Mike Hancock
Main Page: Mike Hancock (Independent - Portsmouth South)Local Government Finance Bill
Mike Hancock Excerpts(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Raynsford
My hon. Friend makes a very good point. Frankly, I am very surprised indeed that Lib Dem members of the coalition are going along with this—[Interruption.] I am pleased to hear the hon. Member for Portsmouth South (Mr Hancock) say what he does; I hope he will demonstrate that in the Division Lobby later.
I am surprised that Conservative Members who have experience of local government, and who must be well aware of the pressures that the Government’s measures will impose on their local government colleagues, are prepared to support such a draconian and ill-thought-out package. Cutting 10% of the cost of council tax benefits at the outset is bad enough, but obliging councils to take the downside risk of a further rise in costs in-year, and imposing conditions that will inevitably force heavier cuts on some categories of recipient, adds insult to injury.
To cap it all, imposing an unreasonably tight implementation timetable without allowing adequate time for local authorities to prepare demonstrates a cavalier disregard for the interests of those authorities, which, not surprisingly, are demonstrating growing alarm. The Government should pause to think about why local authorities, which ought to be welcoming a measure whose intention is localist, are expressing such grave reservations about the implications of this scheme.
Mr Mike Hancock (Portsmouth South) (LD)
Let me first declare my interest as one who is still a member of a local authority.
Is the right hon. Gentleman, like me, aware that some authorities have expressed the fear that they will have to make cuts in this year’s expenditure to prepare the ground for the implementation of the measure? Once again, the Government are showing no semblance of care about what they are imposing on such authorities.
Mr Raynsford
The hon. Gentleman makes a very good point. Any prudent local authority treasurer who takes account of the element of risk that is being transferred will inevitably say that there must be cuts in addition to those required by the Government, to provide a cushion against possible circumstances that cannot yet be anticipated.
Amendment 79 requires local authorities, in planning their council tax rebate schemes, to start from the premise that, all other factors being equal, the overall cost of the new scheme should be no more and no less than the cost in the previous year. In other words, it requires a neutral baseline that avoids arbitrary cuts, but also protects Government against the risk that local largesse will increase their own costs. That arrangement is utterly fair, and will operate in just the same way as the arrangement that we all agreed was appropriate for the introduction of the localisation of the retention of business rates.
The system that I propose will not inhibit local authorities from making changes in the current rebate scheme to reflect their local circumstances or priorities. Provided that the overall effect is cost-neutral, they will be free to make as many changes as they wish. This is a truly localist approach, allowing local discretion without imposing unreasonable and arbitrary central diktats.
Amendment 80 refers to central Government support for local expenditure on council tax rebates. It requires the Secretary of State to ensure that local authorities receive no less subsidy than they would have expected under the previous scheme. Again there will be a neutral baseline: a starting point at which the Government will not be exposed to higher costs, but equally local authorities will not be exposed to the risks that are implicit in the Government’s proposals. Amendment 78 is designed to cover the risk of unforeseen increases in expenditure in-year if the number of claims increases by making it clear that authorities may apply for reimbursement of those costs.
Mr Betts
Of course it will, unless the Government are saying that those people should be exempt as well. To what extent will councils be obliged to take account of the tapers in universal credit in the system they devise? Will Ministers give a clear answer on that? If councils have to take account of it, full stop, that will really throw the onus back on attacking benefits and on reductions for the unemployed. Is that the situation? Is that what Ministers are trying to achieve?
The LGA has done some calculations to the best of its knowledge and information. It says that because of the exemptions for pensioners and others for whom the Government say local authorities cannot make reductions under the scheme, those who are left whose benefits can be reduced—the 1.3 million claimants out of the 5 million who currently claim—will lose, on average, £320 each a year. That is £6 a week being lost by people who are already on low incomes—that is why they are claiming benefits in the first place. That will be on top of any other benefit losses from any other benefit reductions the Government intend. Have the Government analysed whether that £320 figure is right? Do they contest it?
