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Sir Paul Beresford: The Minister is right about the reserve powers, which relate specifically to the provisions on subjective capping, but my hon. Friend is right when he talks about crude and universal capping, which applies to the council tax benefit subsidy limitation--or capping, by any other name.
Mr. Waterson: I am sure that the Minister and I will both be relieved to be right, but on different subjects.
It is worth repeating the powerful comment of the hon. Member for Normanton (Mr. O'Brien). It expresses in words that I could not find the extent of the sense of betrayal felt not only in local government but in Labour-controlled local government. He said:
Before, we had crude and universal capping, which was bad--there is an element of "Animal Farm" about this--and now we have what some of the boffins call refined capping, which is good. It is really a question of what one calls it. Capping is the policy that dare not speak its name. The word "capping" does not even appear in the title or in other parts of the Bill, as has been pointed out in an amendment.
I did not have the pleasure and privilege of serving in Committee on the Bill, but I appeared for the official Opposition in the Second Standing Committee on Delegated Legislation when we considered the crucial statutory instrument that underpins the Bill. Any casual observer reading the title of the instrument would not immediately recognise it as an attempt to bring back a form of capping. It is the Local Authorities (Alteration of Requisite Calculations) (England) Regulations 1999. The title does not give much away.
That measure, along with the part of the Bill that relates to it, does not have a friend in the world. I put it to the Minister in Committee that not one authority or organisation connected with local government had a good word to say about the proposals. At the last count--the Minister is welcome to correct me if the figure has gone up--129 councils and groups of councils had expressed their opposition to it.
Mr. Bernard Jenkin (North Essex):
They have been sent away.
Mr. Waterson:
My hon. Friend may be right. It was pointed out in the Committee considering the regulations that 19 of the 22 poorest councils would be hit thehardest and the hon. Member for Sutton and Cheam (Mr. Burstow) said that the main burden will fall on people in property bands A and B.
I will not detain the House today with a detailed discussion of the formulae and the calculations--
Mr. Waterson:
I am open to persuasion. Suffice it to say that the Local Government Association got it right when it said:
Mr. Oliver Heald (North-East Hertfordshire):
All Labour.
Mr. Waterson:
As my hon. Friend says, those authorities have one thing in common: they are controlled by the Labour party or return Labour Members of Parliament. Where are their representatives during this debate?
Ms Armstrong:
What about being non-partisan?
Mr. Waterson:
If the Minister wishes to intervene, she knows that I am generous about giving way, but she must not keep up a running commentary during my speech.
As I said in the Committee considering the regulations, the disparities will get worse in future. The LGA put it graphically:
Mr. Waterson:
I am delighted that the hon. Gentleman has caught up with the fact that this Government like to do things by stealth. Perhaps one of his more elevated colleagues would care to raise that in one of the Cabinet Committees in which they are involved.
An article in the Local Government Chronicle stated:
Mr. Burstow:
The hon. Gentleman is right to raise council tax benefit subsidy limitation. However, does he accept that the regulations that the Government used to introduce it were based on powers established in the Local Government Finance Act 1992, which was enacted by a Conservative Administration? They also built on the principle of council housing benefit clawback established by the previous Government.
Mr. Waterson:
The hon. Gentleman demonstrates the enormous benefit of never having been in power and of having no hope of it. It is always someone else's fault. It would perhaps be kinder to say that the hon. Gentleman implies the benefit of sunset provisions in regulations. If there had been such a provision in 1992, we would not be here today. Of course, we would not be here today, either, if the Government had not pulled stumps last night.
The Bill has the effect of reintroducing capping, although we may not breathe that word. The handful of Labour Members who are here, and any watching on television, must realise that it introduces capping in all but name. I hope that those whose constituencies are most seriously affected will say something, if not to the House, at least to their constituents, to justify their support for the Bill. I hope that some of them will--despite the pressure of the Whips--think twice about supporting the Bill.
My hon. Friend the Member for Mole Valley gave a good summary of the intent and purport of several amendments. Amendments Nos. 98 and 117 would insert the true name of the Bill and its real effects by referring to limitation and capping. The statutory instrument intimately associated with the Bill could not, as I have said, have had a more misleading title. One has to search for clues as to what the regulations mean.
Amendment No. 1 was tabled by the Liberal Democrats. Bizarrely, though this is not untypical of that party, it suggests that it is all right to have the regulations
for a period--say, five years--but equally all right not to have them afterwards. I cannot see the logic of that. Either the system is fair and useful, or it is not.
Mr. Sanders:
Amendment No. 1 is identical to one tabled by the hon. Member for North Essex (Mr. Jenkin) in Committee.
Mr. Waterson:
I have not said that we would not vote with the Liberal Democrats on that amendment. Anything, however strange, that waters down the effects or the time scale of the regulations must be worth supporting.
Amendments Nos. 101 to 103 would remove the power to distinguish between individual authorities rather than categories of authority. My hon. Friend the Member for Mole Valley was right to say that it is invidious to pick on individual authorities. Perhaps that will happen if their names begin with W and they are successfully run by Conservatives in London. Amendment No. 105 is the same.
