Local Government Finance Bill

Debate between Helen Jones and George Hollingbery

Wednesday 31st October 2012 Commons Chamber

[Helen Jones]

My right hon. Friend may well be right. The Government seem to be able to get into a mess quite easily. The problem is that the people on the receiving end of their decisions are the poorest and most vulnerable in our community.

[George Hollingbery]

There is no doubt that the hon. Lady makes a powerful argument, and as a former deputy leader of a council I appreciate the difficulty that councils will have. It is also an unfortunate truth that those who need benefits will suffer most when they are withdrawn. However, I do not quite follow her argument about what she would like done about that. Does she wish the whole scheme to be repealed, so that we end up with the status quo ante, does she wish to have further delays in the scheme, or does she wish to implement it in part? I understand her arguments against it, but I do not understand what she thinks would replace it.

[Helen Jones]

We made it clear that we did not want the scheme in the first place, and we voted against it. We made it clear that if the Government were introducing universal credit, they should make it universal. The clue is in the name—if there is to be universal credit, it has to include everything.

[George Hollingbery]

There is a question that clearly follows, which I know is asked many times of the Opposition. Given that half a billion pounds of annual savings are attached to the change, can the hon. Lady please tell me where the extra half a billion pounds of savings would come from?

Council Tax Benefit Localisation

Debate between Helen Jones and George Hollingbery

Wednesday 27th June 2012 Westminster Hall

[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.

Local Government Finance Bill

Debate between Helen Jones and George Hollingbery

Tuesday 31st January 2012 Commons Chamber

[Helen Jones]

It is no good the Parliamentary Private Secretary chuntering away—it will have no effect. I spent years dealing with stroppy 15-year-olds on wet Friday afternoons, and he is no different.

Let us really look at this. If the Government are serious when they say, as the Housing Minister did when he spoke to the Communities and Local Government Committee, that councils should not avoid paying those who really need it, then they have to be prepared to meet the unforeseen costs. Why should a person living in a particular authority be penalised simply because a major employer in the area closes down or more pensioners claim? My hon. Friend the Member for Sheffield South East said that it is estimated that only between 57% and 66% of pensioners claim because council tax benefit is classed as a benefit. All those who are experienced in this area say that, once it is seen simply as a reduction in the bill, claims from pensioners are likely to rise. That is a good thing, but the costs have to be met, and it is unreasonable that entitlement for other people should depend on how many pensioners live in their area. They will be penalised because of an increase in council tax, cuts in other services or cuts in benefit to working-age people when the scheme is later revised. It makes no logical sense.

[George Hollingbery (Meon Valley) (Con)]

Purely for the purposes of investigation, does the hon. Lady have any figures—I understand that there will be a wide variety across councils—for the percentage of spending power that is represented by the 10% cut?

[Helen Jones]

I could give such figures to the hon. Gentleman, but I am afraid that I do not have them at the moment, and they vary greatly from council to council. He raises an important issue. Local authorities that have many council tax benefit claimants will see a bigger cut in their spending power, and that is part of the problem.

[Helen Jones]

That makes the point very well.

[George Hollingbery]

Does the hon. Lady agree that the spending power of each of those councils is incredibly different and that the percentage change in their spending power represented by a 10% cut in the council tax bill, despite the varying levels of council tax bills, might be roughly similar? We do not know.

[Helen Jones]

I do not think that is correct. We will debate that with the next group of amendments, but I will make a little progress now.

The point of a national scheme is that risk is spread. If we move to a localised scheme, we must have some way of dealing with risk, but there is no way of doing that in this scheme. The Government cannot seriously argue that the closure of a major employer, for example, is a council’s responsibility. I know that, according to the Government’s “not me, guv” approach, nothing is their responsibility, but even they must accept that they are responsible for the national economy, not Warrington borough council, Nottingham, Carlisle or anywhere else. If a major employer closes, the local authority must have some way of dealing with it.

