Local government Finance Bill (Programme) (No. 2)


That the Order of 10 January 2012 in the last Session of Parliament (Local Government Finance Bill (Programme)) be varied as follows:

1. Paragraphs 5 and 6 of the Order shall be omitted.

2. Proceedings on Consideration shall be taken in the following order: New Clauses and New Schedules relating to council tax; Amendments to Clauses 8 to 12; Amendments to Schedule 4; New Clauses and New Schedules relating to nondomestic rating; Amendments to Clauses 1 to 7; Amendments to Schedules 1 to 3; and remaining proceedings on Consideration.

3. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.—(Robert Neill.)

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Local Government Finance Bill

Consideration of Bill, as amended in the Public Bill Committee

New Clause 9

Regulations about powers to require information, offences and penalties

‘(1) The LGFA 1992 is amended as follows.

(2) After section 14 insert—

“14A Regulations about powers to require information

(1) The appropriate authority may by regulations provide for the exercise, for prescribed council tax purposes, of—

(a) powers to require the provision of information;

(b) powers to require a person to enter into arrangements under which access is permitted to the person’s electronic records.

(2) The appropriate authority may by regulations make provision about arrangements for access to electronic records for prescribed council tax purposes where the arrangements are entered into otherwise than under a requirement of the kind mentioned in subsection (1)(b).

(3) The appropriate authority may by regulations—

(a) make provision about the persons by whom powers conferred by regulations under this section may be exercised;

(b) make provision about the persons by whom arrangements under regulations under this section may be made;

(c) in particular, make provision for the authorisation by billing authorities of persons to exercise those powers or make those arrangements.

(4) The provision that may be made by regulations under this section includes, in particular, provision equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the appropriate authority thinks fit

(5) For the purposes of subsection (4), each of the following enactments as it had effect on the day on which the Local Government Finance Act 2012 was passed is a “relevant enactment”—

(a) section 109A(8) of the Social Security Administration Act 1992 (application of section 109B of that Act to the Crown);

(b) section 109B of that Act (powers to require information);

(c) section 110A of that Act (authorisations by local authorities to exercise powers of investigation);

(d) section 110AA of that Act (power of local authority to require electronic access to information);

(e) section 121DA of that Act (interpretation of Part 6 of that Act);

(f) section 191 of that Act (interpretation of that Act).

(6) This section does not affect the operation of Schedule 2 (administration of council tax).

(7) In this section “council tax purposes” means purposes relating to a person’s liability to pay council tax.

14B Regulations about offences

‘(1) The appropriate authority may by regulations provide for the creation of offences that may be committed by a person in prescribed circumstances—

(a) by intentionally delaying or obstructing a person in the exercise of a power conferred by regulations under section 14A(1);

(b) by refusing or failing to comply with any requirement under regulations under section 14A(1)(b) or with the requirements of any arrangements entered into in accordance with such regulations;

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(c) by refusing or failing, when required to do so by or under this Act or by or under regulations made under this Act, to provide any information or document in connection with a person’s liability to pay council tax;

(d) by making a false statement or representation in connection with such liability;

(e) by providing, or causing or allowing to be provided, in connection with such liability, a document or information which is false;

(f) by failing to notify, or causing or allowing a person to fail to notify, a matter that is relevant to such liability (including in particular any matter that is required to be notified by or under this Act or by or under regulations made under this Act).

(2) Regulations under subsection (1)(a), (b) or (c)—

(a) must provide for an offence under the regulations to be triable only summarily;

(b) may not provide for such an offence to be punishable with a fine exceeding level 3 on the standard scale.

(3) Regulations under subsection (1)(a), (b) or (c)—

(a) may provide, in a case where a person is convicted of an offence under the regulations and the act or omission constituting the offence continues after the conviction, for the person to be guilty of a further offence and liable on summary conviction to a daily fine;

(b) may not provide for the daily fine to exceed £40.

(4) Regulations under subsection (1)(d), (e) or (f) that create an offence that may only be committed by a person acting dishonestly—

(a) must provide for the offence to be triable summarily or on indictment;

(b) may not provide for the offence to be punishable on summary conviction with imprisonment for a term exceeding 12 months or with a fine exceeding the statutory maximum;

(c) may not provide for the offence to be punishable on conviction on indictment with imprisonment for a term exceeding 7 years (and may provide for the offence to be punishable on conviction on indictment with a fine).

(5) Regulations under this section which create an offence within subsection (4) that may be committed before the date that section 154(1) of the Criminal Justice Act 2003 comes into force may not provide for such an offence committed before that date to be punishable on summary conviction with imprisonment for a term exceeding 6 months.

(6) Regulations under subsection (1)(d), (e) or (f) that create an offence that may be committed by a person acting otherwise than dishonestly—

(a) must provide for the offence to be triable only summarily;

(b) may not provide for the offence to be punishable with imprisonment for a term exceeding 51 weeks or with a fine exceeding level 5 on the standard scale.

(7) Regulations under this section which create an offence within subsection (6) that may be committed before the date that section 281(5) of the Criminal Justice Act 2003 comes into force may not provide for such an offence committed before that date to be punishable with imprisonment for a term exceeding 3 months.

(8) The appropriate authority may by regulations make provision—

(a) about defences to an offence under regulations under this section;

(b) about the commission by a body corporate of such an offence;

(c) about the conduct of proceedings for such an offence;

(d) about the time limits for bringing such proceedings;

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(e) about the determination of issues arising in such proceedings;

(f) about other matters of procedure and evidence in relation to such offences.

(9) The provision that may be made by regulations under this section includes, in particular, provision equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the appropriate authority thinks fit

(10) For the purposes of subsection (9), each of the following enactments as it had effect on the day on which the Local Government Finance Act 2012 was passed is a “relevant enactment”—

(a) section 111 of the Social Security Administration Act 1992 (offences relating to powers under that Act);

(b) section 111A of that Act (dishonest representations for obtaining benefit etc);

(c) section 112 of that Act (false representations for obtaining benefit etc.);

(d) section 115 of that Act (offences by bodies corporate);

(e) section 116 of that Act (legal proceedings);

(f) section 121DA of that Act (interpretation of Part 6 of that Act);

(g) section 191 of that Act (interpretation of that Act).

14C Regulations about penalties

‘(1) The appropriate authority may by regulations make provision for the imposition of a penalty by a billing authority on a person where in prescribed circumstances—

(a) that person’s act or omission results or could result in the amount of council tax that a person (“P”) is liable to pay being reduced or subject to a discount, and

(b) P is not or will not be entitled to that reduction or discount.

(2) The appropriate authority may by regulations make provision for the imposition of a penalty by a billing authority on a person where in prescribed circumstances—

(a) that person’s act or omission results or could result in a dwelling in respect of which a person (“P”) would otherwise be liable to pay council tax being treated as an exempt dwelling for a period, and

(b) the dwelling is not or will not be an exempt dwelling for all or part of that period.

(3) Regulations under this section must—

(a) make provision with the effect that a penalty may only be imposed on a person where the person agrees to the imposition of the penalty as an alternative to criminal proceedings being taken against the person in respect of the act or omission to which the penalty relates,

(b) make provision with the effect that a penalty may only be imposed on a person where the person has not been charged with an offence in respect of the act or omission to which the penalty relates, or

(c) make provision within paragraph (a) and (b).

(4) This section does not affect the operation of Schedule 3 (penalties).

(5) The provision that may be made by regulations under this section includes, in particular, provision equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the appropriate authority thinks fit.

(6) For the purposes of subsection (5), each of the following is a “relevant enactment”—

(a) section 115A of the Social Security Administration Act 1992 (penalty as alternative to prosecution);

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(b) section 115B of that Act (penalty as alternative to prosecution: colluding employers etc);

(c) section 115C of that Act (penalties in respect of incorrect statements etc);

(d) section 115D of that Act (penalties in respect of failures to disclose information);

(e) section 121DA of that Act (interpretation of Part 6 of that Act);

(f) section 191 of that Act (interpretation of that Act).

(7) The reference in subsection (6)—

(a) to section 115C or 115D of the Social Security Administration Act 1992 is to that section without the repeals in it contained in Part 1 of Schedule 14 to the Welfare Reform Act 2012;

(b) to any other provision of that Act is to the provision as it had effect on the day on which the Local Government Finance Act 2012 was passed.

14D Sections 14A to 14C: supplementary

‘(1) In sections 14A to 14C—

“the appropriate authority” means—

(a) the Secretary of State, in relation to England, and(b) the Welsh Ministers, in relation to Wales;

“prescribed”, in relation to regulations made by the Welsh Ministers, means prescribed by such regulations.

(2) A statutory instrument containing regulations made by the Secretary of State under any of sections 14A to 14C may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(3) A statutory instrument containing regulations made by the Welsh Ministers under any of sections 14A to 14C may not be made unless a draft of the instrument has been laid before and approved by a resolution of the National Assembly for Wales.”

(3) In section 113(3) (application of negative procedure to orders and regulations under the Act), after “except in the case of regulations under section” insert “14A, 14B, 14C or”.’.—(Andrew Stunell.)

Brought up, and read the First time.

4.24 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell): I beg to move, That the clause be read a Second time.

Mr Speaker: With this it will be convenient to discuss the following:

Government new clause 10—Power for HMRC to supply information for purposes of council tax

New clause 2—Discounts

‘(1) Section 11 of the LGFA 1992 is amended as follows.

(2) In subsection (1), for the word “shall”, substitute “may”.

(3) In subsection (2)—

(a) for the word “shall”, substitute the word “may”;

(b) for the word “twice”, substitute the words “a multiple of”.

(4) Omit subsections (3) and (4) and insert—

(a) In this section “the appropriate percentage” and “multiple” are to be determined by the relevant local authority and approved as part of their Council Tax Reduction Scheme as set out in Schedule 1A.

“(b) The eligibility for any reduction shall be determined as part of the Council Tax Reduction Scheme.

(4) Schedule 1 to this Act shall have effect for determining who shall be disregarded for the purposes of discount.”.’.

New clause 5—Report on effects of provisions

‘At a date no later than three years from the implementation of this Act the Secretary of State shall prepare a report detailing the effects of these provisions on—

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(a) the number of people receiving council tax support in each local authority including the number in employment, the number actively seeking work, and the number of pensionable age, and

(b) the costs incurred by each authority in running the scheme, including the cost of appeals.’.

New clause 7—Power to set higher amount for second homes

‘(1) The LGFA 1992 is amended as follows.

(2) After section 11A insert—

“11C Higher amount for second homes: England

(1) For any financial year, a billing authority in England may by determination provide in relation to its area, or such part of its area as it may specify in the determination, that if on any day a dwelling is a second home—

(a) the discount under section 11(2)(a) shall not apply, and

(b) the amount of council tax payable in respect of that dwelling and that day shall be increased by such percentage of not more than 50 as it may so specify.

