Local Government Finance Bill

Nick Raynsford Excerpts

Wednesday 31st October 2012 Commons Chamber

[Helen Jones]

Labour Front Benchers believe in a fair deal for vulnerable people wherever in the country they happen to live, and we do not believe that a disabled person in Wokingham should be treated differently from a disabled person in Wigan. Our principle is that the help that someone gets should be dependent on their situation, not on where they happen to live. That is a key part of our policy. Let me say this to the hon. Lady: this is a policy designed to hit the poorest people hardest, especially the poorest people who happen to live in the poorest local authorities, which have already taken the biggest cuts in spending power, as we have seen during the passage of the Bill. Let us remember the figures. Liverpool will have lost £235 per person in spending power. In Hartlepool, the figure is £183. In Wokingham—I could not resist mentioning it just once more in the context of this Bill—it is a grand total of £1.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

I put it to my hon. Friend that we may well have disagreement between individual Members, and possibly even parties, about whether it is a localist measure to devolve council tax benefit to local authorities or whether it is sensible to have a national benefit, but no one who is sensible, looking at this, can possibly agree that it is proper and right to make a 10% arbitrary cut in the amount of money available for such people at the time that the system is being decentralised. That is what is utterly objectionable and what the hon. Member for Mid Dorset and North Poole (Annette Brooke) should be apologising for.

[Helen Jones]

My right hon. Friend is right. The reduction in the money available for council tax benefit is not the only thing that we are dealing with. The very same councils will be hit by the Government scheme for business rate localisation before being hit again by the reduction in the amount available for council tax. The Government call it a 10% cut, but in fact it is much more than that, because their calculations are based on what they think the cost of council tax benefit payments will be next year. It is no surprise to hon. Members who have followed the Bill’s passage through Parliament to learn that the Government believe that the cost will go down. In fact, the number of claims is rising as more people face reduced hours of work or unemployment. The Government have produced a wonderful document, which could have been written by Pollyanna, stating that claims will go down because the number of people on jobseeker’s allowance will go down and pensioner take-up will decline and so on. That is nonsense.

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[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.

[Mr Raynsford]

My hon. Friend will know that under the Government’s proposals, the entire downside risk—the risk of further expenditure as the result of an increase in the number of claimants or further demand for council tax benefit—all has to be borne by the local authority, so it is hardly surprising if treasurers are advising their councils that they need to build up reserves against eventualities imposed on them by Government decisions.

[Helen Jones]

My right hon. Friend is entirely right. I suspect that if a council found itself in financial difficulty and did not have reserves, Ministers would be the first to stand up and accuse it of failing to plan prudently for that eventuality.

The scheme will last only one year. Will schemes have to be redesigned again after that? If so, people will have had to cope with three different council tax benefit systems in three years. Currently, they might pay nothing, but next year they might pay 8.5%. After that, who knows—15%, 20%, 30%? There is huge uncertainty for the poorest people in the community.

As my right hon. Friend says, local councils will also be left with huge financial uncertainty. The Government believe that the number of pensioners claiming council tax benefit will drop, but everyone who deals with benefits believes that it will rise, because in future the sum in question will be shown as a reduction in someone’s council tax bill rather than a separate benefit. If unemployment goes up in an area, if a major employer closes down or if there are increases in part-time working, as there have been recently, local authorities will bear all the financial risk.

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[Robert Neill]

I call the greatest deficit in our peacetime history a failure. The benefits system that Labour created was so confusing and complex—it has some 32 different benefits in it—that it is virtually impossible for anyone to navigate it. I call that a failure. I call the fact that spending on council tax benefit doubled over the 13 years of the Labour Government a failure, because they did not achieve what should have been the objective of aiding people back into work. Some of my constituents have not known the opportunity of work for three generations. I call that a failure. The suggestion that the Labour party did anything other than fail is a bogus one. No amount of rhetoric and high-flown words can hide that reality.

We have not heard from Labour Members what they would do about the problem. They have made not a single constructive suggestion.

[Mr Raynsford]

Will the hon. Gentleman give way?

[Robert Neill]

If the right hon. Gentleman will be patient, I will give way to him in due course.

What would Labour Members do to make the saving, which is a necessary contribution to the reduction of the deficit they created? We have not heard anything about that. What would they do to reform the system to increase the incentives to get people who are unemployed into work? What would they do to ensure that, when people move into work, the loss of benefit is not too great a disincentive? Our transitional scheme seeks to deal with that, but what would they do? We have heard not a word on that.

[Mr Raynsford]

I am grateful to the hon. Gentleman for giving way. I listened to him for almost an hour earlier in the debate, so I hope he will not ask me again to be patient—I have been very patient already.

I put it to the hon. Gentleman that he is complaining not about rhetoric—we have heard quite a lot of his rhetoric—but about the experience of Members of Parliament who know from their constituencies that very large numbers of people will be badly hit by the measures, and will suffer hardship, deprivation and poverty as a result of them. He should be ashamed of the remarks he has made.

[Robert Neill]

The right hon. Gentleman is always touchy when his Government’s record is called into question, but he must learn to live with that, because his record is questionable. The simple truth is that the Labour Government’s doubling of spending on council tax benefit is not a success; it is a mark of failure. I have heard not one word on what Labour Members would do to redress the situation.

I am relaxed about whether there is a review. The provisions of the Bill require local authorities, at local level, to keep their schemes under review. I am confident that a national review would demonstrate that the measure is necessary. Not a word has been said by Labour Members about how they would make good the funding gap that would be left if nothing were done. There is nothing from them about that. It is like the old prayer that is adopted—“Lord make me virtuous, but not yet.” They say they want to reduce the deficit, but they will not tell us when or how they will do so. Failing to reduce the deficit damages the underlying economy, real and sustainable growth, and the prospect of real and sustainable jobs for the very people about whom they claim to be concerned. Locking people into a massively complicated benefits system, which they created, is not helping—[Laughter.] Labour Members’ laughter demonstrates the air of unreality that hovers over them. They will not accept their responsibility. They behave like ostriches. To paraphrase the late George Carman QC, they prefer to put their heads in the sand, thereby revealing their thinking parts.

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[Robert Neill]

The point I take from the hon. Gentleman, whose experience I respect, is that, yes, it is not sensible to chase very small sums of money, but that is why the transitional scheme, for example, works to incentivise councils not to do precisely that. We have sensibly reflected on that.

It is important that we get to grips with this intractable issue. Amendment (a) sounds innocuous, and if my hon. Friend the Minister advises the House to accept it, I would have no difficulty in doing so, but the Labour party has not tabled it out of an interest in carrying out a significant and worthwhile review. It is simply a device for the Labour party to get off the hook for not having any constructive alternative to put forward.

[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.