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The Prime Minister: Horse passports—that was a good one. I do not think we eat horses in this country, but the previous Government, in their wisdom, decided that every one needed a passport. That is just one example. In future we can ensure that we do only what is absolutely necessary, rather than gold-plating.

Jim Sheridan (Paisley and Renfrewshire North) (Lab): Will the Prime Minister share with the House and the country what influence, if any, his Back-Bench Eurosceptics have had on his thinking during these discussions?

The Prime Minister: I think the Conservative party is entirely united in thinking that Britain is not right to sign this treaty.

Penny Mordaunt (Portsmouth North) (Con): I congratulate the Prime Minister on defending Britain’s interests, and I note what he says about Iran and Syria. Does he think that if we had a common EU defence policy, HMS Dauntless would now be readying to sail to the south Atlantic?

The Prime Minister: The point is this: we should make sure that NATO is the cornerstone of our defence and we should be very clear about our own defence responsibilities—I have spoken about the Falklands. We need to win the argument in Europe that there is no point in having endless competing defence headquarters. What we need throughout NATO, particularly in Europe, is greater defence capacity, and we need to encourage other European partners to invest in that.

Jonathan Ashworth (Leicester South) (Lab): Will the Prime Minister explain how he will take action, as he says, if this non-EU treaty under which the 25 nations can take advantage of the full force of the EU institutions, encroached on our national interest and undermined the single market?

The Prime Minister: Let me explain: there are uses of the EU institutions set out in previous treaties—mostly put through this House by the Labour Government—but this treaty outside the EU goes further than that, and that raises legal issues. We have said very clearly, including in the EU Council last night, that if that were to encroach on the single market and threaten this country’s national interest, we could take action, including legal action.

Tony Baldry (Banbury) (Con): The UK is fortunate in having many excellent professional bodies—engineers, architects, surveyors, lawyers and so forth—but often they find it difficult to practise within the European Union because of a host of national barriers to professional practice. In the context of the single market, improving competitiveness and creating jobs, has the Council taken steps to remove some of those national barriers to professions being able to practise throughout the EU?

The Prime Minister: My hon. Friend is entirely right to raise that big gap in the single market. We passed the Single European Act all those years ago—more than 20 years ago—yet the professions and services have still not been properly opened up. The action we are taking is for all Governments to agree to open up those professions, and on this occasion the European Court of Justice

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may actually be helpful in that the Commission is taking infraction proceedings against a number of member states—Germany included, I think—to make sure that they genuinely open up their professions and complete the single market.

Ben Gummer (Ipswich) (Con): On the radio today, the shadow Foreign Secretary claimed that Britain had lost influence in Europe. In the matters of the single market, competitiveness, Iran and Syria, what does the Prime Minister feel was achieved by the British presence at the European Council?

The Prime Minister: The specific foreign policy stances taken by the EU are all agreed by unanimity, which proves that agreement by unanimity is possible if there is political will and drive. Almost the entire approach to Iran and Syria and Burma was something that the British requested be discussed at the Council and we requested that there be a statement. I think that shows that with political will, but with unanimity, it is possible to get a lot done.

Kevin Brennan (Cardiff West) (Lab): Does the Prime Minister realise that the more he denies that this is effectively a European treaty, the more he reminds us of comical Ali denying that an invasion had taken place while the tanks rolled by behind him?

The Prime Minister: The hon. Gentleman is in for a big surprise. When no treaty arrives in the House of Commons, he will have to do a bit of explaining.

Martin Horwood (Cheltenham) (LD): On Iran, did the European summit discuss the planned regional conference on non-proliferation of weapons of mass destruction, and does the Prime Minister agree that it might offer a vital pathway out of an increasingly dangerous stand-off?

The Prime Minister: We did not discuss that specific matter. It is entirely right and worth while to try to bring regional neighbours into the debate, but I have to say that it is some of the regional powers that are the most concerned about Iranian activity, not only in their own countries but in stirring up trouble elsewhere, so it is probably only part of what needs to happen, which is to get the Iranian Government to change their strategic direction.

Mark Durkan (Foyle) (SDLP): The Prime Minister has highlighted a growth test to ensure that all actions at European Union level fully support growth and job creation. This new “I can’t believe it’s not an EU treaty” will prescribe prolonged and tight austerity for many economies, affecting not only services there but trade and commercial capacity more widely in Europe. Would this non-EU treaty pass any meaningful EU growth test?

The Prime Minister: If the hon. Gentleman is so against the treaty, I am surprised that he is not praising me for making sure that Britain is not involved in it; I would have thought that would be the first thing that he would say. We have to understand that the countries of the eurozone want to take an approach that prescribes rules on debt and deficit. We can all have our own views

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about whether it is the right approach or whether it is too tight, and all the rest of it, but that is what they want to do; I do not think that we should stand in their way as it is done, but it is better done outside the European Union.

Several hon. Members rose

Mr Speaker: Order. There is still a very significant number of colleagues seeking to get in. I would like to try to accommodate as many as I can, but if I am to do so, brevity is essential.

Mr Julian Brazier (Canterbury) (Con): My right hon. Friend the Prime Minister outlined in his speech at the Council several criteria needed for a successful monetary union, none of which have really been met by the changes, however welcome, outlined there, so may I urge him to continue to plan, while doing everything that he can to co-operate constructively, for the likely eventual break-up of the eurozone?

The Prime Minister: We have to plan for all eventualities, but I would make two points. As I have said, I think we have to respect the fact that the countries of the eurozone want to make it work. They have taken quite a number of steps that are painful and difficult for individual sovereign countries to take, and it must be in our interests, because we want the European economy to grow, for them at least to take the short-term measures to take the heat out of the crisis. There were some signs of the crisis easing at the beginning of this year, as Italian and other bond spreads have come down, but we are far from through it.

Mr Christopher Chope (Christchurch) (Con): Will my right hon. Friend expand on the basis on which we were able to find common cause with our good friends in the Czech Republic?

The Prime Minister: The point came when different countries had to decide whether they wanted to sign up to the treaty or not; it is not a treaty within the EU, so there is no compulsion to do so. The Czechs, on 9 December, were not sure whether they wanted to sign it. They then considered whether they wanted to, and last night they decided what to do, as everyone had to; the only person who cannot seem to make a decision is the leader of the Labour party, who has no idea whether he is against it, in favour of it, or does not know. One day, he will have to decide.

Nadhim Zahawi (Stratford-on-Avon) (Con): What message does my right hon. Friend have for the great manufacturers of this country, such as DCS Europe in my constituency, given that President Sarkozy says that Britain does not have much manufacturing left?

The Prime Minister: The point that I would make gently to my friend Nicolas Sarkozy is that, if one looks at the figures, Britain actually has a higher percentage of industry than France does, but we think that we need to rebalance even further; we want to see a growth in manufacturing, technology and aerospace, but we do not believe that we should do that by damaging the

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financial services industry, which employs many people not just in the City of London, but right across our country.

Andrew Bridgen (North West Leicestershire) (Con): The overwhelming majority of my constituents, and indeed the country, already believe that the European Union has far too much power over the United Kingdom. Does my right hon. Friend agree with that, and if he does, is he as amazed as me that the leader of any political party in this country that claimed to be in touch with public opinion could argue otherwise?

The Prime Minister rose—

Edward Miliband: Briefing note N.

The Prime Minister: I think it is briefing note N, and there is plenty in it; it is full. I think the best one in briefing note N is on whether or not the leader of the Labour party would like to join the euro. I know that the House enjoys this, so I might share it one more time: when asked whether he would join the euro, he said,

“It depends how long I'm prime minister for.”

This is the one thing that the shadow Chancellor and I, who often disagree, have in common: we are not going to let it happen.

Mr Philip Hollobone (Kettering) (Con): The German Chancellor was on the radio this morning saying that she firmly expected the fiscal union to be inside the EU treaties within five years. What part of the British veto is giving her such hope and encouragement?

The Prime Minister: The point is that the countries that have signed the agreement want to fold it into the EU. That cannot happen without the permission of every country, and those people who say that the veto did not have effect perhaps need to explain why they want to fold the treaty back into the European Union. It seems to me that that is a very powerful point.

Neil Carmichael (Stroud) (Con): I welcome the statement because of its focus on competition, the single market, and energy. It is great that the Prime Minister has demonstrated British leadership in those fields, and he has added useful advice to the discussions, but will he ensure that we continue to have dialogue with our European partners? It is absolutely essential that they know and understand where we are coming from and what we can contribute.

The Prime Minister: My hon. Friend is entirely right. As I have said, last night’s meeting proved that it is perfectly possible to stay out of parts of agreements that other European countries want to go into, but have real influence on the things we care about, such as the single market.

Margot James (Stourbridge) (Con): I welcome the fact that the agreement places no new obligations on the UK, but is it not the case that the agreement, whatever its merits or disadvantages, should not distract us or our EU partners from the necessary task of ending the barriers in the single market and reducing regulation?

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The Prime Minister: My hon. Friend makes an important point. Of course the eurozone countries want to see rules on fiscal discipline, but as I have said many times, it is not just fiscal deficits that have to be addressed, but trade deficits, and that is where the single market agenda can help not only countries such as ours, but theirs too.

Joseph Johnson (Orpington) (Con): I welcome the Prime Minister’s commitment to trade deals with fast-growing parts of the world. An ambitious trade deal between the EU and India, which would help us double our trade with India by 2015, has eluded negotiators since 2007. Does he agree that next week’s EU-India summit in Delhi should see a clear timetable for the delivery of an ambitious deal as soon as possible?

The Prime Minister: My hon. Friend is entirely right, and I know that he has a lot of experience in this sphere. We are totally committed to trying to get this free trade agreement going. I think that there are real opportunities for both sides. I have mentioned the fact that we want to open up retail and services in banking and insurance in India. Frankly, we will have to do quite a lot of work to convince the Indians that that is in their interests too, but I profoundly believe that it is, as they want to be a rapidly growing success story of the future.

Gavin Barwell (Croydon Central) (Con): I welcome what the Prime Minister said about applying a growth test to everything that the EU does in future. Will he tell my constituents what prospect he thinks there is of applying that test retrospectively to existing EU regulations, which the British Chambers of Commerce says costs business £7.5 billion a year?

