Housing and Planning Bill
Debate between Lord Beecham and Baroness Hollis of Heigham
Baroness Hollis of Heigham (Lab)
My Lords, I was not going to intervene. I certainly do not know what the noble Lord, Lord Kerslake, will do with his amendment. I want to follow up on the wise words of the noble Lord, Lord Cormack, by saying that this is not a wise Bill. Some of us have been in this House for many years and have handled many Bills. The problem is that, in process terms—leaving aside the content—this is the worst Bill I have seen in 25 years. It is a skeleton Bill in which we do not know the detail; this will be carried out by regulations. I do not blame the Minister at all but we do not know—and the Minister does not know—what will be in the regulations because they will depend on consultation exercises. We do not know what these consultation exercises will say because they were started only two-thirds of the way through the parliamentary process.
Noble Lords all around this House have been trying to scrutinise properly and fairly, as we should, a Bill in which there are huge gaps. We do not know the costs, the statistics, the land requirements or the burdens on local authorities. We know none of this. Yet, we, who scrutinised the Bill, are being told that the Commons has overturned our amendments. In a very truncated debate last night, it barely touched half the issues that we had discussed, having read every word of it. The Commons really did not.
This leaves some of us, who respect the conventions of this House, in a very difficult position. This is a half-baked, half-scrutinised, quarter-digested Bill. We are being asked, in the name of constitutional propriety, to allow the Commons to have the final say on something that is, frankly, not fit for purpose. It should not have been introduced this year; it should have been deferred until next year, until all the detail was in place so that we could scrutinise and amend the Bill, as this House should do. Then, and in that context, we would respect the will of the Commons. The Commons is sending through on a conveyor belt a half-baked Bill that it has not scrutinised. It puts many of us who really value the scrutinising role of this House in a very difficult position. I am sure I speak for many noble Lords, including, perhaps, some on the Benches of the noble Lord, Lord Cormack, who share my concerns. We are being asked to scrutinise a Bill that is not fit for purpose.
Lord Beecham (Lab)
My Lords, I endorse my noble friend’s remarks about the issues perfectly properly raised by the noble Lord, Lord Cormack. From the Minister’s remarks, one might have thought that the amendment of the noble Lord, Lord Kerslake, was going to utterly sabotage the Government’s proposals for starter homes. There is no evidence to support that as a potential outcome if his amendment were to be approved. It does not replace the principle that the Government seek to advance; it complements it. We seem to be invited to adopt the Government’s position on starter homes, failing which we are going to get some starter Peers. We have probably had a few of those in the last few years but that is not a matter that ought to weigh too heavily on us.
I think noble Lords on all sides of the House endorse the Government’s ideas for promoting home ownership, particularly—but not necessarily exclusively—among younger people. After all, this is the week in which we are talking about mortgages for people up to 85 years of age. There are people above the age of 40, who have been on the housing ladder for decades, for whom this Bill will do very little. Whereas, a slightly more relaxed approach of the kind that the noble Lord, Lord Kerslake, is advocating, would assist them, without damaging the prospects of those aged 40 and under, for whom this part of the Bill seeks to provide some hope and action. I agree with that.
I sympathise with the noble Lord’s amendment. I regret that the Government do not appear willing to move towards something that would make a modest difference to the provision of housing for more people in a rather different way but not one which, in my judgment, would damage the Government’s intentions. It certainly would not contravene their manifesto commitment.
Housing and Planning Bill
Debate between Lord Beecham and Baroness Hollis of Heigham
Lord Beecham
Sorry, I have received a prompt from my noble friend Lady Hollis, to ask what the estimate is—I am sorry, I have even forgotten what the prompt was. Perhaps my noble friend can say.
Baroness Hollis of Heigham (Lab)
I am grateful to the Minister. I was going to ask my noble friend to ask the Minister to make it clear that the proceeds will still go to the Exchequer. Various contributors, including my noble friends, have said that they now doubt whether the money collected will exceed the costs incurred. I would like the Minister to tell us, in the light of today’s amendment on 15p, what now is the current estimate of the annual net gains that will flow to the Exchequer from next year onwards, when this policy is embedded. One year will do—2019-20, if she likes, three years down the line. How much money, net, will go to the Exchequer from this policy after taking into account fiscal drag, now capped by CPI, the cost of the taper, now reduced by 15p, as well as the behavioural impact on tenants and the cost of administration? May we please have that figure?
