Baroness Hanham
Main Page: Baroness Hanham (Conservative - Life peer)
Lord McKenzie of Luton
To ask Her Majesty’s Government what assessment they have made of the effects of local council tax support schemes on poverty.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, localising council tax support reduces the cost of council tax benefit by 10%. That contributes to our deficit reduction programme, makes councils responsible for support and creates incentives to get people into work. In designing schemes, local authorities should take into account the impact on low-income families. On 16 October, the Government announced a £100 million transitional grant to assist development of local schemes. Some 195 billing authorities have adopted schemes that are compliant with the criteria for the grant.
Lord McKenzie of Luton
In thanking the noble Baroness for that reply, I must say that it is somewhat complacent and out of touch. The Resolution Foundation estimates that three-quarters of the 326 local authorities responsible for council tax support schemes will be forced by government cuts to adopt schemes giving less support than the current national scheme. That will see working families losing £165 a year on average and non-working families even more. Taken together with all the other cuts about to hit low-income families, including the bedroom tax that we have just discussed, the 1% capping of benefits and other tax credits, is this not going to lead to increased personal debt, more food banks, lower collection rates for local authorities, more bailiffs knocking on the door and all the misery that that entails? Why do the Government find this acceptable?
Baroness Hanham
Well my Lords, a little of what the noble Lord has said is probably overblown. We are well aware that local councils are creating their council tax support schemes. In particular, at the moment, they have been offered transitional relief, as I have already said, to help them with that. Local authorities and the Department for Work and Pensions will be working together to ensure that the worst examples of what the noble Lord has put forward do not occur.
Lord Jenkin of Roding
My noble friend may remember that during the passage of the Local Government Finance Act 2012 I expressed some anxiety about the effect of the localisation of council tax benefits. But does she accept that, having kept closely in touch with the Local Government Association since then—I declare my interest as a vice-president of the association—I have been considerably reassured by the efforts that most councils are now making in order to protect the most vulnerable of their council tax payers? Will she also accept that the transitional grant to which she referred has been a considerable help to them?
Baroness Hanham
My Lords, I thank my noble friend Lord Jenkin for that and I agree that the transitional grant is a great help. It enables local authorities to have extra resources this year to support what they are doing as they develop their own council tax support schemes. It is slightly disappointing that only half the local authorities in the country have felt able to take up this transitional grant because they have not been able and will not be able to bring down their increase for individuals to below 8.5%.
The Lord Bishop of Hereford
My Lords, with changes to council tax benefit coming on top of the changes to housing benefit, working tax credits, benefit up-rating and other changes, will the Minister tell us what the Government are planning to do to monitor and report back to this House the cumulative effect of these cuts on low-income families?
Baroness Hanham
My Lords, each of the departments involved will, of course, be receiving information about anything to do with benefits. Particularly in respect of the council tax support scheme, we hope and expect that local authorities will be able to make the necessary reductions in their own budgets to make up the 10%. After all, everybody in this country is having to make some contribution towards reducing the deficit so kindly left to us by the previous Government.
Baroness Hollis of Heigham
My Lords, do the Government really understand the implications of asking people who have been on benefit and who have never so far paid council tax having to find between 20% and 30% of their council tax bill for the first time? Is the Minister also aware that, as a result, many local authorities are expecting that they will not be able to collect 70% of the monies outstanding from people who have hitherto paid nothing at all? Does she not agree that this is “poll tax mark two”?
Baroness Hanham
My Lords, I do not agree with the noble Baroness, Lady Hollis, that this is poll tax mark anything. This is a change to the council tax benefit scheme for individuals based on their individual requirements. Local authorities have plenty of support in what they are doing. They are perfectly able to make their own budgets fit to help with the 10% reduction and, as I have already said, if they have brought their council tax scheme within the transitional relief scheme, they also have transitional relief to help with that.
Lord Naseby
My Lords, is it not the flexibility that is being offered to local authorities which is most encouraging? When I was leader of the London Borough of Islington, under the guidance of Harold Wilson, there was nil flexibility to local authorities. We had a diktat from the centre and we had to follow it. At least this coalition Government, recognising that change had to come, have given flexibility for local authorities to decide exactly how they should use the amount of help that is available.
Baroness Hanham
My Lords, I thank my noble friend Lord Naseby for bringing reality into this situation. It is correct that the Government have given not only flexibility but also responsibility to local government for making its own decisions, particularly on council tax and the support that comes with that. Local authorities should be—and are—in a good position to make their own schemes and to deal with their own council tax.
Baroness Farrington of Ribbleton
My Lords, I congratulate the Minister on managing to shift all the responsibility for increasing poverty and problems with having to pay bills to the poorest. I recognise that the noble Baroness referred to the fact that we are all having to make very big sacrifices, but from where I sit in the north of England, the sacrifices are not being made by the better off in the south but by the very poor in the English regions. In the name of flexibility the Government have passed the responsibility to local authorities in a way that is at best dishonest and at worst sheer lying about the opportunities available to local government. They can keep their libraries and everything else provided that they take responsibility.
Baroness Hanham
My Lords, I would draw the attention of the noble Baroness to the fact that local government is being given responsibilities in many areas, many of which have been devolved from central government, something that I think she would have welcomed during her distinguished years in local government. One of the things that local government wanted was access to the council tax support scheme, which it now has. It is now up to local government to provide schemes in individual local boroughs that are satisfactory at all stages. The money from council tax benefits comes into councils’ main budgets and they can use it to make changes and reductions which absorb that 10%. I encourage them to do that.