Housing and Planning Bill
Debate between Baroness Hollis of Heigham and Lord Shipley
Lord Shipley
My Lords, the noble Lord is very keen to talk about a place other than your Lordships’ House. It would be part and parcel of successful neighbourhood planning. It is very difficult to organise neighbourhood planning without a formal structure to enable it to happen. Therefore, I entirely subscribe to promoting town councils in the north of Newcastle upon Tyne and I sincerely hope that he will too.
Baroness Hollis of Heigham (Lab)
My Lords, I was not proposing to speak on this, but I want to support strongly the point made by my noble friend Lord Beecham and, to some extent, by the noble Lord, Lord True.
My home city is Norwich, which has tight boundaries. It is not parished. It has wards—obviously—and a strong network of community groups, such as housing associations, residents associations and so on. Part of that is because all the people of Norwich own the city centre as well as the community in which they live. That is fine, but in over 25 years in local government I had, I think, three ombudsman’s rulings against me and possibly one or two JRs. I won the JRs. All of them involved planning. All the cases—certainly those involving the ombudsman, which was why I was aggrieved—were seen as an issue of the individual in their own home being against the nasty local authority stopping them doing something.
Actually, it was the local authority wearing a planning hat trying to hold the ring permanently between the local particularised interest and the wider city interest. Sometimes it might be elderly folk against having a children’s play area near them which would produce noise and possibly ball games. It might be that residents wanted a road closure, nice culs-de-sac or chicanes in the road to keep traffic out or slow it down, against the need to have through roads, otherwise the roads down which the traffic went became intolerable for other residents—it just pushed the problem along.
I remember being involved in building a site for Travellers and the outrage associated with that. I put it down near an allotments area because it was in an outer area of the city, but all the allotments were raided and that produced quite a lot of problems for me. The biggest problem was trying to get social housing, particularly sheltered housing for the elderly, in owner-occupied areas where owner-occupiers believed that they had bought not only an owner-occupied house but an owner-occupied street, park, church and school.
On another occasion I was trying to put halfway houses across the city. I reckoned that no street could take more than about two halfway houses. Some of the houses were for people who were overcrowded or were desperate or suffering from domestic violence; some were for people coming out of Nacro homes and care homes. There was one home for anorexic young women and the residents fought it tooth and nail and would go to the ombudsman if they could. I was having to say that there was a wider community interest involved. I would meet them, talk to them and try to persuade them. On other occasions we were having to demolish something—whether for city widening or because the housing was unfit—and the residents, owners, perfectly reasonably did not want this to happen in their area.
While I hope that I have never gone ahead bulldozing my way through, in a mental sense, none the less you cannot always expect people to have the wider community interest at heart when their own personal interest will be affected by a decision. I probably would not. I am not trying to be superior about it. That is how it is. We had three ombudsman decisions. I think that we won two and lost one and in all cases the ombudsman was wrong in that they saw it as a bipartite city council versus the individual issue, rather than the city council trying to be the umpire in planning disputes.
I just hope that we do not believe in neighbourhood planning without this understanding that the whole city owns the city centre, the city’s traffic network and the city’s housing development and that the whole city owns the community pressures for halfway houses for disadvantaged and vulnerable people and that you must try to scatter them fairly across the community and so on. If we accept that there is always going to be tension, the one thing that I would not want, at any stage, is to devolve decision-making to a body that, by virtue of being a parish with formal electoral position, had extra leverage in this over and beyond that of appropriate, proper and decent discussion, debate, communication and consultation. I have seen in rural Norfolk the implications of nimbyism. I fought that off in my city and I do not want to see nimbyism come in through the back door due to any proposals like this.
Housing and Planning Bill
Debate between Baroness Hollis of Heigham and Lord Shipley
Lord Shipley
My Lords, I rise to speak to Amendments 69D, 70E, 76A and 79C in this group. I have already declared my vice-presidency of the Local Government Association in Committee, but in view of what I am about to say, I will simply draw attention to it again.
