David Ward
Main Page: David Ward (Liberal Democrat - Bradford East)Local Government Finance Bill
David Ward Excerpts(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Howarth
My hon. Friend makes his point well with his experience of that Committee sitting. I absolutely agree with the sentiment behind his question.
I want to return to what the hon. Member for Mid Dorset and North Poole said on that point. She is respected on both sides of the Committee for her long and distinguished record of campaigning on behalf of children. I hope she reflects on the fact that child poverty is likely to increase because of the combined effects of the Bill and the other measures that are currently trundling their way unevenly through the benefits system.
Liberal Democrats who have spoken in the debate, and the hon. Member for Poole, made sensible suggestions to get around that problem. The problem, as many Opposition Members and others have highlighted, is that we are being asked to support a measure that contains massive uncertainty. If we get it wrong, some of the poorest in our communities will suffer the most.
My intention in speaking to the amendments is to support amendment 79, which is in the name of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), amendment 85, which is in the name of my hon. Friend the Member for Sheffield South East (Mr Betts), and new clause 11, which is in the name of my hon. Friend the Member for Warrington North (Helen Jones), but I have a serious suggestion that I believe would command support on both sides of the Committee. I suggest that the provisions should be delayed until they can be aligned with the universal credit system. At that point, a realistic estimate can be made of the impact of the combined changes on those poorest families. That is the only way in which we can ensure that there is fairness in the system, and that those who stand to lose the most are not the most penalised.
I should tell Ministers, one of whom will respond to the debate shortly, that all the evidence from reputable sources suggests that the poorest people in our communities will suffer the most, and that child poverty will increase. I am sure they do not want that to happen. My suggestion is therefore reasonable. I doubt they are briefed to accept it today, but I hope they will reflect on it.
Mr David Ward (Bradford East) (LD)
We are in the same position as we were in last week, in that we are discussing a measure to which most Members agree in principle. Perhaps not all Members agreed on business rates, but we are discussing consequences.
My understanding—we have been told—is that the sums show that the measure balances itself out nationally, whether at £420 million or £500 million.
Mr Ward
It does not really matter because we are talking about local ramifications—how the measure affects each area and what each area will be required to do to make up for lost council tax benefit.
The question is where the money will come from to make up the gap, and there are a couple of answers. First, there are the new freedoms that will be extended to local authorities, and locally determined schemes will generate a lot of additional funding. Members have raised the issue of pensioners being protected, and that will pass the burden on to other people.
The Temporary Chair (Miss Anne McIntosh)
Order. Will the hon. Member for North Durham (Mr Jones) contain himself?
Mr Ward
I sincerely doubt it, but thank you, Miss McIntosh.
Members have noted that if pensioners are protected, the burden will have to be picked up by others, who may be on low incomes. [Interruption.] That is not necessarily the case, because we do not know what the new freedoms will generate, and they may generate sufficient funds to make up the gap.
As a result of the proposals, Bradford faces a £4 million loss in council tax. The figure for the funding that will be generated from the new-found freedoms, if they are extended to new areas, is actually very substantial, and it is not far off that £4 million figure.
Mr Ward
No.
However, that is not really the point. It does not really matter whether those two figures equate. If they do, it will be pure fluke and pure coincidence. If a local authority can generate sufficient funding from the new freedoms to cover the loss in council tax, it will be sheer fluke, and a policy cannot be based on fluke. The certainty of loss will be there, without the certainty of gain. The certainty of the Government withdrawing the 10% will be there; the uncertainty of what can be generated at this time is clear for all to see.
In addition, the collection costs for the alternative sources of funding for the exemptions on classes A, C and L could be enormous. We must take account of the cost of the arrears and the cost of collecting those additional sources of funding. The Government’s position is, “Don’t worry. You may be losing council tax, but your new-found freedoms will easily generate the funds required to balance that.” However, that is simply not guaranteed authority by authority, and it is based on sources of funds that it will be difficult to collect in some cases. There are huge differences when it comes to residents telling their council, “I’ve got an empty property. Give me a discount” and residents saying, “I’ve got a second home. Please tax me.”
Mr Ward
There are, actually, several hundred second homes in Bradford.
If authorities cannot generate funding from the new-found freedoms, the other answer is for them to find it somewhere else in their budget. They have this wonderful freedom to find other areas where they can balance the books. The problem is that council tax is likely to be high in areas of high need. Areas of high need will have high formula grant, and areas of high formula grant will have suffered a large cut in the local government settlement. All those things together mean that the risk, or the uncertainty people have talked about, is disproportionately likely to hit more deprived communities.
