Northern Ireland Act 1998 (Devolution of Policing and Justice Functions) Order 2012

Earl Attlee Excerpts

Wednesday 25th July 2012 Lords Chamber

Moved By

[Earl Attlee]

That the draft order laid before the House on 11 June be approved.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 18 July.

Motion agreed.

Aviation: Policy

Earl Attlee Excerpts

Monday 23rd July 2012 Lords Chamber

[Lord Spicer]

To ask Her Majesty’s Government when they will publish their aviation policy.

[Earl Attlee]

My Lords, the Department for Transport published on 12 July a draft aviation policy framework setting out the importance of aviation to the UK economy and the Government’s proposals on how aviation can grow and deliver for the economy while meeting its noise, climate change and habitat obligations. The Government aim to adopt the final aviation policy framework next spring. Separately, a call for evidence on maintaining the UK’s international aviation connectivity will be published later this year.

[Lord Spicer]

Does my noble friend agree that aviation in general and Heathrow in particular are vital to the nation’s economic prosperity and growth, and that this is particularly apparent in the week in which we begin to host the Olympic Games? If he does, and if the Government do, why the delay in the consultation process about airports?

[Earl Attlee]

My Lords, I agree that aviation is vital to the economy of the United Kingdom. My noble friend asked me about the delay. It is important that we get this policy right and that it can be sustained even with a change in government.

[Lord Clinton-Davis]

Aviation companies and trade unions argue that the aviation policy devised by the Government is based on indecision not decision. Would it not be hugely advantageous for the UK if we had a third runway at Heathrow, embarked on large-scale road traffic amelioration there and, at the same time, sought to develop a south-eastern airport? Would that not be an advantage?

[Earl Attlee]

My Lords, the noble Lord suggests that there would be an advantage in having a third runway. Of course there would be an advantage in having a third runway, which is why the previous Government supported one. However, we also need to bear in mind the interests of the more than 200,000 people who live in west London underneath the flight path.

[Lord Trefgarne]

My Lords, can the Minister confirm that business aviation and general aviation will continue to play an important part in the Government’s aeronautical thinking?

[Earl Attlee]

My noble friend makes an important point. At a meeting with my noble friend Lord Rotherwick, I agreed to take forward to my right honourable friend Theresa Villiers the importance of maintaining general aviation airfields.

[Lord Soley]

I can tell the Minister, as someone who lived under the flight path in west London for something like 30 years and represented the area, that in fact opinion there is much more evenly divided than he says. Why? Because Heathrow provides enormous levels of employment; some 170,000 jobs depend on it remaining a premier hub airport. For the sake of the economy and of jobs, will the Government finally make their mind up?

[Earl Attlee]

My Lords, the noble Lord is quite right about the number of jobs involved at Heathrow Airport. It is, of course, a major consideration that in moving one’s hub airport somewhere else you would have to move 176,000 employees—over time, I agree.

[Lord Wigley]

My Lords, will the Minister confirm that a central part of aviation policy is the question of pilot safety? Will he recall the representations made to him by my noble friend Lady Mar about the quality of air in cockpits? Will he confirm that since he refused to accept those arguments fairly recently, his department has received representations on behalf of pilots who are extremely concerned about this matter?

[Earl Attlee]

My Lords, I can confirm that I have received numerous e-mails on this particular subject, and I will be very surprised indeed if the noble Countess does not pursue the matter vigorously on Report. I am looking forward to the debate.

[Lord Davies of Oldham]

My Lords, is not the Government’s policy since coming to office one just of dither and delay? They have taken one decision—to abandon the third runway proposal at Heathrow—but have taken no other constructive position at all. Is it not about time that the Government stopped looking for the long grass, or the long Recess, in which to run for cover on this issue, and for the Minister to say that by next spring—three years after this Government came to power—they might have some proposals to put before the nation? It is quite scandalous.

[Earl Attlee]

My Lords, it is not quite right to say that we have done nothing about Heathrow. First, we introduced the operational freedoms that will make it easier for Heathrow to recover from any disruption during the day without having any more unscheduled night flights. In addition, we have just announced the western rail access to Heathrow, so the argument that we have done nothing is not a good one.

[Lord Bradshaw]

My Lords, will the noble Earl tell his right honourable friend that there are a lot of capacity issues to discuss? There is a lot of capacity at Stansted, Birmingham, Gatwick, Manchester and Luton that is underused. Will she also make sure that, as well as taking the environment and regional growth outside London into account, what the passenger wants is also taken fully into account?

[Earl Attlee]

My Lords, I am very grateful to my noble friend for putting the other side of the argument to the House. My right honourable friend the Secretary of State is well seized of these points.

[Lord Brooke of Alverthorpe]

My Lords, the Government have delayed this review and the Minister says that that is to “get it right”. Would he be kind enough to tell the House just what they are doing to get it right?

[Earl Attlee]

My Lords, we have published our aviation policy framework for consultation and we will release the call for evidence later this year.

[Baroness McIntosh of Hudnall]

My Lords, since the noble Lord, Lord Bradshaw, has raised the issue of spare capacity at airports outside Heathrow, would the Minister not agree that Stansted, for example, has had its capacity increased very considerably and that that capacity has not been taken up? Would he not further agree, therefore, that the airlines are very unlikely to have any particular wish to make Stansted a seriously larger airport than it is now?

--- Later in debate ---

[Earl Attlee]

The noble Baroness makes an interesting point, but I think what concerns people such as the noble Lord, Lord Soley, is having one very effective hub airport with connectivity right around the world. We issued our call for evidence on hub connectivity because it is such an important issue.

Local Government Finance Bill

Earl Attlee Excerpts

Thursday 19th July 2012 Grand Committee

Clause 12, as amended, agreed.

[Earl Attlee]

My Lords, it may be a convenient moment to adjourn the Committee until Tuesday at 3.30 pm.

Committee adjourned at 6.03 pm.

Northern Ireland Act 1998 (Devolution of Policing and Justice Functions) Order 2012

Earl Attlee Excerpts

Wednesday 18th July 2012 Grand Committee

Moved By

[Earl Attlee]

That the Grand Committee do report to the House that it has considered the Northern Ireland Act 1998 (Devolution of Policing and Justice Functions) Order 2012.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments

[Earl Attlee]

My Lords, the devolution of policing and justice in 2010 was a major step forward on the path towards the political stability that Northern Ireland now enjoys. Noble Lords will be aware that the prospect of devolving policing and justice was raised in the Belfast agreement of 1998, the joint declaration of 2003 and the St Andrews agreement of 2006. However, it was only in 2010, through agreement reached at Hillsborough Castle, that a clear timetable was established for the devolution of policing and justice functions to the Northern Ireland Assembly, which then formally took place on 12 April 2010.

It was necessary as part of the devolution process to make a number of consequential changes to the statute book in order to transfer a wide range of statutory functions conferred on government Ministers to the appropriate authorities in the devolved Administration. The Northern Ireland Act 1998 (Devolution of Policing and Justice Functions) Order 2010 made the vast majority of these transfers of functions. However, due to the timing of the 2010 order, there were provisions of the same parliamentary Session that did not take into account the transfer of policing and justice functions and these now require amendment. In addition, a small number of provisions were also either missed or now require technical correction.

The main purpose of the draft order before us today is therefore to make the necessary amendments to the statute book to complete the transfer of policing and justice functions to the devolved Administration. Most amendments are achieved through straightforward substitutions of references such as “the Department of Justice” for “the Secretary of State”. Where the function being transferred involves both policing and justice matters and excepted matters, such as national security or immigration, provision has been made to divide these functions between the Secretary of State and the Northern Ireland Department of Justice to make clear their respective roles and responsibilities. This follows the approach taken to similar provisions in the 2010 order.

I can confirm that the Department of Justice in Northern Ireland has been fully consulted during the preparation of this draft order and fully supports it. The same is true of Whitehall departments that may be affected. I hope that noble Lords will also support the making of this draft order. It may, in effect, make relatively minor, common-sense amendments to the statute book but this is in pursuit of the much more significant aim of completing the devolution of policing and justice to the Northern Ireland Executive, which itself has led to a level of political stability in Northern Ireland not seen in a generation. I therefore commend the order to the Committee.

[Lord McAvoy]

My Lords, I immediately declare that the Official Opposition are in support of this move. It is worth spending a minute or so on how we got here. As the Minister rightly said, the devolution of policing and justice was a huge achievement after long and painstaking negotiations. I was long enough in the other place to remember the commendable efforts of the Government led by Sir John Major in initiating this process. When Labour came to power, we knew how sensitive and complicated all these issues were. We worked with all parties and the Irish Government to ensure that the transfer of power and the creation of a new Department of Justice in Northern Ireland were stable and sustainable.

David Ford is doing a very good job in difficult circumstances. He has the full support of Vernon Coaker, shadow Secretary of State for Northern Ireland, in carrying out his challenging and important job. He and the Northern Ireland Executive have done good work in continuing progress in building peace. However, the violence of last week, most notably in Belfast, where 20 police officers were injured, shows that there is much to be done. Parading and areas of dispute around parades have a knock-on effect on community relations and the terrorist threat. Heightened tensions mean heightened security and we should all be aware of the desire of dissident republicans to wreck the peace process. I pay tribute to the Police Service of Northern Ireland for the courage and determination they show every day to protect and serve everyone in Northern Ireland.

Significant responsibilities on national security still lie with the Northern Ireland Office. The boundaries are sometimes blurred between what is national security and what is the responsibility of the devolved Administration and the PSNI. That is inevitable and part of the process. We all know that there are no cut-and-dried, easy solutions in Northern Ireland. In the attempt to take everyone with us, there will be blurred edges.

This order is an attempt to do something about that, and my contribution today will be mainly to ask some questions. I am not quite sure of one or two things. I apologise for that. I am new to this job and to studying the legislation affecting Northern Ireland. I hope to learn quickly enough. Article 7 says:

“(2) In paragraph (1) for ‘Secretary of State’ substitute ‘Department of Justice’.

(3) In paragraph (2) for ‘Secretary of State’ substitute ‘appropriate authority’”.

Is there a reason why these cannot both be allocated to the Department of Justice? In paragraph (4), can the areas of authority be defined a bit better between the Department of Justice and the Secretary of State? Can this section be explained a bit better? I do not quite grasp why the responsibility lies where it does.

In Article 14, there seems to be some dubiety about the status of the National Policing Improvement Agency. I am informed by our Home Office spokesman that the agency is being abolished as part of the Crime and Courts Bill. If it is being abolished, why is it mentioned here?

Apart from these questions, the Official Opposition fully support this move. It makes further progress in devolution in Northern Ireland and we are fully supportive of the Government’s actions.

--- Later in debate ---

[Lord Bew]

My Lords, I, too, support the order and I thank the noble Earl, Lord Attlee, for introducing it. I also thank the officials in the Northern Ireland Office for producing helpful explanations of some of the more technical parts of order. That is necessitated not simply by the fact there was legislation going through this place in 2010 but that other prior pieces of legislation such as the Policing and Crime Act 2009 had to be taken into account. So the logic behind the legislation is impeccable and not a problem at all.

I want to make just a brief remark about the general issue of the devolution of policing and justice. The noble Lord, Lord Alderdice, has already alluded to the fact that those of us who tried to make the argument for the Good Friday agreement in 1998 found that at the time that that was one of the most dangerous and weakest parts of the argument. I can remember leaving a television studio, having supported the Good Friday agreement, and receiving a call from the bowels of the Northern Ireland Office from a well-known senior figure therein congratulating me on the fact that I had actually avoided all discussion of the issue and had pushed it to one side. Although allowed for in theory in the 1998 Act, it was considered to be something for the far distant future—and I mean a future beyond the time we are now living in and acting upon. So it is quite remarkable that we have made this progress and that the parties of Northern Ireland have reached so much agreement about it. The logic of that progress has to be, as the noble Lord, Lord Alderdice, said, that we consider the role of the Parades Commission and the devolution of those powers to the First and Deputy First Ministers. I support his request to the Minister that at least some thinking should begin on this matter. The question of timing is inevitably a difficult one for the reasons explained by the noble Lord, Lord Empey.

