Local Government Finance Bill

Lord Smith of Leigh Excerpts

Monday 16th July 2012 Grand Committee

[Lord Smith of Leigh]

I remind the noble Lord, Lord Palmer, that the Olympic Games’ security problems were caused because of the outsourcing of security. As the noble Lord, Lord Jenkin, reminded us, much of the council tax administration is also outsourced, so that may not augur well for us to get a successful conclusion.

I was interested in the point made by the noble Lord, Lord Tope, about his authority already being out to consultation. I question whether the timing is right. Amendment 73 proposes a change to the consultation, and other amendments might come through, so that the consultation that his authority has undertaken might not be the right one when an amendment is passed. That is the danger of rushing it too early.

I would welcome from the Minister in responding to the debate, in addition to answering the questions asked by my noble friend Lord McKenzie, a timetable for the publication of the Government’s default scheme. That would be helpful.

[Lord Tope]

I agree with the noble Lord, and frankly I was surprised when I saw it in the committee papers back at the beginning of June. However, the way in which my authority worked—and I played no direct part in this—was on the basis that the scheme had to be finalised by the end of January. Therefore, working back from that date, given the committee system that we have now adopted thanks to the Localism Act, it was necessary for the draft consultation to be agreed in committee in June. I am not arguing that it is desirable, and I accept that in the course of the consultation there may well be changes. I am quite sure that at the end of the consultation there will be changes as a result of the consultation, never mind any other changes, but unless local authorities start to get on with it now, they will get into difficulties with the timing. I say to the noble Lord that he may need to look at the timing in Wigan as well.

--- Later in debate ---

[Lord Smith of Leigh]

My Lords, I have received an e-mail that tells me that a factory employing 100 people on my patch is going to be closed, so that will give me more problems with the council tax benefit. Local authorities have got into trouble over reductions in expenditure in local authorities through legal challenges. Usually, consultations have not taken account of the equal rights of all groups of people, and that is really important. We need to make sure that we do not fall into this trap and create a minefield. Could the Minister give us a timescale for when the department intends to produce the default scheme? I think that might be helpful.

[Earl Attlee]

We have published the default scheme now.

--- Later in debate ---

[Baroness Sherlock]

I would like to pick up where the noble Lord, Lord Shipley, left off because he made the point that I was going to make. I want to add just one thing. Irrespective of the debates about where the decisions should be located in general, the point about vulnerability is one that the Government brought into play. He said that the Government made a decision and said, in their own documentation:

“The Government has been clear that, in developing local council tax reduction schemes, vulnerable groups should be protected”.

The Government have put this issue out there, so it is not unreasonable for a local authority to say, “What do you mean by ‘vulnerable’?”. I spoke to one local authority last week that was extremely concerned that, almost irrespective of what definition it chooses, it will end up being subject to legal review because it will exclude some people, and it cannot imagine any way in which it could do that that would not have that consequence. In responding, the Minister may point out that a local authority could choose to adopt the default scheme and therefore the legal responsibility would lie with the Government, but that would work only if the authority has the resources available to be able to make good the difference. It does not apply to any other scheme or variation of it that it could take on.

I am very much with the noble Lord, Lord Beecham, who pointed out that there is a very real risk, in addition to the legal point, that the Government are raising expectations by reassuring everybody that vulnerable groups will be protected without explaining what that means. That makes it even harder for local councils to justify whatever decision they take that is short of the total quantum of vulnerability that could be defined out there.

I will make one final point, triggered by something that the noble Baroness, Lady Browning, said. One of the difficult areas in policy and one of the reasons why some decisions should be made centrally is that some kinds of vulnerability are not seen on a sufficiently large scale in an individual area for local councils to be expected reasonably to understand them and make prescriptions about them. It is analogous, perhaps, to health policy where, in commissioning, there will still be certain kinds of rare conditions that are dealt with centrally. Sometimes there are good policy reasons, even if one is being localist, to have guidance coming from the centre so that people can reasonably be expected to understand vulnerabilities that they may not encounter every day. Can the Minister perhaps address that as well?

[Lord Smith of Leigh]

My Lords, I have found this debate and the ones previously on Amendments 76 and 76A fascinating. I need to remind noble Lords that I am still leader of Wigan Council. Therefore, for me, this is not a theoretical debate. I will have to determine a scheme within my authority, with colleagues, that will decide who is eligible, who is not eligible, which group will be regarded as vulnerable and which group will not be regarded as vulnerable. It will not be easy. I was going to say that it is not a zero-sum game, but I remind noble Lords that it is not even a minus 10% game; it is a minus 20% game if we exclude pensioners. So we are lucky in that sense.