The noble Lord, Lord Best, covered all the key issues on pay to stay, although I will say something further when Amendment 81 in this group has been spoken to. These amendments basically challenge the nature of Clause 78, which is about a mandatory approach to local authorities. They require an element of discretion for local authorities to make decisions that they think are best for their areas. It is difficult to understand why, if it is voluntary for housing associations to do this, it is not voluntary for local authorities. The noble Lord made clear that there is to be a change in the nature of what the Government have been proposing on pay to stay, so the “cliff-edge approach” that he talked about is apparently no more—although we have yet to see the detail. I associate myself with what the noble Lord said about the lower sum being better.
Will the Minister give some further thought to the administrative cost to local authorities and others of pay to stay? I think that the cost will be much higher than the Government currently think. On a later group we will come to the issue of access to HMRC data, but it would be easier to raise the thresholds than simply apply a taper, partly because so much of what is being proposed could relate to levels of household income that exist a number of months before the information is made publicly available under HMRC timescales. The Government need to be very careful about the administration and bureaucracy that will be put in place, particularly relating to the taper, whatever its level—and let us hope that it is the lower one.
My objection to what the Government have been proposing on pay to stay is that it reduces the aspiration to work more and actually encourages people to work less. If they are to lose out with the amount of rent they have to pay it is not worth their while to work, or work as much, so there will be a tendency for people to decrease their hours, with a growth in part-time working. That is particularly dangerous in the public sector, where pay levels are not that high. It might encourage people to work less and take qualified people away from public-facing duties.
I say to the Minister that I hope that it is understood that any extra income deriving from higher rents should be kept for reinvestment in the housing stock locally. I know that there are discussions on that. In the end, the requirement for social housing for rent is such that this cannot be seen as some kind of source of taxation for the Treasury to get its hands on. Actually, money needs to be reinvested by local authorities in providing the right level of housing for their areas.
I hope to come back at a later point on Amendment 81 in this group, which relates to the delegated powers that the Secretary of State will have—but I will wait until a later moment to do that.
Baroness Hollis of Heigham
My Lords, I will speak to this group of amendments, and in particular in support of Amendment 69D, which would make pay to stay voluntary for local authorities.
The government argument for RTB for housing association tenants is the level playing field—or, as the noble Lord, Lord Porter, said, similar treatment of people on either side of the street. The Government have also proposed pay to stay, under which so-called high-earning council tenants outside London on £30,000 a year between them—£15,000 times two—were to pay a full market rent. But whereas for housing associations pay to stay is voluntary, for local authorities it is compulsory. We need the level playing field of the noble Lord, Lord Porter.
As the noble Lord, Lord Best, absolutely rightly said, whereas housing associations can retain any proceeds from this, local authorities must send theirs to the Exchequer. The reason for that, according to page 56 of the impact analysis, is that the policy of sending the proceeds to the Exchequer will help the Government “reduce the deficit”. Will the Minister tell us why council tenants have a special duty to reduce the deficit while housing association tenants do not?
Secondly, how does this interact with the 1% social rent reductions? Let us assume that a local authority family with two children on gross £30,000, net £24,000, income a year might now have a social rent of about £100 a week for a three-bedroom house. Social rents will be coming down 1% a year, while market rents will grow, it says, with overall private-rental inflation. So the gap between the two will therefore widen. With the push to market rents, if that family’s rent rose to £150 a week, they would get housing benefit; if it rose to £250 a week, their housing benefit would be £100 a week. Even the Government think that that is daft.
So the Government are now proposing, as the noble Lord, Lord Best, said, that rent increases should be tapered and should not apply to those on housing benefit. What would be the result? As the noble Lord, Lord Shipley, asked, what family on housing benefit would increase their pay and lose their housing benefit firewall? Work incentives would be badly damaged. Fraud would certainly increase—and, incidentally, contaminate HMRC records. Part-time work would move into the grey economy and couples would come to more informal living and financial arrangements, and so on. In a single-parent household, with an adult son living there, what happens to adult non-dependent deductions? Around 25% of their income is taken into account in determining HB. The son may move out—and then there lurks the threat of the bedroom tax.