I want to add one other point. We are extraordinarily lucky in the person of the Minister responsible for justice in Northern Ireland. He was, as the noble Lord, Lord Alderdice, knows, the leader of the Alliance Party, which he led with such distinction for so long. He has his critics, of course, but in Northern Irish terms he is a very consensual figure—as consensual as you are going to get. The political circumstances that led to his appointment will not necessarily subsist for ever, and that is understating the case. In the context of all we have said about the almost magical nature of the improvement in Northern Ireland, we have to be aware that there are still difficulties, one of which is the possible personality of the next Minister for Justice. However, that is a mere caveat, and I agree that in general things have gone remarkably well.

[Earl Attlee]

My Lords, I am grateful for the support of the noble Lord, Lord McAvoy, for the order. He said that he is new to the Northern Ireland brief. In 1998 I was the Opposition Spokesman for Northern Ireland, and I have to say that I enjoyed it, particularly when visiting the Province. I am also grateful to all noble Lords who have contributed to the debate.

The noble Lord, Lord McAvoy, asked me about Article 7: why should not all responsibility be transferred to the Department of Justice and why is there a split of responsibility for the policing of the airport? The policing of an airport involves both excepted functions such as national security and immigration, and devolved functions such as policing. This arrangement ensures that responsibility for key exempted considerations such as national security arrangements remain the responsibility of the Secretary of State while allowing the Northern Ireland Department of Justice to take full responsibility for those aspects that relate to the devolved functions. He also asked me about the interaction of the Crime and Courts Bill: whether it seeks to replace the National Policing Improvement Agency, why is that not referred to in the order. The Crime and Courts Bill is still passing through this House. We will ensure that it makes the necessary consequential amendments, but to legislate now would be the wrong thing to do.

The noble Lord, Lord Alderdice, talked about parades. I agree entirely with his observations about the difficult issues around the Parades Commission. The Government regret that community tensions spilt over into violence in the evening in the aftermath of the 12 July parade in the Ardoyne. The Government totally condemn all violence and we want to avoid a repeat of the violent scenes of riots in Belfast that have been beamed across the world each summer. We need to ensure that the marching season passes off peacefully. Violence around parades affects those living in the areas and does nothing to promote the good name of Northern Ireland. It is in everyone’s interests to find a locally agreed solution to devolving the regulation of parades. It was disappointing that the Northern Ireland Executive was unable to reach an agreement in 2010. I hope that it is something they can look at again and find a compromise solution to this problem that blights Northern Ireland every year.

It is not for the Government, however, to comment on the independent decisions of the commission. I am sure that the Committee fully accepts that the Parades Commission is an independent body that has to make arduous decisions about contentious parades. It has to take many considerations and all factors into account in an attempt to reach a compromise. These are difficult, demanding and sometimes nearly impossible decisions to make, and we stand by its impartial judgment, particularly given that there is no other mechanism to adjudicate on parades in Northern Ireland.

The noble Lord, Lord Empey, also talked about the Parades Commission. All that I can add is that I sincerely hope that agreement can be reached at some point. I agree with him that good news is coming from Northern Ireland. We have come a long way since I was previously an opposition spokesman in the 1990s. The noble Lord asked whether all of Article 9 had been excepted and what the position was in Scotland. The article partly devolves certain functions, such as bail and regulation of the Immigration Services Commissioner, to the Northern Ireland Department of Justice. This brings the legislation into equivalence with Scotland. He asked: why are we altering an Act that deals with excepted issues? Certain aspects of immigration, such as bail, are fully or partly justice issues, and should therefore be devolved. This arrangement again brings the legislation as it relates to Northern Ireland into equivalence with that obtaining in Scotland.

The noble Lord, Lord Kilclooney, talked about the support of the PSNI to the Olympics. This arrangement was agreed some time ago and is not a response to the failure of security firm G4S to recruit enough staff for the Games. However, I should also like to take this opportunity to pay tribute to the PSNI, and the RUC before it, for their assistance on international policing operations that I have seen and have very much appreciated. I should also like to give thanks to the work of the PSNI.

The noble Lord also got on to somewhat wider issues, which he is entitled to do, about discrimination by the Department of Justice in terms of consultation and advertising. This is a matter for the devolved Administration, which I am sure he will recognise. His comments are on record and can be seen by the relevant Ministers. If I have missed out anything, I will write to noble Lords.

Motion agreed.

Railways: Electrification

Earl Attlee Excerpts

Wednesday 18th July 2012 Lords Chamber

[Baroness Seccombe]

To ask Her Majesty’s Government what will be the economic and environmental benefits of the electrification of English and Welsh railways.

[Earl Attlee]

My Lords, electrification is expected to lead to a number of benefits, including higher acceleration and higher top speeds than diesel stock, greater capacity, and lower costs of leasing, maintenance and operation. These savings can lead to reductions in the long-term cost of the rail industry. Electric trains are more environmentally friendly than diesel trains and electrification should make rail freight more competitive with road, reducing environmental damage and congestion.

[Baroness Seccombe]

My Lords, I thank my noble friend for that Answer. I welcome the Statement on the electrification of the east Midlands and other lines most enthusiastically along with the upgrades to mainline stations and extensions to platforms. As the Prime Minister said,

“this investment will mean faster journeys, more seats … greater … links and a truly world class rail network”.

Does my noble friend agree with me that the specification for any future project should ensure that it is for the benefit of the many and not the few?

[Earl Attlee]

My Lords, my noble friend is quite ingenious. I have a feeling that she really wants to talk about HS2. I absolutely agree with her that future projects should be for the benefit of the many and not the few. However, HS2 is not predicated on a very high-cost service for senior businessmen paid for by everyone—a sort of Concorde on tracks. HS2 passenger demand forecasting is based on the current fare structure. It is also essential to understand that the west coast main line will run out of capacity if we do nothing. It is only a matter of time.

[Lord Wigley]

My Lords, will the noble Earl accept my very great appreciation of the electrification of the line through to Swansea and the south Wales valley lines? However, will he accept, in the context of the reply that he has just given, that the line from Crewe to Chester and Holyhead also has very heavy needs, particularly the need to offload freight going through to Ireland? Can he give an assurance that the recent announcement does not preclude progress on that line also?

[Earl Attlee]

My Lords, the CP5 is not the end of the electrification process. We have announced what we will do in terms of electrification for CP5, but the process will go on.

[Lord Bradshaw]

The announcement this week means that more than 800 miles of electrification are now likely. That is good news for consultants, good news for planners and good news for those seeking apprenticeships. Would the Minister care to speculate on what would have been done by the party opposite?

[Earl Attlee]

My Lords, I would hope that the party opposite, if in power, would have carried on with the process of giving us a railway system that is fit for the people of the United Kingdom

[Lord Davies of Oldham]

My Lords, the “party opposite”, of course, produced the plans and had commitments for half the money which is to be expended on these proposals by this Government, expenditure which did not take place immediately after the election because the Government themselves induced the delay. Of course, we welcome the Government’s intention to make progress on electrification. Although the noble Earl referred in glowing terms to the HS2 project, we also note that there is no commitment in these proposals to the expenditure for HS2 and we wonder whether in fact the Government are running a little scared of their Back-Benchers, as they have been recently in the other House.

[Earl Attlee]

My Lords, I can assure noble Lords that the Government are not running scared of their Back-Benchers in respect of HS2. I would also remind the noble Lord that we are currently in CP4, which was devised by the previous Administration. The announcement is for CP5.

[Lord Anderson of Swansea]

My Lords, in the spirit of good will just before the Recess, may I say that the Government deserve full-hearted congratulations on the decision to extend electrification to Swansea and to the valleys? Does the Minister recognise that one of the major problems in Wales is the widening gap between the relative prosperity of south-east Wales and that of west Wales and the valleys? This decision will go at least some way to contribute to a non-extension of that widening gap.

--- Later in debate ---

[Earl Attlee]

My Lords, I agree with the noble Lord. That is exactly why we have done it. I would also like to pay tribute to the efforts of the noble Lord, Lord Touhig, who skilfully put pressure on the Government in respect of the Ebbw Vale electrification project.

[Lord Shutt of Greetland]

My Lords, I commend the Government on pursuing these electrification schemes but it is quite clear that there are plenty of further candidates, whether they be Holyhead, Plymouth, Hull, or indeed the Calder Valley. Is the Minister saying that he now sees a rolling programme going forward for electrification? That is what we want to see. We have had bust, and it seems that we have got a bit of boom, but is it going to be rolling forward?

[Earl Attlee]

My Lords, we want to avoid feast and famine for the civil engineering industry. We are saying now what we will do for CP5. I have already indicated to the noble Lord, Lord Wigley, that we will continue the process in CP6, but of course I cannot at this point make any suggestion as to what will happen in CP6.

Olympic Games 2012: Traffic

Earl Attlee Excerpts

Tuesday 17th July 2012 Lords Chamber

[Earl Attlee]

My Lords, I think the noble Lord got slightly confused there. The Olympic route network—the ORN—has been established to ensure the Games family get to events on time. Games lanes will operate flexibly and be open to all traffic when possible. Motorists should avoid central London and, like everyone, plan their journeys at the Get Ahead of the Games website. We have comprehensive traffic management plans in place and will be focused on getting people to their events on time and keeping London moving.

[Lord Lea of Crondall]

I thank the Minister for that Answer, which means that there is no contingency plan. There is no plan B. I will give an example of a major artery, and I declare an interest shared with many thousands of people in central London: I live on Southampton Row, a continuation of Kingsway, where there is one bus lane alongside one Olympic lane. In other words, it is a no-go area. The Evening Standard reported last Friday that Transport for London said that everyone could use the bus lane in those circumstances, but local officials say that is not the case. Is there not likely to be great confusion, at least after 25 July, leading to gridlock—which is of great concern for shops, buses, taxis and everyone in that area, and in similar areas around London—with no contingency plan in place?

[Earl Attlee]

My Lords, the noble Lord suggested that there is no contingency plan. There are very detailed contingency plans. For instance, Transport for London has designated alternative Olympic route network roads in case the primary Olympic route network becomes inoperative. As regards the problem that the noble Lord describes, I suggest that he consults the Get Ahead of the Games website. My officials tell me that I have to say “Get Ahead of the Games” in every single supplementary question I answer.

[Lord Addington]

My Lords, would the Minister agree that complaining about having some traffic disruption during the world’s biggest event is a little like someone who has sat on a fire complaining about their backside burning?

[Earl Attlee]

My noble friend is absolutely right. The world is coming to London in 2012. Our transport system faces unprecedented challenges, and the Olympic route network is essential to ensuring that the transport system works at Games time and to making the Games a great success, as I am sure they will be.

[Baroness Butler-Sloss]

My Lords, has the Minister tried to work the Get Ahead of the Games website? I am totally in favour of the Olympics and of seeing the signs on the roads. However, I wanted to find out whether I could come into London on a particular route. If the Minister tried the website, he would find it very difficult to find the answer.

[Earl Attlee]

My Lords, when I last answered a Question about the Olympic travel arrangements, I used the Get Ahead of the Games website, and it worked. Sometimes these websites take a little bit of getting used to. I urge noble Lords to persist with it. It is a very good tool, particularly to see which Tube stations will be very heavily congested, and at which times.

[Lord Geddes]

Could my noble friend confirm, or otherwise, that while the House is sitting, Members of the House may use the Olympic lanes when coming to and from the House?

[Earl Attlee]

My Lords, I suggest that that is an extremely unwise course of action. The policing of the Olympic lanes—the Games lanes—is similar to bus lanes. If the noble Lord thinks he can use a bus lane with impunity then he can try the Olympic lanes, but it is not something that I would recommend.

[Lord Davies of Oldham]

I find myself agreeing with the Minister that, of course, London has to offer a welcome to visitors from all over the world to these Games. The lanes are essential to the smooth running of the Games. Of course, there is already sufficient confusion and long tailbacks have been established on some routes and the lanes are not even in action yet. We must make every effort to make things clear to the public. Would the Minister strengthen the point that he made a moment ago that no privileged access to the ZiL lanes, apart from for Olympic officials, will be permitted and certainly not for Ministers of the Crown?

[Earl Attlee]

My Lords, I can assure the House that Ministers of the Crown do not have any privileges in regard to the use of the Games lanes, with the exception of when advised to use them by the security services, and that will apply to very few Ministers indeed.

[Lord Hughes of Woodside]

My Lords, how can the House have confidence in all the contingency plans here and there when, if we are to believe today’s press, a coach driver taking an Olympic team to the stadium could not find his way and took four hours to get there? He could not read a sat-nav and apparently was directed to the stadium only when someone managed to find it on their mobile phone.

