Council Tax Benefit Localisation

Debate between Helen Jones and Lord Stunell

Wednesday 27th June 2012 Westminster Hall

[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.

[Helen Jones]

Will the Minister give way?

--- Later in debate ---

[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.

[Helen Jones]

Makerfield.

[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.

[Helen Jones]

Will the Minister give way on that point?

[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.

Local Government Finance Bill

Debate between Helen Jones and Lord Stunell

Monday 21st May 2012 Commons Chamber

[Andrew Stunell]

I am extremely disappointed by the right hon. Gentleman’s intervention. May I just remind him that when I assured the House that these papers would be published, there was universal astonishment that we proposed to do that before the Bill left this House? There was a universal assumption that I had somehow misspoken and that we actually meant to do this at a later stage. It is very much for the convenience of this House today that it should have these very important documents available for consideration, but the right hon. Gentleman is right to say that Members of the other place will have every opportunity to give further consideration to the information. Of course, the reason for publishing these papers in advance of the Bill completing its passages through the two Houses is to give local authorities and those who have to work on these schemes the maximum length of time to implement the necessary provisions, so that an appropriate and speedy commencement can be made next year.

[Helen Jones (Warrington North) (Lab)]

In fact, the Minister promised us not statements of intent, but draft regulations. He said:

“we intend to publish draft regulations while the Bill is still before the House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]

Where are they?

[Andrew Stunell]

When the hon. Lady has taken the opportunity to look at the statements of intent, she will see that they are in effect—indeed, my note refers to it—draft statutory instruments. I remind her that we cannot publish draft statutory instruments until we have a Bill to publish them against. We have brought the statements of intent before both Houses so that matters for consideration are fully in view.

New clause 9 allows the Secretary of State to make regulations to introduce the necessary powers for local authorities to tackle fraud in claims for a reduction in liability to pay council tax, which will be effective from next April. Powers to investigate potential fraudulent claims for reductions in liability to pay council tax and to issue the appropriate penalties are a vital weapon for local authorities if they are properly to administer schemes and protect the public purse. The change from the existing scheme to the new scheme means that the new clause is needed to provide the necessary safeguards. Rather than simply reintroducing all the powers that local authorities have to tackle council tax benefit fraud, the clause allows us to work with local authorities to identify those powers and offences that will be needed to make local schemes work. The overall aim is that the regulations will reinstate only the necessary powers, offences, penalties and safeguards that are appropriate for the new scheme.

--- Later in debate ---

[Andrew Stunell]

I am sorry if I did not make myself clear. The powers that local authorities rely on to guard against fraud in the current council tax benefit scheme will, in effect, lapse with the introduction of the new scheme. They are not competent to be used under the new scheme, so we need a new scheme. The purpose of the new clause is to ensure that the scheme takes account not just of concerns such as those held by my right hon. Friend but of the need to protect the public purse and that they are kept in proper and proportionate balance. We will not be giving local authorities powers to enter premises or to conduct inquiries and remove and copy documents from such premises. I hope my right hon. Friend finds that assurance helpful. The powers we are giving will require people to enter into arrangements under which access is permitted to relevant records and will, in our view, be sufficient for council tax purposes.

New section 14C will enable the Secretary of State to make regulations providing that authorities may issue penalties as an alternative to prosecution or where a person has not been charged with an offence. That will ensure that local authorities are able to take proportionate action, rather than being faced with the choice of pursuing prosecution or doing nothing. Before the debate on the amendments in the other place, we intend to publish a detailed statement of intent that will spell out clearly our proposals for regulations in accordance with the new clause. We have also made it clear in the new clause that any regulations will be subject to the affirmative procedure and will therefore be debated by both Houses. I hope my right hon. Friend will be somewhat reassured by what I have said.

[Helen Jones]

Will the Minister explain to the House, for my benefit and, presumably, for the benefit of others, how regulations in this section can

“create an offence that may be committed by a person acting otherwise than dishonestly”?

Presumably, if a person is not acting dishonestly, they are acting honestly. How can that create an offence?

--- Later in debate ---

[Helen Jones]

Why does the default scheme replicate the existing scheme on a 10% cut? Is the intention to penalise financially those councils that do not come up with their own scheme in time?

[Andrew Stunell]

There is certainly an incentive for local authorities to introduce a scheme of their own choosing. The whole point of this is that local authorities should have the capacity to have their own scheme, designed as they see fit. If they have not formed such a scheme by the relevant date in January, the default scheme comes into play, and that scheme will, in essence, continue with the existing council tax benefit scheme in its entirety. Taken together, the amendments to schedule 4 ensure that regulations prescribing requirements for schemes and prescribing the default scheme allow local authorities to take this approach and, if they so wish, to adopt the existing scheme lock, stock and barrel.