And how—I am puzzled by this—will all this interlock with universal credit? If you are on HB, you will not be paying market rent; but what happens if you are on universal credit? The Government say, in their consultation exercise, that they will consider the links to UC “in due course”. That is very odd. DCLG is treating housing benefit and universal credit as two separate streams of benefit. Having sorted HB, they will turn to UC. But of course, as the Minister must know—and I am sure that she does—UC is absorbing HB. UC will be based on monthly real-time information. Pay to stay—ultimately part of UC; whether the Minister or the department are fully aware of this or not, I do not know—will be based on out-of-date tax records, perhaps one year behind. So UC will be based on real-time information on a monthly basis, and housing benefit on the taper will be based on records perhaps a year out of date.
The effect for the tenant of the 20% taper on the move to market rent takes UC withdrawal rates—and there is not a word about this anywhere in the impact analysis, needless to say—from up around 73p in the pound, which is already a high work disincentive, as the noble Lord, Lord Shipley, said, to 93p in the pound. As a result of this, you work for 7p an hour. Would any of your Lordships do that? This really screws UC. There is not much point in rolling out UC—which I very much support and which was based on improving work incentives, which I very much support—if you return to pre-UC deduction rates, keeping just 7p in the pound.
Let us turn away from the effect on tenants to the effect on local authorities—again, as mentioned by the noble Lord, Lord Shipley. At the moment, tenants coming forward for housing benefit know that their finances will be scrutinised—of course they will be; it is an income-related benefit. But in future, as far as I can see, local authorities will need blanket information from HMRC on every adult living in a council home not already on HB, reversing separate taxation and matching it by household and address, in order to increase their rent on an individual, tailored basis. So, if you go down the street mentioned by the noble Lord, Lord Porter, almost every tenant could pay a different rent, personally tailored, for the same kind of property—or worse, based on out-of-date details of their previous year’s income.
At the moment, because rents are standard in local authorities, HB is fixed for the most part for 12 months at a time, apart from major reportable changes of circumstance. Yet even now, local authorities are unable to deliver HB as speedily as they would wish, while losing more and more staff because of their 40% cuts. Given, as we found with tax credits, that income fluctuates quite markedly over the course of the year with overtime, commission, children’s school holidays and periods of sick pay, will the tenants’ pay-to-stay rent fluctuate by the month alongside their income?
If it does not fluctuate, or the Government rely on end-of-year HB adjustments, tenants will find it impossible to avoid debt, arrears, poverty and probably eviction. But if it does fluctuate monthly, the local authority will find—as with tax credits—that the pay-to-stay rent it charges on a monthly basis is always a couple of notifications behind the facts and will never catch up. It will be a nightmare. As local authorities said in response to the very perfunctory consultation exercise as reported by the Government, their systems are not designed to do any of this. The Government breezily say that they can keep their administrative costs. But the system will crash—constantly.
Then, any extra rent goes to the Treasury. Local authorities already have the power to pursue an individual on more than £60,000 a year for a rent rise—what we call the Bob Crow amendment—if they see fit. But the last thing they will want to do is proceed with mass investigations of almost every council tenant—some will be on HB; those who are not will need to be investigated—at huge administration and probity costs. This is almost literally another poll tax. And the sums at the end of all this go not to local authorities but to the Exchequer.
Only local authority tenants, not housing association tenants, are being levied to fund huge discounts under the voluntary deal. Only local authorities, not housing associations, are required to pursue market rents. Only council tenants, not housing association tenants, may see their UC taper rise from 73p to 93p in the pound so that poorer council tenants get less financial support than the housing association tenant on the other side of the street of the noble Lord, Lord Porter, while having an identical property, identical family and identical income. Finally, only local authorities, not housing associations, are required to send the proceeds to HMT. Local authorities have become the whipping boy at every point in the Bill. Yet local authorities are publicly elected, fully accountable and entirely transparent bodies, open to the public and the press. None of that is true of even the best-run housing associations.
