Driving: Blood Alcohol Limit
Baroness Sherlock Excerpts(11 years, 6 months ago)
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Earl Attlee
My Lords, I confirm that there was some unwelcome news on the number of casualties. However, if one looks at the graph, there continues to be a welcome downward trajectory. None the less, across the House, we all need to work hard to continue that downward trajectory.
Baroness Sherlock
My Lords, will the Minister tell the House how many fatalities per year the department believe to have any connection with drink-driving among people under 21?
Earl Attlee
My Lords, I am not sure regarding those under 21. The key figure is 280 drink-related fatalities per year.
Local Government Finance Bill
Baroness Sherlock Excerpts(11 years, 11 months ago)
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Baroness Sherlock
Baroness Sherlock
My Lords, in the absence of my noble friend Lady Hollis, I move Amendment 79B and speak to Amendment 83 in my name. My noble friend asked that I convey her apologies to the Committee. When she tabled her amendments, she believed that they would come up last Thursday. When that sitting was cancelled, they were moved to today when, unfortunately, she is chairing a meeting of her housing association, so she asked that I make that clear and apologise to the Committee.
Amendment 79B is designed to make clear that when a local authority makes a council tax support scheme which takes income into account in determining entitlement to support, that income should include universal credit, not just earnings or other kinds of unearned income. I presume that the Minister will need little persuasion of the merits of such an approach, as her default scheme takes precisely that approach. My understanding is that the default scheme will take account of universal credit income with some deductions relating to income that is to meet housing and childcare costs.
Having read the Explanatory Notes, I wrestled for some time yesterday trying to work out why the default scheme would want to take account of income net of the child cost element of universal credit. Why would you deduct the element designed to meet the costs of children? My noble friend Lady Hollis and I had a debate for some time trying to work out what the Government might be thinking of by this. Having read the draft regulations themselves, I concluded that this was meant to be a reference to the childcare cost element of universal credit, which of course is completely distinct from the child cost element. Having talked to an official—I am very grateful to the Minister that her department gave me access to a member of the Bill team—that is still my understanding. It would be helpful if she could confirm that on the record for the benefit of those reading the report of our debate.
I ploughed through the 155 pages of regulations as best I could with my limited understanding, and on page 105 there is a list of the rates that should apply for the various elements of council tax support under the scheme. When I read them, I panicked slightly because they are not the current rates that apply to council tax benefit. They are constructed in the same way but they are different numbers. Again, my noble friend Lady Hollis and I spent some time trying to work out why that might be and, in the usual way of politicians, ranged through cock-up and conspiracy theories trying to work out what the Government might mean by that by the wonderful old-fashioned Kremlinological means. Was this a way of saving 10% in the scheme itself? Actually, my best answer is that it is probably a mistake and that they are last year’s rates rather than the current year’s rates. Again, it would be helpful if the Minister could confirm that the intention is to use the current year’s rates, which were published this January, rather than those for last year.
We know very little about universal credit and the new system, because in those 155 pages of draft regulations the only substantive reference to universal credit comes in chapter 3 of part 10, which addresses the question of income and capital when there is an award of universal credit. That chapter is only 389 words long, and that includes the title. Of course, it would be hard for it to contain much more because there is a great deal that we do not yet know about universal credit, so I do not blame the department for the fact that it does not have that detail yet, but that is a point to which I shall come back. At least universal credit income will be taken into account. The case for doing that for everybody is compelling. Has the Minister had the opportunity to read the IFS report, Reforming Council Tax Benefit? It is a 148-page report that has an entire chapter on integration with universal credit. The report notes that the universal credit system was intended to,
“simplify the benefit system by reducing the number of different benefits that claimants and administrators must contend with”.
As council tax benefit is,
“the means-tested benefit with the largest number of recipients”,
keeping it outside universal credit,
“and allowing it to vary … undermines this simplification”,
but we are where we are. The report goes on:
“Universal Credit is also intended to rationalise work incentives by replacing a jumble of overlapping means tests with a single one, ensuring that overall effective tax rates cannot rise too high. Again, separate means tests for council tax support could undermine this, with the potential to reintroduce some of the extremely weak work incentives that Universal Credit was supposed to eliminate”.
I shall translate that for simpletons like me. If council tax rebates carry on having a 20% withdrawal rate and if universal credit is not counted as income, the effective marginal tax rate for a basic rate taxpayer could go up to 89.8%. Furthermore, it would mean that,
“income from private pensions, contributory benefits and spousal maintenance would actually make some recipients worse off”—
more money coming in, less money left behind, which is really serious—
“unless these income sources were ignored when calculating council tax rebates, which would be expensive for local authorities”,
as well as complicated. The report continues:
“This arises because income from these sources will reduce Universal Credit entitlement on a pound-for pound basis”.
I apologise for getting to this level of detail, but I am trying to illustrate the consequences of not taking universal credit into account as income.
There is no simple way out of the challenge faced by local authorities. Some authorities will decide that they have to devise their own schemes to avoid having to find the money to pay for the 10% saving by next year. The noble Earl, Lord Attlee, gave them some advice during our last sitting, on Monday, saying that local authorities,
“could opt to use the default scheme, but perhaps with some amendment to secure some easy savings. Local authorities could choose to develop a more sophisticated scheme later, but that is a choice that they will have to make … However, if a local authority wants to have a complex scheme, it can have one in later years, and it can go for a simple scheme perhaps based on the default scheme in year one”.—[Official Report, 16/7/12; cols. GC 15-17.]
A simple scheme based on the default scheme of 155 pages of draft regulations would be quite difficult. More complicated still is that any means-tested system is basically a complicated ecosystem.
Although I am teasing the Minister, I do not blame the department at all for having 155 pages of regulations. It is impossible to devise simple means tests that work well; that is why there are 155 pages, and they are based on the regulations for comparable benefits at the moment. If a council were to try to find an easy way forward, the reality is that its most likely step would be, for example, simply cutting 20% off the top of the applicable amount that goes to everyone or the maximum amount, but it may not fully understand the consequences of doing that distributionally across incomes or different types of activity. It is very complicated.
As the IFS notes, it would be simpler for local authorities to have an independent taper from that used for universal credit, but to do so would be worse for effective marginal tax rates. The key question is, “Why should we not leave it up to local authorities to decide how they will individually treat universal credit income?”. The answer is that one of the Government’s main arguments for the upheaval involved in creating universal credit is that it would reduce the very high marginal tax rates faced by some working claimants, so there is a clear risk that council tax rebates will undermine one of the main advantages of universal credit, namely the elimination of those high effective marginal tax rates.
In other words, it is a policy question. Think for a moment about the impact that this could have on the noble Lord, Lord Freud, the DWP Minister. If the Government cannot determine how universal credit income interacts with the taper on the various council tax support systems, it is impossible for central government to determine the effects of changes it makes to its own universal credit systems. The noble Lord, Lord Freud, could make a decision to do something that is more generous and has a particular effect, but when he pulls that lever he will not know what will move in the various parts of the country that have devised their own schemes. That is simply a bad policy outcome given the billions of pounds of public money being spent on universal credit. It is clear that the Committee should agree to this amendment and direct councils to take universal credit income into account.
I turn now briefly to Amendment 83, which would require a local authority to consult not just on the scheme it proposes under the current social security system but, at the appropriate time, on the scheme in the world of universal credit. The reason is very simple. There is a whole series of decisions that a local authority will have to take, even if it sought to devise a scheme that mirrored as closely as possible in the universal credit era that obtains in the current tax credits and benefit system. Simply maintaining the status quo is not possible, as the department has already discovered, because universal credit replaces a range of tax credits and benefits for working-age adults that are currently treated differently for council tax benefit purposes. For example, tax credits count as income, but income support does not, and nor does jobseeker’s allowance or income-based employment and support allowance. In universal credit, if one half of a couple is under state pension age, the whole household is treated as that, as my noble friend Lady Hollis reminded the Committee last week, but that is different from the current situation. Somebody on income support, JSA or income-related ESA is automatically passported on to maximum council tax benefit. That will not be possible in future. If universal credit income is taken into account without making corresponding adjustments to the means test, as the IFS noted:
“It could be impossible even for those with no private income at all to be entitled to maximum rebate”.