Adding the Greater London authority to the provisions was debated, if not in the Standing Committee on the Bill, then in another Standing Committee. My hon. Friend the Member for Mole Valley dealt extremely well with a bizarre result of the regulations, which is that authorities that set budgets below SSA can be caught in the net. We have said before that that is something that Ministers should look at again.
We feel sufficiently strongly about amendment No. 84 wish to press it to a Division at a convenient moment. Amendments Nos. 84 and 85 would take out of clause 29 subsections (7) and (11). That would remove the commencement provision affecting the financial year 1999-2000. In other words, it postpones the provisions, which is entirely right. I agree with what the Liberal Democrat spokesman had to say on that. Apart from anything else, the Local Government Association has been strong and persuasive from the start on the point that these measures are not only wrong and ill thought out but are being introduced far too quickly. It believes that time should be set aside to consult further and consider whether there are other, more sensible ways of achieving the same results in a fairer and more effective way.
Amendments Nos. 42 and 43 seek to limit the scope of the Secretary of State's powers, as so many of the amendments do. The Bill allows him to cap authorities even if they are spending below the SSA set by the Government. That goes beyond what is fair: it is nonsensical. Our amendments seek to restore the more sensible principles that have hitherto underpinned capping. Councils would be allowed to spend up to one eighth more than SSA before being capped. While local taxpayers would be afforded protection, councils would be allowed to increase spending year on year, but would not be given an incentive to do so in order to protect their base for future increases. Again, that is a sensible attempt to amend the Bill.
Amendment No. 108 would oblige the Secretary of State to take into account the council tax levels of authorities in the same category, as my hon. Friend the Member for Mole Valley explained. Thus London boroughs would be compared with London boroughs shire districts with shire districts, and so on.
Amendments Nos. 113, 109, 111, 110, 114, 115 and 117 would ensure that local authorities were treated equally by the capping system. They would require the Secretary of State to determine categories of authority to which various capping criteria would apply and oblige him to announce those criteria in advance. The amendments are intended to reduce the arbitrary nature of the Secretary of State's powers under the Bill, and to provide local authorities with greater certainty that they will not be singled out for special treatment by the Government.
Nothing that the Government have done in their time in office or that Ministers have said during debates on the Bill gives us any confidence that they will be above singling out authorities whose record or complexion they disapprove of and penalising them under the provisions in the Bill. We think that it is too much of a temptation for Ministers in this or any Government to have such powers. The powers should therefore be reduced or watered down.
The LGA speaks for all political complexions across local government. It argued long and hard for a time limit on the capping scheme, which was rejected by the Government. In its latest briefing, it has said that it remains opposed to the present council tax benefit limitation proposals for the reasons that it spells out. It says that the scheme will
"If a council in the poorer group of local authorities tried to increase its council tax over its budget requirements to sustain services, the application of the council tax benefit subsidy limitation scheme would be devastating because of the clawback of the rate support grant."--[Official Report, 4 February 1999; Vol. 324, c. 1152.]
That is absolutely right. As my hon. Friend the Member for Mole Valley said, the nearly poor would be subsidising the poor in some areas.
"The scheme will impact unfairly on different parts of the country . . . the worst hit being those with the highest proportion of low value property and the highest percentage of benefit recipients . . . It will be felt hardly at all in prosperous areas of the South East. It will have much more of an impact in inner London and on Merseyside."
In that sense, I am not speaking on behalf of my constituents in Eastbourne or for my hon. Friends' constituents in other parts of the south-east: we are speaking for the constituents of hon. Members who represent the worst affected areas. It is worth listing them because they include Liverpool, Hackney, Tower Hamlets, Manchester, Newham, Islington, Lambeth, Waltham Forest, Knowsley and Southwark.
"the scheme could become the thin end of a very unpleasant wedge."
24 Mar 1999 : Column 422
A well-behaved authority that tries to do well underthe regulations will not get any benefit. From the Government's point of view, it is a win-win situation. An authority cannot prise more money out of the Government by doing better than expected under the regulations.
Mr. Sanders:
Does the hon. Gentleman agree that this is another example of a stealth tax that will shift the burden of taxation on to council tax payers?
"One of the starkest examples of how the scheme has a different impact across the country, despite built-in safeguards, is that of Liverpool City Council and Wokingham DC."
It goes on:
"Based on each council exceeding the guideline amount for subsidy limitation by 1 per cent. of their Standard Spending Assessments, Liverpool would lose £926,000 and Wokingham would lose just £29,000."
That is incredible.
"hit the poorest areas hardest.
That must have a knock-on effect on local democracy. The LGA brief continues:
It is Government's responsibility to meet the cost of welfare benefits.
The public's understanding of council tax increases will be further diminished rather than enhanced."
"The guideline increases could be seen as a direct substitute for crude and universal capping.
So no one who knows anything about local government at any level has a kind word to say about the proposals. Not only that, but the Bill is being rushed through. The debate is being guillotined today, as we have discussed--it is not a proper matter to return to. How typical of the Government's attitude not only to the Bill but to Parliament in general.
The scheme is not justified on grounds of administrative efficiency".
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