadline can be met.
Lord Palmer of Childs Hill
I do not have to take my name off the top of this amendment because it was never there. However, I share the natural anxieties of the noble Lord, Lord Jenkin, whose name is to one of these amendments.
The argument put forward in these amendments is to put off till tomorrow what should be done today. There is never a good time to do this. Putting it off will not solve this or help in any way. The argument put forward by noble Lords is that we need a greater lead-in time. The Olympics had a great lead-in time for security but there was still a mess at the end. There may be a mess at the end of this and there may be a mess at the end of the Olympics, but greater lead-in times do not necessarily solve problems.
As other noble Lords have said, local authorities have put in a lot of work. As the noble Baroness, Lady Hollis, says, some are further advanced than others. A district council is, by nature, a smaller authority than a London borough, so size should make it easier to deal with IT, benefits and the like. However, you still need a scheme, although the amount of money involved may be vastly different. I worked with a district council and I am still a London borough councillor, and it is different. The answer to the noble Baroness, Lady Hollis, who makes a very valid point, must be that we need to find a way in which those district councils and other councils that are not that far advanced can be assisted. That is why the Local Government Association, London Councils, neighbouring councils such as Norfolk council, which the noble Baroness, Lady Hollis, described, and the regional authorities have to help those councils through the experience of others. A small district authority should not have to reinvent the wheel.
Baroness Hollis of Heigham
The problem is that in a district council—a billing authority—you have two rounds of consultation to go through. There is the precepting authority. Then you amend your scheme. Then you go out to the public for three months. Then you amend your scheme again before it is accepted. That, as much as the software, is the problem. I entirely take the noble Lord’s point about co-operation.
Lord Palmer of Childs Hill
I agree with the noble Baroness, Lady Hollis, that there have to be different consultations. An authority may have a £500 million revenue expenditure, as Barnet authority has, but you have to focus your mind within that authority and, even if there are two or three levels of consultation, it has to be done. There is a short time in which to do it, but there is time.
The noble Lord, Lord Tope, talked about there being a difficult time over the next few months. I agree. Central government and local government, the Olympics and all sorts of organisations are having a difficult time, but local authorities have a history of rising to the occasion. I believe that they are doing that and that they will continue to do so. Therefore, I am against postponement.
Baroness Hollis of Heigham
I am sure that other councils may have had their software packages back in May, but from the county about which I have a little knowledge, I understand that the majority of councils use the same software supplier and it did not come through until nearly the end of June. That means that the proper consultation could not be gone through until councils had already decided on the scheme. That is the dilemma. Both factors were operating: the late supply of software through no fault of their own, and the fact that as a billing authority and not a unitary authority they in effect have two rounds of consultation. Again, that is perfectly proper, but you have a pincer movement on the timetable.
Earl Attlee
My Lords, I will carry on for a moment.
Just to be clear, all billing authorities required to bring forward a scheme must consult with their precepting authorities and with the public. That is as much the case for London boroughs or unitary councils as for district councils. Taken together, Amendments 72, 78, 79, 85 and 88A would delay the start for localised council tax reduction schemes by a year, pushing back introduction from 2013 to 2014. I am sure that noble Lords only intended to test the Government’s policy and, like my noble friend Lord Tope, welcome the debate.
Let us be absolutely clear. The saving scored in the spending review has to be found, as pointed out by my noble friends Lord Jenkin of Roding and Lord Tope. This is a key element of our deficit reduction plan that we must meet. Delaying the implementation of localised council tax reduction schemes would come with a cost.
The noble Lord, Lord McKenzie, skilfully queried what we would use these cost savings for. He talked about refuse bins. However, he will be aware that my right honourable friend the Secretary of State for Transport has announced a major programme of investment in our railway system. We can either spend money on council tax benefit or take a little cut on that and a little cut elsewhere, then put it all together in order to spend money on developing our infrastructure and promoting growth in the United Kingdom.
Earl Attlee
Today, yes. I remind noble Lords that, in respect of the difficulties of devising schemes, we have provided £30 million for local authorities.
Baroness Hollis of Heigham
Is the Minister saying that, in the default scheme, UC will be counted as income? He has had the advantage of seeing the regulations. We have not seen them so I just wanted some information. Is he assuming that UC will be included?
Earl Attlee
My Lords, the answer to that question is, I understand, yes. My answer to the noble Lord, Lord McKenzie of Luton, is that clearly the arrangements for data sharing will have to be in place by 1 April, otherwise it will not work. We are working to ensure that the data-sharing arrangements are in place at the appropriate moment. Universal credit will come in next October.
Lord McKenzie of Luton
Perhaps I may press the Minister on that point because it was originally understood that in October next year all new claimants would be claimants for universal credit. There seems to have been some change to that and this issue is obviously important because local authorities have to assess the volume of claims that they will deal with. Can the Minister confirm that the arrangement is that all new claimants coming through from October 2013 will go straight into universal credit and not into JSA, ESA or income support?
Baroness Hollis of Heigham
The legacy cases will spend two, three or perhaps four years coming across.
Earl Attlee
The noble Lord asked some complex questions. The noble Baroness mentioned legacy claims. It will be best if I write in detail on all those points, including the noble Baroness’s point about legacy claims.
Lord Beecham
In all events, it is fairly modest, but that will also disappear unless it is retained. If it is retained we come back in a vicious circle to the fact that it will be retained essentially at the expense of the working poor, whom, I say with due respect to the noble Baroness, Lady Hanham, we constantly hear that this whole scheme is designed to incentivise. That mantra is wearing a little thin. It is absurd to imagine that the whole burden can simply be borne by those people. It may have to be, if the Government require councils to do it or if councillors feel obliged to do it, because it is unlikely that they would be able to fund any move towards meeting the needs of this or any other group.
However, it is clear that authorities should consider the impact of the scheme on disabled people in their areas. I would like to know whether the Government have conducted any kind of analysis and tried any kind of modelling, with or without the assistance of individual local authorities on how this might work in practice. If they have not, frankly, that would be disgraceful. They may have and, in that case, I commend them. But there is no evidence in the impact analysis that anything like that has happened. In a matter of this significance, for this group in particular but not only for this group, that is simply not good enough.
At all events, these amendments at least focus some attention on the issues. They have the disadvantage of not supplying the answer in terms of the financial resources to meet those needs—and again one would have to go back to the Government. When it suits the Government, money can be found. As I implied in the question to the Minister, who is not departmentally responsible for these matters although he is something of a transport buff, money has been found to fund the deferment of the increase in fuel duty. There may or may not be good reasons for doing that—perhaps there are, but it was found. Apparently, the somewhat hapless Treasury Secretary believes that there was significant under-spending across government from which that money was drawn. Perhaps some of that money might have been used to moderate the impact of these provisions. Again, there was the other obsession of the Secretary of State about weekly bin collections, for which £250 million was offered. I gather that not much of it has been accepted, so there may be a saving there. As my noble friend pointed out earlier this afternoon, that money might be used either for the purposes of delay, which does not seem to be likely to commend itself to Ministers, or at least to help meet the needs of the very groups which they will apparently be advising local government to protect as far as possible.
The Government need to be honest about this. If they are not going to provide resources, they should acknowledge that local authorities will find it extremely difficult to do so. They should not be raising expectations that it will be done easily, if at all. That would be a shabby way in which to proceed, and I know that the noble Earl, Lord Attlee, and the noble Baroness, Lady Hanham, are not politicians of that stamp—absolutely not. But those with greater responsibility than, unfortunately, lies within their powers, need to demonstrate that that is not a course that they wish to pursue.
Earl Attlee
My Lords, I thank the noble Baroness, Lady Sherlock, for the explanation of her amendments. Noble Lords have asked a number of questions about specific groups and local authorities’ responsibilities in relation to those groups. I want to be clear that the legal requirements that established those duties, which your Lordships have already considered as part of legislation, will remain. As accountable public bodies, local authorities will need to continue to take account of all relevant duties. I am grateful to noble Lords for bringing some of those duties to the attention of the Committee.
The noble Lord, Lord Deben, asked me some interesting questions about the organisation of the machinery of government. I am confident that I know how to exercise that machinery but it is rather above my pay grade to try to change it by addressing the issues that he raises. The noble Lord used the term “above my pay grade” after I had drafted my speaking notes on his contribution.
The noble Lord, Lord Beecham, talked largely about financial issues. It is important to remember that, across local government spending, this is only a 0.4% reduction in the budget.