In other words, once a local authority has its own scheme in place, when universal credit comes in, it will be impossible, even for those in the current system, to know for sure what will happen to their entitlements unless there is an additional consultation and more information is made available. Indeed, although I had a very helpful conversation with an official earlier, which has moved me along in understanding this, I am not completely clear about what will happen to somebody in the default scheme. Will the Minister take this opportunity to tell us on the record? The Explanatory Notes to the draft regulations for the default scheme state:
“Applicants with an award of Universal Credit may still receive 100 per cent support under this system”.
“May” is good; “will” would be better. The Explanatory Notes also state that use will be made of income and other assessments. My understanding from the notes and the conversation is that in the default scheme the means test made by the Secretary of State for universal credit purposes will be taken across, certain deductions will be made for housing and childcare allowance and it will then be applied. For simplicity, will the Minister tell the Committee whether, if somebody is on income support, JSA or ESA and is passported on to maximum council tax benefit, when the new system comes in under the default scheme, that person will still get the maximum 100% council tax support, assuming no complicated changes of circumstances or other unknown factors? Simply person for person, will the very poorest still get the most?
This is an issue for all kinds of councils, especially those that do not use the default scheme or that want to make the 10% saving because they may want to use thresholds but they—and certainly the population—will not know what the consequences will be. Local authorities should simply be told that they must consult again under the universal credit regime. It is particularly an issue given, as I understand it—and I think we come back to this on a later amendment—that authorities may not amend their scheme in-year but must determine it some way ahead, when they may not know how universal credit is going to work in practice. Finally, when the Government are consulting they could take the opportunity of combining it with a take-up campaign, if they can afford it, of course. I beg to move.
Lord McKenzie of Luton
My Lords, I shall start on a somewhat disagreeable note, which is to register our protest about the tardiness of the regulations that we now have before us, to which my noble friend Lady Sherlock referred. They were published on Monday, and there was some challenge to get hard copies so that we could work on them on journeys and when away from screens. It is unacceptable, particularly bearing in mind the point my noble friend made that it was quite possible that this amendment would have been taken earlier before we had seen the regulations or known what was published on that day. At least we have the chance now to get into them before Report. The scope of the regulations is profound indeed, and we should at least have had last weekend to review them in some depth. I am grateful to my noble friend Lady Sherlock; it is clear that she has done so from the presentation that she just made.
Lord Greaves
I wonder if the noble Lord shares my alarm at the announcement by the noble Baroness that looking at the regulations had made her head hurt, and whether that is something that those of us who have not yet had the chance to look at them have in store.
Baroness Hanham
But even so, local authorities have been waiting for and expecting these regulations, and they have started off. Also, on consultation, they are now entitled to do less than the 12 weeks—that is in the Bill—so they can curtail or tailor their consultation to different timescales. Moreover, local authorities are far better equipped and far further on than noble Lords opposite are giving them credit for. I have spoken to quite a lot of local authorities, and if they do not already have their scheme in embryo they are all just about there and about to undertake the consultation. While I do not mean any discourtesy to this Committee about the regulations, the most important aspect of this now is that local authorities are getting on with what they are doing and while some may find some difficulties, most are making a good fist of it.
The noble Lord referred to my noble friend Lord Freud. He will appreciate that up until now it has not been entirely in our gift to have discussions since the regulations were published. I do not know the timing for this Bill when we come back but perhaps I can give the noble Lord an undertaking that if it is not considered in the first week, we will make arrangements to have the discussions he has asked for before we get to Report. We may find that helpful and even if there is a day, we will make sure that we do it on that day. I hope that is all right.
I have clarified to the noble Baroness that we were referring to childcare costs; she was quite right to say that. While I am picking up on her questions, before I read my reply, I should say that the universal credit rates are indeed last year’s and will be updated in November, which is in line with the normal uprating procedure in the Department for Work and Pensions for this year.
Baroness Sherlock
I want to be really sure that I understood that. Separate from the uprating, is it the intention that the rates will be the same as those that apply at the time? For example, if it were starting this year it would be the 2012-13 rates and if it were for next year it would be the 2013-14 rates, which is slightly separate from the uprating point.
Baroness Hanham
My understanding is that the rate will be this year’s, uprated. I hope that covers that point. I think the other question that the noble Baroness asked me was whether the very poor will still get the most. The answer is yes, because their income will still be very low, so this should work.
Baroness Sherlock
I am terribly grateful to the Minister for indulging me in this. These are the kinds of questions that I am wrestling with and that I therefore suspect others who read the record will be. It is not just about whether the very poorest will get the most but whether somebody on the equivalent of income support, for example, will get maximum council tax support under the default scheme. Will they get 100%?
Baroness Sherlock
My Lords, I thank the Minister very much for answering the questions that I asked about the default scheme and the universal credit, and I look forward to the opportunity to talk more with her and her team. However, I do not feel that in the end she answered my point of substance about the amendment, and I realise that we have a disagreement on this. She is right that at the moment councils may choose to include universal credit; the point of the amendment was meant to be that they should—not that they may, but that they ought to do so. That is the point that I might want to come back to at a later stage, because I do not think that the Minister answered the policy question as to the impact on central government of being rendered unable effectively to determine the consequences of decisions about its own universal credit policy, due to an inability to control the interaction with separate tapers and schemes around the country.
On the point made by the noble Lord, Lord Greaves, since the default scheme is as the Minister explained in her reply, the real danger about consultation is that those authorities that do not feel able to find the other 10% cannot use the default scheme. They will have to amend it in some other way or change it. Because I cannot, despite the advice of the noble Earl, Lord Attlee, see a simple but fair way of amending the default scheme for a saving on that scale, they will have to engage in some other quite detailed process. Therefore, it is really important that the consultation is right from the outset. However, since they will have to change that scheme when universal credit comes in because they cannot simply move over from one to another for the reasons that I explained—obviously badly—they ought to consult again. That is the point I wanted to press on the Minister. However, since we are in Grand Committee, I thank everybody who has contributed.
Baroness Hanham
My Lords, I am not sure whether the noble Lord would expect me to answer his last point, which was about modelling, today. That has largely been done by the DWP, and it would be more effective if I wrote to the noble Lord giving details of that and did not try to muddle my way through today. We ought to do it properly.
On the question of consultation and the scheme that local authorities are working on, I said very clearly that the current council tax benefit scheme is almost transferable into the one that they will have to operate from January. People who are already receiving council tax benefits and those in the pipeline will automatically be put in, so they will not require any more work done on that. As far as consultation is concerned, I have also dealt with this. The consultation does not have to be 12 weeks. Equally, say if you just have one consultation going out for your scheme, that will be back before the 12 weeks are up. Where there is a precepting authority involved, this is going to have to be a joint scheme and one would expect discussions to take place, or to have taken place, before the scheme was put out for consultation. It should be something that goes smoothly and seamlessly between the two.
We are satisfied that the work that has been done, the way this has been translated and transferred, and the amount of information that is available is absolutely sufficient for local authorities to be working up their schemes now.
Baroness Sherlock
At the risk of prolonging this, I wish to respond briefly. Although it is true that if a local authority were to implement the default scheme as it is now and to find the saving elsewhere then, on the basis of the assurances the noble Baroness has given the Committee today, individuals at the bottom would find themselves unaffected, but that will only be the case if the authority is able to find the money. A number of authorities clearly may decide not to do that, and they will have to make changes. Therefore, nobody can be assured from today that they will be protected from changes. I do not think the Minister is in a position to give that assurance. If she is, I invite her to intervene on me now and give it. I am delighted to pause.
Baroness Hanham
We are able to give that assurance because means-testing will be carried out so that people who have already been means-tested are going to transfer without any hitch or halt.