Housing and Planning Bill
Debate between Baroness Hollis of Heigham and Lord Shipley
Baroness Hollis of Heigham
We have spent a long time on starter homes, where we are not going to get the detail until after Royal Assent because the Government have only just started the consultation process and that will inform the regs, so outside bodies—discussion groups—will inform the regs, not this House. Now we are being told the same thing about all the detail on right to buy and the apportionment of how much money will go into replacing local authority housing and how much will go into housing association discounts.
We cannot make legislation on this basis, where all the detail is in the ether, awaiting consultations that should have started last September but which the Government have got round to only in the past few weeks—too late to inform discussions, but the Government are unwilling to delay parliamentary scrutiny until we have that information. Then, as and when we get the statutory instruments, we will not be able to amend them as we should if we feel we need to. This is a travesty of House of Lords scrutiny.
Lord Shipley (LD)
I agree with the noble Baroness, Lady Hollis of Heigham. It is a travesty of the House’s processes. I think I am right in saying that we have just heard for the first time that we will get further information only after Royal Assent. Prior to that, we have had a different form of words from the Minister, to the effect of “best endeavours”, “as soon as possible”, “hopefully by Report, maybe not everything”, “consultations are being undertaken”, and so on. Now we are talking about getting the information only after Royal Assent. The Minister owes a duty to the House to explain in detail—now—why, on the fifth day of Committee, we are told that we cannot have the information that we need to undertake a proper examination of the Bill until after the Bill has proceeded and has secured Royal Assent. It is a travesty, as the noble Baroness, Lady Hollis of Heigham, said.
Baroness Hollis of Heigham
Perhaps I might add one further point. I do not know whether the noble Lord, Lord Young, would agree with my description, but certainly when I was taking Bills through, including the Bills I was responsible for within the department, I had to go to something called “LegCo”—the legislative sub-committee of the Cabinet—where 40 Bills were queuing up for, say, 25 slots in the programme. I would not have been allowed to bring a Bill before this House if I did not know the timetable for the regs and what the import of those regs was, so that I could take the Bill reasonably and appropriately through the stages of this House and my colleagues could do the same down the other end.
Who is failing here? Is it the fact that the Government are so anxious, having won an election, to proceed with legislation when it is not ready? In a previous Government, the Minister would not have been allowed to bring this Bill to either House, and now we are in a position where we cannot scrutinise it as a result of bad management and the failure, in my view, of LegCo, Bill teams and all the rest to do proper scrutiny.
Housing and Planning Bill
Debate between Baroness Hollis of Heigham and Lord Shipley
Baroness Hollis of Heigham
The noble Lord has made precisely my point: the housing associations have looked after themselves very well at a cost to local authorities. They knew, as my noble friend Lord McKenzie said at the time, that the bill would be picked up by their partners in social housing, local authorities.
As I said, the trade body did its private deal. It looked after itself at great cost, in my view, in money, policy, fairness and trust. Five years down the line, we know what will happen, do we not? Two social homes will be lost to fund one better-off tenant’s huge discount. They cannot all be replaced; the sums do not begin to add up. And the abuses? As we have seen already, RTB properties will be recycled into buy to let. Many will grab their discounts and sell, like local authority tenants, into RTB. Others will be pensioners, living in spacious homes unaffected by the bedroom tax.
A housing manager told me a couple of months ago that one of his elderly tenants had reluctantly applied to buy. Why? “Because my daughter-in-law has said I won’t see the kids unless I do”. The vultures are hovering for her death, when they will receive a massive windfall gain, inherited, unearned and undeserved. The rogue wide boys will move in with malign versions of equity release —I could construct for you now three schemes that would do it—or illegal deferred resales. “Dispatches” last night showed that when council RTB discounts rose, such fraud went up by 400%. Would-be second-home owners will make irresistible offers, wiping out irreplaceable rural homes.