Mr Mike Hancock
The information from the LGA is very helpful, but it is an average. In some areas, the cut will be far worse than £6 a week because the number of pensioners and others who are protected will be greater. In some local authority areas in my constituency, people could lose upwards of £10 a week.
Mr Betts
The hon. Gentleman is absolutely right—the figure of £320 a year or £6 a week is an average, and there will be people who lose significantly more than that. Have the Government done any calculations to show whether the LGA figure is right or wrong? If it is wrong, will they tell us what they believe the correct figure to be? Have they done any analysis regarding the multiple withdrawal of benefits and situations when the council tax benefit reductions that come as a result of this scheme are laid on top of any other benefit reductions that hit the same families? Have they done any calculations of the total losses that such families may face?
My right hon. Friend the Member for Wentworth and Dearne (John Healey) was absolutely right the other day when he said that local authorities are getting a hospital pass here. They are getting a Government scheme with complications, in terms of the totality of the financial arrangements, of which most people will have no understanding. All that people will see is that their council’s scheme will impose cuts in their benefits. It will be councils that get the blame, and no doubt that is where Ministers will firmly put the blame, but it will be grossly and totally unfair.
Another problem is the time scales involved, as my right hon. Friend the Member for Greenwich and Woolwich has pointed out. Local authorities will not be able to work at this over a period of time. They have just over 12 months in which to consult on a new scheme, introduce it and explain it to people in their area. There is also the issue of the technology that will come with it, and we know that the technology in new systems being brought in quickly has a habit of going wrong. So not only will many people be faced with the abrupt introduction of these changes affecting their income overnight, but there will be major failings in service delivery as systems do not deliver on time and people end up without any benefit at all.
Helen Jones
My right hon. Friend is again absolutely right. The Government are a little schizophrenic on this, saying to local authorities, “Don’t build up big reserves,” while at the same time building instability into the system, which will require local authorities to build up bigger reserves.
Mr Mike Hancock
I agree entirely with the point made by the right hon. Member for Wentworth and Dearne (John Healey). The real problem is that local authorities that cut their reserves will be penalised by their district auditor, who will say that cutting reserves below a certain level is not stable local government. The right hon. Gentleman is right to suggest that the Government cannot have it both ways. This is putting pressure where it is simply not needed.
Helen Jones
That is a very fair point. The problem is that instability is being built into the system. My hon. Friend the Member for Sheffield South East (Mr Betts) said that one of the things about local government finance in this country is that it has always been relatively stable and did not have those risks—
Mr Kevan Jones
It is a pleasure to serve under your chairmanship, Mr Crausby.
What we have seen from the hon. Member for Mid Dorset and North Poole (Annette Brooke) is a classic Liberal Democrat tactic: sit on the fence, give an impression—obviously with a leaflet out this weekend—of how she opposes and spoke against the proposal, and then go along and vote with the Government. I remind her, however, that if she and her Liberal Democrat colleagues choose to vote against the Bill, this Government will not get it through. Although she raises articulately the issues that will affect her local council, she cannot get away from the fact that, when these draconian proposals come in and affect many councils, including her own, there will only be one person whom they have to blame, and that will be her for voting for them.
I hope that, come the general election, people reflect on that point, because this is not about the Conservatives doing nasty things to Dorset, but about the Conservatives and Liberal Democrats doing nasty things to local government, and the hon. Lady is taking part in it. I am sorry, but I am not prepared to see her shed crocodile tears for the proposals and then troop through the Division Lobby. If she believed in what she was saying, she would vote against the measures and stand up for local government, a sector that I understand she comes from herself.
It was said last week that what local government requires is stability, and it does, but this is another example—we had one last week with the localisation of the business rate—of massive instability being introduced to local government. My hon. Friend the Member for Sheffield South East (Mr Betts) said that there was nothing wrong in principle with devolving council tax benefits to local councils, and I totally agree, but if it is brought in with a 10% cut, as the Bill proposes, and on the current time scale, it will have a massive effect on many local councils and individual recipients of council tax benefit.
