Council Tax Benefit Localisation

Virendra Sharma Excerpts

Wednesday 27th June 2012 Westminster Hall

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

Thank you, Mr Chairman, for this opportunity to speak. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing such an important and timely debate. I also congratulate everyone who has contributed so far, and I agree with every word they have said.

Time is short, and it is difficult to put every argument forward. As a former councillor of 28 years in the London borough of Ealing, I am only too well aware of the impact that this Government policy will have on those least able to bear the financial consequences of the irresponsibility of the bankers and the Government’s failed economic policies.

Before I address directly the localisation of council tax benefit, I want to remind the House of the cuts that local government is already struggling to deal with, as a result of the Government’s decisions to cut too deep and too fast. Local government across the country is taking a 28% budget cut, a much greater cut than for almost any other arm of Government. In Ealing, the council is faced with an £85 million cut over four years, which is more than 30% of its controllable budget. It has found 70% of the cuts through creating greater efficiencies, cutting out waste, renegotiating contracts, increasing its income, cutting back on senior management and finding new ways of working. Only 30% of the £85 million cuts have fallen on front-line services. That is what a Labour council can do when faced with an unprecedented financial challenge, made worse by the Government’s economic incompetence. But, as the cuts continue to roll in, it can only do so much.

The Government’s scheme to give councils the responsibility for delivering council tax benefit while cutting the funds to pay for it by 10%, is just the latest additional financial burden that councils face. The Government are also telling councils that they must protect pensioners from any cuts to their council tax benefit, which is a good thing, but, with the 10% cut in the grant, other groups of council tax benefit recipients, including the working poor, will receive cuts of up to 40% in their benefit, depending on the number of pensioners in their area. Where does that leave the Government’s policy to make work pay? In tatters, I suggest.

In addition, the grant, reduced by 10%, is a one-off settlement, which means that councils will have to bear all the risk of any future increases in council tax benefit take-up caused by the loss of local jobs. That is a considerable risk, given the current fragile state of the UK economy and the ongoing crisis in the eurozone. The eurozone could fall apart at any moment, and cause a further wave of financial turmoil and job losses. What should a council do if a major employer experiences difficulties and goes to the wall, creating significant job losses and a huge take-up in council tax benefit? On top of the already draconian cuts it is dealing with, it will have to cut other services to meet its council tax benefit obligations.

This is localism of the worst sort. The Government are giving the responsibility and the risk to local government, but are cutting the budget by 10% and telling councils who they should give the benefit to. True localism would give councils both the financial means and the freedom to decide how to administer the benefits, and to whom.

Local government is already bearing the brunt of the Government’s failed austerity programme, and this cut is a cut too far. It will hit the already vulnerable, including the working poor, and it flies in the face of everything that Members on this side of the House believe, and of what the Government profess to believe. The Government are out of touch, and are cynically trying to blame local councils for the cut that they themselves are choosing to make. The public will see through that, and the blame will lie fairly and squarely with the Government, unless they U-turn yet again.