Brandon Lewis
Main Page: Brandon Lewis (Conservative - Great Yarmouth)Local Government Finance Bill
Brandon Lewis Excerpts(11 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I beg to move, That this House agrees with Lords amendment 1.
Mr Speaker
With this it will be convenient to consider Lords amendments 2 and 19 to 82.
Brandon Lewis
This group contains all the amendments made in the other place to the provisions allowing for a business rates retention scheme. The scheme will, for the first time in a generation, allow local areas to share in the proceeds of growth. Continuing the precedent set when the Bill was considered in this House, each amendment was introduced by the Government to make the changes that we believed would improve the Bill. The majority of the amendments are highly technical and, in several cases, have been introduced in direct response to the discussions that we have continued to hold with local government on the operation of the scheme. Other recommendations give effect to local government’s preferred approach or, in one case, to a recommendation of the Delegated Powers and Regulatory Reform Committee.
Owing to their largely technical nature, I do not plan to explain each amendment in the group in detail—though I could be tempted—but I will outline what they do. They enable the Government to deliver on our commitment fully to fund the five-year discount on business rates up to the state aid de minimis level for businesses moving to an enterprise zone before April 2015. They provide for the scheme to operate on local government’s preferred administrative approach. That approach—the collection fund approach—is currently used for council tax, and so is familiar to it, and works well. They also provide for the appropriate assurance of calculation and information supplied under the business rates retention scheme.
The amendments will also clarify some points of detail for local government. In particular, they will remove any ambiguity about the basis on which local authorities can apply for a safety net payment on account—an important process. Authorities anticipate that they will need safety net support and will be able to access that support before the end of the financial year, and to simplify the arrangements for designing a pool without reducing the safeguards in place for pool authorities by removing the duty to undertake consultation with those likely to be affected by a pooling designation or revocation and in direct response to strongly held views of local government on this point.
Taken together, these technical amendments to the non-domestic rating provisions will give effect to smooth implementation of the rates retention scheme, and I urge hon. Members to agree to them.
Brandon Lewis
I shall try to cover the general points raised in the excellent speeches that we have heard and then deal with the specific questions asked by the hon. Member for Warrington North (Helen Jones) and others.
The proposals on the retention of business rates represent a fundamental shift in the way in which local authorities are funded. They give councils a strong financial incentive to drive local economic growth. We will ensure that there is a stable starting point for the scheme so that no council is worse off as a result of its business rates base at its outset, and that will be achieved through a system of tariffs and top-ups that will be fixed in future years so that councils benefit from the growth of their business rates. Tariffs and top-ups will be uprated by inflation to ensure that a major part of authorities’ top-up income under the scheme is not eroded in real terms.
We have also proposed further protections to ensure that councils can meet local needs, including a safety net—I will directly deal with the specific question asked by the hon. Member for Warrington North later—that will be funded by a levy that recovers a share of any disproportionate gain from growth. The safety net will help to ensure that service provision does not suffer as a result of any volatility in a council’s business rates base. We announced that we intended to set the safety net threshold at a level between 7.5% and 10%, with the proportional levy ratio at 1:1, subject to consultation. That consultation took place over the summer; it has now ended, and we will consider the responses that we received before we take a final decision for this year’s settlement.
Mr Iain Wright
During yesterday’s excellent debate on business rates, I made the point that one business in my constituency—the nuclear power station—contributes 15% of all business rates collected in Hartlepool. The Minister says that the safety net will be between 7.5% and 10%, so how will the policy address my specific constituency concerns?
Brandon Lewis
I thank the hon. Gentleman for his question. I will come to that specific point, as the hon. Lady raised a similar one.
Where councils want to join forces to pool their business rates, sharing the rewards and risks with their neighbours and thinking together strategically about how they should invest the money—a topic on which we have spent some time this afternoon—they will be able to do so. I will come back to that in response to the points raised by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill).
The proposals for business rates retention will give all local authorities unfettered access to tax increment financing. There will be no constraints. From April 2013 local authorities will be able to get on with implementation. We are also making £150 million available to fund a limited number of new development deals—projects in the core cities.
A number of Members commented at length on issues related to pooling. My hon. Friend the Member for Bromley and Chislehurst was the first to raise this in his remarks. I record my thanks to him for the fantastic work he did in bringing the Bill to the point at which I inherited it. He gave a great speech outlining some of the thoughts underlying the Bill and answering a great number of questions from Members to help everybody in the House have a fuller and better understanding of where the Bill is coming from and therefore what it aims to deliver.