Mr Mike Hancock
I do not agree with the benefits being devolved to local authorities, so what does the hon. Gentleman, who is arguing against localising the benefits under discussion, see as the real benefit of doing so?
Mr Jones
I would have no problem with a national scheme that was administered locally. The current system with the DWP is cumbersome, but I agree with the hon. Gentleman, because the Bill is going to create an absolute technicolour dreamcoat of schemes throughout the country, including some next door to one another, as we have just heard, in Poole, where two local authorities could have two completely different schemes because of their local circumstances.
However, this is a cleverly construed proposal, and we have to keep exposing what the Secretary of State is up to, because he talks about the devolution of decision making, which is what the measure is, but it is the devolution of decision making—with blame. He is instigating a cut of 10% in council tax benefits and saying to local councils, “Right, you decide how it will actually be administered.” Then, when they take those tough decisions, he will stand back and say, “It’s not my fault, it’s the local council’s fault.” I remind Government Members that that will include Liberal Democrat and Conservative councils. They will have to make tough decisions. The Secretary of State is prepared to hide behind those councils. I accept that he has written off most Liberal Democrats and does not care about them, but the effect will also be felt by local Conservatives.
Amendment 79 is actually quite modest. It states that if we are going to introduce the new scheme, we should start on a neutral basis. It asks for a level playing field so that everybody knows where they are, with no 10% cut. We will talk later about time limits. The fact that this all has to be done by 31 January 2013 will scare many local authority treasurers to death. They are having to second-guess what contingency they will need to bring the scheme in.
The Bill makes no assessment of the differences between councils. Councils with a large number of council tax benefit recipients, which are mainly in the north of England, will not only have the problem of administering such large numbers of people, but will be disproportionately affected. I will give some examples. County Durham has 63,494 council tax benefit claimants, which is 15% of the population. That costs £55.1 million. In comparison, Hart in Hampshire has only 3,029 council tax benefit claimants, which is 4.2% of the population. That costs a mere 3% of expenditure. Likewise, the famous Wokingham, which we cited last week, has only 5,159 claimants, which is 3.9% of the population. That makes up 5.3% of the council’s total expenditure. The 10% cut and the administrative nightmare of bringing it in will be a lot easier to manage for councils with a small number of council tax benefit recipients.
The Secretary of State talks about localism and devolving matters to local councils, but if we read the Bill carefully, we see that he has kept back powers for himself. If he is not happy with the scheme or a council does not implement it by 31 January 2013, he has the power, by order, to implement it. It is not clear whether he will intervene in that way if he is not happy with how a council implements the scheme.
The hon. Member for Mid Dorset and North Poole is correct that the problem with the scheme is that it comes with the 10% cut. It is important to look at the people who are in receipt of council tax benefit. The myth peddled in the media and by the Conservative party is that they are largely people on benefits. The statistics to September 2011 show that 5.9 million people are in receipt of council tax benefit in Great Britain. Of those people, 2.2 million are pensioners, who will not be affected by the scheme. Of the people who will be affected, 1.9 million or 33% are in receipt of standard non-passported benefits—that is, they are not claiming benefits—and the remaining 3.9 million or 67% are on various benefits. Of the people on benefits, 1.3 million receive income support, 600,000 receive jobseeker’s allowance, 300,000 receive employment and support allowance, and 1.7 million receive pension credit. A large number of people, through no fault of their own, will see their incomes squeezed.
John Healey
It is a real pleasure to serve under your chairmanship, Mr Crausby.
I rise to support the amendments and new clause in the names of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) and my hon. Friends the Members for Sheffield South East (Mr Betts) and for Warrington North (Helen Jones). The problem, which my right hon. Friend the Member for Greenwich and Woolwich hits on directly in his amendment 79, is that council tax reduction schemes will be undermined from the start by the 10% funding cut and the constraints that the Government are putting in place to compensate for the problem that it will create.
Throughout the part of the Bill dealing with council tax, we consistently see hallmarks of the scheme that run contrary to the Government’s declared aims. It shows a lack of true localism and a transfer of considerable financial risk from central Government to local government, which promises to have a severe impact on support for many current recipients of council tax benefit. The Bill also sets out an unrealistically and unfeasibly tight time scale.