[Earl Attlee]

My Lords, I expect all noble Lords have had a sat-nav moment. I certainly have in my driving career. LOCOG knows where all the Olympic coaches operated by it are on the Olympic network and, if something goes wrong, LOCOG will know. I do not know the full details about the coach to which the noble Lord refers, but I can assure noble Lords that LOCOG has a good system for managing the coaches.

Local Government Finance Bill

Earl Attlee Excerpts

Monday 16th July 2012 Grand Committee

[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.

[Earl Attlee]

My Lords, we have had an interesting discussion on the timing of the implementation of these reforms. As the Committee knows, this reform is about delivering real decentralisation and contributing to deficit reduction—a contribution that must start from 2013.

The funding for the scheme is also a key component of the new business rates retention system. We are not reinventing a whole new system but providing flexibility and not necessarily complexity for councils to deliver a saving and to tailor schemes to their own circumstances with minimal prescription.

In answer to many Members of the Committee, we are building on our statement of intent and we are today publishing two key sets of regulations, particularly about prescribed requirements. Those regulations are coming out today in draft, which will allow councils to press ahead with the implementation without looking over their shoulders to central government prescription. That is why I am confident in saying that councils will be ready to implement these reforms for April 2013.

We need to do everything that we can to allay any concerns. It is interesting to note that experts in local government on this side of the Committee seem to believe that these changes can be implemented, including with the necessary consultation. The noble Baroness, Lady Hollis, told the Committee that district councils cannot meet the timescale because they need to consult twice.

[Baroness Hollis of Heigham]

I am sure that other councils may have had their software packages back in May, but from the county about which I have a little knowledge, I understand that the majority of councils use the same software supplier and it did not come through until nearly the end of June. That means that the proper consultation could not be gone through until councils had already decided on the scheme. That is the dilemma. Both factors were operating: the late supply of software through no fault of their own, and the fact that as a billing authority and not a unitary authority they in effect have two rounds of consultation. Again, that is perfectly proper, but you have a pincer movement on the timetable.

[Earl Attlee]

My Lords, I will carry on for a moment.

Just to be clear, all billing authorities required to bring forward a scheme must consult with their precepting authorities and with the public. That is as much the case for London boroughs or unitary councils as for district councils. Taken together, Amendments 72, 78, 79, 85 and 88A would delay the start for localised council tax reduction schemes by a year, pushing back introduction from 2013 to 2014. I am sure that noble Lords only intended to test the Government’s policy and, like my noble friend Lord Tope, welcome the debate.

Let us be absolutely clear. The saving scored in the spending review has to be found, as pointed out by my noble friends Lord Jenkin of Roding and Lord Tope. This is a key element of our deficit reduction plan that we must meet. Delaying the implementation of localised council tax reduction schemes would come with a cost.

The noble Lord, Lord McKenzie, skilfully queried what we would use these cost savings for. He talked about refuse bins. However, he will be aware that my right honourable friend the Secretary of State for Transport has announced a major programme of investment in our railway system. We can either spend money on council tax benefit or take a little cut on that and a little cut elsewhere, then put it all together in order to spend money on developing our infrastructure and promoting growth in the United Kingdom.

[Lord Beecham]

Will the noble Earl remind me of how much is being devoted to deferring the increase in fuel duty?

[Earl Attlee]

My Lords, that is always the danger of straying from local government affairs. My point is that the 10% cut in council tax benefit is painful, and I do not deny it, but we have very good projects to spend the money on.

Localising support for council tax is an important localist reform that gives local authorities a greater stake in the economic future of their local area and stronger incentives to get people back into work. It helps to make local authorities fully accountable for decisions over council tax levels and strengthens the incentives to drive down fraud and error. Localisation also has the advantage of giving local authorities real control over how a reduction in funding is managed. It will enable local authorities to offer council tax reductions that match local circumstances and local funding while supporting local policies. Local authorities will take different approaches to managing the reduction, but that is localism in action. Local authorities know their services, their taxpayers and their vulnerable groups, and are best placed to take decisions that affect them.

Delaying localisation does not mean that there will be no saving. There will still be more than £400 million savings to find in 2013-14. Funding for council tax support makes up a significant amount of the local share in the retained business rates system. Not giving local authorities control over this funding from the outset will significantly reduce the funding in the local share and so reduce the incentive that retained business rates are intended to deliver. I know that many noble Lords are supportive of the proposals to enable local authorities to keep a share of the proceeds of growth and would be keen to see local authorities benefit even more from growth. Not localising council tax support would have the opposite effect.

Concerns have been expressed about local authorities’ readiness to implement the schemes. I should like to remind the Committee of the number of significant steps taken by the Government to ensure that local authorities are well placed to press ahead with the development of their local schemes. We have paid £30 million of initial funding to help meet the costs of planning and analysing draft schemes for both billing and precepting authorities. We have provided a free online calculator to help local authorities analyse the potential impacts of their proposed schemes. We have published statements of intent, setting out the details of what will be covered in secondary legislation. We have issued a consultation setting out provisional funding allocations for all authorities. We have published guidance to ensure that local authorities understand their existing responsibilities in relation to vulnerable groups, which I know was a very important point for many noble Lords. We have published guidance setting out the general principles of supporting work incentives to help local authorities design support.

The Government have been clear that local authorities must ensure that they are on the front foot in preparing for this reform. There are things that councils should be doing to help in their preparations: understanding the circumstances of those in their area who currently claim support; ensuring that elected members are aware of the decisions they will need to take; engaging with precepting authorities, such as police and fire authorities; and preparing for consultation.

My noble friends Lord Jenkin and Lord Tope, the noble Lord, Lord McKenzie, and the noble Baroness, Lady Hollis, talked about IT issues. Noble Lords are right to suggest that local authorities and IT suppliers are already getting to grips with the problem. However, there is no need to go for a new and complex system in year one. I would add that if I was an IT supplier, I would point out initially how difficult and expensive it will be because it would be a sensible thing to do in order to try to encourage delay, but noble Lords know that we cannot delay.

The Bill was amended on Report in the other place to make clear that local authorities are able to consult precepting authorities, produce a draft scheme and consult more widely—all before the Bill receives Royal Assent. This was intended to support local authorities in their preparations. I am pleased to note that some local authorities, including that of my noble friend Lord Tope, have already embarked on a public consultation on their schemes.

The noble Lord, Lord McKenzie, talked about the complex matters that LAs will have to take into consideration. However, it seems that LAs are already getting stuck into their work and that it is not an insurmountable obstacle. Local authorities are best placed to take decisions about who should receive support with their council tax. Councils should have the flexibility to manage the reductions in central funding that are crucial to our plans for reducing the deficit. Local authorities should also have a strong incentive to grow their economy by bringing as much funding as possible into the retained business rates system as early as possible and giving them every reason to go for growth.

The noble Lord, Lord McKenzie, asked whether the universal credit details will be available. He is right to suggest that they will be available in the autumn. He also touched on the default scheme. LAs 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.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his response and all noble Lords who have spoken in this debate, particularly my noble friends who spoke in support of the proposition. The noble Lord, Lord Jenkin, and the noble Earl, Lord Lytton, passed on their concerns about the apprehensions that still exist out there over the readiness of all local authorities to deliver.

I shall comment first on the contribution of my noble friend Lady Lister, who made a crucial point. Designing systems of benefit can be complex. People’s lives are complex. How does the Minister deal with the point that my noble friend raised about the lack of child poverty strategies? The Government themselves have issued literature that says that councils should have regard to their obligations under the Child Poverty Act. However, here we are, knowing that there is a big gap in the system but the Government want local authorities to press ahead irrespective of that. That issue alone opens up the prospect of judicial review in a whole raft of cases.

No one is arguing—I certainly am not—that local councils are simply sitting back and ignoring all this. I accept that local councils have a strong track record of delivering in very difficult circumstances. However, in something such as this, surely the key point concerns the time capacity of all councils to be able to deliver. The consequence of councils not being able to deliver, particularly those that are less well resourced, is that they are more likely to have to fall back on the default system or to have it imposed on them. That is a double whammy for them: not only do they not have sufficient opportunity to look at local needs but they must pick up the 10% funding tab. That seems particularly iniquitous.

My noble friend Lord Beecham made the point that we are not dealing here with a national scheme. Local authorities that are dealing with the process will perhaps want to weigh one scheme against an adjoining scheme. My noble friend Lady Hollis talked about the issues of timing in two-tier authorities. My understanding is that in that first round of engagement, even though there does not have to be formal agreement between an upper tier and a district or authority, there is meant to be a meeting of minds and a process by which it can take place. That has to be a real process and it takes time. That is a different process from reaching a conclusion and then consulting widely among a range of people on its outcome. I suggest that that requires something much more substantial.

We recognise that deferral would mean that the so-called localisation of council tax could not deliver the saving that the Government are looking for in that way for 2013-14. I simply reiterate the point that the Government have been adept in other ways in finding funding for this or that project. Looking across the whole of government, I find it difficult to believe that something of an equivalent scale could not be delivered in this case.

I object to the characterisation of what is happening as a little cut here and a little cut there. We are talking about reductions in support for some of the poorest people in our communities. I would not characterise that as a little cut here and there.

The Minister said that nobody was required to reinvent a whole new system, but the reality is that we have a whole new system coming down the track called universal credit. We are not arguing here that council tax should be part of that, although the more one goes into the detail the more blindingly obvious becomes that argument. But that is not what this amendment is about—it is trying to probe the interaction and relationship between universal credit and any revised council tax benefit system. There are lots of points where it ought to interact, if we want to have issues around work incentives properly structured.

The IFS booklet—and what on earth would we do without the IFS?—has a complex chapter on this. But if the details of universal credit are not going to be known until the autumn, which the Minister has confirmed, how can local authorities properly take the detail into account in devising their schemes and consulting on their schemes? It is a practical impossibility. Quite apart from the time needed to understand and test what those interactions with that system should be, it seems entirely wrong to say that it is irrelevant to the timing when it is fundamental.

The Minister did not answer the point about what components of universal credit were at the moment incorporated in the default scheme that the Government are going to impose. We know one aspect of it—that universal credit will take account of income—but that is just one of the possible interactions. What are the consequential changes to the allowances, the housing component and a range of other things? Presumably, the Government have taken a view at least in respect of the default scheme. It would be helpful to know the detail.

The noble Lord, Lord Palmer, said that we should not put off until tomorrow what we could do today. I do not disagree with that, but we are not asking for time for local authorities to sit back and do nothing. We are asking for some local authorities that will struggle the most to get a meaningful system in place to have a bit more time to get it right. So we do not judge this by the well resourced and bigger councils that do not need to worry about the cost of it because they have plenty of second properties on their patch and can generate extra revenue from that. The smaller and more challenged resource-constrained are the ones that we particularly speak for in this amendment.

I see that we will not have a meeting of minds on this across the Room this afternoon—

[Earl Attlee]

My Lords, I am grateful for the opportunity to contribute again. The noble Baroness, Lady Lister, talked about the complexities of the scheme. Yes, I understand that it is a very complex area and there are lots of factors to be taken into consideration. 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.

The noble Baroness raised a very interesting point about the child poverty strategy. We are merely stating that there are existing strategies that councils need to consider in developing schemes. However, she raised a very interesting point about absent child poverty strategies. I will look into the issue and come back to her.

[Baroness Lister of Burtersett]

I thank the Minister for that. I was talking about the absence of a needs assessment in particular, because if you do not have a needs assessment you cannot assess the needs of the people whom your scheme is supposed to help. I should add that there is no such thing as a simple means-tested scheme.

[Earl Attlee]

I was just about to say that the absence of these schemes is no reason not to go forward with the scheme.

The noble Lord, Lord McKenzie, was concerned about universal credit details not being available until the autumn, but I am confident that local authorities will have all the information that they need from the statement of intent that we have already made and the regulations that are coming out in draft today.

[Lord Smith of Leigh]

My Lords, I have received an e-mail that tells me that a factory employing 100 people on my patch is going to be closed, so that will give me more problems with the council tax benefit. Local authorities have got into trouble over reductions in expenditure in local authorities through legal challenges. Usually, consultations have not taken account of the equal rights of all groups of people, and that is really important. We need to make sure that we do not fall into this trap and create a minefield. Could the Minister give us a timescale for when the department intends to produce the default scheme? I think that might be helpful.

[Earl Attlee]

We have published the default scheme now.

