Local Government Finance Bill

Debate between Lord True and Baroness Hollis of Heigham

Tuesday 16th October 2012 Lords Chamber

[Lord True]

My Lords, I associate myself with my noble friend’s remarks, although perhaps not his final point. Those who have heard me take part in these debates will know that I, too, regret very much that the benefit was not included in the universal credit. I think there is very wide agreement in the House on that but, as my noble friend has pointed out, that is not what Parliament has determined, and we must address the situation that we find ourselves in.

As my noble friend Lord Tope also said, there is an expectation for local authorities to deliver reductions in public spending. As I have often said in your Lordships’ House, the state is overspending by roughly £14 million an hour and it is legitimate to ask local authorities to consider playing a part in addressing that problem. We are doing so and, as I have said before in these debates, I would have preferred the Bill to not be too prescriptive in this area.

I agree with the first part of this amendment, that:

“Nothing … shall prevent billing authorities retaining the provisions of the … council tax benefit scheme”.

My problem with the amendment is that it asks your Lordships’ House to make a frontal assault on the principle of deficit reduction. The second part of the amendment effectively gives a put option to any local authority in this country, including the prosperous, leafy authorities that the noble Baroness, Lady Hollis, referred to, such as West Oxfordshire, Westminster and the Royal Borough of Kensington and Chelsea.

If the House passed this amendment, the Government would suddenly have to pick up the costs of Westminster, West Oxfordshire and the royal borough, which are prepared to sustain the existing scheme out of their own resources. This amendment says that your Lordships’ House should ask Her Majesty’s Treasury to pick up those costs, which those boroughs are prepared to meet. Similarly, any local authority in this country, rich or poor, would be able to ask for resources from the Treasury, and the whole effect of seeking to make a reduction in the welfare budget in this area could be negated. That is the fatal flaw in this amendment.

[Baroness Hollis of Heigham]

I am puzzled by the noble Lord’s remark. He says that if this amendment were carried, it would mean that prosperous authorities such as Gloucestershire, Oxfordshire and some of the inner London boroughs we have mentioned—Wandsworth, Westminster and so on—would be getting moneys from the national scheme that they do not need because they are ready to fund it themselves. Of course, given the council tax rebate scheme, they could still fund it themselves from the 90% grant, but is it not the case that under the transitional arrangements they will be entitled to apply for money they do not need, which they will no doubt keep and which will go to their reserves? In fact, the very thing that he is deploring about this amendment is going to be embodied in the transitional grant arrangements.

[Lord True]

The noble Baroness presents another possible wrong to defend the particular wrong that I am addressing.

I am sorry that I was slow coming into the Chamber when the noble Lord, Lord McKenzie, started his speech; I heard it on the monitor and I agreed with many of the things he said about the timing of this announcement, which is also implicit in what the noble Baroness has said. But I return to the fundamental point that if your Lordships pass this amendment, the Royal Borough of Kensington and Chelsea can ask the Treasury to go on funding the scheme as it now is. The noble Baroness thought it was absurd that those leafy boroughs should be funded, and I rather agree.

The other thing one has to accept is that surely there is somewhere between no saving from council tax benefit, which is the potential position if this amendment were passed and every local authority put that upon the Treasury, and the extent of saving, the problems of which we have heard described; there must be some amount that can be saved under this heading, because I believe—I do not have the figures before me—that spending on council tax benefit doubled during the Administration of the party opposite. I do not accept that there cannot be reductions. Therefore, because of the technical flaw in the second part of the amendment and because I think that there is scope for making reductions, I cannot support the amendment if it is put to a Division.

Local Government Finance Bill

Debate between Lord True and Baroness Hollis of Heigham

Wednesday 10th October 2012 Lords Chamber

[Lord True]

My Lords, I do not know whether my noble friend intends to support this but I think that if she did it would be very odd. We have just heard from her a clear statement of the direction of travel in which the Government wish to go. She sees 50% as the minimum and we are going further. Given the state of the economy that we have inherited and still have—and there has been agreement across the House on many things during the course of the Bill—limiting, in effect, the discretion of any Government in the future in this way in respect of local government finance would probably not be, if I may borrow the word, a prudent step. Therefore, if the party opposite presses this amendment, I certainly hope that my noble friends will not be gulled into that Division Lobby.

