Lord McKenzie of Luton
Main Page: Lord McKenzie of Luton (Labour - Life peer)Local Government Finance Bill
Lord McKenzie of Luton Excerpts
Lord McKenzie of Luton
My Lords, this is a probing and, I hope, brief amendment. I apologise for the tardiness in laying it, but it was prompted by the statement of intent on information sharing and powers to tackle fraud —a statement which I found really useful. The problem with statements is that they answer lots of questions but sometimes throw up one that you had not thought of before, hence the amendment.
New Section 14B, inserted into the Local Government Finance Act 1992 by Clause 13, enables regulations to be made to describe a number of offences. It is proposed that they cover such matters as causing delay or obstruction, dishonest representations and false representations. The statement of intent explains the plan to introduce offences that are equivalent to those that currently exist in relation to council tax benefit and other benefits. However, paragraph 3.25 of the statement indicates that not all existing offences are to be replicated, only those that are deemed “necessary and proportionate”. Thus the probe is to ask which offences that currently apply are considered to be disproportionate and unnecessary in the new regime. I beg to move.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, my understanding was that this is a probing amendment, and I thank the noble Lord for confirming that it is. The effect of the amendment would be to remove the words “by a person” from new Section 14B(1) of the Local Government Finance Act.
Powers to investigate potential fraudulent claims for reductions in council tax liability and to prosecute and issue the appropriate penalties will be vital to local authorities to ensure the effective administration of schemes and the control of costs. As the Government made clear when they amended the Bill in the other place by introducing Clause 13 to insert new Sections 14A to 14D into the Local Government Finance Act 1992, we believe that it is important that existing investigatory powers in relation to local authorities offences and relevant penalties to tackle fraud under social security legislation are available to local authorities in relation to council tax.
In response to the consultation on localisation of council tax support last year, a majority of local authorities that responded said that they would need the same or similar powers for local schemes as they currently had to investigate and tackle fraud in council tax benefit claims. Therefore, it is necessary for the Government to provide authorities with the appropriate equivalent powers to be able to deal with fraudulent claims for a reduction in council tax liability.
New Section 14B specifically will allow the Secretary of State to create offences equivalent to those that currently apply. In particular, the Secretary of State may make regulations providing that it is an offence for a person to delay or obstruct an officer exercising his powers to require information or to refuse or fail to provide information when required.
Regulations may also create offences where, for instance, a false statement has been made in connection with a person’s council tax liability or a person has failed to notify a change in circumstances that affects their liability to pay council tax. This includes the ability to create equivalent offences both of dishonesty and of dishonestly and falsely making representations for council tax reductions. We will not be giving local authorities powers to enter premises, powers to conduct inquiries or to remove and copy documents from such premises. The powers we are giving requiring people to supply information and enter into arrangements under which access is permitted to relevant records will be sufficient for council tax purposes.
To be clear, we are not introducing new powers for local authorities through these provisions. We are simply ensuring that some of the powers they currently have in relation to council tax benefit are recreated for reduction schemes. Nor are we simply reintroducing all the existing powers for local authorities that they currently have to tackle council tax benefit fraud. Instead we have worked with local authorities to identify those powers and offences that will be needed for local schemes.
Regulations under new Sections 14A to 14D will be subject to affirmative procedures so that both Houses will be able to consider the appropriateness and proportionality of offences under the regulations. The noble Lord asked me specifically which current powers in relation to fraud we are not planning to recreate in these regulations. Perhaps I may go through the ones that we are not planning to reintroduce. The first is allowing the Secretary of State to authorise individuals to carry out investigations. Local authorities currently authorise the individuals carrying them out, and this power will remain. As for the Secretary of State’s power to require individuals to enter into agreements to supply electronic information, local authorities’ existing powers to require electronic information will be retained, so taking the Secretary of State out of those requirements. On powers of entry, we have made it clear that we will not reintroduce wide powers of entry. Local authorities will have powers to request relevant information which is proportionate to the needs of council tax reduction schemes. I hope that that answers the noble Lord’s question.