[Baroness Hollis of Heigham]

Today?

[Earl Attlee]

Today, yes. I remind noble Lords that, in respect of the difficulties of devising schemes, we have provided £30 million for local authorities.

[Lord McKenzie of Luton]

I pick up on the point about complexity. I do not think that local authorities are anxious to devise complex schemes; they are trying to devise relevant schemes, particularly those that are focused on poorer members of their communities. It is good news that the default scheme details have been issued today, but I struggle to see how they might be comprehensive if some key aspects of the universal credit are not going to be available until October. Surely how those two things sit together is pretty important for the development of schemes.

The Minister said that the regulations issued today would cover issues about the protected arrangements. Perhaps he could answer a specific question. How does the protection given for pensioners apply to households with two people entitled to state pension credit if one person has reached that age and the other is below that age?

[Earl Attlee]

On the point about universal credit, we are aware that the approach in the regulations needs further refinement, and we will continue to work with the DWP on the detailed approach to be able to set this out for LAs in the autumn. However, we believe that that provides a clear general indication of how we intend income to be taken into account in the default scheme, which is intended as a legal back-stop and not a model scheme. While LAs will be free to adopt or build on the approach taken in the default scheme regulations, they will not be compelled to do so if they bring forward their own scheme. I hope that that helps the noble Lord.

[Lord McKenzie of Luton]

I understand the point. If the details of the universal credit that we know can be taken account of only generally in relation to the default scheme, which may or may not help the authorities that want to rely on that, surely it is equally the case for any other tailored scheme that a local authority may wish to devise. How can it consult on something that inevitably is incomplete? We are trying to get an answer to that point. I am not sure that we shall succeed this afternoon. We have given this matter a good airing. I believe that the noble Lord, Lord Tope, said that we should make the best we can of this. Frankly, that is not good enough when we are devising detailed benefit schemes. We ought to have a higher standard than that. I think that is being denied to some local authorities by this timetable. For the time being, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Beecham]

My Lords, I suppose there are two aspects of effectiveness that councils will need to address. The first is the sheer practicability of the scheme and how it can be delivered. We have heard some of the problems that councils face, but assuming that the software goes all right and the mechanical side of the process is, as it were, addressed, there is another issue on which I would have thought it would be very desirable for local authorities to engage with their staff, and that is the assessment of the impact of different proposals within the schemes. The Government are rightly saying in the context of this Bill that councils will need to address the equalities issues and we have heard some of those raised this afternoon, but they will also need to weigh the interests of one group in the community against another group.

That is not a matter for officers in the finance department, with all due respect to them. It should involve the relevant officers and, of course, the elected members dealing with the different groups in the community. It might be social workers looking at the needs of the disabled or children’s services, or welfare rights officers or other officers dealing with different groups in the community—the Armed Forces covenant might apply, for example, to which the Government draw attention. There needs to be collaboration on the policy side rather than on the purely administrative side, as was implicit in my noble friend’s amendment.

Bearing that in mind, I wonder whether the Government have actually had any discussions beyond the consultation process in general with relevant bodies in the professions about the way in which these changes might impact on particular client groups and particularly on the equality duties to which they are at pains to draw the attention of local authorities. Both at the individual local authority level and at the national level where people are professionally engaged with these issues, I would have thought that a proper consultation is needed in order to assess the impact of the various possibilities that will be canvassed and allow the best possible informed decisions to be made at local level, given that the cost of any concession will be borne by other groups within the pool of people eligible for council tax relief. This is a transfer of a burden from the taxpayer as a whole to other council tax payers in the community, particularly those receiving the benefit. These are very complex matters that have to be taken into account, and they should be informed, as I said, on the basis of the experience and knowledge of those working with the groups particularly in that vulnerable category to which the Government draw attention.

[Earl Attlee]

My Lords, I thank the noble Baroness, Lady Donaghy, for her explanation of her amendment. I strongly agree with her sentiment but I cannot agree with the amendment, which would require local authorities to consult staff on the effectiveness of the scheme. Front-line staff involved in the administration of council tax and council tax benefit will have important insights into the delivery of these services and awareness of the people affected by them—a point made by the noble Lord, Lord Beecham. I would hope that all managers, as a matter of routine, would seek the views of staff when taking decisions about services. This is important for ensuring quality services and it is important for staff morale. This is as true for local authorities as it is for any other organisation. From my experience, if you do not consult effectively, you will not lead effectively and therefore you will not have desirable outcomes.

The noble Lord, Lord Beecham, asked whether the Government have consulted professional bodies. I am sure that there is a wide network of contacts between my department and the relevant professional bodies.

However, I do not think it appropriate to make this consultation a requirement on local authorities in relation to council tax reduction schemes. We have to move away from hand-holding and we have to trust that local authorities have the insight to consult their staff, as I am confident that they have. To impose this requirement would add another administrative burden on local authorities that would be nothing other than unnecessary red tape. I therefore hope that the noble Baroness will feel free to withdraw her amendment at the appropriate point.

[Baroness Donaghy]

I thank the Minister for his reply. Naturally I am disappointed that he is not willing to put the proposed amendment into the Bill. However, I welcome his very positive statement about consulting staff and I think that that will be seen as some reassurance. In that spirit, I agree to withdraw my amendment.

--- Later in debate ---

[Baroness Donaghy]

It bears repeating that council tax benefits are in-work benefits. Nearly 750,000 people are non-passported recipients of council tax benefit and in work. It is the most comprehensively claimed benefit, despite the fact that a large number of eligible older people do not claim. People who do claim are in low-paid and often part-time work.

It is government policy to rationalise work incentives, which is why universal credit is being introduced. I realise that there is a genuine debate to be had about whether council tax support should be an integrated part of universal credit or whether it should be localised, as the Government are proposing, but it must be accepted that allowing council tax support to vary throughout the country and introducing it before universal credit undermines any simplification and will make it impossible to judge how well work will pay.

The DCLG advice to councils is:

“The system”—

that is council tax support—

“should not be too complex as to create a disincentive to work”.

The noble Earl said earlier that the Government had given the councils minimum prescription, but that is one of them: work incentives should not be undermined. That statement is the only reference to work incentives. Like TIF 1 and TIF 2, which we discussed the other day, this important topic is not on the face of the Bill. The purpose of my amendment is to ensure that it is central to any council tax support system, so that one government department does not undermine the intentions of the whole Government.

Bearing in mind what the noble Lord, Lord Tope, said about not making Second Reading speeches, I believe that there are at least seven disincentives to work contained in the many council options papers that I have seen. Working people need more transparency and more certainty and I believe that by pointing out these seven work disincentives I am offering an opportunity for the Government to avoid them.

The first is the 10% cut, which noble Lords have already spent considerable time on, so I will be brief. Let us take for example Rossendale, with 44% of pensioners and 56% of adults of working age. A 10% cut will lead to a 20% cut in council tax benefit. Once vulnerable groups are defined and exempted, the cut will be “in excess of 20%”.

Being presented with a council tax bill or an unexpected increase in that bill could be the pivotal point for some working families in deciding that work does not pay. Where are the greatest numbers of working people who will be affected? In County Durham, there are 5,810 working recipients of council tax benefit, more than 8,000 in Manchester, more than 6,000 in Liverpool and 3,500 in Wigan and Salford each. Those are some of the poorest areas in the country. Yet South Bucks has only 420 and the City of London 40. That is a redistribution of wealth which is shameful and which will have consequences for employment and the administration of justice when we see the courts being clogged up chasing large numbers of puny arrears.

The second disincentive to work is an interesting illustration of the mixed messages that we get from the Government. I do not know if it is muddled thinking, doing insufficient homework, the left hand not knowing what the right is doing, speaking before brain engagement, plain doublespeak or a combination of some of the above. Frankly, I do not care, but let us take the option being considered of non-dependant deductions being further exploited. In the June 2010 Budget, the Government decided to upgrade non-dependant deduction rates in three stages. They had been frozen since 2001-02. The intention was to reduce fiscal deficit and, according to the impact assessment by the DWP, to,

“provide an expectation that adults make a reasonable contribution towards their housing costs”.

One objector said:

“If a family living on benefits wants their adult child to stay living at home they are actually penalised—as soon as that child does the right thing and goes out to work. You get what’s called a non-dependant deduction, removing up to £74 off your housing benefit each week. I had a heartrending letter from a lady in my constituency”—

there is a hint there—

“a few weeks ago who said that when her son leaves college next month, her housing benefit will drop significantly, meaning her family may have to split up. This doesn’t seem right”.

The objector was the Prime Minister in a speech only two weeks ago, but councils are considering making this worse as one of their options.

The third disincentive would be by increasing tapers, let us say to 30%. I know that we have had some discussion of this already. Anyone on housing benefit and council tax support will have a marginal tax rate of 95%—65% taper on housing benefits plus a 30% taper on council tax support. In other words, they would keep 5p of every extra £1 pound that they earned. That is not very encouraging, is it?

The fourth disincentive being considered is to remove working tax credit income disregards by varying amounts. One local authority has said:

“Government wants us to incentivise work so this would be against their policy intentions. However, the Working Tax Credit income disregards in UC are sufficiently generous as to allow for a reduction in the earned income disregards applied to local CTS”.

That particular authority estimated that working people could lose between £2.21 and £4.43 per week.

The fifth disincentive is to make workers with income greater than needs contribute more through increasing the rate of withdrawal from 20% to, say, 25%, 27.5%, or 30%. All working people in this category would lose between £0.64 and £1.12 per week.

The sixth disincentive is capping support at the level for band D, E or F. That would have the greatest impact on the older worker and those with children. The asset-rich older person of working age may have to downsize to make ends meet. The difference could be a reduction of £3.72 to £4.10 a week.

The last disincentive, the Committee will be pleased to note, is that everyone pays something, usually 20% to 25%, which is a return to the poll tax but without anything included within income support, jobseeker’s allowance or ESA to cover it. That would hit the poorest hardest and add to local authority billing costs as they clog up the courts with chasing bad debts.

No one is claiming that dealing with poverty-trap issues is easy. Neither is it easy to be clinging on to the job market by your fingernails, trying to raise a family and provide a roof over your head. When I arrived in Westminster two years ago, I was shocked by the ease with which this world swallows its own propaganda. In my world, I have close family members whose job prospects are grim and friends who rely on Mr Beeston’s payday loans, where one unexpected event tips the balance between managing and not managing. The Government have to show that they are serious about keeping low-paid working people afloat and I hope that the Minister will accept my amendment in the spirit in which it is intended. I beg to move.

[Earl Attlee]

My Lords, I thank the noble Baroness for explaining her amendment, which she has done with some useful detail. I have plenty to say, but perhaps I will have to write to her on some of the detail after consulting my officials.

Amendment 74 would require local authorities to have regard to the impact of their scheme on the work incentives for those in work or actively seeking work. The noble Baroness is right to point to the importance of local schemes supporting incentives to work. It is of the utmost importance that people get more overall income in work than out of work and that people should get more overall income from working more and earning more. It will not be in the interests of local authorities to design schemes that discourage work, locking their residents into low aspiration and poverty. Making local authorities financially responsible for the provision of support gives them a real stake in getting people back into work.

To aid local authorities in designing schemes that support positive work incentives and the objectives of universal credit, we have already published guidance setting out the key design features that could support work incentives and which local authorities will want to consider in designing their schemes. The guidance considers the main design features of local schemes that can be used to support work incentives, including how income from universal credit is treated, how other income is treated and the point at which support is withdrawn. It also considers other factors that can influence decisions about work, including how the scheme is administered and communicated to applicants.

Data sharing related to universal credit between the Department for Work and Pensions and local authorities will be an important way in which local authorities can ensure that their schemes work with the grain of universal credit. The Department for Communities and Local Government and the Department for Work and Pensions are working together to ensure that the necessary data-sharing arrangements can be put in place. We want to ensure that, where possible, local authorities continue to have access to the same data on claimants of existing benefits and will be provided with a breakdown of the full universal credit award before the application of any tapers or sanctions, together with the final amount that the claimant receives.

Furthermore, the Government are doing everything in their power to reduce the risk of potentially unhelpful interaction between local schemes and national universal credit. Indeed, changes have already been made to the proposed design of universal credit to increase some income disregards. These changes will help to reduce the risk of “dual tapering”, where council tax support and universal credit are withdrawn simultaneously, leading to higher marginal deduction rates—the rate at which the gains from increased earnings through work are reduced by the withdrawal of benefits and increased tax—and will help to ensure that the incentives to enter work remain strong.

