Local Government Finance Bill

Lord Beamish Excerpts

Tuesday 31st January 2012 Commons Chamber

[Mr Raynsford]

My hon. Friend makes an important point about the assessment of need. The framework imposed by the Government will certainly require local authorities to make very deep cuts in benefit payments to certain categories of people. We will go on to explore some of the implications in later debates; suffice it to say for now that it really is a travesty of localism to say to local authorities, “We are giving you this new responsibility, but we are shackling your ability to do the job properly by imposing, first, an immediate 10% budget cut and, secondly, a total transfer of risk for any future increases in cost; and, thirdly, by requiring you to do this to a rushed timetable that does not allow you adequate time to consult local residents to test the impact of different models for the new scheme, posing a serious risk that the software will not be ready in time to allow orderly implementation.” I am afraid to say that this is a very sad example of a badly conceived scheme being rushed through by a Government who are not themselves going to face the consequences. Local authorities will face the consequences of a lot of very angry and very unhappy residents.

[Mr Kevan Jones (North Durham) (Lab)]

On that point, does my right hon. Friend agree that the Government know exactly what they are doing and that they are doing it so that when people get angry locally, the Secretary of State can stand by and say that it is not his fault, but the local council’s fault?

[Mr Raynsford]

My hon. Friend makes a very good point. Frankly, I am very surprised indeed that Lib Dem members of the coalition are going along with this—[Interruption.] I am pleased to hear the hon. Member for Portsmouth South (Mr Hancock) say what he does; I hope he will demonstrate that in the Division Lobby later.

I am surprised that Conservative Members who have experience of local government, and who must be well aware of the pressures that the Government’s measures will impose on their local government colleagues, are prepared to support such a draconian and ill-thought-out package. Cutting 10% of the cost of council tax benefits at the outset is bad enough, but obliging councils to take the downside risk of a further rise in costs in-year, and imposing conditions that will inevitably force heavier cuts on some categories of recipient, adds insult to injury.

To cap it all, imposing an unreasonably tight implementation timetable without allowing adequate time for local authorities to prepare demonstrates a cavalier disregard for the interests of those authorities, which, not surprisingly, are demonstrating growing alarm. The Government should pause to think about why local authorities, which ought to be welcoming a measure whose intention is localist, are expressing such grave reservations about the implications of this scheme.

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[Mr Betts]

Absolutely. We are told that vulnerable people—perhaps people on very low incomes with children—are going to be protected, or have to be protected, by councils under the scheme, but are they going to be or not? Are the Government going to insist on that? We are not quite sure. We are told that local authorities have to take account of the tapers under universal credit, but what does that mean? Are they obliged to respect completely the 65% taper element within universal credit or not? If so, will that mean that a smaller and smaller number of people will have the totality of the cuts in benefits imposed on them? That is the reality. Will the Government explain what they think is going to happen?

[Mr Kevan Jones]

Does my hon. Friend agree that one problem that the Government seem to ignore is that a lot of the people affected will not be on benefits but will be in low-paid work and that this will be a disincentive for them to work?

[Mr Betts]

Of course it will, unless the Government are saying that those people should be exempt as well. To what extent will councils be obliged to take account of the tapers in universal credit in the system they devise? Will Ministers give a clear answer on that? If councils have to take account of it, full stop, that will really throw the onus back on attacking benefits and on reductions for the unemployed. Is that the situation? Is that what Ministers are trying to achieve?

The LGA has done some calculations to the best of its knowledge and information. It says that because of the exemptions for pensioners and others for whom the Government say local authorities cannot make reductions under the scheme, those who are left whose benefits can be reduced—the 1.3 million claimants out of the 5 million who currently claim—will lose, on average, £320 each a year. That is £6 a week being lost by people who are already on low incomes—that is why they are claiming benefits in the first place. That will be on top of any other benefit losses from any other benefit reductions the Government intend. Have the Government analysed whether that £320 figure is right? Do they contest it?

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[Mr Robert Syms (Poole) (Con)]

I do not support amendment 79, but think it a useful vehicle for debate on an important subject. In my experience, local government is good at adapting to change, provided that it is given sufficient time to do so. I am sure that local authorities will be able to adapt to the Government’s timetable, but there are many pressures in different areas. First, most authorities are cutting spending; secondly, they will have to grapple with the 10% reduction; and thirdly, the Government have stated clearly that that should not affect pensioners. In an area such as Poole, with a heavy preponderance of pensioners, the burden will fall on a small minority of those claiming that benefit. Fourthly, as most local authorities will have to freeze their council tax, or will freeze it anyway, and have limited balances, they may well err on the side of trying to ensure that they get their figures correct and that there is no cross-subsidy in terms of the benefit falling on the council tax payer. A perverse incentive may arise to make larger reductions in support for the vulnerable than the figures necessarily entail, because authorities do not want to take the risk.

The current system is predictable in the sense that it is running and the Department for Work and Pensions can transfer money equally on a monthly basis. The direction of travel in localisation is fine and I am sure that many local authorities can draw up good schemes, but in year one the new arrangements will not be as predictable. Some authorities will draw up schemes that turn out to be more generous than they thought, and others will draw up schemes that are less generous than expected. Ministers have to consider what will happen when a scheme is got wrong, because as sure as eggs are eggs, there will be one authority that gets its figures substantially wrong and has a problem.

[Mr Kevan Jones]

The problem for authorities such as mine in County Durham, where a large number of people receive council tax benefit, will perhaps be bigger than for some of the smaller authorities, where there are relatively few council tax benefit recipients.

[Mr Syms]

I am certain that the measure will have a different effect on different authorities. We need a little bit more clarity from Ministers: will there be emergency funds that can be drawn on if there is a difficulty in the short term?

Of course, what makes it complicated is the fact that the Government are looking for savings because of the overall economic situation. We have to make savings; we are looking to make savings of £420 million, and that makes things much more difficult. Again, speaking from my experience of local government, it is sometimes in a position to deliver savings, given a chance, but as we have heard in this debate, if there is pressure on council tax and council tax benefits, something will have to give. I therefore have concerns about the Government’s direction of travel, and I hope that the Minister can reassure us that they have thought about what would happen in an emergency.

Clearly, if a local authority has to deal with a reduction and is given maximum flexibility to do so, sometimes it can deal with it, but if it is initially told, “You must protect pensioners,” the impact of the reductions may fall on a smaller number of people. We recently heard exchanges across the Chamber about universal credit; that credit may offset some of that, but that might mean that the non-working faced the worst situations. The issue needs careful thought. I am sure that the Government’s timetable can be kept to, but we have to think very carefully; if lots of new schemes are invented following consultation, some people will get them right, some will get them wrong, and some will over-egg the savings, and that may well have an impact on our communities.

The Library briefing says that the reduction might partly be an incentive for local authorities to create jobs, but I am not sure that local authorities can wave a magic wand and create jobs in six months, a year or two years. Over a period of time, if authorities have active economic development departments, build capacity on industrial estates and try to attract firms, they might be able to have some impact. However, from a practical point of view, when it comes to dealing with the problems that arise when the measures are implemented—and perhaps in the year or two after that, in what we all know will be quite difficult economic circumstances—I do not think that councils have the ability to change the number of people in or out of work in their area. That is a long-term thing, not a short-term change that can be made in months, so I have some concerns.

Poole borough council, my authority, is having to deal manfully with the need for a number of savings; dealing with the measure, on top of that, will be difficult. I hope that we get the scheme right in Poole, but if we do not, I hope that the Government have thought about how they will deal with the consequences.

[Helen Jones (Warrington North) (Lab)]

It is a great pleasure to be under your chairmanship, Mr Crausby. We have heard hon. Gentlemen on both sides of the House express real concerns about how the scheme will work in practice, and particularly about what will happen in authorities with a large number of pensioners. Hon. Friends have spoken about the need to start the scheme on the right basis—a neutral basis—and to ensure that councils are adequately funded for the scheme that they are being asked to bring in.

