Council Tax Support

Julie Hilling Excerpts

Wednesday 14th May 2014 Westminster Hall

[Mrs Mary Glindon (North Tyneside) (Lab)]

It is an honour to serve under your chairmanship, Mr Crausby. I, too, congratulate my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) on securing this important debate.

I will speak briefly, but before I say anything about the issue in hand I want to mention the employment figures, in case the Minister refers to them. Yes, employment is up in the north-east but, against that, unemployment is still at 10.3% and the number of people who are unemployed has risen. There may be more jobs for some people, but others are losing theirs.

[Julie Hilling (Bolton West) (Lab)]

Does my hon. Friend recognise that those employment figures include people on Government schemes and zero-hours contracts, and people who have been kicked off benefits or sanctioned? It is hard to know what the accurate figures are.

[Mrs Glindon]

Yes. I thank my hon. Friend for that intervention. That is precisely the point about how iniquitous the benefits situation now is for people.

Let me place in context the situation in my constituency. The Association of North East Councils has found that the north-east has suffered the biggest cuts and experienced much higher reductions in spending power than the national average. The spending power per household in North Tyneside is, at £2,048, the worst in Tyne and Wear. On top of that, North Tyneside council has had to make efficiency savings of £20 million for this year’s budget, which equates to 11% of the net revenue budget. At the same time, the council will see a £12 million reduction in the revenue support grant. That is a reduction of just under 20% for the year. We can see how hard-pressed councils are—a point that my right hon. and hon. Friends have already made.

The history of how the housing support amount has been calculated in North Tyneside is quite curious, because when it first came into effect under this Government, we had a Tory mayor in North Tyneside, and the Tory Administration wanted to impose a charge of 12.5% on people who had not formerly paid any council tax. My former colleagues on the council managed to get that down to 7%. It is still quite a sizeable amount of money for people who do not have the disposable income to pay it.

As I have shown, the council is in dire straits, but it has to do everything that it can to protect the vulnerable. That point has been made over and over again. When the Government impose these kinds of policies, they are not thinking about the most vulnerable in our communities. Some of them are from the working communities. In my constituency, 24% of people earn less than the living wage and 10% earn less than the minimum wage. Let us imagine the effect that any increase in the payments they have to make out of their salary has on them, and not just economically. There is also the mental strain of measures such as the bedroom tax.

Then there is the cost of living. If people are on a restricted budget, even 5p or 10p extra on an item when they go to do their shopping will affect them. We are talking not just about economics, but about people’s peace of mind. They are worrying about how to make ends meet. That takes an extra toll on their health. In the end, it is all a false economy on the part of the Government, because it just means that people will be going to the doctor for antidepressants and so on, perhaps taking days off work and falling into deeper and deeper poverty.

The Joseph Rowntree Foundation says:

“The replacement of CTB with CTS marks a historic move to 326 different local schemes in England. It will be a curious system when a jobseeker with a state-provided income of £71.70 per week pays some council tax in some parts of the country, but is considered too poor to pay in others.”

That just shows how ridiculous the situation is. It is not an equal tax on people. In our country, we strive for equality. We talk of ourselves as a country that has principles, a country people can enjoy living in and feel proud of. How can we be proud of taxation of this sort when it is so iniquitous?

I would like to make a plea to the Minister. Labour has asked for the review to be brought forward. The Lords did the sensible thing and agreed to an amendment on the matter, so will the Minister please bring forward the review as soon as possible, so that he can see the devastating effect that this change in council tax benefit has had on people across the country?

[Julie Hilling (Bolton West) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Crausby. I join in the congratulations to my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) on securing this most important debate.

Localising council tax support and giving local authorities more control sounds good, doesn’t it? Well, it might have been if the Government had given local authorities the same amount of money as they were paying, but instead they reduced funding by 10%. Then they said that pensioners must be protected. I would not be against that, but it means that councils have to impose an average cut of 16% for working-age people. As ever, the Government are devolving responsibility but hiding the fact that they are implementing the cuts themselves. And it is not the ne’er-do-wells of society who are affected; it is disabled people, those in low-paid work, single mums, carers, veterans and those who are desperately seeking work but are among the 2.5 million people who are unfortunate enough to be unemployed.

Council tax has become another part of the cost of living crisis facing my constituents in Bolton West. In Wigan, 13,000 people have been referred to the bailiffs, and that figure does not include the 1,000 businesses that have been served letters by the bailiffs for not paying their business rates. Those are people who cannot afford to pay their council tax, and of course they are usually hit by multiple debt. They may well have been hit by the bedroom tax and seen their housing benefit reduced because they have someone over the age of 18 in the house. They will have been hit by a rise in their food bills and fuel bills, and if they are in work their wages will have been running behind inflation for the last four years at least. They may well have got into debt with payday lenders when they borrowed money to try to keep themselves afloat. They frequently have a whole range of complex issues. Of course, a bailiff’s letter means that the debt has immediately gone up by £75. If the bailiff has to call, the debt rises by another £235. If, heaven forbid, the bailiffs come and seize goods, they will face an additional £110 fee.

It is no wonder that many residents of Wigan and Bolton West have got to the point at which they can see no way out of the situation. Of course, many of those residents were not paying council tax before. They will not be able to set up direct debts and will not have believed it when they got their council tax bill. The council therefore now has a much higher bill for collection. Collection rates have gone down across Wigan to 96%. It is still doing pretty well at collecting the money, but that means that there is less money for the essential public services on which my constituents depend.

This policy has been yet another for which the Government have attempted to devolve blame. Along with other policies, such as the bedroom tax, it causes misery to those who can least afford to pay, and at the same time the Government give tax cuts to millionaires. My constituents deserve better than that. The Minister should review the scheme and take one of the areas of pain away from people who are really struggling to survive in this day and age.