All 1 Debates between Andy Sawford and Marcus Jones

Council Tax Support

Debate between Andy Sawford and Marcus Jones
Wednesday 14th May 2014

(10 years, 7 months ago)

Westminster Hall
Read Full debate Read Hansard Text

Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.

Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.

This information is provided by Parallel Parliament and does not comprise part of the offical record

Andy Sawford Portrait Andy Sawford (Corby) (Lab/Co-op)
- Hansard - -

It is a pleasure to serve under your chairmanship, Mr Crausby. May I start by congratulating my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) on securing the debate and on opening with a comprehensive analysis and critique of the Government’s localisation of council tax benefit? I want to address many of the issues that he raised. Just over a year after the localisation of council tax support, it is timely to debate the impact that the policy has had on millions of households across the country.

We have heard important contributions from my hon. Friends the Members for Stockton North (Alex Cunningham), for Nottingham South (Lilian Greenwood), for Stretford and Urmston (Kate Green), for North Tyneside (Mrs Glindon) and for Bolton West (Julie Hilling). Other colleagues have made powerful interventions. It is good to see so many Opposition Members here to express their concerns, raise issues and ask genuine questions of the Minister about the impact of the policy. In contrast, the hon. Member for Brigg and Goole (Andrew Percy) opened his speech by talking about drivel, and continued on that theme without referring to the topic of the debate at all. Perhaps if he had attended at the start and listened to my right hon. Friend the Member for Greenwich and Woolwich, he would have talked about that important subject, which we know has a huge impact on some of the poorest in our communities.

The “poll tax mark 2”, as the policy has been called by Lord Jenkin, the creator of the original poll tax, is causing misery across the country and driving hundreds of thousands of people into courts and into debt. That is why I fully support the call made by my right hon. Friend the Member for Greenwich and Woolwich for an immediate independent review of the impact of the socio-economic consequences of the localisation of council tax support, and I hope that the Minister will agree to that. The Public Accounts Committee has called for an independent review. The cross-party, Conservative-led Local Government Association has said that councils have been left

“facing an unpalatable choice of either charging council tax to the working age poor, who in many cases had not paid council tax before, or finding savings or extra income from elsewhere”.

That is in the context, as my hon. Friends the Members for Nottingham South and for Stretford and Urmston have said, of other policies such as the bedroom tax that are particularly affecting the disabled and some of the poorest in our communities. It is also in the context, as my hon. Friend the Member for North Tyneside has said, of local authorities having had their budgets slashed by 40% over this Parliament, with councils in areas of the highest need facing disproportionate cuts. Authorities with the highest levels of deprivation are being hit hardest, while the Prime Minister’s local authority, along with those of five Cabinet members, is receiving an increase in its spending power this year. That is directly relevant to councils’ ability to absorb the cuts to council tax benefit, because areas with the highest levels of deprivation that are facing the biggest cuts also contain a larger proportion of residents who require council tax support. Analysis from the special interest group of municipal authorities in the LGA shows that

“Council Tax Support was a much higher percentage of budgets for authorities such as Liverpool and Knowsley at 32% and Manchester and Hull at 29% than the more prosperous ones such as Windsor & Maidenhead and Rutland where the proportion was much lower, around 7.5%.”

Authorities that face additional cuts in their budgets have a difficult choice to make about whether to pass that on to claimants. As we know, four in five authorities have not been able to absorb the reduction in council tax benefit funding. The New Policy Institute found that of the 326 localised schemes, 82% reduced the level of support to working age recipients, with almost three quarters of councils introducing a minimum payment. Analysis from the Institute for Fiscal Studies makes it clear that Conservative and Liberal Democrat councils are more likely than Labour councils to introduce a minimum payment. That is a testament to Labour councils, given the cuts that they have faced and the higher proportion of council tax benefit recipients among their residents.

The LGA says that the scheme is “regressive”, because those on low incomes are dedicating higher percentages of their earnings to paying their council tax. Several hon. Members have talked about the fact that the amounts of money in question may seem small, but to some of our constituents, as we know, they make a huge difference to their ability each week to meet their household bills and their cost of living. Just like the bedroom tax, the policy is hitting those who are least able to pay.

As my right hon. Friend the Member for Greenwich and Woolwich has said, when the Government introduced the scheme, they had four main objectives in mind: to transfer the system to local control, to make savings, to protect vulnerable people and to support work incentives for claimants created by the Government’s wider welfare reforms. I believe that on all four of those objectives, the Government are failing. When it comes to the first objective, the localism for which I campaigned for many years outside this place, and which councils up and down the country wanted, was not merely about the devolution of the axe as exemplified by the localisation of council tax benefit. As my hon. Friend the Member for Bolton West has said, why not transfer the whole budget to councils and give them the discretion to seek to make savings if to do so is right for their local area? Ministers are happy to meddle in everything from the level of reserves to when the bins are collected, while passing on cuts to councils that put those councils in a near impossible position. As my hon. Friend the Member for Stockton North pointed out, the Government calculate that residents will identify the local authority as having made those choices when it has, in fact, been put in a really difficult position.

Marcus Jones Portrait Mr Marcus Jones (Nuneaton) (Con)
- Hansard - - - Excerpts

Will the hon. Gentleman give way?