Baroness Sherlock
I am so sorry; this really is not false modesty on my part. If the authority I live in—and this is just for the sake of argument—decided it could not afford the default scheme and it took on another scheme then obviously the Minister is not in a position to give that assurance, is she? Or is she, even in those circumstances?
Baroness Hanham
If it takes on the default scheme, it takes it on exactly. If it has to use a completely different scheme, it would have to consult on it and indeed it might not be able to give exactly the same benefits.
Baroness Hanham
I understand that the situation is as it would have been had the council not been changing. The default scheme is the current scheme—the current council tax benefit scheme. That will simply transfer and people will be treated the same way for a year unless it is reset the following year. If it is the local scheme, it does that itself; then it can make decisions about the amount that is reduced for council tax benefit.
Baroness Sherlock
My Lords, I am glad that we have cleared that up. My understanding, therefore, so that we are all clear, is that local authorities have two choices. They either adopt or have imposed on them the default scheme or they create a scheme of their own devising, which may or may not bear some relationship to the structure of the default scheme.
The amendment is actually targeted at the second group of authorities. I have probably confused things by asking some questions so that I could better understand the default scheme, but in fact the amendment is targeted at those authorities that either do not choose to adopt the default scheme or on which it is not imposed. This amendment is aimed at those authorities that devise their own schemes and it was intending to say that they should be required to take universal credit income into account in any means test that they go on to apply to determine entitlement on the basis of income.
The case for that is very strong. Nothing that has been said today in any way diminishes it. It is in fact strengthened, if anything, by the intervention of the noble Lord, Lord Greaves. There is a real danger that in attempting to square the kind of circles that have been described, an authority will devise a scheme without having a full understanding of the consequences on either individual incomes for universal credit or of the national position in terms of what the Government want to do. That is problematic.
The Minister’s argument, finally, that it would not be practical to name universal credit because one could name lots of other benefits simply does not hold water. In fact, the purpose of this is not about the individuals who are on it: it is about the national policy conference. The reason I am asking this specifically is to enable the Government to make judgments about universal credit—a single integrated benefit for people of working age—to be able to do the things that, at some considerable length during the passage of the Welfare Reform Bill, we were told universal credit would do. The amendment simply seeks to enable that policy aim to be realised. The case is very strong.
Lord Greaves
I have found a statistic that might help the Committee and might not because it refers to Pendle and nowhere else. There are 6,038 existing claimants of council tax benefit of working age, if I have read this correctly. I do not have a proportion on 100% but I have a proportion on 90% to 100%, most of whom are on 100%. The number is 4,479. Around two-thirds of the working-age claimants who are means-tested are on 100% benefit in Pendle, if I have read these charts correctly, which I think I have. That puts the thing in context.
Baroness Sherlock
Indeed it does. I am afraid that the choice faced in that authority is very stark. Either it finds money from very scarce resources, which it probably will not feel able to do, or it devises a scheme of its own making that must in the end have the effect of penalising some of its population. Does it penalise the very poor in order that everyone should pay something, or does it make it very hard to make work pay by putting that burden on to those in work? That is a Hobson’s choice and I am very glad personally that I do not have to make it. Those who are, in Pendle and elsewhere, have my sympathy. We have aired this as much as we can and, given that this is Grand Committee, I beg leave to withdraw the amendment.
Baroness Sherlock
My Lords, following that helpful contribution, perhaps I may say a brief word. I was talking to a northern authority recently which could not raise significant sums from empty homes for obvious reasons but, as half of its council tax benefit claimants are pensioners, it was assuming that it would be a 20% cut across the board for the rest, because that is how the sums work. It did not have the money available. I had a look at its website. If I were living in a band B property on my own, even with a single-person discount, council tax would be £892.80. If I lost 20% of that discount, I would be £3.43 a week worse off. That does not sound like a lot, but actually, out of £71 a week JSA, that is about 6% of my income. If I were to lose 6% of my income under the current situation and, if the take-up were to increase significantly—given the gaps that both my noble friend Lady Lister and the noble Lord, Lord Shipley, described, that is quite possible, especially with the renaming—that figure would surely rise even further. How will the Minister protect those people and what assurances can she give that authorities would not be put in that position? If the take-up goes up and no additional funds were available, they would simply have to stretch the amount available even further.
Lord Beecham
My Lords, there are Ministers in the Government, I think including the Prime Minister and certainly including the Chancellor, although not, alas, the Minister, and there are certainly Members of your Lordships’ House, who were not even born when I first came into contact with what was then the rate rebate scheme. I put out a leaflet promoting that scheme in the ward to which I had recently been selected as a Labour candidate. That was in the winter of 1966, so we have been living with this system for a very long time, and my interest in it and in other aspects of welfare rights has been continuous throughout that period. Indeed, it is 40 years—I am sorry to go through this historical saga—since I, as opposition spokesman on social services, produced a report about social services for the Labour opposition in Newcastle. We included within that the establishment of a welfare rights department; we called for action to promote the take-up of all kinds of benefits; and we subsequently implemented that plan. Incidentally, I was advocating a passporting system which, at that point, was apparently impossible to achieve. We have something at least approaching that now and, in fairness, universal credit, subject to the qualifications that we have discussed today in Committee and on earlier occasions, should move us in the direction of streamlining the system and seeing that one door is open to the relevant requirement of support. I commend the Government for that, at least.
We are now in a situation in which very many people are clearly not claiming. I have been quoting a figure of £1.8 billion of unclaimed benefit. My noble friend thinks there is a band between £1.8 million and £2.4 million. Traditionally, the greater proportion of that is not claimed by owner-occupying pensioners. About the only good thing about this aspect of the Bill is the change of character from a benefit to a discount or reduction, which was advocated by the LGA—I make no more declarations. I think it was included in the two reports on local government finance which, I am sorry to say, the previous Government kicked rather rapidly into touch. I do not blame my noble friend Lord McKenzie of Luton for that. Others might, but I am sure that he has changed his mind as much as the noble Lord, Lord Shipley, appears to have changed his in a different direction. As we have said many times, the amount will undoubtedly and rightly increase. I would commend the Government for that if they provided the wherewithal to pay for it, so my commendation is qualified. However, the principle is right, and it will have that effect.
What the Government have apparently decided—it was only today that my noble friend Lady Lister of Burtersett discovered this—is that they will not take any steps to make any estimate of the number of people requiring this benefit, let alone promote take-up. I do not know whether the decision was made by the Minister’s department or the Department for Work and Pensions. Perhaps my noble friend can enlighten me.
Lord Beecham
It is even less forgivable that the department that has the overall responsibility for dealing with the problems of poverty and sustaining the income of pensioners and vulnerable people should apparently not wish to know how many people are eligible or how many are claiming. It is not doing what it ought to be doing and promoting take-up. When it comes to promoting take-up, there are a number of things that many councils—in fairness, I think of all political colours—have pursued. I was able to persuade my own council, Newcastle City Council, then under the leadership of the noble Lord, Lord Shipley, to stage a benefits summit two or three years ago in which we brought together a range of people, some major public sector employers, such as the health service, trade unions, community groups and others, to look at ways in which we could promote a range of benefits. The council committed some resource to doing that. It certainly led to an increase on top of what was already being claimed. I think the figure was £8 million or £10 million, so it can be done.
The previous Government mounted take-up campaigns, usually advertising campaigns, but they are not actually all that effective. The increase in take-up from that kind of media campaign, with adverts in cinemas and perhaps on television, tended to be of the order of only about 1%. It did not have sufficient impact. What is needed is face-to-face or some kind of human contact at least, perhaps even at the end of a telephone, with people in the workplace and elsewhere promoting take-up. That is why the first part of my noble friend’s amendment is very important. It is hugely important to engage local charities, such as Help the Aged, although I think that merged into—
Baroness Sherlock
Before my noble friend withdraws the amendment, will the Minister clarify something that she said in her reply to the noble Lord, Lord Greaves? She said that council tax benefit expenditure had more than doubled in that period. Can she clarify that she means that it has more than doubled in real terms? The noble Baroness nods. The reason that I ask is that it was not clear from the impact assessment, so I wanted to be clear that I had understood it properly.