In the statement of intent, to which the noble Lord referred, published on 9 July, we set out exactly how we intend to use the powers under new Sections 14A to 14D to make regulations, making clear that these powers would relate only to reduction schemes. I am clear that the powers in the Bill are sensible measures to ensure that local authorities have the appropriate powers to investigate and prosecute fraud. I hope that the noble Lord will be reassured by what I have said.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Baroness for that response. We support and accept that local authorities should have powers that are necessary and proportionate for them to carry out their duties in tackling fraud. The noble Baroness itemised the current arrangements which are not to be carried forward. Frankly, I would like to read the record on that, but I believe that it deals satisfactorily with the purpose of this probe. I beg leave to withdraw the amendment.
Baroness Hollis of Heigham
My Lords, this is a probing amendment seeking reassurance from the Minister that the existing system will be retained by which disabled people who have made adaptations to their property do not find their property going up a band. It should stay in the band, or, in some cases, drop a band. I have no reason to think that the Government intend that this should change, but, given the discretion to local authorities, I would be grateful if the Minister would give us reassurance on that point.
Lord McKenzie of Luton
My Lords, we speak in support of my noble friend’s amendment, which is a probing amendment, as she explained. I dug out some of the requirements for getting the benefit of the disabled band reduction scheme. It talks about,
“an additional bathroom or kitchen … a room (other than a bathroom, kitchen or toilet) required to meet the needs of the disabled person, and used predominantly by them … extra space inside the property to allow for the use of a wheelchair”.
It says:
“The room or the wheelchair must also be of major importance to the disabled person's well-being, due to the extent of their disability”.
I hope that that is still available in the system. Is there the potential for an inconsistency in government policy between supporting as we do the disabled band reduction scheme and the consequences of potential deemed under-occupation of social housing, which could lead to the withdrawal of housing benefit?
Baroness Hanham
My Lords, with regard to the very last point, the noble Lord has a very neat habit of putting one last question to which nobody has a clue about the answer—and I have to tell him that he has done it again. If I may, we will write, because it involves an interaction between two bits of legislation. I do not think that I am equipped, and my team behind me look a bit blank. So perhaps I could write on that particular aspect, but I hope to be reassuring on the rest.
Amendment 93A seeks to ensure that any changes made by the Bill will not impact upon the disabled band reduction scheme. The scheme offers a reduced council tax bill, where a disabled person lives in a larger house than they would have needed if not disabled or where the living area for normal use has been reduced. The Council Tax (Reductions for Disabilities) Regulations 1992 set out the qualifying criteria for a reduction under this scheme. No part of the Bill has an impact upon the scheme, nor will any of the subsequent regulations that will be made. The Government regard this scheme as an important form of support to disabled people and have absolutely no wish to make any changes to it. Given that there is no question of any change, I invite the noble Baroness to withdraw this amendment.
Baroness Meacher
My Lords, my concern is about the people at the bottom of the heap and the changes in council tax benefit. I know that many colleagues who are in this Room also share that concern. I would be very interested in having the Minister look at what funds might be raised through this amendment and whether something could then be done about the 10% reduction in council tax benefit. As we know, that reduction will not affect pensioners and will therefore affect other households incredibly heavily and disproportionately. Maybe there is a small possibility here to prevent unbelievable hardship as a result of this cut to council tax benefit. We would then achieve less regression—both by the changes at the top end and by using that money to effect changes at the bottom. I would be grateful if the Minister would respond to that.
Lord McKenzie of Luton
My Lords, like my noble friends Lady Hollis and Lord Smith and the noble Lord, Lord Shipley, I am not an advocate or supporter of local income tax. My noble friend Lady Hollis has, as ever, made a challenging case for the introduction of a new band, although her case is, in a sense, seeking a process of consultation. My noble friend is aware that, from this Front Bench, we are not yet able formally to support that proposition, although I note that she has occasionally trail-blazed an opinion and the party—or otherwise—has caught up with her later. There is obviously a range of issues here and my noble friend Lord Smith instanced some of the wider ramifications, such as the redistribution of revenues that might come from this. However, I am interested in the Minister's response on this and we should recognise that there are growing discrepancies and inequities in the current system, if for no other reason than the passage of time. This amendment raises a serious issue.
Baroness Hanham
My Lords, I thank the noble Baroness for introducing this amendment and the others who have spoken. I do not think that she will be entirely surprised that I am not able to accept her amendment, but I will give the reasons.
