Lord Stunell
Main Page: Lord Stunell (Liberal Democrat - Life peer)
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
Government new clause 10—Power for HMRC to supply information for purposes of council tax
New clause 2—Discounts—
‘(1) Section 11 of the LGFA 1992 is amended as follows.
(2) In subsection (1), for the word “shall”, substitute “may”.
(3) In subsection (2)—
(a) for the word “shall”, substitute the word “may”;
(b) for the word “twice”, substitute the words “a multiple of”.
(4) Omit subsections (3) and (4) and insert—
(a) In this section “the appropriate percentage” and “multiple” are to be determined by the relevant local authority and approved as part of their Council Tax Reduction Scheme as set out in Schedule 1A.
“(b) The eligibility for any reduction shall be determined as part of the Council Tax Reduction Scheme.
(4) Schedule 1 to this Act shall have effect for determining who shall be disregarded for the purposes of discount.”.’.
New clause 5—Report on effects of provisions—
‘At a date no later than three years from the implementation of this Act the Secretary of State shall prepare a report detailing the effects of these provisions on—
(a) the number of people receiving council tax support in each local authority including the number in employment, the number actively seeking work, and the number of pensionable age, and
(b) the costs incurred by each authority in running the scheme, including the cost of appeals.’.
New clause 7—Power to set higher amount for second homes—
‘(1) The LGFA 1992 is amended as follows.
(2) After section 11A insert—
“11C Higher amount for second homes: England
(1) For any financial year, a billing authority in England may by determination provide in relation to its area, or such part of its area as it may specify in the determination, that if on any day a dwelling is a second home—
(a) the discount under section 11(2)(a) shall not apply, and
(b) the amount of council tax payable in respect of that dwelling and that day shall be increased by such percentage of not more than 50 as it may so specify.
(2) The Secretary of State may by regulations prescribe one or more classes of dwelling in relation to which a billing authority may not make a determination under this section.
(3) A class of dwellings may be prescribed under subsection (2) by reference to such factors as the Secretary of State thinks fit and may, in particular, be prescribed by reference to—
(a) the physical characteristics of, or other matters relating to, dwellings;
(b) the circumstances of, or other matters relating to, any person who is liable to the amount of council tax concerned.
(4) Where a determination under this section has effect in relation to a class of dwellings—
(a) the billing authority may not make a determination under section 11A(3), (4) or (4A) in relation to that class, and
(b) any determination that has been made under section 11A(3), (4) or (4A) ceases to have effect in relation to that class.
(5) A billing authority may make a determination varying or revoking a determination under this section for a financial year, but only before the beginning of the year.
(6) A billing authority which makes a determination under this section must publish a notice of it in at least one newspaper circulating in its area and do so before the end of the period of 21 days beginning with the date of the determination.
(7) Failure to comply with subsection (6) does not affect the validity of a determination.
(8) For the purposes of this section, the Secretary of State may by regulations prescribe the definition of a dwelling to be considered a “second home”.
(3) In section 11(2) (discounts: no chargeable residents) after “sections 11A”, insert “, 11C”.
(4) In section 11A (discounts: special provision for England) after subsection (4B) (inserted by section 9) insert—
“(4D) Subsections (3), (4) and (4A) are subject to section 11C (4).”.
(5) In section 66(2)(b) (matters to be questioned only by judicial review), after “section 8(2), 11A”, insert “, 11C”.
(6) In section 67(2)(a) (functions to be discharged only by authority), after “section 8(2), 11A”, insert “, 11C”.’.
Government amendments 42 to 48.
Amendment 6, in clause 8, page 5, line 28, leave out ‘2013’ and insert ‘2014’.
Amendment 7, page 5, line 29, leave out ‘2013’ and insert ‘2014’.
Amendment 4, in clause 10, page 7, line 41, at end insert—
‘(12A) After sub-paragraph (7) insert—
(7A) In this paragraph, “increase” means an increase under section 11C(1)(b) (higher amount for second homes: England).”.’.
Government amendments 49 and 50.
Amendment 1, in schedule 4, page 48, line 43, at end insert—
‘(8A) Before making regulations under sub-paragraph (8), the Secretary of State must consult with local authorities regarding any proposed requirements for schemes.’.
Government amendment 51.
Amendment 9, page 49, line 15, at end insert—
(d) notify all persons within their area receiving council tax benefit on or immediately following 1 April 2012, of the implications of the draft scheme, including the estimated impact of that scheme on their living standards.’.
Government amendment 52.
Amendment 2, page 49, line 22, leave out sub-paragraphs (4) and (5).
Amendment 10, page 49, line 44, leave out ‘2013’ and insert ‘2014’.
Government amendments 53 and 54.
Amendment 11, page 50, line 2, at end insert—
‘(3A) The default scheme must be designed in such a way as to ensure, insofar as can reasonably be assessed, that no person below pensionable age, in or seeking employment, shall receive a lesser entitlement to a council tax reduction than that to which they would have been entitled under council tax benefit.’.
Amendment 12, page 50, line 2, at end insert—
‘(3B) If the default scheme has the effect of reducing or removing a reduction to which any class of persons was entitled under council tax benefit, it must include such transitional provision relating to that reduction or removal as the Secretary of State, after consultation with representatives of local government, thinks fit.’.
Amendment 13, page 50, line 5, leave out ‘2013’ and insert ‘2014’.
Amendment 3, page 50, line 14, leave out sub-paragraphs (2) and (3).
Government amendments 55 to 61.
Andrew Stunell
I am delighted to be taking part in the resumption of the debate from the previous Session, as it is good to be resuming our consideration of this important Bill and these important provisions. The Bill is a major step forward in localising fundraising and decision making to local councils and restoring to them local control. Discussing local government finance is very much an acquired taste, albeit one that I can see has not been acquired by too many hon. Members today.
May I draw the House’s attention to the publication of the statements of intent, which the Department has tabled for the benefit of hon. Members over the past few days? The statements bring to the House’s attention a great deal of the technical work behind the Bill and of how the Government intend that the scheme should be implemented over the coming months.