I want to speak about new clause 11 in particular, which seeks to address some of the real financial risks that are being transferred to local authorities. Many hon. Members will remember that last week we debated clause 3, which changed the requirement to pay a grant to a power to do so. In that debate, as in all our debates so far on the Bill, the Government refused to clarify how they would distribute money, fund local authorities and meet the costs of the duties that they seek to impose on them. That is exactly what the Government are trying to do with the localisation of council tax benefit. We are back to the old game of ensuring that the blame for their cuts is taken elsewhere. New clause 11 attempts to ensure that local authorities are reimbursed for expenses incurred as part of the council tax reduction scheme.

The 10% cut in funding that many hon. Members have referred to, along with protection for pensioners, which the Government rightly want to ensure, means that others will face much larger cuts in their benefit. We will debate many of those issues under the next group of amendments.

[Mr Kevan Jones]

Does my hon. Friend agree that that includes the 1.9 million people in receipt of council tax benefit who do not have passported benefits?

[Helen Jones]

Yes, I agree, and we will consider those people as we proceed with discussions this evening. That is the group most often forgotten about in these discussions, and the most at risk.

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[Helen Jones]

I could give such figures to the hon. Gentleman, but I am afraid that I do not have them at the moment, and they vary greatly from council to council. He raises an important issue. Local authorities that have many council tax benefit claimants will see a bigger cut in their spending power, and that is part of the problem.

[Mr Kevan Jones]

Although £55.1 million a year is paid out in council tax benefit in County Durham, less than £3 million is paid out in Hart district council in Hampshire.

[Helen Jones]

That makes the point very well.

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[Annette Brooke]

At this point in time, it is easy to put such amendments forward, but one has to identify where the money is going to come from, and I shall touch on that in a moment, because there are two sides to the issue: first, what needs to be addressed, but, secondly, how we finance it. That is quite important.

Returning to the point I was making, I wish to emphasise that we all have constituents who come to us with a breakdown of their weekly expenditure, and we all know how little there is to spare in some of those budgets, so the possibility of losing £6 to £10 of benefit is truly frightening.

[Mr Kevan Jones]

The hon. Lady talks about constituents going to her surgery. When they start going in 2013, after their benefits have been reduced, will she tell them not just that she voted in support of the measure, but that it was brought in only because the Liberal Democrats supported the Secretary of State?

[Annette Brooke]

At this stage, we are debating, and I hope all trying to be constructive about, the direction in which we would like the Bill to go, and it is important to be constructive, rather than to look for an immediate political hit.

Returning to the point I was making—

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[Annette Brooke]

The very point I was making is that there are variations throughout the whole country, so there needs to be some sort of stabilisation, contingency, transition—whatever we want to call it—because of the differences throughout the country and the possibility that the measure in the Bill will hit some very vulnerable people very hard. I make a plea to the Minister, even if he cannot give me the answers that I might want to hear today, to go away and look at all those issues, which have been raised on both sides of the House.

[Mr Kevan Jones]

It is a pleasure to serve under your chairmanship, Mr Crausby.

What we have seen from the hon. Member for Mid Dorset and North Poole (Annette Brooke) is a classic Liberal Democrat tactic: sit on the fence, give an impression—obviously with a leaflet out this weekend—of how she opposes and spoke against the proposal, and then go along and vote with the Government. I remind her, however, that if she and her Liberal Democrat colleagues choose to vote against the Bill, this Government will not get it through. Although she raises articulately the issues that will affect her local council, she cannot get away from the fact that, when these draconian proposals come in and affect many councils, including her own, there will only be one person whom they have to blame, and that will be her for voting for them.

I hope that, come the general election, people reflect on that point, because this is not about the Conservatives doing nasty things to Dorset, but about the Conservatives and Liberal Democrats doing nasty things to local government, and the hon. Lady is taking part in it. I am sorry, but I am not prepared to see her shed crocodile tears for the proposals and then troop through the Division Lobby. If she believed in what she was saying, she would vote against the measures and stand up for local government, a sector that I understand she comes from herself.

It was said last week that what local government requires is stability, and it does, but this is another example—we had one last week with the localisation of the business rate—of massive instability being introduced to local government. My hon. Friend the Member for Sheffield South East (Mr Betts) said that there was nothing wrong in principle with devolving council tax benefits to local councils, and I totally agree, but if it is brought in with a 10% cut, as the Bill proposes, and on the current time scale, it will have a massive effect on many local councils and individual recipients of council tax benefit.

[Mr Mike Hancock]

I do not agree with the benefits being devolved to local authorities, so what does the hon. Gentleman, who is arguing against localising the benefits under discussion, see as the real benefit of doing so?

[Mr Jones]

I would have no problem with a national scheme that was administered locally. The current system with the DWP is cumbersome, but I agree with the hon. Gentleman, because the Bill is going to create an absolute technicolour dreamcoat of schemes throughout the country, including some next door to one another, as we have just heard, in Poole, where two local authorities could have two completely different schemes because of their local circumstances.

However, this is a cleverly construed proposal, and we have to keep exposing what the Secretary of State is up to, because he talks about the devolution of decision making, which is what the measure is, but it is the devolution of decision making—with blame. He is instigating a cut of 10% in council tax benefits and saying to local councils, “Right, you decide how it will actually be administered.” Then, when they take those tough decisions, he will stand back and say, “It’s not my fault, it’s the local council’s fault.” I remind Government Members that that will include Liberal Democrat and Conservative councils. They will have to make tough decisions. The Secretary of State is prepared to hide behind those councils. I accept that he has written off most Liberal Democrats and does not care about them, but the effect will also be felt by local Conservatives.

Amendment 79 is actually quite modest. It states that if we are going to introduce the new scheme, we should start on a neutral basis. It asks for a level playing field so that everybody knows where they are, with no 10% cut. We will talk later about time limits. The fact that this all has to be done by 31 January 2013 will scare many local authority treasurers to death. They are having to second-guess what contingency they will need to bring the scheme in.

The Bill makes no assessment of the differences between councils. Councils with a large number of council tax benefit recipients, which are mainly in the north of England, will not only have the problem of administering such large numbers of people, but will be disproportionately affected. I will give some examples. County Durham has 63,494 council tax benefit claimants, which is 15% of the population. That costs £55.1 million. In comparison, Hart in Hampshire has only 3,029 council tax benefit claimants, which is 4.2% of the population. That costs a mere 3% of expenditure. Likewise, the famous Wokingham, which we cited last week, has only 5,159 claimants, which is 3.9% of the population. That makes up 5.3% of the council’s total expenditure. The 10% cut and the administrative nightmare of bringing it in will be a lot easier to manage for councils with a small number of council tax benefit recipients.

The Secretary of State talks about localism and devolving matters to local councils, but if we read the Bill carefully, we see that he has kept back powers for himself. If he is not happy with the scheme or a council does not implement it by 31 January 2013, he has the power, by order, to implement it. It is not clear whether he will intervene in that way if he is not happy with how a council implements the scheme.

The hon. Member for Mid Dorset and North Poole is correct that the problem with the scheme is that it comes with the 10% cut. It is important to look at the people who are in receipt of council tax benefit. The myth peddled in the media and by the Conservative party is that they are largely people on benefits. The statistics to September 2011 show that 5.9 million people are in receipt of council tax benefit in Great Britain. Of those people, 2.2 million are pensioners, who will not be affected by the scheme. Of the people who will be affected, 1.9 million or 33% are in receipt of standard non-passported benefits—that is, they are not claiming benefits—and the remaining 3.9 million or 67% are on various benefits. Of the people on benefits, 1.3 million receive income support, 600,000 receive jobseeker’s allowance, 300,000 receive employment and support allowance, and 1.7 million receive pension credit. A large number of people, through no fault of their own, will see their incomes squeezed.

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[Mr Mike Hancock]

May I say how nice it is to see you in the Chair, Mr Crausby?

I wish to raise my concern about the fact that we are approaching 7 o’clock and will hardly get halfway down the selection list. The time available is totally inadequate. Goodness knows what the Government were thinking about, giving us just three days in Committee. It is an absolute travesty. I only hope that they will give us at least one whole day, and possibly two, on Report to allow debate on many of the matters that have not been discussed in Committee.

