Council Tax Support

Lilian Greenwood Excerpts

Wednesday 14th May 2014 Westminster Hall

[Lilian Greenwood (Nottingham South) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Crausby. I congratulate my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) on securing this important debate. He gave a powerful speech, and as my hon. Friend the Member for Stockton North (Alex Cunningham) said, he brings a particular expertise to these debates.

Like me, many of my right hon. and hon. Friends will have sat in their surgeries and heard from constituents who are suffering as a result of the changes we are discussing. Since 2010, families in Nottingham have been hit by Government policies in general and Department for Communities and Local Government decisions in particular. In Nottingham, we saw the cancellation of the £200 million regeneration project for The Meadows, which would have rejuvenated one of the most deprived wards in the country. The Housing Minister at the time, the right hon. Member for Welwyn Hatfield (Grant Shapps), pledged to visit the area, but he never made good on that promise. From the Government’s perspective, he may have moved on to bigger and better things—we certainly know just how much value they place on housing, given that they relegated the post to a junior Minister. My constituents in The Meadows have been left to live with the consequences of the right hon. Gentleman’s damaging decisions.

The lives of many people have also been blighted by the bedroom tax, which affects 5,000 households in Nottingham and has left thousands of my constituents with a debt they have no realistic prospect of paying off. No doubt the Minister will say that the policy sends a strong political message, but the message it sends to people in areas of my constituency such as Clifton is clear: “This Tory-led Government is prepared to single out you and your family and to drive you out of your own home, just to make a political point.” People in Nottingham, and the country as a whole, deserve better.

Nottingham city council has also been left to make impossible decisions, partly as a result of how council tax support has been devolved. As right hon. and hon. Members have said, the funding available has been salami-sliced, with a 10% cut, and that is only the headline figure. Those above pension credit age are exempt—a welcome protection for older residents—but that means that the impact on everyone else is even harsher. As Nottingham city council warned when the policy was announced, there will be a significant impact on working-age claimants who are not pensioners. Like the bedroom tax, this cruel policy hits disabled people and their carers, families with children, and people on low wages.

In 2012, more than 26,000 people in Nottingham were in receipt of council tax support—almost 10% of the city’s population. The point is that almost everyone in Nottingham will be affected directly, or will know someone who is affected directly, by these changes. The policy affects people in work and those who are out of it; those who own their own homes or those who are tenants; and those in council homes and those in the private sector.

Let me give the Minister a sense of the impact this policy will have. In 2012, 19,000 people in Nottingham received full council tax support. A substantial number of them were pensioners, of course, but many were working-age adults. Under the terms of the revised schemes, only a maximum of 80% support will be available, even for those on very low incomes. There is no doubt what the consequences will be. When the revised scheme went out to consultation, 75% of respondents stated that

“as a result of the changes they would have to reduce household spending on essential items such as food and heating.”

A third even said they will have to resort to borrowing money to make up the shortfall. As my right hon. Friend the Member for Leeds Central (Hilary Benn) has warned, this new poll tax

“has caused misery for hundreds of thousands of people across the country, driving them into the courts and into debt”.

As the shadow local government team has established through freedom of information requests, up to 70,000 people have been issued with eviction notices across the country as a result of these changes.

The Minister might be tempted—if he is listening to the debate—to reply that it is for individual councils to design adequate schemes, but we must recognise that councillors and officers in Nottingham have been left to make impossible choices, as have their counterparts in neighbouring cities such as Leicester and Derby, who have implemented similar schemes. Given the constraints that have been imposed on it, Nottingham city council has delivered the best scheme it could. It has also decided to ensure that there is no sharp reduction in support for those entering work, who might lose their eligibility as a result, and I am sure hon. Members will welcome that move.

As my right hon. Friend the Member for Greenwich and Woolwich said, the localisation of council tax support runs entirely counter to the arguments made in support of the Welfare Reform Act. The Government claimed they wanted to bring all social security benefits together in universal credit to reduce complexity and end any disincentives to work, but by localising council tax support they have ensured there is additional complexity, with every local authority across the country operating its own support scheme.

The financial consequences for my constituents are significant. Single people living in band A properties stand to lose more than £3 a week. Where there are two or more people in a household, they are set to lose more than £4 a week. Of course, they will lose more if the property is in band B. Many of these people are carers or single parents with young children. Nottingham city council’s equality impact assessment found that single parents—primarily women—were disproportionately affected. However, disabled people, war widows, veterans and young people facing persistently high levels of unemployment are also left with very limited options. Many will now be forced to go without essentials or go into debt. No wonder there is such a dramatic rise in the use of food banks in my city, and across the country, given that people simply do not have enough money to survive, let alone live a decent life.

I am proud that communities in Nottingham are trying through food banks to support their fellow citizens when they are hit by the Government’s deeply unfair policies, and that the Labour city council is working hard to protect the most vulnerable by investing extra funding in advice services to support its citizens. I visited one of those vital services, the Meadows advice group, last Friday to thank staff and volunteers for the work that they do to ensure that people at least get the help to which they are entitled. They reported a significant increase in requests for help in the past 12 months and said that the total debt that had been dealt with in the past year was up by more than £78,000. They repeatedly expressed concern about the combined impact of the Government’s welfare reform policies.

The individual effects are serious, but the consequences for Nottingham city council’s budget are considerable too—especially now that all the transitional funding has been withdrawn. Complying with the Government’s criteria and delivering a scheme that is as good as possible will mean a £1 million shortfall in this financial year. That is happening at a time when the council is straining to maintain its full range of services, because of the front-loaded cuts imposed on it. Under the present Government things will only get worse, as they seek to make further reductions to funding for the households and areas in the greatest need. There are even greater risks to council finances if those who are asked to pay simply cannot; it is estimated that for every 1% reduction in collection rates, an extra £22,000 is added to the cost of the scheme.

When the Prime Minister said that we were all in this together, it was a cruel joke at the expense of some of my most vulnerable constituents. Meanwhile, millionaires laugh all the way to the bank, where they find that they are much better off, thanks to the Government’s decision to cut the top rate of tax. The Deputy Prime Minister likes to boast that people have benefited from a rise in the personal allowance, but we all know that that does not help the very poorest, who continue to pay the price of the fact that the Government are indifferent to inequality.