Helen Jones
Main Page: Helen Jones (Labour - Warrington North)(12 years, 4 months ago)
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Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is a pleasure to serve under your chairmanship, Mr Howarth. I make heartfelt apologies to the hon. Member for Makerfield (Yvonne Fovargue) and to all hon. Members for not being here at the start of the debate. We had a bit of a train crisis meeting, so I apologise for my delay. I will make a short contribution because I am conscious that many others wish to speak.
My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) and I have written to the Secretary of State asking for more clarity on this matter. I hope that the Minister will be able to give us that today. If not, perhaps he could put out further notices clarifying the definition of what is “vulnerable” and what is a “vulnerable group”.
At the moment, council leaders and officers are struggling with how this system will look. Initially, the view was pessimistic, but that is often the case when there is a cut in funds, and there has to be a redistribution of the pot. In constituencies such as Suffolk Coastal, a significantly higher proportion of the population are pensioners. There are concerns that the impact of the measure on people of working age will be considerably more, given that pensioners will see no impact on their council tax benefits.
However, I say as a supportive Back Bencher that there is a challenge on us all to try to do things with the welfare state. We should see the issue as a way to encourage our local government partners to be part of the solution, which is to attract businesses and employment and to make the system a key part of encouraging people to get out to work.
Helen Jones (Warrington North) (Lab)
I know that, through circumstances beyond her control, the hon. Lady was not here for the early part of the debate. The point that has been made over and over again is that council tax benefit is an in-work benefit. Many of the recipients are deemed, as those who are disabled are, to be incapable of working. Therefore, the argument that councils can mitigate that by attracting more employment fails at that basic level.
Dr Coffey
I understand why the hon. Lady says that. [Hon. Members: “Because it is true!”] Hon. Members should allow me to develop my argument. The average wage in Suffolk is considerably lower than that of counties nearby. It is probably lower than that in Lancashire and possibly lower than that in Liverpool, where I grew up.
District councils must try to attract higher-quality, skilled businesses to our area, so that they are not solely reliant on tourism and agriculture, which traditionally pay fairly low salaries. This system is part of a mechanism to encourage local councils to attract such businesses. With more businesses in an area, there will be a greater retention of business rates, with district councils, not county councils, taking 50% of such rates. Perhaps this measure is a blunt stick to encourage local councils to do their bit and to help their residents get higher skills and higher-value employment. We may be using a blunt stick to achieve that, but the aim is to say to local councils, “You have a role to play in the economic benefits for your area, and you should not simply be a processing house for benefit claims.”
Mr Howarth, I said that my speech would be short. I have taken one intervention, and I now leave it to other hon. Members to continue the debate.
Helen Jones (Warrington North) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this debate, and all my other hon. Friends who have spoken. They are too numerous to mention individually in the time available, but all of them have expressed concern about the unfairness of the policy. It is unfair even according to the standards of the Government, who seem to have elevated inequity into a policy position.
The policy represents a circle that is impossible for councils to square. The shift from annually managed expenditure to cash-limited expenditure, coupled with a 10% budget cut—while pensioners must be protected, which we support—means that the brunt of the cuts will fall on the most vulnerable people in the community. Who are those people? Many of them are poor working families. The cuts that they will bear—entirely arbitrary, depending on how many pensioners are in the local authority—will range from 13.4% to 25.2%. The national average will be 17%. If councils try to protect other vulnerable groups such as disabled people and carers, as the Government default scheme suggests they should, the cut for working families could be as much as 40% of benefit.
The Government trumpet that they have taken people out of tax by raising the tax threshold. Those gains, such as they were, have already been wiped out by increases in VAT and changes to housing benefit and tax credits. For many poor families, they will be wiped out yet again by the increase in council tax. The sad thing is that the Government do not even recognise the existence of such families. The Minister for Housing and Local Government, the right hon. Member for Welwyn Hatfield (Grant Shapps), said to the Select Committee that
“if somebody is in work they will not be receiving the benefit because they will not need to”.
How wrong can one be, and how wilfully blind? A parliamentary answer that I received from a Department for Work and Pensions Minister, the hon. Member for Thornbury and Yate (Steve Webb), told me that 743,600 people are non-passported recipients of council tax benefit and in work. There are others on passported benefits, of course, who are in part-time work.
Looking at the local authorities of which my hon. Friends have spoken, there are 3,430 such people in the Wigan borough and more than 2,000 in my own. Stockport has 2,860, Tameside has 2,830, Rochdale has 2,900 and County Durham has an incredible 5,810. Do the Departments talk to one another, or is this, as most of the Opposition believe, a piece of Government spin designed to convince everyone that the benefits go to people who are out of work?
The implication, of course, is that people are out of work through their own fault. That would be nonsense even if it were true, given that there is a double-dip recession and 2.6 million people are unemployed, but it is not true. The benefit often goes to families trying to do the right thing by going out to work for low wages because they believe in the value of work and in setting an example to their children. The hon. Member for Suffolk Coastal (Dr Coffey) said that councils that pay higher wages can attract more businesses. That is interesting, given that Government policy is clearly to depress wages in many areas of the country by targeting regional pay in the public sector. They are driving wages not up but down.
Who else will be hit by the legislation? There is no protection at all in the Bill for people with disabilities—even those in the support group for employment and support allowance, who are not expected to seek work even if it is available, which in the current double-dip recession is unlikely. Nor is there any protection for those in the work-related activity group, who by definition are not expected to seek paid employment to increase their income. How ludicrous it is, then, for the Government to claim that their purpose is to spur councils on to create more jobs when many of the people affected are in work or defined as unable to seek work.