Business rates retention changes the ground rules for local government and moves power back to where it should be. To pick up on a point made by my hon. Friend the Member for Peterborough (Mr Jackson), it effectively puts local money back with local people in local communities—local money for and by, to coin a phrase, local communities.
Mr Clive Betts (Sheffield South East) (Lab)
I note the Minister’s support for the concept of pooling. It is right that if local authorities choose to bring their capacities together, they should be allowed to do so. Does that not rather contrast, however, with the Government’s response to the Select Committee’s report on housing, in which we suggested that local authorities might be able to pool their capabilities to borrow under their housing revenue account—
Brandon Lewis
I thank the Chairman of the Select Committee. I would like to thank him for his courtesy in inviting me to the Select Committee on Monday, and I enjoyed talking through some of the issues that local councils face. He tempts me to move outside the scope of the amendments, and I think the Deputy Speaker has made clear his views on their scope, but I will expand a little further on pooling without being tempted too far outside the terms of the amendments.
Pooling gives councils a new tool to support economic growth across their area and greater ability to invest in the things that will have a greater impact on economic growth. As has been noted, the more the money comes together, the bigger its multiplier effect—the leveraging—can be. My hon. Friend the Member for Bromley and Chislehurst made a comparison between this and the debate earlier this week on pension schemes, and how, by bringing that money together and building it up into bigger pots, it can have a much more beneficial impact on local areas. That is why it is important that we allow councils to support economic priorities that have a benefit across a wider area. We are allowing councils better to weather any downturns in business rates income by sharing fluctuations in those rates. I will come back to the issue of a particular business.
It is worth local authorities looking at and thinking through the effects of pooling, which will give them greater resilience and greater buying power and allow greater economic growth. I encourage local authorities to consider it, and they have until 9 November to submit proposals. Earlier this year we had more than 20 expressions of interest from authorities. I stress that pooling is wholly voluntary but in terms of resilience, buying power and the ability to grow, I encourage councils to look carefully at it.
We heard queries about whether pools may cross county boundaries and whether they must be linked geographically or in any other way. In the true spirit of localism, it is for councils themselves to determine the make-up of a pool. They will not be restricted to pooling within a county boundary, allowing rates retention to support the priorities of local enterprise partnerships where this is what councils want.
Mr Stewart Jackson
I take this opportunity to congratulate my hon. Friend on his appointment as a Minister, with his great experience as leader of Brentwood borough council. I agree with his point that local enterprise partnerships are based on authentic sub-regional and local economies. Does he see a time when it might be possible to try to—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sorry. We must have shorter interventions. I cannot say that to Members on one side of the House without saying it to those on the other. I am sure the Minister has grasped the question.
Mr Jackson
Does my hon. Friend foresee the Government trying to encourage a more holistic approach, pulling together initiatives such as Growing Places, Get Britain Moving and the Portas review, using the funding he is speaking about?
Brandon Lewis
My hon. Friend makes an excellent point and I am pleased that he had the chance to make that succinct intervention. An important by-product of business rates pooling is the opportunity for local authorities to look across the piece at whether they can pool to give themselves greater resilience, to look at the other funds that they can bring in, including the new homes bonus, and to look at their local enterprise partnership, their Portas money and any city deals that they might have, and how they can pull these things together, so that those authorities can work together to supercharge the opportunity to be part of local economic growth and to drive it from their local perspective.
Mr Iain Wright
Could pooling of business rates apply sectorally as well—for example, the automotive industry? Could Sunderland city council, with Nissan in its patch, link with Coventry council, where Jaguar Land Rover is located, in order to push forward the UK automotive industry? Does the Minister anticipate that?
Brandon Lewis
The hon. Gentleman makes a very interesting suggestion. As I said, there is no county boundary restriction on local authorities working together. One of the more imaginative things that we are seeing in local government generally is that authorities are not delineated by their geographic boundaries. We have seen, for example, the excellent shared services and other work between South Holland and Breckland district council, which do not share a geographic boundary but have found a way of working together. Such arrangements are possible and councils should looking for such interesting and exciting opportunities to work together.