John Healey (Wentworth and Dearne) (Lab)
The Minister mentions the seven technical notes. Dozens and dozens of pages about how the Government are going to approach this were released on the working day before Report and Third Reading in this House, and three and a half months after this House finished its Committee stage. Does the Minister accept that to anyone outside this House it looks as though, at every stage, this Government are going out of their way to avoid people being able to take a proper look at this and to avoid this House being able to do its job of scrutinising this Bill properly? We will be leaving too much to the other House to do.
Andrew Stunell
I am extremely disappointed by the right hon. Gentleman’s intervention. May I just remind him that when I assured the House that these papers would be published, there was universal astonishment that we proposed to do that before the Bill left this House? There was a universal assumption that I had somehow misspoken and that we actually meant to do this at a later stage. It is very much for the convenience of this House today that it should have these very important documents available for consideration, but the right hon. Gentleman is right to say that Members of the other place will have every opportunity to give further consideration to the information. Of course, the reason for publishing these papers in advance of the Bill completing its passages through the two Houses is to give local authorities and those who have to work on these schemes the maximum length of time to implement the necessary provisions, so that an appropriate and speedy commencement can be made next year.
Helen Jones (Warrington North) (Lab)
In fact, the Minister promised us not statements of intent, but draft regulations. He said:
“we intend to publish draft regulations while the Bill is still before the House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]
Where are they?
Andrew Stunell
When the hon. Lady has taken the opportunity to look at the statements of intent, she will see that they are in effect—indeed, my note refers to it—draft statutory instruments. I remind her that we cannot publish draft statutory instruments until we have a Bill to publish them against. We have brought the statements of intent before both Houses so that matters for consideration are fully in view.
New clause 9 allows the Secretary of State to make regulations to introduce the necessary powers for local authorities to tackle fraud in claims for a reduction in liability to pay council tax, which will be effective from next April. Powers to investigate potential fraudulent claims for reductions in liability to pay council tax and to issue the appropriate penalties are a vital weapon for local authorities if they are properly to administer schemes and protect the public purse. The change from the existing scheme to the new scheme means that the new clause is needed to provide the necessary safeguards. Rather than simply reintroducing all the powers that local authorities have to tackle council tax benefit fraud, the clause allows us to work with local authorities to identify those powers and offences that will be needed to make local schemes work. The overall aim is that the regulations will reinstate only the necessary powers, offences, penalties and safeguards that are appropriate for the new scheme.
Mr John Redwood (Wokingham) (Con)
It would be very helpful if the Minister explained to my constituents what extra power is being granted to the council and how it will prevent fraud.
Andrew Stunell
The provision allows us to enter into discussions with local authorities about the point my right hon. Friend raises. It is our intention not to increase the powers of local authorities but simply to transpose them from the existing scheme to the new scheme while recognising that a range of provisions in the current scheme needs to be considered rather than simply transposed without any further thought. New section 14A, which the Bill inserts into the Local Government Finance Act 1992, will allow the Secretary of State to make regulations giving local authorities the power to authorise officers to carry out investigations. Regulations may provide that officers so authorised may require relevant information from specified bodies to check whether a claim that they believe to be fraudulent is in fact so. The regulations may also provide authorities with powers to require that certain bodies must enter into arrangements allowing access to a person’s electronic records.
Mr Redwood
That is the point I am trying to get at. It is already an offence to make a fraudulent declaration and to try to get out of paying this tax, and we all want to stop the fraud, but we also want to keep some civil liberties in this country. I must press the Minister again. What extra powers to investigate people and get access to their data are being taken?
Andrew Stunell
I am sorry if I did not make myself clear. The powers that local authorities rely on to guard against fraud in the current council tax benefit scheme will, in effect, lapse with the introduction of the new scheme. They are not competent to be used under the new scheme, so we need a new scheme. The purpose of the new clause is to ensure that the scheme takes account not just of concerns such as those held by my right hon. Friend but of the need to protect the public purse and that they are kept in proper and proportionate balance. We will not be giving local authorities powers to enter premises or to conduct inquiries and remove and copy documents from such premises. I hope my right hon. Friend finds that assurance helpful. The powers we are giving will require people to enter into arrangements under which access is permitted to relevant records and will, in our view, be sufficient for council tax purposes.
New section 14C will enable the Secretary of State to make regulations providing that authorities may issue penalties as an alternative to prosecution or where a person has not been charged with an offence. That will ensure that local authorities are able to take proportionate action, rather than being faced with the choice of pursuing prosecution or doing nothing. Before the debate on the amendments in the other place, we intend to publish a detailed statement of intent that will spell out clearly our proposals for regulations in accordance with the new clause. We have also made it clear in the new clause that any regulations will be subject to the affirmative procedure and will therefore be debated by both Houses. I hope my right hon. Friend will be somewhat reassured by what I have said.
Helen Jones
Will the Minister explain to the House, for my benefit and, presumably, for the benefit of others, how regulations in this section can
“create an offence that may be committed by a person acting otherwise than dishonestly”?
Presumably, if a person is not acting dishonestly, they are acting honestly. How can that create an offence?
Andrew Stunell
The hon. Lady is well aware that there are such things as negligence and avoidance of reality. We are all aware of such cases. I see quite a few examples in the House from time to time.
New clause 10 inserts into the Bill powers allowing Her Majesty’s Revenue and Customs to supply information for prescribed purposes relating to council tax to billing authorities in England and Wales and to local authorities in Scotland, and provides for offences relating to the misuse of that information. It is the matching part of the preceding clause, the one that gives local authorities the power to ask bodies for information. This clause allows HMRC to supply that information.
Data sharing will be an important way of maximising convenience and reducing complexity for claimants, while also helping to reduce administrative costs. It will reduce the need for individuals to have to provide the same information repeatedly to different public bodies and produce evidence about their situation to those bodies. Section 131 of the Welfare Reform Act 2012 provides for the sharing of information relating to social security benefits and welfare services with a qualifying person for prescribed purposes relating to welfare services or council tax. The two new clauses, together with that provision, will enable data held by the Department for Work and Pensions in relation to current benefits and, in future, to universal credit, to be provided to English and Welsh billing authorities and Scottish local authorities for the administration of local council tax reduction schemes.
Hilary Benn (Leeds Central) (Lab)
I understand the point that the Minister is making about requiring organisations such as DWP to offer information relating to individuals, but section 14A(1)(b) refers to
“powers to require a person to enter into arrangements under which access is permitted to the person’s electronic records.”