Amendment 93B seeks to create an additional council tax band in England based on properties with a 1991 value above £420,000, as the noble Baroness explained, and with a 21 to nine multiplier based on the local band D amount. This Government, like the previous Government, have made no plans to change the banding structure on which the council tax system is based. We are absolutely clear that such a change would have major implications for local government finance, create additional bureaucracy and administrative costs and have significant distributional implications, to which I shall return. To create a new band, there would have to be a general revaluation, and the Government have been absolutely clear that there will be no revaluation in England during the lifetime of this Parliament. Indeed, the coalition Government—I nudge my noble friend Lord Shipley on this—made a clear pledge to Parliament not to undertake a council tax revaluation in this Parliament. A revaluation is unnecessary, expensive and time-consuming and will lead to higher council tax bills.
Lord McKenzie of Luton
My Lords, we support the amendment. It seems that our debate has had various strands to it, including the issue of governance for bailiffs. My noble friend Lord Stevenson talked about the three fundamentals that are missing—the balance of incentives, no independent oversight and no process for those in financial difficulties. Part of that theme is the need to support people who get into debt and to help them to make their payments, as well as the importance of effective advice being at hand. With regard to the challenges that are being felt now, my noble friend Lady Hollis instanced what is happening to the CAB in her area, and my noble friend Lady Sherlock asked the Minister about the assessment that is being made of available support.
However, one strong strand has been the importance of this issue, because it focuses on dealing with poverty. As the noble Lord, Lord Tope, said, everything that is going on—the economic situation that the country and much of the world faces, as well as specific policies, including those that we are debating in this Bill—has a cumulative effect on people. We heard from the noble Baroness, Lady Meacher, and the noble and right reverend Lord, Lord Harries, about financial hardship and why it is of increasing importance in the circumstances in which we find ourselves.
The noble Lord, Lord Best, made the point that in some ways local authorities are victims of the current circumstances. They have to deal with the effects of this Bill and other legislation, particularly cuts in council tax benefit or support. We know and have debated the consequences of that. I recognise the hand of the Reverend Paul Nicholson and the Zacchaeus 2000 Trust in all this, and he should be congratulated on his continued efforts. As a Minister, I always shuddered a bit when a briefing came through from the Reverend Nicholson; I still do.
This amendment focuses on the enforcement procedures, particularly the relationships between bailiffs and councils, and it calls on contractual arrangements between bailiff companies to allow—why not require?—the bailiffs to return a warrant to the council for reconsideration when certain circumstances arise. We support the thrust of the amendment. I do not know whether we need to unpick some legal issues here in order to differentiate between bailiffs appointed by the court and enforcement agents acting under contract to the local authority—that is, whether the return and possible amendment of the warrant is just an issue between the council and the agent. Doubtless the Minister will be able to help us on that.
We have all heard horror stories about the actions of some bailiffs towards vulnerable people, including the very poignant case explained by the noble Baroness, Lady Meacher. In the National Standards for Enforcement Agents there seems to be no problem in setting out who is considered to be vulnerable; perhaps the Lord Chancellor’s Department will be able to assist the DCLG in this regard. I am sure that we all find some of the instances we have heard about completely unacceptable. The amendment refers to the National Standards for Enforcement Agents, a document issued by the Ministry of Justice, but, as my noble friend said, it is really just a rerun of something that happened in 2002 and the problem is that it is not mandatory. I wonder whether we should at least require all local authorities to contract only with those who explicitly adhere to those standards, although they may not be binding.
The standards explicitly refer to vulnerable situations requiring enforcement agents and creditors—the councils —to recognise that they each have a role in ensuring that the vulnerable and socially excluded are protected and that the recovery process includes procedures agreed between the agent and the creditor about how such situations are dealt with. The document states:
“The appropriate use of discretion is essential in every case and no amount of guidance could cover every situation, therefore the agent has a duty to contact the creditor and report the circumstances in situations where there is … a potential cause for concern”.
That is the essence of what this amendment seeks to achieve, but there is also an issue about how councils play their part and this is also implicit in the amendment.