Finally, as I have already mentioned, we are today publishing draft regulations that set out how we propose to treat universal credit income under the default scheme. We will continue to work with the DWP on the detail of the approach, but we believe that it provides a clear general indication of how we intend to take UC income into account in the default scheme. Local authorities will be able to consider whether to take this or a similar approach. With those explanations, I hope that the noble Baroness will feel able to withdraw her amendment.

[Lord McKenzie of Luton]

The noble Earl referred to data sharing, in particular to help in the transfer of people who otherwise would be in receipt of 100% benefit under the existing system. I think that all the documentation we have seen talks about the Government working on these matters. Can the noble Earl say when that process is going to be completed? Will the arrangements for data sharing definitely be in place by 1 April 2013? I think that he also said that the Government are doing “everything in their power” to ensure a sensible outcome so far as universal credit is concerned. One would dispute that because the phrase “everything in their power” could include putting council tax benefit where it belongs as part of that. But the noble Earl said specifically that they have addressed the issue of income and how that is to be dealt with—I think we understand that, because we touched on it in an earlier session. What other adjustments so far as universal credit and its interrelation with other schemes are concerned are currently being contemplated? Will the Government be publishing any thoughts, analysis or guidance?

--- Later in debate ---

[Baroness Hollis of Heigham]

Is the Minister saying that, in the default scheme, UC will be counted as income? He has had the advantage of seeing the regulations. We have not seen them so I just wanted some information. Is he assuming that UC will be included?

[Earl Attlee]

My Lords, the answer to that question is, I understand, yes. My answer to the noble Lord, Lord McKenzie of Luton, is that clearly the arrangements for data sharing will have to be in place by 1 April, otherwise it will not work. We are working to ensure that the data-sharing arrangements are in place at the appropriate moment. Universal credit will come in next October.

[Lord McKenzie of Luton]

Is the Minister saying that the appropriate moment by which the arrangements have to be in place is October?

[Earl Attlee]

My Lords, I think that this revises my initial comments. Universal credit will come in next October.

[Lord McKenzie of Luton]

Perhaps I may press the Minister on that point because it was originally understood that in October next year all new claimants would be claimants for universal credit. There seems to have been some change to that and this issue is obviously important because local authorities have to assess the volume of claims that they will deal with. Can the Minister confirm that the arrangement is that all new claimants coming through from October 2013 will go straight into universal credit and not into JSA, ESA or income support?

[Baroness Hollis of Heigham]

The legacy cases will spend two, three or perhaps four years coming across.

[Earl Attlee]

The noble Lord asked some complex questions. The noble Baroness mentioned legacy claims. It will be best if I write in detail on all those points, including the noble Baroness’s point about legacy claims.

[Baroness Donaghy]

I thank noble Lords who have contributed to the debate and the Minister for his reply. It was beginning to feel a bit like Google Earth, whereby you home in on one house that will be in receipt of universal credit next October. It will be interesting to see exactly how many are in receipt of it by next October. I am disappointed of course that the Minister is not willing to put these provisions in the Bill. I think that I understand why, because it is a contradiction in terms to call this scheme a work incentive scheme. All the points that I have raised exposed that. Nevertheless, I realise that we are not going to have a meeting of minds on this and I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Beecham]

In all events, it is fairly modest, but that will also disappear unless it is retained. If it is retained we come back in a vicious circle to the fact that it will be retained essentially at the expense of the working poor, whom, I say with due respect to the noble Baroness, Lady Hanham, we constantly hear that this whole scheme is designed to incentivise. That mantra is wearing a little thin. It is absurd to imagine that the whole burden can simply be borne by those people. It may have to be, if the Government require councils to do it or if councillors feel obliged to do it, because it is unlikely that they would be able to fund any move towards meeting the needs of this or any other group.

However, it is clear that authorities should consider the impact of the scheme on disabled people in their areas. I would like to know whether the Government have conducted any kind of analysis and tried any kind of modelling, with or without the assistance of individual local authorities on how this might work in practice. If they have not, frankly, that would be disgraceful. They may have and, in that case, I commend them. But there is no evidence in the impact analysis that anything like that has happened. In a matter of this significance, for this group in particular but not only for this group, that is simply not good enough.

At all events, these amendments at least focus some attention on the issues. They have the disadvantage of not supplying the answer in terms of the financial resources to meet those needs—and again one would have to go back to the Government. When it suits the Government, money can be found. As I implied in the question to the Minister, who is not departmentally responsible for these matters although he is something of a transport buff, money has been found to fund the deferment of the increase in fuel duty. There may or may not be good reasons for doing that—perhaps there are, but it was found. Apparently, the somewhat hapless Treasury Secretary believes that there was significant under-spending across government from which that money was drawn. Perhaps some of that money might have been used to moderate the impact of these provisions. Again, there was the other obsession of the Secretary of State about weekly bin collections, for which £250 million was offered. I gather that not much of it has been accepted, so there may be a saving there. As my noble friend pointed out earlier this afternoon, that money might be used either for the purposes of delay, which does not seem to be likely to commend itself to Ministers, or at least to help meet the needs of the very groups which they will apparently be advising local government to protect as far as possible.

The Government need to be honest about this. If they are not going to provide resources, they should acknowledge that local authorities will find it extremely difficult to do so. They should not be raising expectations that it will be done easily, if at all. That would be a shabby way in which to proceed, and I know that the noble Earl, Lord Attlee, and the noble Baroness, Lady Hanham, are not politicians of that stamp—absolutely not. But those with greater responsibility than, unfortunately, lies within their powers, need to demonstrate that that is not a course that they wish to pursue.

[Earl Attlee]

My Lords, I thank the noble Baroness, Lady Sherlock, for the explanation of her amendments. Noble Lords have asked a number of questions about specific groups and local authorities’ responsibilities in relation to those groups. I want to be clear that the legal requirements that established those duties, which your Lordships have already considered as part of legislation, will remain. As accountable public bodies, local authorities will need to continue to take account of all relevant duties. I am grateful to noble Lords for bringing some of those duties to the attention of the Committee.

The noble Lord, Lord Deben, asked me some interesting questions about the organisation of the machinery of government. I am confident that I know how to exercise that machinery but it is rather above my pay grade to try to change it by addressing the issues that he raises. The noble Lord used the term “above my pay grade” after I had drafted my speaking notes on his contribution.

The noble Lord, Lord Beecham, talked largely about financial issues. It is important to remember that, across local government spending, this is only a 0.4% reduction in the budget.

[Baroness Hollis of Heigham]

Is that on top of 30% cuts already?

[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.

[Baroness Lister of Burtersett]

Surely the Minister will accept that if it does not highlight carers, the chances are that carers’ needs will not be taken into account.

[Earl Attlee]

My Lords, they are already taken into account. We are not saying that carers should not be taken into account. A competent local authority will take the needs of carers into account. Why would a local authority not? That is part of its duties.

I was asked whether pensioners and other vulnerable groups are protected. Low-income working families in an area will face a cut in support. Local authorities will have choices about how they manage the reduction in funding. They will be able to choose whether to pass the reduction on to council tax payers, using their flexibility over council tax, or to manage the reduction within their budgets. I know that noble Lords do not like hearing it, but that is the fact.

[Lord Beecham]

Can the Minister explain what flexibility councils have, given the capping regime?

[Earl Attlee]

My Lords, council tax support is part of the total rate retention support. Local authorities can make arrangements for their scheme. They do not have to rely just on the funds relating to council tax benefits.

[Lord McKenzie of Luton]

I wonder whether the Minister could help me on one further point. He talked about pensioners being protected. Can he deal with the point about the circumstances in which one member of a couple may have reached state pension age but the other has not? Is that household protected under the Government’s proposition?

[Earl Attlee]

My Lords, it is clear that I am going to have to write to noble Lords on a lot of these points.

[Baroness Hollis of Heigham]

I understand that the Minister will have to write. Could he pick up the point about one of the problems being that different presumptions and rules are associated with the range of benefits that we currently have when couples straddle the pension age, and will he say what is proposed for universal credit? As I am sure the Minister will know, if one of you is below pension age, both of you will be treated as though you are below pension age. That is not the situation now. There are in effect two sets of schemes, according to whether you are a newcomer into UC or a legacy claimant, and cutting across that will be a CTB discount scheme, which is supposed to embrace both. Perhaps the Minister can take on the issue of this complexity when he writes.

[Earl Attlee]

It may help the Committee if I explain why I am experiencing such difficulties. The proposed amendment talks about disability in very general terms. If noble Lords table an amendment that deals specifically with their concern, I can address that concern specifically, but I am struggling to answer these very technical questions, which are too detailed for me to answer at the Dispatch Box. If I had a more detailed amendment, I could do so.

I would like to say a few more words about carers. Carers provide a vital role in society, and I expect that local authorities will want to consider what provision to make for this important group. Currently council tax benefit makes provision for people who are carers through a specific income disregard and a premium towards their applicable amount. Local authorities will be free to do so under localised council tax support.

The Department for Communities and Local Government is working with the Department for Work and Pensions to ensure that local authorities will continue to receive data on current benefits and universal credit. This could include data that would help local authorities to identify carers so that they are able to provide support in the future if they choose to do so under the terms of their schemes.

[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.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, this is a brief and, I hope, straightforward amendment that I trust the Minister will accept in principle, if not in its detailed wording.

Schedule 4, as we are all now well aware, introduces a new schedule to the Local Government Finance Act 1992 and hence the framework for the council tax reduction schemes. However, regulations under paragraph 2 of the schedule can cover a range of matters, including stating who must or must not be included in a scheme, maximum and minimum reductions, and what might be included to mirror existing arrangements. Paragraph 4 covers regulations for a default scheme. The Delegated Powers and Regulatory Reform Committee, in its fourth report of the Session, reviewed the powers of the Bill and concluded:

“The change from national rules to local schemes is not an insignificant one in an area of law that the government acknowledges must secure appropriate support for vulnerable individuals, and the constraints and requirements imposed by regulations under paragraph 2 will form an important feature of the local schemes. It seems likely that some authorities may model their own schemes on the ‘default scheme’ established by regulations under paragraph 4. In the light of that, we recommend that the Bill should require the affirmative procedure for regulations under paragraphs 2 and 4 of new Schedule 1A”.

This is what the amendment seeks to achieve. I beg to move.

[Earl Attlee]

My Lords, the effect of the amendment would be to make regulations prescribing the requirements for a local scheme and prescribing a default scheme subject to the affirmative procedure. I fully recognise that these regulations will be vital to the operation of local schemes and that provisions in the default scheme could influence the decisions that local authorities take about the shape of the scheme that they wish to operate for working-age claimants, which will generally not be covered by the prescribed requirements.

It is because of the importance of both sets of regulations that the Government published their statements of intent in May, setting out in great detail what they intend to cover in these regulations. Importantly, the statement of intent made clear that with a very few limited exceptions the effect of these regulations would be the same as those currently in operation in relation to council tax benefit: that is to say, local schemes will be required to include provision in respect of pension credit-aged claimants that is the same as the current council tax benefit scheme. For the default scheme, regulations will recreate the current scheme for all claimants.

We are today publishing the draft regulations for the local scheme—which in the main will set out the requirements relating to those of state pension credit age, and which I will refer to as the pensioner regulations—and the default scheme. This will put beyond doubt that our intention is to recreate the effect of existing council tax benefit regulations in the default scheme and to require equivalent provision to be made for those of pension credit age in all local schemes.

Council tax benefit regulations have been in force in various forms for a number of years. Local authorities understand their operation and effect. It is not our intention to bring in significant new untested processes and procedures, and by publishing draft regulations well in advance of the regulations actually coming into force, and ahead of Royal Assent, there will be considerable opportunity for scrutiny by local authorities, Members of this House and the other place.

The default scheme is not intended to apply generally, but only in those authorities who fail to adopt a scheme in time, and for the first year of the localised scheme. Thereafter, any scheme in operation in a local authority will in effect be its adopted scheme, and it will be able to review and alter or replace it for 2014. I understand that the Delegated Powers and Regulatory Reform Committee has indicated that additional scrutiny is needed because local authorities may choose to model their schemes on the default scheme. If they choose to do this, they will in effect be choosing to model their scheme on the existing regulations. The changes that we will be making in bringing forward our own regulations will be limited and largely confined to taking into account changes in other parts of the welfare system. While local authorities may choose to model their schemes on the default scheme, they will not be required to do so.

