Council Tax Benefit Localisation

Kate Green Excerpts

Wednesday 27th June 2012 Westminster Hall

[Yvonne Fovargue (Makerfield) (Lab)]

It is a pleasure, Mr Howarth, to have this debate under your chairmanship. I requested it because of my concern about not only the impact of council tax localisation and the 10% cut in subsidy to already hard-pressed local authorities such as mine in Wigan, but the cumulative effect of the welfare benefit changes disproportionately impacting on people in low-paid work. Council tax benefit is widely claimed; some 5.9 million low-income families claim it, more than claim any other means-tested benefit or tax credit in the United Kingdom. It is a crucial benefit for people in work who are struggling to pay rising bills for food and fuel, and contributes hugely to making low-paid work pay.

A consultation paper published in August 2011 made it clear that although no detailed regulations had been published—they have not been published even today—current claimants of pension age will see no reduction in support and that their entitlement will continue to be protected by national rules. Will the Minister say whether any more categories of claimant are likely to be protected by statute? In Wigan in 2010-11, there were 34,000 claimants, and the Department for Work and Pensions paid a grant of £26 million. On current expenditure, a 10% cut would obviously lead to a £2.6 million shortfall, on top of swingeing cuts of more than £66 million already being made to Wigan council’s funding from central Government.

Another issue to be considered in Wigan is the number of pensioners claiming council tax benefit. More than 40% of people of pension age are claiming it, so the burden on those of working age becomes disproportionately higher with a potential 20% reduction across all working-age customers, and that is before the protection provided to any other groups that the authority might wish to protect—carers, for example.

It is worth reminding hon. Members that council tax is one of the few debts for which the final penalty is imprisonment. Even with council tax frozen and no cuts in council tax benefit, the number of people seeking help from the debt charity, Consumer Credit Counselling Service, because of council tax arrears rose by more than a quarter in 2011. The cost, both human and financial, of collecting more money from people who are already at their wits’ end and struggling to pay their bills must be factored in by local authorities. My council has identified that collection will be difficult and involve a high level of direct contact. In effect, it is saying that it could cost more to collect than the amount collected.

[Kate Green (Stretford and Urmston) (Lab)]

I congratulate my hon. Friend on securing such an important debate. She echoes many of the points that have been made by my local authority, Trafford council—particularly about the cost of collecting council tax and management of the benefit. It has pointed out that as housing benefit moves to universal credit, the current team that processes both benefits in the local authority will not be able to shrink by the same sort of proportion as the value of council tax benefit will, so it will become extremely inefficient. Some 80% of current benefit staff will have to be retained, but only for a rump of processing. Does that make cost-effective sense for councils?

[Yvonne Fovargue]

No, it is not cost-effective, and another factor is that council tax benefit offences are imprisonable. Does it do anyone any good to put people into prison for a short time for a very small debt?