I find it hard to see that that is to do with the Department for Work and Pensions. Can the hon. Gentleman assure the House that this does not relate to individual council tax payers and any electronic records that they have—for example, held on personal computers?
Andrew Stunell
I may wish to return to the right hon. Gentleman’s point later in the debate, if the opportunity arises. My understanding is that there is nothing in the provision that in any way takes the powers of public bodies beyond what they are currently able to do in pursuit of council tax benefit and alleged fraud and misuse of council tax benefit. As I understand it, these powers are absolutely parallel to the existing provisions. I am sure that I will have an opportunity to return to that point later in the debate if I have in any way misguided the House.
New clause 10 inserts paragraphs 15A and 15B into schedule 2 to the Local Government Finance Act 1992. Paragraph 15A(1) and (2) will allow Her Majesty’s Revenue and Customs to supply information held for the purposes of its functions to billing authorities in England, as well as to a person authorised to exercise any of an authority’s functions on its behalf.
Mr Redwood
On new clause 10, when the Revenue has shared information with a local authority, what right will the individual concerned have to make sure that the Treasury has shared the correct information and has not made a mistake?
Andrew Stunell
HMRC is obviously under the same obligations when transferring data in such a case as it is in every other case; it must ensure that the data are relevant to the question being asked, accurate and appropriate, and there are of course safeguards via the Information Commissioner should that be broken. HMRC takes data protection extremely seriously, and the provisions in the Bill, which lie on top of the provisions in the Welfare Reform Act, are needed precisely because it is necessary to ensure that we have safeguarded HMRC and given it specific, explicit and closely confined powers on the transfer of data.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
I must say that that is not an adequate response to the question asked by the right hon. Member for Wokingham (Mr Redwood). We have seen a lot of evidence on data sharing recently. The Electoral Commission has been undertaking data-matching exercises that have revealed huge problems of inaccuracy in data shared between Government Departments. This is a serious matter and the Minister is not justified in brushing it aside like that. There needs to be more certainty and more checks and safeguards need to be in place.
Andrew Stunell
I remind the right hon. Gentleman that at the moment HMRC shares these data with DWP, which then takes a view on an individual’s income and shares it with the local authority that administers the benefit. Under the provision, that information will go directly from HMRC to the billing authority. We absolutely share the view, expressed by both the right hon. Member for Greenwich and Woolwich (Mr Raynsford) and my right hon. Friend the Member for Wokingham (Mr Redwood), that it is extremely important that that creates neither opportunities for error nor opportunities for the misuse of data in any other way.
David Wright (Telford) (Lab)
The real danger, as the right hon. Member for Wokingham (Mr Redwood) said, is that there will be mission creep. Experience under previous Governments, including the Labour Government, shows that there is mission creep on data exchange. Discs are produced and information is passed around. What we really need from the Government is a definitive statement on what data can be passed between Departments, because there is a danger that people’s information will be passed around and that the parameters and scope of the data that ought to be shared will be extended.
Andrew Stunell
I am certainly keen to offer, on behalf of the Department and the Government, a clear undertaking that it is not the intention that that should happen, and that the provisions before the House do not create the opportunity for that to happen.
To return to the question asked by the right hon. Member for Leeds Central (Hilary Benn), proposed new section 14A, which relates to the investigation of fraud, will enable local authorities to investigate the eligibility of a person for a council tax reduction, which might require access to the individual’s records, in the same way as can currently be done for council tax benefit. That is separate from the provisions elsewhere relating to HMRC’s sharing of data with local authorities.
Proposed newparagraph 15B(7), of schedule 2 to the 1992 Act, sets out the procedure that Welsh Ministers must follow when making these regulations, which will be through a statutory instrument, subject to annulment procedures. Proposed new paragraph 15C(7) sets out the procedure that Scottish Ministers must follow when making regulations in respect of the data-sharing provisions, which will be through a Scottish statutory instrument, subject to the negative procedure. Without that legal gateway, HMRC would not be able to provide the information that billing authorities need for council tax purposes, such as calculating an entitlement to a reduction under a council tax reduction scheme, and if that were the case it would clearly increase the complexity for claimants and the administrative costs for billing authorities.
Helen Jones
Why does the default scheme replicate the existing scheme on a 10% cut? Is the intention to penalise financially those councils that do not come up with their own scheme in time?
Andrew Stunell
There is certainly an incentive for local authorities to introduce a scheme of their own choosing. The whole point of this is that local authorities should have the capacity to have their own scheme, designed as they see fit. If they have not formed such a scheme by the relevant date in January, the default scheme comes into play, and that scheme will, in essence, continue with the existing council tax benefit scheme in its entirety. Taken together, the amendments to schedule 4 ensure that regulations prescribing requirements for schemes and prescribing the default scheme allow local authorities to take this approach and, if they so wish, to adopt the existing scheme lock, stock and barrel.
The Government have already confirmed their commitment to protecting pensioners on low incomes and have said that there should be no change in support to them as a result of the introduction of this reform. Support will continue to be rules-based, with provisions about the calculations to be made set out in regulations under paragraphs 2(8) and 2(9) of new schedule 1A to the Local Government Finance Act 1992, which is inserted by schedule 4 to the Bill. As the House is aware, it is intended that the support scheme for pensioners will be protected so that their support is as close as possible to what they receive at present. Paragraph 4 of new schedule 1A provides powers for the Secretary of State to prescribe a default scheme in regulations to take effect in any authority that has not made its own scheme by 31 January. The default scheme will cover those who have attained the qualifying age for state pension credit and those who have not yet attained it. The Government have been clear that they intend the default scheme to be as similar as possible to the existing scheme.
These technical amendments will enable regulations prescribing the requirements for pensioner protection and the default scheme to make use of the same powers, definitions and treatments as set out in the detail of the existing council tax benefit legislation. The Government believe that that will help to facilitate their provision of protection for those of pension credit age and provide the legal backstop of a default scheme that can take effect should a local authority not complete its own scheme. In particular, amendment 51, new schedule 1A, paragraph 2 and sub-paragraph (10) will allow the Government, when they set up the scheme, to make equivalent provision to that contained in the one of the enactments listed in sub-paragraph (12). New paragraph (3A) in amendment 54 allows the default scheme to make equivalent provision to that capable of being made under the same enactment.
