Local Government Finance Bill
Debate between Lord Smith of Leigh and Baroness Lister of Burtersett
Lord Smith of Leigh
My Lords, in moving this amendment I recognise the contributions that have been made around the House today saying that the new council tax support scheme poses a much higher degree of risk to local authorities. There is great uncertainty about the collection rates under the new scheme and how we will be able to get money from people who currently are not paying. That is not in contention.
Those of us who have been involved in local government finance for a number of years recognise that local authority treasurers and finance officers are by nature a conservative bunch in the non-political sense of that word; in other words, they take a gloomy view of life and they want to make sure that they cover all the bases. We welcome their advice although we do not always necessarily take it. Therefore, I am not asking in this amendment that authorities should take the advice of their own treasurers or finance officers. However, auditors may take a more objective view on the balances that an authority needs to hold. Anyone who takes a prudential view of a local authority believes that it is necessary to increase balances, whether a billing authority or a precepting authority is involved. In the past certain announcements or indications have emanated from the Department for Communities and Local Government which seemed to indicate that local authorities which maintained high balances were storing up money, and consequently they might be hammered in the future. I hope that the Minister can assure us that that is not the case and that the Government will support the concept of prudential balances.
As regards Amendment 107C, this matter was raised in Grand Committee in a slightly different format. I seek clarity on whether or not the Government will impose a freeze on council tax support from now on. If that is the case, that is not fair because all local authorities will see a change in the number of claimants. This will in part reflect the state of the economy and the number of pensioners in an area. At my age I was pleased to see that in the Greater Manchester area Wigan has the highest increase in the number of pensioners. That is good news for people like me but it is not good news if you are running a council tax support scheme because the more pensioners you have to deal with the greater the inflexibility of the scheme for everyone else, which tends to increase the burdens falling on them. In the spirit of recognising new burdens, a local authority cannot be expected simply to absorb such changes given the general problems affecting local government finance.
What we are trying to do is make sure that payment for support to each local authority reflects the actual need for council tax benefit, and is based on some historic situation, similar to the point made by the noble Earl, Lord Lytton, about council tax never being updated and still calculated on 1991 figures. We do not want to get into that situation and make this an equally problematic area. I hope that the Minister will think about that. I beg to move.
Baroness Lister of Burtersett
My Lords, I shall speak to Amendment 108. Its purpose is twofold—first, to ensure that a local authority has a duty to do what it can to ensure that local residents claim the council tax discount to which they are entitled and, secondly, to ensure that any consequent increase in expenditure, which exceeds 10% of its 2012 grant, is reimbursed.
In making the case, I can do no better than quote two noble Lords from the Liberal Democrat Benches who expressed concerns in Grand Committee about the potential conflict of interest that local authorities now face as a consequence of the cash limit imposed on the council tax discount settlement, so that the authority will now have to find the money to fund any increase in take-up rather than have it reimbursed by central government.
The noble Lord, Lord Greaves, who is not in his place, warned that,
“Under the new system, there would be a real incentive for local authorities to discourage people from claiming”.—[Official Report, 10/7/12; col. GC552.]
The noble Lord, Lord Shipley, kindly spoke in support of a similar amendment that I moved. He described it as,
“a serious and important issue. That must be addressed. It may be in the financial interest of a local council not to promote or advertise the council tax support scheme. That cannot be right”.—[Official Report, 19/7/12; col. GC147.]
It is not right. It is unethical to build into the template of a statutory income-maintenance scheme an incentive to depress take-up.
Noble Lords will be aware that take-up of means-tested benefits is a perennial problem, and take-up of council tax benefit is among the lowest. The latest government estimates indicate that as many as nearly two-fifths of those eligible might not be claiming their entitlement. Take-up is particularly low among pensioners and among couples with children, of whom between two-fifths and nearly half are not claiming. Overall, the trend in take-up of council tax benefit has been downward. Since 1993-94, take-up has fallen by at least six percentage points for pensioners, by around seven percentage points for non-pensioners, and by a massive 15 percentage points for couples with children, although these figures are approximate.
Take-up matters. The Child Poverty Unit has identified it as a crucial element in the child poverty agenda, suggesting that as many as 400,000 children were living in income poverty in 2009 because their families were not receiving the benefits or tax credits to which they were entitled. The unit also pointed to the benefits for the local economy, as the money is likely to be spent in local communities, and to the importance of increasing awareness of the financial support available to those entering employment.
Given the importance of take-up, in particular to the child poverty agenda, it is extraordinary that the Government now want to cease publication of the official estimates of take-up. If there are no official estimates, we will lose one important indicator of the effectiveness of benefits and of the Government’s own universal credit reforms, one objective of which is supposedly to improve take-up. I asked the Minister if she would make the noble Lord, Lord Freud, aware of the Grand Committee’s concerns on this issue. I should be grateful if she could tell your Lordships’ House whether she has been able to do that.
In Committee, when I moved a similar amendment, the Minister responded that the Bill already,
“seems to cover more or less what the amendment is about”.—[Official Report, 19/7/12; col. 152.]
I am afraid that it does not. There is nothing in the Bill that places a clear duty on local authorities to maximise take-up of the discount. This is in fact a step backwards from the current situation with regard to council tax benefit. Under the Social Security Contributions and Benefits Act 1992, local authorities have a statutory responsibility for council tax benefit take-up. Each billing and levying authority,
“shall take such steps as appear to it appropriate for the purpose of ensuring that any person who may be entitled to council tax benefit in respect of council tax payable to the authority becomes aware that he may be entitled to it”.
Amendment 108 is in the spirit of this obligation and would write a similar, although differently worded, responsibility into this legislation.