Local Government Finance Bill

I would have no problem with a national scheme that was administered locally. The current system with the DWP is cumbersome, but I agree with the hon. Gentleman, because the Bill is going to create an absolute technicolour dreamcoat of schemes throughout the country, including some next door to one another, as we have just heard, in Poole, where two local authorities could have two completely different schemes because of their local circumstances. However, this is a cleverly construed proposal, and we have to keep exposing what the Secretary of State is up to, because he talks about the devolution of decision making, which is what the measure is, but it is the devolution of decision making—with blame. He is instigating a cut of 10% in council tax benefits and saying to local councils, ““Right, you decide how it will actually be administered.”” Then, when they take those tough decisions, he will stand back and say, ““It's not my fault, it's the local council's fault.”” I remind Government Members that that will include Liberal Democrat and Conservative councils. They will have to make tough decisions. The Secretary of State is prepared to hide behind those councils. I accept that he has written off most Liberal Democrats and does not care about them, but the effect will also be felt by local Conservatives. Amendment 79 is actually quite modest. It states that if we are going to introduce the new scheme, we should start on a neutral basis. It asks for a level playing field so that everybody knows where they are, with no 10% cut. We will talk later about time limits. The fact that this all has to be done by 31 January 2013 will scare many local authority treasurers to death. They are having to second-guess what contingency they will need to bring the scheme in. The Bill makes no assessment of the differences between councils. Councils with a large number of council tax benefit recipients, which are mainly in the north of England, will not only have the problem of administering such large numbers of people, but will be disproportionately affected. I will give some examples. County Durham has 63,494 council tax benefit claimants, which is 15% of the population. That costs £55.1 million. In comparison, Hart in Hampshire has only 3,029 council tax benefit claimants, which is 4.2% of the population. That costs a mere 3% of expenditure. Likewise, the famous Wokingham, which we cited last week, has only 5,159 claimants, which is 3.9% of the population. That makes up 5.3% of the council's total expenditure. The 10% cut and the administrative nightmare of bringing it in will be a lot easier to manage for councils with a small number of council tax benefit recipients. The Secretary of State talks about localism and devolving matters to local councils, but if we read the Bill carefully, we see that he has kept back powers for himself. If he is not happy with the scheme or a council does not implement it by 31 January 2013, he has the power, by order, to implement it. It is not clear whether he will intervene in that way if he is not happy with how a council implements the scheme. The hon. Member for Mid Dorset and North Poole is correct that the problem with the scheme is that it comes with the 10% cut. It is important to look at the people who are in receipt of council tax benefit. The myth peddled in the media and by the Conservative party is that they are largely people on benefits. The statistics to September 2011 show that 5.9 million people are in receipt of council tax benefit in Great Britain. Of those people, 2.2 million are pensioners, who will not be affected by the scheme. Of the people who will be affected, 1.9 million or 33% are in receipt of standard non-passported benefits—that is, they are not claiming benefits—and the remaining 3.9 million or 67% are on various benefits. Of the people on benefits, 1.3 million receive income support, 600,000 receive jobseeker's allowance, 300,000 receive employment and support allowance, and 1.7 million receive pension credit. A large number of people, through no fault of their own, will see their incomes squeezed. Once the 10% is cut and the pensioners are taken out, if the number of recipients in an area grows through unemployment, for example, the local council will have two choices: it could cut benefits further, which is what some will do, or it could raise council tax to plug the gap. As we saw last week, the problem is that the ability of councils to raise council tax differs. In north-east England, where 50% of properties are in band A, the option for councils to raise council tax is limited, compared with Surrey, where the figure is 2%. Will the scheme disproportionately affect councils with a large number of council tax benefit recipients? Yes it will. The 10% cut will lead to a lot of uncertainty over the next 12 months, because council treasurers do not know what income they will get. It will be difficult to bring the scheme in within the time scale set by the Government. As my hon. Friend the Member for Warrington North (Helen Jones) said, if there are large numbers of job losses in certain areas, will the councils be compensated? They will not be, under the proposed scheme. The burden will fall on deprived areas, causing them a double whammy. When we discussed business rates last week, we talked about Alcan, a large employer in Northumberland that employs 500 people. If we lost that one employer, most of those people—most of whom live locally in Northumberland—would apply for council tax benefit. That would add a burden to the council, which is Liberal Democrat-controlled at the moment, but will not be for much longer if the proposals are passed. The amendment is modest and asks only for a level playing field at the start. Having seen previous Governments mess around with local government finance, I warn the Minister that when things are done in haste, they always come to be regretted. I think that the Government will come to regret this proposal. When this mess happens, we need to say from day one that it is the fault not of hard-working local councillors, but of the Minister, the Government and the Conservative and Liberal Democrat Members who voted for it.