The Government have already confirmed their commitment to protecting pensioners on low incomes and have said that there should be no change in support to them as a result of the introduction of this reform. Support will continue to be rules-based, with provisions about the calculations to be made set out in regulations under paragraphs 2(8) and 2(9) of new schedule 1A to the Local Government Finance Act 1992, which is inserted by schedule 4 to the Bill. As the House is aware, it is intended that the support scheme for pensioners will be protected so that their support is as close as possible to what they receive at present. Paragraph 4 of new schedule 1A provides powers for the Secretary of State to prescribe a default scheme in regulations to take effect in any authority that has not made its own scheme by 31 January. The default scheme will cover those who have attained the qualifying age for state pension credit and those who have not yet attained it. The Government have been clear that they intend the default scheme to be as similar as possible to the existing scheme.

These technical amendments will enable regulations prescribing the requirements for pensioner protection and the default scheme to make use of the same powers, definitions and treatments as set out in the detail of the existing council tax benefit legislation. The Government believe that that will help to facilitate their provision of protection for those of pension credit age and provide the legal backstop of a default scheme that can take effect should a local authority not complete its own scheme. In particular, amendment 51, new schedule 1A, paragraph 2 and sub-paragraph (10) will allow the Government, when they set up the scheme, to make equivalent provision to that contained in the one of the enactments listed in sub-paragraph (12). New paragraph (3A) in amendment 54 allows the default scheme to make equivalent provision to that capable of being made under the same enactment.

There is a great deal of detail that I am happy to bring to the House should Members wish to have it, and more in the statements of intent. If the House is content at this point, I will move on to Government amendment 52. As set out in the statements of intent that we have published on our plans for localising support, the Government do not propose to make regulations as to how a billing authority will prepare a scheme because that would not enhance the existing requirements and duties of authorities in consulting and involving local people. It therefore does not make sense to prevent billing authorities, after consulting their major precepting authorities, from proceeding to publish their scheme and to consult others if they are in a position to do so prior to the Bill’s receiving Royal Assent. Amendment 52 allows councils to proceed in that direction if they wish. In other words, if, after consulting its major precepting authorities, a billing authority wants to publish its local scheme and to consult any other person with an interest in the scheme, it can do so straight away without running any additional risks arising from carrying out those steps in advance of Royal Assent.

[Helen Jones]

Are not the Government too often taking steps to implement legislation before it has been passed? We saw that with the Health and Social Care Bill and we are seeing it again now. The essence of a democratic Parliament is that legislation has to go through two Houses and get Royal Assent before it becomes law. Are not the Government trying to compensate for the fact that they are rushing this change in far too quickly, instead of giving local authorities time to prepare properly?

[Andrew Stunell]

In the last Session, the hon. Lady spent a lot of time telling us that we had not produced enough detail, nor given local authorities enough warning or flexibility. It seems a little perverse for her to say now that she does not want local authorities to have the flexibility to get a scheme under way pronto, if they are in a position to do so. I do not understand her confused logic.

Government amendment 53 is a minor technical amendment, which will ensure that the first financial year to which the default scheme relates is the same as that specified for the implementation of council tax reduction schemes in clause 8(4). Amendment 55 relates to claims that are in progress when the schemes come into force: in essence, any claims in the pipeline will be rolled over, rather than applicants being required to start again with a new scheme.

That completes my remarks about the Government proposals, but it is right and proper that I comment on the proposals from other parts of the House. New clause 2, tabled by the right hon. Member for Wentworth and Dearne (John Healey), would do away with the automatic entitlement to the single person discount, which has been a feature of council tax since its introduction. I remind the House that households with just one adult are eligible to claim the single person discount on their council tax bill, and that is not a benefit but a tax discount that has been a fundamental feature of council tax since its creation in 1993. Eight million households in England receive the single person discount, of which 90% are in bands A to D; it is therefore not a subsidy for the wealthy. Indeed, 29% of households in Great Britain are single-person households and another 7% are single-parent households, which are also eligible for the tax discount.

New clause 2 would pass to local authorities discretion on whether to grant a discount to such people and the size of the discount as part of setting their council tax reduction scheme. Clause 8(2) provides that

“Each billing authority in England must make a scheme specifying the reductions which are to apply to amounts of council tax”.

--- Later in debate ---

[Helen Jones]

Is the Minister therefore committing to produce a report, as requested in new clause 5?