“Report on effects of provisions
At a date no later than three years from the implementation of this Act, the Secretary of State shall prepare a report detailing the effect of these provisions on—(a) the number of people receiving or eligible to receive council tax support in each local authority, including the number in employment, the number actively seeking work, and the number of pensionable age;(b) the costs incurred by each authority in running the scheme, including the cost of appeals; and(c) the impact on work incentives.”
Local Government Finance Bill
Baroness Sherlock Excerpts(11 years, 11 months ago)
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Baroness Lister of Burtersett
The phrase keeps going through my mind, “More haste, less speed”. It is no criticism of local authorities, but we have to remember that devising a means-tested benefit scheme is very complicated. As the Institute for Fiscal Studies pointed out, councils face a difficult task in squaring a number of circles in devising schemes—and my noble friend Lord McKenzie outlined some of those circles and squares earlier. They have little experience or expertise in designing means-tested support schemes, and very little time to do it. It worries me that we are requiring local authorities to rush this process when they have to take account of so many factors in working out their means test, balancing all the different vulnerable groups that they are supposed to take into account while having their latitude squeezed by having to protect pensioners.
My noble friend Lord McKenzie pointed out that councils will have to take account of their child poverty needs assessments because they have a duty under the Child Poverty Act. A recent survey by 4Children found that fewer than half of English local authorities have a child poverty strategy in place, and 35 of those without a strategy do not even have a needs assessment, so presumably before they can work out their council tax benefit scheme they will have to do a child poverty needs assessment, which will slow things down as well. We will go on to talk about some of the other factors that they need to take into account—disabled people, carers and so forth. It really worries me that, all right, they may have schemes in place, but they will then have a year in which local people will be finding all sorts of holes in those schemes. It will not be us who suffer but local people in need.
Baroness Sherlock
I want to add one brief comment. If I understood correctly, the noble Lord, Lord Tope, suggested that the Committee should not try to press amendments that would delay the scheme because local authorities have already begun to consult on it. I do not want to overly stress the importance of Parliament, but surely the point of this exercise is for us to get the Bill right. If the Government have placed local authorities in a position where they are asking them to start the scheme so early that they are required to consult before Parliament has finished scrutiny of the Bill, surely that is a problem for us, not for them.
Lord Tope
I do not want this to turn into too much of a dialogue, but I said that I welcomed the amendments because it is important that we have this debate. Personally, I do not support them. They will not come to a vote today, but in the unlikely event that they come to a vote in October, which will be a bit late, I will not support them. I am not urging people to press them or not press them. As I said, I actually welcomed the amendments so that we could have the debate. I expressed a view on it, as we all do.
Baroness Sherlock
“( ) In exercising its powers under subsection (2)(b), the authority must have regard to the impact of the scheme on disabled people in the area.”
Baroness Sherlock
My Lords, I shall also speak to Amendment 76A in my name and that of my noble friend Lady Lister of Burtersett. I am grateful for a briefing from a variety of voluntary organisations, including Scope and Carers UK.
At present, national rules are clear, if not simple, on the treatment of disabled people and carers within means-tested benefits. These two amendments are designed to try to draw out for the greater understanding of the Grand Committee how those two categories of people will be treated under the new regime. At the moment, the equality impact assessment published by the Government suggests that nearly half of all council tax benefit is paid to households that may contain an adult claiming a disability-related benefit. The figure could be higher if it included disabled children. We are therefore talking about a significant proportion of the caseload now in receipt of council tax benefit and who may be presumed to be receiving council tax support in the future. This is not simply a marginal group.
At present, if someone receives income-related employment support allowance, they are passported on to maximum council tax benefit. If they have to be means-tested, some benefits and allowances are ignored completely—for example, the DLA care and mobility components, constant attendance allowance, exceptional severe disablement allowance, severe disablement occupational allowance paid because of an injury at work or a war injury or, indeed, mobility allowance paid under the war pensions scheme. In other words, the current council tax benefit makes significant provision to ensure that disabled people are given adequate support to enable them to meet their council tax liability.
I am sure that other noble Lords will be aware that there is considerable concern abroad among organisations that work with a variety of disabled people about what is going to happen in the future. The uncertainty out there is very worrying to disabled people and their families.
I anticipate that the Minister may reply that this is a matter entirely for local authorities. I base my predictive powers on his previous answers, but I may be completely wrong and I shall be delighted to be so. He may simply say that it is entirely up to local authorities how they should go about doing that; they have total freedom to decide how they treat disability in the council tax support schemes. However, I would like to test whether there are any limits to that freedom. To that end, I have some specific questions for the Minister. The various DCLG documents on localising support have been kind enough to remind local authorities of their various obligations under the Equality Act and other legislation such as the Disabled Persons (Services, Consultation and Representation) Act 1986; under the Chronically Sick and Disabled Persons Act 1970, which includes a range of duties relating to the welfare needs of disabled people; or, indeed, under the Housing Act 1996, which gives local authorities a duty to prevent homelessness, with special regard to vulnerable groups.
However, these documents are a little light on advice about what kind of scheme might meet the requirements of this assortment of legislation. We turn to the matter of guidance on what constitutes a vulnerable person at a later amendment, in the name of my noble friend Lady Hollis, but meanwhile can the Minister advise the Committee to what extent disabled people currently entitled to council tax benefit are protected under equalities legislation? Do local authorities have to continue existing full exemptions or can they modify as they see fit? If they can modify as they see fit, would the Minister be content if some local authorities, for example, were to count DLA as being income for the purposes of council tax support, while others were not? If that were all right, we could find two people with identical conditions, identical incomes and identical circumstances, living in neighbouring boroughs whose entitlement to council tax support would differ solely because of which side of the line they came from. That may be true of other categories as well.
I want to explore the implications of that for a minute. We have all read the marvellous IFS report on the scheme. The IFS looks at the potential incentives that this change could give to local authorities in a variety of ways. In doing so, it identifies what the incentives could be, although it does not suggest that authorities would necessarily act intentionally based on those incentives. It suggests that the change could give an incentive to a local authority to discourage low-income families from living within its borders because it would be more expensive.
I wish to look at what the implications could be in this area. Let us suppose that there were a difference in entitlement to council tax support for someone receiving DLA on one side of the border compared with the other. The difference in cash may not be huge but may make a significant difference to the income of the person concerned. Would that constitute an incentive for disabled people in that circumstance to live on one side of the borough line rather than on the other? If it did, what might that do to other costs that might follow? I am thinking, for example, of the social care costs that might then be a liability to one authority rather than to another because of a desire of someone in that situation to live in one authority rather than in a neighbouring authority. Is that a policy consequence? If that were to happen, would the Minister be content with that? Is that simply part of what happens in a free market of local authorities determining what kind of support they give? Have the Government considered that? Perhaps the Minister could tell us.
Thirdly, what assessment have the Government made of the cumulative impact on disabled people of the variety of changes and cuts to benefits and services that have preceded this? In that respect, I wonder where the Minister thinks disabled people should go for advice on these schemes and where the best place would be for them to go to understand the implications of changes in council tax support.
Finally, the Government made it clear on the initial consultation that the rationale for seeking no change in council tax benefit payments for pensioners was that they would not expect them to seek paid employment to increase their income. However, the original consultation document I think went on to explain that there were other groups to whom the Government may wish to ensure that local authorities offer support, and that these groups might not be expected to increase their income through work. Given that certain benefits are given to people who are not expected to work by definition, could the Minister comment on the appropriate distinction for a local authority to choose to give full support to pensioners but not to someone who receives a disability benefit that says that they are not expected to work?
The implications of this could be significant. The local authority plans, as my noble friend described just now, to take potentially 20% off the top of the modest disability income of someone who has no ability to increase their income through work and has never been expected to pay council tax in the past. The implications for that individual and for the authority trying to collect money from that individual, through a range of enforcement mechanisms available to it, are only too easy to imagine. If any noble Lords have a failure of imagination, they may recall various noble Lords’ speeches about what happened with the poll tax when local authorities tried to extract money from some very poor families who were suffering a variety of problems.