Housing and Planning Bill
Debate between Lord Beecham and Baroness Hollis of Heigham
Baroness Hollis of Heigham
I am sorry, but I still do not know what the Minister’s answer is.
Lord Beecham
I am sorry, but I am at a loss to understand quite where the Minister stands on this. It is a perfectly simple proposition. She seems sympathetic to it, as indeed the Secretary of State was in our discussions, yet no conclusion seems to have been reached. I think we ought to send a signal to the other end—possibly, with the help of the noble Lord, Lord Lansley, even improving the provision when it gets there. We ought to make our position clear, and I wish to test the opinion of the House.
Housing and Planning Bill
Debate between Lord Beecham and Baroness Hollis of Heigham
Lord Beecham
My Lords, I join other noble Lords in congratulating the noble Lord, Lord Kerslake, on his ingenious approach. I am, however, slightly disconcerted by the fact that the Mayor of London is, apparently, very much in support of this. No doubt, by tomorrow he will be claiming that it was his idea in the first place.
Lord Beecham
Well, yes—it might bring it to a rapid end. It does appear to be a very useful way forward. I also endorse my noble friend Lady Hollis’s reference to Help to Buy as another avenue through which it should be possible to assist people into home ownership without making difficulties either for local authorities, or, more importantly, for other people who are in need of rehousing. I hope that the Minister will be sympathetic to the amendment.
However, I am slightly puzzled by the description by the noble Lord, Lord Kerslake, of the difficulties of replacing homes on the basis of the numbers being very hard to achieve. I think he said that something like 5,000 a year would be needed to replace and it was difficult to see how that number could be built. That 5,000 houses would be something like 2.5% of the Government’s annual target of 200,000.
Housing and Planning Bill
Debate between Lord Beecham and Baroness Hollis of Heigham
Lord Beecham
Can I remind the Minister of my request to see a comparison of newly built first-time purchases and any other housing that might be bought by a first-time buyer? I suspect that there is a difference.
Baroness Hollis of Heigham
I take it that the letters will be circulated to all Members taking part in the debate?
Housing and Planning Bill
Debate between Lord Beecham and Baroness Hollis of Heigham
Lord Beecham (Lab)
My Lords, I suspect that the Minister will be grateful that my noble friend Lord Campbell-Savours eventually managed to get some sleep, having burned the midnight oil on what has been an absolutely forensic analysis of these proposals in the Bill and the amendments in the name of the noble Lord, Lord Shipley.
I had intended to ask the noble Lord, Lord Shipley, how much of a mortgage would disqualify and for how long would it have to be held under the terms of his amendments. How would the maintenance of a mortgage be monitored? If a mortgage were paid off after a year or two, or three or whatever, would that change the situation in relation to the discount? How would residence be monitored, for that matter? Is somebody supposed to call every so often to check who is occupying the property? On a lesser topic, would very short lets of the Airbnb kind interfere with the concept that the Government have advanced? I understand the intentions of the noble Lord, Lord Shipley, but there are significant problems in realising the objective, with which the Opposition agree, of ensuring that only genuine first-time buyers are covered.
There is also a question about the meaning of locality. Amendment 44 states:
“The meaning of ‘locally’ … shall be defined by the relevant local authority or the Greater London Authority”.
If the Government are disposed to accept this amendment—which would be sensible because someone has to ensure that this is a locally based scheme—I wonder whether, in addition to the terms of the amendment as it stands, “local authority” could be defined as including combined authorities where they exist. Combined authorities will usually have a strategic role in the housing market and development—certainly some agreements have now been signed—and it would incongruous if, in an area designated as one for which it has some housing responsibility, the combined authority was not included in the process of determining the locality for obtaining a grant of this kind. If the Government are disposed to accept the principle of Amendment 44, perhaps that further refinement could be taken on board.
I agree with the suggestions made by the noble Lord, Lord Young. It would be right to look at the range of issues that he has covered and I hope that the Minister will indicate a sympathetic stance—he has already made the point, so she has had a couple of days to think about it—and apply his suggestions to the scheme as it develops. It is to be hoped that, on Report, the Government will reflect at least that much in their own amendments.