There is a great deal of detail that I am happy to bring to the House should Members wish to have it, and more in the statements of intent. If the House is content at this point, I will move on to Government amendment 52. As set out in the statements of intent that we have published on our plans for localising support, the Government do not propose to make regulations as to how a billing authority will prepare a scheme because that would not enhance the existing requirements and duties of authorities in consulting and involving local people. It therefore does not make sense to prevent billing authorities, after consulting their major precepting authorities, from proceeding to publish their scheme and to consult others if they are in a position to do so prior to the Bill’s receiving Royal Assent. Amendment 52 allows councils to proceed in that direction if they wish. In other words, if, after consulting its major precepting authorities, a billing authority wants to publish its local scheme and to consult any other person with an interest in the scheme, it can do so straight away without running any additional risks arising from carrying out those steps in advance of Royal Assent.
Helen Jones
Are not the Government too often taking steps to implement legislation before it has been passed? We saw that with the Health and Social Care Bill and we are seeing it again now. The essence of a democratic Parliament is that legislation has to go through two Houses and get Royal Assent before it becomes law. Are not the Government trying to compensate for the fact that they are rushing this change in far too quickly, instead of giving local authorities time to prepare properly?
Andrew Stunell
In the last Session, the hon. Lady spent a lot of time telling us that we had not produced enough detail, nor given local authorities enough warning or flexibility. It seems a little perverse for her to say now that she does not want local authorities to have the flexibility to get a scheme under way pronto, if they are in a position to do so. I do not understand her confused logic.
Government amendment 53 is a minor technical amendment, which will ensure that the first financial year to which the default scheme relates is the same as that specified for the implementation of council tax reduction schemes in clause 8(4). Amendment 55 relates to claims that are in progress when the schemes come into force: in essence, any claims in the pipeline will be rolled over, rather than applicants being required to start again with a new scheme.
That completes my remarks about the Government proposals, but it is right and proper that I comment on the proposals from other parts of the House. New clause 2, tabled by the right hon. Member for Wentworth and Dearne (John Healey), would do away with the automatic entitlement to the single person discount, which has been a feature of council tax since its introduction. I remind the House that households with just one adult are eligible to claim the single person discount on their council tax bill, and that is not a benefit but a tax discount that has been a fundamental feature of council tax since its creation in 1993. Eight million households in England receive the single person discount, of which 90% are in bands A to D; it is therefore not a subsidy for the wealthy. Indeed, 29% of households in Great Britain are single-person households and another 7% are single-parent households, which are also eligible for the tax discount.
New clause 2 would pass to local authorities discretion on whether to grant a discount to such people and the size of the discount as part of setting their council tax reduction scheme. Clause 8(2) provides that
“Each billing authority in England must make a scheme specifying the reductions which are to apply to amounts of council tax”.
Mr Kevan Jones (North Durham) (Lab)
Is this not another example of not giving local councils freedom, but trying to push the blame on to local authorities? Would it not cause chaos in places such as London, where the 32 boroughs could have 32 different schemes? How does the Minister think that could be run efficiently?
Andrew Stunell
That is a severe criticism of new clause 2, which would pass down to councils the capacity to change single person discounts. As the hon. Gentleman rightly points out, that would create difficulties in implementation. I am sure that the right hon. Member for Wentworth and Dearne, when he speaks in favour of the new clause, will explain to the hon. Gentleman exactly how it would work.
New clause 2 would not only interfere with the single person discount, but give billing authorities discretion on whether a 50% discount should be granted in other circumstances. Currently, that applies when a dwelling is not unoccupied but is no one’s sole or main residence. At one time, that would have meant second homes, but the provision on those was amended in the Local Government Act 2003. The 50% discount still applies in some cases, when the second home is job-related. That is a matter of particular importance to the clergy and to service personnel. I suspect that the new clause would have an effect that the right hon. Gentleman does not intend.
Helen Jones
Is the Minister therefore committing to produce a report, as requested in new clause 5?
Andrew Stunell
If the hon. Lady looks at the impact assessment submitted alongside the Bill, she will see that the specific question of whether the policy will be reviewed is addressed. The answer to her question is yes, and, if I remember correctly, the time interval before the publication will be three years.
Taken together, amendments 10, 13, 6 and 7 would delay by a year the localisation of the council tax reduction scheme, pushing it back from 2013 to 2014. The Government are very clear that the reform needs to be implemented in 2013 to secure the agreed savings set out in the 2010 comprehensive spending review. I think the Labour party is still struggling to come to terms with the fact that in 2010, £1 was being borrowed for every £4 spent and we were adding £400 million to the national debt every day. Tackling the deficit and establishing fiscal responsibility is a central part of the coalition Government’s strategy, and the changes to the scheme are fundamental to achieving the savings set out in the CSR.
There are things that councils should already be doing to prepare for the change, and we are supporting them in doing so, not least through the provision that the hon. Lady queried a few minutes ago. They should understand the circumstances of those in their area who currently claim support, ensure that elected members are aware of the decisions that they will need to take and engage with precepting authorities, such as police and fire authorities. They have the opportunity to prepare for and carry out consultation as soon as they are ready to do so—Government amendment 52 supports local authorities in their preparations by making that clear. The Government therefore believe that the amendments to delay the scheme are inappropriate and would create an unnecessary burden for local authorities, which will continue to be subject to their existing equalities duty and so will have to take that fully into account in their decisions.
The public sector equality duty includes a requirement for local authorities to have regard to advancing equality of opportunity between people who share a protected characteristic and those who do not, and to the need to eliminate unlawful discrimination. That continuous process requires relevant decision makers in local authorities to consider equality issues. That has a bearing not only on the question of delaying the scheme, which would incur costs and difficulties, but on amendment 9, which would require local authorities to notify current claimants of the potential impact of the draft scheme. Local authorities are already required, by paragraph 3(1) or proposed new schedule 1A to the 1992 Act, to consult on the draft scheme with such persons as they consider
“are likely to have an interest in the operation of the scheme”.
Furthermore, public sector bodies, including local authorities, are obliged to comply fully with the public sector equality duty.