Earl Attlee
The 0.4% refers to these specific reductions.
The noble Lord, Lord Beecham, tested us on the overall government policy. I am fully signed up to all government policy, as the noble Lord will know.
Amendment 76 would require local authorities to have regard to the impact of their scheme on disabled people in their area. This is an important consideration and local authorities already have responsibilities in relation to disabled people. These include their responsibilities under the public sector equality duty in Section 149 of the Equality Act 2010 which requires authorities, in the exercise of their functions, to have due regard to equality between people who share a relevant protected characteristic and people who do not share it. Equality legislation explicitly recognises that disabled people’s needs may be different from those of non-disabled people. Therefore, public bodies should take account of disabled people’s disabilities when making decisions about policies or services. This might mean making reasonable adjustments, or in some cases treating disabled people more favourably than non-disabled people to meet their needs.
The Department for Communities and Local Government has already published guidance reminding local authorities of the statutory framework in which they operate and their existing responsibilities to people in vulnerable situations, including responsibilities under the equality duty. Therefore, I do not believe that an additional duty to have regard to the needs of disabled people is needed, especially when local authorities have an already established and understood framework of responsibilities.
Amendment 76A would require local authorities to have regard to the impact of its scheme on carers in the area. I was asked several questions about carers, including whether we would change existing relief for them. There are no plans to make any changes to the existing relief. I was also asked how the default scheme takes carers into account. The default scheme preserves the current CTB regime as far as possible. CTB makes provision for carers through a specific income disregard.
Earl Attlee
My Lords, it is clear that I am going to have to write to noble Lords on a lot of these points.
Baroness Hollis of Heigham
I understand that the Minister will have to write. Could he pick up the point about one of the problems being that different presumptions and rules are associated with the range of benefits that we currently have when couples straddle the pension age, and will he say what is proposed for universal credit? As I am sure the Minister will know, if one of you is below pension age, both of you will be treated as though you are below pension age. That is not the situation now. There are in effect two sets of schemes, according to whether you are a newcomer into UC or a legacy claimant, and cutting across that will be a CTB discount scheme, which is supposed to embrace both. Perhaps the Minister can take on the issue of this complexity when he writes.
Earl Attlee
It may help the Committee if I explain why I am experiencing such difficulties. The proposed amendment talks about disability in very general terms. If noble Lords table an amendment that deals specifically with their concern, I can address that concern specifically, but I am struggling to answer these very technical questions, which are too detailed for me to answer at the Dispatch Box. If I had a more detailed amendment, I could do so.
I would like to say a few more words about carers. Carers provide a vital role in society, and I expect that local authorities will want to consider what provision to make for this important group. Currently council tax benefit makes provision for people who are carers through a specific income disregard and a premium towards their applicable amount. Local authorities will be free to do so under localised council tax support.
The Department for Communities and Local Government is working with the Department for Work and Pensions to ensure that local authorities will continue to receive data on current benefits and universal credit. This could include data that would help local authorities to identify carers so that they are able to provide support in the future if they choose to do so under the terms of their schemes.
Lord McKenzie of Luton
My Lords, I thank the Minister for his reply. I must say that I am a bit taken aback. I thought that it would be pretty much routine to accept the recommendations of the Delegated Powers and Regulatory Reform Committee. I thought that the reasoning was a bit spurious. It is welcome that regulations have been published now and welcome that we will, I hope, have some chance to debate them when we get to Report, although debating at that stage is not necessarily the iterative process that we could have in Committee.
Baroness Hollis of Heigham
Can my noble friend recall any other instance in the past 10 years or so when recommendations from the Delegated Powers Committee suggesting that we go for an affirmative rather than negative procedure have not been followed by the Government?
Lord McKenzie of Luton
I cannot. I can remember one occasion as a Minister when I was minded not to take the advice, but Ministers always did if it was pressed upon them. I am truly shocked by what the Minister says. We have other business to debate tonight so I am not going to prolong the thing, but this is something to which we will come back on Report because I do not think that the answer is satisfactory. I beg leave to withdraw the amendment.
“Council tax discount: vulnerability
The Secretary of State shall issue guidance to all local authorities determining who shall be considered vulnerable for the purposes of eligibility for council tax discount.”
Baroness Hollis of Heigham
I was hoping that we would get to this amendment tonight, so we decided that it was not wise to spend time debating Clause 9 stand part.
The amendment would require the Secretary of State to issue guidance as to who is vulnerable. After the sequence of amendments and discussions that we have had, I think that we need that. At the same time, I want to raise the deeper issue behind it, and I assure the Minister that this is in no sense a technical issue but an issue about policy. I therefore look forward to his reply. On his complaint that we sometimes raise things that are technical, that is of course what Grand Committee is for compared, with Report or Second Reading. If we cannot explore the technicalities here, where can we? I take it a little amiss to be reproved for asking about things that are technical and that cannot therefore be answered in this Committee.
Lord Deben
My Lords, I am so often in agreement with the noble Baroness, Lady Hollis, that I hesitate to intervene, but this is entirely the wrong way round and I deeply disagree with her. This is a very important aspect of what we are doing because the problem with localism is that everyone who has ever been concerned with centralism will find on every occasion that it will be better done by those clever people at the centre. What was behind the noble Baroness’s comments was to say, “The vulnerable will be protected only if we at the centre make sure that no one has any input on this at all in case they might make a different measure and balance, given their available resources”.
I must say that I really wonder what I would say if I had been a local councillor and had heard her comments about what was likely to happen if the local council had made these decisions. The noble Baroness represented a Labour council that decided that in local terms it would bilk the Government’s policy on the sale of council houses. It said, “We have a right to do this”. My noble friend was the one who had to stop the council doing that because it was a government policy, but the council took its own view. It was against the law. It actually broke the law in order to uphold localism as it saw it.
Baroness Hollis of Heigham
My Lords, we did not break the law. I actually won the first round for judicial review. It was only when subsequently it was clear that it would cost the local authority a lot of money if we went to appeal—against Lord Denning—that I decided that we would negotiate. What then happened was that the regional officer was sent in to run the sale of council housing for us and, after six weeks—I was deposed as housing chair—he came knocking at my door saying, “Could we discuss this?” He was hidden behind a huge bouquet of flowers. I said “Of course, of course”. He said, “No one will work with me because when I’m gone, you will still be there”. I said, “Oh, dear me”. We negotiated and six weeks later, he went off to Africa as a chaplain and we went back to where we were.
Lord Deben
As we are going down memory lane, I will just remind the noble Baroness that no other local council thought what her council thought about the law. Everyone else accepted that the law was as it was, and indeed it was the law of the land. I am not blaming her for it; I was cheering her on. In those days, she did think that localism mattered, even in a matter so clearly a national policy. My problem with everything she has said is that I have heard it again and again, but normally from officials. Normally it is central government civil servants who sit there and say, “Better not, Minister. If you allow people down there to make decisions, you never know what might happen”. I would say this to her: you have got to start somewhere. Why can we not start here? After all, council tax is a local tax. It is ludicrous to say that the tax is local but the arrangements for the tax rebate should be national. I find that unacceptable and therefore I hope very much that the Ministers will not read out a concession or a helpful comment. I want the Ministers to be tough about this and say, “This is a matter for local authorities”. If local people don’t like it and think the local authority has not been generous enough or has not used the extra funds from something it is able to control—I hope that local authorities will be controlling more and more because I believe in localism—those local people have in their hands the ability to change the authority. This is exactly what has destroyed local government over the years, and my party has been as guilty of it as others. We are always frightened about giving local councillors the real decisions about things.
I do not want to go too much into the detail, but I can also argue that not all reasons for local council tax rebates are central and national. I can cite a lot of examples where the pressures and the concerns about vulnerability are different in some parts of the country from others. Rural areas have different demands with regard to vulnerability from close-knit communities. I merely say that one could go through a list of those.
I come now to the thing that really made me stand up. It was the use of the phrase “postcode lottery” by the noble Baroness. It is a Daily Mail argument that she should never use.
Lord Deben
We want postcode decisions, not a postcode lottery. We want local authorities to make their own decisions about their own communities and their own priorities. What has been wrong in this society for too long is the use of this ridiculous argument.