Baroness Hollis of Heigham
My Lords, I have a simple question—this is not a speech—to ask the Minister. As far as I can see, the only effective constraint—apart from the price or value of the property—is the age of the applicant for a starter home, who has to be under 40. We all share a common wish to ensure that home ownership is available to people on modest incomes where it makes sense for their lives, but what about the displacement issue? In quite a number of cities where there are universities, colleges and so on, people do not expect to enter the home ownership market until they are around 30 or so—they are doing PhDs and so on—at which point they enjoy relatively generous salaries and could well afford first-time homes on the open market without taking any advantage of the discount. However, because the discount is there with no income-cap qualification to its retirement, we will see people who have quite generous incomes—and whose income increases will also be quite generous—able to pocket this public subsidy paid for by taxpayers, often with incomes much lower, and then trade up as soon as they get their first promotion. Why is the Minister not considering an income cap as well as an age cap to ensure that people who can buy without discount should?
Baroness Hollis of Heigham
My Lords, in that case will local authorities be able to claim Section 106 land which has now been earmarked for starter homes and which in the past has funded more than 50% of social housing in this country? The Minister says that they can do it but she is denying them the powers, the authority and the revenue base by which to do it.
Lord Beecham
Before the Minister replies to that, how does this aspiration match the Government’s imposition of cuts in rents for local authority social housing, which will restrict their capacity to invest?
Lord Beecham
My Lords, I wonder whether it might not be sensible also to look at possible urban exception sites. Take the case of inner London—there may be other places as well—where there are very high levels of demand and very high prices, and even these homes will not exactly be cheap. Would it not be sensible to allow the local planning authorities in those areas to have the discretion to require a local connection, having regard to the pressures they are already experiencing with their existing population? I certainly support the rural exception point, and presumably it may be possible to have a similar mechanism for urban areas. Perhaps in conjunction with discussions with the LGA or combined authorities, the Government could reach an agreement about which areas should have that. Some element of discretion ought surely to be provided for in urban areas. The Minister represented part of Greater Manchester where, I suspect, there will be areas with precisely the same problem.
Baroness Hollis of Heigham
I support my noble friend in what he says. This morning, I was sent briefing data from the city of Cambridge. The average house price in Cambridge city, based on February 2016 data, is £483,625—in other words, £484,000. The lowest quartile price is £315,000, and there has been a 17% increase in the last 12 months. South of Cambridgeshire—so people would have to travel in, but none the less—the average price is £385,700. In the east of England, it is £303,000. These figures confirm the point that my noble friend was making: we are going to need exemptions for urban sites of high demand just as we will in rural areas. Cambridge city and university cities across the country face this sort of price explosion.
Cities and Local Government Devolution Bill [HL]
Debate between Lord Beecham and Baroness Hollis of Heigham
Lord Beecham (Lab)
My Lords, I find myself in the somewhat unusual position of agreeing with the Minister in her analysis of the impact of what the noble Baroness, Lady Janke, proposed in Amendment 43. As my noble friend Lord McKenzie pointed out and as the Minister implicitly confirmed, the impact of allowing the combined authorities to retain money on what is essentially a nationally based taxation would be formidable and difficult for the Wigans and Kirkleeses of this world as compared to the Westminsters and Kensington and Chelseas, and I was very glad to see her not adopting that position.
Having said that, I must say that there is a certain synergy between the amendments that we have just debated and the one that I am now moving, particularly in relation to multiyear finance agreements, which must be common sense, and to business rates growth. However, I am in another unusual position in having to confess that Amendment 44A as printed is actually in error, because it should have referred to the growth in business rates rather than the implicit retention of an entire business rate. In that way, we are agreeing again with only a part, but an important part, of the amendment that we have just debated. However, the critical factor here is that of the fairness or otherwise of the distribution of the funding. That is the subject of Amendment 44B. Of course, if we had suggested, as it appears on the Marshalled List, that the entire business rate would revert to individual councils, it would be disadvantageous. Even the 50% retention rate is inequitable, unless there are other measures to compensate those authorities in need.
The Independent Commission on Local Government Finance has illustrated this position by comparing Hillingdon, which currently collects £101 million of business rates, and Wigan—and my noble friend Lord Smith will be conscious of the fact that Wigan collects just one-third of that, at £34 million a year in business rates. If we had a more equitable system, and if it was based on need, that would result in Hillingdon receiving £42 million and Wigan £62.9 million. That was the finding of the independent commission. That is an illustration in respect of only that one area of financing, because action is desperately needed across the whole system of local government finance. Local authorities have suffered massive cuts as a result of government policy, which singled out the sector for the biggest cuts in public expenditure in the last five years, a process that is far from complete—and we may hear more next week about what is in store. In any event, even the cuts that are still inchoate and beginning to take place will lead to substantial further difficulties.