The Prime Minister: It is important to try to look at some of the existing stock of regulations, but I think that one of the things that badly needs to be done in Europe is making sure that it is not just when Economic Affairs Ministers get together that we think about growth, but that when Social Affairs Ministers and Environment Ministers get together we think about the potential costs of what they are signing up to. That does not happen at the moment and badly needs to.

Rehman Chishti (Gillingham and Rainham) (Con): I very much welcome the Prime Minister’s statement. My question relates to the discussions held on Syria. What action will EU member states take to protect civilians if Russia vetoes any UN Security Council resolution on the matter?

The Prime Minister: My hon. Friend is right to raise this matter. Clearly the Russians have taken a different view up to now and have not supported robust action at the Security Council. My right hon. Friend the Foreign Secretary is trying to build the strongest possible resolution with colleagues at the Security Council and to say to the Russians, “If you go on vetoing or preventing these motions, you will be completely outside not just world public opinion, but the very clearly expressed opinion of the Arab League itself.”

Geoffrey Clifton-Brown (The Cotswolds) (Con): Is not my right hon. Friend’s strategy of rejecting the fiscal union treaty, which would not be in Britain’s economic interests, and at the same time pushing for a

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free trade agreement with Canada, Japan and India, which has the potential to create thousands of jobs in this country, absolutely the right one?

The Prime Minister: I am grateful to my hon. Friend. I think that Britain is better off outside the eurozone, but clearly we need to get trade going with parts of the world that are growing faster, which is why these trade deals are so important to us.

Andrew Percy (Brigg and Goole) (Con): The good folk of Brigg and Goole are under no illusions about how hopelessly out of touch this House, and the Opposition side in particular, is on the European Union, but they were heartened by the Prime Minister’s veto. They are similarly under no illusion about what happens in Europe: it is where assurances are given, but ultimately breached, and a whole new set of proposals come back. What can he say to my constituents to assure them that this will not become another treaty that we end up getting sucked into?

The Prime Minister: We cannot be sucked into this treaty because we are out of it, and we can only go into it if all 27—soon to be 28—EU member states agree. That is the effect of the veto.

Mr Peter Bone (Wellingborough) (Con): I am happy to report that Mrs Bone was singing in the bath yesterday, congratulating the Prime Minister on standing up for British interests and keeping us away from German economic domination of Europe. But she was concerned, because it must be pretty miserable for the Prime Minister to go to Europe when his Deputy Prime Minister forces him to take with him an unelected left-wing Liberal. At the next conference, would it be possible for my right hon. Friend to take a moderate constituent from my constituency—perhaps Mrs Bone?

The Prime Minister: I am just relieved that my hon. Friend did not ask me what happens if I am run over by a bus, which I gather is the question that he has asked everybody else. I have been warming up for that one for some time. To be fair to the Deputy Prime Minister, I do not know whether there is room in the deposition for Mrs Bone, and I would not want to get her out of her bath.

James Morris (Halesowen and Rowley Regis) (Con): I welcome the Council’s statement on Iran, but does the Prime Minister agree that the sanctions that the EU has agreed on Iran really need to bite? Iran is in the last chance saloon, so at the European Council what systems and processes were agreed in relation to monitoring the implementation of those sanctions?

The Prime Minister: My hon. Friend is right to raise that issue. The key part of the sanctions is the oil embargo, which is a very big step for European countries to take. There is a time lag before it comes in, but I believe that it does so in July, and it is a big step, because there are countries, such as Italy, Spain and others, that have been very reliant on Iranian crude in the past. It is an important step. Europe has quite a good record of making sure that the sanctions that it imposes are put in place, but I will make sure that that happens.

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Mr David Nuttall (Bury North) (Con): My constituents warmly welcome the Prime Minister’s determination to protect our interests in Europe. Will he explain how the United Kingdom will, in practical terms, actually be able to prevent those countries that sign up to the fiscal union treaty utilising the European Commission and the European Court of Justice in a way that damages UK interests?

The Prime Minister: The guarantee that they will not damage UK interests is this. First, the treaty itself is clear that it has to be in line with EU law; it cannot override it, and it cannot get into areas such as the single market. Secondly, as I have said in answer to previous questions, if the institutions do things that are not permitted, there can be a challenge, including a legal challenge. But, above all, Britain is protected because, although others are going ahead with this treaty outside the European Union, we are not part of it.

Chris Kelly (Dudley South) (Con): I thank my right hon. Friend for his statement and for bringing greater clarity to Britain’s position, because these are complicated issues. My constituents in Dudley South were very grateful for his exercise of the veto last month, but is the ECJ, as an institution of the whole European Union, not now being unjustly used?

The Prime Minister: As I said, in pre-existing treaties there are ways in which the European institutions can be used by groups of member states. That is a fact, and those treaties, as I said, tend to be passed by the Labour party. But, if member states go beyond that, there are real legal issues, and legal issues that I have set out; and, if that were to happen, we would be able to take action to protect our national interest.

Stephen Mosley (City of Chester) (Con): I trust my right hon. Friend the Prime Minister to do what is right for Britain, but I do not necessarily trust his successors. After all, we saw the previous Government give up our hard-fought opt-out from the social chapter and give up our hard-fought budget rebate. What guarantees are there that the UK will not be sucked into this new treaty?

The Prime Minister: One of the best guarantees is the referendum lock, which we have in place in this country, which this House of Commons passed, which the Labour party opposed and which says that, if we propose any passage of power from Westminster to Brussels, there has to be a referendum. That is absolutely key to protecting our interests and to making sure that future Governments cannot give away powers that they should not.

Christopher Pincher (Tamworth) (Con): The Prime Minister has made clear his determination to secure free trade agreements with, among others, India, but will he agree to pursue with equal vigour similar opportunities in the emerging markets of Africa?

The Prime Minister: My hon. Friend makes a very important point. If we look at which continents are going to grow over the next decade, we find that Africa has a very healthy growth rate and that countries such

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as Nigeria, South Africa, Ghana and others will grow rapidly. We already have very low tariff access from African countries to the European Union, and one thing we ought to try to encourage and look at is a pan-African free trade area, so that more of their trade can take place within Africa and they can have an effective single market, as we do in the European Union.

David Rutley (Macclesfield) (Con): Given that EU regulations account for 70% of the regulatory burden on businesses, will my right hon. Friend tell the House what steps are being taken to exempt micro-businesses from EU legislation?

The Prime Minister: My hon. Friend makes an important point. This is a breakthrough in Europe. We have been arguing for a moratorium on new EU regulations for micro-businesses—those employing fewer than 10 people—and that was agreed to at the European Council. We need to ensure that it is put in place rapidly.

Andrew Selous (South West Bedfordshire) (Con): The Prime Minister is to be congratulated on what he and others achieved with the sanctions on Iran. Will he tell the House whether there have been discussions between the European Union and Asian countries so that Iran cannot sell to Asia the oil that it is now not selling to Europe? Otherwise, we will be back to where we were before.

The Prime Minister: My hon. Friend is right to raise that issue. There are two things that we need to do. First, we must ensure that countries that can increase production, such as Saudi Arabia, sell more oil to the countries in Europe that were reliant on Iranian crude. We then need to persuade Asian countries that might buy Iranian crude not to do the deals that they might otherwise have planned. We need to take action on both fronts.

Dan Byles (North Warwickshire) (Con): I strongly welcome the agreement to reduce regulatory burdens on SMEs and micro-enterprises. Although I do not expect the Prime Minister to give us a list today, will he tell the House when we can expect to see more detail on precisely which regulatory burdens small businesses in my constituency might see reduced and when?

The Prime Minister: The formal European Council on the single market, competitiveness and the economy is in March. This was a special European Council to kick-start progress on the single market. I hope that after the March Council we will have a specific list for my hon. Friend.

Bob Blackman (Harrow East) (Con): I welcome the commitments to bring down trade barriers and encourage trade outside the European Union. Will my right hon. Friend expand on the opportunities that British business will have for increased jobs, trade and commerce throughout the world?

The Prime Minister: This is an important point. In our trade with India and China over the past couple of years, we have seen increases of more than 20%. As there is a difficult situation in European markets, we have to look to the faster-growing markets of the world

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to grow our exports. That means great challenges for businesses. They have to get out there and sell. The Government have to get behind them. We need to help by opening up those markets, and particularly by allowing services full access to those markets. That is why the free trade deals are so important.

Robert Halfon (Harlow) (Con): Will my right hon. Friend say whether there were any discussions about the cost of oil and the geopolitical threats that might increase that cost? Will any action be taken by the EU to reduce the cost of oil and thereby reduce the price at the pump for motorists?

The Prime Minister: We did not discuss the cost of oil. As I have said, Saudi Arabian production is an important issue. The completion of the energy single market should help to bring energy prices down, because it will make the energy markets in Europe more efficient and ensure that there is a proper networked energy grid around Europe.

Alun Cairns (Vale of Glamorgan) (Con): More than 1 million people are employed in the financial services sector across the United Kingdom. Does the Prime Minister agree that many of those jobs could have been exposed to a significant degree if he had not used his veto in December and secured the agreement yesterday?

The Prime Minister: It is important to remember that the financial services industry is not just the City of London; it employs 100,000 people in Birmingham and more than 100,000 people in Scotland. It is important that we stand up for those people. Obviously, there is still the danger of eurozone countries going ahead with financial transactions taxes. However, Britain is making the case strongly that there are ways to ensure that the financial services industry pays its fair share through bank levies and the stamp duty on share transactions, without having a financial transactions tax, which would drive these activities to areas of the world that do not apply it. It does not work and the European Commission has said that it does not work. That is why we should reject it.

Mr Speaker: I thank the Prime Minister and the House for their succinctness, which enabled 72 Back Benchers to question the Prime Minister in 66 minutes of exclusively Back-Bench time. That shows what we can do when we put our minds to it. I am grateful to colleagues.

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Points of Order

4.59 pm

Chris Bryant (Rhondda) (Lab): On a point of order, Mr Speaker. You will know that the ministerial code of conduct makes it clear that Ministers have to provide timely answers to written questions tabled by Members of the House, which is underlined by a motion of the House.