We have discussed council tax support schemes. In many cases, the cut in support for schemes, effectively of the order of 20%, will leave poor people having to pay council tax when they were previously exempt. Even a few pounds a week could push those existing at the margins over the edge, especially when coupled with the other cuts that they have to endure. Given the reminder that local authorities have had from central government about their responsibilities regarding equalities duties, homelessness provisions and the Child Poverty Act, this places a special onus on local authorities to ensure that life is not made even more intolerable by insensitive and inappropriate enforcement processes. We welcome the content of these amendments.
Baroness Hanham
My Lords, I thank the noble Baroness for introducing this amendment. There has been wide discussion, as I rather expected, and I acknowledge the part played by the trust of the Reverend Paul Nicolson and the work it does in support of people who end up in serious debt. I also note what has been said about many people in serious debt having mental health issues. I agree that these are all matters that ought to be taken into account by local authorities, and doing so is very much part of their work. As for the advice agencies, the noble Baroness, Lady Sherlock, will know that this is a matter for local authorities. The funding, apart from the Lord Chancellor’s funding, by and large comes from local authorities and therefore it is in their own interest to ensure that people have proper advice.
The discussion, as I would have expected, has gone widely into the problems that bring in bailiffs, but it is the bailiffs on whom we are concentrating today. That is what the amendment is about, although I understand that it has triggered much concern about the general situation. Unfortunately, it does not quite do the trick. The noble Baroness probably did not think that it did but that it was another opportunity to have this discussion and bring the matter to wider attention again. It does not work for local government because, essentially, it is not properly worded. It requires authorities to include procedures in their contracts with bailiff companies covering the enforcement of council tax. These would allow the bailiffs to refer the decision to take enforcement action to an authority for reconsideration where there are concerns about the debtor’s liability or their ability to pay. I agree with the noble Lord that that should just be part of the practice: that if bailiffs find something wrong, they should automatically take that into account.
I should explain that the amendment does not accurately reflect the way that bailiffs are authorised to take enforcement action in respect of council tax, because no warrant issued by the local authority is involved in the process. Under the Council Tax (Administration and Enforcement) Regulations 1992, bailiffs can be used to recover unpaid council tax—that is, levy distress—only where a magistrates’ court has made a liability order. That was the point made by my noble friend Lord Lucas.
The local authority is allowed to apply for only reasonable costs, and those are capped at £70. There will be further costs only after distress from the bailiffs is levied. I agree with the noble Lord, Lord Smith, that a great deal of work is involved before schedules are produced before the court—I used to deal with them frequently, and magistrates do not just wipe them through; a lot of questions are asked.
That was a slight diversion. I am keenly aware that the use of bailiffs to enforce unpaid council tax is an emotive and sensitive issue—we have heard about many of the reasons why today—particularly when used against vulnerable people. Many disquieting examples have been given this afternoon of where that is happening. The Government believe that the use of bailiffs should be a last resort. I think that most local authorities believe that and that everything else should be done before they say that it must go to the bailiffs. It follows that we do not believe that they should be commissioned disproportionately; they should be a last resort. Councils should take direct responsibility for ensuring that bailiffs abide by acceptable practices. No one can be content with people working on their or the courts’ behalf who do not act reasonably, courteously and sensitively.
However, whether enforcement action is justified is a matter for local authorities and, finally, the courts, having taken account of all the relevant information on a case-by-case basis. Of course it is the local authority’s responsibility to ensure that it is taken only after all the procedures and all efforts have been made to have the matter dealt with in another way.
Although the Government have no plans to make changes to the enforcement regime for council tax, which is what we are talking about in particular, as my noble friend Lord Lucas mentioned, we are looking at bailiff reform. There is a wide perception across the country and across government that it is not working absolutely brilliantly. I say to the noble Lord, Lord McKenzie, that we are talking about the bailiff service, not the enforcement service.
The Ministry of Justice consultation, Transforming Bailiff Action, which was mentioned by the noble Lord, Lord Stevenson, closed on 14 May. It looked at how the Government—that is, going across government —can provide more protection against aggressive bailiffs and encourage more flexibility in their use, including the need for more care in how the bailiffs go about their business. One reason why the amendment is not appropriate to this Bill is that the issue goes across government. The use of bailiffs is a responsibility of the Ministry of Justice; then we get to the Department for Work and Pensions, and then we come back to the DCLG. It is extremely important that this does not just get logged in one department; it must be addressed across the piece. The noble Baroness, Lady Meacher, knows that because she said so. She knows that the amendment is not appropriate, but I do not go over her will to see this matter debated—it is very sensible.