The Secretary of State is more sophisticated than the image and manner that he often cultivates would suggest, but his politics on this matter are brutal and brutish. In my view, the intention is simply to transfer to local authorities the financial risk of the increasing cost of support for council tax costs. The Government want to get local authorities to take the blame for the cuts being imposed by central Government.
Financial risk is crucial for any local authority when it considers the future. Authorities are being asked to take on the new risk without the flexibility to allow them to discharge the responsibilities that they are taking on fairly, effectively or appropriately for their area. Whether the 10% cut leads to pressure on councils’ funding, pressure for them to find cash from other sources or greater cuts for those who are not protected will depend on how the cut is distributed across local authorities, local decisions on the design of the scheme, the make-up of the population within an authority’s area, the proportion of people who are protected by central Government and the degree to which the move from a council tax benefit to a council tax discount encourages take-up among people who are already entitled to support but do not claim it.
Central Government would not make this move if it affected themselves. As my hon. Friend the Member for Warrington North said, they are transferring what is currently annually managed expenditure—the current costs of the council tax benefit scheme are driven by factors that are not under the control of councils—to funding that is covered by the local government departmental expenditure limit. That will put an unrealistic and unfair funding noose around the neck of local government, because the year one base level will involve a 10% cut. My fear is that what could and should be a good move for local government and the people it serves—a locally designed council tax support scheme—is damaged and discredited before it starts by the design of the scheme.
Mr Mike Hancock
May I say how nice it is to see you in the Chair, Mr Crausby?
I wish to raise my concern about the fact that we are approaching 7 o’clock and will hardly get halfway down the selection list. The time available is totally inadequate. Goodness knows what the Government were thinking about, giving us just three days in Committee. It is an absolute travesty. I only hope that they will give us at least one whole day, and possibly two, on Report to allow debate on many of the matters that have not been discussed in Committee.
If the House is to do justice to the Bill, we should at least get a chance to discuss some of the very important amendments that have been tabled. I see them not as wrecking amendments but as helpful, creative amendments that would show the Government the strength of feeling in the House. Legitimate concerns have been raised from both sides of the House on this group of amendments alone, and if I were the Minister leading the Bill I would like to give the House more time to discuss them properly. If we are not careful, we will end up with a dog’s dinner, which cannot be right or fair to local authorities.
The most important issue in this group of amendments is raised in new clause 11, with which I agree entirely. It gets to the very essence of what the Committee has discussed on previous days. It is about the stability and sustainability of local government and its ability to stay clearly focused on its task. Support for new clause 11 is essential to give local authorities a fair chance of implementing the scheme.
The Government have expressed no clear and positive view about what they can do to help local authorities. I ask Ministers what is wrong with new clause 11 if they believe in fairness and in giving local authorities a proper opportunity to get the scheme right. Who will benefit if it is got wrong? No one, least of all the people who claim benefits. Most of the blame will fall on local authorities, and once again we are going down the well trodden path whereby the Government decide to disrobe themselves of their responsibilities and pass them off to local government, but forget to put the resources in place to help things happen.
I do not suppose that at the end of this debate the Minister will dish out to Members a scheme that has already been concocted, so that they can take it back to their local authorities and say, “This is the scheme we want you to use. We’ve paid for it, we’ve got it in place, and all you’ve got to do is tweak it a little. It’s tried and tested, and we’re prepared to give it to you.” That is not going to happen, is it?
Mr Kevan Jones
Does the hon. Gentleman not understand that the Secretary of State is a highly political individual who knows exactly what he is doing? He knows that he is going to save money by making this change, and he will give constituents in Portsmouth and Durham the impression that it is nothing to do with him but is down to the nasty councillors who are making the tough decisions.