In relation to the pensioner regulations, government may from time to time need to amend the regulations. This may be needed to amend cash values in the means test, or to reflect future changes to the welfare system. It would not be a good use of parliamentary time to require a debate each and every time an amendment is required.

In conclusion, I am not persuaded that it is sensible to make subject to the affirmative procedure regulations that will recreate provisions that have been in operation for a number of years and that will be published in draft form for consultation while this Bill is still before the House and well before Report. This will give noble Lords ample opportunity to debate the regulations, and I am not clear what value there would be in further parliamentary debate at the point where they are made. In publishing draft regulations now, noble Lords will nevertheless be able to consider while the Bill is still before Parliament what, if any, provisions in the draft regulations differ sufficiently from the existing regulations to warrant making the regulations subject to the affirmative procedure. I therefore suggest that the noble Lord withdraws his amendment.

--- Later in debate ---

Amendment 79A withdrawn.

[Earl Attlee]

My Lords, this may be a convenient moment to adjourn the Committee until Thursday at 2 pm.

Committee adjourned at 7.58 pm.

Olympic Games: Security

Earl Attlee Excerpts

Thursday 12th July 2012 Lords Chamber

[Earl Attlee]

My Lords, I remind the House of the benefit of short questions in order that my noble friend will be able to answer as many questions as possible.

[Lord Addington]

My Lords, when my noble friend replied she referred to the fact that two weeks ago we had an inkling that this was not happening. Can she give a better guide to the process of the information that was being fed to and fro, and give the House an idea of what was happening and when? When did we know there was going to be a problem? That is the core of this situation. We have a reserve and are deploying it, but when did we know that we might have to call on it? That is the big question. Secondly, will anything that goes wrong be brought front and centre in a review process of what happened in the Games? A legacy of learning from mistakes will be important.

Railways: High Speed 2

Earl Attlee Excerpts

Wednesday 11th July 2012 Lords Chamber

[Earl Attlee]

My Lords, I congratulate my noble friend Lord Astor for securing this debate on a very important subject. I also thank noble Lords for their typically well informed contributions. It is certainly not a matter of nimbyism. It is important and right to raise questions about a project as significant as HS2 and I am happy to try to address such questions this evening. Large scale infrastructure projects are not new or unusual. They have been going on for many years and they have been controversial. For instance, the Jubilee line extension was controversial at the time of its conception, but where would we be without it now?

In his opening speech, my noble friend questioned the benefits that we expect HS2 to deliver. I want to reassure him on this point. I believe passionately in a successful Britain, a country that can compete and thrive in a global economy. To achieve this we need infrastructure fit for the 21st century and beyond. We cannot just make do and mend. Good transport equals good economics. One of the best ways to support British business, power up the recovery and put people back to work is to invest in, and modernise, our transport networks. HS2 will revolutionise travel in our country, transforming connectivity between London, the Midlands and the North, and, as the noble Lord, Lord Adonis, said, it is the best decision. It will provide a step change in the capacity of the rail network to accommodate the growing demand for long-distance travel, providing up to 18 trains an hour, each with up to 1,100 seats. Without it, our main north-south rail arteries will become increasingly disrupted and overcrowded, damaging both our economy and our way of life.

HS2 will slash journey times for passengers between our key cities and regions. It will be a truly national network benefiting the whole country. While the high-speed line itself runs to Birmingham, Manchester and Leeds, the new trains will be designed to continue onto the current network, providing direct services to destinations further afield, such as Liverpool, Newcastle and Glasgow. It will help rebalance the economic geography of the country, supporting thousands of jobs and unlocking growth and opportunity for generations to come. It will be a truly transformative project.

Some noble Lords have questioned whether a new high-speed network is the best way to provide the additional north-south capacity our country needs, suggesting instead a programme of enhancements to the existing network, but this would provide only a short-term answer to the demand challenges addressed by HS2, and even then, only at the cost of significant disruption to passengers on affected lines, all the while sacrificing the connectivity benefits high-speed rail will bring.

Several questions related to the approach taken to assessing the economic viability of the project. In January, when my right honourable friend the Secretary of State for Transport announced her decision on HS2, she set out the economic case underpinning this project and the department will shortly be publishing further updated economic analysis. However, the benefit-cost ratio analysis forms only one part of the decision-making process for this strategically important project. There are wider strategic considerations as well, which I outlined a moment ago. I will try hard to answer as many supplementary questions as I can and when I fail I will, of course, write.

The noble Lord, Lord Rosser, asked about the two hybrid Bills. He will know that each hybrid Bill requires a very considerable amount of work to determine what powers are needed. Several noble Lords, including my noble friend Lord Astor and the noble Lord, Lord Stevenson of Balmacara, claimed that there is no economic case for HS2. I beg to disagree. HS2 continues to have a good economic case. The Government have always been clear that as well as offering good value for money in itself, there are wider social and economic benefits associated with improving connectivity and supporting regeneration in our major cities.

My noble friend Lord Bates was concerned that HS2 will not rebalance the economy. He talked about the north-south divide and the unintended benefit for London at the expense of the regions. The Government’s position has the support of businesses and their representative organisations across the country, which express their belief in the importance of improving our transport network, and specifically our intercity rail network, in order to enable higher economic productivity.

The noble Lord, Lord Stevenson, asked about the release of the Major Projects Authority report. The Cabinet Office has a policy of not releasing the reports for two years, but they will be released at the appropriate point. Noble Lords asked me about the DfT’s record in forecasting and modelling transport demand and they suggested that it is poor. The Department for Transport has significantly improved its passenger forecast modelling in recent years. As acknowledged by my noble friend Lord Astor, we have a better understanding of what drives passenger demand, better computer modelling and our approach to risk analysis has improved.

The position of HS1 and HS2 are very different. Eurostar was accessing a completely new market for intercapital rail travel in competition, it transpired, with a burgeoning short-haul deregulated aviation market. HS2 will relieve a seriously congested existing railway between the two largest conurbations in the country—a long-existing market where demand is well understood and predicted to grow. My noble friend Lord Bradshaw suggested that our appraisal is based on the over-inflated value put on business travellers’ time. The analysis underpinning HS2 has been based on the Department for Transport’s well established approach to appraisal, one that is recognised across the transport industry and conforms to the highest standards of evidence. I know that my noble friend is very concerned about this point, especially in connection with the appraisal of road transport schemes.

Many noble Lords talked about route selection. In terms of the London to West Midlands alignment, HS2 Ltd considered more than 90 options for stations and sections of the route. There are obvious benefits to staying close to existing transport corridors where possible, which is why HS2 Ltd’s recommended route crosses part of the Chilterns close to the A413 and the Chiltern line and, indeed, uses part of the Great Central line. Overall, an M40 route would be an inferior option. It would be longer, have lower maximum speeds, impact on more population centres, resulting in unacceptable impacts on communities and it would be more expensive. In answer to one noble Lord—I think it was my noble friend Lord Bates—since the main capacity constraint is in the south, HS2 will start in the south.

The noble Lord, Lord Stevenson of Balmacara, suggested that the nation could not afford it. The nation cannot afford not to invest in HS2. Investment in HS2, and our wider rail network, can help us overcome the economic challenges we face and secure the country’s economic future. The construction costs will be spread over two decades and on this basis will involve an average level of annual spending of less than £2 billion a year at 2011 prices.

My noble friend Lord Astor suggested that a new railway is not needed to solve the railway capacity problem. By the mid-2020s forecasts show that without HS2, our main north-south rail arteries will be becoming increasingly disrupted and overcrowded, damaging our economy and our way of life, as pointed out by my noble friend Lady Scott of Needham Market. The Government have carefully considered the option of providing additional rail capacity, including upgrading existing lines. These might provide a short-term fix, but not a long-term solution. While alternatives may offer a good benefit-cost ratio, none is able to offer the scale of benefits or change that HS2 offers and would not deliver the increase in capacity that we require. Even the best alternative proposed would lead to decades of disruption on the existing network and lead to unreliable and overcrowded services and more freight on our roads. In answer to the question from the noble Lord, Lord Rosser, the capacity constraints make HS2 essential. The value of time saved is taken into account in the BCR.

My noble friend Lady Seccombe talked about community engagement. The Government and HS2 looked long and hard at possible changes to the route. However, the final design of the route is not yet set. The final design will be developed in consultation with local communities as part of the environmental impact assessment. Once that is complete, we expect to consult on the environmental statement in spring 2013. I encourage everyone with an interest to participate in that consultation. We want local communities to get engaged in the design through their local forums. I do not understand how the problem described by my noble friend arose. I hope that she will brief me later after the debate.

[Viscount Astor]

My Lords, as we have 10 minutes, may I ask my noble friend to address one issue? Does he accept that the benefit/cost ratio has fallen below 1.5? I will quite understand if he is unable to give a detailed answer, but perhaps he would be kind enough to write to me and other noble Lords who have spoken today.

[Earl Attlee]

My Lords, I have already undertaken to write where I have not answered. I am endeavouring to get through all my Box notes as fast as possible.

I know that there is no easy way of building a railway in our country but the concerns of local residents are an important priority for the Government and HS2 Ltd will ensure that local views are fed into the design process and that local communities are aware of what progress has been made with the railway.

My noble friend Lady Seccombe asked what the Government are doing to address blight. The Government recognise that HS2 is already having an impact on communities along the line of route. That is why the exceptional hardship scheme was introduced. When the Secretary of State for Transport announced the decision to proceed with HS2 in January 2012, the Government also committed to introducing a generous compensation package for the long term that goes beyond what was required in law. Developing the right property compensation package for HS2 is complex, as it must be fair to those affected by HS2 proposals while also recognising our broader responsibilities to the taxpayer. The Government will shortly be consulting on the detailed proposals to help affected property owners, with the aim of introducing long-term compensation measures as soon as possible.

My noble friend Lord Astor asked about the HS2/HS1 link, a point raised previously by the noble Lord, Lord Berkeley. I can assure my noble friend that the Government intend to connect HS2 to HS1 through a link built in the first phase. This will enable trains to run directly between HS2 and HS1 without the need for passengers to change trains. There are clear strategic advantages from integrating Britain’s new high-speed rail network with the only existing high-speed line in this country and thence to the growing high-speed rail network on the continent.

My noble friend Lord Astor talked about the demand for HS2 in a digital age. Some have questioned the demand projections underpinning the case for HS2, positing a world in which improved digital communication replaces the handshake and the face-to-face conversation and thus the train journeys that make them happen. If we turn to history, it is clear that the advent of the telegraph, the telephone and now the tweet have not lead to reductions in travel demand—far from it. I reassure the House that the Government will continue to keep the economic case and indeed the wider business case under review throughout the life of the project to ensure that it reflects the latest research, evidence and understanding of the project.

HS2 is much more than just a BCR. It is about a step change in capacity and connectivity for passengers. It is about unlocking the potential of our major cities and regions, supporting jobs and driving growth. It is about building a dynamic society, a thriving economy and a successful Britain. HS2 is not just viable; it is a vital part of our future prosperity.

[Viscount Younger of Leckie]

My Lords, I beg to move that the House do now adjourn during pleasure until 8.42 pm.

Local Government Finance Bill

Earl Attlee Excerpts

Tuesday 10th July 2012 Grand Committee

[Earl Attlee]

My Lords, I know the noble Earl is speaking to very complex amendments. However, I remind him that the Companion suggests that 20 minutes would be sufficient for moving an amendment. I hope that the noble Earl is coming to the end of his remarks.

[Noble Lords]

Oh!

--- Later in debate ---

[Earl Attlee]

To make a quick comment about my intervention on the noble Earl, I was merely observing that he had been speaking for 20 minutes. I allowed for the fact that he was probably coming to the end of his remarks. Also, this is a self-regulating Committee. If the Committee wants to take a longer speech, the Committee can do so.

[Baroness Hanham]

My Lords, I am not sure that I can wind this up in 20 minutes, but I will do my best, gracefully, as I go along. I first thank the noble Earl for raising this subject in the way that he has. I am also extremely grateful to him for the discussions that we have had following the previous day, when I pointed out to him that if I had to answer every amendment one by one I would have 30 pages of speaking notes, which might take us longer than 20 minutes.