Our new clause would ensure that the Government’s power to pay a grant is used to meet any shortfall if a scheme costs more in benefit than the Government had originally agreed to pay to a local authority. Ministers ought not to be too concerned about this, because after all they have to approve the schemes, and they are not being asked to make an open-ended commitment. They approve the scheme and how it works, but a cash-limited budget cannot cope with sudden surges in demand. In fact, the Government admit that in their own impact assessment, which states:

“If demographic changes or economic circumstances mean that eligibility for council tax support increases significantly then the consequence of switching”—

from annually managed expenditure to departmental expenditure limits—

“will be that authorities bear more of the risk of a shortfall in funds.”

The risk of a shortfall or serious economic turbulence destabilising a local authority’s finances and, what is more, the poorest people in the area having to pay the price is not something that any Opposition Member, or I suspect a few Government Members, can accept. We have tabled new clause 11 because we believe that it would deal with the problem, and it might be helpful if I let you know, Mr Crausby, that we will seek to divide the Committee on that when the time comes.

Local Government Finance Bill

Debate between Helen Jones and George Hollingbery

Wednesday 18th January 2012 Commons Chamber

[Helen Jones]

My hon. Friend, who is a distinguished former leader of a local authority, makes a valid point. I agree with him on one thing: local government finance is exceedingly complicated. For that reason, it might well have been useful to hear in Committee from people such as finance officers in local authorities who will have to deal with this procedure from day to day. They might well have been able to suggest technical amendments that would have been beneficial to the Committee and which, if we are honest, are beyond the expertise of most hon. Members.

[George Hollingbery (Meon Valley) (Con)]

Will the hon. Lady remind the Committee how many months of extensive consultation the proposals for the Bill have gone through before this stage and how many changes to the scheme were proposed and then adopted?

[Helen Jones]

The hon. Gentleman should recognise that it is not much use having a consultation unless it informs the legislation. [Interruption.] Local authorities say that it has not. A second process, which many Members have found useful, is to allow people to give evidence on the exact wording and form of the Bill once it has been published. I believe that if we are serious about the legislation that we introduce in this House, it is right and proper to give people the opportunity to do that. People have not had time to do so with this Bill because we are not having evidence sessions in Committee. The House introduced such evidence sessions because it was believed that they would improve legislation. It is a pity that the Government have decided to miss them out.

--- Later in debate ---

[Helen Jones]

My hon. Friend is right. His intervention highlights the fact that no matter how much we want to make local government finance simple, it is never going to be simple because of the variation in need and the difference in resources. There is a balance to be struck between simplification and unfairness, and we do not think the Government have got that balance right in the Bill.

Some councils are coping with huge demands on their resources. Some form of equalisation will be necessary if, for example, children in poorer areas are not to be placed at risk. The idea that children’s services or the care of the elderly should depend on the number of businesses persuaded to relocate to a particular area is difficult to get to grips with.

[George Hollingbery]

In the debate on Second Reading the shadow Secretary of State said that there were far too many points in the Bill where the Secretary of State could interfere. As I said earlier this afternoon, there are mechanisms built into the Bill that ensure that revaluation and re-rating will take place. We can quibble about the date, but there are provisions to do that. There are safety nets built in. There is also at the first setting of this level of support a built-in bias towards communities that need more, as there should be. A calculation that I did showed that there was one public sector worker for every 88 people in Hampshire, because there is much less deprivation there, and I understand that, but one public sector worker for every 19 people in Manchester. Where we start clearly reflects the level of need.

[Helen Jones]

I know the hon. Gentleman made a thoughtful speech on Second Reading, but he is wrong on both counts. First, there is nothing on the face of the Bill about resets. Secondly, resetting the whole system is different from the way in which the system is run in the meantime. The baseline has nothing to do with the number of public sector workers anywhere. The baseline is the current local government financial settlement, which we argue is completely unfair to many local authorities anyway.