Council Tax Benefit Localisation

Andrew Gwynne Excerpts

Wednesday 27th June 2012 Westminster Hall

[Andrew Gwynne (Denton and Reddish) (Lab)]

It is a pleasure to see you in the Chair, Mr Howarth. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on the case that she put forward in opening the debate today.

I would go further than my hon. Friend the Member for Rochdale (Simon Danczuk) and say clearly that the measure is not about reforming the benefit system or creating a fairer system, but a cynical move by the Government to impose crude cuts on individuals who can least afford it. It is a cynical way to cut the money given to local councils.

As we have seen, and heard from my hon. Friend, local authorities, including my own, are facing a massive financial squeeze. The Government were not satisfied with the in-year cuts that they placed on Tameside and similar authorities. Tameside has had to reduce the budget over three years by almost £100 million, which has a major impact on what a local authority can do. It is not only Tameside; the picture is mirrored across the country. The areas most in need feel the pinch the hardest, which means that their local authorities’ capacity to help them is greatly diminished.

A Government proposal such as council tax benefit localisation affects real people. The figures from Tameside council show that in 2011-12 nearly £20 million— £19.3 million—was spent on council tax benefit, which is 32,245 claimants. A 10% reduction would amount to £2 million. According to the Government, among those claimants, the 13,569 pensioners, who received £8,481,078-worth of council tax benefit, are protected, which means that the squeeze is forced on 7,990 families with dependent children, who last year received £5,288,698-worth of council tax benefit. Those are the same families with dependent children who are being attacked at every level of Government policy, not least through the reduction and removal of tax credits.

[Ms Karen Buck (Westminster North) (Lab)]

Does my hon. Friend agree that among those who will be rubbing their hands at the prospect of the measures will be the bailiff agencies? There has already been a significant increase in the use of bailiffs to recover arrears from the kind of low-income families that he mentions. My local authority used bailiffs 30,000 times over three years for council tax and housing benefit. The faster the population churn, the more likely it is that bailiffs will be used. Using bailiffs for very small amounts of money—huge for the families concerned, but small for the bailiffs—is likely to lead to yet another surge in the sector.

[Andrew Gwynne]

I agree with my hon. Friend completely. I know from my casework the pressures that are put on local authorities to collect the money owed to them and to collect it quickly. They utilise all tools at their disposal, including bailiffs, which brings great distress to families who simply struggle to find even small amounts of money. It pushes them further into poverty. I totally accept the point she makes.

What has been completely lost by the Government in all the debates that we have had, most recently in the consideration on the Floor of the House of the Local Government Finance Bill, is that council tax benefit is an in-work benefit. Listening to Ministers at the Dispatch Box, one would think that the changes were all about the feckless poor, who do not deserve the benefit, and about removing money from them—the undeserving poor. I will not get into a debate about the deserving and undeserving poor—I leave that to the coalition parties—but I know from my constituency that a great number of the people who receive council tax benefit are in work. They are in low-paid, and often part-time, work. If we are to create a benefit system that is about making work pay, the way to do it is not to go ahead with such measures.

The Minister and I share a local authority. I have mentioned Tameside.

[Julie Hilling (Bolton West) (Lab)]

On the in-work benefit point, does my hon. Friend not think that it is an absolute nonsense that the Government say that the 10% reduction will strengthen local authorities’ incentive to promote employment and growth in the local economy, given that those who receive the benefit are already working? As he said earlier on the cuts, local authorities do not have the money left for the job and growth promotion tasks that they might have wanted to do.

[Andrew Gwynne]

My hon. Friend is right. That shows what nonsense many of the statements of the DCLG are. It makes no logical sense.

My constituency shares a local authority with the Minister’s. One of the perks, I suppose, of having a cross-borough constituency is that I can quote two councils. The Minister will know that, even in Stockport, which is by all standards a much more prosperous borough than Tameside, there are areas of deprivation and social need. There will also be families in low-paid work, who will feel the squeeze from measures such as the one we are debating. From a local point of view, therefore, I urge the Minister to listen to Stockport council, which has concerns about such measures, and wants them to be thought through better before they must be implemented.

I agree with the hon. Member for Mid Dorset and North Poole (Annette Brooke) about localism. We all believe in localism—certainly those of us who came through local government. I spent 12 almost happy years on Tameside council, which was a great training ground. However, if we are to make localism work, it must be genuine. The council tax benefit reforms are, I fear, localising the cuts and the blame, not genuinely localising a scheme of council tax benefits. That is because the Government have made the false assumption that all councils have a level playing field. Tameside council is completely different from Stockport council. It has a different level of ability to raise income and supplement loss of income, whether that is through localisation of the business rates or raising extra council tax, to pay for services or shortfalls in budgets such as council tax benefit. I urge the Government to consider their proposal carefully, because they are clobbering the working poor.