The noble Baroness says, “You may be on the wrong side of the line”. Well, frankly, that depends on what you think is the wrong side of the line. It may be that in a particular locality, scarce resources are used in a different way from the neighbouring locality. That does not mean to say that you are on the wrong side of the line, it means that you are on the wrong side of the line as defined by the noble Baroness. That is the trouble. Central government has always believed that defining these lines is the business of central government and never of anyone else.
When I was Secretary of State for the Environment I remember addressing a local government conference. When I said that I believed we should do nothing in Brussels that we could not do in Westminster, but what we had to do in Brussels we should do well, and we should never do anything in Westminster that we could do in county hall, but that anything we do in Westminster should be done well, I was cheered. When I went on to say that we should nothing in county hall that we could not do in district council offices, I was cheered again. But when I said that we should do nothing in district council offices that we could not do in the parish council, I was booed. Why was that? It was because everybody believes in subsidiarity—up to there. The moment you talk about subsidiarity below them, all hell breaks loose. The world will fall apart and vulnerable people will be totally stamped on—because we are the only people who know.
That was a very good example of “the man in Whitehall knows best”. It was always the purpose of centralists to claim that no one else could make decisions. I have been longing to say this about the postcode lottery and the moment has come, because it is exactly that which we are fighting against. I must say to my noble friend the Minister that, if she gives way on this, she will be taking away the fundamental element of proper localism; that is, you risk local people making decisions that are different from those that you would make. That is the challenge of localism. The noble Baroness has given us the opportunity to take the most difficult example and say, “No, here we stand”.
Baroness Hollis of Heigham
How then would the noble Lord explain why council tax benefit was originally included in universal credit and the White Paper, why all the planning assumptions were based on that and why it was only subsequently extracted in a deal between departments? How does this have anything to do with localism as a principle?
Lord Deben
It is because the Government have not gone far enough yet; that is the whole point. I would have a different structure, but the noble Baroness must not ask me to answer for the Government. I am lucky enough to be formerly a Minister and to be able to say one or two things which need to be said. I disagree with the noble Baroness, but she will find on other occasions that I am stalwart in support of some of the things that she says which this Government do not agree with. However, on this occasion, I beg my noble friend to stand firm.
Baroness Hollis of Heigham
My Lords, this is not a formality: I thank everyone who has taken part. In a way, the Committee caught alight on this, and it is good that that was on such an important issue.
The noble Baroness, Lady Browning, was right when she said that there was an issue about precepting and billing authorities, which the Minister referred to at the end: the knowledge is on one side and the billing authority is constructing the discount scheme on the other. The lesson that I suggest to the Minister that we take from that is a different one: that you should certainly consult and should have time to consult. She should therefore think again about her response and that of her colleague, the noble Earl, Lord Attlee, to my noble friend’s amendment about the ability to delay, because I assure her that it just will not be possible to get the schemes in alignment and, having done that, to move them out to public consultation all within the financial cycle, ready for introduction in April. That will not work. The Minister, as well as the noble Baroness, Lady Browning, has made our point for us in spades. I hope that as a result she will be able to review the Government's position on the amendment in due course.
I have the greatest admiration for the noble Lord, Lord Deben; on many issues we have been side by side and he was the Minister who, above all, stopped planning in local authorities being subject to the free market, a legacy bequeathed by his colleague Nicholas Ridley, a former Secretary of State for the Environment, which allowed many of us to protect our historic buildings, streets and centres. The noble Lord is in the book of the almost very good in most local authorities, and I am sure that he would want to keep that reputation intact.
No one doubts that planning is a local decision. Obviously there are inspectors and so on, but none the less it is local. However, when you have a number of elderly folk who need care and support and the local authority—rightly, in my view—makes a decision about whether it is more appropriate in its area to go for residential care or, possibly because it is a rural area, to go for extended domiciliary services, it is right and proper that one local authority should differ from another according to the geography and nature of the locality. The noble Lord and I have no differences about that; I was not in local government for 25 years to knock localism. That is why I bothered with it, as do many people in this Room today.
However, it is not a matter of centralism versus localism when you come to the individual entitlement to income. It is simply a different category. In planning, the planning authority is acting as umpire between local residents and car drivers. In residential care, it is a case of deciding how a particular type of need is best met, and many flowers may bloom. However, individual entitlement to income is a basic human right and not part of the proper territory of debate between centralism and localism. This is not about the clever people in the centre knowing best, to copy the noble Lord’s words—that really is an absurd statement—but neither do local people know best. Will the noble Lord argue equally that, because joblessness rises in a locality, unemployment benefit should be locally determined? I await his reply.
Lord Deben
Unemployment benefit does not relate to a local tax. We are talking about a local tax, and in a locality it would be sensible for a local council, for example, to say that the way to deal with child poverty in this area is to spend the money on providing the means for them to be fed because it had discovered that by doing it in another way the children did not get the food because the parents used it elsewhere. That is a perfectly reasonable thing for people to decide.
Baroness Hollis of Heigham
We could have another argument about whether to have cash or benefits in kind, but the point about income is that it is a national entitlement. We have accepted that for unemployment benefit, I think. Even though the lack of a job may arise because of the peculiar distinctiveness of the locality, we do not then say that, as a result, that should determine the level of unemployment benefit. Equally in housing, rents and policy are determined locally. Is the noble Baroness going to argue that housing benefit should also be a local benefit as opposed to a national one? I do not think so. The main argument that he has used is that because council tax is levied locally, council tax benefit should be structured locally. That takes no account of the fact that half the country is in two-tier authorities where they have no control over what the precepting authority may levy on the billing authority, yet the billing authority takes the problem, cost and moral responsibility for the discount scheme that runs. As a former MP for an area with a rural district council in Suffolk, the noble Lord will know that as well as anyone. His argument does not run in two-tier authorities—it cannot, because the council tax is not generated by the billing authority that is constructing the discount scheme, and any toughness in the scheme to impress on people what their value for money is does not relate to that particular billing authority.
Lord Deben
They do have control over it—they have an election. If they do not like what the county council has done they can vote against it. If the noble Baroness is really saying that the only system that people can understand is a single-tier system, she is making a mistake that is very much wider than this. Many people know which do what, and, if they do not like what one of them does, they vote against them in the local election, as we all know.
Lord Beecham
Does my noble friend agree that although there is a significant reduction in the amount of central government support for the benefit, it is still approximately 90% government funded? So it is going towards a council tax, but the funding is still essentially central. Unfortunately, some more of it will fall on the locality as a result of what the Government are doing, but the greater part is still centrally funded.
Baroness Hollis of Heigham
My Lords, that is absolutely true, even more so in two-tier authorities where 75% of the expenditure that falls on local residents is through the county council precept. The precepting authority does not have to do the same as the billing authority, which has to devise the discount scheme.
I understand the noble Lord, Lord Greaves, on the postcode lottery, because I would defend local decision-making as far as possible. The point here is that what a local authority has in terms of resources will depend on the accident of the demography of its particular locality. If only 30% of its population are pensioners, it will have to find a lower degree of cut on people’s working age than if 60% of its population are pensioners. That is an accident of demography. Equally, when anybody seeks help with their council tax discount, it will be determined not by their own efforts, their willingness to vote or the resources of the local authority, but by how many pensioners and other vulnerable people are ahead of them in the queue. That is not localism; it is rationing by queue, with central government having already determined that certain constraints, such as the number of pensioners, shall be imposed on the system. In that sense it is random—you need not call it a postcode lottery, but it is one. The size of cut that your locality will face is accidental, and it will not necessarily bear a resemblance to your particular need. Even though it may be identical in the neighbouring authority, it will experience a different income because the demographics will be different. That is not reasonable.
I suggest to the noble Lord and the Minister that if there were no proposition to find £500 million of cuts, there would be no such scheme about localising council tax benefit before us today. This is not localism; it is the exporting of cuts to localities by central government and then dressing it up in the fancy clothes of localisation issues, even though people’s needs have not originated by virtue of the locality and the random demography of that patch will determine who gets what. That is not localism. It is exporting cuts without any constraints, which will be experienced differentially by vulnerable people who happen to have been unlucky in the lottery of living in one authority rather than another. I regard that as deeply unfair.
As my noble friend Lord Smith said about where the cuts will fall, it is not about centralism versus localism but about the centre exporting its cuts. The noble Lord, Lord Best, may speak to his amendments on a subsequent day in Committee. The noble Lord, Lord Shipley, was absolutely right. Given this distinctiveness between local authorities, there will be judicial reviews. Mencap will run them if CPAG does not, according to how they are treated. They will probably have a very good case.