[Andrew Stunell]

If the hon. Lady looks at the impact assessment submitted alongside the Bill, she will see that the specific question of whether the policy will be reviewed is addressed. The answer to her question is yes, and, if I remember correctly, the time interval before the publication will be three years.

Taken together, amendments 10, 13, 6 and 7 would delay by a year the localisation of the council tax reduction scheme, pushing it back from 2013 to 2014. The Government are very clear that the reform needs to be implemented in 2013 to secure the agreed savings set out in the 2010 comprehensive spending review. I think the Labour party is still struggling to come to terms with the fact that in 2010, £1 was being borrowed for every £4 spent and we were adding £400 million to the national debt every day. Tackling the deficit and establishing fiscal responsibility is a central part of the coalition Government’s strategy, and the changes to the scheme are fundamental to achieving the savings set out in the CSR.

There are things that councils should already be doing to prepare for the change, and we are supporting them in doing so, not least through the provision that the hon. Lady queried a few minutes ago. They should understand the circumstances of those in their area who currently claim support, ensure that elected members are aware of the decisions that they will need to take and engage with precepting authorities, such as police and fire authorities. They have the opportunity to prepare for and carry out consultation as soon as they are ready to do so—Government amendment 52 supports local authorities in their preparations by making that clear. The Government therefore believe that the amendments to delay the scheme are inappropriate and would create an unnecessary burden for local authorities, which will continue to be subject to their existing equalities duty and so will have to take that fully into account in their decisions.

The public sector equality duty includes a requirement for local authorities to have regard to advancing equality of opportunity between people who share a protected characteristic and those who do not, and to the need to eliminate unlawful discrimination. That continuous process requires relevant decision makers in local authorities to consider equality issues. That has a bearing not only on the question of delaying the scheme, which would incur costs and difficulties, but on amendment 9, which would require local authorities to notify current claimants of the potential impact of the draft scheme. Local authorities are already required, by paragraph 3(1) or proposed new schedule 1A to the 1992 Act, to consult on the draft scheme with such persons as they consider

“are likely to have an interest in the operation of the scheme”.

Furthermore, public sector bodies, including local authorities, are obliged to comply fully with the public sector equality duty.

[Helen Jones]

On a point of clarification, the Minister appears to be saying that local authorities have a duty to consider those with protected characteristics. The problem he is not grappling with is that if local authorities seek to do that in their council tax schemes—in respect of disabled people, for example—the cut imposed on the working poor will be even greater. Which mode of operation is he arguing they should undertake? Is he arguing that there should be equal cuts for everyone except pensioners, or that cuts should fall more on people who are in work?

[Andrew Stunell]

The Government have made it absolutely clear that that is a matter on which local authorities should take a decision. I remind the hon. Lady—she made this point—that it is open to councils to continue with the default scheme if they wish to do so; to look at other provisions in the Bill relating to discounts for empty and second homes; to take resources from other parts of their budget, which they could choose to do; and to scale back the benefits they provide in a scheme on which they have consulted.

--- Later in debate ---

[Andrew Stunell]

My hon. Friend makes a very good point. For some rural areas, especially tourist-focused ones, a significant fraction of the housing stock may be occupied—or perhaps unoccupied—as second homes, which makes it very difficult for those who live and work there to secure accommodation. I am sure he has taken note of our changes to the second home discount provisions, which give local authorities in those areas the opportunity to bring their council tax bills up to 100%. His new clause proposes a premium on top of that. I am sure that, in the years ahead, he and I will work jointly on proposals for a Liberal Democrat Government beyond 2015, and I look forward to working with him on that proposition.

[Helen Jones]

The Minister keeps referring to the right the Bill gives councils to increase the charge on second homes, as though all councils could gain a lot of money from that. Will he accept that in the poorest authorities, which will be hit hardest by the Bill—places such as Gateshead, Rotherham and so on—there is not an awful lot of second homes?

[Andrew Stunell]

I understand the hon. Lady’s point, but in Rotherham the funding gap is £1.8 million and the total value of discounts and exemptions granted by the Bill £1.9 million. To be clear, a 10% reduction for Rotherham is easily covered by the discounts and exemptions in the Bill. That is not true of every local authority, but it perhaps illustrates that there is a good deal of unnecessary trouble stirring by the Opposition. They are paid to do it, I understand that; but sometimes it is important to refer to the facts. In particular, I noticed that one of the leading financial officials on whom the Local Government Association draws for advice is the chief finance officer of Rotherham, so I am sure that those figures, which he submitted to the Department, are correct.

I am extremely sorry to have detained the House for so long, but I hope that I have provided a good foundation for the debate. The Government believe these to be important and significant reforms that will return power and responsibility to local government and take them out of Whitehall. We believe that is the right direction in which to head. I commend the Government’s proposals to the House and urge right hon. and hon. Friends and Members not to support the other amendments and new clauses.

