Local Government Finance Bill

Lord Beecham Excerpts

Thursday 19th July 2012 Grand Committee

[Baroness Hanham]

My Lords, we are still on the default scheme. If the council is required to adopt the default scheme, the benefits remain at 100%. If it takes on the default scheme as a local scheme, it will make its own adjustments to whatever it believes that it can do. If it sets up its own scheme, the 100% will only come about for a limited number of people on very low income, and it can then taper it up and down depending on people’s income because they will be means-tested at that stage. I am trying to make it clear that the default scheme is the legal backstop for local authorities that do not have one on 31 January. They do not have to adopt it, but they can as their own local scheme. I hope that I have contributed as much as possible on this matter.

[Lord Beecham]

I hope not, because I am afraid that I have another question. Assuming that, as the noble Baroness says, the scheme operates as a default scheme—assuming that people have not been able to consult and do not have their own schemes, so the default scheme is in position—the 100% people will remain at 100%. To what extent does the default scheme provide for other categories of people whose benefits would, presumably, therefore have to be adjusted? Is there flexibility within the default scheme—I confess that I have not ploughed through it—to see the impact on other people, or would there be a requirement to provide the current proportion of benefit to those people? If so, the financial problems to which the noble Lord, Lord Greaves, referred would be compounded.

[Baroness Hanham]

My Lords, if the default scheme is taken on as the main scheme and not a legal backdrop—

[Lord Beecham]

No; as a legal backdrop scheme.

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[Baroness Sherlock]

My Lords, following that helpful contribution, perhaps I may say a brief word. I was talking to a northern authority recently which could not raise significant sums from empty homes for obvious reasons but, as half of its council tax benefit claimants are pensioners, it was assuming that it would be a 20% cut across the board for the rest, because that is how the sums work. It did not have the money available. I had a look at its website. If I were living in a band B property on my own, even with a single-person discount, council tax would be £892.80. If I lost 20% of that discount, I would be £3.43 a week worse off. That does not sound like a lot, but actually, out of £71 a week JSA, that is about 6% of my income. If I were to lose 6% of my income under the current situation and, if the take-up were to increase significantly—given the gaps that both my noble friend Lady Lister and the noble Lord, Lord Shipley, described, that is quite possible, especially with the renaming—that figure would surely rise even further. How will the Minister protect those people and what assurances can she give that authorities would not be put in that position? If the take-up goes up and no additional funds were available, they would simply have to stretch the amount available even further.

[Lord Beecham]

My Lords, there are Ministers in the Government, I think including the Prime Minister and certainly including the Chancellor, although not, alas, the Minister, and there are certainly Members of your Lordships’ House, who were not even born when I first came into contact with what was then the rate rebate scheme. I put out a leaflet promoting that scheme in the ward to which I had recently been selected as a Labour candidate. That was in the winter of 1966, so we have been living with this system for a very long time, and my interest in it and in other aspects of welfare rights has been continuous throughout that period. Indeed, it is 40 years—I am sorry to go through this historical saga—since I, as opposition spokesman on social services, produced a report about social services for the Labour opposition in Newcastle. We included within that the establishment of a welfare rights department; we called for action to promote the take-up of all kinds of benefits; and we subsequently implemented that plan. Incidentally, I was advocating a passporting system which, at that point, was apparently impossible to achieve. We have something at least approaching that now and, in fairness, universal credit, subject to the qualifications that we have discussed today in Committee and on earlier occasions, should move us in the direction of streamlining the system and seeing that one door is open to the relevant requirement of support. I commend the Government for that, at least.

We are now in a situation in which very many people are clearly not claiming. I have been quoting a figure of £1.8 billion of unclaimed benefit. My noble friend thinks there is a band between £1.8 million and £2.4 million. Traditionally, the greater proportion of that is not claimed by owner-occupying pensioners. About the only good thing about this aspect of the Bill is the change of character from a benefit to a discount or reduction, which was advocated by the LGA—I make no more declarations. I think it was included in the two reports on local government finance which, I am sorry to say, the previous Government kicked rather rapidly into touch. I do not blame my noble friend Lord McKenzie of Luton for that. Others might, but I am sure that he has changed his mind as much as the noble Lord, Lord Shipley, appears to have changed his in a different direction. As we have said many times, the amount will undoubtedly and rightly increase. I would commend the Government for that if they provided the wherewithal to pay for it, so my commendation is qualified. However, the principle is right, and it will have that effect.