It is no use the Minister saying—she may not do this, but she said it about starter homes—that some abuse is inevitable. The Government should have built it out of their proposals. Instead, because the financial returns on abuse are so high, the Government have guaranteed it. The cost of that abuse, on top of the cost of the discounts and the cost of the entire scheme, will be funded not by taxpayers—not by us—not by the Government, who are imposing it, and not by housing associations, which will benefit from it, but by council tenants who are among the poorest in the land. Frankly, I am rather ashamed of it.
Lord Shipley (LD)
My Lords, I do not envy the Minister having to reply to this debate in one sense, but it has been extremely helpful in identifying all the issues. I hope she will be able to take those away and come back with some amended proposals on Report.
It may help if we remind ourselves what Clause 62 is about. It enables the Secretary of State to make grants to private registered providers to cover the cost of right-to-buy discounts for housing association properties. Obviously, there are implications of so doing for other parts of the Bill. As we have been reminded, it brings housing association properties into line with local authority homes and it is, unlike that one, a voluntary scheme.
I think that it is fair to do this to housing association tenants. It is fair to them to take this step, as long as there are a number of very important safeguards in place. The first is that there should be one-for-one replacement in the same area. That is not in the Bill, although there is a statutory commitment for London to replace at two for one. I hope that the Minister will look very carefully at the principle of putting one-for-one replacement into the Bill.
Housing and Planning Bill
Debate between Baroness Hollis of Heigham and Lord Shipley
Lord Shipley (LD)
My Lords, I am grateful to the noble Lord, Lord Beecham, for clarifying the position that explains the difficulty that we might have had with the amendment. In summing up, though, could he explain the period of 10 years? There is a view that it could be a longer period. It would be helpful to know how that figure was decided upon when it could be on some other timescale.
Baroness Hollis of Heigham
My Lords, I am sympathetic to the intent of my noble friend’s amendment although, like him, I have reservations about the way it is drafted. I want to put the question back to the Minister. I do not think that anyone would wish to undermine the capacity of people, particularly young people, to become homeowners, and that is not what we are debating today. The problem is that, given that the scheme is being baited—I use that word deliberately —with huge discounts in some cases, with some people who have spent five or 10 years in housing association property getting a return of 300% or 400% on the rent that they have already paid coming back to them in the form of a discount, how is the Minister, who must share our concerns about this, going to inhibit the rapid recycling of that property into the private rented sector?
The Chancellor has accepted that this has been abused in various forms and has sought to put some financial controls over the tax reliefs and so on that private landlords may receive. No one doubts that there are many good landlords trying to do a decent job by their tenants and charging them a reasonable rent, but this is such high-profit territory that I know that there are scores of wide boys out there just waiting to take advantage of housing association tenants in order to produce sales back into the private rented sector at inflated prices—and then who pays the bill?
Those people may or may not have gone on to buy another home, but the process turns the house into a private rented house. We have seen what has happened with our own eyes when that has happened on council estates: it has sent some streets skidding downwards, to the resentment not only of council tenants who did not buy but of council tenants who did. They see their estates contaminated by the spread of precarious, insecure and low-paid but high-rent-paying tenants on the one hand and students on the other, with no leverage over their landlords to get them to maintain the property or keep it up to a decent standard, for fear of eviction.
How is the Minister going to ensure that the purpose of all of this, which is, after all, to give housing association tenants the same rights as local authority tenants to buy their own homes in which they have lived, is not exploited and abused for a quick buck to increase numbers in a tenancy that will, ultimately, be of poorer quality and infinitely more expensive for the rest of us? On the first round, the local authorities will be financing the discounts; on the second round, the taxpayers will be funding the increased housing benefit bill as those properties get cycled into the private rented sector. How does the Minister expect to control that abuse—and it is an abuse, because that is not what this is all about—if she cannot come forward with some scheme, not necessarily the same as what my noble friend has identified, but some form of control?
Housing and Planning Bill
Debate between Baroness Hollis of Heigham and Lord Shipley
Lord Shipley (LD)
My Lords, I shall also speak to Amendment 41B. Amendment 37B would require a mortgage to be taken out when buying a starter home—in other words, cash sales would not be permitted. Amendment 41B would require a first-time buyer to occupy the dwelling as his or her principal residence.