--- Later in debate ---

[Andrew Stunell]

That is exactly why we produced the statements of intent—to give local authorities and their providers the longest possible time to understand how they might best design and develop a scheme. That is also why we have provided a significant sum of money to assist them in doing that.

The hon. Member for Warrington North also asked about criminal offences being created by the Bill. The Social Security Administration Act 1992 creates several criminal offences in relation to council tax benefit, including an offence of dishonestly making a false statement and one of knowingly making a false statement for the purpose of obtaining council tax benefit. There is a different standard of proof for each offence, as I suspect that the hon. Lady knows better than I do. Greater penalties apply if it can be shown that a person has acted dishonestly.

[Helen Jones]

Can the Minister explain what the position is when a person has not acted dishonestly? We have asked him several times. He has referred to acting knowingly and to acting dishonestly, but the proposed provisions refer to offences that can be committed other than dishonestly.

[Andrew Stunell]

I am surrounded by lawyers, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), is giving me helpful advice, but let me say that there are two separate categories, which I think the hon. Lady has just restated: dishonestly making a false statement and knowingly making a false statement for the purpose of obtaining council tax benefit. To underline a point I made when introducing the debate, those provisions mirror and replicate the existing situation as far as the council tax benefit fraud prevention scheme is concerned. Another relevant point I made earlier is that we are conducting a full review to ensure that what is put into the new scheme is wholly proportionate to the new situation.

Oral Answers to Questions

Debate between Helen Jones and Lord Stunell

Monday 30th April 2012 Commons Chamber

[Andrew Stunell]

Clearly, a good way of reducing the cost to the state of the council tax benefit system, and the cost to the householder, is to freeze council tax, and I commend the hon. Gentleman’s local council on the work that it has done.

[Helen Jones (Warrington North) (Lab)]

The Government’s own figures show that a cut of 16% in council tax benefit will cost the poorest families more than £161 a year, but does the Minister accept that, in fact, the cuts are likely to be far higher than that, up to 25%, depending on the number of pensioners in a local authority area? Does he think that this postcode lottery for the poorest families is fair? How can the Government justify cutting the incomes of 1 million struggling families while increasing the incomes of millionaires?

[Andrew Stunell]

The hon. Lady of course is completely off track. In reality, local authorities will have choices about how they manage the reduction and be able to choose, through the design of their scheme, whether some awards should be reduced. They can manage the reduction by reconfiguring the funding of other services, through efficiency savings, by using reserves or with flexibility over the council tax, which the same Bill before Parliament gives to local authorities.

Local Government Finance Bill

Debate between Helen Jones and Lord Stunell

Tuesday 31st January 2012 Commons Chamber

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

We have had a wide-ranging debate, and I shall do my best to respond to the key arguments made, quite a few of which spilt over into subsequent groups of amendments, if I may say so. If, as a result, I miss out some of the points, I hope that hon. Members will return to them later. I look forward to it.

The amendments have one fundamental problem: they make it impossible to secure a reduction in Government expenditure on council tax support. Even the Opposition have conceded that those savings must be made in order to tackle the deficit. Spending on council tax benefit has risen from £2 billion in 1997 to £4 billion, and it is essential to bring that back under control. The savings from localisation are a vital contribution to deficit reduction, and it is essential that we have a credible deficit reduction plan. I understand the points of view expressed. It would be much easier to have this scheme without deficit reduction, but it is an unavoidable part of the scheme.

[Helen Jones]

First, does the Minister accept that the increases in council tax benefit have been driven not by an increase in claims but by increases in council tax? Secondly, will he explain why he believes that the burden of deficit reduction should fall on the poorest people?

[Andrew Stunell]

On the first point, I agree that it was due to the fact that council tax doubled while Labour was in government. On the second point, as I shall demonstrate—I hope that this expands on the point that my hon. Friend the Member for Bradford East (Mr Ward) made—the Bill not only deals with deficit reduction but creates opportunities for local authorities to collect more council tax in other areas. I will come to that in a minute or two.

Taken overall, our reforms will give local authorities a stake in providing support for council tax, which they have not had before, and will strengthen the incentive for local authorities to support residents back into employment, which in turn will reduce demand for support. Localisation gives local authorities significant control over how that reduction in funding is achieved, and it enables councils to design schemes reflecting local priorities.

I want to pick up on a point made a couple of times about whether the Secretary of State would approve schemes. The Secretary of State is not required to approve schemes, and local authorities do not have to submit schemes for approval. The important points are that the schemes should be transparent and that local authorities should be accountable to the law and local areas but not to the Secretary of State.