(2) The Secretary of State may by regulations prescribe one or more classes of dwelling in relation to which a billing authority may not make a determination under this section.

(3) A class of dwellings may be prescribed under subsection (2) by reference to such factors as the Secretary of State thinks fit and may, in particular, be prescribed by reference to—

(a) the physical characteristics of, or other matters relating to, dwellings;

(b) the circumstances of, or other matters relating to, any person who is liable to the amount of council tax concerned.

(4) Where a determination under this section has effect in relation to a class of dwellings—

(a) the billing authority may not make a determination under section 11A(3), (4) or (4A) in relation to that class, and

(b) any determination that has been made under section 11A(3), (4) or (4A) ceases to have effect in relation to that class.

(5) A billing authority may make a determination varying or revoking a determination under this section for a financial year, but only before the beginning of the year.

(6) A billing authority which makes a determination under this section must publish a notice of it in at least one newspaper circulating in its area and do so before the end of the period of 21 days beginning with the date of the determination.

(7) Failure to comply with subsection (6) does not affect the validity of a determination.

(8) For the purposes of this section, the Secretary of State may by regulations prescribe the definition of a dwelling to be considered a “second home”.

(3) In section 11(2) (discounts: no chargeable residents) after “sections 11A”, insert “, 11C”.

(4) In section 11A (discounts: special provision for England) after subsection (4B) (inserted by section 9) insert—

“(4D) Subsections (3), (4) and (4A) are subject to section 11C (4).”.

(5) In section 66(2)(b) (matters to be questioned only by judicial review), after “section 8(2), 11A”, insert “, 11C”.

(6) In section 67(2)(a) (functions to be discharged only by authority), after “section 8(2), 11A”, insert “, 11C”.’.

Government amendments 42 to 48.

Amendment 6, in clause 8, page 5, line 28, leave out ‘2013’ and insert ‘2014’.

Amendment 7, page 5, line 29, leave out ‘2013’ and insert ‘2014’.

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Amendment 4, in clause 10, page 7, line 41, at end insert—

‘(12A) After sub-paragraph (7) insert—

(7A) In this paragraph, “increase” means an increase under section 11C(1)(b) (higher amount for second homes: England).”.’.

Government amendments 49 and 50.

Amendment 1, in schedule 4, page 48, line 43, at end insert—

‘(8A) Before making regulations under sub-paragraph (8), the Secretary of State must consult with local authorities regarding any proposed requirements for schemes.’.

Government amendment 51.

Amendment 9, page 49, line 15, at end insert—

(d) notify all persons within their area receiving council tax benefit on or immediately following 1 April 2012, of the implications of the draft scheme, including the estimated impact of that scheme on their living standards.’.

Government amendment 52.

Amendment 2, page 49, line 22, leave out sub-paragraphs (4) and (5).

Amendment 10, page 49, line 44, leave out ‘2013’ and insert ‘2014’.

Government amendments 53 and 54.

Amendment 11, page 50, line 2, at end insert—

‘(3A) The default scheme must be designed in such a way as to ensure, insofar as can reasonably be assessed, that no person below pensionable age, in or seeking employment, shall receive a lesser entitlement to a council tax reduction than that to which they would have been entitled under council tax benefit.’.

Amendment 12, page 50, line 2, at end insert—

‘(3B) If the default scheme has the effect of reducing or removing a reduction to which any class of persons was entitled under council tax benefit, it must include such transitional provision relating to that reduction or removal as the Secretary of State, after consultation with representatives of local government, thinks fit.’.

Amendment 13, page 50, line 5, leave out ‘2013’ and insert ‘2014’.

Amendment 3, page 50, line 14, leave out sub-paragraphs (2) and (3).

Government amendments 55 to 61.

Andrew Stunell: I am delighted to be taking part in the resumption of the debate from the previous Session, as it is good to be resuming our consideration of this important Bill and these important provisions. The Bill is a major step forward in localising fundraising and decision making to local councils and restoring to them local control. Discussing local government finance is very much an acquired taste, albeit one that I can see has not been acquired by too many hon. Members today.

May I draw the House’s attention to the publication of the statements of intent, which the Department has tabled for the benefit of hon. Members over the past few days? The statements bring to the House’s attention a great deal of the technical work behind the Bill and of how the Government intend that the scheme should be implemented over the coming months.

John Healey (Wentworth and Dearne) (Lab): The Minister mentions the seven technical notes. Dozens and dozens of pages about how the Government are going to approach this were released on the working day before Report and Third Reading in this House, and three and a half months after this House finished

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its Committee stage. Does the Minister accept that to anyone outside this House it looks as though, at every stage, this Government are going out of their way to avoid people being able to take a proper look at this and to avoid this House being able to do its job of scrutinising this Bill properly? We will be leaving too much to the other House to do.

Andrew Stunell: I am extremely disappointed by the right hon. Gentleman’s intervention. May I just remind him that when I assured the House that these papers would be published, there was universal astonishment that we proposed to do that before the Bill left this House? There was a universal assumption that I had somehow misspoken and that we actually meant to do this at a later stage. It is very much for the convenience of this House today that it should have these very important documents available for consideration, but the right hon. Gentleman is right to say that Members of the other place will have every opportunity to give further consideration to the information. Of course, the reason for publishing these papers in advance of the Bill completing its passages through the two Houses is to give local authorities and those who have to work on these schemes the maximum length of time to implement the necessary provisions, so that an appropriate and speedy commencement can be made next year.

Helen Jones (Warrington North) (Lab): In fact, the Minister promised us not statements of intent, but draft regulations. He said:

“we intend to publish draft regulations while the Bill is still before the House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]

Where are they?

Andrew Stunell: When the hon. Lady has taken the opportunity to look at the statements of intent, she will see that they are in effect—indeed, my note refers to it—draft statutory instruments. I remind her that we cannot publish draft statutory instruments until we have a Bill to publish them against. We have brought the statements of intent before both Houses so that matters for consideration are fully in view.

New clause 9 allows the Secretary of State to make regulations to introduce the necessary powers for local authorities to tackle fraud in claims for a reduction in liability to pay council tax, which will be effective from next April. Powers to investigate potential fraudulent claims for reductions in liability to pay council tax and to issue the appropriate penalties are a vital weapon for local authorities if they are properly to administer schemes and protect the public purse. The change from the existing scheme to the new scheme means that the new clause is needed to provide the necessary safeguards. Rather than simply reintroducing all the powers that local authorities have to tackle council tax benefit fraud, the clause allows us to work with local authorities to identify those powers and offences that will be needed to make local schemes work. The overall aim is that the regulations will reinstate only the necessary powers, offences, penalties and safeguards that are appropriate for the new scheme.

Mr John Redwood (Wokingham) (Con): It would be very helpful if the Minister explained to my constituents what extra power is being granted to the council and how it will prevent fraud.

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Andrew Stunell: The provision allows us to enter into discussions with local authorities about the point my right hon. Friend raises. It is our intention not to increase the powers of local authorities but simply to transpose them from the existing scheme to the new scheme while recognising that a range of provisions in the current scheme needs to be considered rather than simply transposed without any further thought. New section 14A, which the Bill inserts into the Local Government Finance Act 1992, will allow the Secretary of State to make regulations giving local authorities the power to authorise officers to carry out investigations. Regulations may provide that officers so authorised may require relevant information from specified bodies to check whether a claim that they believe to be fraudulent is in fact so. The regulations may also provide authorities with powers to require that certain bodies must enter into arrangements allowing access to a person’s electronic records.

Mr Redwood: That is the point I am trying to get at. It is already an offence to make a fraudulent declaration and to try to get out of paying this tax, and we all want to stop the fraud, but we also want to keep some civil liberties in this country. I must press the Minister again. What extra powers to investigate people and get access to their data are being taken?

Andrew Stunell: I am sorry if I did not make myself clear. The powers that local authorities rely on to guard against fraud in the current council tax benefit scheme will, in effect, lapse with the introduction of the new scheme. They are not competent to be used under the new scheme, so we need a new scheme. The purpose of the new clause is to ensure that the scheme takes account not just of concerns such as those held by my right hon. Friend but of the need to protect the public purse and that they are kept in proper and proportionate balance. We will not be giving local authorities powers to enter premises or to conduct inquiries and remove and copy documents from such premises. I hope my right hon. Friend finds that assurance helpful. The powers we are giving will require people to enter into arrangements under which access is permitted to relevant records and will, in our view, be sufficient for council tax purposes.

New section 14C will enable the Secretary of State to make regulations providing that authorities may issue penalties as an alternative to prosecution or where a person has not been charged with an offence. That will ensure that local authorities are able to take proportionate action, rather than being faced with the choice of pursuing prosecution or doing nothing. Before the debate on the amendments in the other place, we intend to publish a detailed statement of intent that will spell out clearly our proposals for regulations in accordance with the new clause. We have also made it clear in the new clause that any regulations will be subject to the affirmative procedure and will therefore be debated by both Houses. I hope my right hon. Friend will be somewhat reassured by what I have said.

Helen Jones: Will the Minister explain to the House, for my benefit and, presumably, for the benefit of others, how regulations in this section can

“create an offence that may be committed by a person acting otherwise than dishonestly”?

Presumably, if a person is not acting dishonestly, they are acting honestly. How can that create an offence?

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Andrew Stunell: The hon. Lady is well aware that there are such things as negligence and avoidance of reality. We are all aware of such cases. I see quite a few examples in the House from time to time.

New clause 10 inserts into the Bill powers allowing Her Majesty’s Revenue and Customs to supply information for prescribed purposes relating to council tax to billing authorities in England and Wales and to local authorities in Scotland, and provides for offences relating to the misuse of that information. It is the matching part of the preceding clause, the one that gives local authorities the power to ask bodies for information. This clause allows HMRC to supply that information.

Data sharing will be an important way of maximising convenience and reducing complexity for claimants, while also helping to reduce administrative costs. It will reduce the need for individuals to have to provide the same information repeatedly to different public bodies and produce evidence about their situation to those bodies. Section 131 of the Welfare Reform Act 2012 provides for the sharing of information relating to social security benefits and welfare services with a qualifying person for prescribed purposes relating to welfare services or council tax. The two new clauses, together with that provision, will enable data held by the Department for Work and Pensions in relation to current benefits and, in future, to universal credit, to be provided to English and Welsh billing authorities and Scottish local authorities for the administration of local council tax reduction schemes.

Hilary Benn (Leeds Central) (Lab): I understand the point that the Minister is making about requiring organisations such as DWP to offer information relating to individuals, but section 14A(1)(b) refers to

“powers to require a person to enter into arrangements under which access is permitted to the person’s electronic records.”

