Lord Beamish
Main Page: Lord Beamish (Labour - Life peer)
Mr Kevan Jones (North Durham) (Lab)
Is this not another example of not giving local councils freedom, but trying to push the blame on to local authorities? Would it not cause chaos in places such as London, where the 32 boroughs could have 32 different schemes? How does the Minister think that could be run efficiently?
Andrew Stunell
That is a severe criticism of new clause 2, which would pass down to councils the capacity to change single person discounts. As the hon. Gentleman rightly points out, that would create difficulties in implementation. I am sure that the right hon. Member for Wentworth and Dearne, when he speaks in favour of the new clause, will explain to the hon. Gentleman exactly how it would work.
New clause 2 would not only interfere with the single person discount, but give billing authorities discretion on whether a 50% discount should be granted in other circumstances. Currently, that applies when a dwelling is not unoccupied but is no one’s sole or main residence. At one time, that would have meant second homes, but the provision on those was amended in the Local Government Act 2003. The 50% discount still applies in some cases, when the second home is job-related. That is a matter of particular importance to the clergy and to service personnel. I suspect that the new clause would have an effect that the right hon. Gentleman does not intend.
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.
Mr Kevan Jones
My hon. Friend the Member for Warrington North (Helen Jones) raises an interesting point. Clearly, many northern councils whose grants have been slashed have very little room for manoeuvre compared with Wokingham, whose grant has been increased. Does the Minister agree with the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who said that those in greatest need will ultimately bear the cost of the cuts? How can that be equal and fair?
Andrew Stunell
The hon. Gentleman has made his point. I should make it absolutely clear that, from the Government’s point of view, it is right for local councils to take account of the local circumstances in their communities and to draw up a scheme that they believe is appropriate for them. I again make the point that other measures in the Bill give greater discretion to local authorities on raising council tax on second and empty homes. The vast majority of local authorities potentially have a substantial stream of additional income, if they believe they will face difficulties because of the reductions in income resulting from this part of the Bill. The Bill has to be taken as a whole.
Andrew Stunell
At least the right hon. Gentleman acknowledges that we are giving with one hand. It is right for local authorities and local communities to take account of the circumstances they face, and I hope that the council in Rotherham will do precisely that.
Mr Kevan Jones
Is not the Minister making it quite clear that this is not about the reform of local government finance, but about deficit reduction? The point that my right hon. Friend the Member for Leeds Central (Hilary Benn) has just made is that those people might well have been taken out of tax, but they will now be hit by this measure as well as by housing benefit cuts. Furthermore, the poorest are the hardest hit by the VAT increase—a policy that he once believed in.
Andrew Stunell
The hon. Gentleman needs to take stock of just how much council tax benefit someone in band A in his local authority might be getting and compare it with the discount that they might receive through the raising of tax thresholds. He might then grudgingly have to agree that the situation is not as bad as he maintains.
Amendment 1 would require the Government to consult on regulations prescribing requirements for schemes. Of course external scrutiny of plans for the framework is important, which is why the Government have published the detailed statements of intent for the key regulations that will deliver the policy. We will publish further statements of intent at each stage, as necessary. That will provide an opportunity for us to engage with local government on the detail of our plans before draft regulations are produced, and give local authorities the key information they need to develop their schemes. There is no need for additional requirements to consult with local authorities, such as amendment 1 would impose. In addition, we are working closely with local government representatives to design the framework within which local authorities will be required to operate, including considering what—if any—provision needs to be made for how local authorities should prepare schemes.
Mr Raynsford
My right hon. Friend, who is extremely experienced in these matters, makes a telling point. That was just one further way in which the Government could have ensured proper scrutiny, giving a proper opportunity to those most profoundly affected by the changes to give evidence to us and to help shape a better Bill than the one we face today. But no, the Government simply did not want scrutiny because, as we shall see, they are pushing through a crude measure that will have a profound impact—of some £500 million—either on individuals or on local authority budgets, and they are doing so without proper care or consideration of those consequences. As I have said, they should be deeply ashamed of themselves.