If the House is to do justice to the Bill, we should at least get a chance to discuss some of the very important amendments that have been tabled. I see them not as wrecking amendments but as helpful, creative amendments that would show the Government the strength of feeling in the House. Legitimate concerns have been raised from both sides of the House on this group of amendments alone, and if I were the Minister leading the Bill I would like to give the House more time to discuss them properly. If we are not careful, we will end up with a dog’s dinner, which cannot be right or fair to local authorities.

The most important issue in this group of amendments is raised in new clause 11, with which I agree entirely. It gets to the very essence of what the Committee has discussed on previous days. It is about the stability and sustainability of local government and its ability to stay clearly focused on its task. Support for new clause 11 is essential to give local authorities a fair chance of implementing the scheme.

The Government have expressed no clear and positive view about what they can do to help local authorities. I ask Ministers what is wrong with new clause 11 if they believe in fairness and in giving local authorities a proper opportunity to get the scheme right. Who will benefit if it is got wrong? No one, least of all the people who claim benefits. Most of the blame will fall on local authorities, and once again we are going down the well trodden path whereby the Government decide to disrobe themselves of their responsibilities and pass them off to local government, but forget to put the resources in place to help things happen.

I do not suppose that at the end of this debate the Minister will dish out to Members a scheme that has already been concocted, so that they can take it back to their local authorities and say, “This is the scheme we want you to use. We’ve paid for it, we’ve got it in place, and all you’ve got to do is tweak it a little. It’s tried and tested, and we’re prepared to give it to you.” That is not going to happen, is it?

[Mr Kevan Jones]

Does the hon. Gentleman not understand that the Secretary of State is a highly political individual who knows exactly what he is doing? He knows that he is going to save money by making this change, and he will give constituents in Portsmouth and Durham the impression that it is nothing to do with him but is down to the nasty councillors who are making the tough decisions.

[Mr Hancock]

The Secretary of State will be making a grave error of judgment if he thinks he is going to get away with that in Portsmouth, because I will be telling people there loud and clear where the responsibility for the change lies. Above all, I am disappointed that a Secretary of State who was groomed in politics in local authorities and who, having led one, has a fundamental understanding of their problems is not being more responsible towards something that I thought he cherished and cared for. Like the hon. Gentleman, I am disappointed, but I can assure him that people in Portsmouth will not have any illusions about where the blame lies.

Portsmouth is a local authority that is making reductions, and many hon. Members’ local authorities are in the same position. People are losing their jobs, and here we are contemplating another burden that will be placed on them with not even an indication of what it will cost to put in place. I know from bitter personal experience, having led a local authority, how much money can be lost when authorities get the wrong advice on a system. Hampshire county council squandered literally tens of millions of pounds over a 20-year period on schemes that failed in one way or another, and I do not want that to happen again.

Where is the inspiration that we ought to be getting from the Minister about how we can resolve the problem easily? Where is the offer to meet the House halfway on this issue? Nowhere. That is disappointing. If there are to be localised benefit systems, I want us to find a way to get a scheme in place in good time, but in proper time. That cannot happen in the time scale before us. If we are to have a change in the system, it must be seen to be fair and properly implementable. The scheme cannot punish those who desperately try to get into work but are on low pay.

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[Mr Howarth]

George—not only a different party, but an entirely different politics, Miss McIntosh.

It is a pleasure to follow the hon. Member for Portsmouth South (Mr Hancock). Both he and the hon. Member for Mid Dorset and North Poole (Annette Brooke) made a plea for constructive suggestions. I tried to intervene on the hon. Lady’s contribution with a constructive suggestion, but I think she thought that I was going to be disagreeable, and she refused to accept my intervention.

Many hon. Members have mentioned the consequences of protecting pensioners in the overall scheme, and I will not labour the point. It is important to say at the outset that nobody on the Opposition Benches and, I am sure, elsewhere, disagrees with the principle that pensioners should be protected. It is an important principle, to which we all subscribe. The difficulty that we are trying to address is not the Government’s decree that pensioners should be protected but their failure to deal with the consequences of that in the context of a 10% overall cut.

Some contributions have referred to the impact. For example, the hon. Member for Poole (Mr Syms) wanted more information about how the proposal would work in practice. I would like to rely on a briefing that the special interest group of municipal authorities—SIGOMA—has given me. It is a local government representative group, but of a particular set of local authorities. It concludes that, to protect pensioners’ council tax credit, the rest of council tax payers nationally will face a reduction of 17% rather than 10%. We are talking about averages, and we discussed the problem of averages earlier. The range means that, at the bottom end, the figure will be 13.4%, and at the high end, it will be 25.2%. Those who have concerns should take those figures into account.

I will talk about Knowsley shortly. It is a Knowsley problem—there is a distinct flavour of Knowsley to it—but every hon. Member will be confronted with it if the scheme is implemented in its current form.

[Mr Kevan Jones]

Does my right hon. Friend agree that the scheme will disproportionately affect constituencies such as his and mine in Durham, which not only have many people in receipt of council tax benefit, but a growing elderly population?

[Mr Howarth]

Yes. There might occasionally be disputes about the scale, but every demographer recognises that people are living longer and that there are therefore many more elderly people in the system.

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[Mr Howarth]

My right hon. Friend makes a strong point, which I hope to tackle shortly.

Currently, many people, especially young people, have to accept jobs, often well below the level of their qualifications, on a minimum wage, at the same time as having to forge an independent existence from their families. I fear that they, or young couples with families, in which the principal earner is on a low wage, will be most affected and put in an impossible position, unless the discretionary powers that the Bill describes are spelled out clearly so that the outcomes cannot be arbitrary. We deserve to know at least what the Government are planning, and that should appear on the face of the Bill. Who are the classes of people? There are vague descriptions in schedule 4, but nothing is spelled out clearly.

I said I wanted to talk about Knowsley and the Liverpool city region. I am indebted to the director of finance in Knowsley for the impartial briefing he has given to me—it is a Labour authority, but he has provided advice on the basis of his financial experience and qualifications. His view is that the 10% cut combined with pensioner protection means that the benefit of other claimants will have to be cut by 18%. If there is provision for others in a local scheme—they could be singled out or ring-fenced—that 18% cut could increase to as much as a 100%, because people could be excluded altogether, as the hon. Member for Poole said.

[Mr Kevan Jones]

Does my right hon. Friend agree that those same people will also be affected by the Welfare Reform Bill? For example, some will lose money under the under-occupancy rule in addition to their losing their council tax reduction. Many such people are in work.

[Mr Howarth]

I am grateful to my hon. Friend. If he bears with me, I will cover precisely that point shortly in the context of the Liverpool city region, but I am sure the same trend applies in his constituency.

[Mr Howarth]

The hon. Gentleman, who is always fair and reasonable, makes a fair and reasonable point. I hope that the Ministers, who represent the two parties in the coalition, will at least take notice of the concerns that have been expressed from the Government Back Benches, even if they do not take notice of what Opposition Members say.

The Office for National Statistics estimates that pensioner take-up of Knowsley council tax benefit could be as low as 53%, but there could be a significant increase in take-up as a result of a localised scheme, which would place a disproportionate burden on other categories of people. If a greater number of pensioners take up the scheme, which is perfectly possible, the 18% I mentioned could be still higher.

My hon. Friend the Member for North Durham (Mr Jones) has been patient, so I shall speak about the effects of other measures. It is important that the changes are not taken entirely in isolation. We will talk about welfare reforms tomorrow, but a series of measures will combine to hit some of the poorest in society.

When Labour was in government, I remember the Opposition hammering us by saying, “Well, the Institute for Fiscal Studies says something different from what the Government say.” If that is good for Conservatives and Liberal Democrats when they are in opposition, it is good for Labour Members. “The Impact of Austerity Measures on Households with Children”—an IFS report published this month and produced on behalf of the Family and Parenting Institute—found that the planned changes in the tax and benefit system, including those to council tax benefit, will hit the incomes of families with children the hardest. The IFS estimates that the measures will increase child poverty by 2014-15, with the poorest families being around 10% worse off.

[Mr Kevan Jones]

Will my hon. Friend give way?

[Mr Howarth]

I will give way in a minute. I just want to finish my point. The measure in the Bill combined with other measures will have a devastating effect on some of the poorest families in our communities.

