Local Government Finance Bill

Debate between Lord Smith of Leigh and Lord Best

Monday 16th July 2012 Grand Committee

[Lord Smith of Leigh]

My Lords, I have found this debate and the ones previously on Amendments 76 and 76A fascinating. I need to remind noble Lords that I am still leader of Wigan Council. Therefore, for me, this is not a theoretical debate. I will have to determine a scheme within my authority, with colleagues, that will decide who is eligible, who is not eligible, which group will be regarded as vulnerable and which group will not be regarded as vulnerable. It will not be easy. I was going to say that it is not a zero-sum game, but I remind noble Lords that it is not even a minus 10% game; it is a minus 20% game if we exclude pensioners. So we are lucky in that sense.

I find myself agreeing with much of what the noble Lord, Lord Deben, said about localism. I recognise what he said and I agree with it. Where I would differ from him and what we need to recognise is that local authorities come at this with very different needs in terms of the number of people who are receiving council tax benefits, as has been said earlier, and the potential changes, as I mentioned earlier. I already know from being in this meeting that I have 100 more people who will be regarded as needing council tax benefits as a result of their factory closing this afternoon. So these things are changing all the time, and we need to recognise that.

I have had some interesting solutions to my dilemma from various quarters today, such as applying reserves. The noble Lord, Lord Beecham, is absolutely right. My treasurer is already coming to me to say, “You are going to lose probably £500,000 on your council tax collection because these people are not going to be able to afford to pay the cost, so you have to think about that”. We have talked about the problems of increasing demands on council tax benefits as it becomes a local thing, and I think that the noble Lord is right that we will do it much better than it is done at the moment, so that probably will encourage more people who do not claim at the moment to start to claim.

Earlier in this Bill we talked about the problems of business rates and the fact that they will have some risk element, so we will have to put that in. We talked about the flexibility of council tax, which is a very interesting phrase. Perhaps the Minister could let me know whether he means by “flexibility of council tax” that he is going to allow me to put the council tax up and is not going to require me to hold a referendum. I cannot believe that anyone sensible is going to say that they are going to have a referendum to put council tax benefits up: “Please vote for it and you will pay more council tax”. We would never win that, so it is not going to work.

We have heard that we should make further cuts. In my authority I am planning £66 million of cuts over four years. The Government thankfully gave me some warning and we have them in place. If I now have to make more cuts to accommodate all this—probably between £2.5 million and £3 million-worth—where are they going to come from? What have I got to do that I am not already looking at? I need to remind noble Lords that it is the vulnerable groups who rely most on councils’ services. If I cut services to vulnerable groups, they suffer. I can put up daily charges or raise the qualification for receiving social care. All these things affect vulnerable groups and there is no easy solution.

The difficulty for me is this. Presumably all the people we give council tax benefit to are regarded as vulnerable people, otherwise we should not be giving them that benefit. If we start to define vulnerability—here I echo what the noble Lord, Lord Shipley, said, as well as the comments of other noble Lords about the needs of different groups in communities—the danger is that we will define who are the deserving and the non-deserving poor. In the future, there will be people who get council tax benefit support and those who either get less or nothing.

A lot of vulnerable groups have strong lobbying sectors, but the ones who do not get that kind of support are the working poor. I remind the Committee that we are talking about a marginalised and alienated group in our society made up of people who do not vote very much at the moment. But they could be tempted to vote by extremists who say, “We will listen to you”. It is happening in certain communities. People are listening to those who are giving them false promises. We know that Respect, which was mentioned by the noble Baroness, the BNP or whatever group it is will offer things that they cannot deliver. The result of this Bill and the way we will have to design the council tax support scheme will drive more and more people to the political extremes. Are we doing a good job here?

[Lord Best]

My Lords, I am provoked to give a short preview of the amendments tabled in my name that are to follow—but not tonight. However, I thought I might briefly whet appetites because they relate so closely to what we are talking about. I see that noble Lords are all agog.

These amendments are about more localism. They are about removing some of the inhibitions on councils deciding precisely how they want to raise the funds that will pay the £400 million the Treasury is waiting for. They are about whether pensioners are included or not included as a vulnerable group being decided locally. This is the point made by the noble Lord, Lord Deben. In my full and unamended speech I will say that there are many grounds on which pensioners might already be treated slightly more favourably than some of the other vulnerable groups. I will contend that in respect of the groups that are considered to be vulnerable, local authorities should have greater discretion, and suggest that local authorities should also have greater flexibility in how they raise council tax, not only in respect of the current discounts for empty and second homes, but in respect of single person discounts. I will explain that if local authorities were allowed to vary the single person discount, currently fixed at 25% and set centrally by diktat from Whitehall, some might choose to reduce that discount across the board to 20%, meaning that all those who currently receive it would have to pay another 46 pence a week. It is not a vast sum, but it would raise more than the £400 million across the piece and make it unnecessary for us to define vulnerable groups and get ourselves into all kinds of tangles in reducing support for the very poorest in our communities. In advance of moving those amendments and in the context of this debate, I thought that noble Lords might like to hear the preview.