Lord Tope
Main Page: Lord Tope (Liberal Democrat - Life peer)Local Government Finance Bill
Lord Tope Excerpts“Power to make grants discretionary
(1) Section 11 of the Local Government Finance Act 1992 (discounts) is amended as follows.
(2) After subsection (5) insert—
“(6) Notwithstanding subsection (3) above, the billing authority shall have discretion to set the appropriate percentage at a rate between 20 and 25 per cent.
(7) In subsection (6) above, the discretion to set the appropriate percentage at a rate other than 25 per cent shall not be exercisable for pensioners.
(8) In subsection (7) above “pensioner” means a person who has attained the qualifying age for state pension credit.””
Lord Tope
My Lords, Amendment 2 stands in my name and in the names of my noble friend Lord Shipley and the noble Lord, Lord Jenkin of Roding. It has been drafted by the Local Government Association; reflects exactly the policy of the Local Government Association; and has the support of all four groups on the Local Government Association.
We had a long debate on this issue on Report. As the matter was explained fully at that time, I do not intend to go through all of it again today. The amendment differs from the amendment that we debated on Report last Tuesday in two important respects, and, together, those two differences meet the objections that were raised in that debate. First, the amendment would restrict to only 5% the discretion given to local authorities to vary the single person discount. At present that discount is 25%; under this amendment, it could not be less than 20%. Secondly, everyone of pensionable age would be exempt from the change. They would all remain entitled to a 25% single person discount, as at present.
In her reply to last week's debate the Minister commented that she herself received and welcomed the 25% discount. I can reassure her that if this amendment is successful, she will continue to receive the 25% discount, which I know she will welcome.
Perhaps rather more significantly, the Minister also pointed out that an unrestricted amendment—an amendment which would have allowed local authorities, in theory at least, to get rid of the single person discount altogether—could represent a potential tax increase for more than 8 million people. Although I do not think that that would ever have happened, this amendment will ensure that it cannot happen. A very high proportion of people currently in receipt of the single person discount are pensioners and will therefore be exempt from this, and not all local authorities will need or choose to vary the current discount. Therefore, the number facing a very small tax increase will be very significantly less than those maximum figures quoted in the previous debate on this subject.
Nearly all those people will also have benefited from a freeze in their council tax for the past two years, and they will probably do so for a third year, next year. I do not pretend for a moment that this is easy or welcome—there are many in receipt of the single person discount for whom any tax increase will be difficult—but we are talking about a few pence per week from people who are already paying council tax. Surely that is better, or less bad, than local authorities having to take rather larger sums, and certainly much larger sums as a proportion of their income, from the poorest members of their community, many of whom have not previously had to pay any council tax.
The Bill already gives power to local authorities to vary the discounts that they give on empty properties and second homes. Although that is welcome, in many areas it is nowhere near enough to bridge the gap created by the 10% reduction—or as my noble friend Lord Shipley said in the previous debate, more likely, in effect, the 12.5% cut in funding for council tax support. Areas with large numbers of claimants tend not to have many second homes. If the Government are so willing to allow local authorities to vary these two discounts, why has the Secretary of State so resolutely refused even to discuss allowing them to make a small variation in this third discount scheme? The Local Government Association calculates that if this limited discretion were given to local authorities, all but 14 local authorities would be able to meet the funding gap fully without making any charge on claimants.
If the amendment is not agreed and implemented, the LGA states that 90% of the schemes currently being consulted on by local authorities intend to charge working-age claimants generally between 15% and 25% of their council tax. I suspect that the funding scheme announced last week by the Government will not make a significant difference to that, because local authorities will find that the costs of implementing it for one year only will make it simply not worth doing. We will see, but I doubt if any local authority will charge council tax claimants because it wants to; it will do so because it has no choice.
Baroness Hanham
My Lords, I thank those noble Lords who have returned to the battle on this front, and I thank the noble Lord opposite for indicating where his party stands on this.
It might be worth reminding the House why we are in the position that we are in. We still sit on one of the largest deficits that this country has ever seen, and everything and every aspect is having to make a contribution to that. If we had not inherited that financial situation, we would not be here.