Amendments 79, 80 and 85 would, in effect, guarantee that there would be no reduction in funding to local authorities and leave authorities with no plan to reduce that funding. In the context of the wider deficit reduction programme, that is neither affordable nor sustainable.

--- Later in debate ---

[Andrew Stunell]

No, I will not give way. I am just going to make a little progress.

The hon. Lady said that we did not understand the leeches on the estate who collected the money on payday, but at the same time she seems to be in favour of channelling money through universal benefit, rather than localising it through a council tax reduction scheme. As the Select Committee Chairman rightly said, that is not only localist, but helpful in securing income for local authorities. The hon. Lady reinforced the point with her story of the leeches on the estate.

[Helen Jones]

I am sorry, but the Minister cannot have it both ways either. The Secretary of State is taking the power to give guidance on what should be included in the scheme, and the Government have already said that pensioners must be protected under the scheme—we agree with that—so the Minister cannot then argue that he wants everything left to local councils, because that is exactly what he is not doing.

--- Later in debate ---

[Andrew Stunell]

I am looking for a nod somewhere, but let us stick with this House.

Amendment 71 states that the Secretary of State should have regard to the impact of any guidance on those of pensionable and working ages and those on benefits, particularly disability benefits. However, the Government have already made clear their intention to use the guidance to set out the importance of supporting work incentives through the design of local schemes and will consider how to ensure that local authorities are aware of their duties in respect of vulnerable groups. It is unclear whether amendment 71 would add to the Government’s commitment in this regard.

There are things that councils can begin to do now to help in their preparation—in understanding the circumstances of those in their area who currently claim support, in ensuring that elected members are aware of the decisions they need to take and in engaging with precepting authorities such as police and fire authorities. The Government have been clear that local authorities must ensure that they are on the front foot in preparing for this reform.

In summary, I must recommend that the Committee reject the Opposition amendment on this occasion.

[Helen Jones]

Yet again we have heard a reply of the most astonishing complacency from the Minister, which appears to have been prepared so long before the debate that he did not realise that he was responding to amendments that my right hon. Friend the Member for Leeds Central (Hilary Benn) was not even present to speak to. Yet again we have heard him dismiss the concerns of local authorities and Members, dismiss our concerns about the poorest people in the poorest communities, and, in particular, dismiss concerns about those who work for low wages and the effects that this scheme will have on them.

Let me warn the Minister that he has been put up to respond to the amendments in order to provide a human shield for the Tories in the Government, and that it will come back to haunt him. I wish to press amendment 66 to a vote, and I urge my colleagues to support it.

Question put, That the amendment be made.

Oral Answers to Questions

Debate between Helen Jones and Lord Stunell

Monday 30th January 2012 Commons Chamber

[Andrew Stunell]

Yes I do. I would make the point that with localism comes the capacity of local authorities to fine-tune the schemes in their areas to suit their local circumstances, and I would encourage local authorities to start to do that.

[Helen Jones (Warrington North) (Lab)]

The Minister needs to accept that the scheme he is proposing is arbitrary and unfair, and hits the working poor most. How can he possibly justify cuts of between 13% and 25% in benefit for people of working age, and a switch from annually managed expenditure to grant, which means that any increase in claims will be paid for by cuts in benefit for the poorest people? Is it not time that the Government, who were prepared to accept a million-pound bonus for a banker, realise that they do not have the moral authority to inflict such cuts on the poorest people in our communities?

[Andrew Stunell]

I think that that was yesterday’s soundbite—[Interruption.]

Local Government Finance Bill

Debate between Helen Jones and Lord Stunell

Tuesday 24th January 2012 Commons Chamber

[Andrew Stunell]

My hon. Friend is right and I will bring some of the facts and figures to the attention of the Committee in a moment or two. I hope that will reassure not just her but Opposition Members about the impact of the scheme.

Once the baseline is set—for shorthand, let us say that it is set at formula grant level—it remains fixed in place and in amount, in real terms, until there is a reset. We have already said that that figure will be uprated by RPI to effect that. In advance of any reset, protections will be built in for those authorities that are less able to respond to the growth incentive. For instance, there will be the safety net payments we have already discussed, which will apply to any local authority that sees its income drop by more than a set percentage below its baseline funding level.

[Helen Jones]

The Minister and his colleagues keep talking about the growth incentive, so will he now answer one simple question to which we cannot get an answer from any of his colleagues? What does he think local authorities will do differently under his scheme from what they do now? The point has been made again and again that most local authorities are constantly seeking to attract new jobs and new investment.