With the noble Earl’s agreement—and, I now hope, the Committee’s—I propose to tell the Committee what the noble Earl’s four main themes are, and will then write on each of the specific amendments so that the Government’s answer to each is there. That will help the Committee at the next stage. I am manifestly not going to be able to answer all the points today.

The answers are grouped under the noble Earl’s points about the valuation system not being well managed; that it should be independent of the Treasury; that the Valuation Office Agency and the Valuation Tribunal Service have been adopting, as the noble Earl put it, several bad practices; and that there are abuses by a small number of rating advisers. Those are the four themes that I will go through and, following the Committee sitting, we will make sure that every Member of the Committee and the Library has a response to each of the amendments. I thank the noble Earl for grouping them together, as it could have been even longer had he chosen to speak only to two or three at the same time.

First, on the resourcing and management of the rating and appeals system, ratepayers expect their rating assessment to be correct, and for appeals to be resolved quickly. This will always be the case, but under the rates retention system it would become increasingly important that the rating system delivered a good service for both ratepayers and local government. I appreciate the noble Earl’s concerns regarding the backlog of appeals in the rating system. We share those concerns. The Valuation Office Agency is working flat out to clear over 250,000 appeals by the end of March 2013, including the majority of the outstanding appeals against the 2005 rating list. It has recruited additional front-line staff and has transferred staff from other work areas to speed up the clearance times for these outstanding appeals. Around 75% of all appeals on the 2010 list to date have resulted in no change to the rateable value, but we are well aware of how significant business rates are to all businesses and that this makes the fast and efficient processing of appeals vitally important. Likewise, the Valuation Tribunal Service is proactively working to ensure that appeals that cannot be resolved through initial discussions with the Valuation Office Agency are listed and dealt with by the tribunal. In fact, only some 2% of listed cases result in disputes being brought before a tribunal panel, with the rest being settled between the parties.

I hope that I have been able to offer some comfort to the noble Earl that the valuation and appeal system will be able to cope with the rates retention. Let me also assure him that the resourcing and performance of the Valuation Office Agency and valuation tribunal are a matter for regular discussion in the Government, especially now as we move into the rates retention system. As with all public bodies, the Valuation Office Agency and valuation tribunal have to deliver their services in challenging financial circumstances, but we are fully aware of the important role that they will play in the rates retention system and we will ensure that they have the necessary capabilities to meet these objectives.

The second theme of the noble Earl, Lord Lytton, is the Valuation Office Agency’s response to rates retention. An example of those capabilities is the way in which the Valuation Office Agency has responded to the planned introduction of rates retention. Since as early as late last year, the Valuation Office Agency has been working with local government to understand what local authorities will need to budget effectively under rates retention. It recognises that there will be step change in its relationship with local government and it has established a dedicated project team for rates retention. This has already led to several discussions with local government and with the Local Government Association. While I understand the concerns of the noble Earl, I hope that he will agree that to date the Valuation Office Agency has responded well to the rates retention scheme and is working with local government to ensure its smooth implementation.

The Valuation Office Agency is independent. An essential part of any system of tax is that the public have confidence in their tax assessments—not only in the accurate level of those assessments but in the manner in which they have been reached. I agree with the noble Earl that the independence of the Valuation Office Agency is important. That is why valuation officers who perform their statutory functions, such as the assessment of individual rateable values, act independently of Ministers. In this respect they have to answer to the courts rather than to the Government.

We also have to recognise that the Valuation Office Agency is a public sector body, spending public funds, and is part of the delivery system for business rates and council tax. That is why it is right that the Valuation Office Agency should answer to the Government for its overall performance. As such, the Valuation Office Agency forms part of Her Majesty’s Revenue and Customs and reports to Ministers in the Treasury for its work. It also accounts to Parliament—this is the point about the report—in the form of an annual report, and senior officials in the Valuation Office Agency can be called to give evidence to Select Committees.

While I appreciate the noble Earl’s point, in practice we have to strike a balance to preserve both the independence of the Valuation Office Agency’s statutory functions and the need to maintain the accountability of public servants. The noble Earl’s amendment would prevent the Valuation Office Agency from reporting to either the Treasury or the Department for Communities and Local Government, and under those circumstances I do not believe that we could deliver that accountability.

The noble Earl also raised concerns about some of the practices and procedures of the Valuation Office Agency and the valuation tribunal. Having just stressed the importance of the independence of the Valuation Office Agency when exercising its statutory functions, I think that the Committee would be disappointed if I signalled a willingness to interfere in its day-to-day work. I appreciate the concerns that the noble Earl’s amendments have raised in such areas as invalid appeals and the use of a strike-out by the valuation tribunal. We have powers to make regulations on any matter relating to the valuation tribunal and we have made regulations under those powers that describe when a strike-out can be used. However, in line with other tribunals, we do not describe all the necessary procedures in those regulations, but instead allow the valuation tribunal to make directions. Those directions describe the procedures that must be followed in taking an appeal through to a valuation tribunal hearing. The Secretary of State has given the valuation tribunal, in line with other tribunals, the power to strike out appeals where the appellant has failed to follow the directions.

This is not a matter that we take lightly. It is important for the effective operation of a fair judicial system that a valuation tribunal is able to set directions and enforce them through the use of a strike-out. The tribunal will consult its users before it introduces any standard directions, and any parties will be made fully aware of the requirements, by means of practice statements and information leaflets, when they make an appeal. Therefore, while noting the noble Earl’s concerns, I do not believe that we should change the current system. Allowing these matters to be set out in directions rather than regulations will ensure that the tribunal can lay down procedures that reflect the nature of the court and are responsive to changing circumstances. The system would not be improved through our direct intervention or by bringing all the procedures into regulations.

The noble Earl referred also to abuses by some agents. He raised valid points about abuses of the system by ratepayers’ representatives. I know that he works closely with the Royal Institution of Chartered Surveyors and the Institute of Revenues Rating and Valuation. Both organisations have clear professional standards. The Valuation Office Agency includes guidance on its website about employing a rating agent and how to contact these organisations for advice, so it would not be appropriate to regulate in this area. I hope that the noble Earl will agree that by stringently and consistently applying professional standards, the professional bodies and the Valuation Office Agency can address some of the abuses that he mentioned.

I have not addressed every amendment—as I said I would not. However, I thank the noble Earl for the knowledge he brought. I hope that he will feel able not to press his amendments on the basis of the explanations provided and of the assurance that, before Report, he will have a reply to each one.

I was asked by the noble Lord, Lord McKenzie, whether under the current system local government pays all costs of mandatory reliefs. It pays between 0% and 75% of the costs of reliefs for eligible businesses and some not-for-profit agencies. If a local authority chooses to go beyond the existing rate reliefs to grant extra relief using the business rate discount powers in the Localism Act, it can meet the cost locally. If not, the cost will be reimbursed. However, from next April the system of funding business rate reliefs will change as part of wider reforms. We will shortly publish a consultation paper setting out the details of this. The basic principle is that changes in rates income, including changes in relief, will be shared 50:50 with central government. I hope that that answers the noble Lord’s question.

There may be other points that noble Lords wish to pursue with me. I think that I answered the point of my noble friend Lord True about the fact that a number of important issues have been raised, and individual replies will be given on all the amendments so that we can consider them further at a later stage.

--- Later in debate ---

[Earl Attlee]

My Lords, I am grateful to the noble Baroness, Lady Hollis, for introducing her amendment. She started by talking about the poll tax years. I well recall them but it was long before I came to your Lordships’ House. I do not believe that this legislation has those weaknesses but I am well aware that I face a formidable adversary. In parliamentary terms, I have admired the noble Baroness for many years. I am delighted at last to start working with her on legislation.

The noble Lord, Lord McKenzie, asked me when the Government decided that council tax benefits would be localised and included in universal credit. That decision was made in the spending review of 2010.

The effect of Amendments 89, 90 and 91 in the name of the noble Baroness, Lady Hollis, and with the support of the noble Baroness, Lady Sherlock, would be to make support for council tax part of universal credit. I know that this is a matter dear to the heart of the noble Baronesses. Amendment 70A seeks to establish that nothing in the Local Government Finance Bill would prevent council tax support from being included in universal credit. The Government have been clear that council tax will be localised and will not form part of universal credit. Council tax is a local tax and it is right that local authorities, which are responsible for setting and administering council tax, are free to decide the level of support to be offered to working-age taxpayers. Nevertheless, I have listened carefully to the concerns expressed in Committee about the working poor. Localisation means that local authorities will be able to align the system of council tax support much more closely with the existing system of council tax discounts and exemptions, and with local decisions on the level of tax.

The noble Baroness, Lady Hollis, and other noble Lords mentioned the effect of protecting pensioners. Of course, all noble Lords will be aware that not all pensioners receive council tax benefits; only those who need the benefit get it. The noble Lord, Lord Smith of Leigh, talked about the problem of the housing market, of which all noble Lords will be aware. However, local authorities will be able to take account of this when devising their scheme. Many noble Lords, including the noble Lord, Lord Greaves, talked about the effect of the 10% cut in CTB from the centre. It is worth remembering that council tax benefit doubled under the previous Administration. The noble Lord, Lord Beecham, asked who will pay the bill. The answer is that the taxpayer will pay the bill because the taxpayer is still paying 90% of the cost of council tax benefit.

This policy is consistent with the drive for greater local financial accountability and decision-making. The noble Baroness, Lady Hollis, suggested that we are just passing the risk on to local government and asked what happens if a local authority runs out of money. The Government intend local schemes to be fully integrated with the council tax system, with support offered in the form of a council tax reduction. Where demand for support increases above or falls below local forecasts, billing authorities will collect less or more council tax than had been estimated at the beginning of the financial year. Provision is made in the Bill to enable billing authorities to pass on any reduction in council tax receipts in a year, allowing cash-flow pressures that would otherwise fall on the billing authority alone to be shared with other local authorities.

Localisation will give local authorities a financial interest in the provision of support for council tax and a bigger stake in the economic future of their local area; I am sure that the Committee accepts that point.

[Noble Lords]

No!

[Earl Attlee]

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

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

[Baroness Hollis of Heigham]

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

[Earl Attlee]

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

[Baroness Hollis of Heigham]

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

[Earl Attlee]

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

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

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

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

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

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

[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.

[Baroness Hollis of Heigham]

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

[Earl Attlee]

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

[Baroness 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 Greaves]

My Lords, I am grateful that the Minister specifically responded to some of the points I made. He asked, “Who will pay the bill?”, and answered, “The taxpayer”—by which of course he meant the Government, although clearly most government funds come from taxation of every kind. He pointed out that in future the Government will pay only 90% of the costs, which is, in other words, a 10% cut in the requirement to pay from government funds—taxation in general. What he did not explain was why it was fair to cause what most councils will find themselves doing by imposing that 10% on a small group of people—those of working age who claim council tax benefit. It is a clear transfer of that burden from everyone in the country who pays all different sorts of taxes to a very small number of people. The Minister did not explain why that was fair.

Secondly, he said that it would be an opportunity for councils to align council tax benefit—the new council tax reduction scheme—with existing council tax discounts. I do not understand what “align” means, and perhaps he would like to explain it.

[Earl Attlee]

My Lords, unfortunately, I did not catch the noble Lord’s final question. In response to his first point, he said that the difficulty with the scheme was that it would hit a small proportion of the population. The local authority will devise a scheme but, more importantly, it could at the same time also reduce its budget a little, if it wanted to. It is at the local authority’s discretion.

[Lord Greaves]

I wonder if the Minister could write to me on my question about the word “align”? He specifically said, if he checks, it would be possible to align—that was the interesting word—council tax reductions with existing council tax discounts. They seem to be very different things at different levels and I do not know what “align” means at all.

[Earl Attlee]

My Lords, I can assure the noble Lord that we will be very careful to answer all questions.

[Lord Greaves]

Thank you.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, we support the thrust of these amendments. I will start with Amendment 73A, spoken to by the noble Lord, Lord Jenkin, and supported by the noble Lords, Lord Shipley and Lord Tope, about the new burdens doctrine. I was broadly going to support this anyway. A new burden in this context would be if there were increased take-up of the benefits system in a subsequent year, so on that basis it is doubly worth supporting. It is not as though we are dealing with a new service or something of that nature, but if we are including in that definition the fact that there will be changes in the volume of take-up, it is certainly right to push back at the Government on that.