I can almost hear the Minister’s reply—
Baroness Hollis of Heigham (Lab)
Order. May I ask the noble Lord to give us a second while noble Lords leave the Chamber? We cannot hear anything he is saying and we do not wish to miss a word of it.
Lord Shipley
My Lords, I shall start again in a moment.
I can almost hear the Minister’s reply, which may be to tell us that all this will be made clearer in regulations, but as the Minister well knows, we have no regulations. There are no draft regulations and it is essential that, before Report, we have regulations which explain clearly what the Government’s intentions are on matters such as buy to let, subletting for short periods and leaving and letting a starter home within five years. In the case of this probing amendment, we need to know whether payment for a starter home can be in cash. I hope that the Government will rule this out today.
The basic principle is that cash buyers do not need a starter home. The simplest way to address this is via a requirement that the purchaser takes out a mortgage. Indeed, a key part of the National Planning Policy Framework definition of affordable housing is an eligibility test, with its provision for those whose needs are not met by the market. However, that is not a cash buyer, whose needs can self-evidently be met by the market. Therefore confirming in the Bill that anyone buying a starter home must do so via a mortgage would restrict market abuse.
Amendment 41B would require a first-time buyer to occupy their starter home as a principal residence. Thus, starter homes must not become second homes, and buy to let should be prohibited. However, there may need to be some consideration prior to regulations being published about how a property could be let out for short periods, where, for example, a purchaser of a starter home has a six-month temporary work transfer to another place. Therefore I am very keen to know what the Government’s thinking is on this matter. In the face of the fact that the Bill lacks so very much detail—even the technical briefings lack detail to enable us to respond properly to exactly what is planned—I hope very much that the Minister will be able to clarify these matters.
Cities and Local Government Devolution Bill [HL]
Debate between Baroness Hollis of Heigham and Lord Shipley
Lord Shipley (LD)
My Lords, my name appears on both Amendments 1 and 2 and we give our full support to both. The amendments require an annual report on the progress of devolution, and require that Ministers consider when they introduce a Bill whether that legislation is compatible with the principle that decisions should be made at the most local level possible. Both amendments seem to us to be entirely reasonable.
In Committee, we moved an amendment to create an independent panel that would review proposals for devolution and assess the Government’s record. We now have this amendment, which achieves broadly the same objective. It is important because devolution must not be unnecessarily piecemeal—that is, it needs to be clear what responsibilities are being devolved, or not devolved, to whom, and why. That, in turn, will help to define the criteria that the Government are pursuing—and that will help other authorities to frame their own proposals.
I agree with the noble Lord, Lord McKenzie of Luton, that the point which the noble Lord, Lord Bichard, raised in Committee on Amendment 2 is a very important statement of principle and I am glad that it has been included in this group in the form of that amendment.
I hope the Minister will take seriously the suggestion of the noble Lord, Lord McKenzie, that the Government should accept the amendment, which is entirely reasonable. I declare again my vice-presidency of the Local Government Association.
Baroness Hollis of Heigham (Lab)
My Lords, I, too, support my noble friend’s amendment. This is a very welcome Bill and we are delighted that the Minister—together with her boss, the Secretary of State—is so committed to localist values. That is great, and it is very welcome.
However, one of the problems that we found in Committee is that—because of the desirability that the energy in the Bill should come from the bottom up, from localism and from local authorities trying to establish what works best in their patch—it will be very difficult for those of us outside the great authorities to know what will or will not be acceptable to the Secretary of State as future patterns for combined authorities. No general principles of any sort are laid down in the Bill—anything may go, or nothing may go. We do not want to descend into ad hocery, and we do not want to descend into blueprints, but we do need to learn from what the Secretary of State is supportive of in other bids so that those that follow in the wake of those bids can devise a structure of combined authorities that are more likely not to waste our time, waste resources or raise false hopes in our local taxpayers but will command the support and, I hope, the assent of the Secretary of State as the way forward.