[Andrew Stunell]

Similar questions were asked about the Government’s decision to apply the new homes bonus to empty homes. We were asked what possible difference that could make, but it has reduced the number of empty homes by 21,000 this year and, as I go around the country, I find that local authorities are, for the first time, seized with the importance and necessity of tackling empty homes because that is an income stream for them. That will definitely be the case with local authorities in this situation. Indeed, the Opposition have given some illustrations that suggest that they rather fear that it might. There have been questions about whether the measure will prohibit the redevelopment of sites if authorities cannot keep the business rate income coming in. Opposition Members see that the perception about receiving a business rate income will be a significant consideration for local authorities of all kinds.

--- Later in debate ---

[Helen Jones]

rose—

[Andrew Stunell]

I will give way to the hon. Lady in a moment, but I want to mention Knowsley first. The right hon. Member for Knowsley has done a very good job of illustrating the challenges faced by his council and his residents. He made the point that he has a number of large employers and he has understandable anxieties about the possibility of extreme volatility that that introduces. However, in the four-year period I have mentioned, Knowsley had an annual average growth of 8.7% in its business rates. Again, I invite him to talk to his chief finance officer and find out whether the formula grant increase for Knowsley under Labour was higher or lower than 8.7% per year. I hope that gives yet another illustration that it is not necessarily the most challenged or challenging authorities that face the losses he fears from the transfer of decision making and money from Whitehall to the town hall

--- Later in debate ---

[Helen Jones]

rose—

[Andrew Stunell]

I shall give way to the right hon. Gentleman and then to the hon. Lady.

[Andrew Stunell]

On the right hon. Gentleman’s first point, I agree and I am sorry if any of my remarks conveyed a different impression. He is absolutely right that the issue is not about the future of particular companies in his constituency. On his second point, it is a good idea for me to tackle this issue of need head-on, as the amendment is about need.

[Helen Jones]

Will the Minister give way?

[Andrew Stunell]

I am so sorry, I will certainly give way.

[Helen Jones]

I am very grateful to the Minister for giving way, but I have to say that he is advancing an entirely specious argument. He is comparing growth at a time when the Labour Government were investing hugely in cities such as Liverpool and when the economy was growing with a time when that investment has been mostly withdrawn under this Government and the economy is flatlining. Anyone who seriously thinks we will get the same amount of growth in the next—

[Helen Jones]

No, the Minister quoted the actual growth in business rates. Anyone who thinks we are going to get the same amount of growth in the next few years is living in cloud cuckoo land.

[Andrew Stunell]

I invite the hon. Lady to check her diary carefully and see exactly when it was that we had to buy all the banks because they had gone bust.

I want to contrast Knowsley with another local authority. Knowsley gets £1,225 per resident in formula grant. I am sure the right hon. Member for Knowsley would say that is not enough, and I understand his point of view, but I want to draw his attention to Wokingham, which is often prayed in aid as one of those rich southern places that benefits from an unfair system. Wokingham had a 3.3% growth in its business rates in the period I have mentioned against Knowsley’s 8.7%, and whereas Knowsley got £1,225 in formula grant per person, Wokingham got £686. That is being built into the system.

The hon. Member for Hyndburn (Graham Jones) said he thought the Government were behaving grotesquely unfairly. He may think that, but I have hon. Friends who think that that outcome is grotesquely unfair for a different reason. We have a system that recognises need, albeit imperfectly and even though we have built in damping. That suits the right hon. Member for Knowsley but does not suit my hon. Friend the Member for Isle of Wight (Mr Turner). That is entrenched in the system and it is important that if the Opposition make criticisms—understandably, because that is their job—they should be based on a sense of reality.

We are introducing a scheme that provides an incentive for growth and localises decisions over the money that local authorities can spend. That growth and localisation is very much better than local authorities standing as beggars at the door of Whitehall, year after year, saying, “We want more money.” Surely it is right that those who have the money can decide how to spend it and those who can promote growth have opportunities not only to do it but to benefit from it.

What about Westminster which the right hon. Member for Knowsley prayed also in aid? Let us be clear: he should rejoice when Westminster gets loads of business rate. Why? Because the authority keeps only the baseline figure. It will keep only its formula grant figure. All the rest will go to help Knowsley, among other places—[Interruption.] The hon. Member for Warrington North (Helen Jones) says it is not true. I am not sure whether she is accusing me of deceiving the Committee.

Westminster gets its formula grant and the rest goes back into the pot. When Westminster has growth, it will be able to keep some of it. If it has disproportionate growth, it will be taken away in the levy. Two things will affect Westminster: it will get only the equivalent of its formula grant in its baseline, and when growth comes, any disproportionate growth will be taken away to fund the right hon. Gentleman’s safety net.