Last December, I tabled three questions to the Secretary of State for the Home Department for named day answer on 14 December, and then another two on 20 December for answer on 10 January. I have still had no reply, so last week I decided that I would table a question asking when I was going to get an answer to those questions. I was very excited yesterday to get a reply, which said, “I will reply as soon as possible.” Surely the ministerial code means that we must get substantive replies, not evasive ones that make it look as though a question has been answered when it has not actually been answered.

Mr Speaker: I am grateful to the hon. Gentleman for his point of order, and I would say two things in response to him. First, he is of course right that the reply that is forthcoming should be not only timely but substantive. It is not good enough for Ministers to provide holding replies in such circumstances, particularly when they are provided very late, simply saying, “I will reply as soon as possible.” It must be a substantive reply.

Secondly, moderately vivid imagination though I possess, a fact to which I made reference in responding to someone last week, I really cannot imagine a colleague whom it is more impolitic or foolish to fail timeously to answer than the hon. Gentleman, for there is no colleague more absolutely certain to make a very substantial and justified fuss about it for some considerable period after the non-event.

Chris Bryant: Is that a compliment?

Mr Speaker: The hon. Gentleman should take his compliments when they come to him. It was.

The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt): On a point of order, Mr Speaker. In the course of oral questions earlier, there were a number of questions about the deaths of Alex Kelly and Jake Hardy in youth custody, and in my replies I said that there had not been a death in custody of such a kind since 2007. Of course, that overlooked the case of Ryan Clark, who died in April 2011 and for whom an inquest verdict is still awaited. I should like to take this opportunity to correct the record.

Mr Speaker: I am most grateful to the Minister for doing so, and for doing so as promptly as he has. It will be noted and appreciated by the House.

Bills Presented

Department for Environment, Food and Rural Affairs (Relocation to Bristol) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for Environment, Food and Rural Affairs to Bristol; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 279).

31 Jan 2012 : Column 705

Department for Business, Innovation and Skills (Relocation to Sheffield) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for Business, Innovation and Skills to Sheffield; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 280).

Department for Transport (Relocation to Birmingham) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for Transport to Birmingham; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 281).

Department for Culture, Media and Sport (Relocation to Manchester) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for Culture, Media and Sport to Manchester; and for connected purposes,

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 282).

Department for Education (Relocation to Nottingham) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for Education to Nottingham; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 283).

Department for International Development (Relocation to Newcastle) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for International Development to Newcastle; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 284).

Department for Work and Pensions (Relocation to Leeds) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for Work and Pensions to Leeds; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 285).

Department for Communities and Local Government (Relocation to Liverpool) Bill

Presentation and First Reading (Standing Order No. 57)

31 Jan 2012 : Column 706

John Mann presented a Bill to require the Secretary of State to relocate the headquarters of the Department for Communities and Local Government to Liverpool; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 286).

English Police Forces Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to reduce the number of police forces in England to ten; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 287).

Local Government (Amendment) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to amend the Local Government Act 1992 to allow for the establishment of unitary authorities throughout England; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 288).

Armed Forces (Germany) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the Secretary of State to repatriate to the United Kingdom before the end of 2015 all British military personnel serving on British military bases in Germany; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 289).

Child Benefit (Amendment) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to amend the Child Benefit Act 2005 to disqualify nationals of European Union member states other than the United Kingdom who are resident in the United Kingdom with children living overseas from eligibility for child benefit payments; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 290).

Parliament (Amendment) (No. 2) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to make provision to limit the membership of the House of Lords to 300 unpaid members; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 291).

Local Government Finance (Amendment) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to amend the Local Government Finance Act 1992 to provide for an additional council tax band applicable to second homes; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 292).

31 Jan 2012 : Column 707

Local Government Finance (Amendment) (No. 2) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to amend the Local Government Finance Act 1992 to provide for three additional council tax bands applicable to homes valued at over £500,000, £1 million and £1.5 million respectively; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 293).

Public Sector Salaries Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to stipulate a maximum salary for public sector employees; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 294).

Public Sector Bonuses Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to prohibit the payment of bonus payments to higher rate taxpayers working in the public sector; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 295).

Corporate Tax Reductions Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to require the authorisation by Parliament of corporate tax reductions by amounts exceeding £100,000 by Her Majesty’s Revenue and Customs; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 296).

Ministerial and Other Pensions and Salaries (Amendment) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to abolish the payment of grants to persons ceasing to hold Ministerial and other offices; and for connected purposes.

31 Jan 2012 : Column 708

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 297).

Parliamentary Standards (Amendment) (No. 2) Bill

Presentation and First Reading (Standing Order No. 57)

John Mann presented a Bill to provide that Ministerial salaries shall not exceed the basic salary paid to Members of Parliament by more than 25 per cent.; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 298).

Mr Speaker: Hon. Members have a date for their diaries, and it is clear that the hon. Member for Bassetlaw (John Mann) is an exceptionally busy bee.

Mr George Howarth (Knowsley) (Lab): On a point of order, Mr Speaker.

Mr Speaker: Order. We will come to the right hon. Gentleman. We are saving him up and we will keep the best until last.

Recall of Elected Representatives (no. 2) Bill

Presentation and First Reading (Standing Order No. 57)

Zac Goldsmith presented a Bill to permit voters to recall their elected representatives in specified circumstances; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 300).

Mr George Howarth: On a point of order, Mr Speaker. Will you assist the House by letting us know whether somebody has amended the number of hours in the day on Friday 27 April?

Mr Speaker: Not yet, but don’t encourage them—[Laughter.] I am glad that the House is in such an upbeat and buoyant mood.

31 Jan 2012 : Column 709

Electricity Generation (Wales)

Motion for leave to bring in a Bill (Standing Order No. 23)

5.6 pm

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): I beg to move,

That leave be given to bring in a Bill to provide that powers relating to energy generation in Wales be devolved to the National Assembly for Wales; and for connected purposes.

The Welsh people are very protective of their natural resources. It was the UK Government’s decision in the 1960s to allow Liverpool Corporation to drown a Welsh valley and the Welsh-speaking village of Capel Celyn that led to my party, Plaid Cymru, winning the historic Carmarthen by-election in 1966. That seismic moment in the history of these isles also led to our Scottish sister party’s securing representation in the House, and the speeding up of the political dynamic that led to the creation of devolved Government and legislatures in Scotland and Wales.

We are living in historic times, and if the British state is to survive there needs to be a radical realignment that appeases the aspirations of the Celtic peoples of these islands to govern themselves and shape their own future. In the case of Scotland, it is probably too late.

Wales is an energy-rich nation. According to the Welsh Government, we have the potential to produce twice the electricity we require for our needs. According to the Department of Energy and Climate Change here in London, we are a net exporter of electricity. Yet in Wales, energy prices are among the highest in the British state, and we have some of the highest energy poverty levels. Clearly, something is going wrong somewhere. Unfortunately, some Unionist politicians seem happy to accept that unjust situation.

The topic of my maiden speech was fuel poverty. Having worked for the CAB movement before entering the House, I became acutely aware of the blight of fuel poverty on our communities. I remember doing a radio phone-in interview for the BBC, when somebody phoned in to explain that he depended on using a hairdryer to heat his flat during the winter. The fact that using such a device is more costly than orthodox heating methods misses the point. It shows the desperation that many households face in my country.

With, according to the campaign group National Energy Action Wales, a quarter of Welsh households in fuel poverty, we need radical solutions. I would like to put it on record that I am disappointed to read reports in the press this week that the Welsh Government have decided to scrap their fuel poverty advisory body, on which I once served.

Nobody in an energy-rich nation should suffer from fuel poverty so my party and I view control of our natural resources, energy-generation planning policy and energy policy as a whole as a key element of dealing with some of the major social justice issues we face.

Control over energy policy is also a key element of our vision of creating a new, dynamic economy for our country. Indeed, sustainable development is written into the constitution of Wales as a legislative country. We reject the vision of dependence and fiscal transfers from a self-serving London elite that some of our opponents

31 Jan 2012 : Column 710

accept as an article of faith. We want a future for Wales in which we can stand on our own two feet and chart our own course in history.

Our natural resources offer huge opportunities for our country, but if those opportunities are to be realised, those resources need to be utilised in the interests of our country and our people. We cannot allow our natural resources to be pillaged for the benefit of others as our iron, coal and gold reserves were. This will be a major political dividing line for the future, and there are clear dangers for politicians who continue to treat Wales as a second-class nation.

Although responsibility for energy generating stations is completely devolved in Scotland and Northern Ireland, we in Wales have responsibility only for energy generation stations that generate up to a risible 50 MW. Where I come from politically, what is good enough for Northern Ireland and Scotland is good enough for Wales. We were given no reason in the debate I introduced last September why Wales had received such inferior status.

In the past 12 months, all three Unionist parties pledged in the National Assembly elections in Wales to increase the arbitrary 50 MW level to 100 MW for renewables. Is that progress? It is, but perhaps not at the speed I want. When given the opportunity to introduce that policy in the Localism Act 2011—schedule 13 to the Act, to be precise—the UK Government failed to introduce the pledges of their Welsh branches.

I thank the hon. Members for Ceredigion (Mr Williams) and for Worthing West (Sir Peter Bottomley) for supporting my Bill and for displaying consistency with the promises made to the people of Wales last year by their respective parties. I had hoped to amend the Act with a new clause, but alas it was not debated, so I am grateful for the opportunity to present this Bill.

There is no stronger message in Welsh politics than equality with Scotland and I look forward to using that battle cry in a different context after autumn 2014, certainly in respect of energy powers. The previous Welsh Government were in favour of increasing the limit to 100 MW, as are the Labour Government in Wales in relation to renewables. Civic and environmental organisations also support the policy—the Campaign for the Protection of Rural Wales and Friend of the Earth included it in their National Assembly manifestos.

The communities I represent in Carmarthen East and Dinefwr also support the policy. My constituency contains two of the seven strategic search areas earmarked for renewables developments in Wales in the Welsh Government’s 2005 technical advice note 8—TAN 8—policy document. That was a crude exercise if the truth be told, with lines drawn on a map, mostly on Forestry Commission land, to earmark where onshore wind developments would henceforth be located.

The major problem is that developments above and below the 50 MW threshold are decided by different planning criteria. Those below the limit are processed by the local planning authority, which in this case is Carmarthenshire country council, and those above the limit are, for the next few months, the preserve of the Infrastructure Planning Commission. They will be the preserve of UK Government Ministers thereafter.