What the Government have apparently decided—it was only today that my noble friend Lady Lister of Burtersett discovered this—is that they will not take any steps to make any estimate of the number of people requiring this benefit, let alone promote take-up. I do not know whether the decision was made by the Minister’s department or the Department for Work and Pensions. Perhaps my noble friend can enlighten me.

[Baroness Sherlock]

It was the Department for Work and Pensions.

[Lord Beecham]

It is even less forgivable that the department that has the overall responsibility for dealing with the problems of poverty and sustaining the income of pensioners and vulnerable people should apparently not wish to know how many people are eligible or how many are claiming. It is not doing what it ought to be doing and promoting take-up. When it comes to promoting take-up, there are a number of things that many councils—in fairness, I think of all political colours—have pursued. I was able to persuade my own council, Newcastle City Council, then under the leadership of the noble Lord, Lord Shipley, to stage a benefits summit two or three years ago in which we brought together a range of people, some major public sector employers, such as the health service, trade unions, community groups and others, to look at ways in which we could promote a range of benefits. The council committed some resource to doing that. It certainly led to an increase on top of what was already being claimed. I think the figure was £8 million or £10 million, so it can be done.

The previous Government mounted take-up campaigns, usually advertising campaigns, but they are not actually all that effective. The increase in take-up from that kind of media campaign, with adverts in cinemas and perhaps on television, tended to be of the order of only about 1%. It did not have sufficient impact. What is needed is face-to-face or some kind of human contact at least, perhaps even at the end of a telephone, with people in the workplace and elsewhere promoting take-up. That is why the first part of my noble friend’s amendment is very important. It is hugely important to engage local charities, such as Help the Aged, although I think that merged into—

[Baroness Eaton]

Age UK.

[Lord Beecham]

Yes, Age UK. I should know because I am the honorary president of the Newcastle branch. Perhaps I am suffering some of the consequences of advancing old age myself. But organisations such as that one are very much involved, along with Citizens Advice and other organisations. We have projects in my own ward dealing with problems of the elderly, and there will be organisations of that kind and different groups, such as Child Poverty Action Group. They are the first port of call, but they are facing huge extra demand anyway as a result of other changes currently in train, not least around legal aid and advice, so there is huge pressure on them in terms of delivery. But other organisations should be involved.

I come back to the workplace point. We have talked repeatedly about the working poor who are likely to face increased pressures; not even all the working poor by any means claim benefits, as we have already heard. It would be useful for local authorities to consult employers and trades unions and particularly public sector employers, who ought to have the highest sense of responsibility towards their workforce, to engage them in the process of helping people to claim their entitlement. Arguably, it is in the interests of any employer to do that, as employers might almost see this—although I am not commending this as an ethical approach—as a way in which to help people without having themselves to bear the cost of increasing wages. I would much rather see wages go up but, in the absence of that and in the present economic circumstances, it is perhaps unrealistic to expect them to do that. Employers could then at least be engaged in promoting this kind of take-up. Therefore, those parts of the amendment moved by my noble friend that talk about consultation with organisations should, as I am sure she would agree, embrace not just the charity or third sector but also employers and trade unions. People should also be connected to a proper estimate of the likely entitlement. It really is a matter for the Government to rethink their position if, as my noble friend has described today, they are simply not going to do that, which would be a gross dereliction of duty. It is bad enough that they do not seem to be interested in promoting take-up as a department; it is worse if they do not even want to know what the extent of the demand really is.

In respect of Amendment 81, I take the point made by the noble Lord, Lord Shipley. The sense of the amendment is that it would be in the totality of the approach to funding that the Government would be required to see that the discount scheme was capable of dealing with all eligible claimants. That would be our preference, but that does not necessarily mean that it should be directly funded by the Secretary of State. It would be a question also of the department seeking to know what is happening on the ground in terms of this range of 330 different schemes and different levels of discount. The principle is certainly worth looking at. Perhaps the amendment might need further refinement on Report. The noble Lord has a point, but so does my noble friend.