Mr Hancock
The Secretary of State will be making a grave error of judgment if he thinks he is going to get away with that in Portsmouth, because I will be telling people there loud and clear where the responsibility for the change lies. Above all, I am disappointed that a Secretary of State who was groomed in politics in local authorities and who, having led one, has a fundamental understanding of their problems is not being more responsible towards something that I thought he cherished and cared for. Like the hon. Gentleman, I am disappointed, but I can assure him that people in Portsmouth will not have any illusions about where the blame lies.
Portsmouth is a local authority that is making reductions, and many hon. Members’ local authorities are in the same position. People are losing their jobs, and here we are contemplating another burden that will be placed on them with not even an indication of what it will cost to put in place. I know from bitter personal experience, having led a local authority, how much money can be lost when authorities get the wrong advice on a system. Hampshire county council squandered literally tens of millions of pounds over a 20-year period on schemes that failed in one way or another, and I do not want that to happen again.
Where is the inspiration that we ought to be getting from the Minister about how we can resolve the problem easily? Where is the offer to meet the House halfway on this issue? Nowhere. That is disappointing. If there are to be localised benefit systems, I want us to find a way to get a scheme in place in good time, but in proper time. That cannot happen in the time scale before us. If we are to have a change in the system, it must be seen to be fair and properly implementable. The scheme cannot punish those who desperately try to get into work but are on low pay.
Mr Syms
I am listening carefully to the hon. Gentleman’s passionate speech. Clearly, apart from potential costs for software and computers, a scheme will have to be drawn up and publicised. All the schemes will be different, which means that there will have to be a lot of publicity locally to ascertain what people are entitled to. We need some answers.
Mr Hancock
I agree entirely. Some hon. Members like me, have close-knit communities that are right next to communities in other local authorities. People on one side of the road will have a different scheme from those on the other side. It will be horrendously difficult to explain why one scheme prevails in Fareham and another in Portsmouth. Indeed, the hon. Member for Meon Valley (George Hollingbery) will have great problems, given the different districts that his constituency abuts. I therefore ask Ministers to consider seriously coming back on Report with something that shows they have heard the cry from local authorities. It is heartfelt and not just for effect. The Local Government Association has not done all that work to sustain its arguments without a great deal of effort.
In the spirit of trying to be constructive, I hope that if we are to have a day—or even two—on Report, creative thinking in the Department will soften some of the provision’s effects. Otherwise, I shall vote against it not only tonight but on Third Reading.
Mr Jones
My right hon. Friend makes a good point. The Bill is being rushed through. If we were considering a root and branch, proper review of local government finance, we could examine my right hon. Friend’s suggestion. I suspect that the Government do not want to do that because it affects a lot of pensioners and they think that pensioners may be more interested in voting Conservative than not. For the same reason, they will not go anywhere near revaluation of domestic properties.
My hon. Friend the Member for Warrington North made a very good point about the comments of the Minister for Housing and Local Government, who seems to think that people can somehow magic up economic development in local areas to increase revenues. That is supposedly the entire basis of the Bill: that councils will be free to create extra demand instantly through economic development. It is a damn sight harder to attract businesses to the north-east than it is to the south-east of England.
There is a problem with who is consulted about the scheme. My hon. Friend the Member for Warrington North made a good point about the mess caused by the system having to be tackled by the charitable sector, local credit unions, which will have to sort people out when they get into debt, local branches of Age Concern, citizens advice bureaux and others. It is only right that they are statutorily consulted on the drawing up of the scheme. If they are not, at the end of the process they will have further burdens because they will have to try to sort out the mess created by the Bill—many are having their grants cut already.
I am sure the Minister, in his feeble way, will refuse to accept the amendments because the Bill is part of a strategy. He is part of that strategy, even if he does not understand it. In effect, the Secretary of State wants to give as many freedoms as possible to local government so that he can wash his hands of it and stand up to the electorate and say, “It’s your local council’s fault.” I hope local councillors of all political persuasions are waking up to what the Secretary of State is up to. He is blaming them for his decisions. Until they wake up to that fact and start protesting—some Liberal Democrats bravely voted against the Bill tonight—we will end up with confusion and mess in local government and blame, and some of the poorest and weakest in our society will be affected.