This is a complex matter. The introduction of housing benefit in the 1980s, many years ago, was bungled. It was bungled because it was rushed and local authorities did not have enough time to prepare. There were horror stories from all over the country of people not receiving the benefits to which they were entitled, and huge backlogs of cases building up in local authorities. One would think that a Government who had experienced that in their history—or at least the Conservative part, which went through that experience in government—would want to avoid doing the same thing again. But here we are, with a Government once again rushing to introduce complex changes in benefits that will have profound impacts on many individuals’ potential entitlement, and doing so to a ridiculously tight timetable.
Mr Kevan Jones
I think the Minister answered the question earlier: this measure is not about reform of local government finance, but about deficit reduction. However, is it not also about devolving the responsibility—and the blame—for implementing these proposals to local authorities?
Mr Kevan Jones
As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, the Bill has not changed greatly since we last debated it. The underlying theme remains. As the Minister made clear, it has nothing to do with reform or enabling councils to implement a local scheme; it is actually about the Government’s deficit reduction targets. That is why they are so keen to aim for implementation in 2014.
The Minister seems to think—and I recall that the hon. Member for Mid Dorset and North Poole (Annette Brooke) said this during our last debate—that all local authorities are on a level playing field, but they are clearly not. The Minister suggested that, following the 10% cut in council tax benefit, councils could make up the difference if they wished to, which may be all well and good for councils in areas where the benefit is being increased. I hate to return to my favourite example of Wokingham, but a few weeks ago a very good article in the Financial Times stated that its budget was rising by 3%—unlike the budgets of authorities such as Durham, which are declining by as much as 15%.
We are not dealing with level playing fields; we are dealing with a strategy that the Government have worked out quite well. As we can see from the playbook according to which the Conservative part of the coalition is working, it is nothing new. The same strategy was adopted by the Conservatives in Canada in the 1990s. They made savage cuts in public services and devolved decision making to local level: in their case, federal level. What they were saying was “We are giving you freedoms, but we are ensuring that you take all the blame for the cuts.” The flexibility that councils will be given will, in fact, cause them great difficulty, unless they are in Wokingham.
That very good article in the Financial Times, published on 7 May, was headed “The well-to-do towns that austerity forgot”. I think that it is worth looking at, and not just because it makes it plain that the Government are rewarding their own councils while penalising poor areas. Let us look at the calculations for Wokingham. It is among the 8% of local authority areas—out of a total of 152—that are expecting a real increase in local government spending over the period set out by the Government. Meanwhile, 20% of councils, including Durham, are taking cuts in excess of 15%.
We are being told that we are all in this together and that what is being done is fair, but let us look at the difference between Wokingham and Wigan. In the index of multiple-deprivation, Wokingham scores 5.5 whereas Wigan scores 26. On average, there is an additional 1% increase in local government spending cuts between 2009-10 and 2011-12. Not only are local authorities in the north-east and other deprived areas suffering because their grants are being cut, but they are now going to be hit again by the council tax benefit cut. Local authorities will be told they are being given the flexibility to administer the scheme, but the result will be a 10% cut.
John Healey
My hon. Friend mentions Wigan in the north-west and authorities in the north-east, but the case he makes is equally true for many authorities in Yorkshire and the Humber, such as Barnsley and Rotherham. As he has access to the figures, he might care to look at them in this regard. Wokingham may be facing an increase in its grant, which is astonishing given that local government is taking such a hit across the board, but Barnsley and Rotherham are facing double-digit reductions in their grant, despite increasing need and increasing pressure on services in their communities.
Mr Jones
I agree. My right hon. Friend’s authority and mine are among those that are having to take £152 million out of the budget over the next four years. In Wokingham, however, the council is planning to overhaul its town centre at a cost of £30 million, and it is not closing its libraries and its voluntary sector groups have not lost their funding. In communities such as mine and that of my right hon. Friend, councils are having to find savings—and they are having to find them in areas such as libraries and non-statutory services.