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[Mr David Ward (Bradford East) (LD)]

We are in the same position as we were in last week, in that we are discussing a measure to which most Members agree in principle. Perhaps not all Members agreed on business rates, but we are discussing consequences.

My understanding—we have been told—is that the sums show that the measure balances itself out nationally, whether at £420 million or £500 million.

[Mr Kevan Jones]

No it does not.

[Mr Ward]

Whether the hon. Gentleman believes it or not, that is what we are told. The real issue is the local ramifications—winners and losers area by area.

[Mr Jones]

Will the hon. Gentleman give way?

[Mr Ward]

Let me just get on. I want to develop my thoughts if I may.

[Mr Jones]

But that statement was wrong!

[Mr Ward]

It does not really matter because we are talking about local ramifications—how the measure affects each area and what each area will be required to do to make up for lost council tax benefit.

The question is where the money will come from to make up the gap, and there are a couple of answers. First, there are the new freedoms that will be extended to local authorities, and locally determined schemes will generate a lot of additional funding. Members have raised the issue of pensioners being protected, and that will pass the burden on to other people.

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Mr Ward]

No. Just sit and listen.

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[Mr Ward]

No.

However, that is not really the point. It does not really matter whether those two figures equate. If they do, it will be pure fluke and pure coincidence. If a local authority can generate sufficient funding from the new freedoms to cover the loss in council tax, it will be sheer fluke, and a policy cannot be based on fluke. The certainty of loss will be there, without the certainty of gain. The certainty of the Government withdrawing the 10% will be there; the uncertainty of what can be generated at this time is clear for all to see.

In addition, the collection costs for the alternative sources of funding for the exemptions on classes A, C and L could be enormous. We must take account of the cost of the arrears and the cost of collecting those additional sources of funding. The Government’s position is, “Don’t worry. You may be losing council tax, but your new-found freedoms will easily generate the funds required to balance that.” However, that is simply not guaranteed authority by authority, and it is based on sources of funds that it will be difficult to collect in some cases. There are huge differences when it comes to residents telling their council, “I’ve got an empty property. Give me a discount” and residents saying, “I’ve got a second home. Please tax me.”

[Mr Kevan Jones]

There are a lot of second homes in Bradford.

[Mr Ward]

There are, actually, several hundred second homes in Bradford.

If authorities cannot generate funding from the new-found freedoms, the other answer is for them to find it somewhere else in their budget. They have this wonderful freedom to find other areas where they can balance the books. The problem is that council tax is likely to be high in areas of high need. Areas of high need will have high formula grant, and areas of high formula grant will have suffered a large cut in the local government settlement. All those things together mean that the risk, or the uncertainty people have talked about, is disproportionately likely to hit more deprived communities.

I think it was the hon. Member for Meon Valley (George Hollingbery) who said that 10% is 10%. There may be a lot more council tax in monetary terms in Durham or Bradford than in Meon Valley, but 10% is 10%. However, that is not really the issue, because more deprived, less affluent areas will be disproportionately harmed, given that they have disproportionately more council tax recipients. That is not fair, but the issue of fairness cannot be assessed until the thing has run its course, and we have developed all the possible ways that an authority may have of generating funds.

Of course, there is the issue of whether the software can be introduced, but there are also the unanswered questions. How will the future growth in claimant numbers affect the 90% base in terms of eligibility? Opposition Members talked about the low level of claims by certain groups, such as pensioners, where 65% of those who are eligible actually claim. What will the scheme do to protect authorities from the growth in claimant numbers as a result of increased take-up or deteriorating economic circumstances? What is the situation with the administration grant for council tax support? When will authorities know about that? Where is the evidence that has been collected about the relative difficulty of collecting some of the income from the new potential sources of income? Where is the evidence that that will be done?

Finally, the proposals are clearly Treasury driven. Most people here have at heart local government and the local government system. That is why we have a generally positive response to localisation measures as they affect local authorities, although we understand that local government must make a contribution to tackling the deficit, as it has through the local government settlement. However, instead of treating local authorities as cash cows, why could we not have treated them as partners in deficit reduction? Why could we not have gone go them and said, “We will keep the council tax, and we intend to reduce council tax benefit over a period of time. In the first year, having given you that warning, we will extend new powers and freedoms to you to collect tax and remove some exemptions. You will yield the money that is generated from them to the Exchequer, so you will keep your council tax, and there will be no 10% cut, but it is on its way. In the meantime, you should generate additional funds from the new freedoms you will be given and yield those funds to the Exchequer in the first year. You will then be weaned off that over a period of time.” In the spirit of the business rates, why do we not do that, with some reward to those authorities that take up the challenge of extending the council tax base by generating money from new sources?

There was a different way to tackle this issue.

[Mr Kevan Jones]

Vote against it.

[Mr Ward]

I am going to. Unlike the hon. Gentleman, I am not a party lackey. Sometimes, we have to vote the right way, not simply the way the party tells us.

--- Later in debate ---

The Government say that they want to protect pensioners—and rightly so—but the consequence of the decision, coupled with a 10% reduction in funding, means that those in local authorities with a high proportion of pensioners will suffer more than those in an area with fewer pensioners. How can that system be fair? As we heard from my hon. Friends earlier, the reductions for those of working age will range from 13.4% to 25.2%—a national average of almost 17%. Of course, that situation could get worse. The Government have said that they are minded—only minded—to base their funding on previous expenditure. As a result of that, spending will no longer rise to meet changes in demand. It is, in effect, a cash-limited system. If unemployment rises and more people need to claim, and if more pensioners claim—quite rightly under this system, as we heard earlier—that must be paid for.

[Mr Kevan Jones]

Does my hon. Friend agree that, contrary to the impression given by the Minister in his winding-up speech on the previous group of amendments—that use of the flexibility on second homes, and growing the economy, could make up the difference—the only option available to most councils is to raise council tax and that councils with a high proportion of band A properties will be at a severe disadvantage when it comes to the amount of money they will be able to raise?

[Helen Jones]

My hon. Friend is, of course, right. In trying to remedy the problem, the most disadvantaged councils will be those with the lowest tax bases. That has been true throughout all our discussions on the Bill. If demand goes up, councils will be faced under this scheme with either bearing the extra cost or, more likely, redesigning their schemes to restrict the number of those eligible. The Chartered Institute of Housing said it very clearly: council tax benefit awards will be

“squeezed precisely at the point at which there is the most need for help amongst low income households.”

London Councils estimated that if this scheme had been in place earlier, a shortfall of £400 million would have been faced in the five years to 2009-10.

The Government say that councils can do something about this. The Minister for Housing and Local Government says, in what I have to say reads like a rather garbled piece of evidence to the Select Committee, that considering whether to pass on the 10% reduction to claimants or to find the money elsewhere was “old-school thinking”—or what the rest of us might call “doing your sums”. I am sure that councils facing these cuts will have been relieved to hear that they could reduce the bill

“not by unfairly not paying people who are vulnerable and need it”,

which seems to me to be the precise effect of this scheme; no, he said, councils should be ensuring that there is

“a definite interest in starting up that new industrial estate, business park and getting economic activity going so there are jobs.”

Let me say this slowly, so that Ministers can understand it. If a firm closes down or lays off staff, a new business park does not open up the next day. People are out of work; they claim benefit; and if there is not enough money to pay that benefit, councils either have to cut what is available or find the money somewhere else from budgets already facing massive cuts. It is staggering to hear a Government who have presided over a rise in unemployment to 2.6 million and who have seen the economy flatline lecturing local councils about the need to open business parks. Only the Minister for Housing and Local Government, whose overwhelming self-confidence is matched only by the staggering depths of his ignorance, could come out with such nonsense.

It is not surprising that the Select Committee was unimpressed, saying:

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

It continued to stress what we have talked about throughout this Committee stage—that

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

It is, of course, precisely the authorities that have already borne the brunt of the Government’s cuts that will find themselves in most difficulty with this council tax scheme.