Another group who will suffer, mentioned by my hon. Friend the Member for Edinburgh East (Sheila Gilmore), is carers. Carers are defined by the national insurance credit regulations as caring for 20 hours a week or more for someone in receipt of certain benefits. Carers are the people whom the Prime Minister called the unsung heroes of society in 2010. Now they will be rewarded with a council tax increase. What are they supposed to do? If they stop caring and go out and get a job, the state will pick up a burden costing millions of pounds for the social care that they were providing. A tax increase for carers and disabled people and a tax cut for millionaires—nothing could better sum up the Government’s distorted priorities.
As some of my hon. Friends have mentioned, as with the Government’s plans for business rates, the poorest areas will be hit hardest. I have already given some figures. The number of people in Manchester who are in work and receiving council tax benefit is more than 8,000. In Liverpool, it is more than 6,000. In Salford, a much smaller authority, it is 3,500. By contrast, South Bucks has 420, Melton has 440 and the City of London has 40.
That means that councils with a lot of people in that category are being hit by a triple whammy. First, defaults will rise. As my hon. Friend the Member for Makerfield reminded us, that is an imprisonable offence. Secondly, it will be much harder for councils to mitigate the effect on people in work, simply because there are more of them. Thirdly, they will lose a significant amount of money from their local economy, as people try to make up the shortfall with income that they would otherwise have spent in local shops and businesses. My own local authority, for instance, will lose £1.3 million. Wigan will lose £2.6 million, Tameside £1.9 million and County Durham a whopping £5.5 million.
George Hollingbery
Is it not true that from an individual rather than a collective point of view, the cuts will actually fall hardest on those areas with the oldest demography rather than the greatest poverty? That is where the most distortion will happen. Collectively, there are areas with more people in receipt of benefit, but of course the budgets reflect that already.
Helen Jones
Actually, they do not. If the hon. Gentleman looks at the Local Government Finance Bill, he will see that its impact falls on the poorest authorities in the country. I have no doubt that there are difficulties in some areas with pensioners, but let me give him figures on what some of the wealthier areas will lose: Hertfordshire will lose £293,000 and Melton £246,000. Like the rest of the Government’s financial initiatives, this is designed to hit the poorest areas most—and, of course, it transfers all the financial risk to local authorities.
If more pensioners claim, as is likely under this system, that will be a good thing, but the money will have to be found in a cash-limited system. If unemployment increases, especially if a big employer closes down, the money will have to be found either from the poorest people receiving benefits or from cuts in benefits elsewhere. When the Government say that they wish to include council tax in the local business rate system, they fail to say that safety nets will kick in only if a council’s income falls between 7.5% and 10% below the baseline.
Helen Jones
I am sorry, but I have to wind up; otherwise, I will exceed my time.
This ill-thought-out system will produce disincentives against working and hit the poor and vulnerable most. The Minister needs to think again.
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.
Andrew Stunell
No, I will not.
At that time, there was a gap of £400 million every day between the amount being spent by the outgoing Government and the amount they were receiving, in tax and other receipts—£400 million was being added every day to the national deficit. The measure we are discussing is part of the Government’s strategy to put this country’s finances back on a firm footing. As has been noted, it consists of a reduction of £500 million per year—not per day—as a contribution to closing the gap between public expenditure and public income.
That brings me to the contributions of hon. Members representing constituencies in Wales and Scotland. In both those nations, the allocation of the reduction is strictly in accordance with the Barnett formula, and that reduction is no more ring-fenced in its decrease than any increase under the formula. It is entirely a matter for the Welsh and Scottish Administrations to decide how to proceed on the schemes in their respective countries. It is important to make that point.[Official Report, 17 July 2012, Vol. 548, c. 1MC.]
That brings me to the many points that have been made about the implications and ramifications of the reductions. I want to illustrate how far wide of the mark some of those comments were by reference to a point made by the hon. Member for Mackerfield.
Andrew Stunell
I apologise for mispronouncing the constituency name; I ought to know better, as I come from that part of the world.
Under our proposed scheme, Wigan metropolitan borough will face a reduction of £2,130,661. I am happy for that to appear on the record.
Andrew Stunell
No, I will not give way on any points, because I want to proceed.
In another part of the Local Government Finance Bill, we are giving Wigan metropolitan borough the capacity to change its current discounts and exemptions for empty homes and second homes. Wigan metropolitan borough, which I am sure the hon. Member for Makerfield would agree has considerable social and economic problems, will be able to raise £2,173,854, if it chooses to exercise its discretion fully. The difference between those two figures is £43,000 in Wigan’s favour; under the Bill, it will have capacity to raise more revenue than it will lose.
That important point very much undermines the arguments made by a number of Members. It brings a sense of reality—[Laughter.] The nature of things is that very few Members of Parliament have detailed experience of local government finance systems; they are highly dependent on the advice they receive from local authorities and their senior finance officers. If Opposition Members asked their individual local authorities how much they would be able to increase their income if they took advantage of the Bill’s proposed discounts and exemption changes, I think that, almost without exception, those Members would be substantially surprised.
In my remaining two minutes, I want to thank my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) for her comments. I welcome her back, because she has been absent from the House for some time. She has not lost her touch. She made it very clear what she thinks about the issue and has been consistent and persistent in making her point. The authorities in Dorset and Poole can, if they choose to, offset the reduction in support for council tax benefit via changes to the exemptions that they levy.
The hon. Member for Makerfield made a point about the schemes that local authorities will introduce, but I am sure that it will be obvious to her that Wigan can continue with exactly the same scheme as it has now, if it wishes to do so. If it continues with that scheme, it will not need the guidance and support that we have already issued to local authorities on all the relevant matters. Indeed, some local authorities are already carrying out public consultations on alternative schemes and will have them in place by 1 April.