I find it hard to see that that is to do with the Department for Work and Pensions. Can the hon. Gentleman assure the House that this does not relate to individual council tax payers and any electronic records that they have—for example, held on personal computers?

Andrew Stunell: I may wish to return to the right hon. Gentleman’s point later in the debate, if the opportunity arises. My understanding is that there is nothing in the provision that in any way takes the powers of public bodies beyond what they are currently able to do in pursuit of council tax benefit and alleged fraud and misuse of council tax benefit. As I understand it, these powers are absolutely parallel to the existing provisions. I am sure that I will have an opportunity to return to that point later in the debate if I have in any way misguided the House.

New clause 10 inserts paragraphs 15A and 15B into schedule 2 to the Local Government Finance Act 1992. Paragraph 15A(1) and (2) will allow Her Majesty’s Revenue and Customs to supply information held for the purposes of its functions to billing authorities in England, as well as to a person authorised to exercise any of an authority’s functions on its behalf.

Mr Redwood: On new clause 10, when the Revenue has shared information with a local authority, what right will the individual concerned have to make sure that the Treasury has shared the correct information and has not made a mistake?

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Andrew Stunell: HMRC is obviously under the same obligations when transferring data in such a case as it is in every other case; it must ensure that the data are relevant to the question being asked, accurate and appropriate, and there are of course safeguards via the Information Commissioner should that be broken. HMRC takes data protection extremely seriously, and the provisions in the Bill, which lie on top of the provisions in the Welfare Reform Act, are needed precisely because it is necessary to ensure that we have safeguarded HMRC and given it specific, explicit and closely confined powers on the transfer of data.

Mr Nick Raynsford (Greenwich and Woolwich) (Lab): I must say that that is not an adequate response to the question asked by the right hon. Member for Wokingham (Mr Redwood). We have seen a lot of evidence on data sharing recently. The Electoral Commission has been undertaking data-matching exercises that have revealed huge problems of inaccuracy in data shared between Government Departments. This is a serious matter and the Minister is not justified in brushing it aside like that. There needs to be more certainty and more checks and safeguards need to be in place.

Andrew Stunell: I remind the right hon. Gentleman that at the moment HMRC shares these data with DWP, which then takes a view on an individual’s income and shares it with the local authority that administers the benefit. Under the provision, that information will go directly from HMRC to the billing authority. We absolutely share the view, expressed by both the right hon. Member for Greenwich and Woolwich (Mr Raynsford) and my right hon. Friend the Member for Wokingham (Mr Redwood), that it is extremely important that that creates neither opportunities for error nor opportunities for the misuse of data in any other way.

David Wright (Telford) (Lab): The real danger, as the right hon. Member for Wokingham (Mr Redwood) said, is that there will be mission creep. Experience under previous Governments, including the Labour Government, shows that there is mission creep on data exchange. Discs are produced and information is passed around. What we really need from the Government is a definitive statement on what data can be passed between Departments, because there is a danger that people’s information will be passed around and that the parameters and scope of the data that ought to be shared will be extended.

Andrew Stunell: I am certainly keen to offer, on behalf of the Department and the Government, a clear undertaking that it is not the intention that that should happen, and that the provisions before the House do not create the opportunity for that to happen.

To return to the question asked by the right hon. Member for Leeds Central (Hilary Benn), proposed new section 14A, which relates to the investigation of fraud, will enable local authorities to investigate the eligibility of a person for a council tax reduction, which might require access to the individual’s records, in the same way as can currently be done for council tax benefit. That is separate from the provisions elsewhere relating to HMRC’s sharing of data with local authorities.

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Proposed newparagraph 15B(7), of schedule 2 to the 1992 Act, sets out the procedure that Welsh Ministers must follow when making these regulations, which will be through a statutory instrument, subject to annulment procedures. Proposed new paragraph 15C(7) sets out the procedure that Scottish Ministers must follow when making regulations in respect of the data-sharing provisions, which will be through a Scottish statutory instrument, subject to the negative procedure. Without that legal gateway, HMRC would not be able to provide the information that billing authorities need for council tax purposes, such as calculating an entitlement to a reduction under a council tax reduction scheme, and if that were the case it would clearly increase the complexity for claimants and the administrative costs for billing authorities.

4.45 pm

Government amendments 42 to 50 and 56 to 60 would provide Welsh Ministers with the powers to place a duty on specified bodies in Wales to introduce council tax reduction schemes in Wales. Welsh Ministers have developed plans for locally delivered council tax reductions and asked for these amendments, which will enable them to prescribe, by regulations, for establishing in Wales council tax reduction schemes that are broadly similar to those that billing authorities in England will be required to introduce in accordance with the Bill. Those powers would provide Welsh Ministers with the scope to establish the remit for council tax reduction schemes in Wales that were appropriate for Wales.

Welsh Ministers have said that they intend to use the powers to introduce a single national scheme set out in regulations and include the reforms necessary to meet the 10% reduction in funding. They intend local authorities to be given an amount of local flexibility in the new scheme’s delivery, and deviation from the national scheme will be funded locally. Welsh Ministers have recently consulted on the policy’s detail, and they intend to set out their proposals on vulnerable groups, including pensioners, in due course.

Amendment 44, to section 13A of the Local Government Finance Act 1992, would provide Welsh Ministers with the power to require specified bodies in Wales to introduce council tax reduction schemes, and the proposed change details the scope of the regulations that Welsh Ministers would be able to make. Amendment 45 sets out the procedure that Welsh Ministers would have to follow when making regulations on the introduction of council tax reduction schemes.

The amendments include a series of provisions that I am very happy to bring to the House’s attention if Members would like me to do so, but it might be sensible if I proceed by saying simply that the amendments set out a range of requirements and rules that are intended entirely to ensure that the scheme can be applied as Welsh Ministers determine in the Welsh environment.

Amendments 51 and 54 are technical amendments to ensure that we can deliver our policy to protect pensioners, enabling regulations to provide for a default scheme that largely replicates current council tax benefit, and providing reassurance to local authorities that their schemes can incorporate certain features of current council tax benefit when they choose them to do so.

Taken together the amendments to schedule 4 would achieve that aim by ensuring that regulations prescribing requirements for schemes and regulations prescribing

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the default scheme may incorporate provisions equivalent to those that are, or could be, provided for in the sections of existing legislation relating directly to council tax benefit.

Helen Jones: Why does the default scheme replicate the existing scheme on a 10% cut? Is the intention to penalise financially those councils that do not come up with their own scheme in time?

Andrew Stunell: There is certainly an incentive for local authorities to introduce a scheme of their own choosing. The whole point of this is that local authorities should have the capacity to have their own scheme, designed as they see fit. If they have not formed such a scheme by the relevant date in January, the default scheme comes into play, and that scheme will, in essence, continue with the existing council tax benefit scheme in its entirety. Taken together, the amendments to schedule 4 ensure that regulations prescribing requirements for schemes and prescribing the default scheme allow local authorities to take this approach and, if they so wish, to adopt the existing scheme lock, stock and barrel.

The Government have already confirmed their commitment to protecting pensioners on low incomes and have said that there should be no change in support to them as a result of the introduction of this reform. Support will continue to be rules-based, with provisions about the calculations to be made set out in regulations under paragraphs 2(8) and 2(9) of new schedule 1A to the Local Government Finance Act 1992, which is inserted by schedule 4 to the Bill. As the House is aware, it is intended that the support scheme for pensioners will be protected so that their support is as close as possible to what they receive at present. Paragraph 4 of new schedule 1A provides powers for the Secretary of State to prescribe a default scheme in regulations to take effect in any authority that has not made its own scheme by 31 January. The default scheme will cover those who have attained the qualifying age for state pension credit and those who have not yet attained it. The Government have been clear that they intend the default scheme to be as similar as possible to the existing scheme.

These technical amendments will enable regulations prescribing the requirements for pensioner protection and the default scheme to make use of the same powers, definitions and treatments as set out in the detail of the existing council tax benefit legislation. The Government believe that that will help to facilitate their provision of protection for those of pension credit age and provide the legal backstop of a default scheme that can take effect should a local authority not complete its own scheme. In particular, amendment 51, new schedule 1A, paragraph 2 and sub-paragraph (10) will allow the Government, when they set up the scheme, to make equivalent provision to that contained in the one of the enactments listed in sub-paragraph (12). New paragraph (3A) in amendment 54 allows the default scheme to make equivalent provision to that capable of being made under the same enactment.

There is a great deal of detail that I am happy to bring to the House should Members wish to have it, and more in the statements of intent. If the House is content at this point, I will move on to Government amendment 52. As set out in the statements of intent that we have published on our plans for localising support, the Government do not propose to make regulations as to

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how a billing authority will prepare a scheme because that would not enhance the existing requirements and duties of authorities in consulting and involving local people. It therefore does not make sense to prevent billing authorities, after consulting their major precepting authorities, from proceeding to publish their scheme and to consult others if they are in a position to do so prior to the Bill’s receiving Royal Assent. Amendment 52 allows councils to proceed in that direction if they wish. In other words, if, after consulting its major precepting authorities, a billing authority wants to publish its local scheme and to consult any other person with an interest in the scheme, it can do so straight away without running any additional risks arising from carrying out those steps in advance of Royal Assent.

Helen Jones: Are not the Government too often taking steps to implement legislation before it has been passed? We saw that with the Health and Social Care Bill and we are seeing it again now. The essence of a democratic Parliament is that legislation has to go through two Houses and get Royal Assent before it becomes law. Are not the Government trying to compensate for the fact that they are rushing this change in far too quickly, instead of giving local authorities time to prepare properly?

Andrew Stunell: In the last Session, the hon. Lady spent a lot of time telling us that we had not produced enough detail, nor given local authorities enough warning or flexibility. It seems a little perverse for her to say now that she does not want local authorities to have the flexibility to get a scheme under way pronto, if they are in a position to do so. I do not understand her confused logic.

Government amendment 53 is a minor technical amendment, which will ensure that the first financial year to which the default scheme relates is the same as that specified for the implementation of council tax reduction schemes in clause 8(4). Amendment 55 relates to claims that are in progress when the schemes come into force: in essence, any claims in the pipeline will be rolled over, rather than applicants being required to start again with a new scheme.

That completes my remarks about the Government proposals, but it is right and proper that I comment on the proposals from other parts of the House. New clause 2, tabled by the right hon. Member for Wentworth and Dearne (John Healey), would do away with the automatic entitlement to the single person discount, which has been a feature of council tax since its introduction. I remind the House that households with just one adult are eligible to claim the single person discount on their council tax bill, and that is not a benefit but a tax discount that has been a fundamental feature of council tax since its creation in 1993. Eight million households in England receive the single person discount, of which 90% are in bands A to D; it is therefore not a subsidy for the wealthy. Indeed, 29% of households in Great Britain are single-person households and another 7% are single-parent households, which are also eligible for the tax discount.