We have, however, said that there should be a clear rationale for the geographic coverage of a pool if councils are to work together. It is important that councils have the flexibility to do what is right for them. That has worked well in local enterprise partnerships, on which a number of speakers have commented this afternoon. One of the reasons that LEPs are gaining such support and will be such a long-term success and powerhouse is that they have not been artificially designed and drawn on a map by people in Whitehall. They have come about as a result of communities, business organisations and local authorities coming together to decide what works for them and their community.
Some interesting structures have developed. For example, in my part of the world, Great Yarmouth, the New Anglia partnership crosses the county boundary between Norfolk and Suffolk. It focuses much of its time on the energy industry across Lowestoft and Great Yarmouth. It goes further in that it does not pick just one piece of land as its enterprise zone. It has a number of different sites because that is what the local business people, communities and local authorities coming together thought would work best for them. That is showing success already.
Mr Stewart Jackson
Will my hon. Friend have a word with our colleagues in the Treasury about the design of some fiscal policies that are based on regional boundaries, such as the national insurance holiday, which disadvantage those on the wrong side? For instance, Peterborough was at a disadvantage compared with, say, Corby or the south of Lincolnshire because it was in a different county and region. There was an obvious disincentive for businesses to consider Peterborough, based on that fiscal change.
Brandon Lewis
My hon. Friend makes a good point, and he makes it so well that I have no doubt that the Treasury will have heard it directly, so I will leave it there.
Robert Neill
I congratulate my hon. Friend on the admirable speech he is making and warmly congratulate him face to face on his new appointment. I am delighted he has succeeded me. I think that we share the same philosophy in these matters. He made an important point about pooling, for which I am grateful, and there are some other issues that my hon. Friend the Member for Meon Valley (George Hollingbery) raised. As I understand it, the key element in Lords amendment 1, which deals with my hon. Friend’s point, is that the Government have undertaken to fund the discretionary rate relief in relation to enterprise zones so that there is not the disincentive to have an enterprise zone that there might otherwise be. Will he indicate that that is the way the rate relief will be delivered so that we can be sure that it is worth while for a local authority to have an enterprise zone without prejudicing the benefits of rate retention?
Brandon Lewis
I thank my hon. Friend for his intervention and hope that you, Mr Deputy Speaker, will allow me 30-seconds’ leeway to thank him for his kind words. This is the first time I have been at the Dispatch Box during a debate in which he, who he is a good friend, has spoken, so I want to put on the record how fortunate I am to be following in the footsteps of someone who laid so clear a path, and one that I support and agree with. Equally, that offers a challenge, because I have quite an act to follow. As in all the matters we are discussing this afternoon, he is absolutely right that enterprise zones are structured in that way so that there is no such disincentive. It is important to bear in mind how the incentives work. Business rates retention offers local authorities a clear incentive to help drive growth, because they will benefit from all the growth they see. That is something we very much want to see so that local authorities are absolutely at the heart of driving economic growth.
I will turn now to some of the question hon. Members asked. The hon. Member for Warrington North asked what happens when a major business goes down mid year, a point the hon. Member for Hartlepool (Mr Wright) also touched on. The payments to major precepting authorities would be set on the basis of estimates of income made by the billing authority. Those payments will not change, so billing authorities might need to consider how they would fund any shortfall in the short term before the safety net calculations are made.
Helen Jones
Will the Minister explain how a billing authority would fund a shortfall of 20% in its business rate income?
Brandon Lewis
I must stress that that is the approach the Local Government Association wanted and has been pushing for. It is also linked to the operation of the safety net more generally if a business has a problem mid-year. The draft regulations we published last week envisage safety net calculations and payments being made after the end of the financial year, and safety net payments on account to be made where the authority thinks, on the basis of its estimates before the start of the year, that its rates income will be less than the threshold. The draft does not currently propose that authorities be able to apply during the year for a safety net payment on account, in line with the clear views of our local government finance working group. These regulations are out to consultation in draft, and we look forward to receiving comments and will obviously feed back.
The hon. Member for Warrington North also commented on the discrepancy, as she perceives it, between some of the Bill’s clauses and the situation with regard to the Audit Commission. I was somewhat flabbergasted, because I think that she might have been trying to argue for retaining the Audit Commission, but this is a transitional phase. It seems amazing to suggest delaying parts of the Bill or not having the clause that will allow it to move forward in dealing with that side of the Audit Commission, because the Bill is about driving growth of about £10 billion. To do something because of her views on the Audit Commission seems very short-sighted for our economy, so she will excuse us if we resist that.