If the Minister is not willing to do this—and she has very good reasons not to be willing—and lay down principles by which local authorities may guide their submissions to the Secretary of State, it will be important for the rest of us to learn through example which submissions have been successful with the Secretary of State so that we can model ourselves on the best practice that he has commended. It seems to me that this amendment is entirely in the spirit of what the Minister wants and what the Secretary of State should follow. It is the route forward to combine the best of localism and a bottom-up approach, while avoiding a straitjacket of top-down structures and allowing us to learn from each other what is going to be best practice in the eyes of the Secretary of State. I hope very much that the Minister can support something that seems very strongly to support the path that she wants to go down and we want her to go down.
Cities and Local Government Devolution Bill [HL]
Debate between Baroness Hollis of Heigham and Lord Shipley
Lord McKenzie of Luton
I am grateful to my noble friend for that clarification. I will just say to the Government that where my noble friend leads, Governments eventually catch up.
Lord Shipley (LD)
My Lords, I do not wish to repeat anything that has been said on Amendments 31 and 32, because I am very happy with the debate we have had so far. I will draw the Minister’s attention to the very helpful words of the noble Lord, Lord Low, on Amendment 67, and will then take that and compare it to Amendment 34 and the list of public functions, which the Labour Party has identified as needed, and which I support. It starts to matter. We had a brief discussion in Committee around careers services and their role as regards the devolution of skills budgeting—what the exact responsibility of combined authorities would be as regards careers services. All that matters because it is not clear to all the organisations outside your Lordships’ House exactly what is in scope. Therefore the production of that list called for by Amendment 34 seems very important, because the points made by the noble Lord, Lord Low, were extremely important and appropriate.
Baroness Hollis of Heigham
My Lords, I support my noble friend and the noble Lord, Lord Shipley, and agree with their comments. Although I am delighted by the flexibility and the responsiveness of the Minister, I am now unclear as to why an individual local authority should necessarily join other authorities to form a combined area if it could equally well receive powers. Obviously that would be a matter for negotiation. For example, it would be absurd to confine transport to one area, but for another power associated with economic development you might not necessarily need a combined authority to do so; you just need additional powers to be able to do X, Y or Z.
Therefore, given that at the lowest level we now have single local authorities, then combined authorities and, floating somewhere above them, metro authorities with metro mayors, which will be required, it would be very helpful if the Minister could give us some indication—not necessarily tonight, but as soon as possible—of what the Secretary of State might have in mind to be appropriately delegated to different tiers of authority, particularly for those of us who are in two-tier shire authorities. In that way, a lot of wasted effort will not be put into submissions that will go nowhere. We understand unitary authorities in metropolitan areas very clearly, but where there are district councils and county councils, and the district councils are often rural and urban and have different political views and attitudes towards economic growth, it will be quite complicated to find a way through to maximise our common agenda of economic growth for the prosperity of us all. Therefore anything the Minister can do to help clarify the routes we travel on this will be very welcome.
Local Government Finance Bill
Debate between Baroness Hollis of Heigham and Lord Shipley
Lord Shipley
My Lords, I should like to speak to Amendments 107C and 108. The noble Lord and the noble Baroness in whose names those amendments stand will be reassured to know that I support their comments. There are several issues of principle which I hope the Minister will take on board in her response.
There has been a lot of discussion about demand: what the demand is and what it could be. The figure of 60% has been mentioned for current take-up. If that is true, it implies that 40% of those who might take up the entitlement are not doing so. However, the facts on growth and demand can be understood only if there is a clear means of collecting data to a common format. Given that council tax support is being localised, it would need to be to a common format because different councils may do things slightly differently. Therefore, there has to be a means for knowing what actually happens. I think that guidance needs to be given on what that common format should be.
The second point of Amendment 107C, tabled by the noble Lord, Lord Smith, about altering,
“the funding for council tax support to reflect the changes to entitlement”,
is extremely important. It is unclear what the impact of the £100 million transitional funding will lead to because, of course, that money has not yet been allocated. Therefore, in my view it should in theory be allocated to meet need and demand. Depending on how and when that money is allocated and whether it has met the problem identified in earlier debates, an 8.5% cap could be difficult for some councils to deliver without dipping into their own resources. We have to have an information base that is commonly reported and commonly understood.