The New Policy Institute estimated that five out of the 10 hardest-hit local authorities are among the top 10 most deprived areas in the country: Hackney, Newham, Liverpool, Islington and Knowsley. In the Liverpool city region, for example, the current proposals would result in cuts of between 17% and 23% for people of working age—those who are not pensioners. Let me give one example. A single person in Halton in a band A property would have to find £179.92 a year extra. In Sefton, which has a higher than average number of pensioners, a minimum reduction of 23% will be required for people of working age. A couple living in a band A property would have to find an extra £226.72 a year.

Those might not seem large sums to Government Members, but to people who have to count every penny, who sometimes run out of money before the end of the week, they are simply impossible to find. That is why we have tabled these amendments—to ensure that the needs of people of working age and those in poverty are taken into account. Where is this extra money going to come from? Do Government Members believe that it can be somehow magicked out of thin air? This does not even provide incentives to work, even if there were jobs to go to. The Government are not clear about the vulnerable households that should be protected. They have made it clear that they want to protect pensioners, but they are singularly unclear about other vulnerable groups. If, as is likely, local authorities will have to protect those on employment and support allowance, jobseeker’s allowance and income support, there will have to be an even bigger cut for the unprotected group—overwhelmingly the working poor. We have a Government who claim that they are freezing council tax, but they are actually increasing it for those least able to pay.

[Helen Jones]

I could not have put it better myself. An especially ridiculous aspect of the proposals is that the extent to which a council is hit will depend largely on the number of pensioners who live in the area. It is essentially a matter of chance. Moreover, if people on passported benefits are protected, it is possible that those in work will face a cut of up to 40%, which would wipe out any gains from the raising of personal allowances. The Government have absolutely no right to boast about a tax cut when they give with one hand and take with the other.

We are attempting to ensure that at least the needs of those of working age are not forgotten when councils draw up the scheme. I fully accept that Labour councils will try to do that anyway, although they have been hamstrung by the Government, but I do not believe that Government Members have demonstrated during our debates on the Bill that they understand how much these sums mean to the very poorest people. If I may use the Prime Minister’s words, they do not get it. They do not understand what it is like to run out of money before the next wage packet or benefit payment. They do not understand what it is like to have to choose between paying a bill and buying the children a new pair of shoes.

[Mr Kevan Jones]

Did the Minister not make it clear earlier that he “did not get it” when he dismissed a 16% decrease in council tax benefit as though it were loose change?

[Helen Jones]

My hon. Friend has hit the nail on the head. The problem is a lack of understanding of the fact that trying to find even an extra couple of pounds a week is simply impossible for those on such tight budgets.

This ill-thought-out scheme, which even Government Members agree is being rushed through, is full of holes. First, the Government have failed to align it with their much-hyped universal credit. Most of us would assume that a universal credit would be—well—universal, but that is not the case in this instance. Council tax benefit is to be split from universal credit: there will be one national scheme, another local scheme, two sets of administrative costs, and a huge scope for anomalies. Secondly, the Government are introducing a 10% cut while protecting pensioners. Thirdly, they want schemes that will not create work disincentives.

In a parliamentary answer to my right hon. Friend the Member for Leeds Central (Hilary Benn) on 17 June, the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) said:

“The Government intend that the general principles of supporting work incentives will be set out in guidance”

—guidance that the Secretary of State will provide, although the Minister tells us that he did not want to interfere in the schemes—

“which will help local authorities to design support.”—[Official Report, 17 January 2012; Vol. 538, c. 629W.]

How on earth can that work? Families will face two means tests, one for universal credit and one for council tax benefit, along with one set of national rules and goodness knows how many local rules. There will be one taper for universal credit; if councils fix a different taper for council tax, how can there be an integrated benefits system? If the taper is fixed at the same rate, when will it be calculated, before or after the calculation for universal credit? It simply will not work, and the people who will pay the price are the most vulnerable members of society: people who have lost their jobs, and families who are trying to do the right thing by going out to work for poverty wages. They will find themselves in an absolute mire.

[Mr Jones]

As was pointed out earlier, different councils may operate myriad different schemes. Would that not make people’s search for work more difficult? In central London, for example, some schemes might be advantageous while others would make it hard for people to move around to find work.

[Helen Jones]

My hon. Friend is right; indeed, Government Members expressed similar reservations during our earlier debate. Such a disincentive is precisely the opposite of what the Government say they want.

[Helen Jones]

They will not help those people, and they will not help councils. We discussed the financial risks for councils earlier, but one of the main financial risks is an increase in the number of defaults because people are simply unable to pay—and, indeed, there is no evenness in that situation. In North-East Derbyshire 49.4% of recipients of council tax benefit are pensioners, while in North Kesteven the proportion is 53.2%. People living there face a bigger cut than people living in, say, Luton, where the proportion is only 28.2%. The scheme will subject people to cuts that are entirely arbitrary and unfair, while transferring the risk to local authorities. Many people will find themselves in real financial difficulty, while councils’ collection rates will fall.

Amendment 67 would require local authorities to make people aware of their entitlement to council tax benefit, and to give the necessary assistance to those who wish to make an application. I believe that good councils will do that anyway, but the Bill puts such pressure on local authorities that some—albeit, I believe, very few—will be deterred from seeking out claimants and informing them of their rights. Authorities are currently reimbursed monthly for expenditure that they actually incur, but the Government intend to pay grants, and we do not know what methodology they will use to set the level of those grants. Although they have promised to set allocations annually for the first two years, there is no certainty about what will happen after that.

The Government have already said, in their response to the consultation, that

“multi-year allocations would provide greater certainty and better allow local authorities to benefit financially where demand for support was reduced over several years.”

I think my hon. Friends will see immediately where that is going, because we have seen it before. I am talking about the creation of incentives for councils to reduce claims. In a time of economic uncertainty, and when the economy is flatlining, we cannot reduce those claims by bringing in lots of jobs, because the jobs are simply not there for people to get. Not only will local authorities that are experiencing increasing unemployment or falling wages leading to new claims be penalised, but the Government are already considering how to build in incentives to reduce claims.

There will clearly be pressures on local authorities. They will take all the financial risks associated with the possibility of demand exceeding supply, and they will also have to deal with the extra costs of setting up the scheme—which may or may not be fully reimbursed—as well as the costs of revising it regularly, of notifying people about it and of appeals. That final subject has hardly been mentioned so far in our debate, but appeals could well be considerable when people find that their entitlement is being cut. If we add in the Government’s desire to move to multi-year settlements, we can all see that there is a genuine risk of the number of claims being driven down.

That is why we have tabled the amendment. We want to ensure that local authorities must take proper steps to publicise their schemes, and also that they assist those facing difficulties in applying, perhaps because of disability or because they are not sufficiently literate or numerate and do not understand the forms. We have all come across such constituency cases. Having rights is of no use if people are ignorant of them or cannot exercise them, so it is only fair and reasonable that these safeguards should be built into the Bill from the start. Through them, we hope to counter the Government’s incentives to reduce the number of claims from people who have an entitlement to benefit.

Amendment 68 seeks to ensure that before a scheme is drawn up there is consultation not only with precepting authorities and what the Bill vaguely refers to as “others” with an interest, but with organisations that assist and represent people on the receiving end of this Government’s cuts. In respect of this Bill, it is fair to say that so far such organisations have been largely ignored. The big society clearly does not include those who give up their time to assist some of our most vulnerable citizens, and who deal every day with the impact of job losses and the consequences of child poverty and try to help those for whom every day is a struggle. Any redesign of the scheme ought to take account of the views of those who will be dealing with its impact.

As has been said, the impact will be extremely severe because it will come on top of the Government’s other changes to welfare benefits. Let me give an example of a one-parent family living in a three-bedroom house in Knowsley. Assuming that they can stay in their home even though they will be more than £800 a year worse off under the Government’s changes, they will then be hit again by this scheme because in Knowsley there is likely to be a 20% council tax benefit cut. They will therefore have to find a further £170 per year. Those who deal with people in our welfare system and who give advice to people in poverty should be consulted on the design of these schemes.

We often forget the great number of children who will be forced further into poverty by this scheme. In the Liverpool city region, 14.8% of children in poverty are in working families—those claiming working family tax credit or child tax credit. Those families will also be reliant on council tax benefit. What will happen to them when this scheme comes into force is very clear. More people will be unable to pay, so there will be more pressure, more debt and quite possibly more people falling into the hands of loan sharks. Anyone who does not think that will happen has never walked around a big estate and seen how these people operate. They often wait outside the place where people collect their benefit, and take the money straight off them. That is the reality of life on the edge. That is what many of our charitable organisations and benefit advice agencies deal with every day. It is only right that they should be consulted.