New clause 2 would pass to local authorities discretion on whether to grant a discount to such people and the size of the discount as part of setting their council tax reduction scheme. Clause 8(2) provides that

“Each billing authority in England must make a scheme specifying the reductions which are to apply to amounts of council tax”.

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Mr Kevan Jones (North Durham) (Lab): Is this not another example of not giving local councils freedom, but trying to push the blame on to local authorities? Would it not cause chaos in places such as London, where the 32 boroughs could have 32 different schemes? How does the Minister think that could be run efficiently?

Andrew Stunell: That is a severe criticism of new clause 2, which would pass down to councils the capacity to change single person discounts. As the hon. Gentleman rightly points out, that would create difficulties in implementation. I am sure that the right hon. Member for Wentworth and Dearne, when he speaks in favour of the new clause, will explain to the hon. Gentleman exactly how it would work.

New clause 2 would not only interfere with the single person discount, but give billing authorities discretion on whether a 50% discount should be granted in other circumstances. Currently, that applies when a dwelling is not unoccupied but is no one’s sole or main residence. At one time, that would have meant second homes, but the provision on those was amended in the Local Government Act 2003. The 50% discount still applies in some cases, when the second home is job-related. That is a matter of particular importance to the clergy and to service personnel. I suspect that the new clause would have an effect that the right hon. Gentleman does not intend.

5 pm

Whatever the superficial attractions of the new clause—particularly to billing authorities, whose revenue-raising powers would be increased—it would certainly not be attractive to the 29% of households in which people live alone or the 7% of households that are single-parent families. Those categories include many older people, including widows and widowers, and the Government have made it clear that we intend that they retain their protection. We have prefigured that with our two-year council tax freeze, and our clear intention is to ensure that there is no loss of single person discount.

New clause 5 is interesting. The Government will monitor and review changes as part of the equality impact assessment process, as they do after every Act is implemented to check that it works as planned and to screen for unexpected equality impacts. There are already powers in the Bill to allow for that. Schedule 4 will insert into the Local Government Finance Act 1992 a new schedule 1A, which will enable the Secretary of State to require authorities to supply specified information to him. In the Government’s equality impact assessment of that reform, we made it clear that those powers could be used to collect information to support future evaluation of the policy. In other words, new clause 5 is not necessary, as what it suggests is already covered entirely in the Bill.

Helen Jones: Is the Minister therefore committing to produce a report, as requested in new clause 5?

Andrew Stunell: If the hon. Lady looks at the impact assessment submitted alongside the Bill, she will see that the specific question of whether the policy will be reviewed is addressed. The answer to her question is yes, and, if I remember correctly, the time interval before the publication will be three years.

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Taken together, amendments 10, 13, 6 and 7 would delay by a year the localisation of the council tax reduction scheme, pushing it back from 2013 to 2014. The Government are very clear that the reform needs to be implemented in 2013 to secure the agreed savings set out in the 2010 comprehensive spending review. I think the Labour party is still struggling to come to terms with the fact that in 2010, £1 was being borrowed for every £4 spent and we were adding £400 million to the national debt every day. Tackling the deficit and establishing fiscal responsibility is a central part of the coalition Government’s strategy, and the changes to the scheme are fundamental to achieving the savings set out in the CSR.

There are things that councils should already be doing to prepare for the change, and we are supporting them in doing so, not least through the provision that the hon. Lady queried a few minutes ago. They should understand the circumstances of those in their area who currently claim support, ensure that elected members are aware of the decisions that they will need to take and engage with precepting authorities, such as police and fire authorities. They have the opportunity to prepare for and carry out consultation as soon as they are ready to do so—Government amendment 52 supports local authorities in their preparations by making that clear. The Government therefore believe that the amendments to delay the scheme are inappropriate and would create an unnecessary burden for local authorities, which will continue to be subject to their existing equalities duty and so will have to take that fully into account in their decisions.

The public sector equality duty includes a requirement for local authorities to have regard to advancing equality of opportunity between people who share a protected characteristic and those who do not, and to the need to eliminate unlawful discrimination. That continuous process requires relevant decision makers in local authorities to consider equality issues. That has a bearing not only on the question of delaying the scheme, which would incur costs and difficulties, but on amendment 9, which would require local authorities to notify current claimants of the potential impact of the draft scheme. Local authorities are already required, by paragraph 3(1) or proposed new schedule 1A to the 1992 Act, to consult on the draft scheme with such persons as they consider

“are likely to have an interest in the operation of the scheme”.

Furthermore, public sector bodies, including local authorities, are obliged to comply fully with the public sector equality duty.

Helen Jones: On a point of clarification, the Minister appears to be saying that local authorities have a duty to consider those with protected characteristics. The problem he is not grappling with is that if local authorities seek to do that in their council tax schemes—in respect of disabled people, for example—the cut imposed on the working poor will be even greater. Which mode of operation is he arguing they should undertake? Is he arguing that there should be equal cuts for everyone except pensioners, or that cuts should fall more on people who are in work?

Andrew Stunell: The Government have made it absolutely clear that that is a matter on which local authorities should take a decision. I remind the hon. Lady—she

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made this point—that it is open to councils to continue with the default scheme if they wish to do so; to look at other provisions in the Bill relating to discounts for empty and second homes; to take resources from other parts of their budget, which they could choose to do; and to scale back the benefits they provide in a scheme on which they have consulted.

Mr Kevan Jones: My hon. Friend the Member for Warrington North (Helen Jones) raises an interesting point. Clearly, many northern councils whose grants have been slashed have very little room for manoeuvre compared with Wokingham, whose grant has been increased. Does the Minister agree with the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who said that those in greatest need will ultimately bear the cost of the cuts? How can that be equal and fair?

Andrew Stunell: The hon. Gentleman has made his point. I should make it absolutely clear that, from the Government’s point of view, it is right for local councils to take account of the local circumstances in their communities and to draw up a scheme that they believe is appropriate for them. I again make the point that other measures in the Bill give greater discretion to local authorities on raising council tax on second and empty homes. The vast majority of local authorities potentially have a substantial stream of additional income, if they believe they will face difficulties because of the reductions in income resulting from this part of the Bill. The Bill has to be taken as a whole.

John Healey: The Minister has just said that the Government want councils to be able to draw up schemes to take account of local circumstances. Why then is he putting this funding noose around their necks by cutting the available money by 10% from the start?

Andrew Stunell: I dealt with that point a minute or two ago, when I pointed out that the UK-wide reduction announced in the 2010 comprehensive spending review of some £500 million—with an impact of approximately £440 million in England—was part of the Government’s deficit reduction programme. Of course that has implications, as Opposition Members have pointed out. We think that pensioners are the important group to safeguard, which is why we are putting the statutory safeguard in the scheme and saying that local authorities should have regard to the most vulnerable in their area when drawing up their schemes.

Nic Dakin (Scunthorpe) (Lab): Will the Minister acknowledge that yet more demand and stimulus will be taken out of local economies as a result of the measure? Will not the Government then have to revise their borrowing figure yet again, and borrow even more than £150 billion?

Andrew Stunell: I think the hon. Gentleman has got that slightly topsy-turvy. We are ensuring that it will always be better to work and that it will always pay to work. One of the statements of intent sets out the Government’s view on how that can sensibly be integrated with universal credit, which will start in a year or two.

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John Healey: How can the Minister say that? He talks about protecting pensioners. In Rotherham, there are 2,600 people who are in work but on incomes so low that they need the support of council tax benefit to get by, week to week and month to month. They will lose out as a result of this measure, and they will do so by significantly more than 10% of the overall cut, so how can the Minister piously say that work incentives matter to this Government?

Andrew Stunell: It would be interesting to hear the right hon. Gentleman tell the House how many of those 2,000 people received an income tax rebate as a result of the decisions taken by this Government. Indeed, I suspect that many of them will have been taken out of income tax altogether.

Hilary Benn: You are giving with one hand and taking away with the other.

Andrew Stunell: At least the right hon. Gentleman acknowledges that we are giving with one hand. It is right for local authorities and local communities to take account of the circumstances they face, and I hope that the council in Rotherham will do precisely that.

Mr Kevan Jones: Is not the Minister making it quite clear that this is not about the reform of local government finance, but about deficit reduction? The point that my right hon. Friend the Member for Leeds Central (Hilary Benn) has just made is that those people might well have been taken out of tax, but they will now be hit by this measure as well as by housing benefit cuts. Furthermore, the poorest are the hardest hit by the VAT increase—a policy that he once believed in.

Andrew Stunell: The hon. Gentleman needs to take stock of just how much council tax benefit someone in band A in his local authority might be getting and compare it with the discount that they might receive through the raising of tax thresholds. He might then grudgingly have to agree that the situation is not as bad as he maintains.

Amendment 1 would require the Government to consult on regulations prescribing requirements for schemes. Of course external scrutiny of plans for the framework is important, which is why the Government have published the detailed statements of intent for the key regulations that will deliver the policy. We will publish further statements of intent at each stage, as necessary. That will provide an opportunity for us to engage with local government on the detail of our plans before draft regulations are produced, and give local authorities the key information they need to develop their schemes. There is no need for additional requirements to consult with local authorities, such as amendment 1 would impose. In addition, we are working closely with local government representatives to design the framework within which local authorities will be required to operate, including considering what—if any—provision needs to be made for how local authorities should prepare schemes.

5.15 pm

Amendment 3 is a bit of a stray. It would remove the deadline of 31 January for making revisions to or wholly revising schemes. The Government are clear that

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schemes cannot be amended in-year, but changes can be made between years. It is necessary to set a deadline of 31 January for revisions to schemes to provide certainty for council tax payers about when a final scheme will be issued. To remove the deadline could create significant uncertainty for low-income groups concerned about what support they will be able to claim.

Amendments 11 and 12 relate to the default scheme. I hope that I have already said enough to make it clear that the Government propose that the default scheme should retain the criteria and allowances currently in place for council tax benefit. We published a detailed statement of intent setting out how we expect to provide for the default scheme of regulations. As it is not intended that the default scheme will provide for any reductions in support, there will—as the hon. Member for Warrington North (Helen Jones) said—be a strong financial incentive for local authorities to avoid that, but the amendments are designed to guarantee that under the default scheme there will be no reduction in the level of support. Well, the scheme itself will have no reduction in the level of support.

Mr Raynsford: As I am responsible for the amendments, may I remind the Minister that the first of the two he described simply requires that there should be no reduction in benefit entitlement for pensioners. As he has already given that commitment to the House, how can he possibly object to that amendment?

Andrew Stunell: It is completely unnecessary. The right hon. Gentleman could have tabled an amendment that said today is Monday, and I would have resisted it on the grounds that we already know that. We do not need it.