Helen Jones
On a point of clarification, the Minister appears to be saying that local authorities have a duty to consider those with protected characteristics. The problem he is not grappling with is that if local authorities seek to do that in their council tax schemes—in respect of disabled people, for example—the cut imposed on the working poor will be even greater. Which mode of operation is he arguing they should undertake? Is he arguing that there should be equal cuts for everyone except pensioners, or that cuts should fall more on people who are in work?
Andrew Stunell
The Government have made it absolutely clear that that is a matter on which local authorities should take a decision. I remind the hon. Lady—she made this point—that it is open to councils to continue with the default scheme if they wish to do so; to look at other provisions in the Bill relating to discounts for empty and second homes; to take resources from other parts of their budget, which they could choose to do; and to scale back the benefits they provide in a scheme on which they have consulted.
Mr Kevan Jones
My hon. Friend the Member for Warrington North (Helen Jones) raises an interesting point. Clearly, many northern councils whose grants have been slashed have very little room for manoeuvre compared with Wokingham, whose grant has been increased. Does the Minister agree with the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who said that those in greatest need will ultimately bear the cost of the cuts? How can that be equal and fair?
Andrew Stunell
The hon. Gentleman has made his point. I should make it absolutely clear that, from the Government’s point of view, it is right for local councils to take account of the local circumstances in their communities and to draw up a scheme that they believe is appropriate for them. I again make the point that other measures in the Bill give greater discretion to local authorities on raising council tax on second and empty homes. The vast majority of local authorities potentially have a substantial stream of additional income, if they believe they will face difficulties because of the reductions in income resulting from this part of the Bill. The Bill has to be taken as a whole.
John Healey
The Minister has just said that the Government want councils to be able to draw up schemes to take account of local circumstances. Why then is he putting this funding noose around their necks by cutting the available money by 10% from the start?
Andrew Stunell
I dealt with that point a minute or two ago, when I pointed out that the UK-wide reduction announced in the 2010 comprehensive spending review of some £500 million—with an impact of approximately £440 million in England—was part of the Government’s deficit reduction programme. Of course that has implications, as Opposition Members have pointed out. We think that pensioners are the important group to safeguard, which is why we are putting the statutory safeguard in the scheme and saying that local authorities should have regard to the most vulnerable in their area when drawing up their schemes.
Nic Dakin (Scunthorpe) (Lab)
Will the Minister acknowledge that yet more demand and stimulus will be taken out of local economies as a result of the measure? Will not the Government then have to revise their borrowing figure yet again, and borrow even more than £150 billion?
Andrew Stunell
I think the hon. Gentleman has got that slightly topsy-turvy. We are ensuring that it will always be better to work and that it will always pay to work. One of the statements of intent sets out the Government’s view on how that can sensibly be integrated with universal credit, which will start in a year or two.
John Healey
How can the Minister say that? He talks about protecting pensioners. In Rotherham, there are 2,600 people who are in work but on incomes so low that they need the support of council tax benefit to get by, week to week and month to month. They will lose out as a result of this measure, and they will do so by significantly more than 10% of the overall cut, so how can the Minister piously say that work incentives matter to this Government?
Andrew Stunell
It would be interesting to hear the right hon. Gentleman tell the House how many of those 2,000 people received an income tax rebate as a result of the decisions taken by this Government. Indeed, I suspect that many of them will have been taken out of income tax altogether.
Andrew Stunell
At least the right hon. Gentleman acknowledges that we are giving with one hand. It is right for local authorities and local communities to take account of the circumstances they face, and I hope that the council in Rotherham will do precisely that.
Mr Kevan Jones
Is not the Minister making it quite clear that this is not about the reform of local government finance, but about deficit reduction? The point that my right hon. Friend the Member for Leeds Central (Hilary Benn) has just made is that those people might well have been taken out of tax, but they will now be hit by this measure as well as by housing benefit cuts. Furthermore, the poorest are the hardest hit by the VAT increase—a policy that he once believed in.
Andrew Stunell
The hon. Gentleman needs to take stock of just how much council tax benefit someone in band A in his local authority might be getting and compare it with the discount that they might receive through the raising of tax thresholds. He might then grudgingly have to agree that the situation is not as bad as he maintains.
Amendment 1 would require the Government to consult on regulations prescribing requirements for schemes. Of course external scrutiny of plans for the framework is important, which is why the Government have published the detailed statements of intent for the key regulations that will deliver the policy. We will publish further statements of intent at each stage, as necessary. That will provide an opportunity for us to engage with local government on the detail of our plans before draft regulations are produced, and give local authorities the key information they need to develop their schemes. There is no need for additional requirements to consult with local authorities, such as amendment 1 would impose. In addition, we are working closely with local government representatives to design the framework within which local authorities will be required to operate, including considering what—if any—provision needs to be made for how local authorities should prepare schemes.
Mr Raynsford
As I am responsible for the amendments, may I remind the Minister that the first of the two he described simply requires that there should be no reduction in benefit entitlement for pensioners. As he has already given that commitment to the House, how can he possibly object to that amendment?
Andrew Stunell
It is completely unnecessary. The right hon. Gentleman could have tabled an amendment that said today is Monday, and I would have resisted it on the grounds that we already know that. We do not need it.
New clause 7 was tabled by my hon. Friends on the Liberal Democrat Benches. It would introduce a premium on second homes that is an exact mirror of the Government’s proposal for the council tax premium on empty homes. The empty homes premium came from the Liberal Democrat stable and I am pleased that it is in the Bill. I am sure that my hon. Friends will be eloquent in supporting their proposition, but I have to tell them that the Government believe that it is right to invest heavily in bringing empty homes back into use, and that is why we are using the policy levers available to us. Certainly, there are difficulties in the second home sector; we fully acknowledge that and we fully understand the concerns that my hon. Friends have expressed.
Mr John Leech (Manchester, Withington) (LD)
I thank the Minister for addressing our new clause. Does he accept that there is a real problem with second homes in some parts of the country? If that problem does not decrease as a result of the changes, will the Government look again at measures to ensure that such areas are protected from a massive increase in the number of second homes?