I think it was the hon. Member for Meon Valley (George Hollingbery) who said that 10% is 10%. There may be a lot more council tax in monetary terms in Durham or Bradford than in Meon Valley, but 10% is 10%. However, that is not really the issue, because more deprived, less affluent areas will be disproportionately harmed, given that they have disproportionately more council tax recipients. That is not fair, but the issue of fairness cannot be assessed until the thing has run its course, and we have developed all the possible ways that an authority may have of generating funds.
Of course, there is the issue of whether the software can be introduced, but there are also the unanswered questions. How will the future growth in claimant numbers affect the 90% base in terms of eligibility? Opposition Members talked about the low level of claims by certain groups, such as pensioners, where 65% of those who are eligible actually claim. What will the scheme do to protect authorities from the growth in claimant numbers as a result of increased take-up or deteriorating economic circumstances? What is the situation with the administration grant for council tax support? When will authorities know about that? Where is the evidence that has been collected about the relative difficulty of collecting some of the income from the new potential sources of income? Where is the evidence that that will be done?
Finally, the proposals are clearly Treasury driven. Most people here have at heart local government and the local government system. That is why we have a generally positive response to localisation measures as they affect local authorities, although we understand that local government must make a contribution to tackling the deficit, as it has through the local government settlement. However, instead of treating local authorities as cash cows, why could we not have treated them as partners in deficit reduction? Why could we not have gone go them and said, “We will keep the council tax, and we intend to reduce council tax benefit over a period of time. In the first year, having given you that warning, we will extend new powers and freedoms to you to collect tax and remove some exemptions. You will yield the money that is generated from them to the Exchequer, so you will keep your council tax, and there will be no 10% cut, but it is on its way. In the meantime, you should generate additional funds from the new freedoms you will be given and yield those funds to the Exchequer in the first year. You will then be weaned off that over a period of time.” In the spirit of the business rates, why do we not do that, with some reward to those authorities that take up the challenge of extending the council tax base by generating money from new sources?
There was a different way to tackle this issue.
Mr Ward
Those Members who sat on the Localism Bill Committee will not be too surprised by what I have to say. Before us is a series of amendments that seek to impose on local authorities an obligation to have regard to different categories and groups when coming up with their new schemes. The Opposition seem to be oscillating between complete outrage that the Secretary of State is using powers to impose various things on local authorities and seeking to impose through legislation requirements that local authorities do certain things before introducing their schemes.
Helen Jones
Is the hon. Gentleman seriously arguing that local authorities should not have regard to people employed on low wages, people actively seeking work or levels of poverty in their areas? What is the reason for that?
Mr Ward
Not at all. I anticipate that any local authority worth its salt would have regard to all the things proposed in the amendments. In fact, that will differentiate good local authorities from bad ones, but it is not for the Secretary of State to specify those things, or indeed for us to do so through legislation, which frankly would be patronising and very centralist. As we said many times in relation to the Localism Bill, people have a right to judge at the ballot box whether their authorities are doing what they should be doing—it is not for this House to tell them.
Mr Kevan Jones
I was going to say that it was a pleasure to follow the hon. Member for Bradford East (Mr Ward), but his contribution kept getting worse.
Clause 8 of the Bill, headed “Council tax reduction schemes”, sets out the provisions for local councils to draw up their local council tax schemes. Proposed new subsection (2) states:
“Each billing authority in England must make a scheme specifying the reductions which are to apply to amounts of council tax payable, in respect of dwellings situated in its area, by—
(a) persons whom the authority considers to be in financial need, or
(b) persons in classes consisting of persons whom the authority considers to be, in general, in financial need.”
However, the Bill gives no guidance on what local authorities should take into consideration when drawing up their schemes. We could have a plethora of different schemes up and down the country and, as was referred to earlier by Government Members, neighbouring authorities could have completely different schemes and criteria for how people apply for council tax benefit. We know that the Secretary of State will exclude pensioners, but the amendments tabled by my right hon. and hon. Friends would add some criteria or at least set out what the baseline should be.
I am sorry that the hon. Member for Bradford East does not seem to care and trusts that every local authority, good or bad, will consider every single thing, including child poverty. If he had any experience of the Secretary of State’s time in charge of Bradford council, for example—clearly he had—he would know that he had little concern for the poor and the needy.
The Temporary Chair (Mr Jim Hood)
Order. That intervention is not relevant to the amendments.