--- Later in debate ---

[Andrew Stunell]

I am disappointed with that, I have to say. I said very clearly that the Government have reached a settled view about including damping in the formula grant system; I hope that that is very clearly on the record.

Let me turn to the part of the amendment that relates to what should happen to revenue support grant. We are talking about funding outside the local share of the rates retention scheme. We could only use the revenue support grant for other matters. For instance, in the financial year 2013-14, the most likely recipient will be Local Government Improvement and Development. Perhaps the scale of these things needs to be understood: £27.8 billion is being distributed through formula grant—the amount that will, in future, come through the business rates retention scheme. Local government receives funding from outside that, from departmental budgets. For instance, under the provisional settlement for the coming year, the learning disability and health reform grant will be £1.36 billion; that comes from the Department of Health. The local sustainable transport fund will be a much smaller figure—£100 million—and comes from the Department for Transport. The preventing homelessness grant will be £90 million, and comes from the Department for Communities and Local Government. In the great majority of cases, it would be completely inappropriate to do what is suggested in amendment 65 and run those through a needs assessment.

[Helen Jones]

I am sorry, but most of the grants that the hon. Gentleman mentioned could not be run through needs assessments, because they are paid by other Departments, not by DCLG. The amendment relates to DCLG.

[Andrew Stunell]

I think that the hon. Lady is asking a question about revenue support grant, and that is the answer that I am giving her.

The Government have strongly endorsed the previous Government’s policy that new burdens imposed on local authorities should be funded directly by central Government. We would therefore want a more tailored assessment of how those new burdens fall, rather than a needs assessment process.

The amendment misses the mark entirely. The speakers in this debate have started from a position of understandable oppositional attack on the proposals that we have introduced, and have entirely missed the point of what we are doing in returning power and opportunities to local authorities. Their fears for their individual authorities are misplaced. With that explanation and assurance, I hope that the hon. Lady will choose to withdraw the amendment.

Localism Bill

Debate between Helen Jones and Lord Stunell

Monday 7th November 2011 Commons Chamber

[Andrew Stunell]

The Bill does not encompass matters relating to city region mayors. That would require a separate provision. Let me, however, draw the right hon. Gentleman’s attention to the amendments with which we will deal shortly relating to core cities, and to my right hon. Friend’s request for the core city regions to consider what powers they might wish to take. There are various options, but I should make it clear that there is no proposal in the Bill for a city region mayor.

Under the Local Government Act 2003, local authorities can already conduct non-binding referendums on matters relating to their services or expenditure. In addition, the Bill gives local people powerful new rights to vote on key issues such as governance changes—for example, mayoral elections, council tax increases and, of course, neighbourhood plans. A number of members of the House of Commons Committee feared that, given those new rights, the provisions on referendums did not add enough to justify the additional burden. Similar observations were made in the House of Lords Committee, and, after careful reflection and discussion, we determined that the right course was to accept on Lords Report amendments 96 to 112 removing the provisions relating to local referendums. That does not change the provisions on council tax referendums, which are the vehicle that switches the power to prevent excessive tax rises from the Government and the Secretary of State to the local communities and electors who will be paying those bills if they vote for them.

[Helen Jones]

What is the Minister’s response to the view of the Electoral Commission that if council tax referendums are introduced in 2012, the time scale will be too short to allow them to be prepared for properly? Will he listen to the commission’s representations?

[Andrew Stunell]

We will, of course, take careful account of all the advice we receive. The powers are to be changed only in respect of non-binding referendums. The Government are committed to giving people a greater say, but local people currently have many good opportunities to speak out and be heard.

--- Later in debate ---

[Andrew Stunell]

Absolutely. We are clearly setting out what councils have to do and have in place, and the safeguard that they are required to provide.

On the application of the standards regime in London, we took the opportunity on Lords Report to make amendments 16 to 19, 28, 37, 408, 411 and 413, which ensure that the Mayor of London and the Greater London assembly are given equal roles in and responsibility for promoting and maintaining high standards, rather than leaving that function to be discharged by the assembly alone. The amendments also allow the assembly and Mayor to delegate functions to a committee or member of staff.

With these amendments, taken as a whole, we have achieved a balanced approach to the promotion and maintenance of high standards of conduct, with local authorities determining for themselves how best to achieve that. They will be freed up from the top-down, bureaucratic yoke of a national regime, of a model code and of a quango-regulated regime that became a vehicle for petty, vindictive and often politically motivated complaints. Our approach, which balances localism with safeguards, is the right one to ensure accountability locally and consistently high standards right across the country.

