Clause 8 — Council tax reduction schemes
Bills Presented — Department for Environment, Food and Rural Affairs (Relocation to Bristol) Bill
Helen Jones (Warrington North, Labour)
My hon. Friend is, of course, right. In trying to remedy the problem, the most disadvantaged councils will be those with the lowest tax bases. That has been true throughout all our discussions on the Bill. If demand goes up, councils will be faced under this scheme with either bearing the extra cost or, more likely, redesigning their schemes to restrict the number of those eligible. The Chartered Institute of Housing said it very clearly: council tax benefit awards will be
“squeezed precisely at the point at which there is the most need for help amongst low income households.”
London Councils estimated that if this scheme had been in place earlier, a shortfall of £400 million would have been faced in the five years to 2009-10.
The Government say that councils can do something about this. The Minister for Housing and Local Government says in what I have to say reads like a rather garbled piece of evidence to the Select Committee that considering whether to pass on the 10% reduction to claimants or to find the money elsewhere was “old-school thinking”—or what the rest of us might call “doing your sums”. I am sure that councils facing these cuts will have been relieved to hear that they could reduce the bill
“not by unfairly not paying people who are vulnerable and need it”,
which seems to me to be the precise effect of this scheme; no, he said, councils should be ensuring that there is
“a definite interest in starting up that new industrial estate, business park and getting economic activity going so there are jobs.”
Let me say this slowly, so that Ministers can understand it. If a firm closes down or lays off staff, a new business park does not open up the next day. People are out of work; they claim benefit; and if there is not enough money to pay that benefit, councils either have to cut what is available or find the money somewhere else from budgets already facing massive cuts. It is staggering to hear a Government who have presided over a rise in unemployment to 2.6 million and who have seen the economy flatline lecturing local councils about the need to open business parks. Only the Minister for Housing and Local Government, whose overwhelming self-confidence is matched only by the staggering depths of his ignorance, could come out with such nonsense.
It is not surprising that the Select Committee was unimpressed, saying:
“We have seen little evidence to support the hope that the new and better-paying jobs for individuals, immediately sufficient to offset the 10% reduction in the benefit budget will inevitably follow from these incentives.”
It continued to stress what we have talked about throughout this Committee stage—that
“the means of economic growth are never solely in the gift of individual local authorities.”
It is, of course, precisely the authorities that have already borne the brunt of the Government’s cuts that will find themselves in most difficulty with this council tax scheme.
The New Policy Institute estimated that five out of the 10 hardest-hit local authorities are among the top 10 most deprived areas in the country: Hackney, Newham, Liverpool, Islington and Knowsley. In the Liverpool city region, for example, the current proposals would result in cuts of between 17% and 23% for people of working age—those who are not pensioners. Let me give one example. A single person in Halton in a band A property would have to find £179.92 a year extra. In Sefton, which has a higher than average number of pensioners, a minimum reduction of 23% will be required for people of working age. A couple living in a band A property would have to find an extra £226.72 a year.
Those might not seem large sums to Government Members, but to people who have to count every penny, who sometimes run out of money before the end of the week, they are simply impossible to find. That is why we have tabled these amendments—to ensure that the needs of people of working age and those in poverty are taken into account. Where is this extra money going to come from? Do Government Members believe that it can be somehow magicked out of thin air? This does not even provide incentives to work, even if there were jobs to go to. The Government are not clear about the vulnerable households that should be protected. They have made it clear that they want to protect pensioners, but they are singularly unclear about other vulnerable groups. If, as is likely, local authorities will have to protect those on employment and support allowance, jobseeker’s allowance and income support, there will have to be an even bigger cut for the unprotected group—overwhelmingly the working poor. We have a Government who claim that they are freezing council tax, but they are actually increasing it for those least able to pay.