The Minister said that local authorities should, in her words, develop schemes that are relevant to their authorities. That challenges the core of my argument. She assumes that vulnerability and poverty are so peculiar and distinctive to a particular local authority as to justify separate local schemes. I simply do not accept that for one moment. Whether you are autistic, have a disability, are a carer with an elderly mum or are a child in poverty, it is not generated by your locality although it may be experienced in your locality. Given that it is not distinctive to your locality, it is not relevant to your local authority. Therefore, there should be a national scheme.
I leave the Minister with two questions. Who will she exclude from the scheme? We know that pensioners are automatically covered. Unfortunately, we have not had the pleasure of seeing the guidance because it did not come out on Friday but on the very day when we are sitting. Therefore, we cannot cross-refer to it, which is shame. The Minister says that vulnerable people will apparently be protected. The working poor will also need to be protected, so who is not? That is 100%. Who is not protected? Who does the Minister think should see their council tax benefit cut, given that pensioners, vulnerable people and the working poor and their incentives are protected?
Secondly, if there was no £500 million cut, does the Minister think that any local authority in the land would seek to establish its own distinctive council tax scheme and to pull it out of universal credit? She knows that would not happen. I have put two questions to her. She is welcome to respond to me—to tell me what is wrong with council tax benefit, who is already covered but should be excluded and whether, if we did not need £500 million of cuts, any local authority would touch this scheme with a barge pole. I think everyone in this Room today knows the answer to all those questions. They are not answers that enforce the Minister’s argument.
Baroness Hanham
I have answered the questions that the noble Baroness has asked me today if not on previous days. I am sure we will return to them. We have had an extremely wide debate today, although we are not over our time. I repeat that local authorities know very well who their local people who need help and support are. That is a very localist issue. The noble Baroness may not agree with me but those are my words on the subject. She gave me the opportunity to say so.
Baroness Hollis of Heigham
My Lords, I simply disagree. According to the knowledge of the local authority—or not as the case may be—individuals may see their entitlement to income support decreased. However, the time is late; I beg leave to withdraw the amendment.
Local Government Finance Bill
Baroness Hollis of Heigham Excerpts(12 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“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.
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.
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.
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.
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.
“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.
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.
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.
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.
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?
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.
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.
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?
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.
Earl Attlee
My Lords, we would all love to have a fully funded council tax benefit scheme.
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.
Local Government Finance Bill
Baroness Hollis of Heigham Excerpts(12 years, 5 months ago)
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Lord Shipley
My Lords, I first declare my interest as a vice-president of the Local Government Association, which is the first of the afternoon. I apologise for missing Tuesday's Committee when large numbers of noble Lords were making a similar declaration.
Baroness Hollis of Heigham
Could we take it for granted that we do not need to continue to declare? If we have done so on our first Committee day it should stand for the rest of the Committee stage.
Lord Shipley
I should be very happy to have a written note about this prior to Report. It would help us enormously. The issue is that the exemption should be fully refunded to local authorities; as I understand it, in the past few years it has not been. It is becoming a problem for places that have large numbers of houses that are wholly exempt because they are wholly occupied by students. There is simply no income at all.
Baroness Hollis of Heigham
It would be very helpful if the Minister could clarify a position that is increasingly causing concern. There may be a house for students that is completely exempt from business rates and council tax. Then one of the students goes into a part-time job while continuing their degree. My understanding is that if the student’s income from their part-time work is above the threshold, that brings the whole property into council tax, although the student continues to be eligible for a single person discount. That seems to run directly against the concern about work incentives for universal credit and against the need for students to find part-time work, given the increase in fees that they now have to meet for the first time. Will the Minister clarify whether this affects business rates or council tax?
Lord Best
My Lords, I shall be brief in supporting the amendment of the noble Lord, Lord Warner. We all owe him a debt of gratitude. He was one of the three Dilnot commissioners, along with Dame Jo Williams and Andrew Dilnot. Their report remains the key piece of policy guidance to which we all look to reform the system fundamentally.
I have declared my interest as president of the Local Government Association, which is right behind this amendment. The LGA has made adult social care its highest priority. It is the issue about which it is most concerned at the moment. If we take out the dedicated schools grant, social care is already much the largest area of local government spending. The 28% cut to central government support for local authorities over the current spending review period has not, I am glad to say, led to a 28% reduction in social care services for older people, adults with learning difficulties and others in need of care. Local authorities have absorbed some 85% of those cuts through service redesign and efficiency savings. However, this can go on for only so long before very painful results become apparent.
The cost of adult social care services is now set to rise, on a trajectory that the LGA has calculated, from some £14.4 billion to £26.7 billion over 18 years. That is an increase of 85%. By the time we get 18 years down the road, we very much hope that a series of measures will be in place to head this off before we get to the point at which virtually all local government expenditure must be on social care. However, there is the period in between in which things may get worse and we do not want this legislation to heighten those dangers.
It seems unlikely that a Bill could be introduced before the next election. If something came forward in 2015, it would probably be enacted in 2016 and become effective in 2017-18. We would already be several years down the road. The King’s Fund has estimated that by 2014-15 the gap in social care provision will already have reached £1.2 billion a year. Central government support needs to be in place now. We will get a reset in 2020 but in the intervening period funding for social care is a really important consideration for the Government. Although there may not be an expectation of the noble Lord’s amendment being accepted in its entirety, the sentiment behind it is strongly supported by the Local Government Association.
Baroness Hollis of Heigham
I support my noble friend’s amendment. I am confident that the Minister will not reproduce the rather unwise remarks that we sometimes get on the Floor of the House that in seeking to cut the deficit you cannot afford to spend money on social care. There are sources of finance that could be available to government—any Government, including mine, which could and perhaps should have done this as well so I am not making a partisan point—which would adequately fund the Dilnot proposals on pension tax relief, about which some of us know something and others know relatively little. I may be in the second group.
At the moment pension tax relief is £30 billion and the difference between the standard rate and the higher rate is £7 billion. In the past we weaned the country off mortgage tax relief, first by bringing it down from higher rate to standard rate—that was done by a Conservative Government; the noble Lord, Lord Lamont, I think, but it may have been the noble Lord, Lord Lawson—and subsequently it was abolished altogether. The point about this is that in all our thinking about funding people’s long-term savings and their ability to cope with long-term care and so on, we think there is something called work and something called retirement, and that you should save from the one and transfer it to the other. We have to start thinking much more about people’s longevity, which is a good sign, and moving money from work to early retirement and from early retirement to later retirement; there are three categories.
If you were to ring-fence the money that is currently spent on higher rate tax relief down to lower rate tax relief, which is enjoyed by higher rate taxpayers on their way in, even though they pay only lower rate tax on the way out, it would be redistributed within the pensioner community from younger pensioners in their 60s and 70s to that same group of pensioners as they age into their 80s and 90s. For what it is worth, it would also redistribute, to some degree, from the better off to the poorer. As far as I am concerned, it would hit every winning duck that we want to hit: we would make pension tax relief fair; we would redistribute within the pension community in a ring-fenced way; we would redistribute from the better off to the poorer; and we would, I am sure, be able to commend it to the public in terms of fairness, because most people will be postponing income they might have got in their 60s and 70s to be able to have it in their 80s and 90s.
Before the Minister says that we cannot possibly do anything about this given the deficit—and I realise that this is for HMRC and the Chief Secretary and so on to think about—I would like to put this into play because I would be very sorry indeed if the proposal coming out next week was put into the long grass on the grounds that there can be no funding available and therefore we have to struggle on from an interim ad hoc base, as we are doing at the moment. There is a way if there is political will, and I am quite sure it is the sort of proposition that could command support right around the House and from all political parties. It would be fair, decent and affordable and it would give people security.
Baroness Hollis of Heigham
My Lords, I am giving only my own views at the moment. I have not sought the views of my Front Bench on this. I am coming out of the pensions world on this and my concern about the unfairness in pension tax relief and the way that we could link this to the funding for long-term care that my noble friend has mentioned. But certainly not; they are my views.
Lord Warner
It might just help the Committee to say that there are plenty of suggestions around, which the Government are well aware of, that enable you to implement the Dilnot proposals without any increase in public expenditure. What you are required to do, though, is reprioritise, which the Government are unwilling to do, as far as I can see. Starters for 10 would be not just the creative proposal of my noble friend but means-testing generous winter fuel payments, free TV licences and bus passes for people who are higher rate taxpayers. Plenty of proposals have been put forward for using inheritance tax to pay for that. All these proposals could be put into play if the Government were prepared to enter objectively into a discussion with the Labour Front Bench in the other place, with whom they are having so-called cross-party talks, but very little creativity seems to be coming from the government side.