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Moved by

[Lord Beecham]

83A: Schedule 4, page 60, line 18, at end insert—
“( ) If a local billing authority is subject to judicial review in respect of a failure to complete the steps set out in sub-paragraph 1 because of any delay in the issue of regulations or guidance, or in the coming into force of this paragraph, the Secretary of State shall reimburse the authority for any costs incurred in connection with such a review.”

[Lord Beecham]

My Lords, this should be a fairly short debate. Given the limited time for consultation, particularly the limited period between now and the end date of January by which schemes have to be approved, the risk exists that some councils—particularly those in shire county areas, to which my noble friend Lady Hollis has referred fairly frequently throughout the Committee—will have difficulty in conducting a full consultation process. The Government have indicated that the normal three-month period may be reduced. However, in any event we will have a summer month—well, a month—when people are likely to be away. August is almost upon us, and that is not a good time to engage in proper or full consultation with the range of individuals, organisations and precepting authorities that will be required, particularly in the shire county areas.

Given the proliferation of schemes we are likely to see, there is therefore a danger that when people begin to compare one with another, as they no doubt eventually will, there may be a challenge to some authorities’ schemes. That will perhaps be in good part because the local authority has not been able to consult as fully as it would have wished or would be expected to do. Since that would be a consequence of this government-imposed timetable, particularly its start and end dates, it seems only reasonable in that event—providing that a court would be satisfied that it is a question of the externally imposed timetable, rather than any culpability on the part of the local authority—for the Secretary of State to reimburse the local authority for any costs.

I hope that this is an academic point and will not materialise in practice. It may be that the Bill is not necessarily the place for it. However, I seek some assurance from the Government that if an authority is caught out in these circumstances, they would look sympathetically at its plight and seek to make good any cost to the authority incurred otherwise than by its own neglect. That is because any additional costs will ultimately fall not upon the council but upon the very council tax payers for whom these benefits—or discounts, as they will become—are intended in the first place. That would be reasonable; there should not be many cases, but there may be some. It would be hard on an authority for its council tax payers to have to bear that cost, particularly in the shire districts that have to consult with a number of precepting authorities, including their county. I hope that the Minister will look at that position sympathetically, not necessarily in the form of legislation, as this is a probing amendment, but by way of a policy stance.

[Baroness Hanham]

My Lords, I thank the noble Lord for his explanation of this amendment. Paragraph 3(1) of new Schedule 1A to the 1992 Act requires local authorities to consult with their major precepting authorities, publish a draft scheme and consult on that scheme with,

“such other persons as it considers are likely to have an interest”,

in its operation of that scheme before they make it. The amendment seeks to require the Government to indemnify a local authority for costs associated with any legal challenge made to it in respect of a failure fully to comply with the requirements if that failure was because of any delay in the sub-paragraph coming into force or the late issuing of guidance or regulations. The Government have taken—and will be taking—steps to ensure that no local authority is in a position where it cannot comply with the requirements in Paragraph 3(1).

Let me clearly reiterate that local authorities have been aware of this policy and its proposed implementation for some time. The policy was first announced in the spending review of 2010. In August 2011, we published a consultation on this policy, followed by a government response alongside the draft Bill in December 2011. Since then, we have provided information and funding to help local authorities design their schemes.

On Report in the other place, the Government amended the Bill to allow for consultation on a scheme to take place before the Bill receives Royal Assent and the provision comes into force. Paragraph 3(2) of new Schedule 1A means this should not be a barrier to local authorities proceeding. The Government have published detailed statements of intent for the key sets of regulations and draft regulations for the two key areas, the default scheme and the prescribed requirements, including requirements for pensioners, while the Bill is still in this House. Since then we have provided information, tools and funding to help local authorities design their schemes. The Government have already published the guidance they promised on existing local authority responsibilities in relation to vulnerable groups and promoting work incentives. The Government have issued a funding consultation setting out provisional funding allocations for all authorities. We have also provided a free online calculator to help local authorities analyse the potential impacts of their proposed schemes, and we have announced and paid out £30 million of initial funding to help meet the costs of planning and analysing draft schemes.

