Council Tax Benefit Localisation

George Howarth Excerpts

Wednesday 27th June 2012 Westminster Hall

[Several hon. Members]

rose—

[Mr George Howarth (in the Chair)]

Order. It might be helpful if I explain that the first of the two Front Benchers will be called at 10.40 am. There are rather a lot of hon. Members wishing to speak. If Members exercise a self-denying ordinance and stick to five minutes, we should be able to get everyone in. I will leave Simon Danczuk with that thought.

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[Sheila Gilmore (Edinburgh East) (Lab)]

Thank you, Mr Howarth, for giving me the opportunity to speak. I also thank my hon. Friend the Member for Makerfield (Yvonne Fovargue) for calling this debate. My contribution will follow on neatly from that of the last speaker, the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because I will talk a bit about the situation in Scotland.

When I came into the House two years ago and this whole debate about localism began, I was wont to go around saying to my colleagues, “Huh! We’ve had this for the last three years”—I think that was how long it had been by that point—“and it isn’t working.” That was because the Scottish nationalist Government had introduced in 2007 a policy of localism, although they did not quite call it that and they did not perhaps talk about it in quite the same way as others. However, the impact has been exactly the same as elsewhere.

The problem is that talking about delegating decisions to local authorities is all well and good, but if at the same time the financial squeeze is put on, that is not real delegation of power. That is what we have seen in Scotland; we have now seen it for five years. We have had a council tax freeze, which nobody has been able to break out of. It is a very populist notion. I know that people think, “Oh, that’s great, you’re freezing the council tax,” but we must remember that those who receive council tax benefit—the poorest and most vulnerable people—got absolutely nothing from it. The measure is actually highly regressive, and it is also cumulative year on year.

In that financial strangulation, a council tax freeze is applied. Then, as has happened in Scotland this year, local government starts to be given less money and is told, “There you are, it’s over to you for all sorts of decisions.” That has been very damaging and very difficult for local government. Although some local councils in Scotland embraced the notion of a council tax freeze at the outset—wrongly, I think, and my own Labour group on the City of Edinburgh council, although they were then in opposition, pointed out the flaws in the notion right from the beginning—most of them have now realised that the situation is very difficult for them indeed. Without a local area having the power to raise its own resources and have control over its finances, localism is not really localism, and that is the root of a lot of the problems that we have discussed this morning.

Obviously, Scotland faces the same situation as other places, in that the money is simply being cut by Westminster. What the Scottish Government have done about that so far is disappointingly limited: they have said they will not impose the 10% cut, although the cut will be coming from London. That sounds good on the surface, but only half of that money is coming from Scottish Government funds; the rest will come from local government. Therefore, local government in Scotland is experiencing the squeeze in exactly the same way as local government in other places.

The Scottish Government made that announcement shortly before the local government elections in May and said, “We will be saving Scotland from this 10% cut,” but they did not say that that will have an impact on other services, and that half of the money to deal with the cuts will be found from local government, which already has reduced resources. To anybody who thinks that the Scottish Government have some magical way out of these difficulties, I would say, “That is just not the case.”

I regret the fact that, at the moment, there is still a lack of clarity in Scotland about how the proposal will work in future, how it will be developed and how a new form of benefit will come out of the present situation. It is all too easy for the Scottish Government. Their line on most things at the moment is to say, “Well, if you vote for separation, everything will be solved.” It’s land of milk and honey stuff, but a lot of the problems that I have mentioned will still be there.

I hope that in the next few months the Scottish Government will not wait for this nirvana that they claim is to come but instead will start to think seriously about how we create a proper benefit in Scotland for all the groups who receive council tax benefit. For example, the current system for council tax benefit has some details that we do not want to lose. On carers, the current structure of council tax benefit includes a carer’s premium, which makes a difference to many households with caring responsibilities. We have just had carers week, and a lot of warm words have been said about carers. Let us hope, however, that all local authorities up and down the country that will be affected by this change—both the Scottish Government and the Welsh Government will be creating a new form of benefit—do not forget carers.

[Mr George Howarth (in the Chair)]

Order. Three Members still wish to speak. If they can each confine themselves to speaking for three to four minutes, we should be able to get everyone in.

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[Mr Betts]

On a point of order, Mr Howarth. The Minister has not referred to the deliverability of the timetable, which is a crucial issue.

[Mr George Howarth (in the Chair)]

The hon. Gentleman is experienced enough to know that that is not a point of order.

[Andrew Stunell]

Wigan does not have to do that, because if it takes advantage of the discounts and exemptions that we have given it, it will be able to carry on with its current scheme.