What is particularly galling is the unfairness of the way the burden has fallen on those areas with the greatest need. The 10 most deprived councils in the country, as defined by the department’s own measure, have suffered cuts 10 times greater than the 10 least deprived. Liverpool, the authority with the highest deprivation score of all—I repeat that these are on the department’s own measure—has suffered a loss just under 30 times greater than Hart District Council, the least deprived authority.
Interestingly, 14 councils were lucky enough to receive an increase in government funding over the past few years, and by sheer coincidence all but one of these have Conservative MPs, including Michael Gove, Chris Grayling, Philip Hammond and Jeremy Hunt. Some of us think that one or two of those have been lucky to have been in the Cabinet for these past few years, but certainly their constituents have been lucky to have received this benison from the Government.
If the Government’s ambitions for cities in the context of devolution are to be carried out and are not to suffer the same signal failure as their northern rail transport policy, as was revealed last week, or, in the light of last week’s belated disclosure of a three-year-old report, the fate that may be awaiting HS2, their philosophy about devolution must be accompanied by a needs-based funding formula and not rely on a continuation of the present system, which is so damaging to so much of the areas that could most benefit from the Government’s well-intentioned approach to devolution. That is why Amendment 44B calls, initially at any rate, for a report on the fairness of the distribution of funding, taking into account the cumulative cuts so far—and, indeed, those that are pending—in spending power and resources per household. I beg to move.
Baroness Hollis of Heigham
Will my noble friend read into the record, if he happens to have the information to hand, the 10 most rewarded local authorities and the 10 most deprived, in terms of grant, and their political complexion?
Lord Beecham
I am afraid that I am going to have to follow the usual ministerial procedure and say that I shall have to write to my noble friend. I do not have the information. I copied the report to my noble friend this morning and I think it runs to 163 pages. I do not have it immediately to hand, or anything big enough to contain it, but I will communicate with my noble friend.
Baroness Hollis of Heigham
My Lords, I support the comments made by my noble friend Lord Smith about the increasing frailty of the existing council tax structure to bear the responsibility we ask of it. I believe I am right in saying that, had the older rates system remained in place, the most expensive properties, compared to the median average, would be in a ratio of something like 20:1. In fact, the ratio of the top band to band D—the fulcrum point on the council tax scale—is only 3:1. That shows just how narrow the redistributive effect of council tax has become.
In the past, the Government have resisted looking at council tax revaluation, even though a full-scale revaluation went through fairly smoothly in Wales, without any great hiccups in the procedures. A few years ago, some of us did some work on this. It was clear that it would be desirable to revalue all properties—but at the very least, you could fish the top band. I was advised, by the Valuers’ Association and the Government’s valuation service that that would represent less than the valuations which happen now whenever a flat becomes a shop, a shop becomes a flat or a house is sold and is given a new valuation. So the amount of work required to allow local authorities to increase the bands above the current top band would be quite modest—I am assured of that by the district valuers who carry out this work, day in, day out, on other use changes and so on and so forth—and would allow us to stretch more fairly and produce more revenue in a way that was more reasonable.
Certainly the compression that has come from council tax bands compared to the old rate bands is probably, in my understanding, the narrowest in the OECD. In America, Australia and most of the countries in Europe, the property range of bands is far wider than we now have in the UK as a compression of council tax. As I said, we have only about three or four bands above the band D fulcrum compared to the 20:1 ratio that we used to have under the old rates system. So it is a perfectly serious proposition that this would be a fair and appropriate way to increase revenues to local authorities and to reflect local need and local ability to pay.
Lord Beecham
My Lords, perhaps my noble friend would agree with me that a major part of the problem is that the council tax embodies a significant element of the poll tax, and that that is what leads to such narrow banding.
Local Government Finance Bill
Debate between Lord Beecham and Baroness Hollis of Heigham
Baroness Hollis of Heigham
I support the amendments, particularly the one spoken to so ably and powerfully by my noble friend Lady Lister which overlapped with the amendment moved by my noble friend Lord Smith, speaking from his Wigan experience.
