Baroness Hollis of Heigham
Main Page: Baroness Hollis of Heigham (Labour - Life peer)Local Government Finance Bill
Baroness Hollis of Heigham Excerpts
Lord McKenzie of Luton
My Lords, I did not know whether we were going to get a quasi-statement from the Minister at the start of our proceedings, but perhaps I may comment on the Written Statement we received yesterday and then move directly to my amendment.
We should thank the noble Baroness for her Written Statement, if not the entirety of its content. This is an astonishing state of affairs. Just 24 hours before we are due to commence our final day on Report, we are told that there is, after all, just a little more funding for local council tax support schemes. Of course we should welcome any new money for councils, even if it is just a fraction of the endless cuts they have endured, added to by an extra £1.1 billion cut in formula grant that has emerged from recent edicts. The extra money, £100 million, comes with strings. Yesterday’s Written Statement said that it was about “best practice” and that the money,
“will be available to councils … who choose to design their local schemes”,
according to certain criteria.
However, the design of the schemes has been going on for months. They have been consulted on by local authorities up and down the country. Councils have been agonising over the impossible choices with which many of them have been faced, trying to juggle the near impossibility of protecting the most vulnerable and maintaining vital services. The Government have been sitting back and watching all this happen, denying that the councils needed more time, refusing to accept that there was insufficient funding in the system for all councils to produce decent schemes, and letting them go through the agony. However, this announcement is not, even at this late hour, really about protecting vulnerable people or having good work incentives. The cynical reality is that this is about the Government trying to get political cover as the consequences of their policies strike home.
What does this mean for local councils who wish to access this funding? Some may not have to change their proposed schemes to access the pot, presumably but not necessarily including those who have opted for the default scheme. Some may have to make considerable changes, although they do not yet know how the pot is to be distributed and how this relates to the cost of any changes they may have to make. Some richer councils, through the use of increased flexibility from the empty properties and second homes provisions of the Bill, are in a position to have already funded a compliant scheme and will get a windfall from it.
Minor changes to draft proposals consulted on may not require reconsultation, but more substantial changes might, and we need proper advice and the opportunity to research this. Councils will have to grapple with the sustainability of all this. The funding is for one year only. Using this money to fund improvements in year one and for what would otherwise be affordable for the council may just mean reverting to the original scheme in year two. However, of course, the risk is that political blame will be visited on the council rather than the Government.
Quite apart from the content of the Written Statement, the process has been a disgrace. Springing this on our deliberations at the last moment does not make for a considered legislative process. Perhaps we should not be surprised, because the record shows that the Government have failed to live up to commitments to have full information, including draft regulations available, in good time.
As for our business today and as already mentioned, we have a number of amendments that affect vulnerable people and relate to tapers and work incentives that, in addition to this announcement, need to be considered fully in the context of schemes already consulted on by councils. We need to consider whether to push these today or at Third Reading. We would be grateful if we could have a clear statement from the Minister on the approach that will be taken to Third Reading and whether what we took to be the Minister’s position from our meeting on Monday will become the reality.
For us, of course, this approach is irksome and inconvenient but councils are having to deal with the practicalities of it now. This is not a good way for government to do business. Ultimately, it is abundantly clear that, even after this 12th-hour panic measure, the Government are still not prepared to insist that all the most vulnerable, including those currently passported to full council tax benefit, should be fully protected. It is to their shame that they eschew this responsibility.
I now turn specifically to the amendment, which requires the Government to fund local council tax support schemes up to the level of the proposed default scheme—that is, as now. In seeking agreement to this, we reject the notion that the Government’s newly announced transitional funding is an adequate response to the challenges that local councils face in creating local schemes. I acknowledge up front that the amendment would deny the Government the savings that they are seeking—some £400 million—but, when they are so minded, the Government have a happy knack of finding resources for a council tax freeze, bin collections and even tax cuts for millionaires.