Amendment 76A relates to carers. This is an area in which again I need some help from the Minister. Council tax is paid at a flat rate, regardless of how many people live in a property, but if only one person lives in a property, or no one who is treated as such, a discount can be applied to the bill. Noble Lords will realise that a number of people are disregarded and treated as not living in the property when calculating council tax. At the moment, a category of people are seen as carers who can be disregarded entirely when working out whether someone must pay council tax and, if so, how much should be paid. At present, to be disregarded as a carer, someone must provide care for at least 35 hours a week, live in the same property as the person they are caring for, and must not be the spouse, partner or parent when caring for a child aged under 18, and the person being cared for must either receive the highest rate of the care component of DLA or the higher rate of attendance allowance or constant attendance allowance.
I hope that I will be forgiven for reading all this into the record, but I want to understand what happens. Will any change be made to council tax liability for carers in that category when the new regime comes in? I am not referring to council tax support but to liability for council tax itself. It may be in the documents, and I apologise if I failed to find it, but otherwise I hope that the Minister will be able to explain the situation.
I could go on great length about the other implications for means-tested benefits and carers, but I shall put just one more specific question. How should local authorities treat carers’ allowance in deciding what council tax support should be available? The Minister may want to reply only in respect of the default scheme, but, as I say, I have not had an opportunity to look at it. How will carers’ allowance be treated in assessing entitlement to council tax support under the default scheme?
Carers are a group of people who have been struggling a lot over recent years. A Carers UK survey of over 4,000 heavy-end carers conducted last year showed that four in 10 were already in debt as a result of caring, that the stress of money worries was affecting the health of half of them, and that many were cutting back on essentials such as food. What assessment have the Government made of the likely impact on carers and the people they care for, and what will the costs be of providing social care should carers find that they are not in a position to carry on as a result of this change?
Finally, I should point out that I had originally considered tabling amendments that would try to draw out the impact on a number of categories of people. I could have tabled a similar amendment on the impact on child poverty, which my noble friend Lady Lister raised. I could have tabled an amendment on the impact on homelessness. I could have tabled an amendment on the impact on larger families. I mention this because it is easy to say that the Government want to protect certain categories of people, but, as my noble friend has just explained, if councils are to be encouraged to protect those in work, on whom should the burden fall?
I live in Durham, where the council is doing its absolute best to see how it can address the scheme well, but half of the current recipients of council tax benefit are pensioners, so if it did nothing else, it would mean a cut of 20% for the rest. Once the council takes account of higher levels of disability—in a very poor county—what should it do then? Should it try to protect those who are not expected to work? If so, who should pick up the benefit? If one takes into account the impact on child poverty in the area, again a very poor one, the council might feel that it has to take other steps. If we are not careful, we will end up with one family in Easington paying the entire council tax liability for the whole borough. I make a joke only to make a point. There will be a stage by which only so many circles can be squared.
There is a problem with simplicity. The Minister sought earlier to encourage us by saying that councils could set up simple schemes; they do not have to make complex ones. However, in welfare benefits, simplicity and fairness pull in opposite directions. When the Welfare Reform Bill was being considered in Grand Committee, I commented then that the best example of this is support for children. Child benefit is very simple but it is not fair. If it were the only kind of support, it would not be fair. Tax credits for children are very fair, but even I would not say that they are simple, and I was involved in designing them. I just said that child benefit is an example of something that is simple, but thanks to the recent changes it is going to be less simple. However, noble Lords will take the point. That is the difficulty in dealing with all these different categories. If a county council is to try to be fair to all these groups, not to mention protecting itself from potential legal challenge under the variety of legal instruments I have described, it is going to be difficult for it also to be simple. If it is going to be simple, it may struggle to deliver that by next April. I beg to move.
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.
Baroness Sherlock
Before the Minister leaves that point, I want to be sure that I understand what he has just said. I specifically asked how carers’ allowance would be treated in the default scheme. Could he tell me how carers’ allowance is to be treated? Is he saying that there will be no changes from the current treatment under the default scheme?
Earl Attlee
My Lords, I expect I shall get some inspiration on that point in a moment.
My noble friend Lady Browning asked how local authorities should have regard to the Autism Act. She raised local authorities’ other responsibilities, particularly in relation to the Act. That is precisely why we have not proposed a new and potentially cost-cutting definition. Local authorities have a range of duties that they will want to consider. My noble friend is right to point to the Autism Act as one of the key matters that needs to be considered.
The noble Baroness, Lady Lister, claimed that there was no reference to carers in the guidance. The guidance is not exhaustive. It highlights some key legal duties.
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.
Baroness Sherlock
My Lords, I thank all noble Lords who have contributed to making this a very interesting and useful debate. I have learnt much from it.
I am slightly smarting from the Minister’s criticism that my amendment is too general. By referring to disabled people in general, I was seeking to avoid detaining the Committee by tabling a whole succession of amendments dealing with a full range of disabilities, which I might reasonably have done; but I have learnt my lesson for the future. I shall look forward to visiting the Public Bill Office with more regularity in future.
I asked the Minister at least eight questions, and I do not think that I got answers to any of them, since “inspiration” did not arrive in time. I was not trying to ask technical questions; I was trying to draw out, so that the Committee could understand, what the implications of these changes are for some of the most vulnerable groups in our country in order that we might understand whether we needed on Report to seek to take any specific steps to protect those groups. Given that, I would be very grateful if the noble Earl, when his team has had the opportunity to reflect and to give him all the appropriate advice, would agree to pick up specifically the range of questions that I mentioned when he comes to write. I would add that, even though it might have sounded general, the point about the possible unintended consequences of having neighbouring authorities with different regimes and what that might do to drive both differential costs between authorities was particularly important. Although it might sound like a debating point, it was intended to try to find out to what extent the Government had modelled for that.
I urge the Government to reflect very carefully on the points raised by all noble Lords in this debate, but, this being Grand Committee, I beg leave to withdraw the amendment.
Baroness Sherlock
I would like to pick up where the noble Lord, Lord Shipley, left off because he made the point that I was going to make. I want to add just one thing. Irrespective of the debates about where the decisions should be located in general, the point about vulnerability is one that the Government brought into play. He said that the Government made a decision and said, in their own documentation:
“The Government has been clear that, in developing local council tax reduction schemes, vulnerable groups should be protected”.
The Government have put this issue out there, so it is not unreasonable for a local authority to say, “What do you mean by ‘vulnerable’?”. I spoke to one local authority last week that was extremely concerned that, almost irrespective of what definition it chooses, it will end up being subject to legal review because it will exclude some people, and it cannot imagine any way in which it could do that that would not have that consequence. In responding, the Minister may point out that a local authority could choose to adopt the default scheme and therefore the legal responsibility would lie with the Government, but that would work only if the authority has the resources available to be able to make good the difference. It does not apply to any other scheme or variation of it that it could take on.
I am very much with the noble Lord, Lord Beecham, who pointed out that there is a very real risk, in addition to the legal point, that the Government are raising expectations by reassuring everybody that vulnerable groups will be protected without explaining what that means. That makes it even harder for local councils to justify whatever decision they take that is short of the total quantum of vulnerability that could be defined out there.
I will make one final point, triggered by something that the noble Baroness, Lady Browning, said. One of the difficult areas in policy and one of the reasons why some decisions should be made centrally is that some kinds of vulnerability are not seen on a sufficiently large scale in an individual area for local councils to be expected reasonably to understand them and make prescriptions about them. It is analogous, perhaps, to health policy where, in commissioning, there will still be certain kinds of rare conditions that are dealt with centrally. Sometimes there are good policy reasons, even if one is being localist, to have guidance coming from the centre so that people can reasonably be expected to understand vulnerabilities that they may not encounter every day. Can the Minister perhaps address that as well?