The Minister spoke earlier in the day about the need to get council tax benefit under control because of its doubling and so on over the past decade, 12 or 14 years. My noble friend, so to speak, revised his statistics by insisting that this was the result primarily of the increase in council tax. Let us do a counterfactual and assume that this system had been in place in 1997. The result is that all of that increase in council tax benefit generated perfectly properly by the increase in council tax would be expected to be carried by the local authority. A grant that starts at 90% would the following year be 75%, the year after that perhaps 50%, and so on. As council tax rose and as claims rose, and as the grant remained capped, the local authority would have to pick up more and more of these moneys. I do not see how it can reasonably be expected to do so. It is not just a question of take-up; where local authorities may differ is in the degree to which they may depend on a single industry. Norwich, for example, is very dependent on financial services, and in particular on the former Norwich Union, now Aviva. If that company was to make a major decision and relocate, for example, to Sheffield, which is a second source of Aviva jobs, it would have a dire effect on the Norwich economy, and on the demand for benefits, including council tax benefit. The local authority would have no obvious resources with which to respond to what my noble friend Lady Lister called an economic shock.
For a number of reasons, there will be an ethical dilemma. First, it is not in the council’s interest to promote people’s entitlement to benefits they should have—and we know that pensioners underclaim. Secondly, the council can be very vulnerable to significant economic shocks such as the closure of a factory or even, with the NHS consultation coming through, of a local hospital, where we could very well see 1,500 jobs go very quickly. Many holders of those jobs will be poorly paid women who will come into the council tax benefit claims system. They will be trying to get money from a limited pot, and the resources available to others will diminish. The third problem is that there will continue to be modest future council tax rises, and unless the money keeps pace with that increase, taking into account inflation and everything else, we will find that people who receive aid with their council tax benefit will get a smaller and smaller share of the moneys that they should get.
This means that we will be asking local authorities each and every year to revise their scheme not so much because of local needs but because the amount of bidding for it has outpaced the resources available. I fear that if the Minister does not take this issue very seriously, she will embed instability into the future projections of local authorities’ need to fund their council tax benefit system, so they will continue each and every year to have to revise their scheme to take account of the new needs and take-up, and of the increase in council tax. Unless we have some back-up mechanism to enable local authorities to fund this, we will have major problems down the road that—bluntly—could make some poll tax issues look quite small by comparison.
Lord Beecham
My Lords, the localisation of council tax, coupled with the localisation of the social fund, will give local authorities the unenviable task of dispensing a capped budget on two important areas of welfare benefits. Hitherto, the responsibility for funding both schemes has come from central government. Now local authorities will have to administer the scheme, and presumably also deal with the local consequences in the form of pressures on their budgets and the difficulties that will be occasioned to many of their residents. It is another case of the Government passing the buck to local government, but not providing the resources for local government to deal with it.
The noble Lord, Lord Shipley, and I were both at one time leaders of a council that has done a great deal to promote the take-up of benefits—not only council tax benefits but other benefits as well. The welfare rights department and other agencies of the authority, in collaboration with the voluntary sector, succeeded to a significant extent in promoting claims. Over the past few years in particular, several million pounds were won for potential claimants, who had their rights enshrined in practice as well as in theory. This is fairly typical of local government across the piece. Nevertheless, something like £1.8 billion in council tax benefit remains unclaimed. Much of that is thought to be money that would have gone to owner-occupying old-age pensioners.
I congratulate the Government on one thing; I repeat the congratulations I uttered in Grand Committee. The change of style from a benefit to support—it was called a rebate in earlier days—may well encourage people, particularly perhaps elderly people, to claim. This is something that does not seem to have been taken into account in relation to the total amount of funding that will be provided. However, that is the only thing that one can congratulate the Government on because when I tabled a Written Parliamentary Question last year asking what steps the Government would be taking to increase the take-up of the benefit as it then was—and, for the moment, still is— the Answer was “nothing”. So even at that time the Government were not keen apparently to promote the take-up of these benefits.
Local Government Finance Bill
Debate between Lord Beecham and Baroness Hollis of Heigham(11 years, 7 months ago)
Lords ChamberRead Full debate Read Hansard Text
Lord Beecham
My Lords, I shall speak to my noble friend’s amendments, and the amendments in my name and that of my noble friend Lord McKenzie.
My noble friend Lord Smith rightly referred to the concern about the threshold level above which protection would be given. I note that in the debate in Committee, the Minister said that the Government had been carefully considering these issues,
“together with the safety net support threshold in the range of 7.5% to 10% below baseline funding”,
and said that that offered the, “best combination on balance”. She went on to say:
“We will be consulting local government over the summer before any final decisions are taken”.—[Official Report, 5/7/12; col. GC424.]