Earl Attlee
My Lords, the Committee has made very good progress but I would be extremely grateful if we could consider this amendment. I do not think it will take very long and it would be advisable to take it.
Earl Attlee
My Lords, I have agreed with the usual channels that we would do so.
Local Government Finance Bill
Baroness Hollis of Heigham Excerpts(12 years, 5 months ago)
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Lord Jenkin of Roding
Surprise, surprise, but there we are. Discussing this with the Local Government Association, it seemed to me that there would be merit in building in some form of escalator. Amendment 12 in this group introduces a limit, as it were, to say that it cannot be less than the previous year. However, that only stops it going down. Amendments 21 and 22, in the names of my noble friends and me, seek to build in a regular process by which the centralised share falls and the localised share rises. I do not for one moment claim that this is the only way of achieving an escalator; obviously, there might be a whole range of different options to do that. With these amendments we are arguing for the principle that the local authorities should be able to look forward over the next few years to a steadily rising proportion, both to increase the incentive to encourage development and more jobs, and to give expression to the increased localism which the Government aim to champion.
Amendment 22 spells out our proposal. I have said that I do not think this is necessarily the only way of doing it, but the proposal is quite simple: one starts at 50%; two years later the central share declines to 45%; two years after that to 40%; and two years after that to 35%. This takes us only up to 2018, and of course one is hopefully looking further forward than that. The corresponding local shares would go from 50% to 55% two years later; then to 60%; and then up to 65%. Therefore, over the period up to 2018, we would move from 50:50 to 65:35. Perhaps we could write this, or something like it, into the Bill. I made it absolutely clear that there are a number of different options for doing this and this was the one that seemed to attract some support in the local authority world. Local authorities particularly want to see some legislative provision setting out that the 50:50 split is not to be permanent or long-term.
As I have made clear—and this is very different from what I said when I was Secretary of State for the Environment in charge of local authorities—I am a huge supporter of the principle of localism. The noble Lord, Lord McKenzie, and others have made the same point. However, I detect the hand of the Treasury in this wish to maintain a 50% share. There is a feeling that it does not want to let go. My noble friend Lord Brooke of Sutton Mandeville and I have both been Treasury Ministers—I was the Chief Secretary at the Treasury—and I recognise that temptation. It seems to me that we have a choice here. Are we really going to encourage an increase in localisation or are we going to maintain a strong central control with some modest shift in favour of localism?
In considering the Bill and this particular proposal for the division of the business rate retention scheme, I hope that the Government will be prepared to accept that their good faith and belief in the principle of localism and localisation would be demonstrated by writing something like this into the Bill. That is what we are looking for. It would give an enormous fillip to the encouragement of local government which would go the whole way back, and local government would come to be seen as a more important area of governance in this country.
There is no doubt that as, over the past 30 or 40 years, the public have seen local government decision-making increasingly being taken over by central government, there has been a great loss of public interest in and concern over lower and lower voting figures. It is to the huge credit of local councillors such as the noble Lord, Lord Smith of Leigh, and others who are here that they have kept the flag flying in these difficult times. We now have a change of direction and I think that this has given local government an enormous boost of encouragement. It can say, “We really do still count. We are still looked to as an important area of government and not just as an instrument of central government”.
To my mind, if we could build into the Bill some form of escalator so that over the next few years there could be seen to be a shift in the percentage from a 50:50 towards a 65:35 split, or whatever it might be in six or seven years’ time, that would send out a very important signal to local government that the national Government are on its side and that they want to make localism work and make it a greater reality. The advantage would be that it would increase local authorities’ incentive to encourage development and so achieve growth and jobs.
If that is not done, it will give the impression that the Government—the Treasury would carry the blame—are giving a higher priority to tight monetary control than to encouraging growth. There has been a huge amount of argument about that over the past year or two but here is one way in which we can fight back on it. I hope that we will be able to persuade my noble friend on this. She will no doubt wish to discuss it not only with her colleagues in the DCLG but with Treasury Ministers—I know that they have a lot of other things on their plate at the moment—to see whether we can do something along these lines. It would be a hugely important signal to send out and a great encouragement to local authorities, as I hope that noble Lords will agree.
Lord Greaves
The noble Lord was sacked. I think further investigations are required, and we will report back.
I was moved to speak by listening to my noble friend Lady Eaton. I support a great deal of what she said, which was in emphasis a little different from some of the contributions made by other noble Lords. In principle, these amendments are right: 50% is a remarkably low figure to be retained by local government, and certainly not what was expected when the scheme was first announced to the world. However, I want to bring noble Lords down to earth with regard to some local authorities. Retention locally of the business rate will not be a financial bonanza for those local authorities at 50% or at any other higher percentage. Many authorities, as my noble friend said, will continue to need to rely on the rate support grant, if it continues to be called that, because they will have great difficulty not only in finding ways in which to expand their tax base by increasing their business rate but also maintaining them at the present level. This is a fact of life, and the localisation of business rates in these areas, including my own region of east and Pennine Lancashire, does not have the rosy glow around it as it does in areas that will find it easier to grow a commercial base. That is not to say that people will not try to do it, but in areas such as my own it will be a matter of trying to hang on to what is there at the moment.
I give an example. A small district might have two or three large mills or factories contributing quite a high proportion of the business rate. It only requires one or two of those to close down and the position will be fairly catastrophic. It is not the same in every kind of area and whatever kind of system we have in future will have to retain a substantial element of redistribution at least for those authorities. I do not know what proportion of authorities that is, but I have heard my honourable friend Andrew Stunell tell me that about 20% will be substantially reliant in future on continued redistribution elements of the grant. I do not know whether the Minister has an idea or can enlighten us after this Committee.
The second thing that causes a certain amount of alarm is the 50%. It is really the argument about what happens to the money that is centrally controlled. How far will this kind of area, which tends to be the old, declining, industrial area—although not all as some are coastal towns that have fallen on bad times, and so on—rely on the traditional kind of government grants, particularly capital grants, for regeneration? We discussed this issue in your Lordships’ House last week in a debate launched by the noble Lord, Lord Mawson.
The noble Lord, Lord McKenzie, and I were making similar points that parts of the country are missing out on the grants that are now available, compared with the past. That is partly as a result of the reduction in funding for capital schemes and the fact, for example, that the regional growth fund is cumulatively less than the regional development agencies used to have available to disperse. It is partly because there is a tendency now to go for growth and to go for the places where growth is easiest and perhaps to go more to the south-east, the Greater London area, the big cities, the city regions and metropolitan areas. There are very exciting and worthy schemes for authorities to work together for economic growth and development in areas such as Greater Manchester. Those places that do not naturally fit into the big city regions risk missing out. I am talking about my own area in Pennine Lancashire, but there are others as well, in the north-east, in west Cumbria, and elsewhere around the country. Our concern is about how much the less fashionable and less sexy areas, or the areas which find growth more difficult and where the return on investment may be less as a percentage, are going to miss out on this 50% redistribution. There are huge questions there.
I ask the Minister whether the Government have an assessment at this stage of how much of this central fund is expected to be used for different purposes. How much of it is expected to be used for council tax issues which the noble Earl, Lord Lytton, was talking about? How much is expected to go on administration? How much is expected to go on straightforward redistribution to the sort of areas I am talking about? How much will go to traditional funds and schemes for capital investment and development around the country? How much will go on regeneration? How the Government will use this money is not clear to me at all. I can see in total the kinds of things it is going to used on, but I do not really know whether they have an estimate of how much is likely to be used for the different elements. I would find it extremely interesting and useful to have that information, if the Government have worked it out.
Baroness Hollis of Heigham
My Lords, I had not intended to come in on this part of the Bill; I was waiting for council tax to come up. However, the points made by the noble Lord, Lord Greaves, have triggered a set of questions for me. Does the department have a “who pays, who gains” outcome as a result of these changes? If so, can the Minister share that with us? I am very unclear.
I am delighted to see that the noble Lord, Lord Jenkin, has been converted from the error of his ways. Let me remind him that before the business rate was nationalised—I think it was the only thing that was nationalised under the Thatcher Government—authorities like my own, which were no longer unitary after the disaster of 1974, none the less received a business rate. This meant that those who lived outside the fringes of the city area and who did not pay the domestic rate, contributed through the business rate to the city’s well-being. This meant that a city could therefore serve as a regional centre while having only the property rate of a rural district council.