This group also contains a number of more minor amendments, many of them technical in nature, but I will mention one because it will be of particular interest to Labour Members. Lords amendments 38 to 43 introduce measures intended to increase accountability on local authority decisions about pay and reward. During the Commons’ consideration, Labour Members welcomed these provisions, as far as they went, on senior pay and asked us to go further to see how the Bill could bring similar levels of accountability on the pay of the rest of an authority’s work force. We committed to do so, particularly in the light of Will Hutton’s review of fair pay in the public sector, which made several recommendations. Following the representations that we have received, and with that report as the background, we made amendments in the Lords which have the effect of expanding the scope of pay policy statements to include an authority’s policies towards its lowest-paid staff, as well as the relationship between the pay of its most senior staff and the rest of its work force. I hope that Labour Members will agree that these sensible changes broaden the scope of the measures to capture the spirit of their comments and the Hutton recommendations.

In summary, this group of amendments will radically reduce the prescription bearing down on local authorities, freeing them up to serve their local communities better. I wish to pay tribute to the way in which hon. Members from all parties have—in Committee and on Report in this House, and in the other place—engaged with this part of the legislation to deliver a much-improved Bill. I urge the House to agree to these Lords amendments, and I hope that hon. Members will not press their amendment (a) to a Division.

[Helen Jones]

We are dealing with a broad group of amendments relating to local authority governance. I wish to begin by speaking to amendment 15, which would ensure that it is compulsory rather than voluntary for local councils to adopt a code of conduct. The subsequent amendments make it clear that the code of conduct must be in line with the Nolan principles and would ensure that arrangements are in place to investigate complaints against a member, including the appointment of an independent person whose view must be sought before action is taken. As the Minister said, this group would also allow the Mayor of London to exercise functions relating to standards and provides for a register of interests.

We welcome the amendments. It was bizarre that, in Committee, Government Members opposed the requirement to have a code of conduct—I found that extremely confusing. We accept, in this House, that we should be subject to clear standards of behaviour, but the Government were proposing that other elected representatives—people who deliver important services to their communities and take decisions that affect people’s daily lives—should not face a similar requirement; a council might have a code or it might not. Such a situation is not acceptable. It fails to offer sufficient protection to the public and it implies that the standards regime is optional.

Business Rates (North-East)

Debate between Helen Jones and Lord Stunell

Tuesday 25th October 2011 Westminster Hall

[Andrew Stunell]

That is exactly what I said and it was clear in the consultation document from the very beginning. I am sure that the former Minister, the hon. Member for Hartlepool (Mr Wright), had his tongue in his cheek when he said that he thought that Hartlepool faced a drop of £13 million. That is not the case. If the figure for Hartlepool is £40 million—which is the figure that he quoted—that is the baseline from which all further development for Hartlepool will be taken.

[Helen Jones]

The Minister is being generous in taking interventions. Will he confirm that the only promise from the Government is that local authorities will not lose out in the first year that the scheme comes into operation? There is no guarantee after that first year.

[Andrew Stunell]

The hon. Lady misunderstands what the Government have said. The baseline is fixed permanently in the system. The losses and gains come from changes in the business rate income that an authority might receive. I point out to Members who represent constituencies in the north-east that, over the five years from 2006, the total business rate income in England rose by 5% per year—not 5% overall, but per year—and by 5.1% in the north-east. In other words, the rise in business rates in the north-east during that five-year period was greater than that in England as a whole. Furthermore, a rise of 5% per year is significantly higher than RPI, CPI or, indeed, any rise in formula grant that any of those authorities gained. This is not a zero-sum reform. Beyond the CSR period, there is every prospect that the north-east will do well out of this system of having an increasing flow of business rates.

A number of points have been made about whether or not this is an incentivising system. If, during that five-year period, the north-east was able to secure an annual rise of 5.1% in its business rate income without any incentive, it seems to me that, even if the incentive effect turns out to be quite weak, it is likely to be better than that, than RPI and than the increase in formula grant, which the previous Government, in their munificence, decided was appropriate for north-east authorities. It is important that we nail some of the misunderstandings that have arisen.

My hon. Friend the Member for Redcar (Ian Swales) made the point that the regional growth fund is active and effective. Fourteen companies in the north-east have had support, and that will provide more than 5,200 direct jobs and 8,300 indirect jobs.

The Chief Secretary to the Treasury has announced a £500 million growing places fund for infrastructure in England, for which local authorities in the north-east will be eligible. I am sure that the hon. Member for Tynemouth (Mr Campbell) will make sure that his local authority makes a suitable proposal to deal with the roundabout on the A19 that he mentioned.

The consultation is still—