Andy Sawford Portrait Andy Sawford
- Hansard - -

I will not give way because the hon. Gentleman was not present at the start of the debate and there is much to discuss relating to the informed contributions that have been made.

The Government’s second objective was to make savings. As the Local Government Information Unit, always a sound source of commentary, points out:

“Local authorities have incurred new costs through the changes to Council Tax Benefit”—

Marcus Jones Portrait Mr Jones
- Hansard - - - Excerpts

Will the hon. Gentleman give way?

Andy Sawford Portrait Andy Sawford
- Hansard - -

The hon. Gentleman’s hon. Friend the Member for Brigg and Goole did not have the courtesy to give way to my hon. Friends, so I am afraid that the tone has been set.

I was quoting the Local Government Information Unit:

“Local authorities have incurred new costs through the changes to Council Tax Benefit, including the cost of designing and modelling schemes, communicating changes, consulting with local residents, paying IT suppliers, and setting up a system for appeals”.

As my hon. Friend the Member for Stretford and Urmston said, it is an administrative nightmare. Some local authorities have actually had to employ additional staff to cope with the increased burden of council tax collection, including the cost of issuing 600,000 summonses across England and sending in bailiffs.

As well as new outgoings, the Local Government Association has said there has been a year-on-year drop in overall collection rates. It is, of course, quite rightly expected that council tax collections will increase and costs will decline over time as local authorities find it easier to collect money and the new system beds in, but the scheme’s difficulties in these early years have made it much more of a problem for local authorities and meant that the costs have ultimately been passed on to the most vulnerable residents.

On the Government’s aim to protect vulnerable people, it is a relief to poorer pensioners in my constituency and throughout the country that they will not be hit by the policy. Nevertheless, that protection has placed the burden of any reduction in council tax more on the shoulders of low income working-age people and families, as several of my hon. Friends have illustrated. In its March 2014 report, the Public Accounts Committee said:

“Contrary to the Department’s intentions, many local authority schemes have not protected vulnerable groups other than pensioners and war widows”.

The Government have not yet responded to that report, but when they do, they will claim that they are protecting vulnerable groups by freezing council tax. Of course, that is a con. Many Tory councils, including the Prime Minister’s own local county council, are putting council tax up. In my area, the county council has increased council tax, while the Labour-controlled borough council has frozen it, building on the record of Labour councils such as Hackney that have been freezing council tax for many years.

In many areas, including those where the council tax has been frozen, people on low incomes have seen their bills rise by more than £100 a year because of Tory cuts to council tax support. In fact, if someone lives in an area controlled by a Tory council, not only is their council tax £334 a year higher on average, but the Institute for Fiscal Studies calculates that their council

“is 14 percentage points more likely than Labour councils…to introduce minimum payments for council tax for low income households”.

That is confirmed in the report published last month by the Joseph Rowntree Foundation, which shows that low-income families have been affected by changes to council tax support.

A number of my hon. Friends referred to that important report, and I would be grateful if the Minister told us whether he has read it. If so, what does he make of its findings that 2.34 million low-income families will pay on average £149 more in council tax per year than they would have done under council tax benefit, and that 580,000 families have seen their council tax increase by 55% on average? How can the Government credibly seek to claim that there is a council tax freeze when 580,000 families around the country have seen their council tax increase by more than 50%?

Can the Minister account for the huge rise in the number of people approaching Citizens Advice with concerns about council tax debt? The chief executive of Citizens Advice told us in a briefing on this debate:

“In the past year Citizens Advice dealt with more than 150,000 problems of council tax debt”.

We know that many people have had the bailiffs at the door; indeed, my hon. Friend the Member for Bolton West highlighted how bailiffs can now charge £75 to charge a letter and £235 to pay a first visit, costing a debtor £310. Of course, such costs only mount. Many such people are already in financial hardship and are prey to loan sharks as they struggle to cope financially. They are also often the victims of other measures, such as the bedroom tax. The Ministry of Justice estimates that bailiff profits will double on the back of the Government’s new hike in bailiff charges. The debt charity StepChange says that profits will be made by compounding

“the hardship of some of the UK’s most vulnerable people”.

As we have heard, the Government’s proposal is not achieving their fourth objective: to make work pay. The Public Accounts Committee found that in 19 local authority areas, individuals are losing more through the combined impact of income tax and national insurance contributions and the withdrawal of council tax and housing benefits than under the previous scheme; some are losing 97p for every extra £1 earned. The Committee called it “a perverse result”.

If the Minister will not listen to the PAC or to organisations such as the Resolution Foundation, which has said that the scheme is not making work pay, perhaps he will listen to the Conservative commentator Fraser Nelson, who said that there is

“Precious little sign of…anger”

that the very poorest in our country face 98% tax rates. The Opposition are angry about that, and I hope that the Minister understands that he should feel angry about it too, because there is huge injustice in our communities.

I sense that you are encouraging me to draw my remarks to a close, Mr Crausby, so I will. There must be an independent review, to which I hope the Minister will agree. We have tabled amendments to that effect in the Lords because that is the right thing to do—it is the right time to assess the impact of the changes on the poorest people in the country. I very much hope that the Minister has listened to the powerful case made by my right hon. Friend the Member for Greenwich and Woolwich and other hon. Friends from across the country about how the policy is affecting the poorest in our society.