Local Government Finance Bill

Lord Cormack Excerpts

Tuesday 16th October 2012 Lords Chamber

[Baroness Meacher]

My Lords, I shall speak briefly in view of the hour; I am sure that the Minister and everyone else would like to get away shortly. The amendment provides for a 100% council tax rebate, fully funded by central government, for people with out-of-work incomes at the income support or JSA level, or when the universal credit is implemented, at the maximum award level under Section 3 of the Welfare Reform Act 2012. I should say that the noble and right reverend Lord, Lord Harries of Pentregarth, had planned to speak to this amendment but at this time he has had to go to an appointment.

The Government may argue that this is a “money” amendment that would increase government spending, but I would refute that suggestion. The basic income of people depending on JSA, for example, as your Lordships will know, is £71 per week for a single person and £111.45 per week for a couple. This is some £20 per week below the Joseph Rowntree assessment of income required to cover the basic costs of food, heating and travel, and one has only to think that there will be a few more costs than that to realise that these people are in dire trouble and need. Such households cannot and will not pay a tax on their home out of that tiny income. I understand that already 2 million households are failing to pay their council tax, a number which will put 2010-11 in the record books for the level of council tax default—that is £1 billion lost to taxpayers, a very large sum—while 3 million liability orders are being sought annually by local authorities through the courts, a 37% increase between 2000 and 2007. The poorest citizens will simply swell these numbers. The amendment would therefore not increase public spending, and that is before we consider the subsequent costs that the Government would have to pick up when these poor households failed.

The Government’s statement refers to transitional council tax benefits between 0% and 8.5%, which to me suggests a positive number. Whatever the number, though, it will be only for a limited period and therefore, as I hope the Minister will appreciate, does not in any way address the concerns that I and others have. I know that she does not really like to be reminded that this is the poll tax mark two, but that is what it will be unless this amendment is accepted by the Government, who could then bring forward their own amendment. I suppose you could say that we are trying to rescue the Government from themselves.

The New Policy Institute refers in its recent report to the return of one of the principles of the poll tax: that every household will pay. It was surely that principle that lay at the heart of the revulsion of the country against the poll tax and which brought down the Prime Minister of the day—Mrs Thatcher, as she was then. It is not surprising, then, that John Major promised Parliament that the council tax would provide up to 100% benefit for the unemployed and those on low incomes. Council tax benefit was expected to protect the poorest in the community, particularly from enforcement action in the courts. I cannot imagine anything more distressing, when you have no money and cannot buy any food, than spending your time going to court to defend yourself.

Now, however, the principle of the DCLG seems to be that instead of a 100% council tax benefit for the poorest, all shall pay something, and the favoured minimum has been 20%. My feeling is that once the transitional plans and arrangements are over, that is the sort of figure that we will probably return to, which means something like £5 per week for these very poor households to find out of income that I believe none of us in this House could survive on. Why issue demands if it is any less than that? Why issue a demand for £1 or £2 a week when even those sums cannot and will not be paid by these people on the lowest of incomes? Already these households will be losing benefit as a result of the move from RPI to CPI as the index used to upgrade benefits. Also many will lose from the housing benefit cap, as my noble friend Lord Best always argues so eloquently. There are disability benefit cuts and lots of other cuts. It is difficult to imagine how they are going to cope.

When these poorest households default, as they will, a liability order will be issued adding £120 to the liability. Then the unregulated bailiffs will turn up with a further cost to the household of £75 or £210 depending on whether they have to make a visit. These costs are piled upon council debt of, let us say, £1 to £2 a week or perhaps £4 to £5 a week. I am sure the Minister can see the nonsense of all this. We can call it nonsense, but for the family or household at the other end, it is not nonsense. It must be absolutely terrifying. People who owe small amounts of money at the beginning can find themselves owing thousands of pounds in a relatively short period. I welcome the Government’s statement, but I ask the Minister to assure the House today that she does not want to introduce poll tax mark two and that the Government will provide a 100% council tax benefit for those at the very bottom of the heap. That is what we are asking today. As other noble Lords have said, these very poorest people are not the right target for the cuts that, as we all know, were made necessary by the banks of this country.

[Lord Cormack]

My Lords, coming in to listen is fatal. I was very taken by what the noble Baroness, Lady Meacher, said. As somebody who did not support the introduction of the poll tax in Scotland and voted against it on every conceivable occasion thereafter, I would hate to think that we are in any sense moving in that direction. I say briefly, but with great feeling, that I hope the Minister, for whom I have genuinely high regard, will be able to give us some comfort in her response, either now or on Third Reading, because the problems that the noble Baroness sketched are for us theoretical, but for those who suffer, they can make the difference between a life and an existence.

[Lord McKenzie of Luton]

My Lords, we fully support the amendment moved by the noble Baroness. It touches the issues of justice and of practicality. The noble Lord, Lord Cormack, has just emphasised the challenges of collecting small amounts and revisiting the poll tax. This is, in part, genuinely saving the Government from themselves. I hope the Minister will not pray in aid the transitional funding because that simply does not address the problem. It might ameliorate it at the margins, but it does not deal fully with the very substantial issue that the noble Baroness has raised.