New clause 7 was tabled by my hon. Friends on the Liberal Democrat Benches. It would introduce a premium on second homes that is an exact mirror of the Government’s proposal for the council tax premium on empty homes. The empty homes premium came from the Liberal Democrat stable and I am pleased that it is in the Bill. I am sure that my hon. Friends will be eloquent in supporting their proposition, but I have to tell them that the Government believe that it is right to invest heavily in bringing empty homes back into use, and that is why we are using the policy levers available to us. Certainly, there are difficulties in the second home sector; we fully acknowledge that and we fully understand the concerns that my hon. Friends have expressed.

Mr John Leech (Manchester, Withington) (LD): I thank the Minister for addressing our new clause. Does he accept that there is a real problem with second homes in some parts of the country? If that problem does not decrease as a result of the changes, will the Government look again at measures to ensure that such areas are protected from a massive increase in the number of second homes?

Andrew Stunell: My hon. Friend makes a very good point. For some rural areas, especially tourist-focused ones, a significant fraction of the housing stock may be occupied—or perhaps unoccupied—as second homes, which makes it very difficult for those who live and work there to secure accommodation. I am sure he has taken note of our changes to the second home discount

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provisions, which give local authorities in those areas the opportunity to bring their council tax bills up to 100%. His new clause proposes a premium on top of that. I am sure that, in the years ahead, he and I will work jointly on proposals for a Liberal Democrat Government beyond 2015, and I look forward to working with him on that proposition.

Helen Jones: The Minister keeps referring to the right the Bill gives councils to increase the charge on second homes, as though all councils could gain a lot of money from that. Will he accept that in the poorest authorities, which will be hit hardest by the Bill—places such as Gateshead, Rotherham and so on—there is not an awful lot of second homes?

Andrew Stunell: I understand the hon. Lady’s point, but in Rotherham the funding gap is £1.8 million and the total value of discounts and exemptions granted by the Bill £1.9 million. To be clear, a 10% reduction for Rotherham is easily covered by the discounts and exemptions in the Bill. That is not true of every local authority, but it perhaps illustrates that there is a good deal of unnecessary trouble stirring by the Opposition. They are paid to do it, I understand that; but sometimes it is important to refer to the facts. In particular, I noticed that one of the leading financial officials on whom the Local Government Association draws for advice is the chief finance officer of Rotherham, so I am sure that those figures, which he submitted to the Department, are correct.

I am extremely sorry to have detained the House for so long, but I hope that I have provided a good foundation for the debate. The Government believe these to be important and significant reforms that will return power and responsibility to local government and take them out of Whitehall. We believe that is the right direction in which to head. I commend the Government’s proposals to the House and urge right hon. and hon. Friends and Members not to support the other amendments and new clauses.

Mr Raynsford: I draw attention to my interests as declared in the register.

This is a shocking example of how not to legislate. It is three months and 21 days since we completed a rushed Committee stage on the Floor of the House, and during that time, the Government have sat on their hands. Why, during that period, did we not have proper time to discuss the Bill’s very serious implications? Why did the Government not use it to publish the draft regulations that the Minister promised in the debate on 31 January? I remind him of what he said:

“I recognise, of course, that local authorities and suppliers need as much information as possible as soon as possible. For that reason, we intend to publish draft regulations while the Bill is still before the House.”

My right hon. Friend the Member for Wentworth and Dearne (John Healey) sharply picked up on that and asked the Minister whether he meant

“this House or the other House”.

The Minister replied:

“I am looking for a nod somewhere”—

he was clearly in need of guidance—

“but let us stick with this House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]

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That was his commitment on 31 January 2012. As I said, three months and 21 days later we still do not have the draft regulations. The Government, belatedly and to cover their embarrassment, pushed out a series of positioning papers on 17 May—four days before this debate—rightly provoking anger and criticism in local government that it had not been given time to consider the detail far enough in advance of today’s Report stage to issue briefings. We had the worst possible example of the Government rushing the Committee stage, preventing proper scrutiny. I remember well the lack of detailed scrutiny, with a number of amendments simply not being called because of the lack of time. The Government then did nothing for three months and 21 days, and now they have come to this House without draft regulations. They should be deeply ashamed of themselves and should apologise to the House for the shambles they have made of introducing this legislation.

John Healey: Does my right hon. Friend agree that one other consequence of taking the Committee stage on the Floor of the House, rather than in a Public Bill Committee, was that those organisations responsible for implementing the system with concerns about its consequences did not have the opportunity formally to give evidence to the House, and thereby inform the debate and scrutiny, and ensure that the legislation was better than it is now?

Mr Raynsford: My right hon. Friend, who is extremely experienced in these matters, makes a telling point. That was just one further way in which the Government could have ensured proper scrutiny, giving a proper opportunity to those most profoundly affected by the changes to give evidence to us and to help shape a better Bill than the one we face today. But no, the Government simply did not want scrutiny because, as we shall see, they are pushing through a crude measure that will have a profound impact—of some £500 million—either on individuals or on local authority budgets, and they are doing so without proper care or consideration of those consequences. As I have said, they should be deeply ashamed of themselves.

This is a complex matter. The introduction of housing benefit in the 1980s, many years ago, was bungled. It was bungled because it was rushed and local authorities did not have enough time to prepare. There were horror stories from all over the country of people not receiving the benefits to which they were entitled, and huge backlogs of cases building up in local authorities. One would think that a Government who had experienced that in their history—or at least the Conservative part, which went through that experience in government—would want to avoid doing the same thing again. But here we are, with a Government once again rushing to introduce complex changes in benefits that will have profound impacts on many individuals’ potential entitlement, and doing so to a ridiculously tight timetable.

Mr Kevan Jones: I think the Minister answered the question earlier: this measure is not about reform of local government finance, but about deficit reduction. However, is it not also about devolving the responsibility—and the blame—for implementing these proposals to local authorities?

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Mr Raynsford: My hon. Friend is absolutely right: this measure is not about reforming the benefits system or creating a benefit; it is about imposing crude cuts in expenditure either on individual recipients or on local authorities. It is about the Government passing the buck, putting the responsibility and blame elsewhere.

Let us look at the timetable. We know how many tasks are involved if a local authority is properly to introduce its own local scheme of council tax benefit next April. What will a local authority have to do? It will first have to consider in detail the implications of the regulations—it has to know what law it has to comply with. Over the last year or so we have heard about various aspirations from the Government. We heard the Minister say that no pensioner should lose; we have also heard the aspiration that there should not be any work disincentives. How those two are compatible we have never had explained to us. If we have a benefit that goes to a substantial number of pensioners and a substantial number of people in low-paid work, and if we exempt one of those groups from any losses and then announce a 10% cut overall, the other group has to face that loss by definition. It is, I am afraid, a simple piece of logic. The Government have not come forward with any explanation of how the aspiration that there should be no work disincentives can possibly be achieved. It is the most flabbergasting case of what George Orwell would have described as “doublethink”.

The first task of local authorities, when they have seen the regulations, will therefore be to consider the implications. Then they will have to devise a draft scheme, taking account of the needs of the area and local aspirations. Many people in this House support the concept of localisation, but want it done properly. That would require local authorities to have the opportunity to consider what the best shape of a local council tax benefit scheme would be for it to respond to the needs of the area. Having done that, they should consult, which we all know is part of good administration. Consulting the considerable numbers of people affected is not trivial—we are talking about 6 million households nationally, which means tens of thousands in every local authority area. After a proper consultation, so that individuals will know the likely implications, local authorities should finalise their schemes and then brief their IT suppliers to produce the software necessary to administer them.

5.30 pm

Ministers are seriously suggesting that local authorities should conduct that particular process in a matter of little more than eight months, because January next year is the cut-off date by which the benefits scheme has to be finalised. What world are they living in? What experience do they have of implementing complex changes in benefits? If they had any real-world experience, they would immediately realise that they have set local authorities an impossible task.

What makes this sinister is the fact that we know what the Government expect to happen. They know that local authorities will probably respond by saying, “This is too difficult, so we had better take the hit ourselves. We will take the cost of the reduction in subsidy and absorb it into our own budget to avoid upsetting too many of our local residents by imposing harsh cuts on them.” That, we know, is the reality. As I said earlier, that is why the Government are guilty of

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trying to offload this £500 million package of cuts either on recipients or on local authorities. That is why amendments 6, 7, 10 and 13 seek to get the Government off the hook by delaying implementation for 12 months to allow proper consideration and a proper orderly transition so that implementation will not lead to the problems I have described.

There is no logical case against that course. The Select Committee was adamant when it looked at the problem, and it recommended that the Government should delay. Local authorities are all backing these amendments, so why will the Government not accept them? We have heard the feeble excuse offered once again by the Minister, “Oh, it’s due to cuts. We can’t do anything else because of cuts.” I am sorry to say that this is not a Government looking intelligently or carefully at how to make savings without causing difficulties and hardship; rather, they are simply trying to offload these problems.

There is one other consideration to which the Government should give some thought, and I suspect some local authority lawyers are already giving thought to it. If it is impossible for local authorities to administer the scheme in a way that makes the savings by reducing benefits, and they conclude that they have to absorb the costs themselves, this amounts to a new burden imposed by the Government. Under the new burdens doctrine, Governments have said repeatedly—and this Government have repeated it—that they should cover any additional costs imposed on local government that result from Government decision.

I therefore advise Ministers to think a bit more about the implications of their new burdens doctrine. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who, when in opposition, was only too keen to talk about new burdens and to attack the Labour Government of the time for not honouring the new burdens doctrine, would do better if he now ensured that his own Government followed the words he used then. It is an interesting case of someone changing their tack once they find themselves on the Treasury Benches—briefly, I suspect, in his case. [Interruption.] This is not a unique or personal slight aimed at the Under-Secretary, as I would apply it to the entire Government Bench.

Amendment 9 seeks to impose an obligation whereby councils, in devising their local scheme, should inform recipients in advance of what the impact will be “on their living standards”. This is a fairly straightforward and sensible proposal to make people aware of what the local authority is proposing. It was suggested for that reason, and I would have thought that any reasonable Government would support it.

Amendments 11 and 12 deal with the default scheme that the Government are going to produce. Amendment 11 simply confirms what the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) has said he intends—that there should be no pensioner losers. It is extraordinary, therefore, that he is so reluctant to accept it. He says that it is not necessary. However, because we know that so many Government pledges unfortunately prove worthless, we would rather have this on the statute book than in the form of a ministerial assurance, and we will draw our own conclusions from his refusal to accept the amendment.

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Amendment 12 concerns transitional protection. If the Minister argues that there will be no losses under the Government’s default scheme, his argument will suggest that there is no need for such protection. The amendment would ensure that if losses are implicit in the default scheme, the scheme must include the transitional protection that is proposed. That is an entirely reasonable and logical formulation, and I am surprised that the Government are reluctant to accept it.