It would be interesting to know what representations there have been and what progress was made during those consultations because, on the face of it, it looks as though the Government are still on course for that higher figure. My noble friend Lord Smith rightly pointed out the severe financial problems facing local authorities—a combination both of cuts in government grant and the rising demand for and costs of services. Many authorities will find themselves in an unprecedentedly grey financial situation. The noises outside suggest that the heavens appear to echo my sentiments.
The problem is shared by many authorities. I ought to declare an interest as a member of Newcastle City Council and, like others, I am an honorary vice-president of the Local Government Association. In Newcastle, we are contemplating reaching a position whereby we have to find £90 million a year by the end of a three-year period. That is £90 million every year, which is a significant proportion of the budget. Consequently, any diminution of resources from the reduction in business rate income would be a matter of even greater significance.
Baroness Hollis of Heigham
Perhaps I may interrupt my noble friend. The staff of the House are getting the engineers to see what is going on. Alas, we do not have any surveyors left.
Lord Beecham
I shall endeavour to proceed despite the interesting background noise.
There is a serious question about the extent of the threshold and, as my noble friend rightly pointed out, there is another question about how it is to be financed. The assumption was that the Government would be meeting this cost, and it was a reasonable assumption. Indeed, that was the position put last year by a senior Treasury official in consultation with local government finance officers. We are now faced, apparently, with a safety net cut of £245 million. Originally, it was thought that that would be met from the Government’s AME contingency of around £400 million, topped up with some of the set-aside, which could have provided a potential £700 million. In addition to that source, the Government are, of course, sitting on around £600 million extra in business rates. I slightly anticipate the answer that the Minister may make in response to the question of my noble friend Lord McKenzie: that figure is the extra amount collected by councils for the department last year, and it will probably be more this year.
Local Government Finance Bill
Debate between Lord Beecham and Baroness Hollis of Heigham(11 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
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.
Lord Beecham
Does my noble friend agree that although there is a significant reduction in the amount of central government support for the benefit, it is still approximately 90% government funded? So it is going towards a council tax, but the funding is still essentially central. Unfortunately, some more of it will fall on the locality as a result of what the Government are doing, but the greater part is still centrally funded.
Baroness Hollis of Heigham
My Lords, that is absolutely true, even more so in two-tier authorities where 75% of the expenditure that falls on local residents is through the county council precept. The precepting authority does not have to do the same as the billing authority, which has to devise the discount scheme.
I understand the noble Lord, Lord Greaves, on the postcode lottery, because I would defend local decision-making as far as possible. The point here is that what a local authority has in terms of resources will depend on the accident of the demography of its particular locality. If only 30% of its population are pensioners, it will have to find a lower degree of cut on people’s working age than if 60% of its population are pensioners. That is an accident of demography. Equally, when anybody seeks help with their council tax discount, it will be determined not by their own efforts, their willingness to vote or the resources of the local authority, but by how many pensioners and other vulnerable people are ahead of them in the queue. That is not localism; it is rationing by queue, with central government having already determined that certain constraints, such as the number of pensioners, shall be imposed on the system. In that sense it is random—you need not call it a postcode lottery, but it is one. The size of cut that your locality will face is accidental, and it will not necessarily bear a resemblance to your particular need. Even though it may be identical in the neighbouring authority, it will experience a different income because the demographics will be different. That is not reasonable.
I suggest to the noble Lord and the Minister that if there were no proposition to find £500 million of cuts, there would be no such scheme about localising council tax benefit before us today. This is not localism; it is the exporting of cuts to localities by central government and then dressing it up in the fancy clothes of localisation issues, even though people’s needs have not originated by virtue of the locality and the random demography of that patch will determine who gets what. That is not localism. It is exporting cuts without any constraints, which will be experienced differentially by vulnerable people who happen to have been unlucky in the lottery of living in one authority rather than another. I regard that as deeply unfair.
As my noble friend Lord Smith said about where the cuts will fall, it is not about centralism versus localism but about the centre exporting its cuts. The noble Lord, Lord Best, may speak to his amendments on a subsequent day in Committee. The noble Lord, Lord Shipley, was absolutely right. Given this distinctiveness between local authorities, there will be judicial reviews. Mencap will run them if CPAG does not, according to how they are treated. They will probably have a very good case.