More important still, it meant that the leader of the council—myself—or the chair of finance would take great pains with the Chamber of Commerce. Every year, I went with a prospective budget, and it had a very direct influence over how we constructed our budget. As a result, until the nationalisation of the business rate under the noble Lord, Lord Jenkin, and as there was a direct pay-off to our revenues, I was willing to forego rateable value on new property; I was willing to invest in apprenticeship schemes; I was willing to do the environmental works, the roads and so on, to get small enterprises off the ground; and we were willing to help SMEs to develop through local enterprise trusts. We did all that because there was a direct pay-off. I could never understand the huge folly of a Conservative Government, which is above all expected to be business-oriented, cutting that link with the city authorities—admittedly, they largely tended to be Labour authorities at that time—which gave them an incentive to build their business.
After nationalisation of the business rate, the result was—I did the figures—that my local authority was contributing something like £14 million a year in business rate to the Exchequer and receiving back something like £7 million. The adjacent Conservative authorities, which did virtually nothing, were contributing about £2 million and receiving back about £4 million. In other words, they were piggy-backing off the flow of the nationalisation of our business rate to rural areas, because they had never had a concern to develop business in their areas, partly because they had high property values and did not want to be contaminated by it. It also meant that I no longer had any incentive to do something similar. I forgot to declare that I, too, am a vice-president of the Local Government Association.
I applaud this move, even if it does not go as far as I would like. However, I understand the need for an equalisation grant, otherwise Westminster would retain far too large a share and other local authorities would have very little. As a result, it will be really important for us to see what greater equity there will be now in terms of the statistics between who pays in and who gains and what the return is. Some authorities, such as my own, are district councils trying to do a unitary job with district council revenues—thank you very much to the Government for that—and they will be glad to have that money if it allows them to look after their business economy as well as the wider economy, in terms of building tourism and so on for the whole area.
For the sort of authorities that the noble Lord, Lord Greaves, mentioned, which may well need this money but may not receive it, there is a problem, too, of the distribution between those authorities whose money comes from small but highly valued premises—solicitors’ premises and so on—and those that have relied in the past on large physical premises such as factories, which are now closing due to the shift in the British economy. A reason for this request is that we were screwed the last time around and it was a disastrous policy for government, of whatever complexion, as well as for regional economies. I hope that this time around we will get a more equitable and sensible distribution. If the Minister can help us by promising to circulate some of these figures, it would be very valuable indeed.
Lord Beecham
My Lords, my noble friend Lady Hollis makes a very good point about the relationship between local government and business. It is interesting that the London Chamber of Commerce and Industry, in its briefing for today’s discussions, makes the point that more than a quarter of a century after the noble Lord, Lord Jenkin, perpetrated his terrible crime, 53% of London businesses apparently think that councils are currently responsible for setting the level of business rates. It says that that reveals a breakdown in communication between councils and businesses. Some of us might think that it simply betrays a complete ignorance of how local government works on the part of those who really should know a little better. However, that does not mean that the situation should not be improved.
I sympathise with the amendment tabled by the noble Lord, Lord Jenkin, because he seems, rightly, to want to rebalance this position. The Government seem to take a rather Augustinian position in respect of localism: “Lord, give them localism—but not yet”, would be one way of putting it. Another way, perhaps more familiar to the Secretary of State in his earlier days as an enthusiastic Marxist, would be to describe it as a form of democratic localism. Democratic centralism was the vogue under the Stalin regime but this is democratic localism, which is to say that all the orders come from on top and are then applied locally. This division certainly seems to portend something of the kind.
In a way, the game is given away by paragraph 9 of the statement of intent on business rates retention. Having previously said that a number of “specific grants”, which I will mention in a moment, will be included in the business rates system, that paragraph goes on to say:
“As a result, the Government is able to set the local share at 50% which delivers our objectives on growth and localism while allowing for future fiscal control to protect the interests of the taxpayer and the wider economy”.
That is a fairly clear statement that the Government are seeking to use this 50% as a controlling mechanism.
Baroness Hanham
That was an interesting, if unexpected, debate. When it started, I was very touched by the fact that I had a little note that said, “The purpose of Amendment 15 is not entirely clear”. My reply may not be totally applicable either, but somewhere along the line we have clearly raised really important points. We are going to have to look again at the amendment, but in the mean time, I will tell the Committee what we thought it was about, and if it does not quite tie up, we will sort it out, I am sure, between now and the next stage.
I am advised that the amendment in its current form could not stand as it would insert an amendment into Schedule 8 which, as a result of this Bill, will cease to apply for any purpose in England. That is the first problem. Even without this technical deficiency, we have a bit of a problem. We fully respect the noble Lord’s views that under the rates retention scheme authorities should be able to benefit from rental growth as well as physical growth. Westminster has been touched on by several speakers, but for authorities such as Westminster or, potentially, for my ex-authority Kensington and Chelsea, the potential for physical growth is much more limited than for others as there are very constrained sites with developments all through.
The efforts of local authorities to make their areas more attractive to business are not quite as limited as some would like to pretend. Efforts that have resulted in a steady increase in rental values and hence rateable values will arguably go unrewarded under the rates retention scheme. The duty of government is to legislate for a rates retention scheme that is workable for the whole of local government, not just for some authorities. For that reason, we could not devise a scheme that allowed local authorities to keep any part of the growth in rateable values. To explain why, I need to explain to the Committee how the revaluation works, although I hesitate to do that because the noble Earl, Lord Lytton, will understand this far more than I do. Perhaps for the benefit of the Committee we should go through it.
Every five years, the Valuation Office Agency undertakes the revaluation of non-domestic properties and, as a result, the aggregate rateable value of all English non-domestic properties either—amazingly—increases or decreases. In setting the multiplier for the first year following the revaluation, the Government take account of the overall increase or decrease in order to ensure that overall the same amount of tax is raised from business after revaluation as from before. For example, if the aggregate rateable value were to double, the multiplier would have to halve. In that way, it simply redistributes the tax burden between businesses on the basis of their up-to-date property values.
In the new world of rates retention, the system is set up at the outset so that through the means of tariffs and top-ups there is an initial redistribution of resources. That protects the position of those authorities that are relatively resource poor. But if, as I explained, we collect no more money from businesses following the revaluation than we did before, it follows that there is no additional money in the rates retention system. If therefore some authorities are to be allowed to keep additional resources, by the same token, some will have to receive less. Therefore, because of the uneven distribution of the rates base, this would not just mean a cut in funding for those authorities that have seen their rateable value fall. So an authority could see a funding fall, even if its rateable value had risen, if that price was by less than the national average. That could not be fair. In fact the only way to ensure that all authorities see their rateable value rise and see some income benefit is to break the multiplier link and raise the overall burden on business, and the Government are not prepared to do that.
For those reasons, I cannot accept the amendments that seek to allow any part of an increase in rateable values to be retained by local authorities. I hope that that explanation, somewhere along the line, meets the basis of the amendment. If it does not, perhaps we could discuss it between now and the next stage. I am not sure at all that it covers any of the matters raised by the noble Earl, Lord Lytton. Having looked at Hansard, we may need to come back to that. While it was a very relevant aspect to commercial improvements, I am not sure that it necessarily fits in with the amendment, but it may do. I will happily say that if the amendment is to be pursued and if the noble Earl feels that the reply is not adequate or there is something more that needs to be done, we should discuss it between now and the next Sitting and then we might be able to get us both together to decide what we are trying to achieve.
Baroness Hollis of Heigham
I was intrigued by the Minister’s answer. I fully understand her point about the multiplier effect and all the rest of it, but I did not understand her bald statement that the Government were not willing to allow local authorities to retain any growth et cetera under that formula, if you were to break the link. Why can the Minister not make a distinction, which most of us would expect to operate, between an increase in the value of commercial property—the amount per square foot as affected which runs across a city, which I absolutely accept has to be recalibrated given the equalisation formula—with the additional increase that comes through the efforts of local authorities for either the growth of a particular business or new business coming in? Those are two different sets of flows of money. The Minister did not distinguish between the two. The point about encouraging local authorities in this way was precisely to put a new emphasis and new attractiveness on the second of these.