Amendments 70 and 71 seek to ensure—[Interruption.] Yes, it is the same story, I say to the hon. Member for Burnley (Gordon Birtwistle), and it will be the same story for many of my constituents, and his, when this scheme comes into effect. I am terribly sorry the hon. Gentleman does not want to hear about the reality of the impact this scheme will have. That is hard luck for him, but it is even worse luck for the people who will be on the receiving end.

[Mr Kevan Jones]

Does my hon. Friend also agree that the Bill’s provisions will hit a lot of northern cities—including Burnley, perhaps—much harder than some of the leafier suburbs of the south?

[Helen Jones]

My hon. Friend is right, but many different authorities will be affected. We heard earlier from Members on the Government Benches who represent south coast constituencies where there are lots of elderly people. They and their colleagues will be very surprised when they begin to realise the impact in their own constituencies of what they have voted for.

Amendments 70 and 71 seek to ensure that in any revision of the scheme by the Secretary of State the impact on all those who may receive, or be entitled to, benefit is considered. We therefore state that it is not only those of pensionable age who need to be considered, but those in employment or seeking work and people in receipt of other benefits, such as disability benefit. We do so because although under the current scheme 5.9 million people receive council tax benefit and 38% of them are over 65, 62%—3.7 million people—are under 65. These amendments seek to put their needs on the agenda, as they appear to have been forgotten by the Government. Also, 67% of claims are passported claims—they are from people receiving income support, jobseeker’s allowance or employment support allowance, for instance. Only 1.7 million of the 3.9 million on passported benefits are receiving pension credit, so most of these people are also of working age.

Other claims—the standard claims—are decided following a means test. Crucially, people who are working may get council tax benefit, subject to an income taper. Claimants lose 20p in council tax benefit for each additional pound they earn over the applicable amount. No one knows what the position will be for those people under localised schemes. The Government may issue guidance but, as usual in respect of this Bill, we are debating this topic without knowing what the guidance will say or even if the Government’s preferred options will be affordable for local councils. All local councils will be forced to cut the benefits available to non-pensioners and, as my hon. Friend the Member for Lewisham East (Heidi Alexander) said, they could cease payment entirely to certain groups.

We believe it is right to protect pensioners but, as we are making clear in the amendments, we also believe that others’ needs have to be considered. The Government seem to want to ignore those people as they have done with every other measure they have introduced. They strive to paint a picture of people on benefits as feckless and workshy. They talk about the price paid by hard-working taxpayers as though they were somehow a different species from those receiving benefits. I have to say, as someone who would clamp down ruthlessly on benefit fraud, that the vast majority of people on benefit receive it legitimately, and that most unemployed people receiving council tax benefit have paid taxes and would like nothing better than to be in work paying them again, as would all the disabled people I meet. Those in employment who receive council tax benefit are precisely the hard-working taxpayers—people who go out every day to work in low-paid jobs—whom the Government will penalise for doing the right thing by going out to work for poverty wages.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

I support the amendments on the impact of the scheme. This debate is about people’s lives, about families and people who live on the edge financially, but it is also about local authorities’ ability to deliver services at the standards we have come to expect in our communities. It is a debacle: the Government’s proposals on council tax benefit will simply heap greater burdens on the most vulnerable households and families at a time when the Secretary of State for Work and Pensions is already making life tougher for them. I would have hoped that the Secretary of State for Communities and Local Government had at least talked to his counterpart at the Department for Work and Pensions to ensure that their policies did not conflict in the way they clearly do. The amendments would help to deal with some of that conflict.

“Make work pay.” That is what the Prime Minister has said over and over again, and he is determined to make that happen. No one could or should argue with that statement, but it is vital to create incentives so that it is always better to be in employment than on benefits. The Government’s proposals on council tax benefits will totally undermine that objective. They are simply yet another attack on hard-working families.

I know that council tax benefit is available to those on low incomes who need financial help to pay their council tax bill, but I am shocked that Ministers appear to believe that a 10% cut to the benefit will somehow—perhaps magically; we talked about magic earlier on—reduce the number of people who need it. In these harsh economic times, with high and rising unemployment as well as rising energy and food bills, this tax relief is to be squeezed precisely at the point when there is the greatest need for help among low-income households. As others have said, pensioners and vulnerable households are to be protected, and rightly so, from the cuts, but that means that the whole of the 10% saving that local authorities must make will fall on the unprotected group—mainly the working poor.

[Mr Kevan Jones]

In his response to the previous debate, the Minister suggested that gap could be filled by councils being able to levy extra tax on second homes, and his hon. Friend the Member for Bradford East (Mr Ward) said there were plenty of those in Bradford. How many does my hon. Friend think there are in Stockton?

[Alex Cunningham]

That is an interesting question, which I wish I could answer. I do not see many empty homes, never mind second homes, in our area, so I think it might be a challenge for us to find some. I am sure we have a few, but I doubt they would fill the gap as the Minister suggests they could. In an authority such as Stockton, with high numbers of older people, the burden on the people the measure hits will be tremendous.

The burden will get higher and higher on ever fewer people. In many cases, the gains made by the working poor from the recent £1,000 increase in the income tax personal allowance will be completely wiped out by the reduction in council tax benefit and the knock-on effects. Surely that is exactly the opposite of what the DWP says it is trying to do? Are the Secretaries of State talking to each other? I wonder. Alongside the rise in VAT and other benefit changes, we are faced with these regressive policies that will hit some people extremely hard—people who already work hard for little reward. These proposals are simply a slap in the face for their efforts to improve their lives.

The Local Government Association has calculated that councils are being asked to share the £500 million cut among 1.3 million claimants, which works out at an average loss of £320 each. That is a significant sum for low earners, especially when the Government claim they are trying to protect work incentives for them. It has been estimated that council tax support for pensioners makes up 50% of the total funding, and roughly a further 25% recipients would also be exempt from the reductions in support because of councils’ duties to support vulnerable groups and tackle child poverty. Such people should of course be exempt, but that could lead to the 10% budget cut falling on the remaining 25% of recipients—on the support provided to low-paid people in work. Those people are working hard for their families, trying to do their best. They have pride in what they are doing, yet this Government are just kicking them.

--- Later in debate ---

[Mr Ward]

Not at all. I anticipate that any local authority worth its salt would have regard to all the things proposed in the amendments. In fact, that will differentiate good local authorities from bad ones, but it is not for the Secretary of State to specify those things, or indeed for us to do so through legislation, which frankly would be patronising and very centralist. As we said many times in relation to the Localism Bill, people have a right to judge at the ballot box whether their authorities are doing what they should be doing—it is not for this House to tell them.

[Mr Kevan Jones]

I was going to say that it was a pleasure to follow the hon. Member for Bradford East (Mr Ward), but his contribution kept getting worse.

Clause 8 of the Bill, headed “Council tax reduction schemes”, sets out the provisions for local councils to draw up their local council tax schemes. Proposed new subsection (2) states:

“Each billing authority in England must make a scheme specifying the reductions which are to apply to amounts of council tax payable, in respect of dwellings situated in its area, by—

(a) persons whom the authority considers to be in financial need, or

(b) persons in classes consisting of persons whom the authority considers to be, in general, in financial need.”

However, the Bill gives no guidance on what local authorities should take into consideration when drawing up their schemes. We could have a plethora of different schemes up and down the country and, as was referred to earlier by Government Members, neighbouring authorities could have completely different schemes and criteria for how people apply for council tax benefit. We know that the Secretary of State will exclude pensioners, but the amendments tabled by my right hon. and hon. Friends would add some criteria or at least set out what the baseline should be.

I am sorry that the hon. Member for Bradford East does not seem to care and trusts that every local authority, good or bad, will consider every single thing, including child poverty. If he had any experience of the Secretary of State’s time in charge of Bradford council, for example—clearly he had—he would know that he had little concern for the poor and the needy.