Mr Mike Hancock
Once again, I am concerned about the lack of time, because I would have loved to have had a proper debate on amendments 59 and 60, which go to the heart of the problems we face. The amendments, which were tabled by the right hon. Member for Greenwich and Woolwich (Mr Raynsford), would defer the scheme for a year. Unfortunately, he is not in the Chamber to move the amendments, so it looks like we will not have the chance to pursue the matter. The need to give local authorities more time was one of the things about which Members spoke most eloquently when we debated the previous group of amendments.
It is disappointing that the Minister did not give even a hint that the problems exposed by hon. Members would be given consideration. I have a lot of sympathy for the hon. Member for Stockton North (Alex Cunningham), who spoke of the problems of “outsourcing” 20,000 people from London. He said that that would have an effect on London’s infrastructure and mean impending problems for receiving authorities. Any authority that has received large numbers of people after population movements will know only too well of the struggle to put in place the infrastructure needed to absorb them. Suggesting that 20,000 people leaving London will be easy is an easy soundbite, but I simply do not believe it. The Government need to think again if they are suggesting that that is a ground for supporting the Bill, because it cannot be right.
The hon. Member for Warrington North (Helen Jones) mentioned the cost of appeals and how long they will take. When do they kick in? For how long must people appeal? What would the regime be? Would it be a simple paper exercise or could people appear and give details of their circumstances in front of, say, a group of councillors or officials? We need to know. How will they be resolved?
Why should local authorities take into account the impact of the scheme on the aspects outlined in amendment 66? That is a key question. The hon. Member for Stockton North made the point that we cannot ask local authorities to exclude so many people and not ask them to consider the effects on the poorest groups of working people. If they do not consider that, they would be doing a great disservice to the people. The Secretary of State for Work and Pensions was in the Chamber just now, but it is sad that he has not heard more of the debate, because the points being made are relevant for his Department.
However, if the Bill goes through without the amendment, it will cause local authorities serious problems. Any local authority worth its salt would want to take the issues I mentioned into consideration and would like to have some flexibility to help the groups affected. Why not say that in the Bill? Is anyone seriously saying that that would be an unreasonable expectation for local people to have? [Interruption.] I am getting a signal that my hon. Friend the Member for Bradford East (Mr Ward) might be of a different opinion from me. I happen to think that setting out those matters in the Bill is the right thing to do, and I have yet to hear a coherent argument to suggest that we should not take that into consideration. Once again, that is why, when we vote tonight, I will vote to support the amendment.
Mr Hancock
I honestly believe that the hon. Gentleman is in the market for a property in Wokingham, or if not Wokingham, Hart.
Mr Hancock
I am sure the hon. Gentleman could; he is being far too modest.
On the hon. Gentleman’s point about income tax and higher income tax payers, I am disappointed that we will not get anywhere near the amendments that I and others tabled on excluding higher income tax payers from the 25% discount. I would hope that the Government would give local authorities the ability totally to restrict people on higher income tax from having the 25% discount.
Once again, I am disappointed that we will not have the opportunity to pursue many of these issues, and I implore the Minister to try to secure the maximum amount of time on Report to allow us properly to discuss the amendments that we have not reached.
Andrew Stunell
Again, we have had an interesting and wide-ranging debate. I have to say that the amendments we have discussed cut across the approach we set out for reforming support for the council tax and the whole localisation agenda. In the first debate, there seemed to be broad support for the view that the localisation part of the proposals was the right way forward, and I particularly welcomed the words of the hon. Member for Sheffield South East (Mr Betts), the Select Committee Chairman, who made it clear that that was his view. In the event, that turned out to be rather a contrast with the views of the hon. Member for Warrington North (Helen Jones), who argued strongly against localisation. Then, rather puzzlingly, she said that some of us did not know what was going on in the real world. Perhaps that is not a puzzling thing to say, but I have to say that it is not the reality. With my wife, I brought up five children on family income supplement for two years, so I think I do know what it means when there is not enough money to buy things.