I will turn to the comments made by my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), who made a powerful and clear speech in which she talked about town and parish councils working together. On the technical side of her point, I point out that parish councils raise their own cash with their precept; they are funded not through the money raised by business rates, but directly through council tax. We feel that it is right that the district billing authorities receive funds from business rates as they are the key local drivers of growth. However, I want to stress that I feel clearly—this has been reflected in the comments made by several hon. Members this afternoon—that they should work with all bodies that can support growth, including parish councils, and will be involved in some areas in the potential for growth.
We have worked with the Local Government Association, the National Association of Local Councils, with which I had a good meeting earlier this week, and other organisations and parties in the other place throughout the passage of the Bill, and I would like to thank all parties that have been involved in feeding into it. It is also important to note that there is a range of measures for driving economic growth at community level, which provides parish councils with a particular opportunity to get involved. There are community budgets, neighbourhood planning, the right to build, the right to challenge, and the community share scheme, all of which will play a huge part.
My hon. Friend the Member for Mid Dorset and North Poole—I know that parish councils are close to her heart—will have noted that only today we announced formally the measures to make it easier to establish new parish, town and community councils, which I think is an important step forward, working with local communities, to offer the opportunity for more people to get involved and to be part of their local community. Their local council at parish, district, county, unitary and metropolitan level will be part of driving economic growth, which is at the heart of the move forward with the business rates retention scheme.
My hon. Friend the Member for Peterborough (Mr Jackson) spoke clearly about the power and ability of LEPs and touched on Lord Heseltine’s report, which highlights exactly where LEPs and local enterprise zones have a huge part to play. As I have said, the business rates retention scheme makes a fundamental shift in the way local authorities are funded. It will give councils a strong financial incentive to be part of driving local economic growth.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
In the spirit of localism, will the Minister now commit to implementing the recommendations of the Morgan report, commissioned by the Welsh Government, which calls for the full devolution of responsibility for business taxes to the Welsh Government so that they, too, can increase their taxation base?
Brandon Lewis
I thank the hon. Gentleman for his intervention, but he will excuse me if I stay within the remit of the Bill and do not delve into changes to financial and tax arrangements that the Treasury, the Welsh Assembly, the Local Government Association and many Members across the House will undoubtedly have a view on. I welcome his decision to choose this moment to start that debate.
What I think is important in business rates retention and the way it moves the goalposts and the way local councils work is that it is really starting to shift back to what local authorities always want—I know this from my time as a council leader—which is to have their hands on the purse strings and the ability to have a direct impact on the amount of money they can bring in. They want more direct control over the way they work, their decisions, the way they develop the local economy and community and the way they involve the community. Local authorities will see a financial benefit and will be able to use that income to provide even more benefits for their communities and residents, and perhaps they will also use it to keep council tax down and, in so doing, further develop the work the Government are rightly doing through the council tax freezes we have brought in over the past few years. This is a very important step forward, and we are pleased that local government seems to be enthused by it. We hope that it motivates them towards growth.
We are looking at the consultation results that we have received, and we will return to them later this year. We are setting out a whole new framework in which local government can work and where it becomes part of driving its local economy. That is not only a key part of how it shapes its community; it means that it can benefit from the advantages and growth that it sees in that community. The community will see that the local authority is benefiting in that way, and we will get a positive circle that can only be good for our communities, for our residents, and for economic growth in our country.
Lords amendment 1 agreed to, with Commons financial privileges waived.
Lords amendment 2 agreed to, with Commons financial privileges waived.
Before Clause 9
Council tax reduction schemes: review
Helen Jones (Warrington North) (Lab)
I beg to move amendment (a) to Lords amendment 3.
Helen Jones
The hon. Gentleman, as a former leader of a local authority, should know that in the current circumstances, local authority treasurers are advising councils to build up reserves because of the uncertainty of the system that the Government are introducing.
Brandon Lewis
Will the hon. Lady share with the House her view on whether borough treasurers should run their local communities and councils, or whether the leaders and politicians should make those decisions?
Helen Jones
Of course the politicians should make the decisions, but in cases such as this they make them based on proper professional advice. If they did not, the Minister would be the first to criticise them.
Robert Neill
My hon. Friend is absolutely right. Labour Members’ approach is bizarre. They claim to be localist but object when anything is localised. They claim to recognise the need to reduce the deficit—I am never quite sure about that—but never actually say how or when they would do it. Instead, they just give a blanket criticism of anything that seeks to move things forward.
