Welfare Reform Bill

Lord Skelmersdale Excerpts

Thursday 6th October 2011 Grand Committee

[Lord Skelmersdale]

My Lords, we have heard an enormous amount of words, some of them very persuasive, for this amendment. But I find myself remarkably schizophrenic about the whole thing. The noble Baroness, Lady Turner, put her finger on at least half my schizophrenia.

Universal credit is a cash sum. You get it in your bank account, through your giro, from the post office or wherever. Council tax benefit is exactly the opposite. It is a discount; you do not see the money. Therefore, I can see that it ought to be treated in a totally different way from universal credit. On the other hand, you cannot live in a house without paying council tax. This is where my schizophrenia comes in. From your lump sum of universal credit, you are going to pay your rent, and so on, but you have the likelihood of outgoings and you cannot from those outgoings separate out the council tax that you are also going to pay. I wonder whether my noble friend Lord Freud can solve this great dilemma that I have.

[Lord McKenzie of Luton]

My Lords, I will speak briefly on this issue in support of the amendment proposed by my noble friend Lady Hollis and the exceptionally powerful case made by her and by pretty much every other the noble Lord who has spoken on the issue. The noble Lord, Lord Skelmersdale, raised an interesting point about how you would extract the payment. My noble friend Lady Turner asked whether it was a rebate, a discount or quite what it was.

I recollect that she pressed us in Government on behalf of the Royal British Legion, who were campaigning to have the term rebate replacing the benefit. We all signed up to that at the time. I am not quite sure what progress was made. I think that it went to local authorities. However, I remember that there was a potential price tag of tens of millions of pounds to local authorities just for that one system change. These are not inexpensive projects that we are dealing with. I cannot believe that this is what the noble Lord or the DWP want. The noble Lord is an exceptionally logical person. He analyses things. The scale of the problems that the localisation of council tax would bring seems to me to be totally out of kilter with all of the work and analysis that has gone on in producing plans for the universal credit. As everyone has said, it undermines the universal credit—the benefits of the single taper in particular. With all the raft of issues about how people would understand what their position was, the simplicity of the system would fall away.

We had a meeting with officials. As ever they were very helpful. We explored this issue a little bit. My understanding is that it was not until March of this year that the department started to contact local authorities to get their minds around how it would work. To produce something in a Bill and develop a policy on an assumption that this component can be dealt with separately without any clear knowledge as to how that will work in practice seems unusually foolhardy. Again, I cannot believe that the Minister believes that this is the best way forward. There are lots of practical issues. We know lots of local authorities will have outsourced their arrangements in respect of housing and council tax benefits. You would have to break the costs involved in the multiplicity of contracts. I do not know if the Minister has any idea of what would be involved in that exercise.

What we are seeing here is what we have seen in the Localism Bill writ large. There have been a lot of instances where the Government and the Secretary of State have said that they want to devolve power and give more freedoms to local authorities, but have then realised the consequences and drawn those back with all sorts of regulation powers, which, as my noble friend Lady Hollis said, would have to be there if you were going to make any sort of sense of this proposal to have any sort of understanding of whether it is regional systems, which are common.

There is another component as well. It relates to the cut in the total amount available. I agree with the noble Lord, Lord German, that in a sense there are two issues: the financing and what cash sum is available, and how it should be dealt with. This Government have a record of imposing on local authorities and getting them to take the pain, the heat and the difficult decisions, and seeking to walk away scot free. We will see and debate what is going to happen with the social fund. That is another example—no duties on local authorities and no ring-fenced funding from it.

My noble friend Lady Hollis made a telling point. If our understanding is correct—and the Minister will doubtless confirm this—this is switching AME to DEL, the reverse of what I think the Minister himself negotiated so effectively when he was dealing with work programmes. It does not make any sense. I know that the Minister has to do his job. We have all been in the position of defending the indefensible before. However, I cannot believe that it is going to end up as currently proposed because it would seriously undermine the universal credit and all the good work that the Government are trying to do on that.

--- Later in debate ---

[Lord Freud]

As I was about to say, we will soon publish an impact assessment on the universal credit that incorporates this approach. As noble Lords will be aware, the existing impact assessment assumes council tax in the system. This one will assume council tax out of the system.

[Lord Skelmersdale]

My Lords, does that mean that in this impact assessment, there will be an assumption that the taper will be the same? That seems to me to be all-important.

[Lord Freud]

I ask my noble friend to resist pressing me, which I know he enjoys doing, at this moment. Let us wait for the new impact assessment.