I am delighted that the UK Government scrapped the IPC in the Act. Indeed, scrapping that body was one of my major pledges during the last Westminster elections.

31 Jan 2012 : Column 711

I am delighted that the coalition Government have delivered for me on that one, but the key question of where those powers should reside has left me and my constituents extremely disappointed. Instead of devolving the powers to Wales, the UK Government have retained them within the Department of Energy and Climate Change here in London, in the hands of Ministers far removed from the issues in the communities that I represent.

TAN 8 area G is located in the Brechfa forest in north Carmarthenshire, an area that is world famous for its rally car stages. At least three major developments are to be located within the area. The first—the Alltwalis scheme—was below the 50 MW level. As a result of a string of problems associated with that development, my party’s councillors on the local authority have been presenting mitigating measures to improve the local planning authority’s policies to protect the communities of the affected area,. They include introducing a substantial buffer zone and operating conditions. This is called democracy—when local politicians react to the problems faced by those they serve.

However, the remaining developments are above the 50 MW level and will be determined by Ministers in London. The improvements to planning policy that we are working on in Carmarthenshire will not be adopted here. Development will be very much a free-for-all, with no protection for local residents. Indeed, in answer to a written question from me, the Secretary of State has not even bothered to visit the development in my constituency to gauge the concerns of those affected. That is clearly unsatisfactory. What faith can my constituents have in a system that gives them absolutely no control over developments on their doorstep? How can a system under which major planning decisions are taken by an alien Westminster Government, and not by democratic bodies in Wales, be just?

The Bill will mean the people of Wales gaining control over the Crown Estate in Wales so that the huge potential of tidal and wave power on the Welsh coastline is utilised as part of our energy strategy. Control over our energy resources matters because, without it, we are limited in what we can do to reach our potential as a country, to grow a new economy for Wales and to help the vulnerable.

I would like to finish by quoting that great Welsh political philosopher D. J. Williams, from Rhydcymerau, in my constituency. This is a translation, and I hope the great man will forgive me:

“It may be said that there is a divine right to anything on earth. The right over the land of Wales belongs to the Welsh nation, and no alien, whoever he be.”

Diolch yn fawr iawn.

5.16 pm

Albert Owen (Ynys Môn) (Lab): I rise to oppose the motion and do so as someone who is pro-devolution, pro-Welsh and pro-UK, and I can hardly be called the London elite.

Hywel Williams (Arfon) (PC): Only when you’re doing somersaults.

Albert Owen: I will come to somersaults in a minute.

31 Jan 2012 : Column 712

I believe in practical devolution. Less than 12 months ago, a referendum was held on giving the National Assembly for Wales extra powers in areas that were already devolved. I and the Labour party supported that, and I worked alongside the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). That referendum gave the National Assembly for Wales the tools to carry out and deliver, which is the Welsh Government’s priority, and rightly so. They are delivering in the areas of health, education and economic development, and I want to see them work in partnership with the UK Government and local government.

In no area is it more important to work in partnership than on energy, where responsibilities for large infrastructure reside at the UK level, while planning and environmental issues are shared between the Welsh Government and local government. The present balance is right. Energy security is one of the biggest issues facing the UK. We need a proper UK strategy on generation, transmission and developing new technologies as we move—I think this is the aim of everybody in the House—towards a low-carbon economy.

The hon. Gentleman often says that Wales is a net exporter of electricity, and he did so again today. However, he often fails to mention—he did so again today—that between 32% and 40% of the electricity used in Wales is produced from nuclear power at Wylfa in my constituency. My constituency is in line for a new Wylfa B power station, which could produce three times the current level of nuclear power and make Wales self-sufficient in low-carbon nuclear power, as well as creating hundreds of jobs.

Plaid Cymru’s policy on nuclear power is as clear as mud. Its leader—my Assembly Member—supports nuclear power on Anglesey. Its president told me on Friday that she and her party were against it. I believe that the party’s parliamentary leader, the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd), is in favour of it. Talk about mixed messages!

What is needed on energy policy is clarity and stability to attract the right investment and deliver a low-carbon economy. Whichever Government are in power in Westminster, electricity market reform is needed to deliver investment in grid infrastructure, transmission, generation and new and established technologies for the future. As a member of the Energy and Climate Change Committee, I hear regularly from experts and academics, the industry and environmentalists about the need for clear policies at the UK level.

The Labour party supports increasing the Assembly’s devolved powers over renewable energy. We put that in our Assembly manifesto and argued for it in the House when we debated the Energy Bill—my hon. Friend the Member for Ogmore (Huw Irranca-Davies) did so—but unfortunately it was not taken up. Nevertheless, this House is the place to debate energy issues, and there will be opportunities for that in the future. My party will argue that line consistently. However, some renewable technologies, such as biomass and wind technology, are growing considerably, and we need to consider devolving to the Welsh Assembly Government powers in respect of larger megawatt capacities.

As the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) knows, my area aspires to be an energy island—it has adopted that concept—and in partnership with the

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Welsh Assembly Government is working to become an energy enterprise zone in order to create jobs and encourage the technologies and research and development in Anglesey. All levels of government are working together on that. That is a microcosm of how the UK is developing its technologies to meet its low-carbon objectives. And yes, nuclear energy is at the core of that.

That case is a good example of partnership working between the Welsh Government, all levels of government and stakeholders, and I believe that it strikes the right balance. Such a clear demarcation line is what is needed, and it is what businesses, including international businesses wanting to develop and invest in Wales and the rest of the United Kingdom, say that they want. However, the ten-minute rule motion is far from clear and sends the wrong messages to investors who want to invest in my constituency, in Wales and in the rest of the United Kingdom. I urge right hon. and hon. Members to oppose it.

Question put (Standing Order No. 23).

The House divided:

Ayes 44, Noes 239.

Division No. 445]

[5.22 pm


Beith, rh Sir Alan

Bottomley, Sir Peter

Brake, rh Tom

Brooke, Annette

Bruce, rh Malcolm

Crockart, Mike

Dodds, rh Mr Nigel

Durkan, Mark

Edwards, Jonathan

Farron, Tim

Flynn, Paul

Foster, rh Mr Don

George, Andrew

Gilbert, Stephen

Goldsmith, Zac

Hancock, Mr Mike

Hemming, John

Horwood, Martin

Hughes, rh Simon

Huppert, Dr Julian

Leech, Mr John

Lloyd, Stephen

Llwyd, rh Mr Elfyn

MacNeil, Mr Angus Brendan

McCrea, Dr William

Munt, Tessa

Percy, Andrew

Pugh, John

Reid, Mr Alan

Robertson, Angus

Rogerson, Dan

Russell, Sir Bob

Sanders, Mr Adrian

Simpson, David

Smith, Henry

Smith, Sir Robert

Swales, Ian

Thurso, John

Ward, Mr David

Williams, Hywel

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Willott, Jenny

Tellers for the Ayes:

Pete Wishart and

Caroline Lucas


Abbott, Ms Diane

Abrahams, Debbie

Afriyie, Adam

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Andrew, Stuart

Ashworth, Jonathan

Austin, Ian

Bacon, Mr Richard

Bailey, Mr Adrian

Bain, Mr William

Baldwin, Harriett

Banks, Gordon

Baron, Mr John

Barron, rh Mr Kevin

Bebb, Guto

Begg, Dame Anne

Bell, Sir Stuart

Benton, Mr Joe

Betts, Mr Clive

Bingham, Andrew

Blackman, Bob

Blears, rh Hazel

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Bone, Mr Peter

Bradley, Karen

Bradshaw, rh Mr Ben

Brazier, Mr Julian

Brennan, Kevin

Bridgen, Andrew

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bruce, Fiona

Bryant, Chris

Cairns, Alun

Campbell, Mr Alan

Campbell, Mr Ronnie

Chapman, Mrs Jenny

Chope, Mr Christopher

Clappison, Mr James

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Dr Thérèse

Crausby, Mr David

Creasy, Stella

Cryer, John

Cunningham, Alex

Cunningham, Tony

Curran, Margaret

Danczuk, Simon

David, Mr Wayne

Davies, David T. C.


Davies, Geraint

Davis, rh Mr David

Dinenage, Caroline

Dobbin, Jim

Docherty, Thomas

Donohoe, Mr Brian H.

Doyle, Gemma

Dugher, Michael

Elliott, Julie

Ellis, Michael

Ellison, Jane

Esterson, Bill

Eustice, George

Evans, Chris

Fitzpatrick, Jim

Flello, Robert

Fovargue, Yvonne

Francis, Dr Hywel

Freer, Mike

Fullbrook, Lorraine

Gapes, Mike

Gardiner, Barry

Garnier, Mark

Gilmore, Sheila

Glass, Pat

Glen, John

Glindon, Mrs Mary

Gray, Mr James

Greatrex, Tom

Greenwood, Lilian

Griffith, Nia

Griffiths, Andrew

Gwynne, Andrew

Halfon, Robert

Hamilton, Mr David

Hamilton, Fabian

Hanson, rh Mr David

Harrington, Richard

Harris, Rebecca

Harris, Mr Tom

Hart, Simon

Havard, Mr Dai

Heald, Oliver

Healey, rh John

Heaton-Harris, Chris

Hendrick, Mark

Hepburn, Mr Stephen

Hilling, Julie

Hinds, Damian

Hodgson, Mrs Sharon

Hollingbery, George

Hollobone, Mr Philip

Hopkins, Kelvin

Howarth, rh Mr George

Irranca-Davies, Huw

Jackson, Mr Stewart

James, Mrs Siân C.

Jamieson, Cathy

Jenkin, Mr Bernard

Johnson, Gareth

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Mr Marcus

Jones, Susan Elan

Joyce, Eric

Kaufman, rh Sir Gerald

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lavery, Ian

Lazarowicz, Mark

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Chris

Liddell-Grainger, Mr Ian

Lloyd, Tony

Lopresti, Jack

Lord, Jonathan

Lucas, Ian

Malhotra, Seema

Mann, John

McCann, Mr Michael

McCartney, Karl

McClymont, Gregg

McFadden, rh Mr Pat

McGovern, Jim

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Mensch, Louise

Mercer, Patrick

Michael, rh Alun

Mills, Nigel

Mitchell, Austin

Mordaunt, Penny

Morden, Jessica

Morrice, Graeme


Morris, Anne Marie

Morris, Grahame M.