In Durham, the bulk of expenditure goes on adult social care. The Labour-run local authority is rightly making sure the most vulnerable are protected, but that restricts where savings in the budget can be made. I send a clear message to the Liberal Democrats sitting on Durham county council that, as a result of their Ministers’ actions and their Members’ votes on this Bill, Durham and other local authorities are having to make savage cuts. The idea that they can be found simply through efficiencies is complete nonsense. No organisation could reduce expenditure so much without affecting front-line services.
John Healey
Does my hon. Friend agree that not only is the current settlement unfair, but it is the baseline for the future system, and the Bill will lock in that unfairness for at least a decade?
Mr Jones
That is a very important point. That will limit the ability of my council in County Durham and my right hon. Friend’s authority to effect any change. That will lock in the unfair and disproportionate effects, which have been caused by no account having been taken of deprivation. We have just heard a Minister saying this Bill takes account of equality, but it must be the first Bill in history that supports a system by which the poorest in our society and those councils with the largest need—growing aged populations and increasing numbers of looked-after children, for example—will suffer the most.
Mr Jones
Huge regional inequalities are involved. In addition, the pressures on councils in South Yorkshire, and in Middlesbrough and South Tyneside, which I cited in a previous debate, compared with leafy Wokingham, mean that if services such as providing for looked-after children and a growing elderly population are to be protected, the scope for cuts is very limited. The Minister laid it bare in his response: this is not about reforming or giving local councils the ability to be flexible; it is about implementing the deficit reduction strategy of this coalition Government. As my hon. Friend said, that will take demand out of areas such as mine. It is impossible to implement this system without further cutting the support for some of the most vulnerable in our society.
Mr Raynsford
My hon. Friend is making a powerful case, and I wholly agree with him about the adverse impact on some of the most deprived areas. Does he also recognise that one of the bizarre features of the Government’s proposals is that they will inflict losses on people throughout the country? There are 6 million recipients of council tax benefit, many of whom are in low-paid work in parts of the country that are relatively more affluent than the area he represents, and those people will suffer, too. Although he is absolutely right in what he is saying, the impact of the Government’s proposal will be even more savage and unfair.
Mr Jones
Well it will be. The mistake that the Government are making in the spin they are clearly putting out is in saying that this will affect only the “undeserving poor”—the workshy and feckless. As my right hon. Friend rightly points out, many people in receipt of council tax benefit are in low-paid work. In sectors where jobs are growing, the increases are mainly in part-time, low-paid and low-skilled jobs, so more people might come into this bracket.
This measure will affect people, and not only in terms of their council tax benefit; we need to add on the ludicrous nonsense in the housing benefit changes, which will result in individuals in my constituency who have an extra bedroom suddenly finding themselves up to £10 to £15 a week worse off. The Government’s measures will have a cumulative effect on the poorest communities and, I have to say, some of the hardest-working individuals in this country. We might add to that this Government’s VAT increases, which the Liberal Democrats and the Deputy Prime Minister were clear in opposing before the election only then to implement and turn a blind eye to, saying, “It does not really matter because we have a commitment to reducing income tax.” The cumulative effect of these measures will be to take a vast amount of money out of the poorest communities in the country. The opportunity to gain full-time employment is very limited in some areas, because of short-time working, which means lower wages, and the growth in the number of part-time workers.
The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) has at least admitted that this is exactly what the Government are doing. I have a cutting here from the Daily Mail of 11 June 2010 headlined, “Tory minister under fire for gaffe as he tells MPs: ‘Those in most need will bear the burden of cuts’”. The article states:
“Unveiling a 1.2 billion package of cuts to councils, Local Government minister Bob Neill suggested the poorest areas would suffer the most.
Asked why northern cities were losing…more than southern areas, Mr Neill said: ‘Those in greatest need ultimately bear the burden of paying off the debt.’”
