Council Tax Benefit Localisation

Simon Danczuk Excerpts

Wednesday 27th June 2012 Westminster Hall

[Simon Danczuk (Rochdale) (Lab)]

Thank you, Mr Howarth. I welcome the debate and thank my hon. Friend the Member for Makerfield (Yvonne Fovargue) for securing it. My comments will concentrate on two things: first, the purpose of the policy change and, secondly, the impact that it will have on our constituents.

One would like to think that Government make such changes to improve services, to improve people’s lives and to improve decision making. Unfortunately, this change does little to improve matters, because of how the policy is being introduced. If I were a cynical person, I would argue that the change is about saving money and redistributing money away from poorer areas. The Government have cut the funding for council tax benefit by 10%, as the hon. Member for Mid Dorset and North Poole (Annette Brooke) pointed out. That is a saving of £500 million, but surely that is an arbitrary figure. It is another example of the Government making decisions without evidence. It is not based on fact. Why is it 10%?

I understand from the Local Government Association that the Government estimate a decline in the number of council tax benefit claimants in 2013-14 of about 12%, but as the Local Government Association states, it is not clear why the number is expected to decline. Perhaps the Minister can shed—[Interruption.] Yes, the number is probably going to increase. If the Government’s other predictions are anything to go by, in terms of unemployment, economic decline and the amount of money that the Government need to borrow, surely the number of council tax benefit claimants will increase. The Government are pushing their cuts on to local government to administer. That is the reality. Not only that, but because they have protected certain groups, such as older people, areas with higher need will carry a greater burden. That is after local authorities have had funding cuts of 19% over the past two years.

Let me point out that the public are not daft. The local government settlement, public health funding, the new homes bonus, repatriation of the business rates and now council tax benefit are all skewed towards better-off areas. In effect, the Government are stuffing money into the back pockets of wealthy local authority areas. That is the reality of the policies they are pushing forward. The public can see exactly what they are doing and they see that it is unfair.

The Government are also shifting risk. That cannot be dressed up as localism, because the Secretary of State for Communities and Local Government has given himself powers to prescribe who receives the benefit. Unhappy with wheelie bin collections and council newspapers, he gave himself more power. For such a big guy, the Secretary of State is obsessed with the minutiae of local authorities. He has the power, but local councils carry the risk. When the Department for Work and Pensions managed the budget, it was based on annually managed expenditure. When it transferred to councils, it was based on a cash-limited funding pot, so all the financial risk has switched from central to local government.

The other risks associated with the policy concern timing, as my hon. Friend the Member for Makerfield (Yvonne Fovargue) pointed out. Will councils be ready in time? Is the software ready and appropriate? What happens if local groups challenge the decisions made locally? All the change is happening in a short time frame, when local authorities face unprecedented cuts and other major changes to their financial systems.

In conclusion, the issue is not only about systems and whether the power lies with central or local government; what concerns me most is the impact that the change will have on hard-working families—people who are not that well-off and people who struggle to make ends meet. Everyone here knows that in many towns and cities across the country, local councils will have to do the Government’s bidding when it comes to increasing the amount of council tax that working families pay, because council tax benefit is being cut. As my hon. Friend pointed out, the Select Committee on Communities and Local Government, of which I am a member, said

“The proposals for the localisation of council tax support seem to us to provide an illusion of delegation with a minimum of real discretion, virtually guaranteeing that the funds available to support working-age unemployed people will be squeezed.”

I rest my case.