My noble friend Lady Hollis’s amendment gave a devastating critique of what the proposals will actually mean for individual local authorities and the people who will be hurt. My noble friend talked about adjoining authorities, one that included DLA in the computation of income and one that did not. What a nonsense when people are being forced into those sorts of judgments.

The noble Lord, Lord Shipley, said that one of the problems is that the timescale is too tight. I hope that we will be able to have common cause in an amendment that is coming up—I hope shortly; if not, next week—to address that specific issue.

My noble friend Lord Smith asked what local authority would not want to find jobs for young people. Part of the problem for some local authorities is that their economic regeneration departments are under pressure from the cuts that are already there, so it is not lack of desire to do that; the capacity to do it is becoming increasingly constrained.

Issues were raised about who is going to do the forecasting for the council tax benefit expenditure for the year in question, not only for 2013-14 but for subsequent years. The fear has been expressed here—and I share it—that 90% of forecast subsidised council tax benefit expenditure in reality will be an underestimate for what actually comes to fruition.

Perhaps I can press the Minister on a couple of techie points. I would guess that at the moment the reimbursement to local authorities for council tax benefit is on subsidised council tax benefit expenditure, and I think that is because there is not a full subsidy where a benefit is paid incorrectly or late. How is that going to work under a supposed localised system? Who is going to make the judgments, under various schemes that do not have the same parameters, whether a benefit is paid incorrectly or late? Is that what we mean by the reference to subsidised council tax expenditure?

Can the noble Earl also deal with the fact that this is going to be funded by way of the business rate retention scheme? What does that actually mean in practice? Are we saying that part of the central share is going to be used to fund this? Will it be deducted from the total business rates collected in the first instance and then split on a local and central basis? Precisely what does that mean?

On the specific issue of having to forecast subsidised council tax benefit expenditure, if that means making a judgment about that which is paid properly, correctly and in accordance with the scheme, it is clearly going to be much more difficult with a whole raft of different local schemes. The fundamental point that noble Lords have made is that is that the 10% cut—or whatever it turns out to be—is going to impose impossible conditions on local authorities having to make the judgment of Solomon. It is deeply uncomfortable and deeply unfair.

[Earl Attlee]

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

[Baroness Hollis of Heigham]

Sorry, I could not hear that.

--- Later in debate ---

[Earl Attlee]

There is no incentive on the local authority to reduce the claimant count because, as their claimant count and the CTB goes up, they get the money from the DWP.

[Noble Lords]

Oh!

[Lord Greaves]

It has been said that the existing claimant count is about 60% of people entitled to it. Is the Minister saying that it is wrong for local authorities to encourage those people who are entitled under the present or new system to actually claim? Under the new system, there would be a real incentive for local authorities to discourage people from claiming. Effectively, because it is a discount, the more people that claim, the lower the council tax base will be in that authority.

[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.

[Baroness Hollis of Heigham]

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

--- Later in debate ---

[Baroness Lister of Burtersett]

The Minister will of course be aware of the House of Commons’ Communities and Local Government Committee report on localisation issues and welfare reform. It said:

“We have seen little evidence to support the hope that new and better-paying jobs for individuals, immediately sufficient to off-set the 10% reduction in the benefit budget, will inevitably follow from”—

the incentives that have been discussed; and,

“the means of economic growth are never solely in the gift of individual local authorities”.

What evidence did the Government have that the Committee did not to support the Minister’s contention?

[Earl Attlee]

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

[Baroness Hollis of Heigham]

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

[Earl Attlee]

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

[Lord Beecham]

I take it that we have finished that little discourse. I shall just revert to the question of the noble Lord, Lord Greaves, about what happens if more people claim benefits. What would happen if councils, or indeed the Government, went so far as to encourage people—particularly pensioners, 60% of whom do not claim—to do so? There is, I believe, £1.8 billion of unclaimed council tax benefit. What happens if those people start to claim? That would presumably take us beyond the £500 million. Who pays for the benefit for those people? Will the Government pay 90% of it or will it all fall on the local authority?

[Earl Attlee]

My Lords, it is clear that a local authority could devise a scheme that would increase the number of claimants. It would then have to take account of that in its budget. Whether local authorities choose to do that is a matter for them.

[Lord Greaves]

Let us assume that a local authority does not devise a scheme that encourages more claimants, but the number of claimants in that area goes up for whatever reason; and that the local authority runs a scheme to means-test people for housing benefit. My authority will probably do that in the first year, although it will be put out to consultation. What if the 60% of people who claim at the moment goes up to 80%? At the moment, it is a national benefit and the Government would automatically pay the cost of the extra 20 percentage points. Under the new scheme, the cost would fall on the local authority because it is a discount, not a national benefit. Increasing the number of people claiming by 20 percentage points would effectively reduce the council tax base of that authority. It is not money that is paid out to people; it is simply deducted from their bill.

We all, I hope, want people to claim benefits to which they are entitled. However, if the local authority, local campaigners for welfare and benefits, or local councillors with the interests of their residents at heart organised a campaign to increase the number of people claiming under the new system, it would reduce the amount of money coming into that authority. Will the Government adjust the grants to that specific authority over a period to take account of that, and how would that be done?

[Earl Attlee]

My Lords, I accept the noble Lord’s analysis of what would happen but the question is: why does it not happen now? Why do we not suddenly see a 20% increase in claimants? The noble Lord is describing a hypothetical situation.

[Lord McKenzie of Luton]

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

--- Later in debate ---

[Lord Tope]

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

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

[Earl Attlee]

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

[Baroness Hollis of Heigham]

How will they pay for it?

[Earl Attlee]

My Lords, I need to make progress.

[Lord Greaves]

I agree that the Minister needs to make progress, but will he reflect on this with his officials and write a clear letter about what will happen and who will pay the extra cost if the take-up rises? That is the issue that worries us. It is clear that we will not resolve it today, but reflection by the Minister and some information in writing would be extremely helpful.

[Earl Attlee]

My Lords, I will cover that in my concluding remarks. The noble Baroness, Lady Hollis, suggested that schemes would be determined on the basis of councillors’ prejudices. I refute this, as does my noble friend Lord Shipley. Schemes will have to be constructed by the council, not on the basis of individual councillors’ prejudices. They will not be in a position to take decisions on individuals but will agree to the best system after considering any changes they think they need to make to the current scheme—or they can use the default scheme which, as noble Lords know, is more or less the current scheme.

The noble Lord, Lord Smith of Leigh, made an interesting observation. He said that he supported the localisation of council tax benefits, but not this scheme. If that is so, what scheme would the noble Lord support?

[Lord Smith of Leigh]

One that is fully funded, so we do not have to make local authority cuts.

[Earl Attlee]

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

[Baroness Hollis of Heigham]

We have one—and it is just fine.

--- Later in debate ---

[Earl Attlee]

But unfortunately we have to make savings.

The noble Baroness, Lady Hollis, suggested that this reform does not support local financial accountability. I disagree. Currently, local authorities can put up council tax without any regard for the impact on the cost of council tax benefit. This reform changes that by ending the subsidising of council tax increases from the benefits bill. There have been previous attempts to address this acknowledged problem. The recent report by the Institute for Fiscal Studies, to which the noble Baroness Lady Sherlock referred, noted that this reform restored the link between council tax increases and the benefits bill.

I was asked who should not get CTB. It is not black and white. The point of localisation is that councils will have the option to continue with the current scheme and find savings elsewhere, or to reduce some awards a little and raise money on empty homes. Localisation will mean that councillors will have choices about how they manage the cuts. There may be different schemes across the country. We trust local government to choose how to deliver local services to vulnerable groups. We trust them to deliver this scheme to support local people with their council tax bills. This is local accountability in action.

Speaking to Amendment 73A, my noble friend Lord Jenkin asked what happens once the spending review period ends and whether there are any guarantees for local government. Funding for the first two years of localised schemes is derived from the Office for Budget Responsibility forecast for spending on council tax benefit, which reflects existing spending and therefore assumptions about underlying demographic changes and council tax increases. Thereafter, decisions about overall levels of funding will be taken as part of the spending review process, which will provide an opportunity to consider cost pressures. Funding will be allocated via the retained business rate system, and the recent consultation set out provisional allocations.

[Lord McKenzie of Luton]

I am sorry to interrupt the Minister; I know he is trying to make progress. Assuming the first year is 2013-14, if the forecast by the OBR proves to be inadequate, will there be a basis for revision for the subsequent year within the spending review? Can the Minister say precisely what funding being provided by the business rate retention scheme means in practice?

[Earl Attlee]

My Lords, that is one of those matters of detail that the noble Lord will have to look forward to in my letter.

The noble Lord, Lord Jenkin, asked whether this policy reform was a new burden. This reform is not a new burden. Local authorities will have a significant degree of control over how a 10% reduction in expenditure on the current council tax benefit is achieved, enabling them to benefit local priorities and their own financial circumstances as they see fit. The Government are committed to carrying out a new burdens assessment regarding the administration of the schemes, and are gathering data on administrative costs to support this assessment.

I was asked whether the Government would be able to adjust allocations. As I said, the spending review provides an opportunity to review overall funding levels. Funding is allocated through the retained business rates. Baseline allocations will be set for 2013. Councils will have the flexibility and responsibility to design schemes that match local circumstances. Adjusting allocations would undermine the key principle at the heart of our reforms to local government finance, since funding will be within the retained business rate system. As we discussed in previous debates, it is essential that there is a sufficiently long period between resets to incentivise growth. Frequent adjustments to funding allocations would undermine this wider principle. Local authorities will have a range of flexibilities enabling them to manage costs in the mean time, including making adjustments to their own organisations and costs.

Increasing local financial accountability is a key objective of the localism agenda. Localising support for council tax gives local authorities an increased stake in the economic future of their local area, strengthening the incentive to support people back into employment. It also increases financial accountability by helping to make local authorities accountable for decisions over council tax levels, putting an end to the central subsidy of council tax increases.

There is widespread recognition of the need to reduce welfare spending. As I mentioned, spending on council tax benefit doubled under the previous Administration and it is essential that we take steps to bring it back under control. The saving from localisation announced in the spending review is a crucial contribution to the vital task of tackling the deficit.

Localisation gives local authorities significant control over how to manage the reduction in funding. Authorities will be able to offer council tax reductions that reflect local circumstances and priorities. They can decide whether to pass the reduction on to council tax payers, use flexibility over council tax or manage the reduction within their budgets. The noble Baroness, Lady Hollis, talked about the difficulty of collecting relatively small amounts of money and I will have to weary the Committee by repeating that it is up to local authorities to devise their schemes and take account of that difficulty.

Amendment 71 makes delivering the savings impossible and would in fact encourage local authorities to plan for that. The intention behind it is not realistic. The 10% saving has to be delivered, and we have given local authorities the freedom to decide how best to do this in their local area.

I do not deny that we are in hard times. The noble Baroness went into government in 1997 in a period of steady economic growth. The present Government are faced with truly dreadful financial circumstances.

[Lord McKenzie of Luton]

Does the Minister accept that when the coalition Government came into office they were experiencing a period of economic growth?

[Earl Attlee]

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

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

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

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

[Baroness Hollis of Heigham]

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

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

--- Later in debate ---

[Noble Lords]

Hear, hear!

[Earl Attlee]

My Lords, I thank the noble Earl for the explanation of his amendment. It would require the Secretary of State to create regulations providing for the use of electronic council tax billing. However, billing authorities already have powers under Regulation 2 of the Council Tax (Administration and Enforcement) Regulations 1992 to serve council tax bills electronically, as long as it is by agreement with individual council tax payers. The Government believe that this is a sensible arrangement.

Clause 14 makes provision for the costly supporting information that goes with council tax bills to be provided electronically. However, regulations will state that hard copy must be provided if a bill payer requests it. The Government consulted on this measure and it was strongly supported by respondents. Relieving authorities of the duty to provide the information in hard copy may encourage the take-up of electronic billing, because all parts of the process can be paperless, if the taxpayer so chooses.

However, given that billing authorities already have the powers to send bills electronically, I do not see any need for the amendment and invite the noble Earl to withdraw it.

[The Earl of Lytton]

My Lords, I thank the Minister for that. I did not know that there was already a power and I am surprised to hear it, given that there appears to be a rather small uptake. I am heartened by what he had to say. I entirely agree with his sentiments. If the powers are there, let them be used, and perhaps his department could encourage greater use of them among billing authorities in the interests of economy and speed. I happily beg leave to withdraw the amendment.