Lord Smith of Leigh
My Lords, I have found this debate and the ones previously on Amendments 76 and 76A fascinating. I need to remind noble Lords that I am still leader of Wigan Council. Therefore, for me, this is not a theoretical debate. I will have to determine a scheme within my authority, with colleagues, that will decide who is eligible, who is not eligible, which group will be regarded as vulnerable and which group will not be regarded as vulnerable. It will not be easy. I was going to say that it is not a zero-sum game, but I remind noble Lords that it is not even a minus 10% game; it is a minus 20% game if we exclude pensioners. So we are lucky in that sense.
I find myself agreeing with much of what the noble Lord, Lord Deben, said about localism. I recognise what he said and I agree with it. Where I would differ from him and what we need to recognise is that local authorities come at this with very different needs in terms of the number of people who are receiving council tax benefits, as has been said earlier, and the potential changes, as I mentioned earlier. I already know from being in this meeting that I have 100 more people who will be regarded as needing council tax benefits as a result of their factory closing this afternoon. So these things are changing all the time, and we need to recognise that.
I have had some interesting solutions to my dilemma from various quarters today, such as applying reserves. The noble Lord, Lord Beecham, is absolutely right. My treasurer is already coming to me to say, “You are going to lose probably £500,000 on your council tax collection because these people are not going to be able to afford to pay the cost, so you have to think about that”. We have talked about the problems of increasing demands on council tax benefits as it becomes a local thing, and I think that the noble Lord is right that we will do it much better than it is done at the moment, so that probably will encourage more people who do not claim at the moment to start to claim.
Earlier in this Bill we talked about the problems of business rates and the fact that they will have some risk element, so we will have to put that in. We talked about the flexibility of council tax, which is a very interesting phrase. Perhaps the Minister could let me know whether he means by “flexibility of council tax” that he is going to allow me to put the council tax up and is not going to require me to hold a referendum. I cannot believe that anyone sensible is going to say that they are going to have a referendum to put council tax benefits up: “Please vote for it and you will pay more council tax”. We would never win that, so it is not going to work.
We have heard that we should make further cuts. In my authority I am planning £66 million of cuts over four years. The Government thankfully gave me some warning and we have them in place. If I now have to make more cuts to accommodate all this—probably between £2.5 million and £3 million-worth—where are they going to come from? What have I got to do that I am not already looking at? I need to remind noble Lords that it is the vulnerable groups who rely most on councils’ services. If I cut services to vulnerable groups, they suffer. I can put up daily charges or raise the qualification for receiving social care. All these things affect vulnerable groups and there is no easy solution.
The difficulty for me is this. Presumably all the people we give council tax benefit to are regarded as vulnerable people, otherwise we should not be giving them that benefit. If we start to define vulnerability—here I echo what the noble Lord, Lord Shipley, said, as well as the comments of other noble Lords about the needs of different groups in communities—the danger is that we will define who are the deserving and the non-deserving poor. In the future, there will be people who get council tax benefit support and those who either get less or nothing.
A lot of vulnerable groups have strong lobbying sectors, but the ones who do not get that kind of support are the working poor. I remind the Committee that we are talking about a marginalised and alienated group in our society made up of people who do not vote very much at the moment. But they could be tempted to vote by extremists who say, “We will listen to you”. It is happening in certain communities. People are listening to those who are giving them false promises. We know that Respect, which was mentioned by the noble Baroness, the BNP or whatever group it is will offer things that they cannot deliver. The result of this Bill and the way we will have to design the council tax support scheme will drive more and more people to the political extremes. Are we doing a good job here?
Baroness Hanham
My Lords, I refer to the comments just made by the noble Lord, Lord Beecham, and by one or two other Members of the Committee about the present situation. The noble Lord has defined people in poverty and children in poverty and what is happening now under a national scheme. It is not a scheme that is operated by local authorities but one that is operated nationally. I am sure that the noble Lord will have known of many people who have looked for disability allowance and carers’ allowance, who have not been granted them. Do not start by thinking that the current scheme is brilliant because it is not. There are certainly disparities across the country where there are different needs. There may be different needs in cities or in rural areas for children in poverty and children in need. It is for local authorities to decide where those vulnerable people are. There will be more disabled people and pensioners in one local authority than there will be in another. Would it not be right for that local authority to have the right to make the decisions on what is required and make a scheme according to what it knows and who lives in the area? We have had a long dissertation today on vulnerability but it actually turned out to be yet another go at the scheme itself.
The fact of the matter is that the council benefit scheme was removed entirely from universal credit and there is therefore not the slightest point in trying to equate the two and include the scheme again. We are dealing with a situation where localism and local authorities are going to deal with council tax benefit, otherwise there would not be any such benefit—or else there would have to be some form of top slicing to enable the money to be raised. Let us get real about this. Let us be absolutely clear what we are talking about. We are talking about putting the scheme locally because we believe—I accept that the Opposition does not—that local authorities can be trusted to develop schemes that are relevant to people in their areas.
The noble Baroness and one or two others talked about the dividing line between what happens regarding those schemes in Hammersmith and Fulham, Kensington and Chelsea, Rotherham and Preston. Local authorities are already administering schemes. They make decisions daily on criteria regarding who is eligible for one scheme or another. They do that in relation to children, old people, health and public health. They are making decisions all the time. Why say that they cannot make decisions on this? Of course they can and they consider what schemes they should put together.
The noble Lord, Lord Beecham, produced 20 options. If I was putting together a scheme such as this, I would expect at least 50% of the options to be totally unacceptable. I would know that they were totally unacceptable and that they would never get further than the discussion stage. However, you have to look at those options and take them into account. We need to shift this discussion on to the basis of looking at what local authorities are doing and what they need to do. The council tax benefit scheme is already there with its criteria and all its ramifications. Local authorities know what the current scheme involves.
I simply do not accept the arguments that have been put. I very much thank my noble friend Lord Deben for one of his rare but gallant performances, and for providing some sparkling entertainment between him and the noble Baroness who moved the amendment. The whole discussion turned into an interesting event.
I have screeds of notes that I can tell you all about. Let us start with the setting of guidance on vulnerability, which the noble Baroness, Lady Browning, asked to be included in the Bill. I do not know of any guidance in a Bill, but I know that guidance can be positively directed. The guidance is out today and people can look at it to see what it involves. There is no definition of vulnerability, which needs to be dealt with at a local level. Local authorities are already working within the definitions and they know what they are. Noble Lords look sceptically at me, but if local authorities do not do that, they are not very good local authorities and it is time that someone took a decision about having them changed. Local authorities are well aware of their responsibilities and the guidance will help practitioners to understand the statutory framework in relation to vulnerable people because that is already there. We discussed that earlier when my noble friend Lord Attlee was answering from the Front Bench.
The guidance will remind local authorities of the statutory framework in which they operate and their existing responsibility in relation to people who are vulnerable. Those responsibilities are also included in the statutory duty. Local authorities will have to take account of the equality duty; that is very relevant to the point made by the noble Baroness, Lady Lister, about disabled people. They have a statutory responsibility to look at that in making local schemes and to have due regard to the need to advance equality of opportunity between people who share the relevant protected characteristics. That is there and they will have to look at it.
I am sure that everybody here knows the relevant characteristics covered by the equality duty. They are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, and sex and sexual orientation. The disabled fall very clearly within those criteria. The equality duty is not prescriptive about the approach a public authority should take in order to comply with its legal obligation. However, authorities do have to think consciously about the need to do the things set out in the aims of that duty. I am sure that local authorities will not want to be found wanting under those circumstances. Carers are already covered under the legislation—I think it is this legislation. They will have to be taken into consideration in the same way as part of this.
Baroness Sherlock
Under what legislation are carers to be taken into account? I am not sure what the noble Baroness is referring to.
Baroness Hanham
Oh crumbs, I will stop swinging from the lights. The council tax benefit regulations take carers into account and I am sure that local authorities would want to do that.