Mowat, David

Munn, Meg

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Murray, Sheryll

Nandy, Lisa

Nash, Pamela

Nokes, Caroline

Nuttall, Mr David

O'Donnell, Fiona

Offord, Mr Matthew

Owen, Albert

Parish, Neil

Pawsey, Mark

Pearce, Teresa

Perkins, Toby

Phillips, Stephen

Pincher, Christopher

Pound, Stephen

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reckless, Mark

Rees-Mogg, Jacob

Riordan, Mrs Linda

Robertson, Mr Laurence

Rosindell, Andrew

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Scott, Mr Lee

Sharma, Mr Virendra

Sheerman, Mr Barry

Shepherd, Mr Richard

Sheridan, Jim

Skinner, Mr Dennis

Smith, rh Mr Andrew

Spellar, rh Mr John

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Stuart, Mr Graham

Sutcliffe, Mr Gerry

Syms, Mr Robert

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Tomlinson, Justin

Turner, Mr Andrew

Turner, Karl

Twigg, Derek

Twigg, Stephen

Tyrie, Mr Andrew

Uppal, Paul

Vaz, rh Keith

Vickers, Martin

Walker, Mr Robin

Walley, Joan

Walter, Mr Robert

Watson, Mr Tom

Weatherley, Mike

Wharton, James

Whitehead, Dr Alan

Whittaker, Craig

Williamson, Chris

Wilson, Phil

Wright, David

Wright, Mr Iain

Tellers for the Noes:

Nick Smith and

Mr Dave Watts

Question accordingly negatived.

31 Jan 2012 : Column 714

31 Jan 2012 : Column 715

31 Jan 2012 : Column 716

Local Government Finance Bill

[3rd Allocated Day]

Further considered in Committee

[Dawn Primarolo in the Chair]

Clause 8

Council tax reduction schemes

5.34 pm

Mr Nick Raynsford (Greenwich and Woolwich) (Lab): I beg to move amendment 79, page 4, line 35, at end insert—

‘(1) Each local authority in preparing its council tax reduction scheme should start on the basis that, all other factors being the same, the total cost should be no greater or less than in the previous financial year.’.

The Second Deputy Chairman of Ways and Means (Dawn Primarolo): With this it will be convenient to discuss the following:

Amendment 85, page 5, line 19, at end insert—

‘(5A) Any grant payable to a local authority in England in support of a council tax reduction scheme for a financial year beginning with 1 April 2013 shall not be less than the amount paid in council tax benefit subsidy for the financial year beginning with 1 April 2012.

(5B) The total amount of any grant payable to a local authority in England will be assessed each year or financial year beginning with 1 April 2013 in line with the Government’s New Burdens Doctrine.’.

Amendment 80, line 31, at end insert—

‘(5A) The Secretary of State must ensure that local authorities receive no less in subsidies under the council tax reduction schemes than they would have expected to receive under the earlier scheme.’.

Amendment 78, in schedule 4, page 49, line 39, at end insert—

‘(2A) In circumstances where a deficit arises in the billing authority’s collection fund the authority shall be able to make an application to the Secretary of State for a payment to cover that deficit.’.

New clause 11—Payment of additional grant

‘The Secretary of State shall be required to pay an additional grant to a local authority if, at the end of any financial year, the total expenditure incurred by the authority under any scheme approved pursuant to Schedule 4 of this Act is greater than the amount of grant received from the Secretary of State to fund the scheme. The amount paid to the authority shall be the difference between the sum originally received and the total cost to the authority of the scheme.’.

Mr Raynsford: Amendment 79 and the linked amendments, 78 and 80, aim to put this part of the Bill, which devolves responsibility for council tax rebates to local authorities, on the same basis as the earlier parts of the Bill, which we have debated over the past two weeks. Those parts sought to localise business rate revenue. Hon. Members will recall that, during the debates on the business rate localisation, Ministers were emphatic in insisting that the baseline from which the new business rate arrangements would operate should not involve any local authority losing revenue. In other words, the scheme was designed to be revenue neutral in year 1. That is precisely what the amendments seek to achieve for the new local council tax reduction schemes.

31 Jan 2012 : Column 717

My hon. Friend the Member for Sheffield South East (Mr Betts), the Chair of the Select Committee, seeks to achieve a similar result through his amendment 85, which is linked to this group. My hon. Friend the Member for Warrington North (Helen Jones) has tabled new clause 11, also linked to this group, which seeks to protect local authorities from any additional costs that might fall on them during the course of a year. That might happen, for example, as a consequence of more people becoming eligible to claim benefits if a local factory were to close, or if more people were to lose their jobs for other reasons. Currently, local authorities are reimbursed for unforeseen expenditure, and Government grant meets the full cost of the benefit scheme, which is of course an integral part of the overall national scheme of welfare benefits, including housing benefits, that are the responsibility of the Department for Work and Pensions.

Some would query the logic of separating council tax benefit from the other benefits at a time when the Government are arguing for simplifying the whole benefit structure through the universal credit. However, I do not propose to pursue that argument today. There are good reasons for localising this aspect of benefits to local authorities, but there is no justification for doing it in a way that imposes harsh cuts in benefits from the outset and leaves local authorities, and therefore benefit recipients, vulnerable to further cuts because they have to take the downside risk of any increased expenditure caused by additional benefit claims in-year.

Andrew Gwynne (Denton and Reddish) (Lab): Do not the Government’s proposals introduce some quite substantial financial risks for local authorities, not least that there are no real needs-based criteria for authorities, as we discussed in earlier sittings of the Committee? Every local authority is different in its make-up and economic circumstances might change within financial years, so there needs to be a mechanism to reflect that need.

Mr Raynsford: My hon. Friend makes an important point about the assessment of need. The framework imposed by the Government will certainly require local authorities to make very deep cuts in benefit payments to certain categories of people. We will go on to explore some of the implications in later debates; suffice it to say for now that it really is a travesty of localism to say to local authorities, “We are giving you this new responsibility, but we are shackling your ability to do the job properly by imposing, first, an immediate 10% budget cut and, secondly, a total transfer of risk for any future increases in cost; and, thirdly, by requiring you to do this to a rushed timetable that does not allow you adequate time to consult local residents to test the impact of different models for the new scheme, posing a serious risk that the software will not be ready in time to allow orderly implementation.” I am afraid to say that this is a very sad example of a badly conceived scheme being rushed through by a Government who are not themselves going to face the consequences. Local authorities will face the consequences of a lot of very angry and very unhappy residents.

Mr Kevan Jones (North Durham) (Lab): On that point, does my right hon. Friend agree that the Government

31 Jan 2012 : Column 718

know exactly what they are doing and that they are doing it so that when people get angry locally, the Secretary of State can stand by and say that it is not his fault, but the local council’s fault?

Mr Raynsford: My hon. Friend makes a very good point. Frankly, I am very surprised indeed that Lib Dem members of the coalition are going along with this—[Interruption.] I am pleased to hear the hon. Member for Portsmouth South (Mr Hancock) say what he does; I hope he will demonstrate that in the Division Lobby later.

I am surprised that Conservative Members who have experience of local government, and who must be well aware of the pressures that the Government’s measures will impose on their local government colleagues, are prepared to support such a draconian and ill-thought-out package. Cutting 10% of the cost of council tax benefits at the outset is bad enough, but obliging councils to take the downside risk of a further rise in costs in-year, and imposing conditions that will inevitably force heavier cuts on some categories of recipient, adds insult to injury.

To cap it all, imposing an unreasonably tight implementation timetable without allowing adequate time for local authorities to prepare demonstrates a cavalier disregard for the interests of those authorities, which, not surprisingly, are demonstrating growing alarm. The Government should pause to think about why local authorities, which ought to be welcoming a measure whose intention is localist, are expressing such grave reservations about the implications of this scheme.

Mr Mike Hancock (Portsmouth South) (LD): Let me first declare my interest as one who is still a member of a local authority.

Is the right hon. Gentleman, like me, aware that some authorities have expressed the fear that they will have to make cuts in this year’s expenditure to prepare the ground for the implementation of the measure? Once again, the Government are showing no semblance of care about what they are imposing on such authorities.

Mr Raynsford: The hon. Gentleman makes a very good point. Any prudent local authority treasurer who takes account of the element of risk that is being transferred will inevitably say that there must be cuts in addition to those required by the Government, to provide a cushion against possible circumstances that cannot yet be anticipated.

Amendment 79 requires local authorities, in planning their council tax rebate schemes, to start from the premise that, all other factors being equal, the overall cost of the new scheme should be no more and no less than the cost in the previous year. In other words, it requires a neutral baseline that avoids arbitrary cuts, but also protects Government against the risk that local largesse will increase their own costs. That arrangement is utterly fair, and will operate in just the same way as the arrangement that we all agreed was appropriate for the introduction of the localisation of the retention of business rates.

The system that I propose will not inhibit local authorities from making changes in the current rebate scheme to reflect their local circumstances or priorities. Provided that the overall effect is cost-neutral, they will be free

31 Jan 2012 : Column 719

to make as many changes as they wish. This is a truly localist approach, allowing local discretion without imposing unreasonable and arbitrary central diktats.

Amendment 80 refers to central Government support for local expenditure on council tax rebates. It requires the Secretary of State to ensure that local authorities receive no less subsidy than they would have expected under the previous scheme. Again there will be a neutral baseline: a starting point at which the Government will not be exposed to higher costs, but equally local authorities will not be exposed to the risks that are implicit in the Government’s proposals. Amendment 78 is designed to cover the risk of unforeseen increases in expenditure in-year if the number of claims increases by making it clear that authorities may apply for reimbursement of those costs.

Bob Blackman (Harrow East) (Con): Having read amendment 78, I assume that if it were passed any losses on collection of council tax would enable a local authority to apply to the Secretary of State for reimbursement. As the right hon. Gentleman will know from his long experience, the effect would be to cause virtually every local authority in the country to suffer losses on council tax collection. His amendment would open the door for every local authority to apply for reimbursement.