Lord McKenzie of Luton
My Lords, this is totally clear to us and we are very happy to support the amendment.
Baroness Hollis of Heigham
My Lords, I strongly support the amendment moved so powerfully by my noble friend Lady Sherlock. I want to add two further points to the admirable way in which she raised the concerns that I think we all share. The first was the implication for social workers and the second is the implication for certain local authorities. I will glare at the noble Lord, Lord Tope, when we come to the second point as he will guess where I am going on that.
On the implications for social workers, they are being asked to undertake a role that is not consistent with their current responsibilities. Their work towards helping children with occasional financial support is based on Section 17 of the Children Act 1987, under which they are expected to intervene when children’s health and development is seriously at risk. That may involve issues of abuse or when children need to go into grandparents’ care, and so on. It was never intended to meet basic needs of relieving poverty, providing family housing or accommodation for children separately from the parents unless it was necessary to promote and safeguard their welfare. As a result of the Social Fund—whether ring-fenced or otherwise—going over to local government, social workers will be asked to do two additional things as well as trying to deliver the purposes of Section 17 of the 1987 Act.
First, it is feared that local authorities will not inevitably budget for sufficient funds. Money might run out in January, which is always a problem with cash-capped grants, or the amount will be so low that the Section 17 work will be drawn on, which will diminish the work that we are currently doing to help children who face abuse. Secondly, and more worryingly, social work time will be taken up with assessing whether a child whose parents cannot meet their basic needs is being neglected or is in need according to the Section 17 definition. They will be saying no frequently as poverty alone, or lack of accommodation, does not fit the Section 17 definition. That was taken away from child protection and other work with families with complex needs. It will create friction with families that they are trying to help, as they will frequently have to say that they do not fit the legal criteria and will appear heartless.
Asking local authorities to now be the gateway to cash handouts for cookers, tables and chairs, bedding, and so on, is inconsistent with the role that social workers actually have, which is trying to help families to develop. The same will apply equally to local authorities and council tax benefit. There is a real problem for council social workers. Although I cannot speak for the British Association of Social Workers and do not have its views, social workers I have talked to, including eminent professors of social work, are deeply concerned about what they regard as the deforming and warping of the role of social workers. They will now be guardians of the gateway to cash handouts in a way they have not been before and do not wish to be now.
My second problem is the implication for two-tier authorities. Providing social services is a county function and housing is a district council function. They are splintered because of the two-tier structure that we have in this country. Social services will have discretionary Social Fund moneys, often for claimants for whom they have not previously worked, across a county-wide area—40 miles by 60 miles, perhaps, or with a million people living in it. They will have to make judgments about who to help with a limited budget that is not ring-fenced and which may be used for child protection or social care for the elderly, which has increasing dominance and a higher priority in most county council budgets—and perfectly reasonably so.
Housing authorities, of course, have responsibility for discretionary housing. My authority in Norwich has enough to support 50 families. In the previous year it ran out in November. Some of those families in distress will be the same families; some of them will be dealt with by county council social workers and the Social Fund, and many of the same families will possibly be dealt with by the local authorities at the district level, handling the housing discretionary payments. They are often likely to be the same families in the future. For unitary authorities, I hope that there will be a cohesive service as they should be able to manage the local connection issues. For cities such as mine where we are stuck against our will in a two-tier system, it will not be easy to handle. There will be costly duplication and even more profound problems about the localisation issue; the county might be helping people who live in one district where they have a local connection whose housing needs may be experienced in a different district. The same family may get help simultaneously from welfare rights people at district level as well as social services at county level.
As the measure stands, it is a mess. As noble Lords will know, if they know about two-tier authorities, I cannot see how it can work, when you have county council social workers trying to dish out cash hand payments to a proportion of 1 million people at county council level while simultaneously the district authority is responsible for discretionary housing payments which may have been engendered by the same crisis and is supposed to maintain a separate fund, also not ring-fenced. This is costly and it is duplication. At the very least it should be ring-fenced; at the very least there should be issues of guidance—and, at the very least, central government should require county social services to work closely with district authorities to try to overcome what this Government in a previous incarnation splintered—I refer to housing from social services—which affects the most vulnerable people in our communities.