We have made it clear that we consider the move away from a national scheme to be wholly misguided and, ultimately, not sustainable. However, in the interim, the underfunding of the task given to local government has put many councils in an impossible position—one which the transitional funding does not fully address. Even with this transitional funding, which is to last but one year, millions of people around the country will face rises in their council tax from April next year. At the very time when the Secretary of State is lecturing councillors that they have a duty not to increase council tax bills, his own actions are forcing up the bills to be paid by people on the lowest incomes. The Secretary of State is delegating the responsibility of providing council tax support but with 10% less funding than the cost of the current national council tax benefit scheme. As my noble friend Lord Beecham said at Second Reading, it is passing the buck without passing the bucks. However, as we know, the 10% cut in funding is greater because it assumes that claimant numbers for council tax benefit will fall when they are rising, and it will not protect councils to the extent that the benefit is attributable to council tax increases.
Of course, because councils have properly to keep the benefit to pensioners whole and are cynically reminded by the Government of their duty under equalities legislation and—would you believe it from this Government?—child poverty legislation, the burden of the cut has to fall on others: the working-age poor. This awful dilemma is being presented to councils at the same time as they face unprecedented cuts in their funding—bigger than the cuts imposed on any government department. The latest cuts facing local government are significantly higher than those anticipated in the 2010 spending review.
As things stand, we know that some councils are being pushed to financial collapse by all this, and the cuts in council tax benefit funding will hit the poorest areas the hardest. Those that have already endured the largest cuts will suffer the greatest reductions in council tax benefit funding: Manchester will lose £5 million; Liverpool, £6 million; Birmingham, £10 million; and the City of London, to which we gave special consideration just last week, £27,000.
Through the consultations that local authorities are undertaking, we have a glimpse of how, before the one-year transitional money, they are seeking to address these challenges. The LGA tells us that of some 200 councils surveyed, nearly 90% are looking to require a minimum from all working-age claimants. Half will seek a minimum payment of 20%. The transitional funding may impact favourably on this for one year, but this permits—even encourages, one might say—a minimum payment of 8.5%.
Of course, we acknowledge that the Bill presents some councils with additional revenue-raising possibilities from empty properties and second homes but these are not equally spread across authorities. There are not many second homes in Luton. Securing maximum revenue from these sources will not always be possible anyway. According to the LGA, if half the additional potential revenue could be garnered, it would still leave some 307 councils needing to reduce council tax discounts. One way or another we are faced with the prospect of hundreds of thousands of citizens who do not currently have to pay council tax having to do so. Whatever amelioration comes from some one-year funding, it will not dramatically change that. These, of course, will be the poorest citizens. They are likely also to be those most likely to suffer other cuts, especially those in receipt of housing benefit. The Government have seemingly still not woken up to the problem of collecting a relatively small amount of council tax from poor people who have not previously been required to pay. The amounts may be smaller for one year as a result of the extra funding but it potentially makes the problem worse. It seems that the lessons of the poll tax have been forgotten.
There are other admirable amendments before us today, which one way or another seek to lessen the harm that the Bill will inevitably inflict. In our view they do not go far enough. This amendment would require the Government to fund as now, without the 10% cut. We have seen time and again proposals that have a profound impact on the lives of our fellow citizens. We are instructed that they have to be accepted because the deficit must be addressed. The impact is invariably measured on a stand-alone basis without the accumulative consequences being laid out. The alternative is invariably measured in a narrow juxtaposition and not across the whole sweep of what government can really do. It is time to say no. The 10% cut is too far and it is time for us to stand up for poor people. I beg to move.
Baroness Hollis of Heigham
My Lords, I take pleasure in seconding the amendment. What do Westminster and West Oxfordshire District Council have in common? Not much you might think. One is a prosperous inner-city London borough and the other is a prosperous leafy, rural district council, although admittedly the Prime Minister lives in both of them. However, they are very different local authorities. If the localism agenda means anything at all, one might expect two very different schemes in two such very different councils—Westminster and West Oxfordshire.