Mr Raynsford: If the hon. Gentleman looks carefully at the wording of the amendment, he will see that it allows local authorities to apply, but does not require the Secretary of State to pay. In new clause 11, my right hon. Friend the Member for Leeds Central (Hilary Benn) proposes to go further by requiring the Secretary of State to reimburse. I can see the logic of that, but it is open to the criticism that the hon. Gentleman has advanced. I hope he will accept that I have framed my amendment in an extremely moderate way, in order to make it clear that there should be a presumption that if costs are increased through no fault of the authority involved—not as a result of a failure to collect the money owed to it, but because of circumstances outside its control such as an increase in the number of unemployed people in the area—it should be able to seek reimbursement. The amendments are silent on the obligation of the Secretary of State to meet such applications. Some might say my proposals are rather too moderate, and that I should have shackled the Secretary of State, but I hope Members on the Government Benches will realise that I have tried to frame a very moderate series of amendments that simply seeks to create a neutral starting baseline and to avoid the draconian cuts that will otherwise be imposed on local authorities.

These are sensible amendments that should command the support of the Committee, and certainly of everyone who understands, and sympathises with, the needs of local government.

5.45 pm

Mr Clive Betts (Sheffield South East) (Lab): I support the amendments of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), and I also agree with what he said. Amendment 85 stands in my name and seeks to achieve similar ends to my right hon. Friend’s amendment 79 and consequent amendments. My amendment seeks to localise council tax on the

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basis that local authorities will have the same amount of money in 2013 as in 2012-13, so that we have a consistent base from which to develop and implement the new scheme.

I am in favour of localising council benefits and of not incorporating the reduction scheme into the universal credit scheme. I know that there are differences of view on that even within parties, but linking council tax benefits with the term “benefit” has discouraged many people from applying for something to which they are entitled. In the previous Parliament, the Select Committee conducted an inquiry into the council tax benefit system and suggested that it should, perhaps, be renamed precisely because the word “benefit” discouraged some people—especially those who applied for nothing else and who were not entitled to anything else—from applying for it. After all, it has one of the lowest take-ups of any benefit, particularly among pensioners. Often, they are forgoing merely £2, £3 or £4 a week, but that can be a relatively important sum for people on relatively low incomes.

As I have said, I support the introduction of this reduction scheme and its both being clearly outside universal credit and being linked to council tax in such a way that people pay a reduced amount of that tax. I should point out that earlier today the Minister defended the imposition of an unwanted referendum for local mayors in Sheffield by his Lib Dem colleagues on the city’s council, yet he will now extol the benefits of council tax. That is a somewhat different position from the one he would have adopted only a few months ago.

Although there is general support for the Government’s proposed change, there is also a problem. If one of the aspirations of renaming the council tax benefit as the council tax reduction is to encourage more people to take it up, the consequences for local government are clear. Previously if councillors had gone out on a publicity drive to improve the take-up of what is currently known as this benefit, central Government would have paid for that. Furthermore, if more people take up the benefit—or reduction—there is a cost in that that also fully falls on local authorities. That is a perverse impact of the Government’s proposal.

Mr Graham Stuart (Beverley and Holderness) (Con): Will the hon. Gentleman confirm my understanding that in a rural coastal area such as the one I represent, which has a high number of elderly people and quite a low take-up of this benefit, if there is a big increase in take-up and there is protection for the elderly, the impact on the council or on the other people entitled to the benefit would be rather large and profound?

Mr Betts: I could not have put it better myself; that is precisely right—there will be a perverse incentive. If a council gets the older people who are entitled to claim to do so in greater numbers, other council services will be cut, council tax might increase at some point or, if no more money is spent on the scheme, the benefits of people who are not pensioners will be affected. That is precisely the point.

The problem is not with the Government’s attempt to rebadge the scheme or to localise it, but with the 10% reduction at the beginning, all in one go, and the way in which the Government have framed the restrictions on the extent to which local authorities can implement the

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reduction. Local authorities can always find extra money to increase the cost of the scheme, but is the Minister really suggesting that it will be possible for any local authority in the current circumstances to find extra resources at a time when services all round are being cut for reasons we all know about?

The 10% restriction or cut in the available Government funding comes in from day one in 2013. Pensioners are going to be protected, and no one in the Opposition is going to argue about protecting pensioners because we want to increase the number of pensioners taking up their entitlements, but that obviously means that the 10% reduction will fall on other people who claim the reduction. That is self-evident. I asked the Minister about this yesterday, because the Local Government Association has kindly put forward the information that about half those claiming the benefit are pensioners, which means that half are not pensioners. So if pensioners are protected, that means a reduction of about 20% for other claimants, does it not?

Andrew Gwynne: My hon. Friend makes an excellent point. Is it not worrying that if one section of society is to be prioritised, another, very needy, section is to be penalised, and does not that place councils in the very tough position of deciding who are the deserving poor and who are not?

Mr Betts: Absolutely. We are told that vulnerable people—perhaps people on very low incomes with children—are going to be protected, or have to be protected, by councils under the scheme, but are they going to be or not? Are the Government going to insist on that? We are not quite sure. We are told that local authorities have to take account of the tapers under universal credit, but what does that mean? Are they obliged to respect completely the 65% taper element within universal credit or not? If so, will that mean that a smaller and smaller number of people will have the totality of the cuts in benefits imposed on them? That is the reality. Will the Government explain what they think is going to happen?

Mr Kevan Jones: Does my hon. Friend agree that one problem that the Government seem to ignore is that a lot of the people affected will not be on benefits but will be in low-paid work and that this will be a disincentive for them to work?

Mr Betts: Of course it will, unless the Government are saying that those people should be exempt as well. To what extent will councils be obliged to take account of the tapers in universal credit in the system they devise? Will Ministers give a clear answer on that? If councils have to take account of it, full stop, that will really throw the onus back on attacking benefits and on reductions for the unemployed. Is that the situation? Is that what Ministers are trying to achieve?

The LGA has done some calculations to the best of its knowledge and information. It says that because of the exemptions for pensioners and others for whom the Government say local authorities cannot make reductions under the scheme, those who are left whose benefits can be reduced—the 1.3 million claimants out of the 5 million who currently claim—will lose, on average, £320 each a year. That is £6 a week being lost by people

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who are already on low incomes—that is why they are claiming benefits in the first place. That will be on top of any other benefit losses from any other benefit reductions the Government intend. Have the Government analysed whether that £320 figure is right? Do they contest it?

Mr Mike Hancock: The information from the LGA is very helpful, but it is an average. In some areas, the cut will be far worse than £6 a week because the number of pensioners and others who are protected will be greater. In some local authority areas in my constituency, people could lose upwards of £10 a week.

Mr Betts: The hon. Gentleman is absolutely right—the figure of £320 a year or £6 a week is an average, and there will be people who lose significantly more than that. Have the Government done any calculations to show whether the LGA figure is right or wrong? If it is wrong, will they tell us what they believe the correct figure to be? Have they done any analysis regarding the multiple withdrawal of benefits and situations when the council tax benefit reductions that come as a result of this scheme are laid on top of any other benefit reductions that hit the same families? Have they done any calculations of the total losses that such families may face?

My right hon. Friend the Member for Wentworth and Dearne (John Healey) was absolutely right the other day when he said that local authorities are getting a hospital pass here. They are getting a Government scheme with complications, in terms of the totality of the financial arrangements, of which most people will have no understanding. All that people will see is that their council’s scheme will impose cuts in their benefits. It will be councils that get the blame, and no doubt that is where Ministers will firmly put the blame, but it will be grossly and totally unfair.

Another problem is the time scales involved, as my right hon. Friend the Member for Greenwich and Woolwich has pointed out. Local authorities will not be able to work at this over a period of time. They have just over 12 months in which to consult on a new scheme, introduce it and explain it to people in their area. There is also the issue of the technology that will come with it, and we know that the technology in new systems being brought in quickly has a habit of going wrong. So not only will many people be faced with the abrupt introduction of these changes affecting their income overnight, but there will be major failings in service delivery as systems do not deliver on time and people end up without any benefit at all.

Mr Graham Stuart: I am grateful to the hon. Gentleman for giving way again, as I have to leave the Chamber in a moment to meet the chairman of the Commission for Rural Communities. People in rural areas earn on average less than people in urban areas, pay £100 a head more in council tax and see urban areas getting 50% more in central Government grant than rural areas. There is also a higher average age of population in rural areas, so the impact on the rural poor of further skewing could be particularly profound. Will the hon. Gentleman comment on that?

Mr Betts: I do not want to get into a debate about whether people in rural areas or urban areas suffer most. The reality is that people throughout the country are likely to suffer and that it will be councils, whether they are Conservative councils in rural areas or Labour

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councils in metropolitan areas, that get the blame, but it will not be the fault of local councillors, whichever party they represent.

Coming back to my point about speed, I say to the Minister that this is an accident waiting to happen. Some of us have been through significant benefit changes before. When Sheffield outsourced its benefits administration to Capita a few years ago there was complete chaos for 18 months. Some of us have experienced elderly people coming into our surgeries and breaking down in tears because although they have always paid their bills on time they have been unable to do so owing to the fact that their benefit application had not been dealt with appropriately. That is what will happen in the rush that the Government are embarking on. Some councils will get it right but others’ systems will fail because of the speed at which this is being done.

Oliver Heald (North East Hertfordshire) (Con): Will the hon. Gentleman amplify his comments about universal credit, because I understood that with universal credit as someone went into work the taper arrangements were such that they would always be considerably better off than they were on benefits? If that is the case and those taper arrangements are to be respected by councils, surely he is wrong to say that people who are just over the limit—those who are in work and on the lowest levels of income—will be worse off.

6 pm

Mr Betts: I am sure the Minister is far better able than I am to explain, because it was his consultation and his response that I have been trying to read. I understand that the council tax reduction scheme is separate from universal credit. The Government do not want withdrawal of council tax reduction as people get into work to affect their income as they earn more to the extent that it increases the tapers by 65% in total and therefore undermines the principle of universal credit. The Government intend the council tax reduction scheme to have regard to that, so it is likely that it will not be possible for the changes to the scheme—the worsening of the scheme—to affect people in work. More of the change and reductions in the benefits available will therefore hit non-working people of non-pensionable age. That is the explanation of the Government’s position, I think, but it would be helpful if Ministers set out their understanding.