Brandon Lewis
The hon. Member for Warrington North (Helen Jones) talked about West Oxfordshire and Westminster councils not having schemes as if that was a bad thing. Does my hon. Friend agree that, actually, the decision to protect local residents by not changing the schemes is an example of the very point we are making—it is about local choice?
Mr Raynsford
I have heard a number of speeches by the hon. Member for Bromley and Chislehurst (Robert Neill), but that was probably the worst. There was a total failure to acknowledge any problem with the proposals we are debating this afternoon and an attempt to deflect blame, rather than recognising that he has created something that will haunt him, his colleagues and all Members of Parliament, who from next April are likely to see large numbers of aggrieved constituents coming to ask why they suddenly have to pay sums of money that they do not have the means to pay. Then—this is an interesting point about the hon. Gentleman’s suggestion about fraud—when those constituents see that some councils will not pursue relatively small arrears, just because it is uneconomical to do so, they will probably think, “Well, there’s probably no need for me to pay.” If ever something were likely to undermine the culture of payment and responsibility, it is this kind of scheme, in just the same way that the poll tax undermined the culture of paying because it was seen as unfair, because it was arbitrary and because the arrears that built up took an enormous amount of time to recover.
All this is unnecessary. We can have a debate about whether council tax benefit should be localised. I have been happy to participate in that debate, and there are arguments both ways. There is an argument that council tax benefit should be part of a universal credit and benefit system. There are also arguments about localisation. We can have those debates. I would have been happy to participate in an argument about that and to try to develop either a local or national scheme that worked and that met the objectives that had been articulated. However, that is not what we are debating this afternoon. This is a ham-fisted set of proposals, cooked up by the Government in a way that shows a complete lack of joined-up thinking between Departments—the Department for Communities and Local Government is going in a completely different way from the Department for Work and Pensions—and then imposed to a chaotic timetable.
The way this House has handled the process is a cause for concern in itself. Our first debates about the Bill were in January, when the Committee stage was taken on the Floor of the House and had to be rushed through without adequate time to consider all the issues. Then the Bill was parked for three or four months. We heard nothing more about it. We wondered what was going on, until the penny dropped and one of the Clerks was wise enough to point out what was happening. The Government had suddenly realised that if they went through the parliamentary procedures, the Bill would fall with the end of the Session. They had to park it because they had not realised that the only way to get it through the current Session was not to take it through the House of Lords in the previous Session, so that they could then reintroduce it in this one.
Here we are, less than six months before the implementation of a hugely complex scheme that will affect the benefit entitlement of around 4 million people nationally, without the details agreed and with an extraordinary series of last-minute adjustments, including the transitional relief. We could not devise such a chaotic implementation programme if we tried. I am really disappointed that Ministers have not acknowledged that this is a mess. The right way forward now is to say, “We need time to get it right.” Let us give them credit: let us give them the opportunity to say that localisation is the right thing to do, but then please let us recognise that this is not the right way to do it. We have to give local authorities sufficient time to prepare, consult and carry their communities with them. We have to give them the means to do that without these arbitrary cuts, which affect individuals so harshly and unfairly, because there will be marked differences between categories of people.
Let us take the position of two households, one just over pension age and the other just under. Under the arrangements that are being introduced, if they both receive an equivalent amount of benefits, one group will be protected from any cuts because they are over pensionable age and the other will not. How will that be explained? How is there any sense of fairness whatever if those households’ circumstances are broadly the same? There will be anomalies, problems and a sense of injustice on the part of the public, and then there will be all the administrative issues in trying to collect small sums of money. It cannot make sense to proceed in this rushed way towards what is likely to be serious administrative chaos in early spring next year. The sensible measure would have been to say, “We must take stock. We must now pause and try to get this right.” Even if the Government will not accept that, they should at least confirm that there will be a review. It cannot be right to proceed with such a chaotic scheme that has gone through such a bad gestation period and that is now going to produce the kinds of problems that Members have articulated so well today, without a commitment to a thorough review.
The other place did us a service by passing the amendment that would make a commitment to such a review, and the Government should, at the very least, accept that the measure must be reviewed independently and fairly; otherwise, we shall be condemning large numbers of our citizens to an unfair and harsh series of measures that will impact on their livelihoods and that they will find impossible to understand. The Government are committing local authorities to implementing harsh and unfair measures for which they will get quite a lot of the blame. The whole thing is a terrible mistake, and I just hope that the Government will now recognise that they have a serious responsibility to the public and to local authorities to try to make the best of the very unfortunate position that they have got themselves into.