[Baroness Hollis of Heigham]

In that case, what does localism mean if its revenues are available for raiding by central government when it chooses?

[Lord True]

My Lords, I have made a general statement of principle about public finance. I do not think that anyone who has heard my contributions to debates on this or other Bills relating to localism would doubt that I am very strongly committed to it. I would like the direction of travel to be as my noble friend has indicated. I am simply saying that ring-fencing local authority provision for ever in this manner does not seem an appropriate way to tie the hands of any future Chancellor from whatever party.

Local Government Finance Bill

Debate between Lord True and Baroness Hollis of Heigham

Thursday 5th July 2012 Grand Committee

[Baroness Hollis of Heigham]

I support my noble friend’s amendment. I am confident that the Minister will not reproduce the rather unwise remarks that we sometimes get on the Floor of the House that in seeking to cut the deficit you cannot afford to spend money on social care. There are sources of finance that could be available to government—any Government, including mine, which could and perhaps should have done this as well so I am not making a partisan point—which would adequately fund the Dilnot proposals on pension tax relief, about which some of us know something and others know relatively little. I may be in the second group.

At the moment pension tax relief is £30 billion and the difference between the standard rate and the higher rate is £7 billion. In the past we weaned the country off mortgage tax relief, first by bringing it down from higher rate to standard rate—that was done by a Conservative Government; the noble Lord, Lord Lamont, I think, but it may have been the noble Lord, Lord Lawson—and subsequently it was abolished altogether. The point about this is that in all our thinking about funding people’s long-term savings and their ability to cope with long-term care and so on, we think there is something called work and something called retirement, and that you should save from the one and transfer it to the other. We have to start thinking much more about people’s longevity, which is a good sign, and moving money from work to early retirement and from early retirement to later retirement; there are three categories.

If you were to ring-fence the money that is currently spent on higher rate tax relief down to lower rate tax relief, which is enjoyed by higher rate taxpayers on their way in, even though they pay only lower rate tax on the way out, it would be redistributed within the pensioner community from younger pensioners in their 60s and 70s to that same group of pensioners as they age into their 80s and 90s. For what it is worth, it would also redistribute, to some degree, from the better off to the poorer. As far as I am concerned, it would hit every winning duck that we want to hit: we would make pension tax relief fair; we would redistribute within the pension community in a ring-fenced way; we would redistribute from the better off to the poorer; and we would, I am sure, be able to commend it to the public in terms of fairness, because most people will be postponing income they might have got in their 60s and 70s to be able to have it in their 80s and 90s.

Before the Minister says that we cannot possibly do anything about this given the deficit—and I realise that this is for HMRC and the Chief Secretary and so on to think about—I would like to put this into play because I would be very sorry indeed if the proposal coming out next week was put into the long grass on the grounds that there can be no funding available and therefore we have to struggle on from an interim ad hoc base, as we are doing at the moment. There is a way if there is political will, and I am quite sure it is the sort of proposition that could command support right around the House and from all political parties. It would be fair, decent and affordable and it would give people security.

[Lord True]

My Lords, are the policy prescriptions just put forward by the noble Baroness supported by her Front Bench?

[Baroness Hollis of Heigham]

My Lords, I am giving only my own views at the moment. I have not sought the views of my Front Bench on this. I am coming out of the pensions world on this and my concern about the unfairness in pension tax relief and the way that we could link this to the funding for long-term care that my noble friend has mentioned. But certainly not; they are my views.

[Lord True]

My Lords, I am aware of the noble Baroness’s views and, for the enlightenment of the Committee, I thought it might be interesting to know whether they were the views of the Labour Party Front Bench as well.

[Baroness Hollis of Heigham]

I have not put them to the Labour Party Front Bench.