Both councils are going for the same scheme—the identical scheme and existing national default scheme. Is that because their local needs are the same? Hardly. Is it because they have identical insights into their locality? Unlikely. Is it because they have a similar demographic make-up? Doubtful. Is it because they have similar economies? Of course not. So what then? What they have in common is that they are both prosperous. As they are prosperous they can afford the existing scheme. That is welcome news for their poorer residents, but elsewhere, as my noble friend has said, councils are leaving the existing national default scheme not because they want to but because they have to—not because of vacuous and deeply cynical mantras of localism but because of the reality of the cuts.
These authorities tend to be the poorer authorities, which do not have the pretty second homes to levy or the comfortable reserves to cover their funding gap. Poorer authorities, with poorer residents, will be cutting their council tax benefit, and those with second homes or deep comfortable reserves who can afford not to choose not to. Some of the poorer authorities may try to revise their schemes for one year, but if they do in the light of the transitional grant, and if it is legal to do so, it will mean that their residents will have three different schemes in three years: this year’s scheme, next year’s scheme at 8.5%, and the third year at 20%.
Local authorities did not want to cut their money for their poorer citizens. Councillors of whatever political complexion did not come into local government to make the poor poorer. Not many want to spend hours, unless they are anoraks, fiddling with various models of tapers, capital limits and contribution levels. Nor—and I am certain of this—do they want to undermine the work incentives of the Welfare Reform Act, as some of these local schemes undoubtedly do, as my noble friend Lady Donaghy will explore. That is why Mr Cameron’s West Oxfordshire District Council, for example, has denounced the Pickles plan as damaging to work incentives, and was absolutely right to do so.
Lord True
My Lords, I associate myself with my noble friend’s remarks, although perhaps not his final point. Those who have heard me take part in these debates will know that I, too, regret very much that the benefit was not included in the universal credit. I think there is very wide agreement in the House on that but, as my noble friend has pointed out, that is not what Parliament has determined, and we must address the situation that we find ourselves in.
As my noble friend Lord Tope also said, there is an expectation for local authorities to deliver reductions in public spending. As I have often said in your Lordships’ House, the state is overspending by roughly £14 million an hour and it is legitimate to ask local authorities to consider playing a part in addressing that problem. We are doing so and, as I have said before in these debates, I would have preferred the Bill to not be too prescriptive in this area.
I agree with the first part of this amendment, that:
“Nothing … shall prevent billing authorities retaining the provisions of the … council tax benefit scheme”.
My problem with the amendment is that it asks your Lordships’ House to make a frontal assault on the principle of deficit reduction. The second part of the amendment effectively gives a put option to any local authority in this country, including the prosperous, leafy authorities that the noble Baroness, Lady Hollis, referred to, such as West Oxfordshire, Westminster and the Royal Borough of Kensington and Chelsea.
If the House passed this amendment, the Government would suddenly have to pick up the costs of Westminster, West Oxfordshire and the royal borough, which are prepared to sustain the existing scheme out of their own resources. This amendment says that your Lordships’ House should ask Her Majesty’s Treasury to pick up those costs, which those boroughs are prepared to meet. Similarly, any local authority in this country, rich or poor, would be able to ask for resources from the Treasury, and the whole effect of seeking to make a reduction in the welfare budget in this area could be negated. That is the fatal flaw in this amendment.
Baroness Hollis of Heigham
I am puzzled by the noble Lord’s remark. He says that if this amendment were carried, it would mean that prosperous authorities such as Gloucestershire, Oxfordshire and some of the inner London boroughs we have mentioned—Wandsworth, Westminster and so on—would be getting moneys from the national scheme that they do not need because they are ready to fund it themselves. Of course, given the council tax rebate scheme, they could still fund it themselves from the 90% grant, but is it not the case that under the transitional arrangements they will be entitled to apply for money they do not need, which they will no doubt keep and which will go to their reserves? In fact, the very thing that he is deploring about this amendment is going to be embodied in the transitional grant arrangements.