Lord McKenzie of Luton
My Lords, we have just heard a compelling and comprehensive case from and on behalf of my noble friends, with which I wholly agree. As my noble friend Lady Sherlock said, it does not cost any money and it would provide some protection for some of the most vulnerable members of our community. If we could unite around this issue, it would be a good way in which to conclude our Committee deliberations.
The proposal concerning local connection rules is at the very least something that the Government should accept. They are prepared to give central direction to protect pensioners whom they see as vulnerable when it comes to council tax support schemes, so why do we not have some central guidance to protect those fleeing domestic violence, those leaving care, the homeless and those leaving institutional care? My noble friend Lady Sherlock quoted assurances received from Ministers during the passage of the Welfare Reform Bill to the effect that funding for what was the Social Fund, now transferred to local authorities will be part of a special revenue grant accompanied by a detailed settlement letter. Can the Minister deal specifically with the inquiry made by my noble friend on that point? We know that there will be a revenue support grant for the first couple of years of the business rate retention scheme, but the position after this is a little opaque. In any event, can the Minister confirm that the funding in question will be provided by central government in addition to the central share of the business rate, on top of the central share?
We know that councils will try to do the right thing for those who most need their support, but life has been made incredibly difficult for them by prior cuts, the cuts in this Bill and more cuts to come. In all the near impossible judgments that councils will have to make, we can provide just a small voice for those who might otherwise not be heard. I support my noble friend’s amendment.
Baroness Hanham
My Lords, this has been a short but interesting debate. I thank the noble Baroness for raising this on behalf of the noble Baroness, Lady Lister, and I should say how delighted we are about her honorary degree. I hope that it is in something associated with what we are doing here—but, if not, it is none the less a great achievement.
Amendment 97 relates to the Social Fund. As the noble Baroness said, this is provided for in the Welfare Reform Act, for which the Department for Work and Pensions is responsible. It states that:
“Any grant paid to local authorities under section 70 of the Welfare Reform Act 2012 … shall be expended by the local authority only for said purposes”,
and that:
“Any such grants will be made under the guidance of the Secretary of State with regard to the application of any ‘local connection rules’ … so that any such rule does not apply to”,
various categories of vulnerable people.
Proposed new subsection (1) of the amendment may be based on a confusion, as Section 70 of the Welfare Reform Act 2012 relates to the winding up of the Social Fund and transfer of money into the consolidated fund, rather than the transfer of money to local authorities. However, I believe that the intention behind the amendment is to guarantee that grants allocated to local authorities for local welfare provision, following the abolition of community care grants and crisis loans from April 2013, are used for the purpose intended.
I reassure the Committee that the settlement letter to which the noble Baroness referred will accompany that funding. I am not yet sure when that letter is due, but I will make inquiries and let her know. The settlement letter will set out what the funding is to be used for, the underlying principles and the outcome that must be achieved—although not the method that should be used to achieve it. It will state that the funding is to concentrate resources on those facing the greatest difficulty in managing their income and to enable a more flexible response to unavoidable need.
Lord McKenzie of Luton
Will the noble Baroness say a little more about this settlement letter? I am trying to envisage the settlement letter in the context of business rate retention schemes and revenue support grants, but will she say whether the funding stream for this purpose is going to be additional and will not come from the central share of business rates, which accrue to Government and then go back? Is it going to be funding on top of that?
Baroness Hanham
This is funding being moved from one area to another, so is it additional? I suppose the answer is probably yes, because it is coming from the Department for Work and Pensions into the Department for Communities and Local Government. Is it additional in terms of revenue support grant? I think the answer is probably yes, because it is within the funding of the local authority but expected to be used for the Social Fund purpose. As for the settlement letter, it will include the detail. I do not know, I am afraid, what the settlement letter will be. I suspect that there are a lot of people in the DWP who do not know either, but I have told noble Lords that as soon as we know when it is being issued and what it contains, we will let them know.