Alison Seabeck (Plymouth, Moor View) (Lab): It was interesting to hear my hon. Friend mention Capita, which was at the wrong end of the car crash of IT failings in Sheffield. Capita has stated publicly that it has concerns about this proposal and the speed at which it is being pushed forward. I am sure my hon. Friend will reinforce those concerns in his questions to Ministers.

Mr Betts: Absolutely. Anyone involved in developing a new system, consulting on it, explaining it and getting the technology right will have real concerns. I just hope that Ministers listen to local councils and the LGA and are prepared to say, even if they go ahead with this flawed scheme, that they will at least delay it by another year, to allow time for further thought to be given to producing a scheme that might deliver without the problems that I have identified arising.

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John Healey (Wentworth and Dearne) (Lab): My hon. Friend talks about the tight time scale and the argument for the Government seriously considering putting implementation back for a year. Does he accept that although it is a year today that councils have to have an approved scheme in place—otherwise they will have to use the present scheme—we do not yet know when the Government will require schemes to be submitted for approval, or how quickly they undertake to turn those decisions round, or the principles by which they will require the schemes to operate and therefore be able to get approval—

The Temporary Chair (Mr Edward Leigh): Order. We are in danger of straying into the next group. Please keep in order, Mr Betts.

Mr Betts: My right hon. Friend is right to say that the time scale is incredibly tight and there are so many potential problems associated with the measure that Ministers really ought to think them through. In the end, the problems will be created not for councils, but for people on low incomes who need benefits simply to sustain themselves. They are the ones who will be damaged if this is got wrong.

Altering the responsibility for any future changes in the number of people claiming council tax reductions is a fundamental shift. Now, if more people claim the reductions, the Government pick up the bill; in future, councils will. The present arrangements, with the Government picking up the bill, make council tax revenue very stable for local authorities. One of my criticisms of previous Lib Dem proposals to scrap council tax and introduce local income tax was that it would make local councils’ revenue unstable, putting them at risk in times of recession, as we had in 2008, and undermining their financial base if unemployment rises. That is a real problem.

Some of us went on a parliamentary trip to the United States after the recession. We talked not only to local authorities, but to states whose budgets were cut to shreds by the recession and the associated decline in their income tax and sales tax revenues. They became unstable because they could not borrow for revenue, just as our local authorities cannot. The current compact between central and local government is that although local authorities cannot borrow for revenue, they know that their revenue will be stable. They set their council tax and they know they will receive the money—council tax has a very low rate of non-collection. That is why I understand the amendment tabled by Labour Front Benchers to compensate councils for changing revenue in-year. There is a real risk not only of longer-term instability for councils, especially those in areas that start to experience economic decline because of the collapse of a particular industry and more people therefore claiming reductions, but in the increased uncertainty for councils year on year. Councils will no longer have certainty. If they do not know whether unemployment will rise in their area and they do not know how successful a campaign to persuade more people to take up the reduction scheme will be, councils cannot forecast their revenue with the normal degree of accuracy.

Ministers do not appear to understand that. Until now, there has been a clear system in this country in which councils cannot borrow for revenue, but they can

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be sure that revenue will come in so they do not have to borrow. They can set their budget for the year with a good degree of certainty. Ministers appear not to have tackled that issue at all. Local government in this country has been absolutely sound and stable throughout all the recent economic difficulties. The proposed scheme introduces an element of doubt at a time of great turbulence in local authority revenues, when grants are being cut and there is great pressure on services. The Government should think carefully before adding this extra potential for loss of revenue—this extra risk—by pursuing the scheme in such a short time scale.

Mr Robert Syms (Poole) (Con): I do not support amendment 79, but think it a useful vehicle for debate on an important subject. In my experience, local government is good at adapting to change, provided that it is given sufficient time to do so. I am sure that local authorities will be able to adapt to the Government’s timetable, but there are many pressures in different areas. First, most authorities are cutting spending; secondly, they will have to grapple with the 10% reduction; and thirdly, the Government have stated clearly that that should not affect pensioners. In an area such as Poole, with a heavy preponderance of pensioners, the burden will fall on a small minority of those claiming that benefit. Fourthly, as most local authorities will have to freeze their council tax, or will freeze it anyway, and have limited balances, they may well err on the side of trying to ensure that they get their figures correct and that there is no cross-subsidy in terms of the benefit falling on the council tax payer. A perverse incentive may arise to make larger reductions in support for the vulnerable than the figures necessarily entail, because authorities do not want to take the risk.

The current system is predictable in the sense that it is running and the Department for Work and Pensions can transfer money equally on a monthly basis. The direction of travel in localisation is fine and I am sure that many local authorities can draw up good schemes, but in year one the new arrangements will not be as predictable. Some authorities will draw up schemes that turn out to be more generous than they thought, and others will draw up schemes that are less generous than expected. Ministers have to consider what will happen when a scheme is got wrong, because as sure as eggs are eggs, there will be one authority that gets its figures substantially wrong and has a problem.

Mr Kevan Jones: The problem for authorities such as mine in County Durham, where a large number of people receive council tax benefit, will perhaps be bigger than for some of the smaller authorities, where there are relatively few council tax benefit recipients.

Mr Syms: I am certain that the measure will have a different effect on different authorities. We need a little bit more clarity from Ministers: will there be emergency funds that can be drawn on if there is a difficulty in the short term?

Of course, what makes it complicated is the fact that the Government are looking for savings because of the overall economic situation. We have to make savings; we are looking to make savings of £420 million, and

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that makes things much more difficult. Again, speaking from my experience of local government, it is sometimes in a position to deliver savings, given a chance, but as we have heard in this debate, if there is pressure on council tax and council tax benefits, something will have to give. I therefore have concerns about the Government’s direction of travel, and I hope that the Minister can reassure us that they have thought about what would happen in an emergency.

Clearly, if a local authority has to deal with a reduction and is given maximum flexibility to do so, sometimes it can deal with it, but if it is initially told, “You must protect pensioners,” the impact of the reductions may fall on a smaller number of people. We recently heard exchanges across the Chamber about universal credit; that credit may offset some of that, but that might mean that the non-working faced the worst situations. The issue needs careful thought. I am sure that the Government’s timetable can be kept to, but we have to think very carefully; if lots of new schemes are invented following consultation, some people will get them right, some will get them wrong, and some will over-egg the savings, and that may well have an impact on our communities.

The Library briefing says that the reduction might partly be an incentive for local authorities to create jobs, but I am not sure that local authorities can wave a magic wand and create jobs in six months, a year or two years. Over a period of time, if authorities have active economic development departments, build capacity on industrial estates and try to attract firms, they might be able to have some impact. However, from a practical point of view, when it comes to dealing with the problems that arise when the measures are implemented—and perhaps in the year or two after that, in what we all know will be quite difficult economic circumstances—I do not think that councils have the ability to change the number of people in or out of work in their area. That is a long-term thing, not a short-term change that can be made in months, so I have some concerns.

Poole borough council, my authority, is having to deal manfully with the need for a number of savings; dealing with the measure, on top of that, will be difficult. I hope that we get the scheme right in Poole, but if we do not, I hope that the Government have thought about how they will deal with the consequences.

Helen Jones (Warrington North) (Lab): It is a great pleasure to be under your chairmanship, Mr Crausby. We have heard hon. Gentlemen on both sides of the House express real concerns about how the scheme will work in practice, and particularly about what will happen in authorities with a large number of pensioners. Hon. Friends have spoken about the need to start the scheme on the right basis—a neutral basis—and to ensure that councils are adequately funded for the scheme that they are being asked to bring in.

I want to speak about new clause 11 in particular, which seeks to address some of the real financial risks that are being transferred to local authorities. Many hon. Members will remember that last week we debated clause 3, which changed the requirement to pay a grant to a power to do so. In that debate, as in all our debates so far on the Bill, the Government refused to clarify how they would distribute money, fund local authorities and meet the costs of the duties that they seek to impose on them. That is exactly what the Government

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are trying to do with the localisation of council tax benefit. We are back to the old game of ensuring that the blame for their cuts is taken elsewhere. New clause 11 attempts to ensure that local authorities are reimbursed for expenses incurred as part of the council tax reduction scheme.

The 10% cut in funding that many hon. Members have referred to, along with protection for pensioners, which the Government rightly want to ensure, means that others will face much larger cuts in their benefit. We will debate many of those issues under the next group of amendments.

Mr Kevan Jones: Does my hon. Friend agree that that includes the 1.9 million people in receipt of council tax benefit who do not have passported benefits?

Helen Jones: 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.

6.15 pm

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.

John Healey: My hon. Friend is making the clear and strong case that the new scheme will increase the financial risks to local authorities. Does she accept that local

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authorities will therefore have to increase their financial reserves, and to do that, they will have to increase the cuts that they make to expenditure, and possibly to services?

Helen Jones: My right hon. Friend has got it exactly right. In fact, throughout the passage of the Bill, we have seen that much more instability will be built into the system, whether that is on business rates or council tax localisation. The inevitable consequence is local authorities building up bigger reserves, because no local authority finance officer would advise their authority to do anything else; it has to be prepared for the worst-case scenario.

John Healey: My hon. Friend is making the case very cogently that council treasurers will take a prudent view; does she agree that that runs completely counter to the advice that councillors are getting from the Secretary of State, who is talking about reserves being “piggy banks”, and who says:

“These untapped funds exist to ensure councils can respond to unexpected situations like the pressing need to tackle the nation’s unprecedented level of debt”?

That advice clearly runs contrary to the principles of good local government, and it simply will not and cannot be followed by councils.

Helen Jones: My right hon. Friend is again absolutely right. The Government are a little schizophrenic on this, saying to local authorities, “Don’t build up big reserves,” while at the same time building instability into the system, which will require local authorities to build up bigger reserves.

Mr Mike Hancock: I agree entirely with the point made by the right hon. Member for Wentworth and Dearne (John Healey). The real problem is that local authorities that cut their reserves will be penalised by their district auditor, who will say that cutting reserves below a certain level is not stable local government. The right hon. Gentleman is right to suggest that the Government cannot have it both ways. This is putting pressure where it is simply not needed.

Helen Jones: That is a very fair point. The problem is that instability is being built into the system. My hon. Friend the Member for Sheffield South East (Mr Betts) said that one of the things about local government finance in this country is that it has always been relatively stable and did not have those risks—

Gavin Barwell (Croydon Central) (Con) indicated dissent .