Localism Bill
Baroness Hollis of Heigham Excerpts(13 years, 3 months ago)
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“Social housing rents
Landlords of social housing may levy a rent above the target rent for that dwelling to fund the capital cost of additional facilities requested by the tenant.”
Baroness Hollis of Heigham
My Lords, this is a relatively small amendment but I think that it may have wider repercussions. First, I declare an interest as chair of Broadland Housing Association. It is a medium-sized, traditional-build housing association—not a stock transfer—which seeks to meet housing need in Norfolk and north Suffolk. Every one of our homes is of decency standard and properly insulated, and we are effectively at target rent levels.
Last year, a dozen or so middle-aged and older tenants in a small close of bungalows in sunny Norfolk asked us to install solar panels at a cost of some £3,000 to £4,000 a property. We did so and I understand that the tenants’ fuel bills have fallen considerably. However, the cost of those solar panels has effectively fallen on other tenants, either in increased rents if they are below the target rents or in opportunities forgone—for example, in environmental works.
There is now a queue for work such as the installation of solar panels, which is understandable, but as a housing association we cannot afford it for all who wish it. We know that hundreds of thousands of tenants throughout the country are in fuel poverty. They may be elderly or disabled or they may be lone parents with large families, and they want and need to reduce their fuel bills. We, as a country, are investing in grants for loft and cavity wall insulation to cut fuel poverty and reduce energy consumption. Nearly half of all carbon emissions come from buildings. As a housing association we have done all that. However, many tenants now want us to go further with, for example, solar panels, but we cannot afford to help them as we would wish, and of course they cannot afford the capital cost of doing the work themselves under the feed-in tariff proposals, amounting to some £3,000 to £8,000 a household. The Green Deal is proposed for next year, but housing associations do not yet know how it will apply to them, if at all, and they doubt that it will.
We would like to suggest co-payment. If, say, the fuel saving from installation of a solar panel was £10 a week, the rent could rise by £5 a week above the target rent to contribute to the capital cost of the loan of that money. The tenant would keep as a bonus the other £5. Why can we not do that now? Very simply, we are at the target rent for properties, which takes no account whatever of energy efficiency. That is foolish. The Minister in her letter in August—for which I thank her—explained that she could not support the amendment. She said, first, that it would lead to increased rents, which was unacceptable, and, secondly, that this could lead to unacceptable rises in housing benefit. I challenge both those points.
The concept of the target rent that the Minister said cannot be exceeded has of course been exceeded by Government with the introduction of 80 per cent market; that is, affordable rents. In future, with two identical houses, side by side and currently up for re-letting, one will go for a rent of £90 as it is social housing, the other will go for a rent of £120 because it is at the new 80 per cent of market value. That increase is simply because we have relabelled the description of tenure over the lintel of that house.
Why does it make sense to have increased rent properties because we have renamed the tenure, adding nothing of value at all to the property, but not be able to increase the rents when we have markedly improved the property by reducing fuel costs? Why have we got to choose either a rent of £90 that equals social housing or one of £120 that equals 80 per cent of market value intermediate rents when it would make sense to have a rent of £95 because of investment in energy efficiency? Raising rents above the target, despite the Minister’s letter, involves no new principles because government is doing that already.
But, says the Minister in her letter of August, it might come out of housing benefit. The Minister says that such increases are not affordable and that the taxpayer would not obtain value for money from this increased public expenditure. There are two points on that. First, her new 80 per cent of market rents will largely be financed by housing benefit. Virtually every tenant going to our housing association is on HB. Whatever the tenure label—social housing or intermediate rent—it will largely be met by HB if our housing association is anything to go by. Indeed, it is calculated that to fund Mr Pickles’s building programme through 80 per cent market rents at the DCLG will add £2 billion to the housing benefit bill of the DWP. The DWP is paying for the building programme of the DCLG, which reflects no added value and cannot be used to fund improved facilities, as we would all wish.
The Minister then went on to say that such investment may not represent value for money for the taxpayer, at a time when the same Government are urging energy companies and individuals to take up government grants to increase loft and cavity wall insulation, replace boilers or install wind turbines—which are, as is solar power, renewable. If a part of Government is urging all of us because it thinks it prudent to invest in energy reduction, why does the DCLG oppose it? Indeed, why is the DCLG not positively encouraging us to do what we wish and get housing associations to work with tenants to consider energy renewables such as solar panels? As I say, that will reduce fuel poverty and carbon emissions—both goals we all want. Therefore, I think that the Minister’s letter in August, in reply to the original tabling of this amendment in Committee, is entirely invalid.
I would like to make a proposal to the Government. If increased HB would be the obstacle, because the increased rent would be met by housing benefit—
Earl Ferrers
The noble Baroness is making a very interesting speech, but she will talk in acronyms. She talks about HBs, DCLGs and so on, and some of the more modest of us are not quite certain what she is talking about.
Baroness Hollis of Heigham
I apologise to the noble Earl. As I am so anxious to persuade him to agree with me, I will happily take extra time in spelling out the acronyms.
If indeed housing benefit is the issue—because an increase in rent of £5 would be covered by housing benefit—I put it to the Government that any increase in rent above the target rent for such purposes should not be covered by housing benefit, quite simply. That way the housing benefit bill to the Government would be protected and the tenant could choose whether to proceed with solar panels by way of co-payment. If the tenant did so choose, the tenant would enjoy reduced fuel bills and contribute to lower energy consumption in this country. The choice would be with the tenant, there would be no additional cost to the Government, but the reduction in conventional energy and the substitution of green renewable energy would be a gain to us all. I beg to move.
Lord Kennedy of Southwark
My Lords, the amendment proposed by my noble friend Lady Hollis is most interesting and has considerable merit. She has considerable experience in the local government and social housing sectors. Where tenants want to make major improvements or improve other amenities, I can see the case for this being financed by an increase in the rent paid on the property. My noble friend makes compelling points in particular regarding fuel poverty and green energy and also dealing with the issue of housing benefit. If the Government are not able to accept the amendment, will the noble Lord at least agree to take it away and reflect on it? It could be explored further and perhaps introduced at another time following discussion with relevant departments.
Baroness Hollis of Heigham
My Lords, I regret that the noble Lord, Lord Shutt, did not actually listen to the arguments I sought to make. He has repeated the two points made by the noble Baroness, Lady Hanham, in her helpful letter in August, which I sought to rebut in my speech and on which the noble Lord, Lord Shutt, has not commented. It was as if the speech had not been made and that the arguments of August were still the only arguments in town.
I remind the noble Lord that I was not arguing for complete freedom for landlords, as he suggested. It was made very clear that this would be at the initiation of the tenant. The reason I used the solar panels example was because it had such obvious spill-over benefits for the tenant, fuel poverty, energy consumption, renewables and the reduction of carbon emissions, so we would all gain. I used the example, too, because it is consistent with the drive by this Government in the Department of Energy for the further extension of insulation and the use of renewables. So it is entirely consistent with government policy, though in a different department, and it would be initiated by the tenant and would therefore not give complete freedom to the landlord.
Secondly, the noble Lord argued, as was argued by the Minister’s letter, that it would lead to an unacceptable rise in housing benefit. I hoped that I had made it clear that if the Minister so wished it could all be outside and above the rent covered by housing benefit. I am well aware of the role of housing benefit—I made that point explicitly—but the Minister has not replied to that offer as a way forward that would address the issue, which I understand, of housing benefit, but would equally allow us to respond to a perfectly proper and appropriate request by tenants to be able to reduce their fuel bills at no cost to the Government. That is what I sought. The noble Lord, Lord Shutt, has not answered that point at all.
Given that there is clearly no meeting of minds, because people are not listening to each other’s arguments, I wish to take up the suggestion made by the noble Baroness, Lady Hanham, for a further discussion about this matter. I assure her that surveyors across the country are very interested in trying to proceed with such policies as a way of producing the nearest that we can get to things such as passive housing, and so on, which we need to see in this country. I beg leave to withdraw the amendment.
Lord Tope
Whereas the noble Baroness began by saying that she had been neither an MP nor a councillor, I begin by saying that I have been both. I was an MP for a rather short tenure a very long time ago but have been a councillor for the past 37 years, representing a ward with a substantial amount of social housing. Therefore, I have real and practical experience of some of the issues that have been spoken of. The noble Baroness will know well that I have considerable sympathy with much of what she has said. Indeed, my noble friend Lord Shipley and I have our names to Amendments 70 and 73 in this group. As I say, I have great sympathy with what the noble Baroness has said. My preference would certainly be to have unfettered direct access to the Housing Ombudsman. I feel strongly that tenants should have the right of direct access to the Housing Ombudsman when necessary, and I wish to spend a few moments considering when that is necessary.