I agree entirely with the noble Baroness, Lady Lister, about conflict of interest. I did say that it is not even a potential conflict of interest, in one sense because it is just a conflict of interest. If a council advertises council tax support systems very widely it will end up paying out more money. I am absolutely sure that all of them would want to do that but it could mean some difficult choices for those councils. Therefore, there has to be clear guidance on what constitutes publicity that is reasonable. What do the Government expect? It is not about regulating but guiding. What do the Government expect councils will do to ensure that information gets out to those who might wish to apply?
My noble friend Lord Greaves said in Grand Committee that there is an issue about reimbursement. The amendment now calls for a sum in excess of 10% to be reimbursed. Of course, there is now an extra £100 million transitional grant as well. We have to understand it a little better. I think that it means that a cut of 12.5% as opposed to 10% is what will actually happen, based on 2013-14 take-up levels. That £100 million may go some way to meeting that problem of the cut being higher than we had anticipated. How that works through in terms of transitional relief distribution, to which authorities, how much and exactly for what purpose will need to be carefully understood. Those are very important issues of principle and I hope to hear from the Minister how the Government will help us to address those problems.
Baroness Hollis of Heigham
I support the amendments, particularly the one spoken to so ably and powerfully by my noble friend Lady Lister which overlapped with the amendment moved by my noble friend Lord Smith, speaking from his Wigan experience.
The Minister spoke earlier in the day about the need to get council tax benefit under control because of its doubling and so on over the past decade, 12 or 14 years. My noble friend, so to speak, revised his statistics by insisting that this was the result primarily of the increase in council tax. Let us do a counterfactual and assume that this system had been in place in 1997. The result is that all of that increase in council tax benefit generated perfectly properly by the increase in council tax would be expected to be carried by the local authority. A grant that starts at 90% would the following year be 75%, the year after that perhaps 50%, and so on. As council tax rose and as claims rose, and as the grant remained capped, the local authority would have to pick up more and more of these moneys. I do not see how it can reasonably be expected to do so. It is not just a question of take-up; where local authorities may differ is in the degree to which they may depend on a single industry. Norwich, for example, is very dependent on financial services, and in particular on the former Norwich Union, now Aviva. If that company was to make a major decision and relocate, for example, to Sheffield, which is a second source of Aviva jobs, it would have a dire effect on the Norwich economy, and on the demand for benefits, including council tax benefit. The local authority would have no obvious resources with which to respond to what my noble friend Lady Lister called an economic shock.
For a number of reasons, there will be an ethical dilemma. First, it is not in the council’s interest to promote people’s entitlement to benefits they should have—and we know that pensioners underclaim. Secondly, the council can be very vulnerable to significant economic shocks such as the closure of a factory or even, with the NHS consultation coming through, of a local hospital, where we could very well see 1,500 jobs go very quickly. Many holders of those jobs will be poorly paid women who will come into the council tax benefit claims system. They will be trying to get money from a limited pot, and the resources available to others will diminish. The third problem is that there will continue to be modest future council tax rises, and unless the money keeps pace with that increase, taking into account inflation and everything else, we will find that people who receive aid with their council tax benefit will get a smaller and smaller share of the moneys that they should get.
This means that we will be asking local authorities each and every year to revise their scheme not so much because of local needs but because the amount of bidding for it has outpaced the resources available. I fear that if the Minister does not take this issue very seriously, she will embed instability into the future projections of local authorities’ need to fund their council tax benefit system, so they will continue each and every year to have to revise their scheme to take account of the new needs and take-up, and of the increase in council tax. Unless we have some back-up mechanism to enable local authorities to fund this, we will have major problems down the road that—bluntly—could make some poll tax issues look quite small by comparison.
Local Government Finance Bill
Debate between Baroness Hollis of Heigham and Lord Shipley(12 years, 4 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?