The Minister said that local authorities should, in her words, develop schemes that are relevant to their authorities. That challenges the core of my argument. She assumes that vulnerability and poverty are so peculiar and distinctive to a particular local authority as to justify separate local schemes. I simply do not accept that for one moment. Whether you are autistic, have a disability, are a carer with an elderly mum or are a child in poverty, it is not generated by your locality although it may be experienced in your locality. Given that it is not distinctive to your locality, it is not relevant to your local authority. Therefore, there should be a national scheme.
I leave the Minister with two questions. Who will she exclude from the scheme? We know that pensioners are automatically covered. Unfortunately, we have not had the pleasure of seeing the guidance because it did not come out on Friday but on the very day when we are sitting. Therefore, we cannot cross-refer to it, which is shame. The Minister says that vulnerable people will apparently be protected. The working poor will also need to be protected, so who is not? That is 100%. Who is not protected? Who does the Minister think should see their council tax benefit cut, given that pensioners, vulnerable people and the working poor and their incentives are protected?
Secondly, if there was no £500 million cut, does the Minister think that any local authority in the land would seek to establish its own distinctive council tax scheme and to pull it out of universal credit? She knows that would not happen. I have put two questions to her. She is welcome to respond to me—to tell me what is wrong with council tax benefit, who is already covered but should be excluded and whether, if we did not need £500 million of cuts, any local authority would touch this scheme with a barge pole. I think everyone in this Room today knows the answer to all those questions. They are not answers that enforce the Minister’s argument.
Local Government Finance Bill
Debate between Lord Beecham and Baroness Hollis of Heigham(11 years, 10 months ago)
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Baroness Hollis of Heigham
My Lords, I had not intended to come in on this part of the Bill; I was waiting for council tax to come up. However, the points made by the noble Lord, Lord Greaves, have triggered a set of questions for me. Does the department have a “who pays, who gains” outcome as a result of these changes? If so, can the Minister share that with us? I am very unclear.
I am delighted to see that the noble Lord, Lord Jenkin, has been converted from the error of his ways. Let me remind him that before the business rate was nationalised—I think it was the only thing that was nationalised under the Thatcher Government—authorities like my own, which were no longer unitary after the disaster of 1974, none the less received a business rate. This meant that those who lived outside the fringes of the city area and who did not pay the domestic rate, contributed through the business rate to the city’s well-being. This meant that a city could therefore serve as a regional centre while having only the property rate of a rural district council.
More important still, it meant that the leader of the council—myself—or the chair of finance would take great pains with the Chamber of Commerce. Every year, I went with a prospective budget, and it had a very direct influence over how we constructed our budget. As a result, until the nationalisation of the business rate under the noble Lord, Lord Jenkin, and as there was a direct pay-off to our revenues, I was willing to forego rateable value on new property; I was willing to invest in apprenticeship schemes; I was willing to do the environmental works, the roads and so on, to get small enterprises off the ground; and we were willing to help SMEs to develop through local enterprise trusts. We did all that because there was a direct pay-off. I could never understand the huge folly of a Conservative Government, which is above all expected to be business-oriented, cutting that link with the city authorities—admittedly, they largely tended to be Labour authorities at that time—which gave them an incentive to build their business.
After nationalisation of the business rate, the result was—I did the figures—that my local authority was contributing something like £14 million a year in business rate to the Exchequer and receiving back something like £7 million. The adjacent Conservative authorities, which did virtually nothing, were contributing about £2 million and receiving back about £4 million. In other words, they were piggy-backing off the flow of the nationalisation of our business rate to rural areas, because they had never had a concern to develop business in their areas, partly because they had high property values and did not want to be contaminated by it. It also meant that I no longer had any incentive to do something similar. I forgot to declare that I, too, am a vice-president of the Local Government Association.
I applaud this move, even if it does not go as far as I would like. However, I understand the need for an equalisation grant, otherwise Westminster would retain far too large a share and other local authorities would have very little. As a result, it will be really important for us to see what greater equity there will be now in terms of the statistics between who pays in and who gains and what the return is. Some authorities, such as my own, are district councils trying to do a unitary job with district council revenues—thank you very much to the Government for that—and they will be glad to have that money if it allows them to look after their business economy as well as the wider economy, in terms of building tourism and so on for the whole area.