Andrew Stunell
My hon. Friend makes a very good point. For some rural areas, especially tourist-focused ones, a significant fraction of the housing stock may be occupied—or perhaps unoccupied—as second homes, which makes it very difficult for those who live and work there to secure accommodation. I am sure he has taken note of our changes to the second home discount provisions, which give local authorities in those areas the opportunity to bring their council tax bills up to 100%. His new clause proposes a premium on top of that. I am sure that, in the years ahead, he and I will work jointly on proposals for a Liberal Democrat Government beyond 2015, and I look forward to working with him on that proposition.
Helen Jones
The Minister keeps referring to the right the Bill gives councils to increase the charge on second homes, as though all councils could gain a lot of money from that. Will he accept that in the poorest authorities, which will be hit hardest by the Bill—places such as Gateshead, Rotherham and so on—there is not an awful lot of second homes?
Andrew Stunell
I understand the hon. Lady’s point, but in Rotherham the funding gap is £1.8 million and the total value of discounts and exemptions granted by the Bill £1.9 million. To be clear, a 10% reduction for Rotherham is easily covered by the discounts and exemptions in the Bill. That is not true of every local authority, but it perhaps illustrates that there is a good deal of unnecessary trouble stirring by the Opposition. They are paid to do it, I understand that; but sometimes it is important to refer to the facts. In particular, I noticed that one of the leading financial officials on whom the Local Government Association draws for advice is the chief finance officer of Rotherham, so I am sure that those figures, which he submitted to the Department, are correct.
I am extremely sorry to have detained the House for so long, but I hope that I have provided a good foundation for the debate. The Government believe these to be important and significant reforms that will return power and responsibility to local government and take them out of Whitehall. We believe that is the right direction in which to head. I commend the Government’s proposals to the House and urge right hon. and hon. Friends and Members not to support the other amendments and new clauses.
Mr Raynsford
I draw attention to my interests as declared in the register.
This is a shocking example of how not to legislate. It is three months and 21 days since we completed a rushed Committee stage on the Floor of the House, and during that time, the Government have sat on their hands. Why, during that period, did we not have proper time to discuss the Bill’s very serious implications? Why did the Government not use it to publish the draft regulations that the Minister promised in the debate on 31 January? I remind him of what he said:
“I recognise, of course, that local authorities and suppliers need as much information as possible as soon as possible. For that reason, we intend to publish draft regulations while the Bill is still before the House.”
My right hon. Friend the Member for Wentworth and Dearne (John Healey) sharply picked up on that and asked the Minister whether he meant
“this House or the other House”.
The Minister replied:
“I am looking for a nod somewhere”—
he was clearly in need of guidance—
“but let us stick with this House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]
That was his commitment on 31 January 2012. As I said, three months and 21 days later we still do not have the draft regulations. The Government, belatedly and to cover their embarrassment, pushed out a series of positioning papers on 17 May—four days before this debate—rightly provoking anger and criticism in local government that it had not been given time to consider the detail far enough in advance of today’s Report stage to issue briefings. We had the worst possible example of the Government rushing the Committee stage, preventing proper scrutiny. I remember well the lack of detailed scrutiny, with a number of amendments simply not being called because of the lack of time. The Government then did nothing for three months and 21 days, and now they have come to this House without draft regulations. They should be deeply ashamed of themselves and should apologise to the House for the shambles they have made of introducing this legislation.
John Healey
I hesitate to disagree with my right hon. Friend, but I am not sure that they have forgotten it, because earlier the Minister said from the Dispatch Box that the scheme will somehow preserve work incentives. The whole design of the proposal, the framing of the legislation and everything the Government have published do not match the claims he has made from the Dispatch Box. They are hollow words that will hurt many people who are working at the moment and others who are not pensioners but who rely on the council tax benefit to help make ends meet, week to week and month to month.
John Healey
The Minister wants to intervene. Perhaps he will give the House the straight account of the figures for Rotherham, on which I challenged him five minutes ago.
Andrew Stunell
I was going to intervene on the right hon. Gentleman’s last point, but I am happy to respond to the other one as well. On the last point, it is absolutely not the case that the Government have made explicit anything relating to disadvantaging working recipients. On the contrary, the statement of intent—I appreciate that he might not have got to this section—makes it clear that it is important for schemes devised by local authorities to link with universal credit and preserve exactly that protection.
On the other point, Rotherham council, according to the figures it submitted to the Department, will lose approximately £1.8 million of funding, but the discounts and exemptions that it will be able to recover in future will amount to £1.9 million. That is all in the Bill before the House today. Whether the council chooses to join those two things together is a matter for it, but it is absolutely the case that, taking the Bill as a whole, the council will in fact have a greater capacity to meet the needs of the people it serves.
John Healey
The Minister has just told the House and me that, to run the new scheme from April next year, Rotherham will have available no less funding than it has during this financial year. I will look very carefully at the facts, and, if they match the Minister’s words, I will welcome them; if they do not, I shall demand that he puts the House straight and offers an apology.
On work incentives, will not the Secretary of State therefore use his powers under schedule 4 to specify that people in work must, and work incentives will, be protected as he proposes, and has pledged, to use them for pensioners? If that is the case, the Minister’s actions will match his words. If that is not the case, exhortations on the importance of local government schemes reflecting needs and not damaging work incentives will not be worth the paper of the circular on which they are sent out, because there will be no protections guaranteeing the preservation of work incentives until and unless the Secretary of State chooses to use his powers as he has pledged to use them for pensioners.
Until that point, it is reasonable for Opposition Members, who are concerned about the future of this support for council tax payments, to continue to press the Minister and to be concerned that non-pensioners are likely to bear a heavy cut in their current support. Those on low incomes who are not pensioners, but who would get the full council tax benefit under the current system, will, as the Barnsley advice network has told me, have to find 20% of their council tax bill from their basic income, whatever they earn, as councils try to make less go further.
The Minister is old enough, experienced enough and has been involved in local government long enough for this measure to sound a warning to him and his colleagues. This is the return of the poll tax—[Interruption.] There are a few groans from Tory Members, but let us remember that a 20% minimum payment expected of all people, whatever their means, was part of the flaw in, and at the heart of the unfairness of, the community charge a couple of decades ago. In practice, that is what we are building in for non-pensioners: a requirement to cover for themselves, whatever their income, about 20% of the council tax costs in their local area.
