Local Government Finance Bill

Yes, I agree, and we will consider those people as we proceed with discussions this evening. That is the group most often forgotten about in these discussions, and the most at risk. There is also a huge risk to local authorities; councils will find themselves bearing all the risks of the scheme, because there is to be a move from annually managed expenditure, whereby local authorities were reimbursed for correctly processed claims, to a grant—a grant, moreover, that has to come within the Government's expenditure totals. Any rise in benefit claims—any unforeseen problems such as the closure of a major employer—will mean local councils bearing potentially large costs, with no guarantee of reimbursement from the Government. If the Government move to multi-year settlements—it seems from the response to the consultation that they want to do so—that financial risk will simply increase. According to their response to the consultation, the Government believe that the problem can be tackled by billing and precepting authorities sharing risks, and that deficits can be tackled either by a general increase in council tax, which, as many hon. Members have said, is difficult in the current circumstances, or by allowing billing authorities to vary the amount of precept paid to precepting authorities to"““reflect any fluctuations in collection rates””," as the Government put it. In other words, that transfers part of the financial risk not back to Government, but to another authority, thereby creating further instability in that authority's system, and the result is likely to be cuts. Although the Government have said that they will assess the transitional costs of the scheme—whether authorities will be reimbursed for all those costs remains to be seen, because there is not a great track record on this—that does nothing to tackle the inherent financial risks, and the built-in disincentive to encourage people to make claims. In the past, many local authorities have done excellent work encouraging people to claim the benefits to which they are entitled. I am sure that many of them will still do so, but now, if a council encourages more people to claim, it will have to bear the costs, and that is a ridiculous system.