Lord True
The noble Baroness presents another possible wrong to defend the particular wrong that I am addressing.
I am sorry that I was slow coming into the Chamber when the noble Lord, Lord McKenzie, started his speech; I heard it on the monitor and I agreed with many of the things he said about the timing of this announcement, which is also implicit in what the noble Baroness has said. But I return to the fundamental point that if your Lordships pass this amendment, the Royal Borough of Kensington and Chelsea can ask the Treasury to go on funding the scheme as it now is. The noble Baroness thought it was absurd that those leafy boroughs should be funded, and I rather agree.
The other thing one has to accept is that surely there is somewhere between no saving from council tax benefit, which is the potential position if this amendment were passed and every local authority put that upon the Treasury, and the extent of saving, the problems of which we have heard described; there must be some amount that can be saved under this heading, because I believe—I do not have the figures before me—that spending on council tax benefit doubled during the Administration of the party opposite. I do not accept that there cannot be reductions. Therefore, because of the technical flaw in the second part of the amendment and because I think that there is scope for making reductions, I cannot support the amendment if it is put to a Division.
“( ) The Secretary of State shall issue guidance to local authorities as to what persons or category of persons shall be deemed to be vulnerable.”
Baroness Hollis of Heigham
This amendment has now been cut across by the Government’s statement about the transitional grant. I may wish to return to the issue at Third Reading, but for the moment, I ask the House’s permission to withdraw the amendment.
“( ) Any dwelling which receives a band reduction in its council tax by reason of disability adaptations (or in the case of Band A properties, the relevant discount), shall not be deemed to be under-occupied for the purposes of housing benefit.”
Baroness Hollis of Heigham
My Lords, I will be brief. Many years ago, as a Norfolk and Norwich councillor, I found that the then MAFF, the Ministry of Agriculture, Fisheries and Food, was giving grants to Norfolk farmers to drain the Broads wetlands and that the then DoE was at the same time giving the same farmers grants not to take up the grants. We have a similar problem here in the interaction of the Bill with the Welfare Reform Act. That is not helped because the interaction between the two departments, at least on this issue, is clearly fraught. That is most obvious over housing benefit, which came up in our previous debate.
DCLG has a more appropriate definition of bedrooms to families than has DWP. DWP’s new HB rules penalise couples where one has a moderate disability—asthma or arthritis—and needs a separate bedroom but will receive HB not for the two bedrooms that they currently have and need but for a one-bedroom flat, if they or their social landlord can find one. Middle-aged couples, one with disturbed and disturbing sleep, but who are reduced to a one-bedroom flat, will be sofa-surfing in their new home if they cannot afford to take the benefit cut that they would face if they stayed put. Someone with asthma or emphysema, sofa-surfing at 55 in their own home—it is awful.
We could perhaps help one small group of disabled people with more severe needs. They are those disabled people whose socially rented property has an extra bedroom and would normally be in a higher band—say, band C—but, because of their disability needs, have had their council tax banding dropped from C to B. However, for housing benefit purposes, they may well be judged to be underoccupying and have their benefit cut. The amendment states simply that anybody who has had a band reduction by DCLG should not thereby be caught by DWP’s underoccupation rules for housing benefit purposes; they should be exempt.
We are not talking about large sums here. Sam Lister from the Chartered Institute of Housing has kindly produced for me an estimate of those affected, based on top-down departmental statistics, for which I am most grateful. It is an estimate, but it accords with my own hunch work, bottom-up from several authorities and grossing up those figures. There are 125,000 properties in England with a band discount, usually on grounds of disability. Leaving aside band A, which would not normally be overoccupied, that gives 110,000 people in discounted properties. Excluding owner-occupiers, whom HB would not affect, and pensioners, who would not be affected by HB, we estimate that the number of households affected across England—and, perhaps, Wales—would be between 2,200 and 3,000. The cost of protecting their current HB levels so that they are not hit by an underoccupation charge would, including Wales, come to between £1.8 million and £2.1 million.