For the sort of authorities that the noble Lord, Lord Greaves, mentioned, which may well need this money but may not receive it, there is a problem, too, of the distribution between those authorities whose money comes from small but highly valued premises—solicitors’ premises and so on—and those that have relied in the past on large physical premises such as factories, which are now closing due to the shift in the British economy. A reason for this request is that we were screwed the last time around and it was a disastrous policy for government, of whatever complexion, as well as for regional economies. I hope that this time around we will get a more equitable and sensible distribution. If the Minister can help us by promising to circulate some of these figures, it would be very valuable indeed.
Lord Beecham
My Lords, my noble friend Lady Hollis makes a very good point about the relationship between local government and business. It is interesting that the London Chamber of Commerce and Industry, in its briefing for today’s discussions, makes the point that more than a quarter of a century after the noble Lord, Lord Jenkin, perpetrated his terrible crime, 53% of London businesses apparently think that councils are currently responsible for setting the level of business rates. It says that that reveals a breakdown in communication between councils and businesses. Some of us might think that it simply betrays a complete ignorance of how local government works on the part of those who really should know a little better. However, that does not mean that the situation should not be improved.
I sympathise with the amendment tabled by the noble Lord, Lord Jenkin, because he seems, rightly, to want to rebalance this position. The Government seem to take a rather Augustinian position in respect of localism: “Lord, give them localism—but not yet”, would be one way of putting it. Another way, perhaps more familiar to the Secretary of State in his earlier days as an enthusiastic Marxist, would be to describe it as a form of democratic localism. Democratic centralism was the vogue under the Stalin regime but this is democratic localism, which is to say that all the orders come from on top and are then applied locally. This division certainly seems to portend something of the kind.
In a way, the game is given away by paragraph 9 of the statement of intent on business rates retention. Having previously said that a number of “specific grants”, which I will mention in a moment, will be included in the business rates system, that paragraph goes on to say:
“As a result, the Government is able to set the local share at 50% which delivers our objectives on growth and localism while allowing for future fiscal control to protect the interests of the taxpayer and the wider economy”.
That is a fairly clear statement that the Government are seeking to use this 50% as a controlling mechanism.
Legal Aid, Sentencing and Punishment of Offenders Bill
Debate between Lord Beecham and Baroness Hollis of Heigham(12 years, 1 month ago)
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Baroness Hollis of Heigham
My Lords, I support the noble Lord, Lord Best, in his Amendment 16. Like him, I am a refugee from the Welfare Reform Act and, like him, I am deeply concerned that the new system of universal credit, which I strongly support, is coming together with huge cuts in housing benefit. This will produce uncertainty and complexity at the same time as withdrawing legal aid—unless the Commons supports the amendment previously passed by your Lordships’ House and unless the House supports the noble Lord, Lord Best, today.
To introduce a new system, with the implications for the tenants of my housing association of losing up to £1 million a year, means that some will face homelessness, eviction and bed and breakfast accommodation, or alternatively will flood the tribunals and the courts system. To withdraw legal aid at the time of introducing these cuts and changes to housing benefit, as well as universal credit, creates a perfect storm that no Government should wish to whirl up. I hope very much that the noble Lord, Lord McNally, will respond positively to the amendment moved by the noble Lord, Lord Best.
Lord Beecham
My Lords, I support my noble friend Lady Hollis and, of course, the noble Lord, Lord Best, in moving this amendment. They have made a very powerful case, which was rehearsed on Report. At that time, I quoted Shelter and the Nottingham Law Centre, two separate organisations from the not-for-profit sector, which strongly urged the Government to change their position on this. They are the organisations that provide legal help and advice, not necessarily extending to court proceedings, on the benefits side as well as the remainder of the housing issue—some of which, in fairness, the Government are including within scope.
This is a classic case, as my noble friend has implied, where there is a potential modest saving to the Ministry of Justice budget but a potential extra cost to other departments. If homelessness ensues, particularly where children are involved, very substantial costs are imposed on the budgets of the local authority, and maybe also on the Department for Work and Pensions, which in certain circumstances may be devolved; for example, special needs payments or crisis loans, which a family on the streets may clearly require.
In this context, cost is a consideration which, if anything, tells against the Government’s proposals rather than the other way round. I hope that the Government will recognise the strength of arguments from those dealing with this directly—not from the legal profession in this case, but from the advice sector—and provide for the possibility of timely advice being given to avoid worse consequences for the individuals and their families and, for that matter, the public purse. I hope that the Minister will reconsider the position the Government have hitherto adopted.