Local Government Finance Bill

Debate between Nick Raynsford and Bob Blackman

Tuesday 31st January 2012 Commons Chamber

[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.

[Bob Blackman (Harrow East) (Con)]

Having read amendment 78, I assume that if it were passed any losses on collection of council tax would enable a local authority to apply to the Secretary of State for reimbursement. As the right hon. Gentleman will know from his long experience, the effect would be to cause virtually every local authority in the country to suffer losses on council tax collection. His amendment would open the door for every local authority to apply for reimbursement.

[Mr Raynsford]

If the hon. Gentleman looks carefully at the wording of the amendment, he will see that it allows local authorities to apply, but does not require the Secretary of State to pay. In new clause 11, my right hon. Friend the Member for Leeds Central (Hilary Benn) proposes to go further by requiring the Secretary of State to reimburse. I can see the logic of that, but it is open to the criticism that the hon. Gentleman has advanced. I hope he will accept that I have framed my amendment in an extremely moderate way, in order to make it clear that there should be a presumption that if costs are increased through no fault of the authority involved—not as a result of a failure to collect the money owed to it, but because of circumstances outside its control such as an increase in the number of unemployed people in the area—it should be able to seek reimbursement. The amendments are silent on the obligation of the Secretary of State to meet such applications. Some might say my proposals are rather too moderate, and that I should have shackled the Secretary of State, but I hope Members on the Government Benches will realise that I have tried to frame a very moderate series of amendments that simply seeks to create a neutral starting baseline and to avoid the draconian cuts that will otherwise be imposed on local authorities.

These are sensible amendments that should command the support of the Committee, and certainly of everyone who understands, and sympathises with, the needs of local government.