Council Tax Benefit Localisation

Grahame Morris Excerpts

Wednesday 27th June 2012 Westminster Hall

[Grahame M. Morris (Easington) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this significant debate and I pay tribute to her. She has highlighted an important issue.

I want to follow on from some of the points made by my hon. Friend the Member for Denton and Reddish (Andrew Gwynne). I agreed with many of the comments of the hon. Member for Mid Dorset and North Poole (Annette Brooke), who made them in a calm and reasoned manner and highlighted the effect of benefit changes on the working-age population. I thank Durham county council, my local authority, for furnishing me with some figures to suggest the scale of the impact in my area.

The Consumer Credit Counselling Service reports a rise of almost a third in the number of people who rent their homes and seek advice on council tax debts, and a rise of more than a quarter across both renters and owners. That dramatic increase comes as a result of the worsening financial situation for ordinary people, particularly in my area, that is made tougher by the plethora of coalition Government policies, which seem to be hitting the poorest hardest. By scrapping the existing council tax benefit system at the same time as cutting funding for benefits, the Government will only exacerbate the financial problems that ordinary families face in areas such as Easington.

Ring-fencing council tax benefits for pensioners is, on the face of it, an idea to protect some of the most vulnerable, but the other side of the coin is that the impact on working-age households will be all the more severe. Indeed, just before the debate I twittered that I hoped to catch your eye, Mr Howarth, and one of my constituents, Madeleine, contacted me and asked me to be at pains to point out the impact on people like her—single adults in work who are claiming council tax benefit.

There are 43,710 homes in the former Easington district council area that makes up the bulk of my constituency, 13,800 of which are in receipt of council tax benefit. That amounts to almost one third of households. As my hon. Friend the Member for Makerfield said, council tax benefit is the most comprehensively claimed benefit. It is claimed by 5.9 million households across the UK, a rate that is higher than for any other means-tested benefit or even tax credit. The plans to force local authorities to deliver a localised benefit system will create unfair disparities between council areas and regions.

Welfare benefits are, in the main, determined at a national level; I am referring to the determination of benefit levels and qualifying entitlements. However, the present proposals have the potential to undermine the fairness of the overall benefits system. The Institute for Fiscal Studies has made it clear that the proposals mean that councils must choose between cuts in essential services, cuts to benefits for working-age households or a council tax rise. Sir Merrick Cockell of the Local Government Association has highlighted a starker choice for councils:

“They can either cease helping the working poor, or continue to support them by taking money from other services or putting up council tax”.

A report by the LGA yesterday suggested that by 2020, because of external pressures—principally meeting the costs of adult social care—local authorities are likely to provide only those services that they are statutorily obliged to provide. Not only is the coalition shirking its responsibility and passing the buck to local government; it is cutting funding by 10% for good measure— £500 million, as the hon. Member for Mid Dorset and North Poole said.

The policy of localisation of council tax benefit is completely at odds with the Government’s rhetoric that there should be no increase in council tax. Durham county council has 63,000 claimants and an estimated spend of £55 million for 2012-13. Almost half of claimants in Durham are pensioners, who the Government stipulate will face no cut. Therefore the burden will clearly fall on the one quarter of claimants in County Durham who have dependent children; the one tenth of claimants who are in work on low wages; and those who are out of work and looking for work. The latter group has grown in number, particularly in the north-east and especially in my constituency, under the policies of the coalition Government. Indeed, the DWP’s own research shows that 3 million households currently entitled to claim council tax benefit do not do so. That figure is likely to rise in tough economic times.

It is true that pensioners are protected, but the proposals place only an “expectation” on councils to protect vulnerable groups. As my hon. Friend the Member for Makerfield said, that throws up a raft of other problems. Indeed, Durham county council is not alone in its concern that councils may face a legal challenge owing to local interpretations of which groups should be treated as more vulnerable than others; my hon. Friend mentioned carers.

Other concerns include the danger that as the financial burden will now fall on local taxpayers, should costs increase owing to conditions largely outside a council’s control—I might mention the rising cost of adult social care—the impact on services, benefits or rates will be overwhelming. The proposals are inherently unfair and go against the grain of the Government’s plan for a streamlined benefits system. It is not acceptable for the Secretary of State to wash his hands of his responsibilities.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on launching the debate, and the many colleagues who have contributed to it. It will be extremely challenging to answer all the points raised, so I will pick out what seem to me to be the key ones. It is time that will limit what I am able to say, certainly not the strength of the arguments.

There has always been recognition in the House that welfare spending needs to be targeted properly and that more needs to be done to tackle poverty by getting people off benefits and into work. Part of achieving that, and part of the Government’s strategy for doing so, is to return control over council tax support to councils and for local authorities to have the freedom to decide how to help provide for the most vulnerable in their communities.

[Grahame M. Morris]

Will the Minister give way?

[Andrew Stunell]

Yes, although it will reduce my chances of answering all the points that have been raised.

[Grahame M. Morris]

I am grateful to the Minister for giving way on this fundamental point. Will he recognise that housing benefit is an in-work benefit?

[Andrew Stunell]

I suspect that the hon. Gentleman meant to say council tax benefit, which is what we are debating. I certainly accept the figures given by the hon. Member for Warrington North (Helen Jones). Of course, some of the recipients of the benefit are in work. That is not in doubt or dispute.

I remind Members that council tax benefit expenditure more than doubled between 1997 and 2010. Much of this debate has centred on two different but overlapping things: localisation, which, on the whole, Members present seem to approve of; and the reduction in the total amount of money being distributed, which, on the whole, they seem to disagree with. I understand the difficulties that this creates, but I remind Members that the reason why we have to reduce central Government spending is the inheritance that the Government received in 2010.