In some cases, their properties may have been adapted for them by the social landlord, and DWP has allowed that it would be a false economy to shuffle them into somewhere smaller and then have to readapt the new property. However, many such couples—perhaps most—are simply in large properties, such as the middle-aged couple who need all three bedrooms of their flat or bungalow, one each for sleeping and the small, third bedroom for equipment. Anyone who has cared for a disabled person, as many in this Chamber today have, knows how much equipment can be needed: the wheelchair, the oxygen tanks, the nearly new mattress that has been temporarily replaced by a water mattress, the commodes, the tray tables, the cradles, the backrests and the banana boards. I could go on.
Under the new HB rules, those 2,500 disabled families with a reduced CTB because, according to DCLG, they need that extra space, could still be hit by the bedroom tax contrived by DWP, which says that they do not need that extra space, at a cost to them of between £15 and £20 or more. This amendment would simply allow those with a reduced band by virtue of their disability, as recognised by one part of government, to be exempt from the bedroom tax imposed by another part of government. This would bring consistency between the two departments and would be the right thing to do for families who are usually poor and certainly disabled. It seems self-evidently just. It may be that the Government propose to protect such families and I very much hope that the Minister can say that they will do so, in the same way as she was helpful in Committee in telling us that council tax band reductions would continue. If not, I hope that your Lordships will support this amendment. I beg to move.
Lord Best
My Lords, I have put my name to this amendment as well. As a long-time campaigner on the famous bedroom tax, I am very supportive of this amendment, which I think affects only between 2,000 and 3,000 households. For them, however, it would be very important and to have a double whammy would be disastrous for that group. I support the amendment.
Baroness Hanham
My Lords, we discussed this in Committee and, while I appreciate and understand the intention behind the amendment, the trouble is that this would reopen debates that I know have already been had on what is now the Welfare Reform Act. The Government do not plan to revisit what is in that Act. Blanket exemptions for specific groups, including for disabled people and those living in adapted accommodation, were extensively discussed then. I appreciate that the noble Baroness has now reduced this exemption to thousands of people rather than tens of thousands, but the fact of the matter is that it reopens something which I do not think we can reopen here.
Blanket exemptions can also be an inefficient and complex way of targeting resources, so the Government favour discretionary housing payments to help meet any shortfalls between a person’s rent and a housing benefit award. Noble Lords will recall that we announced that an additional £30 million would be added to the discretionary housing payments fund from 2013-14. This is aimed specifically at two groups: disabled people living in significantly adapted accommodation and foster carers. Local councils make the decisions on them on their individual circumstances. However, I assure the House and the noble Baroness that the Government have no intention of changing the long-standing council tax disabled band reduction scheme and that anyone in receipt of a reduction will not lose it as a result of the underoccupation measure. As I say, I cannot support this amendment and I hope that the noble Baroness will feel able to withdraw it.
Baroness Hollis of Heigham
My Lords, I am extremely disappointed by the Minister’s reply. She has made two points: first, basically, that we cannot reopen something that has already been discussed. Forgive me, but that is precisely the point of the Report stage on this Bill. We are opening up issues on housing, particularly disabled persons’ right to housing support. After all, council tax benefit is part of the housing support that families receive. They pay rent and council tax, and in the past those two have been brigaded. To say that while DCLG recognises their need and reduces their council tax bands, the department’s colleagues a few stones’ throw away are perfectly able to penalise them for the very same discount that they are receiving from DCLG is really quite shocking.
The Minister said, secondly, that they could go to discretionary housing payments. By my calculations, that money has already been spent about three times over, given the number of families who will be capped and the like. I know that we are running very late for all sorts of reasons. I would dearly like to test the opinion of the House but I may leave this to Third Reading. I beg leave to withdraw the amendment.