This series of badly thought out proposals will cause widespread hardship and serious financial difficulty to local authorities, and it is being rushed through in a way that will make it difficult to implement properly. It is a sad and sorry saga, and I find it regrettable that the Government have not the realism and the sense of respectability to admit that they have made a serious mistake. They have got themselves into a difficult mess, and the only honest thing that they can, and should, do now is agree to the amendments that would defer implementation until 2014. That would provide time for the issues to be considered seriously and properly by all involved, and would enable the Government to escape from this mess.

Mr Kevan Jones: As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, the Bill has not changed greatly since we last debated it. The underlying theme remains. As the Minister made clear, it has nothing to do with reform or enabling councils to implement a local scheme; it is actually about the Government’s deficit reduction targets. That is why they are so keen to aim for implementation in 2014.

The Minister seems to think—and I recall that the hon. Member for Mid Dorset and North Poole (Annette Brooke) said this during our last debate—that all local authorities are on a level playing field, but they are clearly not. The Minister suggested that, following the 10% cut in council tax benefit, councils could make up the difference if they wished to, which may be all well and good for councils in areas where the benefit is being increased. I hate to return to my favourite example of Wokingham, but a few weeks ago a very good article in the Financial Times stated that its budget was rising by 3%—unlike the budgets of authorities such as Durham, which are declining by as much as 15%.

We are not dealing with level playing fields; we are dealing with a strategy that the Government have worked out quite well. As we can see from the playbook according to which the Conservative part of the coalition is working, it is nothing new. The same strategy was adopted by the Conservatives in Canada in the 1990s. They made savage cuts in public services and devolved decision making to local level: in their case, federal level. What they were saying was “We are giving you freedoms, but we are ensuring that you take all the blame for the cuts.” The flexibility that councils will be given will, in fact, cause them great difficulty, unless they are in Wokingham.

That very good article in the Financial Times, published on 7 May, was headed “The well-to-do towns that austerity forgot”. I think that it is worth looking at, and not just because it makes it plain that the Government are rewarding their own councils while penalising poor areas. Let us look at the calculations for Wokingham. It is among the 8% of local authority areas—out of a

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total of 152—that are expecting a real increase in local government spending over the period set out by the Government. Meanwhile, 20% of councils, including Durham, are taking cuts in excess of 15%.

We are being told that we are all in this together and that what is being done is fair, but let us look at the difference between Wokingham and Wigan. In the index of multiple-deprivation, Wokingham scores 5.5 whereas Wigan scores 26. On average, there is an additional 1% increase in local government spending cuts between 2009-10 and 2011-12. Not only are local authorities in the north-east and other deprived areas suffering because their grants are being cut, but they are now going to be hit again by the council tax benefit cut. Local authorities will be told they are being given the flexibility to administer the scheme, but the result will be a 10% cut.

John Healey: My hon. Friend mentions Wigan in the north-west and authorities in the north-east, but the case he makes is equally true for many authorities in Yorkshire and the Humber, such as Barnsley and Rotherham. As he has access to the figures, he might care to look at them in this regard. Wokingham may be facing an increase in its grant, which is astonishing given that local government is taking such a hit across the board, but Barnsley and Rotherham are facing double-digit reductions in their grant, despite increasing need and increasing pressure on services in their communities.

Mr Jones: I agree. My right hon. Friend’s authority and mine are among those that are having to take £152 million out of the budget over the next four years. In Wokingham, however, the council is planning to overhaul its town centre at a cost of £30 million, and it is not closing its libraries and its voluntary sector groups have not lost their funding. In communities such as mine and that of my right hon. Friend, councils are having to find savings—and they are having to find them in areas such as libraries and non-statutory services.

In Durham, the bulk of expenditure goes on adult social care. The Labour-run local authority is rightly making sure the most vulnerable are protected, but that restricts where savings in the budget can be made. I send a clear message to the Liberal Democrats sitting on Durham county council that, as a result of their Ministers’ actions and their Members’ votes on this Bill, Durham and other local authorities are having to make savage cuts. The idea that they can be found simply through efficiencies is complete nonsense. No organisation could reduce expenditure so much without affecting front-line services.

John Healey: Does my hon. Friend agree that not only is the current settlement unfair, but it is the baseline for the future system, and the Bill will lock in that unfairness for at least a decade?

Mr Jones: That is a very important point. That will limit the ability of my council in County Durham and my right hon. Friend’s authority to effect any change. That will lock in the unfair and disproportionate effects, which have been caused by no account having been taken of deprivation. We have just heard a Minister saying this Bill takes account of equality, but it must be the first Bill in history that supports a system by which

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the poorest in our society and those councils with the largest need—growing aged populations and increasing numbers of looked-after children, for example—will suffer the most.

Nic Dakin: My hon. Friend is making a powerful case, identifying the regional inequalities at the heart of these proposals.

5.45 pm

Mr Jones: Huge regional inequalities are involved. In addition, the pressures on councils in South Yorkshire, and in Middlesbrough and South Tyneside, which I cited in a previous debate, compared with leafy Wokingham, mean that if services such as providing for looked-after children and a growing elderly population are to be protected, the scope for cuts is very limited. The Minister laid it bare in his response: this is not about reforming or giving local councils the ability to be flexible; it is about implementing the deficit reduction strategy of this coalition Government. As my hon. Friend said, that will take demand out of areas such as mine. It is impossible to implement this system without further cutting the support for some of the most vulnerable in our society.

Mr Raynsford: My hon. Friend is making a powerful case, and I wholly agree with him about the adverse impact on some of the most deprived areas. Does he also recognise that one of the bizarre features of the Government’s proposals is that they will inflict losses on people throughout the country? There are 6 million recipients of council tax benefit, many of whom are in low-paid work in parts of the country that are relatively more affluent than the area he represents, and those people will suffer, too. Although he is absolutely right in what he is saying, the impact of the Government’s proposal will be even more savage and unfair.

Mr Jones: Well it will be. The mistake that the Government are making in the spin they are clearly putting out is in saying that this will affect only the “undeserving poor”—the workshy and feckless. As my right hon. Friend rightly points out, many people in receipt of council tax benefit are in low-paid work. In sectors where jobs are growing, the increases are mainly in part-time, low-paid and low-skilled jobs, so more people might come into this bracket.

This measure will affect people, and not only in terms of their council tax benefit; we need to add on the ludicrous nonsense in the housing benefit changes, which will result in individuals in my constituency who have an extra bedroom suddenly finding themselves up to £10 to £15 a week worse off. The Government’s measures will have a cumulative effect on the poorest communities and, I have to say, some of the hardest-working individuals in this country. We might add to that this Government’s VAT increases, which the Liberal Democrats and the Deputy Prime Minister were clear in opposing before the election only then to implement and turn a blind eye to, saying, “It does not really matter because we have a commitment to reducing income tax.” The cumulative effect of these measures will be to take a vast amount of money out of the poorest communities in the country. The opportunity to gain full-time employment is very

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limited in some areas, because of short-time working, which means lower wages, and the growth in the number of part-time workers.

The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) has at least admitted that this is exactly what the Government are doing. I have a cutting here from the Daily Mail of 11 June 2010 headlined, “Tory minister under fire for gaffe as he tells MPs: ‘Those in most need will bear the burden of cuts’”. The article states:

“Unveiling a 1.2 billion package of cuts to councils, Local Government minister Bob Neill suggested the poorest areas would suffer the most.

Asked why northern cities were losing…more than southern areas, Mr Neill said: ‘Those in greatest need ultimately bear the burden of paying off the debt.’”

That comes from exactly the same Government who were happy to slash the income tax rate from 50p to 45p, giving huge tax breaks to some of the wealthiest in the country. The Minister should come to North Durham to speak to some of my constituents in low-paid work who are earning less than what some of these individuals are going to get in tax breaks in a year. That clearly shows that the Government do not have a clue about the effect on the poorest in our society. The idea that we are all in this together is complete nonsense.

Mr Graham Stuart (Beverley and Holderness) (Con): The hon. Gentleman will be aware that for nearly the entirety of the period for which his party was in office the higher rate of tax was lower than it is today. As for the hypocrisy we are hearing from the hon. Gentleman and his colleagues who put this country in a position where public expenditure must necessarily be brought under control, his party always leaves office with unemployment higher that when it entered it and it is under his party that the money has all gone. This Government are having to deal with that, and he should show some shame for his part in the situation.

Mr Jones: I do not know whether the hon. Gentleman is old enough to remember records—I think he is—but if he does he will remember that trying to play a broken record is very difficult. The rhetoric from the election, when the Government blamed everything, including the world recession, on the Labour party, has now become a broken record. We are now into another recession in this country that was of this Government’s making. It is interesting that the Chancellor of the Exchequer now argues that the British economy is not doing well because of the eurozone. In 2008, 2009 and 2010, when the banking crisis hit, it was all Labour’s fault; now it is all Europe’s fault. The only people who are not accepting any responsibility are this coalition Government.

Was our borrowing in 2008 and 2009 the right thing to do? Yes, it was. It was the right thing to do to ensure a growing and stable economy. We do not have that now; we have a recession that has been made in Downing street by this coalition Government. The idea that the fair way of dealing with that is to reduce the top rate of income tax so that it will, through Reaganomics, trickle down to boost the economy is complete nonsense. We have also heard complete nonsense this afternoon that

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the way to get growth is to slash employment rights. The Government are living in cloud cuckoo land if they think that that will not have an effect on local people.

I was in local government for about 11 years, and I know that if a Government tinker with the system only to get it wrong they pay for it dearly. I remember the Conservative Government getting the poll tax wrong. Even when it was quite evident that it was going to be complete chaos, they would not change their mind. We are trying to rush through a system that will affect some of the poorest people and the poorest councils, adding to the injustice of the skewed way in which the Government have rewarded their friends on councils in the south. We are setting local government an absolutely horrendous task. The idea that the system can somehow be changed tomorrow at the flick of a switch is complete nonsense and I hate to think of the sleepless nights these provisions will give local treasurers. The practicalities will have an effect on councils’ individual income while they try to work out the system.

Mr Raynsford: One of the nightmares that local authority treasurers might well be thinking about is the downside risk in future years. Up to now, we have been talking only about the 10% cut, which totals £500 million, but under the scheme local authorities will be liable if there is an increase in demand for council tax benefit, possibly because of the closure of a local business or because the double-dip recession, which the Government have created, has caused further hardship and unemployment, meaning that more people are claiming council tax benefit. That risk is clearly now with the local authority and many treasurers will be nervous about the implications for them.

Mr Jones: My right hon. Friend makes a good point. Let me take my constituency as an example. Compared with April last year, 384 more people are unemployed. The figure represents nearly 7.2% of the population and shows no sign of decreasing. The demand will not be on the central pot but on the councils. If councils have the large pressures that we see in Durham and elsewhere, because of the number of children in care and adults with social needs, where will that money come from? We can add the 10% cut to those pressures, too.