Helen Jones: It is no good the Parliamentary Private Secretary chuntering away—it will have no effect. I spent years dealing with stroppy 15-year-olds on wet Friday afternoons, and he is no different.

Let us really look at this. If the Government are serious when they say, as the Housing Minister did when he spoke to the Communities and Local Government Committee, that councils should not avoid paying those who really need it, then they have to be prepared to meet the unforeseen costs. Why should a person living in a particular authority be penalised simply because a major employer in the area closes down or more pensioners

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claim? My hon. Friend the Member for Sheffield South East said that it is estimated that only between 57% and 66% of pensioners claim because council tax benefit is classed as a benefit. All those who are experienced in this area say that, once it is seen simply as a reduction in the bill, claims from pensioners are likely to rise. That is a good thing, but the costs have to be met, and it is unreasonable that entitlement for other people should depend on how many pensioners live in their area. They will be penalised because of an increase in council tax, cuts in other services or cuts in benefit to working-age people when the scheme is later revised. It makes no logical sense.

George Hollingbery (Meon Valley) (Con): Purely for the purposes of investigation, does the hon. Lady have any figures—I understand that there will be a wide variety across councils—for the percentage of spending power that is represented by the 10% cut?

Helen Jones: I could give such figures to the hon. Gentleman, but I am afraid that I do not have them at the moment, and they vary greatly from council to council. He raises an important issue. Local authorities that have many council tax benefit claimants will see a bigger cut in their spending power, and that is part of the problem.

Mr Kevan Jones: Although £55.1 million a year is paid out in council tax benefit in County Durham, less than £3 million is paid out in Hart district council in Hampshire.

Helen Jones: That makes the point very well.

George Hollingbery: Does the hon. Lady agree that the spending power of each of those councils is incredibly different and that the percentage change in their spending power represented by a 10% cut in the council tax bill, despite the varying levels of council tax bills, might be roughly similar? We do not know.

Helen Jones: I do not think that is correct. We will debate that with the next group of amendments, but I will make a little progress now.

The point of a national scheme is that risk is spread. If we move to a localised scheme, we must have some way of dealing with risk, but there is no way of doing that in this scheme. The Government cannot seriously argue that the closure of a major employer, for example, is a council’s responsibility. I know that, according to the Government’s “not me, guv” approach, nothing is their responsibility, but even they must accept that they are responsible for the national economy, not Warrington borough council, Nottingham, Carlisle or anywhere else. If a major employer closes, the local authority must have some way of dealing with it.

Our new clause would ensure that the Government’s power to pay a grant is used to meet any shortfall if a scheme costs more in benefit than the Government had originally agreed to pay to a local authority. Ministers ought not to be too concerned about this, because after all they have to approve the schemes, and they are not being asked to make an open-ended commitment. They approve the scheme and how it works, but a cash-limited

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budget cannot cope with sudden surges in demand. In fact, the Government admit that in their own impact assessment, which states:

“If demographic changes or economic circumstances mean that eligibility for council tax support increases significantly then the consequence of switching”—

from annually managed expenditure to departmental expenditure limits—

“will be that authorities bear more of the risk of a shortfall in funds.”

The risk of a shortfall or serious economic turbulence destabilising a local authority’s finances and, what is more, the poorest people in the area having to pay the price is not something that any Opposition Member, or I suspect a few Government Members, can accept. We have tabled new clause 11 because we believe that it would deal with the problem, and it might be helpful if I let you know, Mr Crausby, that we will seek to divide the Committee on that when the time comes.

Annette Brooke (Mid Dorset and North Poole) (LD): It is a pleasure to serve under your chairmanship, Mr Crausby.

On the first string of amendments, we are focusing on the 10% cut, which leads to all the other problems identified in subsequent strings. I accept that in addition to the 10% cut there are unexpected changes in the number of claimants and that apparently there is no cushion for that situation. Although I do not support the amendments that have been put forward, it is important to flag up the problems, which must not be ignored.

Let us consider the situation for a council faced with setting up a new system. Any savings it will be able to make through localisation of council tax benefit will need to be offset against the administrative costs it will incur. I accept that there must be some savings, because otherwise there would not be the same need for external audit when money is sent to the council to cover payments, but will the Minister state explicitly where the money will come from for the inevitably large cost of setting up individual schemes, particularly in the first year. There is of course the possibility that councils will work together, which would reduce the administrative costs of setting up new schemes, but they would then lose the advantage of localisation, because even an adjoining local authority will have a different demographic make-up. As soon as we focus on the 10% cut, we think about the demographic make-up.

I share some of the concerns that have been raised across the House. Once we ring-fence pensioners—we probably all agree that they should be protected—we effectively put a gearing effect on everyone else. By the time we have picked out families with a disabled member and other vulnerable groups, the reduction in council tax benefit, which might have started as an average of £2 a week, will start escalating on the backs of just a few people to £6, then £10, all depending on the make-up of the local authority area.

Mr Raynsford: I am finding it a little difficult to reconcile most of the hon. Lady’s speech and, in particular, her point about the impact of the 10% cut, which she clearly sees as damaging, with her earlier statement that she cannot support the proposed changes. Amendment 79 would quite simply allow the scheme to start on a revenue-neutral basis without the 10% cut, so what objection can she possibly have to it?

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6.30 pm

Annette Brooke: At this point in time, it is easy to put such amendments forward, but one has to identify where the money is going to come from, and I shall touch on that in a moment, because there are two sides to the issue: first, what needs to be addressed, but, secondly, how we finance it. That is quite important.

Returning to the point I was making, I wish to emphasise that we all have constituents who come to us with a breakdown of their weekly expenditure, and we all know how little there is to spare in some of those budgets, so the possibility of losing £6 to £10 of benefit is truly frightening.

Mr Kevan Jones: The hon. Lady talks about constituents going to her surgery. When they start going in 2013, after their benefits have been reduced, will she tell them not just that she voted in support of the measure, but that it was brought in only because the Liberal Democrats supported the Secretary of State?

Annette Brooke: At this stage, we are debating, and I hope all trying to be constructive about, the direction in which we would like the Bill to go, and it is important to be constructive, rather than to look for an immediate political hit.

Returning to the point I was making—

Mr George Howarth (Knowsley) (Lab) rose

Annette Brooke: I have given way several times, and I shall proceed in order to retain the flow of my speech. There are concerns, and it is right that we discuss how we address them.

A further concern is how the burden of the proposal is to be shared between the billing authority and any other authority that might be involved, such as a district or county council. I give the example of East Dorset district council, which last year had a revenue support grant of just £29 per head, meaning that it has very little flexibility with which to pick up any extra costs. So this is a matter not only of working with other councils, but of coming up with a clear solution to the issue.

I share the concern about whether the scheme can be introduced within the proposed time frame, which looks tight. The major software companies say that it cannot be done, but we know the timetable we are on: July for the Bill, October for the regulations and then the consultation on schemes. Can it be done? I want Ministers to address those questions and to give more thought to how the issue is going to be handled.

Mr Syms: There also needs to be consultation between local authorities. The hon. Lady represents two or three districts, and we in Dorset know that somebody can move from a home in Poole to one in Bournemouth or in east Dorset, but, if there are totally different housing benefit and council tax schemes in those areas, that too could have a perverse effect, so local authorities next door to each other will have to talk as well.

Annette Brooke: Yes, indeed. Such local authorities will need to talk to one another, and it will be difficult to get the right balance between a truly local scheme and work with adjoining authorities—I suppose I am

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talking about working across, horizontally and vertically. It is not clear from the Bill how a district council will cope with the issue

The string of amendments under discussion is about funding, and the concern all comes from the 10% cut. There are potential extra revenue streams, however, and they need to be addressed. I appreciate that point, given the modifications to the second homes and empty homes premiums, but it is unlikely that we will get an absolute match between the money that is lost and any money that might be gained, so we need to look at that aspect.

Helen Jones: Does the hon. Lady accept, however, that the second homes premium and, even, the empty homes premium do not apply in many local authorities? There are very few second homes in Warrington, so there will be no extra revenue going to the local authority from that premium.

Annette Brooke: The very point I was making is that there are variations throughout the whole country, so there needs to be some sort of stabilisation, contingency, transition—whatever we want to call it—because of the differences throughout the country and the possibility that the measure in the Bill will hit some very vulnerable people very hard. I make a plea to the Minister, even if he cannot give me the answers that I might want to hear today, to go away and look at all those issues, which have been raised on both sides of the House.

Mr Kevan Jones: It is a pleasure to serve under your chairmanship, Mr Crausby.

What we have seen from the hon. Member for Mid Dorset and North Poole (Annette Brooke) is a classic Liberal Democrat tactic: sit on the fence, give an impression—obviously with a leaflet out this weekend—of how she opposes and spoke against the proposal, and then go along and vote with the Government. I remind her, however, that if she and her Liberal Democrat colleagues choose to vote against the Bill, this Government will not get it through. Although she raises articulately the issues that will affect her local council, she cannot get away from the fact that, when these draconian proposals come in and affect many councils, including her own, there will only be one person whom they have to blame, and that will be her for voting for them.

I hope that, come the general election, people reflect on that point, because this is not about the Conservatives doing nasty things to Dorset, but about the Conservatives and Liberal Democrats doing nasty things to local government, and the hon. Lady is taking part in it. I am sorry, but I am not prepared to see her shed crocodile tears for the proposals and then troop through the Division Lobby. If she believed in what she was saying, she would vote against the measures and stand up for local government, a sector that I understand she comes from herself.

It was said last week that what local government requires is stability, and it does, but this is another example—we had one last week with the localisation of the business rate—of massive instability being introduced to local government. My hon. Friend the Member for Sheffield South East (Mr Betts) said that there was nothing wrong in principle with devolving council tax benefits to local councils, and I totally agree, but if it is brought in with a 10% cut, as the Bill proposes, and on

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the current time scale, it will have a massive effect on many local councils and individual recipients of council tax benefit.

Mr Mike Hancock: I do not agree with the benefits being devolved to local authorities, so what does the hon. Gentleman, who is arguing against localising the benefits under discussion, see as the real benefit of doing so?

Mr Jones: 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

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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.

6.45 pm

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.