That comes from exactly the same Government who were happy to slash the income tax rate from 50p to 45p, giving huge tax breaks to some of the wealthiest in the country. The Minister should come to North Durham to speak to some of my constituents in low-paid work who are earning less than what some of these individuals are going to get in tax breaks in a year. That clearly shows that the Government do not have a clue about the effect on the poorest in our society. The idea that we are all in this together is complete nonsense.
Mr Graham Stuart (Beverley and Holderness) (Con)
The hon. Gentleman will be aware that for nearly the entirety of the period for which his party was in office the higher rate of tax was lower than it is today. As for the hypocrisy we are hearing from the hon. Gentleman and his colleagues who put this country in a position where public expenditure must necessarily be brought under control, his party always leaves office with unemployment higher that when it entered it and it is under his party that the money has all gone. This Government are having to deal with that, and he should show some shame for his part in the situation.
Mr Jones
I do not know whether the hon. Gentleman is old enough to remember records—I think he is—but if he does he will remember that trying to play a broken record is very difficult. The rhetoric from the election, when the Government blamed everything, including the world recession, on the Labour party, has now become a broken record. We are now into another recession in this country that was of this Government’s making. It is interesting that the Chancellor of the Exchequer now argues that the British economy is not doing well because of the eurozone. In 2008, 2009 and 2010, when the banking crisis hit, it was all Labour’s fault; now it is all Europe’s fault. The only people who are not accepting any responsibility are this coalition Government.
Was our borrowing in 2008 and 2009 the right thing to do? Yes, it was. It was the right thing to do to ensure a growing and stable economy. We do not have that now; we have a recession that has been made in Downing street by this coalition Government. The idea that the fair way of dealing with that is to reduce the top rate of income tax so that it will, through Reaganomics, trickle down to boost the economy is complete nonsense. We have also heard complete nonsense this afternoon that the way to get growth is to slash employment rights. The Government are living in cloud cuckoo land if they think that that will not have an effect on local people.
I was in local government for about 11 years, and I know that if a Government tinker with the system only to get it wrong they pay for it dearly. I remember the Conservative Government getting the poll tax wrong. Even when it was quite evident that it was going to be complete chaos, they would not change their mind. We are trying to rush through a system that will affect some of the poorest people and the poorest councils, adding to the injustice of the skewed way in which the Government have rewarded their friends on councils in the south. We are setting local government an absolutely horrendous task. The idea that the system can somehow be changed tomorrow at the flick of a switch is complete nonsense and I hate to think of the sleepless nights these provisions will give local treasurers. The practicalities will have an effect on councils’ individual income while they try to work out the system.
Mr Raynsford
One of the nightmares that local authority treasurers might well be thinking about is the downside risk in future years. Up to now, we have been talking only about the 10% cut, which totals £500 million, but under the scheme local authorities will be liable if there is an increase in demand for council tax benefit, possibly because of the closure of a local business or because the double-dip recession, which the Government have created, has caused further hardship and unemployment, meaning that more people are claiming council tax benefit. That risk is clearly now with the local authority and many treasurers will be nervous about the implications for them.
Mr Jones
My right hon. Friend makes a good point. Let me take my constituency as an example. Compared with April last year, 384 more people are unemployed. The figure represents nearly 7.2% of the population and shows no sign of decreasing. The demand will not be on the central pot but on the councils. If councils have the large pressures that we see in Durham and elsewhere, because of the number of children in care and adults with social needs, where will that money come from? We can add the 10% cut to those pressures, too.
As for the chaos that the process will lead to, although some councils—certainly Wokingham—will be able to afford to absorb such a reduction to their budget, not many will be. The mechanics of putting the system in place will be very difficult. What will happen if, with the best of intentions and advice, the computer systems cannot be put in place? Where will a local council find its money? What will happen if a scheme is put in place that has teething problems that lead to mistakes? What will happen with appeals and with the process of dealing with the situation? There is no remedy at all.