As for the chaos that the process will lead to, although some councils—certainly Wokingham—will be able to afford to absorb such a reduction to their budget, not many will be. The mechanics of putting the system in place will be very difficult. What will happen if, with the best of intentions and advice, the computer systems cannot be put in place? Where will a local council find its money? What will happen if a scheme is put in place that has teething problems that lead to mistakes? What will happen with appeals and with the process of dealing with the situation? There is no remedy at all.

Chaos and uncertainty will be faced by many low-paid families in this country and they will not know how the change will affect them. That is why amendment 9, tabled by my right hon. Friend the Member for Greenwich and Woolwich, is right. It must be made crystal clear what the effect will be on individuals. I support my right hon. Friend’s amendment, but I think that it might be playing into the Government’s hands, as they will want to blame the local council—in my case, Durham—for what is happening. Councils need to make it very clear

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that responsibility for the cuts lies with this Conservative and Liberal Democrat coalition Government. If they do not do that, the tactics that the Conservatives are using and that the Liberal Democrats have sleepwalked into mean that local people will blame local councils.

Local Liberal Democrat councillors in Durham, for example, are arguing against changes to library hours and to local leisure centres. They will sign petitions to their hearts’ content. Small equatorial rainforests are decimated for local Liberal Democrat copies of “Focus” that state that they are supporting decisions against such moves by Labour Durham county council. They are not explaining to the people, however, that their coalition with the Conservatives in government nationally is cutting the county council’s budget savagely while helping the leafy Wokinghams of this world. That is the message we must get across to people: these cuts and their effect on local services and on people’s income are down to the coalition Government.

I reiterate what I have said before: not one single piece of the legislation that has such an effect could go through without the complicity and support of the Liberal Democrats. They must take as much of the blame for the pain and heartache coming the way of many people in County Durham over the next 12 months as the Conservatives and it is no good hiding behind the idea that County Durham has somehow been given the freedom to come up with this scheme.

6 pm

My other concern is the differentials between schemes. That will create particular problems in parts of London, where there is a transient population and people frequently move around. They understand the present scheme and know what is expected of them. Different schemes in operation in different boroughs will lead to chaos and confusion not only for individuals but for borough treasurers trying to keep track of what people earn.

The Minister made it clear today that the measure is about deficit reduction. It is no great radical idea about devolving responsibility to local authorities, and no great victory for the Liberal Democrats who believe in the devolution of local decision making. If the scheme has been properly worked out, why can we not have a transitional scheme, as my right hon. Friend the Member for Greenwich and Woolwich suggested, so that the people and the councils affected have time to adjust? That would give some local authorities the stability that they will not get from the proposed scheme.

I hate to say it, but, as my right hon. Friend said, in 12 months or less, we will say we told you so. The misery and heartache that will be created for some of the most vulnerable people in our society is shameful. That is to be expected of Conservatives, but not of Liberal Democrats. The Minister may say that according to his impact study, equality is taken into account, but it is not. The measure will affect some of the poorest in society, including many women, who will not be protected in any way. The only group to have been taken out of the system for electoral reasons is the elderly. Having borne the wrath resulting from the granny tax, the Government clearly did not want to upset the elderly by allowing the council tax benefit reduction to affect them.

But the Government cannot have it both ways. They cannot say that they are devolving responsibility to local councils, and then tell local councils that they

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must take one section of society out of that scheme from day 1, along with a 10% cut. If it were genuine devolution, it would not have been so rushed, and if the Minister genuinely believed in devolving power, although I have never believed that Whitehall would want to give truly devolved powers to local authorities, there would be no ring-fencing. The Government are doing that because they know that the measure will be unpopular with a large section of the population who actually vote. That is the only reason why older people are excluded from the provision.

A delay is needed, but the Minister let the cat out of the bag and said that the measure is nothing to do with local government finance, but is aimed at deficit reduction. The Opposition would enter into dialogue with the Government about genuine devolution and proper reform of local government finance, but they have shied away from the elephant in the room—the re-banding of council tax. Ministers will not go near that for fear of upsetting a lot of people. If there is going to be radical change in local government finance, it must include a review of council tax bandings. I am sorry if that scares members of my own Front-Bench team. Without that, the Bill is no more than a short-term measure to achieve savings, as the Minister admitted, as a means of deficit reduction.

The strategy has clearly failed. We are now in a continuing double-dip recession, which this time will be blamed on the euro crisis. Why pay for that on the back of some of the poorest parts of the country? That is inexcusable in the Government’s approach to the Bill. Let us do away with the pretence that it is about reform. It is about deficit reduction and about hitting the poorest hardest. We need to remind people at local level that the decisions taken in this place by Conservatives and Liberal Democrats will take financial support from the poorest in our communities and some of the most hard-working families in this country.

John Healey: It is a pleasure to follow my hon. Friend the Member for North Durham (Mr Jones), who has more than a decade’s experience in local government and knows what it is like for local authorities trying to deal with central Government cuts and central Government diktats. He knows that local government across the board, irrespective of party, is willing to change but wants that change to be implemented properly and fairly. Much in the Bill will make that more difficult for local government in the months ahead.

The Bill signals that council tax benefit is no longer a benefit or an entitlement for those whose incomes are such that they need help with council tax costs. In future, there will be a means-tested, cash-limited discount on council tax bills. That limit next year will be 10% less than the spend on and cost of council tax benefit this year. I have the figures released recently by the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), showing the total subsidy properly paid by councils to those entitled and then properly reclaimed from Government in 2010-11. In Rotherham, the figure was £22.5 million; in the other local authority that my constituency partly covers, Barnsley, it was nearly £20 million; and the total for South Yorkshire was £112 million. That money went to many of the poorest, who need help with their council tax costs and who currently have an entitlement to that help. In future

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there will be a smaller cash-limited pot and a severe means test, with that £112 million cut from the outset by 10%.

Earlier, from the Dispatch Box, the Minister gave some figures—£1.8 million and £1.9 million—which he said were the figures for the value of the reliefs and discounts compared with what he argues is the shortfall in Rotherham. Of course, reliefs and discounts are part of the council tax scheme. They bear no relation to the level of council tax subsidy, which under the current system is paid by councils and reclaimed from central Government. If the Minister was telling the House and telling me, as one of the MPs representing Rotherham, that there will be no cut in the pot available for council tax benefit payments next year compared with this year, I will willingly give way to him, but I think he was using those figures to make a completely different case, entirely separate from the challenge that Rotherham and every other council will face next year because of the decision taken, as he admitted tonight, for the purposes of crude deficit reduction, not as a bold local and localising reform. The Minister has not accepted my offer to give way, so I take it that he accepts the case I made and is not able to sustain the impression that he gave the House earlier.

The problem faced by many of the poorest non-pensioners is that they will lose the most, as the Government tell councils to protect pensioners and make everybody else worse off—in other words, penalise everybody else and protect pensioners. That cannot be done without causing significant pain for many non-pensioners because the overall sum available, irrespective of need or entitlement under the current system, will be cut by £500 million next April.

Mr Leech: Does the right hon. Gentleman endorse the proposal made by the hon. Member for North Durham, who seems to think that there should be an impact on pensioners as well?

John Healey: The hon. Gentleman must not have been listening carefully, because that is not the case my hon. Friend was making. His point was that providing special protection for pensioners when £500 million is being cut overnight from the available fund means that those people who are not pensioners but who are currently entitled to council tax benefit or council tax support will inevitably be hit harder. Local authorities and charities are making the same case, as did Barnsley Advice Network to me last week when we discussed the potential challenges and problems that people will be forced to face.

Andrew Gwynne (Denton and Reddish) (Lab): I apologise for coming late to the debate. I had a meeting elsewhere in the Palace.

My right hon. Friend is making a pertinent point. Is he aware of the work done by the House of Commons Scrutiny Unit, which has estimated the impact of a 10% cut to council tax benefit, with protection for the over-65s, using DWP figures? It calculates that non-pensioners will face an average cut of 16% in their council tax support.

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John Healey: I am glad to see my hon. Friend in his place. He has been an active participant in all debates on the Bill, including on Second Reading and in Committee. I have seen that work by the House of Commons Scrutiny Unit, which I think is useful and supports the point I am making to the hon. Member for Manchester, Withington (Mr Leech). If anything, the 16% figure is probably on the conservative side. My local authority in Rotherham calculates that non-protected, non-pensioner claimants of council tax benefit are likely to lose, on average, 19% of their support.

Mr Kevan Jones: To clarify my earlier point for the hon. Member for Manchester, Withington, who is obviously having problems with earwax tonight, I was not suggesting that pensioners should be taken out of that protection; I was making exactly the same point as my right hon. Friend is making. The fact of the matter is that the hon. Gentleman will go into the Lobby tonight to vote for some swingeing cuts to the lowest paid, including some of his constituents in Manchester, who no doubt will have their revenge at the next general election.

John Healey: My hon. Friend makes clearly and succinctly the points he made earlier.

I am concerned about the percentages, whether 16% or 19%, and the averages, such as the LGA’s calculation that non-pensioners are likely to lose, on average, £6 a week from the support they currently receive to help pay council tax. Percentages and averages are one thing, but the family, household or individual—the one in eight people currently entitled to council tax benefit who are in work but do not earn enough to cover their council tax bills without help—will face a reduction of perhaps £10, £12 or £15 a week, at a time when other costs are being loaded on them and they are struggling to make ends meet. They will find such a difference really hard to deal with. I hope that we do not lose sight of the sort of pressure that the Bill and the changes the Government are making will put on many households, including many that are working hard and have an entitlement that they simply will not have under the new system.

Nic Dakin: My right hon. Friend, as ever, speaks with great clarity and integrity. The core of the issue, as he is showing, is that it appears that there will be unintended consequences that create a disincentive to work for those very people.

6.15 pm

John Healey: I wonder—are they unintended consequences? If they are, the degree of negligence in the legislation is unforgivable. If they were foreseen and have been calculated as part of the legislation, that speaks volumes about the “doublethink” and “doublespeak” that my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), quoting Orwell, talked about earlier.

The Government are making a pious claim to be on the side of those who are struggling but who are trying to do the right thing by staying in work in order to support themselves and their families, but those people will find it much harder from next year as a result of the changes that are going ahead. In Rotherham, just over 2,600 people are in that position, in Barnsley, just over 2,200, and across South Yorkshire there are more than

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13,500 people in work who earn so little that they are entitled to support from us and others to help cover their council tax bills.