Local Government Finance Bill
Baroness Sherlock Excerpts(11 years, 12 months ago)
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Baroness Sherlock
My Lords, the Institute for Fiscal Studies, in its excellent report, Reforming Council Tax Benefit, states rather drily:
“It is difficult to think of reasons why the government’s original plan to integrate CTB into Universal Credit was inferior to what is now being proposed”.
Later on, the report says:
“There is no simple way that making only minimal changes to CTB will allow the new council tax rebate systems to interact with Universal Credit in a coherent way”.
I and a number of other noble Lords here spent months sitting through the stages of the Welfare Reform Bill, now the Welfare Reform Act 2012. This country is spending billions of pounds to create it, and the Government are now creating a scheme that will not interact in any coherent way with that thing that the whole country has now been told to expect.
A number of questions need addressing, many of which were raised by my noble friend Lady Hollis in her very powerful speech; I will ask just a couple. First, how is universal credit as income to be treated in the new system? Do the Government propose to give any advice to local councils? There is nothing very straightforward about this, and it is one of the many questions that every council will have to address. If universal credit is not treated as income, that would be much simpler, but it means that people facing the withdrawal of universal credit in addition to the withdrawal of council tax support, as well as paying national insurance and tax, would stand to lose at least 90p of every extra £1 earned, as my noble friend Lady Hollis pointed out. The alternative is that councils face putting incredible pressure on those who least can afford to bear the burden.
My noble friend Lady Hollis pointed out very well, I think, why council tax benefit and its successors are not basically local benefits. The only thing different about them is the extent of the liability. The reason why council tax benefit is national is because all of the assessments made are related to the extent to which the individual needs help in paying that liability, and that, of course, is shown out. For example, in working out how much somebody should get in help or council tax benefit, the starting point is the applicable amount, as I am sure the Minister is only too well aware. I recommend to him the Welfare Benefits and Tax Credits Handbook, which shows that the applicable amount is the same for income support, income-based jobseeker’s allowance and income-related employment and support allowance; indeed, it is used as the basis for housing benefit and council tax benefit. The point is that council tax benefit is a national benefit because it is designed on exactly the same basis as all the other elements of a social security system related to the need to assess what help somebody needs to meet their outgoings.
It is also based on a national assessment by central government of the amount of money that somebody needs to live on. Separating that out from the rest of the system creates fractures in what has previously been a coherent system. Ironically, it is going in precisely the opposite direction of the creation of universal credit. The point of universal credit was meant to be to bring all the component parts together in one place in order to simplify it both for the individual and for those administering it. Yet now we have a fairly important part of the system that has been broken off entirely and done in a different way.
On 8 March, welcoming the Royal Assent granted to the then Welfare Reform Bill, the right honourable Iain Duncan Smith, Secretary of State for Work and Pensions, said the following:
“The Universal Credit will mean that work will pay for the first time, helping to lift people out of worklessness and the endless cycle of benefits. Whilst those people who need our help and support will know they will get it without question. Universal Credit will, from October 2013, replace the current complex myriad of means-tested benefits with a single benefit system. It will be simpler for people to navigate and harder for people to defraud, but most importantly it will make work pay. No longer will it be possible to be better off on benefits than in work”.
If I were a council leader, I would be asking the Minister this question: how can I structure my scheme of council tax support to do both of the things that Mr Iain Duncan Smith pledges on 90% of the funding? I can see that I could simply cut support to all but the poorest, but that would have the effect simply of reducing work incentives. I could try to protect work incentives, but that would have an effect on the poorest. That is the choice I have. So the question for the Minister is: how can a council structure it so that it can help the poorest to get the help and support they need “without question” and ensure that people are always,
“better off in benefits than in work”?
Can the Minister explain? I have every confidence that councils all around the country are waiting to hear the answer because those that I have spoken to have not been able to figure it out for themselves. If the Minister cannot answer the question, is she going to break it to Iain Duncan Smith, or shall I do so?
Lord Smith of Leigh
My Lords, I support my colleagues in their contributions, which covered some of the points that I was going to raise. We thought that in Greater Manchester, where we worked together closely, we would try to work out a scheme of council tax benefits covering the 10 authorities. It has proved to be absolutely impossible. The reason is that we all start from different financial positions and we therefore approach the onset of the council tax benefit scheme from very different situations.
The point that my noble friend Lady Hollis raised about the poll tax is something that we should not forget. In the days of the poll tax, the cost of collection took a huge amount of the revenue that was collected. That was the law, we had to encourage people to pay, and if they did not pay we had to go for them in ways that were not as satisfactory as one would have liked, but that was the only way we could go forward. It created the problems that my noble friend mentioned. The unintended consequence was that a whole load of young people disappeared from Wigan and neighbouring authorities. They never registered for the poll tax; they never registered to vote because that would have exposed them as being liable to the tax; and most of them were probably not too bothered about voting. Someone said they had all moved to Spain. Well, not that many Wiganers were moving to Spain at that time. Again we are introducing a system whereby local authorities will be collecting very small bills from people who find it difficult to pay. In her response, the Minister might provide us with a calculation of the estimated extra costs of collection.
On the point about risk, my noble friend Lady Hollis made it clear that for a local authority the situation is very unpredictable as regards council tax benefit. We can devise a scheme for it, as I am doing at the moment, but I can tell noble Lords that that is not an easy task. The outcome of that scheme is unpredictable because we do not know, even when we set it to start on 1 April, how many people will be eligible to claim the benefit during the year. Clearly, treasurers will be advising local authorities that they have to cover that risk with additional balances. They cannot make an assumption. My authority covers 300,000 people and is therefore relatively large compared with other authorities. The noble Lord, Lord Greaves, comes from a smaller authority, but if, as we mentioned last week, one of the factories in his area were to close, the impact upon the scheme in Pendle would be huge. The money would have to be found for that and, at the same time, as noble Lords will remember from last week, the authority would not be receiving the business rate to cover the increase in benefit—so there would be a double impact.
At Second Reading, the Minister suggested that we can pay for this scheme by the new proposal to end discounts on empty properties and second homes. It may come as a surprise to your Lordships but there are not many second homes in Wigan. It is not a preferred choice for people who want to buy second homes. Unfortunately, that is not a source of revenue that I look forward to collecting money from. What about empty properties? We have empty properties and some have been empty for some time. I therefore asked for some information, and the number is less than the Government seem to think it is. Empty homes in Wigan are a reflection of a number of things. One is the state of the housing market, which is in great difficulties and people who need to sell their houses cannot do so. Maybe they want to move away for work, or have done so and left the house empty, and still cannot sell the property because there is no demand; I notice that the noble Earl’s organisation, the Royal Institution of Chartered Surveyors, has today announced that house prices are going down, revealing the state of the housing market. It is not there. They cannot sell the properties that they wish to sell. Many are people who have inherited properties from their parents and, again, cannot sell the property. Many of these properties are on terraces, so not desirable for modern couples. I cannot believe that there will be a huge amount of money there.
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.
Baroness Sherlock
My Lords, I thank the Minister for that answer and for his attempt to address some of the questions raised in the debate. I asked how we would advise a council to construct a scheme that would manage to protect both the poorest and work incentives. He answered half that question in the sense that he assured me that a council would not wish to do anything that would damage work incentives. He did not answer the other half, and crucially he did not explain how one might construct a scheme that did both. Perhaps he could elaborate on that.
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.
Earl Attlee
My Lords, that is a matter of detail for local authorities to work out.
Baroness Sherlock
My Lords, I am very grateful. I look forward to receiving a letter outlining a scheme that might meet those criteria. There will be a lot of interested people waiting to read it. I thank the Minister.
Lord Tope
My Lords, I am not a vice-president of the Local Government Association and I certainly do not claim to speak for it. I said in a debate on an earlier amendment that the views of local authorities within the Local Government Association, as most are, have differed on this issue, regardless of political control. There are certainly Labour-majority councils that have supported what they thought was the localisation of council tax. There are some in my own authority. However, as people have come to realise the implications of what we are debating today, that support has become more questioning. I shall put it no more strongly than that. The briefing that I imagine we have all had from the LGA today states:
“The LGA supports the principle of localising responsibility for decisions about the incidence of council tax”.