Chaos and uncertainty will be faced by many low-paid families in this country and they will not know how the change will affect them. That is why amendment 9, tabled by my right hon. Friend the Member for Greenwich and Woolwich, is right. It must be made crystal clear what the effect will be on individuals. I support my right hon. Friend’s amendment, but I think that it might be playing into the Government’s hands, as they will want to blame the local council—in my case, Durham—for what is happening. Councils need to make it very clear that responsibility for the cuts lies with this Conservative and Liberal Democrat coalition Government. If they do not do that, the tactics that the Conservatives are using and that the Liberal Democrats have sleepwalked into mean that local people will blame local councils.
Local Liberal Democrat councillors in Durham, for example, are arguing against changes to library hours and to local leisure centres. They will sign petitions to their hearts’ content. Small equatorial rainforests are decimated for local Liberal Democrat copies of “Focus” that state that they are supporting decisions against such moves by Labour Durham county council. They are not explaining to the people, however, that their coalition with the Conservatives in government nationally is cutting the county council’s budget savagely while helping the leafy Wokinghams of this world. That is the message we must get across to people: these cuts and their effect on local services and on people’s income are down to the coalition Government.
I reiterate what I have said before: not one single piece of the legislation that has such an effect could go through without the complicity and support of the Liberal Democrats. They must take as much of the blame for the pain and heartache coming the way of many people in County Durham over the next 12 months as the Conservatives and it is no good hiding behind the idea that County Durham has somehow been given the freedom to come up with this scheme.
John Healey
I am glad to see my hon. Friend in his place. He has been an active participant in all debates on the Bill, including on Second Reading and in Committee. I have seen that work by the House of Commons Scrutiny Unit, which I think is useful and supports the point I am making to the hon. Member for Manchester, Withington (Mr Leech). If anything, the 16% figure is probably on the conservative side. My local authority in Rotherham calculates that non-protected, non-pensioner claimants of council tax benefit are likely to lose, on average, 19% of their support.
Mr Kevan Jones
To clarify my earlier point for the hon. Member for Manchester, Withington, who is obviously having problems with earwax tonight, I was not suggesting that pensioners should be taken out of that protection; I was making exactly the same point as my right hon. Friend is making. The fact of the matter is that the hon. Gentleman will go into the Lobby tonight to vote for some swingeing cuts to the lowest paid, including some of his constituents in Manchester, who no doubt will have their revenge at the next general election.
John Healey
My hon. Friend makes clearly and succinctly the points he made earlier.
I am concerned about the percentages, whether 16% or 19%, and the averages, such as the LGA’s calculation that non-pensioners are likely to lose, on average, £6 a week from the support they currently receive to help pay council tax. Percentages and averages are one thing, but the family, household or individual—the one in eight people currently entitled to council tax benefit who are in work but do not earn enough to cover their council tax bills without help—will face a reduction of perhaps £10, £12 or £15 a week, at a time when other costs are being loaded on them and they are struggling to make ends meet. They will find such a difference really hard to deal with. I hope that we do not lose sight of the sort of pressure that the Bill and the changes the Government are making will put on many households, including many that are working hard and have an entitlement that they simply will not have under the new system.
Mr Kevan Jones
Is not this yet another example of the Secretary of State’s schizophrenic approach to local authorities? His previous edicts have given advice on everything from pot plants to levels of chief executives’ pay to publications. He wants to give the impression that he is giving up powers, but in fact he is retaining them.
John Healey
To be honest, no Minister of any Government is immune to that temptation. I am sure that it would be possible for the Minister to find one or two examples where I myself might have made such moves as a Local Government Minister. However, we in this House have a right to challenge the Government on what they claim is the underpinning principle of the Bill and to point out how the principles they claim are not matched in their legislation. There is a strong, principled case for the Secretary of State to back off, loosen the reins, and let those in local government devise the schemes that they will be obliged and required to run.
There is a principled case and a practical case for the amendments. If the Government are able to set the key constraints and parameters of any scheme, and to do so at any time, it is entirely possible not only that local flexibility—the ability to tailor to local circumstances—will be undermined, but that local authorities will devise their schemes, set about implementing them, and then find that they have to revise them because the Secretary of State has decided to step in and make regulations under the many regulation-making powers that he has available to him in this primary legislation. If it is pensioners today, could it be carers tomorrow and ex-service personnel the day after?