Brandon Lewis
I will deal first with the points raised by the right hon. Member for Greenwich and Woolwich (Mr Raynsford). I am still relatively new to the House, having joined in 2010, and I am certainly new to the Dispatch Box. I have to say that the opening remarks of his speech were the most undignified I have heard in this Chamber in my short time here. I therefore do not intend to comment further on what he had to say.
The hon. Member for Warrington North (Helen Jones) made a point about the scheme in general, and I shall respond to it directly. She seemed to suggest that her party would like to see a centrally controlled policy scheme, rather than trusting local councils. I must point out that the Local Government Association does not want this provision to be part of universal credit; it wants it to be localised, if it needs to change. I was disappointed that Labour Members seemed to lack trust and faith in local councils and local councillors to do what is right for their communities. We have far more trust and faith in them than Labour does.
I was astounded to hear at least one Member complain that the Government’s pledge of a further £100 million to help local authorities with the transition was unhelpful. That provision is of course voluntary; local councils do not need to take part and do not need to take up any of the money. It is simply a transitional grant that will be available if councils wish voluntarily to take up the offer of it. Some councils will come up with different schemes. It is part of localism that they will do what they think is right for their local communities. Some might have large reserves. If, for example, a council had about £45 million in reserve, it might use some of that to prepare for the changes. The Government’s position is that that should be a local decision. This is about local councils having the political will to do the right thing, to look at what is right for their communities, and to work to develop economic growth to get more people off benefits and into work. That goes hand in hand with the business rate retention that we discussed earlier.
Andrew Gwynne
It is important to record the fact that no Labour Member is saying that localism is a bad thing. The Minister cannot have it both ways, however. Either the Government take a localist approach, in which the arrangements for council tax benefit will be different from one local authority to another, or they do what the Minister says he wants to do, which is to simplify the system. That would involve one nationwide system.
Brandon Lewis
I am not quite sure what point the hon. Gentleman is trying to make. This is a localised scheme in which local councils will do what they want to do. Different councils are consulting on different schemes, and in response to some of the consultations the Government have made provision to allow local authorities some transitional money to help them to move to what might be a better scheme for their area. But—this is the key point—that money is part of a voluntary scheme. It is up to local authorities whether they take part in it, or whether they go ahead with what they believe is the right scheme for them.
Andrew Gwynne
By the Minister’s own admission, then, this is not a simplified scheme. It is a localised scheme, but it is not simplified. Every local authority will have a different system in place, which will add to complexity.
Brandon Lewis
I think the hon. Gentleman is starting to understand that localism means that local councils can do what they think is right for their local communities, understanding that what might work in one local community would not necessarily be right in another local community in respect of the schemes they devise to secure economic growth, to create more jobs or to get more people off benefits in the first place.
George Hollingbery
It is not an absolute certainty that localising council tax will indeed lead to fiendish complexities. It is entirely within the gift of local councils to negotiate among themselves to have council tax schemes grouped, which could then be agreed across, say, Hampshire. Given the commonality of economic prosperity in the area I represent, that would seem to make sense. Does the Minister agree?
Brandon Lewis
My hon. Friend makes a good point. I would add that there is a range of things for local councils to look at. Some local authorities will be looking to bear down on some of the fraud and error, which we believe is worth £200 million a year. They will be looking to come up with schemes to drive economic growth, to put more people into work, to be more efficient. They might be looking at saving money through shared services in the management teams and various other schemes. The flexibilities we are putting in place give them a huge opportunity.
The hon. Member for Warrington North (Helen Jones) made a comment, implying that the Government have somehow depressed the council tax benefit forecast. She will be aware that the forecasts for council tax benefit expenditure are considered and ratified by the independent Office for Budget Responsibility. I entirely reject her suggestion, if that is what it was, that we have in any way been able to influence these forecasts.
Stephen Timms
On the point of simplicity, many of us, including Government Members, sat through the Welfare Reform Bill debates, in which the simplicity of universal credit was presented to us as a great advantage. This change undermines that simplicity—fatally, it seems to me. As the director of the Social Market Foundation said in an article this morning, under this proposal
“not only will you need a computer to work out your benefit entitlements, you’ll need a map”.
Brandon Lewis
Coming from a party that had 32 different benefits to work through, I find that quite an amazing comment.