The question is whether that is what we are getting now but maybe that is for another debate.
I support my noble friend Lord Jenkin. My noble friend Lord Shipley and I have added our names to Amendment 73A, which the noble Lord, Lord Jenkin, explained very well. The concern that we address with this amendment is the expectation that, for a range of reasons, the cost of council tax support will increase. More people are likely to claim it because, sadly, they will fall into that category, perhaps because the change in wording from “benefit” to “support” will—wrongly, maybe—encourage more people to feel able to claim it. Therefore it is highly probable that the costs will increase in years to come. We seek from the Government an indication of how they intend to deal with that and, more particularly, an assurance that it will fit under the new burdens doctrine and that the increased costs, assessed annually by the Government, will be met in full in accordance with the doctrine. That is the purport of the amendment in my name and that of the noble Lord, Lord Jenkin. We seek reassurance from the Government.
Baroness Sherlock
My Lords, unaccountably I have never been invited to become a vice-president of the Local Government Association—
Baroness Sherlock
But I hope that the letter will arrive any day now, despite the fact that I have never served as a councillor.
I do not support the principle of the localisation of council tax benefit—as my earlier speech may have made clear. Even if I did, under these terms I would not be happy about it. I would think that I had been sold a pup. One reason for differing views within local authorities—I hope that the Minister will help me understand this better—is that potentially there will be significant regional differences in the impact of this policy.
I will refer again to the report on council tax benefit of the Institute for Fiscal Studies. The IFS note that the pain of this cut will fall disproportionately on poorer areas. It states that in cash terms, the cut in funding will be larger in areas where council tax benefit spending is highest—the more deprived areas of Britain. The report goes on to point out that almost 90% of local authorities face a funding cut of between £10 and £25 per dwelling. It would seem that the risks described by other noble Lords are all downside. That must be of serious concern to local authorities. What does the Minister envisage happening? Will the Government be able to take account of the different positions?
I will give an example. The OBR forecasts a reduction in the number of people claiming passported benefits as a result of the combined effect of presumed economic growth and welfare reform—an increase, therefore, in the number of low earners. The effect on CTB would be to see fewer people claiming maximum council tax benefit or its successor, and more people claiming partial council tax benefit as a result of moving into work. Has any work been done by the OBR to see how even those cost assumptions would be? The most recent quarterly Northern Economic Summary from IPPR North showed two things that spring to mind. First, the number of young people not in education, employment or training is highest in the north of England, at 19%, compared to an average of 16% in England. Given the trends in youth unemployment, that could see more people moving into the unemployed category rather than out of it.
Secondly, the report found that the amount of time people are spending on jobseeker’s allowance is increasing. Almost half—47%—of those claiming JSA in the north have been doing so for more than six months. The average time people have been claiming benefits is more than double what it was during the previous 2008-09 recession. Here I am trying to tease out an understanding of whether the assumptions underlying the costings of the impact on local authorities, and the extent to which they have been future-proofed, have taken account of north-south divides and differences, and what assumptions have been made about changing patterns.
Finally—I will come back to this when we debate later amendments—the Minister will be aware that 85% of council tax benefit at the moment goes to the lower-income half of households, and that almost half goes to the lowest-income quintile. Inevitably, any cuts are bound to be borne by the poorest households. Given the combination of poor households and poor areas being hit, is the Minister not concerned about what will happen to the economies of those areas? I know from talking to at least one northern authority that such a significant proportion of its households are in receipt of a variety of means-tested benefits that cuts in the Welfare Reform Bill alone will, it is anticipated, produce a reduction of demand in the economy as a whole. Have the Government modelled any of those impacts on a regional basis?
Lord Shipley
My Lords, first, I do not share the concern of the noble Baroness, Lady Hollis, about the capabilities of local government and councillors. Councillors are perfectly able to produce fair and equitable council tax support schemes. However, one problem we have is that timescales are driving the publication of draft schemes very quickly. Inevitably, draft schemes that go out to consultation will be different. After all, lots of things that local government does are different. Council tax rates are different. It would not be surprising, given differences between local authority areas that there may be differences in council tax support schemes. However, timescales are likely to prove too tight. I think that there will be a problem over equalities impact assessments and the timescales that they require. I would prefer a start date of April 2014, but we will come to that in a moment.
The real issues remain financial support, the level of financial support going into those schemes, and the new burdens doctrine. Amendment 73A matters quite profoundly because we are having a debate about the 10% cut and how it should be applied, and I absolutely subscribe to the view that it cannot simply be loaded on to the working poor. I would prefer it, if it is to be applied, to be spread across council tax payers generally.
Secondly, it has become clear to me that 10% is at the low end of what the reality will be. It will be significantly higher than that and, for the reasons that my noble friend Lord Tope outlined, demand is likely to rise and the change of title from “council tax benefit” to “council tax support” is likely to produce more people applying for it. Economic conditions remain difficult and will continue being difficult for the next two to three years; therefore, more people are likely to be applying.
Thirdly, the fixed-grant system that the Government are likely to introduce seems dubious in terms of who will actually decide on which data the government estimates are based. I fear that the estimates of demand over the first two years of the scheme will prove to be understatement. Therefore, the Government should manage the risk. In the context of 28% front-loaded cuts in the current and previous financial years, which have had a great impact on councils’ ability to meet all their obligations, there is a major principle at stake. If we have a new burdens doctrine, it ought to be applied; otherwise there is no point in the Government having a new burdens doctrine. Given the sum of money involved—£500 million, 10% of the £5 billion annual commitment to council tax benefit—this is an acid test of whether the new burdens doctrine has a future.
I sincerely hope that the Government will look again at this whole issue. I have subscribed, in my role as vice president of the Local Government Association, to the view that if you are going to localise—we are trying to devolve and localise—it is entirely appropriate for local government to take responsibility for this. They are the ones who set council tax. Therefore, they are the ones who are capable and should be responsible for setting the level of council tax support, but they have to be able to do it in the context of knowing that that cash will be available and the risk will be managed against rising demand by a Government that is supportive of them.
Earl Attlee
No, my Lords, I am not saying that. People should claim the benefits to which they are entitled. I am saying that the system is designed to encourage local authorities to go for local growth in order to reduce the claimant count. I fully accept the noble Lord’s point that people should claim the benefits to which they are entitled. The local authority may—
Baroness Sherlock
I just want to check that I have not misunderstood the Minister. Since council tax benefit is payable to people in work as well as people not in work, economic growth could still lead to people in work claiming benefits. Is he saying that an objective of localisation is to reduce the number of people who claim the successor to council tax benefit?
Earl Attlee
Not quite, my Lords. One of the objectives is to encourage better quality work, with better quality employers in higher technology businesses using a more skilled and higher-paid workforce, to still reduce the cost of the council tax benefit.
Baroness Sherlock
This scheme was designed to encourage the creation of high-tech work? Could the Minister explain that? I am sorry but maybe I have not understood the connection between those two things.
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.
Local Government Finance Bill
Baroness Sherlock Excerpts(12 years ago)
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Baroness Hanham
My Lords, the answer to the noble Lord’s point is that it will be part of the consultation in the summer. Consideration is still being given to the position on reliefs and the consultation will produce an answer. I hope that by Report we will know for certain what the answer is. But I take the noble Lord point’s completely about something that you have to do and how that will be shared. Discretionary seems to be more something that is within the ability of the council to decide. But I do not want to dig myself any deeper into a hole here. I will leave it and write to the noble Lord. I understand that the noble Lord is happy about due diligence.
Baroness Sherlock
When the Minister is writing, will she help us to understand not just the impact on local authorities but the consequences for those bodies to which they might have contracted? Also, what impact do the Minister and the Government think that that might have on localism and the big society, for example?
Baroness Hanham
That is a little wider than the amendment, but we will look at Hansard and see.