Council Tax Benefit Localisation

Debate between George Howarth and Sheila Gilmore

Wednesday 27th June 2012 Westminster Hall

[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.

Business and the Economy

Debate between George Howarth and Sheila Gilmore

Monday 14th May 2012 Commons Chamber

[Mr George Howarth (Knowsley) (Lab)]

It is a pleasure to follow the hon. Member for Wirral West (Esther McVey). She will not be surprised to learn that I do not share all of her analysis of the problems, but I hope to refer to some of the points she made about the banking system.

When I was considering what I wanted to say in today’s debate, I was struck by a depressing familiarity—not about what I wanted to say, but about some of the relevant issues—as what I am about to say about youth unemployment in my constituency could have been said in the 1980s and in the first half of the 1990s. As of March, 16.3% of 18 to 24-year-olds in Knowlsey were jobseeker’s allowance claimants. To bring that into a more human focus, I should say that that amounts to 1,725 young people in that age range. Even though the figures were even worse in the 1980s, that is alarming enough. The question I wish to address in the time available to me is: what is going to happen as a result of this Queen’s Speech or the Budget that preceded it that will give those young people hope that opportunities are available to them?

In that regard, I wish to discuss a couple of possibilities, the first of which is apprenticeships. The Government make frequent broadcasts about how much they have invested in apprenticeships. Perhaps unusually for someone in this House these days, I actually was an apprentice—I served a five-year engineering apprenticeship—and the opportunities now being called “apprenticeships” are not what my generation knew as apprenticeships; they are training opportunities, but they do not have any of the characteristics of the apprenticeships of my day.

I have to say—this was as true of my Government as it is of this one—that the whole training system is in a complete muddle. I chair a local charity—the Knowsley Skills Academy—that trains young people who would struggle to find a place in the job market. Unless they are on sweet terms with such wonderful organisations as A4e, it is nigh on impossible for them to get any funding for that kind of training. The situation is not unique to this Government—my own Government got this wrong too—but it is time that we woke up to the fact that the national training systems do not work and that what we want to do is fund and support local organisations that actually can provide realistic training for young people.

[Sheila Gilmore]

Does my right hon. Friend agree that one of the problems with the way that things such as the Work programme are being funded is that the local organisations at the end of the supply chain are not getting the work at the moment and may go out of business altogether, along with their expertise?

[Mr Howarth]

Of course I agree entirely with my hon. Friend. What she says brings me on to my second point: what in the Government’s programme will be attractive to small and medium-sized enterprises? Last October, the Department for Business, Innovation and Skills carried out a survey of 500 SMEs, in which they listed the things they found to be obstacles to success. Some 45% cited the state of the economy; 12% cited obtaining finance, and I wish to discuss that in a moment; and 6%—it was there but it was mentioned by only that number—cited the issue of regulation. I want to talk about small businesses, because they could provide the work opportunity that young people in my constituency and elsewhere need.

I wish to discuss a firm in my constituency, Sterling Services. Its owner, Mr Blennerhassett, has been to see me to talk about the problem he faces. He described how he has been in business for 28 years, has always been in the black and has never had any financial problems with the banks. He told me what happened when he tried to get a loan of £70,000 from the Royal Bank of Scotland to employ two full-time adult employees and two apprentices, to pay for two vans and to make some minor adjustments to his premises. The response he got from RBS was, “We don’t have a flavour for construction at the moment.” So the possibility of him taking on two young people and giving them a real apprenticeship has been closed off by RBS.

Higher education might offer another opportunity for young people. I want to refer briefly to the so-called core and margin model mentioned by my hon. Friend the Member for West Bromwich West (Mr Bailey), which effectively means that universities charging £9,000 in fees will have a proportion of their students directed to lower fee higher education institutions. Some universities will therefore have fewer places and the Government have provided no assessment of how they think that will work in practice. It might mean that opportunities in local higher education institutions will be closed off to young people, which would be a further obstacle in the way of their finding employment.

Finally, I talked earlier about regulation. If one were to compile a list of things that are important for creating jobs and getting the economy going again, I would think that the last place one would look would be regulation. The idea that making it easier to sack people will kick-start the economy is, to say the least, foolish. It is worse than that, however. If the Government really think that the most important priority for legislation is to make it easier to sack people, they should be ashamed.