Let us be clear: the amendment is a tax rise on millions of single people, even in the reduced form that now comes before us. An amendment to give local authorities complete discretion over the level of discount was discussed for over an hour and a half on Report, but ultimately was not pressed. The Government were opposed to any change in the single-person discount then, and our position has not changed now. The single-person discount was part of the regional council tax system. It was part only of the system, not of anything to do with what was then council tax benefit. It is correct that it was not included or considered as part of the consultation on changes to support for council tax benefit. Noble Lords have said, “Well, that doesn’t matter; we can produce this in this House if we wish to”, and of course that is absolutely right—that can be done. In broad terms, though, the country has not been asked about this, although we have heard views about it. The noble Lord, Lord True, is correct in what he said; it goes back to the fact that this was not part of the original local government scheme.
The single-person discount exists because, by and large, single-adult households make less use of local authority services. I accept that there are some who do not—those who need adult support or social services support—but by and large single people, and I return to the fact that I am a beneficiary of this particular discount, do not make as much use of the facilities.
I do not want to repeat my arguments from Report but I want to be clear on the impact that the amendment would have. Changes to the single-person discount would be, as I have already said, a significant tax increase. Although the amendment clearly excepts pensioners, it would still hit other groups such as single parents and low-income people of working age. It is important, perhaps, to be aware that in October 2011—the noble Lord, Lord McKenzie, came to this conclusion in a different way—more than three-quarters of the claimants of single-person discount were in dwellings that were banded A to C. Only one-third live in band A and only 10% of such claimants live in properties that are band E, so the effect would fall disproportionately on the people who lived in the lower-cost accommodation—and I suspect that most of those would be people who by definition would not be considered to be very well off. So the amendment would tax those whom noble Lords are seeking to help.
Noble Lords have previously commented on the amount of revenue that may be raised by reducing the rate of discount. I would like to sound a note of caution. People losing their single-person discount under this amendment may ultimately find themselves in greater need of help with their council tax. This would mean curtailing the impact of any additional resources, putting more people in need of council tax support and creating unintended pressures on councils. I am sure that the House would agree that it is not quite the outcome for this amendment that would be expected or hoped for.
Finally, without a direct correlation between distribution and financial need, it is not at all certain that the limit of new funds that the amendment would realise would indeed help those councils which the noble Lord is trying to support—another point which the noble Lord, Lord McKenzie, made very strongly in his comments.
I have made it clear from the outset that the Government will not be supporting this tax rise on several million people. I tell the House that the Government will not be able to support this amendment.
Lord Tope
My Lords, I am of course grateful to all noble Lords who have spoken in this debate, particularly to those who have spoken, from all sides of the House, in support of the amendment. I pay particular tribute to the noble Lord, Lord Best, who has indeed fought this fight, not to make policy on the hoof, as the noble Lord, Lord True, suggested, but who has tried to bring it about for many, many months. The noble Lord, Lord Best, will understand if I say that his view that it is not worth entering the race if you are bound to lose is not shared by most Liberal Democrats. Similarly, we are grateful to him for his offer of a protest vote. That is something that we are also used to gratefully receiving; we sometimes put them to surprisingly good effect, as I hope that we will today.
The Minister has said, quite rightly, that if this amendment were passed, it would be a tax rise for some. It would. It would be a small tax rise where local authorities chose to vary the single-person discount, and not all of them will do that. It would be a small tax rise for those in receipt of the full 25% discount.
The cut in funding for council tax support being implemented in the way that most local authorities are having to do so is itself a tax rise for the people least well able to afford it. I do not pretend for one moment that the amendment is ideal, the perfect solution, the cure-all. Of course it is not. It is what the noble Lord, Lord Smith, quite rightly described as the least worst option. It is the least worst option that is before us tonight. We have heard speeches in support of it from all sides of the House tonight. I hope very much that we will see them translated into support.
I find it inexplicable—I have used that term before—that the Labour Party is choosing today to vote with the Conservative Government and against the amendment.
Lord McKenzie of Luton
Will the noble Lord tell me what he and his colleagues have been doing for the past two and a half years?
Lord Tope
My Lords, as the noble Lord never ceases to remind us, we are actually part of the Government, and willingly so. We have been lobbying for a long time on this issue. I do not lightly bring an amendment to the House which I know that my coalition partners cannot agree with. I do so because we are at the very last stage of the Bill. This is the last opportunity that any of us in this House have to do something about it. I am now going to give the House the opportunity. I beg leave to test the opinion of the House.