It does not seem to me that there are any grounds for the noble Lord’s amendment, since local authorities already have the detailed information they need to design and consult on a scheme and need not be constrained by the timescale for primary or secondary legislation coming into force to comply with the requirements on them to consult. With this explanation, I hope the noble Lord will feel able to withdraw his amendment.

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[Lord Beecham]

One basic premise underlies the Minister’s assertions, which is that the Bill will pass in its present form. I think that is a somewhat premature conclusion. Changes could be made. We are not yet at Report stage, let alone at Third Reading or Royal Assent, and authorities are being asked to proceed with these schemes in advance of the completion of the legislation. If the Government had accepted, as they should have done, the proposal to delay implementation, particularly in respect of this aspect of the Bill, there would not be a problem. There would be ample time to consult properly and, indeed, to prepare schemes thoroughly.

As for the information that is supplied, I have here two of the three documents that were published last Friday—I can just about hold them—entitled Draft Council Tax Reduction Scheme (Prescribed Requirements) Regulations. If authorities had been consulting before now—there were, no doubt, in general terms—they are going to have to go back and wade through this document, which is not 150 pages, but only 87 pages, coupled with the Explanatory Notes which, at first glance, explain very little. That is before the default scheme, which we discussed earlier this afternoon. I do not have a copy of that at the moment, but I think it is the 150-page document that the Minister said is very clear and apparently does not much change the existing scheme. I do not know whether that is the case because I have not seen the document. It would be interesting to know whether the Explanatory Notes refer to any changes between the existing scheme and the current scheme because if it was just the existing scheme, it would presumably not be necessary to publish anything. People would just be referred to existing schemes, so I am assuming there must be changes, otherwise it would not require the publication of anything very much.

The Minister referred to the consultation requirement. In fact, as my noble friend Lord McKenzie implied earlier, there are two consultations because you have to consult the precepting authorities first. In county areas, there is the shire county and there may also be a police authority. Sometimes it is part of the county council, and sometimes it is not. If we take the Thames valley, for example, there would be a precepting authority for policing covering a number of counties, so the districts in those areas will have to consult it as a precepting authority and perhaps also a separate fire authority. I am not sure about other areas, but in metropolitan areas, there will also be a passenger transport authority as well as the police and fire authorities, so there will be at least three precepting authorities to consult. District councils will presumably want to consult each other, if only because of the relationship with the precepting authorities. This is not a simple process. It is to be conducted not only in advance of legislation, but in a hurry.

It may be all right on the night, but if it is not, it is not likely to be the fault of authorities, particularly small authorities with limited resources. That has not happened. As the Opposition, all we are asking for is an understanding on the part of the Government if things go wrong in terms of a judicial review and that, if it can be established that the authority is not at fault, but simply has not been able to manage this complex process, then they will meet the costs. The noble Baroness has pointed out, perfectly fairly, that £30 million has been provided to help local authorities through the process. I do not think we are looking at anything like that amount in the event of a few charges by way of judicial review. The noble Baroness is not giving any ground tonight. I hope she will look at this again before Report stage and consult with colleagues and perhaps with the Local Government Association as well, which I do not think has expressed a view about this, but which may do well to consider its position. The LGA will no doubt help its member authorities, but these are not straightforward, simple matters. As I say, the whole thing rests on an assumption that may yet prove to be unfounded, that the Bill will pass in its present form.

[Baroness Hanham]

My Lords, before the noble Lord makes a decision about his amendment, it might be helpful to remind the Committee that when we were talking about the amendment of the noble Lord, Lord McKenzie, earlier, we said that we would write to him and set out the very few differences that there are in these regulations. I am advised that the annex to the Explanatory Notes sets out those limited number of changes and the relationships between the two lots.

[Lord Beecham]

I beg leave to withdraw the amendment, while hoping that we return to the matter.

Amendment 83A withdrawn.