John Healey
Perhaps that is not as serious a case to put to the Government as ex-service personnel and carers, but my hon. Friend makes the point. If the Secretary of State had a particular concern about cat lovers, he could indeed use these regulations to make special provision for council tax support for them.
John Healey
Perhaps, Mr Deputy Speaker, I had better not pursue that. However, it is certainly true that given their drubbing a couple of weeks ago, the Liberal Democrats will have to chase votes wherever they can find them.
Amendment 1 is designed to challenge the Government to concede, and to give a commitment to this House, that should they use their powers under the Bill and make stipulations about the schemes that local authorities will run, they will at least consult local government before doing so.
Amendment 3, which also stands in my name, exemplifies my belief that, as my right hon. Friend the Member for Greenwich and Woolwich argued, this is a rushed reform that has been introduced without an ear to proper consultation or a thought to the consequences. The amendment attempts to flush out whether the Government have properly considered the impact of the Bill in relation to the provisions of the Localism Act 2011, which allows a local authority, in setting its budget and its council tax, to put to the vote in a referendum a level of council tax that it might want to propose for its area, and allows local residents to veto what they may regard as excessive council tax rises. Under those powers, a local authority must hold a referendum no later than the first Thursday in May of the financial year to which the council tax would relate. In practice, that means that a local authority will have to run contingency spending plans, budgets and council tax levels until the result of the referendum is known, and if it is unsuccessful, those contingency budgets will need to be put in place and new council tax bills issued. That process must take place around the turn of the financial year, and by early May at the latest, yet the Bill requires that the council tax support scheme must be designed and in place by January—before most local authorities finalise and agree their budgets and council tax levels, and certainly before the level in any referendum might be established.
That mismatch indicates that this reform is ill thought out, rushed and likely to be wrong, and it reinforces the arguments that my right hon. Friend made about his amendments 6, 7, 10 and 13, to which my name has been added. There are good reasons for making this part of the benefits system local, but there is no justification for doing it by making harsh cuts to the national and local totals of spend available, by capping the totals against any future rise in needs or costs, by requiring local councils to carry all the risk of any increases in claims, or by forcing very big cuts in council tax support for many of those who need it most.
When we last debated this in Committee in January, my right hon. Friend and I noted that councils were faced with an extraordinarily tight timetable of 12 months until the point at which they would have to have these new schemes in place. That period is now eight months. There is no time to consult local residents, to design the computer software systems necessary to run these schemes or to test them and put them into practice, to work out how the tapers to the new universal credit system will have to work with the council tax support system, or to plan for the new local scheme in the context of next year’s budget planning by local authorities.
This is a disaster waiting to happen. The Government have not done the work needed for local government to do the work that it needs to do. I say this to Ministers: take a leaf out of the Health Secretary’s book, pause, listen, and be prepared to put back the start of this scheme from April next year to April 2014.
Helen Jones
My hon. Friend is correct and I will come on to some examples of what he says in a moment.
I received a parliamentary answer from the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), which said that in 2010-11, the last year for which we have the figures, 743,660 non-passported council tax benefit recipients were in work. There were 2,860 such people in Stockport, which is the area that the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) represents. That is more than 743,000 people who the Minister for Housing and Local Government does not think exist. They do not go to Tory fundraisers, I suppose, or attend the black and white ball. All the time, his implication has been that council tax benefit goes only to those not in work. The further implication, of course, is that they are deliberately not in work, which is what underlies most of what he says. Coming from a Government who preside over unemployment of 2.6 million, that is breathtaking arrogance.
Mr Kevan Jones
Does my hon. Friend agree that the people who will be affected are the same group who will be affected by the crazy bedroom tax? If they have an unoccupied bedroom in their house they will lose housing benefit, which is another in-work benefit.
Helen Jones
My hon. Friend is right. The same group of people is being hit again and again. Whatever the Government tell us, we are not all in it together.