Local Government Finance Bill

Andrew Gwynne Excerpts

Tuesday 10th January 2012 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

I want to talk about council tax benefit. The hon. Member for Harrow East (Bob Blackman) is one of the few Government Members to have raised concerns. Another Government Member who raised concerns served with me on the Welfare Reform Bill Committee, where we discussed this issue extensively. He, too, expressed considerable doubts about the council tax benefit proposal, especially as another Government Department, the DWP, has a project for universalising benefits under one umbrella—which might not be as easy as it thinks. Why keep council tax out of that?

That is a very good question. One of the main reasons that the Government give for making such a huge change in welfare law in this country is to incentivise work and to make sure there are not the kind of perverse incentives that they think arise as a result of things such as different tapers on different benefits. There are, indeed, different tapers at present for tax benefits and housing benefit, but if we create a situation whereby everything apart from council tax goes into universal credit, we will immediately recreate an anomaly. That will have a work disincentive unless it is very carefully worked out. We must question why two major Departments do not seem to be talking to each other about that.

The 10% reduction is a substantial reduction in the money available to local authorities to provide assistance to people on low incomes who need help. It should not simply be seen as something quite minor. I thought, particularly having worked on the Welfare Reform Bill, that this was primarily about saving money, but having read a lot of the comments in the consultation about this Bill, I realise that it is part and parcel of the Government’s view of local authorities: that they are not trying hard enough to get people into work. The Housing Minister said to the Select Committee on Communities and Local Government that the 10% reduction would encourage local authorities to make sure that business parks got off the ground and that people got into jobs—because of course, if people had jobs they would not then need council tax benefit. Actually, that is not true.

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

My hon. Friend is making a really interesting point about the perverse incentives that the Bill will introduce. Does she accept that in fact it will really clobber hard-working families who are struggling to make ends meet on low-paid work, and who rely on council tax relief to ensure that they can afford to work? In areas such as mine, it is those low-paid jobs that people will give up.