I find myself agreeing with much of what the noble Lord, Lord Deben, said about localism. I recognise what he said and I agree with it. Where I would differ from him and what we need to recognise is that local authorities come at this with very different needs in terms of the number of people who are receiving council tax benefits, as has been said earlier, and the potential changes, as I mentioned earlier. I already know from being in this meeting that I have 100 more people who will be regarded as needing council tax benefits as a result of their factory closing this afternoon. So these things are changing all the time, and we need to recognise that.

I have had some interesting solutions to my dilemma from various quarters today, such as applying reserves. The noble Lord, Lord Beecham, is absolutely right. My treasurer is already coming to me to say, “You are going to lose probably £500,000 on your council tax collection because these people are not going to be able to afford to pay the cost, so you have to think about that”. We have talked about the problems of increasing demands on council tax benefits as it becomes a local thing, and I think that the noble Lord is right that we will do it much better than it is done at the moment, so that probably will encourage more people who do not claim at the moment to start to claim.

Earlier in this Bill we talked about the problems of business rates and the fact that they will have some risk element, so we will have to put that in. We talked about the flexibility of council tax, which is a very interesting phrase. Perhaps the Minister could let me know whether he means by “flexibility of council tax” that he is going to allow me to put the council tax up and is not going to require me to hold a referendum. I cannot believe that anyone sensible is going to say that they are going to have a referendum to put council tax benefits up: “Please vote for it and you will pay more council tax”. We would never win that, so it is not going to work.

We have heard that we should make further cuts. In my authority I am planning £66 million of cuts over four years. The Government thankfully gave me some warning and we have them in place. If I now have to make more cuts to accommodate all this—probably between £2.5 million and £3 million-worth—where are they going to come from? What have I got to do that I am not already looking at? I need to remind noble Lords that it is the vulnerable groups who rely most on councils’ services. If I cut services to vulnerable groups, they suffer. I can put up daily charges or raise the qualification for receiving social care. All these things affect vulnerable groups and there is no easy solution.

The difficulty for me is this. Presumably all the people we give council tax benefit to are regarded as vulnerable people, otherwise we should not be giving them that benefit. If we start to define vulnerability—here I echo what the noble Lord, Lord Shipley, said, as well as the comments of other noble Lords about the needs of different groups in communities—the danger is that we will define who are the deserving and the non-deserving poor. In the future, there will be people who get council tax benefit support and those who either get less or nothing.

A lot of vulnerable groups have strong lobbying sectors, but the ones who do not get that kind of support are the working poor. I remind the Committee that we are talking about a marginalised and alienated group in our society made up of people who do not vote very much at the moment. But they could be tempted to vote by extremists who say, “We will listen to you”. It is happening in certain communities. People are listening to those who are giving them false promises. We know that Respect, which was mentioned by the noble Baroness, the BNP or whatever group it is will offer things that they cannot deliver. The result of this Bill and the way we will have to design the council tax support scheme will drive more and more people to the political extremes. Are we doing a good job here?

[Lord Best]

My Lords, I am provoked to give a short preview of the amendments tabled in my name that are to follow—but not tonight. However, I thought I might briefly whet appetites because they relate so closely to what we are talking about. I see that noble Lords are all agog.

These amendments are about more localism. They are about removing some of the inhibitions on councils deciding precisely how they want to raise the funds that will pay the £400 million the Treasury is waiting for. They are about whether pensioners are included or not included as a vulnerable group being decided locally. This is the point made by the noble Lord, Lord Deben. In my full and unamended speech I will say that there are many grounds on which pensioners might already be treated slightly more favourably than some of the other vulnerable groups. I will contend that in respect of the groups that are considered to be vulnerable, local authorities should have greater discretion, and suggest that local authorities should also have greater flexibility in how they raise council tax, not only in respect of the current discounts for empty and second homes, but in respect of single person discounts. I will explain that if local authorities were allowed to vary the single person discount, currently fixed at 25% and set centrally by diktat from Whitehall, some might choose to reduce that discount across the board to 20%, meaning that all those who currently receive it would have to pay another 46 pence a week. It is not a vast sum, but it would raise more than the £400 million across the piece and make it unnecessary for us to define vulnerable groups and get ourselves into all kinds of tangles in reducing support for the very poorest in our communities. In advance of moving those amendments and in the context of this debate, I thought that noble Lords might like to hear the preview.