[Mr Ward]

I wonder whether the hon. Gentleman carried out a full impact assessment before voting to get rid of the 10p rate of income tax, which affected the most deprived people in the country.

[The Temporary Chair (Mr Jim Hood)]

Order. That intervention is not relevant to the amendments.

[Mr Jones]

Interventions have to be relevant, as Mr Hood points out, but I would not stand for election, as the hon. Member for Bradford East and other Liberal Democrats did, on the idea of supporting the poor by increasing income tax thresholds, and then support the Conservatives in pushing through this Bill, which is going to affect some of the poorest and neediest in our society—and somehow turn a blind eye to that. As I said earlier in response to his hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), none of this legislation could go through without the Liberal Democrats, and I am sure that in Bradford at the next general election the Labour party and others will remind the hon. Gentleman’s electorate that he and his party were the ones who put through this Bill, which takes away council tax benefits from the poorest and most vulnerable in our society. So he cannot have it both ways.

The amendment would take unemployment into consideration, and it is important to look at unemployment and how it affects local councils’ claimants for council tax benefit. As you will know, Mr Hood, unemployment in the north-east stands at 11.7%, 3.4 percentage points higher than the national average, while unemployment rates in the south-east are just 6.3%. If we look across the constituencies, we find that the most recent claimant count in my constituency was 2,674 people, or 5% of the population; in Beaconsfield, it was 903 people, or 1.5% of the population; in Aldershot, it was 1,749 people, or 2.6%; and in Wokingham—I have to say to the people of Wokingham that I have nothing against their town, but it is always a good example to cite in such debates—it was just 936 people, or 1.3%.

That shows the disproportionate effect of council tax benefit in different areas, and if there is nothing in the Bill to say that unemployment needs to be taken into consideration, it prompts the question, will those councils where unemployment is relatively low take it into consideration when fixing their council tax scheme? The Minister said that the Secretary of State will not need to intervene, but that is not the case, because as my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) points out, the right hon. Gentleman will intervene if he does not agree with a scheme. He has the power to do so, and to change the financial year of a scheme, so what the Minister has said is not the case.

[Ian Mearns]

In the light of the Minister’s reflection that the Secretary of State is highly unlikely to use his powers of intervention, on what date does my hon. Friend think the right hon. Gentleman became such a shrinking violet that he would not use the powers that were open to him?

[Mr Jones]

The Secretary of State’s track record is there to see. On his edicts, he talks very much about localism, but in this Bill we already see that he has kept for himself swingeing powers to intervene. Over the past 18 months, we have had diktats to councils on weekly elections, including the idea that to save money they should have fewer pot plants, and lectures on the size of their balances, so I do not accept that he is a born-again devolutionist who is giving powers to local authorities. He will quite clearly intervene when he needs to.

[Helen Jones]

Does my hon. Friend also agree that the Secretary of State’s attitude to poorer people in our communities can be seen clearly from when he ran Bradford city council? We do not have to look into the crystal ball when we can read the book.

[Mr Jones]

Exactly. But the Secretary of State is also highly political, and the Bill does not take into account unemployment and other things because, again, that is part of its general sweep. It is about giving local councils not only responsibilities, but blame, because if a local council comes up with a certain scheme, the right hon. Gentleman can say, “It’s not my problem, it’s your local authority dealing with it,” even though he has poisoned the pill that he has given them with a 10% cut in the grant for council tax benefit.

The Secretary of State is also political in saying that councils are free to not put up council tax because they will get grant for three years, but that he can give no guarantee for the year before the next general election. That is because he wants to shift the blame for the decisions that this Government are taking—both Liberal Democrats and Conservatives—on to local councils. Slowly but surely, local councils and councillors of all persuasions are waking up to the fact that they will have to make tough decisions. They will have to not only divide the smaller cake after the 10% reduction in council tax benefit, but invent a scheme that is seen to be fair.

My hon. Friend the Member for Warrington North (Helen Jones) spoke about people who are in receipt of council tax benefit. There is a misnomer that is repeated on a number of occasions. Reading the press, one would think that every single person who gets housing benefit or council tax benefit is in receipt of unemployment benefit. They are not. Some of the poorest people in society are working very hard to keep a roof over their head. These changes will affect their ability to keep that roof over their head.

Another concern is that if there are no criteria for the various schemes, there will be a plethora of different schemes up and down the country.

[Gavin Barwell]

That’s localism.

[Mr Jones]

The hon. Gentleman says that that is localism, but it will lead to real issues, especially if the Secretary of State is of the Norman Tebbit variety and thinks that people should get on their bike and work. If there are disincentives because of the different schemes in different parts of the country, it will be difficult for people to do that.

The chaos that will ensue in London will be something to behold. Potentially, there will be 33 different schemes for the administration of council tax benefit in London. From talking to colleagues in London, I know that people move across the council boundaries freely. They do not take into consideration the fact that they are moving from one council to another. Some colleagues tell me that 25% or more of their local electoral register churns over every single year. How will people be clear about what the scheme is in one borough as opposed to another? If we add to this the changes in the Welfare Reform Bill, which will have a disproportionate effect in London and drive people out of higher-cost rental areas, there will be administrative chaos.

Individuals will not be clear about which scheme applies to them and some people will get into arrears with their council tax, as my hon. Friend the Member for Alyn and Deeside (Mark Tami) said when he intervened on my hon. Friend the Member for Warrington North. We will get to a situation where the number of evictions increases and where people and their children face insecurity about their homes. It will be very difficult for councils that have a large turnover of individuals to collect council tax. There is nothing to compensate authorities that have a large turnover for that effect. There will be a double whammy for those councils: they will face the 10% cut and it will be difficult for them to collect council tax.

We must also consider the difference in the number of people who claim council tax benefit in different authorities. As I said earlier, County Durham has 63,494 claimants, which is 15% of people aged 16 and above. Last year, that cost £55.1 million. The situation will be the same in other large councils in the north-east, and in other areas such as the constituency of my right hon. Friend the Member for Knowsley (Mr Howarth). There are a large number of people on either unemployment benefits or low wages who receive council tax benefits. We can compare that with some southern councils, and I will give a few examples. Wokingham—

[Mr Mike Hancock]

You’re going to buy a house there, aren’t you?

[Mr Jones]

I am hoping to be made a freeman. I have given it enough plugs in these debates.

[The Temporary Chair (Mr Jim Hood)]

Order. I am sure second home preferences are a matter for some other debate, but not for this one.

[Mr Jones]

In the 2010-11 financial year, Wokingham had 5,159 people claiming council tax benefit, which was 3.9% of the population and cost £5.3 million. That authority covers the constituencies of Wokingham, Maidenhead, Reading East and Bracknell. Hart, in Hampshire, had 3,029 claimants, which was 4.2% of the population and cost £3 million. It covers the Aldershot and North East Hampshire constituencies.

South Buckinghamshire council had 3,024 claimants for the year 2010-11, which equated to 5.6% of the population aged over 16 and led to expenditure of £3.4 million. South Oxfordshire had 5,848 claimants, which represented 5.6% of the population aged over 16 and cost £6.1 million. That area covers the constituencies of Henley and Wantage. Finally, Vale of White Horse council in Oxfordshire had 5,578 claimants, which was 5.8% of the over-16 population and cost £5.7 million. It covers the constituencies of Wantage and Oxford West and Abingdon.

[Ian Mearns]

My hon. Friend emphasises the differences between local authority areas, and he has compared Durham and Wokingham. A prime indicator of levels of deprivation is the number of looked-after children per 10,000 population, and I just happen to have that statistic for Wokingham. The number there is 22 per 10,000 population, whereas in Middlesbrough it is 104 per 10,000 population. That illustrates the contrast between the levels of deprivation and need in different areas, and I hope he will bear it in mind.

[Mr Jones]

I will, and that is why it is important to have in the Bill the criteria by which authorities will draw up their local schemes.

The reason why I give the differences between areas is that it is quite clear that Durham will have to draw up its scheme very differently from the other authorities that I have mentioned. They also indicate that, as I said in last week’s debate, the Bill will favour southern councils over northern ones such as Durham. It is not a coincidence that all the constituencies that I read out happen to be Conservative.