It is for the Minister, and certainly not for me, to explain the Government’s reasons for the proposals in the Bill and for wanting to tackle the matter in this way. However, we have to recognise that, certainly in the 37 years that I have been a councillor, the involvement of local authorities, and therefore of councillors, in housing management issues has decreased. We have had the wholesale stock transfer and the creation of ALMOs. Generally, the move has been away from involvement. It is fair to say that some councillors—I cannot say that this has been my experience—have much less engagement in the day-to-day business of housing management, and therefore of knowing and understanding the issues that their constituents, as tenants, experience. If the Government wish to bring politicians, particularly councillors, closer to these issues—I do not know what the relevant phrase is—that is an objective we all share. We might have varying degrees of cynicism about how effective that will be, but it is an objective that we all share. I certainly share the Government’s objective in that regard.
If the Government’s objective is also to ensure that, whenever possible, complaints and issues are resolved locally, I am sure that we all share that objective too. That is clearly desirable for all sorts of reasons. It is usually quicker, more effective and engages people. I would expect that, in most instances when a tenant has a complaint of this sort, normally the first port of call would be a councillor or MP, partly because they are better known—or at least their existence is better known—than the Housing Ombudsman and they are more accessible and accountable. Therefore, I would normally expect an issue to be raised first with a councillor or Member of Parliament. I would expect that, in pretty well every case, that representative would try to get the matter resolved locally as that is what councillors and MPs do. Instead of immediately going off to the ombudsman, they go to the relevant housing management authority to try to resolve the issue and then tell their constituent what a wonderful job they have done in resolving the problem. That is what happens in reality. When they are successful, that is good, right and proper.
The difficulty that I have with the Government’s proposal is that, while I am sure that we all share those objectives, one of the—I hope unintended—consequences is that it will give councillors, Members of Parliament and tenants panels a right of veto. I have to say that that is wrong. I do not think that it is our job as councillors, Members of Parliament and so on to be the final adjudicator of the rightness or wrongness of the complaint. I would expect that in practice most Members of Parliament and most councillors would anyway refer something to the ombudsman—whether the Local Government Ombudsman or Housing Ombudsman. That was always my practice whether I thought the complaint was wholly justified or even unjustified. I felt that the complainant had the right to independent arbitration and to go to an ombudsman, and referred it that way.
I have had the opportunity to discuss this at some length with the Housing Minister, who says that as an MP that was what he always did. The reality, which I know from personal experience, is that some elected representatives, for whatever reason—and sometimes for no good reason other than personal idiosyncrasy—refuse to do that. That is wrong. I do not think that a Member of Parliament or a councillor should have the right to deny the tenant access to the ombudsman to have the complaint, whether justified or not in our view, properly investigated and independently decided upon.
A little later this afternoon we will get to Amendment 73A and those with it. Amendment 73A is a compromise to try to help the Government, which is always our objective on these Benches. Amendment 73A says that, if the designated person will not refer the complaint—we should have included the words, “or fails to do so within 30 days”, or some other given period—the tenant has the right to go direct to the ombudsman. That amendment has been decoupled from this group for reasons that I understand, but I hope that when the Minister replies she can give us clear and strong words of comfort that it is not the Government’s intention to give the right of veto to us councillors to decide whether or not a complaint is worth forwarding. We need to ensure that the tenant may do so when necessary—I come back to those important words—if a designated person who is willing to forward the complaint cannot be found. That is a pragmatic and sensible compromise to find a way through the entirely honourable and proper intentions of the Government, which we would probably all support, and the undesirable effects of the way in which they are trying to do it. I hope that the Minister can give us clear comfort on that. If she is able to do so, we will judge what to do with Amendment 73A when the time comes.
Baroness Hollis of Heigham
My Lords, like the Minister I, too, have been a housing chair in a local authority, for some 11 years. I am also chair of a housing association—an interest that I have declared—and regularly sit at stage 4 of precisely these complaints panels that are the subject of discussion. I am sure that the Minister knows but I wonder whether your Lordships realise how thorough the complaints procedure is, and rightly so, within housing associations and local authorities, particularly encouraged by the TCA of the Homes and Community Agency.
At stage 1, the tenant’s complaint—often, it is a complaint against the behaviour of a neighbour of some sort—is investigated by the local senior housing manager. If that is not resolved to the satisfaction of the tenant, stage 2 means that it will go to the housing manager at the top of the organisation, who will then seek to get all the information, build the file and see whether some resolution can be arrived at. If that is not satisfactory, there is a stage 3 where the complaint goes to the chief legal officer, who is usually the deputy chief executive of the housing association, who goes through the file, takes the evidence, makes further notes and attempts again a further resolution of the difficulty. If that is not enough—by this stage, most complaints have been reasonably addressed—the matter goes to stage 4, which involves the panel, chaired by someone like me, alongside the tenant board representatives of the housing association and the senior staff. Five or six of us spend perhaps a couple of hours going through a thick file and seeking as best we can to hear and resolve the tenant's complaints and concerns.
Lord Greaves
My Lords, this is the first time that I have spoken on Report so I should declare a few interests. I am an elected member of a district council in Lancashire, a vice-president of the LGA, a vice-president of the Open Spaces Society and a member of the access, conservation and environment group of the British Mountaineering Council. Those are the interests I can think of that might come up during Report. If I have any others, I shall declare them later.
I apologise for having to nip out of the Chamber for the latter part of the speech by the noble Baroness, Lady Hayter, and the beginning of the speech by my noble friend Lord Tope. I can assure everyone that I probably agree with every word that they said, even when I was not here, on the basis of what they have said otherwise. We had a glowing account from the noble Baroness, Lady Hollis, about how wonderful the complaints and resolution system is in her housing association.
Baroness Hollis of Heigham
My Lords, I was not trying to say that. I was trying to say that, having gone through such an exhaustive system, I could not see what added value would come by having a fifth tier, an MP or a councillor, as opposed to going direct to the ombudsman.
Lord Greaves
I entirely accept that. However, in my experience, not all housing associations are the same and some do this better than others, which is inevitable with any type of organisation. In a sense, if there are housing associations or social landlords that do not do it quite as well as the organisation in which the noble Baroness, Lady Hollis, is involved, that is an even more important reason why tenants should be able to go to the housing ombudsman as easily and quickly as possible.
Like my noble friend, we on these Benches would have preferred that this proposal from the Government was not in this Bill. It seems to go back to a local government ombudsman system that, as noble Lords have said, used to exist in local government but that, frankly, was not necessary and in some cases was harmful. There is no doubt whatever that on some occasions councillors used to find reasons not to pass complaints on or tried to persuade people not to pursue them. I always took the view that unless it was clearly vexatious I would automatically pass it on, even on one occasion when it concerned a complaint against the borough council about a housing matter in which I had been closely involved. I was chairman of the housing committee and I still said, “I will pass it on because it is right and proper that it gets dealt with”.
At Lancashire County Council, on one occasion I made a complaint against the education authority. Shortly after, I went to a reception of important people at county hall in Preston. As soon as I walked in the room, the then education officer came bounding across the room and at the top of his voice tore a strip off me for daring to question the reputation and organisation of that education authority. He then marched back to the other side of the room. I was much younger and a bit more timid than I am now but I still marched after him and, in an equally loud voice, tore a strip off him and told him that he was undermining democracy. In a sense, I should not have had to be there as part of that system. The people involved should have been able to go direct.
Along with other noble Lords, I think, around the Chamber, we have had quite a few discussions with members of the Government, particularly with Grant Shapps, who I believe is in charge of the housing parts of this Bill. We came to the view that we might win the argument but would not win the process of this legislation of removing these parts of the Bill or of putting in an amendment along the lines of that proposed by the noble Lord, Lord Whitty, which I would otherwise strongly support.
To help the Government, in these discussions we are looking for some compromise that at the very least provides a backstop so that, if any of these designated persons are not helpful and try to resist or are just incompetent in passing on a complaint, the tenant can nevertheless go direct to the housing ombudsman. It is a slightly messy process and it is not as good as now, but it can work and at the very least would maintain their right to go direct to make the complaint, even if someone else tries to persuade them otherwise or to block it.