Local Government Finance Bill

Sheila Gilmore Excerpts

Tuesday 10th January 2012 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

I want to talk about council tax benefit. The hon. Member for Harrow East (Bob Blackman) is one of the few Government Members to have raised concerns. Another Government Member who raised concerns served with me on the Welfare Reform Bill Committee, where we discussed this issue extensively. He, too, expressed considerable doubts about the council tax benefit proposal, especially as another Government Department, the DWP, has a project for universalising benefits under one umbrella—which might not be as easy as it thinks. Why keep council tax out of that?

That is a very good question. One of the main reasons that the Government give for making such a huge change in welfare law in this country is to incentivise work and to make sure there are not the kind of perverse incentives that they think arise as a result of things such as different tapers on different benefits. There are, indeed, different tapers at present for tax benefits and housing benefit, but if we create a situation whereby everything apart from council tax goes into universal credit, we will immediately recreate an anomaly. That will have a work disincentive unless it is very carefully worked out. We must question why two major Departments do not seem to be talking to each other about that.

The 10% reduction is a substantial reduction in the money available to local authorities to provide assistance to people on low incomes who need help. It should not simply be seen as something quite minor. I thought, particularly having worked on the Welfare Reform Bill, that this was primarily about saving money, but having read a lot of the comments in the consultation about this Bill, I realise that it is part and parcel of the Government’s view of local authorities: that they are not trying hard enough to get people into work. The Housing Minister said to the Select Committee on Communities and Local Government that the 10% reduction would encourage local authorities to make sure that business parks got off the ground and that people got into jobs—because of course, if people had jobs they would not then need council tax benefit. Actually, that is not true.

[Andrew Gwynne (Denton and Reddish) (Lab)]

My hon. Friend is making a really interesting point about the perverse incentives that the Bill will introduce. Does she accept that in fact it will really clobber hard-working families who are struggling to make ends meet on low-paid work, and who rely on council tax relief to ensure that they can afford to work? In areas such as mine, it is those low-paid jobs that people will give up.

--- Later in debate ---

[Sheila Gilmore]

It is people in work who will suffer in particular. Of course, this localising Government are not prepared to leave even their own local authorities to decide how the new council tax benefit should be distributed, because they want to insist that pensioners be protected. That is all very worthy, but protecting pensioners creates a greater burden on other people. There has even been the somewhat vague suggestion that some other vulnerable groups will be protected. The definition is not quite clear, but if other people are to be protected—which may not be a bad thing—the burden on those who are in low-paid work will be increased even further.

This is the direct opposite of what the Government say they want to do in incentivising work, and I do not believe that making such a change will alter the way local authorities work. In fact, I do not think we need to do that. This Government are very good at tilting at windmills, and the windmills are creations in their own head. We have heard about one from various speakers today, and it runs like a thread through the consultation: the suggestion that local government is not interested in creating jobs or encouraging development and industry. I do not recognise that feature of local government. Indeed, during my 16 years as a councillor, we were more often accused of favouring business over local people at various times. We created a large office park development in the city, which would not have happened had the local authority not put together the land assembly and the infrastructure and encouraged that to happen. That happened without having our local business rates in our own hands.

I simply do not recognise this false stereotype. It shows that a Government who say they believe in localism actually have a very poor attitude to local government and those who serve it. This Bill will be unhelpful in a lot of ways, not least because it will make the working relationship between Government and local government worse, not better. There is no respect in it for the very hard work that local authorities are putting in. We should not be perpetuating such a factless myth when we are trying to encourage localism.

It is not too late. One Government Member suggested that it is somehow too late to deal with the council tax benefit, but even the Welfare Reform Bill has not yet passed into law. It is not too late for the Secretary of State and his colleague in the DWP to get together and find a better system.