[Helen Jones]

Does my hon. Friend agree that councils will face a further penalty through the cost of appeals once the scheme comes in, which again will be worse for councils with more claimants? I suspect that there will be a lot of appeals, and there will be a cost in both staff time and legal representation. Councils will also face the cost of chasing up unpaid council tax, which will increase hugely.

[Mr Jones]

I agree, and that will have a disproportionate effect on northern councils such as County Durham. It will also be a complete nightmare for local authorities in London. I know that the Bill allows for data sharing between local councils and the Department for Work and Pensions, but given the movement of people in London it will be very difficult indeed for councils to chase people up.

What are the options open to councils such as Durham, given the 10% cut, to make up the difference? The Minister and the hon. Member for Bradford East said that it would be made up by charging a different rate on second homes.

[Mr George Howarth]

My hon. Friend the Member for Warrington North (Helen Jones) just made the point that councils could be bogged down in appeals. Does my hon. Friend the Member for North Durham (Mr Jones) believe that it is also conceivable that the Bill could be deemed discriminatory under the Human Rights Act 1998? The Bill contains a declaration—as do all Bills, for purposes of the Human Rights Act—that the Secretary of State says that

“the provisions of the Local Government Finance Bill are compatible with the Convention rights.”

Does my hon. Friend think that that might slightly overstate the case?

[Mr Jones]

My right hon. Friend raises a very good point, because we will have different schemes in different areas. I wonder whether there will be challenges to the criteria that are used to draw them up. The hon. Member for Mid Dorset and North Poole said that various equality Acts applied to the measure. They may well do, but that is not stated in the Bill. If people who find that they are not in receipt of council tax benefit after the measure is introduced feel that their local authority has discriminated against them, that will doubtless lead to court cases. Again, the costs will fall on local authorities, and again, no doubt the Secretary of State will be nowhere to be seen and will blame councils for not implementing the scheme properly.

The hole could be plugged by further cutting benefits for those who are in work and others. Second homes give another method—obviously, there are a plethora of second homes in Bradford.

[Ian Mearns]

There are loads in Gateshead.

[Mr Jones]

Obviously, and in other places. They will fill the black hole. We could also increase council tax. However, that is no good for councils in the north-east, where 50% of properties are in band A.

[Ian Mearns]

Fifty-six per cent.

[Mr Jones]

My hon. Friend says that the figure is 56%. Only 2% of properties in Surrey are in band A. The ability of councils in the north-east to raise additional funds is severely limited.

[John Healey]

My hon. Friend is talking about plugging the hole caused by the 10% cut and highlighting the feeble arguments from Ministers about the flexibility around the second home discount. Has he asked himself why the Government have not considered the single person’s discount, which is worth £2.4 billion in total—more than five times the 10% cut?

--- Later in debate ---

[Mr Jones]

My right hon. Friend makes a good point. The Bill is being rushed through. If we were considering a root and branch, proper review of local government finance, we could examine my right hon. Friend’s suggestion. I suspect that the Government do not want to do that because it affects a lot of pensioners and they think that pensioners may be more interested in voting Conservative than not. For the same reason, they will not go anywhere near revaluation of domestic properties.

My hon. Friend the Member for Warrington North made a very good point about the comments of the Minister for Housing and Local Government, who seems to think that people can somehow magic up economic development in local areas to increase revenues. That is supposedly the entire basis of the Bill: that councils will be free to create extra demand instantly through economic development. It is a damn sight harder to attract businesses to the north-east than it is to the south-east of England.

There is a problem with who is consulted about the scheme. My hon. Friend the Member for Warrington North made a good point about the mess caused by the system having to be tackled by the charitable sector, local credit unions, which will have to sort people out when they get into debt, local branches of Age Concern, citizens advice bureaux and others. It is only right that they are statutorily consulted on the drawing up of the scheme. If they are not, at the end of the process they will have further burdens because they will have to try to sort out the mess created by the Bill—many are having their grants cut already.

I am sure the Minister, in his feeble way, will refuse to accept the amendments because the Bill is part of a strategy. He is part of that strategy, even if he does not understand it. In effect, the Secretary of State wants to give as many freedoms as possible to local government so that he can wash his hands of it and stand up to the electorate and say, “It’s your local council’s fault.” I hope local councillors of all political persuasions are waking up to what the Secretary of State is up to. He is blaming them for his decisions. Until they wake up to that fact and start protesting—some Liberal Democrats bravely voted against the Bill tonight—we will end up with confusion and mess in local government and blame, and some of the poorest and weakest in our society will be affected.

[Mr Mike Hancock]

Once again, I am concerned about the lack of time, because I would have loved to have had a proper debate on amendments 59 and 60, which go to the heart of the problems we face. The amendments, which were tabled by the right hon. Member for Greenwich and Woolwich (Mr Raynsford), would defer the scheme for a year. Unfortunately, he is not in the Chamber to move the amendments, so it looks like we will not have the chance to pursue the matter. The need to give local authorities more time was one of the things about which Members spoke most eloquently when we debated the previous group of amendments.

It is disappointing that the Minister did not give even a hint that the problems exposed by hon. Members would be given consideration. I have a lot of sympathy for the hon. Member for Stockton North (Alex Cunningham), who spoke of the problems of “outsourcing” 20,000 people from London. He said that that would have an effect on London’s infrastructure and mean impending problems for receiving authorities. Any authority that has received large numbers of people after population movements will know only too well of the struggle to put in place the infrastructure needed to absorb them. Suggesting that 20,000 people leaving London will be easy is an easy soundbite, but I simply do not believe it. The Government need to think again if they are suggesting that that is a ground for supporting the Bill, because it cannot be right.

The hon. Member for Warrington North (Helen Jones) mentioned the cost of appeals and how long they will take. When do they kick in? For how long must people appeal? What would the regime be? Would it be a simple paper exercise or could people appear and give details of their circumstances in front of, say, a group of councillors or officials? We need to know. How will they be resolved?

Why should local authorities take into account the impact of the scheme on the aspects outlined in amendment 66? That is a key question. The hon. Member for Stockton North made the point that we cannot ask local authorities to exclude so many people and not ask them to consider the effects on the poorest groups of working people. If they do not consider that, they would be doing a great disservice to the people. The Secretary of State for Work and Pensions was in the Chamber just now, but it is sad that he has not heard more of the debate, because the points being made are relevant for his Department.

However, if the Bill goes through without the amendment, it will cause local authorities serious problems. Any local authority worth its salt would want to take the issues I mentioned into consideration and would like to have some flexibility to help the groups affected. Why not say that in the Bill? Is anyone seriously saying that that would be an unreasonable expectation for local people to have? [Interruption.] I am getting a signal that my hon. Friend the Member for Bradford East (Mr Ward) might be of a different opinion from me. I happen to think that setting out those matters in the Bill is the right thing to do, and I have yet to hear a coherent argument to suggest that we should not take that into consideration. Once again, that is why, when we vote tonight, I will vote to support the amendment.

--- Later in debate ---

I should tell the hon. Member for North Durham (Mr Jones) that if I was a betting man, I would be in Ladbrokes tomorrow to see who had made a wager about how many times Wokingham was mentioned in the House of Commons. His speech reminded me of a Pakistani bowler bowling no balls, and there seemed to be a premeditated effort on his part to secure the most mentions possible of Wokingham.

[Mr Kevan Jones]

Does the hon. Gentleman think I should get a sponsorship deal with the borough of Wokingham?

[Mr Hancock]

I honestly believe that the hon. Gentleman is in the market for a property in Wokingham, or if not Wokingham, Hart.

[Mr Jones]

I could not afford it.

[Mr Hancock]

I am sure the hon. Gentleman could; he is being far too modest.

On the hon. Gentleman’s point about income tax and higher income tax payers, I am disappointed that we will not get anywhere near the amendments that I and others tabled on excluding higher income tax payers from the 25% discount. I would hope that the Government would give local authorities the ability totally to restrict people on higher income tax from having the 25% discount.

Once again, I am disappointed that we will not have the opportunity to pursue many of these issues, and I implore the Minister to try to secure the maximum amount of time on Report to allow us properly to discuss the amendments that we have not reached.