Given the way in which the measure will work for many, it is a return of the poll tax: rushed into law and rushed into practice, with a deaf ear to local government, to charities, to experts and to Members, who warn the Government, “You’re pushing too far, too fast with these changes.” I will return in a moment to the amendments on the legislation’s commencement tabled by my right hon. Friend the Member for Greenwich and Woolwich, but first let me do my job and introduce new clause 2 and the amendments that stand in my name.
With new clause 2 and amendment 2, I seek to challenge the Secretary of State’s powers over, and prescription of, the new council tax support schemes. My purpose is this: I believe that the House and local government require a justification for the inclusion in this Bill of such powers of prescription from the centre over the local, otherwise their removal from the Bill is justified. None of the arguments that I have heard from Ministers, on Second Reading, in Committee or today, justifies the extent of the centralised powers vested in the Secretary of State to design and to enforce a particular manner of council tax support scheme.
The Government claim that the reform is a localising one. If it is, they should localise the decisions on the design of, and procedure for preparing, the scheme. They should localise the decisions and let the local authorities that will run the scheme devise them, in the Minister’s words, to suit local circumstances.
Andrew Stunell
I should like to remind the House that, contrary to some of the wild assertions from the Opposition, the Bill represents a major step towards bringing power back to local government and local communities. The business rates retention scheme, the localisation of the council tax benefit system and the return of the power to set discounts and reductions in council tax for empty homes and second homes are all measures that the previous Government failed to introduce, notwithstanding a lot of hot air about what they might have done or would not do, as the case may be—
Mr Raynsford
On a point of order, Mr Deputy Speaker. The Minister has made a factually incorrect statement that I would not want to remain on the record without giving him the opportunity to reconsider it. I hope that he will therefore take an intervention.
Mr Deputy Speaker (Mr Lindsay Hoyle)
The right hon. Gentleman has pointed out that he believes the Minister’s statement to be incorrect. It is up to the Minister to decide whether he wishes to give way. I do not think that he is willing to do so at this stage, but I am sure that the right hon. Gentleman will try again.
Andrew Stunell
Thank you, Mr Deputy Speaker. I am sure that the opportunity to give way will arise, and I shall certainly do so in due course to those who think that there is anything to be said against our view that the Bill represents a significant localisation for local government and local communities. The return of business rates to local authorities, the capacity to set council tax without having capping limits set by the Secretary of State, and the transfer of the benefits system to local authorities are all significant measures.
I want to restate my point about the return to local authorities of the ability to set council tax discounts. If every local authority chose to exercise the changes that are being passed into their hands, that would generate for English local authorities a total of more than £400 million. There is no direct connection in the Bill, but I want to make it clear that, whatever might be said about the proposals in the Bill, that discount change will be of significant benefit to local authorities.
I shall deal with some of the points raised in the debate. The right hon. Member for Greenwich and Woolwich (Mr Raynsford) suggested that we ought to accept at least some of his amendments, simply because they were already in the Government’s plans. Well, it is because they are already in the Government’s plans that we do not need to accept them. Some of his other amendments were intended to dismantle the Bill and its provisions, but I made it clear that this is not just a localism measure but a component part of putting our finances right. At no point have we disguised the fact that localisation and deficit reduction are both involved in the proposals.
Andrew Stunell
I am happy to give way to the hon. Gentleman, even though he could not find the time to be present earlier.
Graham Jones
I am very grateful to the Minister for giving way. He keeps using the word “localisation”, but it is obvious that what he is doing is localising cuts. He has spoken about raising £400 million and about the empty homes premium and the council tax discounts. Why are central Government being prescriptive about such measures? Why are they stating that homes must have been empty for two years? Why will they not give local authorities the power to decide how long a home needs to have been empty in order to qualify for the empty homes premium?
Andrew Stunell
The flexibility on discounts will apply to all empty homes from day one, not just to those that have been empty for two years. The two-year condition relates to the empty homes premium, which is a separate provision that is being put in the hands of councils by the Bill.
The hon. Member for North Durham (Mr Jones) made some interesting points, but he did not seem to be aware that, whereas Wokingham has the capacity to generate £700,000 extra income, Wigan, which he mentioned specifically, has the capacity to generate £2.2 million from the discounts. If Wigan chose to implement those measures, that would completely offset the funding gap he talked about.
To be clear, much of the shroud-waving from the Opposition is completely misplaced. It was strange that the hon. Member for North Durham argued—although he tried to back out of it—for additional cuts in council tax benefit for pensioners, because he wants councils to have the flexibility to switch their spending on pensioners to others whom he thinks are more worthy of protection. That is a point of view, but it is not one that the Government share.
I have a lot of time for the right hon. Member for Wentworth and Dearne (John Healey). He served time in the Treasury, during which I believe he was party to the introduction of the 10p tax rate—[Interruption.] We all have skeletons we wish we could keep in the cupboard. When it comes to protecting the low-paid, it is this Government who have raised tax thresholds for low-paid people, many of whom are women, of course, and will take 2 million people out of tax over the next three years.
The right hon. Gentleman did get round to welcoming the localism measure, but—not for the first time—he wants localism, but not yet. The Opposition do not have a strong track record on localism, but they have realised just how important it is to the people we represent. They now pay lip service to it at every opportunity, but I see no sign that it goes beyond lip service to their agreeing to implement localism in practice. At every turn, they try to delay, dismantle and divert the successful attempts of the Government to localise decision making and give local communities the power to take decisions about their services.
I answered the right hon. Gentleman regarding Rotherham’s figures. He mentioned Barnsley, and its figures are an almost exactly equal balance, just slightly in favour of Barnsley, with £1.6 million in each direction. He also waxed lyrical about the new clause 2 single person discount. Some 29% of households are single person, and another 7% are single-parent households. I do not believe that he would want to put those people under additional pressure. The Government do not accept that new clause 2 is the way forward.
The right hon. Gentleman also made an interesting point, of the kind that only a former Secretary of State might make, about what would happen if a council tax referendum failed and the impact that would have on the scheme. The scheme that a local authority sets up by 31 January each year will have statutory force and cannot be changed for the following 12 months, so it would be required to be considered in any reduced budget. Of course, when a local council sets up its scheme, it will be with the full knowledge of its intended settlement. As I say, the right hon. Gentleman welcomes localism, but he does not want it yet.