Mr Betts
It is all down to local councils to decide, but one of the complications is that the Government are localising council tax benefit, but centralising housing benefit. Local councils can get no sensible decisions from the Department for Work and Pensions on whether an arrangement will be allowed whereby applicants can go to one point for information and advice about both benefits. Are the Government to sort out this problem between the two Departments?
Brandon Lewis
I am sure we can take that back to the DWP, but I am sure the hon. Gentleman will appreciate that this goes some way outside the remit of the amendments. I will reflect on his comment and come back to him on it. As I have said, councils will have choices about how to meet the cost of support, and local authorities that have consulted on their proposals will need to consider whether they want to apply for the grant or whether they need to make changes to the proposed schemes in order to do that. I shall return to that issue in a few moments, if Members wish it.
Let me deal with the specific amendments. I shall ask the House to agree to Lords amendment 3 and to the other Lords amendments, but to resist the Opposition amendments to the amendments, which I shall ask the hon. Member for Warrington North to withdraw.
Lords amendment 3 requires the Secretary of State to provide for a review of council tax reduction schemes within three years of the Act coming into effect and sets out certain considerations for that review. As Baroness Hanham made clear in the House of Lords, Government routinely review policy and respond to ensure our objectives are met. The transitional grant scheme announced on 16 October was a direct response to those authorities that are proposing schemes that place what the Government consider to be an unacceptable burden on the very poorest. That is why we will accept that amendment, but we will not seek to overturn it.
In accepting the principle that Government should keep policy under review, I would make a couple of points. The terms of the review, as set out in the amendment, do not bind the Government to any course of action as a result of the review’s recommendations. I know that the Local Government Association is keen for us to make that clear. We will need carefully to consider the findings of the review before considering how we will respond. We remain clear that localisation is our preferred policy. It strengthens incentives to support local growth and jobs, drive down fraud and error and hold down council tax. It gives local authorities control over how to design support schemes, taking into account the impact on local populations and council tax collection rates. It also ensures that funding for council tax support is paid directly to the authorities that provide vital services. All those are important considerations that the Government would want to take into account in any future review.
The Opposition’s amendments seek to ensure that such a review would apply only to England, but I believe that if the Secretary of State is required to review the operation of local schemes in England that are provided for under powers in this Bill, such a review should also take place in relation to schemes that are similarly provided for in Wales. Let me explain that further.
Such schemes will be provided for under regulations to be introduced by Welsh Ministers, so it is right for Welsh Ministers to lead on any review. In complying with the requirement of the Lords amendment, the Secretary of State will therefore seek to agree with Welsh Ministers the scope and format of the review in relation to Wales. It will also be for Welsh Ministers to consider the implications of the review’s recommendations for the framework for schemes provided for through their regulations, and the powers provided, at their request, in the current Bill.
In the light of these assurances, I do not think that the Opposition’s amendments are necessary.
Lords amendments 83, 84 and 86 would enable regulations made by the Secretary of State or Welsh Ministers about council tax reduction schemes of billing authorities in England or Wales to make provision equivalent to the provisions of, or the provisions that could be made under, sections 32 to 34 of the Welfare Reform Act 2007. The amendments would also give billing authorities in England power to make additional provision in their local scheme which replicates, or could be made under, those sections. The amendments would allow local authority schemes to provide for extended payments, which are an important way of supporting work incentives.
Lords amendment 85 is a technical amendment. It is intended to ensure that the power in new paragraph 6 of schedule 1A to the Local Government Finance Act 1992, which allows major precepting and billing authorities to reach an agreement to vary payments or instalments that are required to be made under regulations about funds, applies—as was intended—only to regulations in relation to council tax.
Lords amendments 87 to 90 would ensure that the expertise of members of the First-tier Tribunal could be used in the deciding of appeals against decisions made in relation to council tax reduction schemes. The amendment would enable First-tier Tribunal members to sit as members of the Valuation Tribunal for England at the request of the president of the tribunal, with the approval of the Senior President of Tribunals, and only in relation to appeals that relate in whole or in part to council tax reduction schemes.
I urge Members to agree to the Lords amendments and resist the Commons amendments, and invite the hon. Member for Warrington North to consider withdrawing amendment (a).
Mr Speaker
I am extremely grateful to the Minister and I did wonder whether he had had a rather urgent job swap, but he has not. We are grateful to him for his conscientiousness, but he is not needed at this stage.