I draw to the attention of the hon. Member for Warrington North (Helen Jones) one of the documents we published last week, “Localising Support for Council Tax: Vulnerable people—key local authority duties”, which sets out clearly the factors that a local authority needs to have in mind when it exercises its discretion and introduces a scheme. When she studies that, she will find that many of the questions that she raised are answered and her concerns are dealt with.
The hon. Lady commented on the introduction of the Welsh Assembly clauses. She will know from what the Government said previously that we took the time to consult with our colleagues in the Welsh Administration, and it is at their behest that the clauses take their present form. That is an example of the Government taking a measured approach, consulting with the relevant bodies and introducing proposals entirely in accordance with the Welsh Administration’s views.
The hon. Lady also drew attention to an amendment on consulting with those affected. There is a requirement on local authorities, when they have drawn up their scheme, to consult with those whom they believe will be affected. That clearly will involve a consultation with all the groups the hon. Lady mentioned.
Mr Clive Betts (Sheffield South East) (Lab)
I apologise for not being here earlier, but I was at a Select Committee meeting.
My right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) apparently raised the point about the time local authorities will have to propose a scheme, consult on it—as the Minister has just described—and then get their providers of services, such as Capita, to design the schemes and implement them. In January, Capita raised concerns about the time constraints that it would face and its real worry that it would have inadequate time to do that. Is the Minister convinced that local authorities will have adequate time and that there will be no problems with the delivery of services to constituents?
Andrew Stunell
That is exactly why we produced the statements of intent—to give local authorities and their providers the longest possible time to understand how they might best design and develop a scheme. That is also why we have provided a significant sum of money to assist them in doing that.
The hon. Member for Warrington North also asked about criminal offences being created by the Bill. The Social Security Administration Act 1992 creates several criminal offences in relation to council tax benefit, including an offence of dishonestly making a false statement and one of knowingly making a false statement for the purpose of obtaining council tax benefit. There is a different standard of proof for each offence, as I suspect that the hon. Lady knows better than I do. Greater penalties apply if it can be shown that a person has acted dishonestly.
Helen Jones
Can the Minister explain what the position is when a person has not acted dishonestly? We have asked him several times. He has referred to acting knowingly and to acting dishonestly, but the proposed provisions refer to offences that can be committed other than dishonestly.
Andrew Stunell
I am surrounded by lawyers, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), is giving me helpful advice, but let me say that there are two separate categories, which I think the hon. Lady has just restated: dishonestly making a false statement and knowingly making a false statement for the purpose of obtaining council tax benefit. To underline a point I made when introducing the debate, those provisions mirror and replicate the existing situation as far as the council tax benefit fraud prevention scheme is concerned. Another relevant point I made earlier is that we are conducting a full review to ensure that what is put into the new scheme is wholly proportionate to the new situation.
Mr Raynsford
The Government are having great difficulty in convincing anyone that the Bill does what they claim. They claim it is a localising measure, but, as we have heard, there is an extraordinary lack of support for it on their own Back Benches. Indeed, so far not a single one of their Back Benchers has spoken in support of it.
Local authorities are the supposed beneficiaries, but they, too, are profoundly unconvinced. Let us listen to what they say. London Councils says:
“London Councils supports the principle of business rate retention, but has grave concerns about the proposed changes set out in the Bill regarding the way in which the system will function.”
It adds:
“London Councils is strongly opposed to the introduction of local council tax reduction schemes, as set out in Clause 8 and Schedule 4 of the Bill.”
The Local Government Association says:
“In principle we support the localisation of National Non-Domestic Rates…The principle of full business rate localisation, which also ensures fair treatment of councils in areas with weak economies, would be a powerful move towards localism…However, the government proposes to keep a top slice amounting to 50 per cent of business rates for the Treasury, taking taxes paid by local businesses for local services and using them for local services based on national priorities instead. That is not a localising policy and goes against the Government’s stated commitment to localism.”
If the Government cannot convince the people who are supposedly the beneficiaries of their reforms that they are acting in their favour, I am afraid they are in serious difficulty. The Government are, indeed, clearly in deep difficulty in this regard.
Incidentally, in the earlier debate I sought to intervene on one of the Ministers, the hon. Member for Hazel Grove (Andrew Stunell), as he had inaccurately claimed that the previous Government had done nothing to allow greater local discretion over discounts on second homes. I hope he will use this opportunity to put the record straight, because, as he will know, that is simply not correct. I am sure it was an unintentional error, however. The previous Government legislated to give local councils discretion to reduce the discount on second homes from 50% to just 10%. The Minister may wish to argue about the 10% figure, but there was good reason for deciding on it, and that was a clear extension of discretion to local government. It is therefore simply wrong to suggest that we did nothing in that regard. I hope the record will be put straight.
Andrew Stunell
If it helps the proceedings, let me say I am happy to acknowledge the factual account the right hon. Gentleman has given, and I am sorry if I gave a misleading impression earlier.
Mr Raynsford
I am very grateful indeed to the Minister for that gracious apology.
The first part of this Bill is a wasted opportunity, as it fails to deliver what people want in terms of a truly localist objective. The second part, which deals with the council tax benefit changes, is deeply flawed. The changes are damaging and will either cause serious hardship to recipients of council tax benefit or will put pressure on local authority budgets. It is not just the initial £500 million that will be a problem; increased costs may come later on as a result of further claims for council tax benefit, which may result from closures of local businesses or a further period of recession. That will be an extra risk for local government, which will get no support for central Government.
Finally, on the issue of administration, the Government are acting recklessly by rushing ahead without giving adequate time for proper preparation. It has been said repeatedly by those in the know, be they people in local authorities or their IT advisers, that the timetable is too tight to allow proper implementation. I will not go through the details, as we did so in the earlier debate, but it is reckless of the Government to ignore that and to claim that local authorities and others are happy with the timetable that the Government have set—they are not.
I shall end by quoting what local government has said on this. The LGA says:
“The tight timeframe for implementing this places an even greater burden on councils and we urge the Government to give councils the necessary time to do this”.
London Councils says that
“even under best-case scenario planning, the proposed implementation timetable may well be unachievable if council tax bills are to be sent out on time”.
That is not the action of a prudent Government; it is reckless and, I am afraid, it is typical of this Bill.
Question put, That the Bill be now read the Third time.