Mr Raynsford: I wholly concur with my right hon. Friend’s argument. Does not he, like me, think it extraordinary that the Government, when they first announced the proposals, said specifically that they intended the reduction not to create any work disincentives? That has now disappeared from the rhetoric—they appear to have forgotten that objective entirely. Given their overall approach and the rhetoric they are adopting in relation to other benefit changes, such as saying that they are on the side of people in work, is it not extraordinary that they are now explicitly accepting the fact that this measure will create serious work disincentives?

John Healey: I hesitate to disagree with my right hon. Friend, but I am not sure that they have forgotten it, because earlier the Minister said from the Dispatch Box that the scheme will somehow preserve work incentives. The whole design of the proposal, the framing of the legislation and everything the Government have published do not match the claims he has made from the Dispatch Box. They are hollow words that will hurt many people who are working at the moment and others who are not pensioners but who rely on the council tax benefit to help make ends meet, week to week and month to month.

Andrew Stunell rose

John Healey: The Minister wants to intervene. Perhaps he will give the House the straight account of the figures for Rotherham, on which I challenged him five minutes ago.

Andrew Stunell: I was going to intervene on the right hon. Gentleman’s last point, but I am happy to respond to the other one as well. On the last point, it is absolutely not the case that the Government have made explicit anything relating to disadvantaging working recipients. On the contrary, the statement of intent—I appreciate that he might not have got to this section—makes it clear that it is important for schemes devised by local authorities to link with universal credit and preserve exactly that protection.

On the other point, Rotherham council, according to the figures it submitted to the Department, will lose approximately £1.8 million of funding, but the discounts and exemptions that it will be able to recover in future will amount to £1.9 million. That is all in the Bill before the House today. Whether the council chooses to join those two things together is a matter for it, but it is absolutely the case that, taking the Bill as a whole, the council will in fact have a greater capacity to meet the needs of the people it serves.

John Healey: The Minister has just told the House and me that, to run the new scheme from April next year, Rotherham will have available no less funding than it has during this financial year. I will look very carefully at the facts, and, if they match the Minister’s words, I will welcome them; if they do not, I shall demand that he puts the House straight and offers an apology.

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On work incentives, will not the Secretary of State therefore use his powers under schedule 4 to specify that people in work must, and work incentives will, be protected as he proposes, and has pledged, to use them for pensioners? If that is the case, the Minister’s actions will match his words. If that is not the case, exhortations on the importance of local government schemes reflecting needs and not damaging work incentives will not be worth the paper of the circular on which they are sent out, because there will be no protections guaranteeing the preservation of work incentives until and unless the Secretary of State chooses to use his powers as he has pledged to use them for pensioners.

Until that point, it is reasonable for Opposition Members, who are concerned about the future of this support for council tax payments, to continue to press the Minister and to be concerned that non-pensioners are likely to bear a heavy cut in their current support. Those on low incomes who are not pensioners, but who would get the full council tax benefit under the current system, will, as the Barnsley advice network has told me, have to find 20% of their council tax bill from their basic income, whatever they earn, as councils try to make less go further.

The Minister is old enough, experienced enough and has been involved in local government long enough for this measure to sound a warning to him and his colleagues. This is the return of the poll tax—[ Interruption. ] There are a few groans from Tory Members, but let us remember that a 20% minimum payment expected of all people, whatever their means, was part of the flaw in, and at the heart of the unfairness of, the community charge a couple of decades ago. In practice, that is what we are building in for non-pensioners: a requirement to cover for themselves, whatever their income, about 20% of the council tax costs in their local area.

Given the way in which the measure will work for many, it is a return of the poll tax: rushed into law and rushed into practice, with a deaf ear to local government, to charities, to experts and to Members, who warn the Government, “You’re pushing too far, too fast with these changes.” I will return in a moment to the amendments on the legislation’s commencement tabled by my right hon. Friend the Member for Greenwich and Woolwich, but first let me do my job and introduce new clause 2 and the amendments that stand in my name.

With new clause 2 and amendment 2, I seek to challenge the Secretary of State’s powers over, and prescription of, the new council tax support schemes. My purpose is this: I believe that the House and local government require a justification for the inclusion in this Bill of such powers of prescription from the centre over the local, otherwise their removal from the Bill is justified. None of the arguments that I have heard from Ministers, on Second Reading, in Committee or today, justifies the extent of the centralised powers vested in the Secretary of State to design and to enforce a particular manner of council tax support scheme.

The Government claim that the reform is a localising one. If it is, they should localise the decisions on the design of, and procedure for preparing, the scheme. They should localise the decisions and let the local authorities that will run the scheme devise them, in the Minister’s words, to suit local circumstances.

Andrew Gwynne: My right hon. Friend is absolutely right that any system has to be flexible enough to ensure that, if there are changes in demand locally, the system

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can catch up with the increase, but is not the concern that the Government’s proposals are completely inflexible, and that any increase in demand will impact on local services?

John Healey: My hon. Friend is absolutely right. Any increase in need, demand and, as a consequence, cost will all have to be borne by the local authority—borne by switching funding from other budgets that perhaps support important local services, or borne by cutting back within the council tax support scheme the support that is paid to those who remain eligible.

However, I want to exemplify the challenge that the Minister faces to justify the powers that the Secretary of State is taking in the Bill in order to prescribe from the centre. In paragraph 3(4) of schedule 4, the Secretary of State may make regulations on the procedure for preparing the scheme, including in paragraph 3(5) regulations to

“require the authority to produce documents of a particular description”;

regulations to

“include requirements as to the form and content of documents produced in connection with the preparation of the scheme”;

regulations on the

“requirements…about the manner in which such documents must be published”;

regulations to

“require the authority to make copies of such documents available”

in certain ways, and “to supply” copies of such documents to certain people; and even regulations to prescribe the charges that local councils should make for those documents.

In all honesty, that is the sort of prescription we expect to find in a memorandum from a publications manager to a graphic designer and a press officer, not from central Government to elected local government officials throughout England. If the Minister and the Secretary of State are to have any credibility on the claim that this is a localising move and a localising measure, they should back off and guarantee what they say. If the schemes should be under local control, as the Minister and Secretary of State claim, the Government should give local authorities the powers to control them, not take those powers and exercise them from the centre.

Amendment 1, which is also in my name, is in the same vein although more moderate, because it seeks simply to require the Secretary of State to consult before making any changes to the requirements that he chooses to impose nationally on local schemes. As the Bill stands, there is not even any obligation to consult local government on the requirements that central Government impose.

Paragraphs (8) and (9) of schedule 4 make it clear that the Secretary of State may make regulations to require any matter to be included in the design of a local scheme; may prescribe any class of person to be included in the scheme; may prescribe the reductions that cover any class in any area; and, to reinforce my earlier point, may prescribe the way in which the provisions are made. That completely undermines not only the constant mantra of Ministers across the range of their departmental responsibilities but the specific pledge

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that they made in their response to the consultation, where, on page 2, they said that this is

“a policy of decentralisation that will give local authorities increased financial freedoms”.

6.30 pm

Mr Kevan Jones: Is not this yet another example of the Secretary of State’s schizophrenic approach to local authorities? His previous edicts have given advice on everything from pot plants to levels of chief executives’ pay to publications. He wants to give the impression that he is giving up powers, but in fact he is retaining them.

John Healey: To be honest, no Minister of any Government is immune to that temptation. I am sure that it would be possible for the Minister to find one or two examples where I myself might have made such moves as a Local Government Minister. However, we in this House have a right to challenge the Government on what they claim is the underpinning principle of the Bill and to point out how the principles they claim are not matched in their legislation. There is a strong, principled case for the Secretary of State to back off, loosen the reins, and let those in local government devise the schemes that they will be obliged and required to run.

There is a principled case and a practical case for the amendments. If the Government are able to set the key constraints and parameters of any scheme, and to do so at any time, it is entirely possible not only that local flexibility—the ability to tailor to local circumstances—will be undermined, but that local authorities will devise their schemes, set about implementing them, and then find that they have to revise them because the Secretary of State has decided to step in and make regulations under the many regulation-making powers that he has available to him in this primary legislation. If it is pensioners today, could it be carers tomorrow and ex-service personnel the day after?

Mr Jones: It could be cat lovers.

John Healey: Perhaps that is not as serious a case to put to the Government as ex-service personnel and carers, but my hon. Friend makes the point. If the Secretary of State had a particular concern about cat lovers, he could indeed use these regulations to make special provision for council tax support for them.

Mr Jones: I am sure that my right hon. Friend agrees that given their desperate state after the drubbing they got in the local elections, Ministers would do anything if it got them votes.

John Healey: Perhaps, Mr Deputy Speaker, I had better not pursue that. However, it is certainly true that given their drubbing a couple of weeks ago, the Liberal Democrats will have to chase votes wherever they can find them.

Amendment 1 is designed to challenge the Government to concede, and to give a commitment to this House, that should they use their powers under the Bill and make stipulations about the schemes that local authorities will run, they will at least consult local government before doing so.

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Amendment 3, which also stands in my name, exemplifies my belief that, as my right hon. Friend the Member for Greenwich and Woolwich argued, this is a rushed reform that has been introduced without an ear to proper consultation or a thought to the consequences. The amendment attempts to flush out whether the Government have properly considered the impact of the Bill in relation to the provisions of the Localism Act 2011, which allows a local authority, in setting its budget and its council tax, to put to the vote in a referendum a level of council tax that it might want to propose for its area, and allows local residents to veto what they may regard as excessive council tax rises. Under those powers, a local authority must hold a referendum no later than the first Thursday in May of the financial year to which the council tax would relate. In practice, that means that a local authority will have to run contingency spending plans, budgets and council tax levels until the result of the referendum is known, and if it is unsuccessful, those contingency budgets will need to be put in place and new council tax bills issued. That process must take place around the turn of the financial year, and by early May at the latest, yet the Bill requires that the council tax support scheme must be designed and in place by January—before most local authorities finalise and agree their budgets and council tax levels, and certainly before the level in any referendum might be established.

That mismatch indicates that this reform is ill thought out, rushed and likely to be wrong, and it reinforces the arguments that my right hon. Friend made about his amendments 6, 7, 10 and 13, to which my name has been added. There are good reasons for making this part of the benefits system local, but there is no justification for doing it by making harsh cuts to the national and local totals of spend available, by capping the totals against any future rise in needs or costs, by requiring local councils to carry all the risk of any increases in claims, or by forcing very big cuts in council tax support for many of those who need it most.

When we last debated this in Committee in January, my right hon. Friend and I noted that councils were faced with an extraordinarily tight timetable of 12 months until the point at which they would have to have these new schemes in place. That period is now eight months. There is no time to consult local residents, to design the computer software systems necessary to run these schemes or to test them and put them into practice, to work out how the tapers to the new universal credit system will have to work with the council tax support system, or to plan for the new local scheme in the context of next year’s budget planning by local authorities.

This is a disaster waiting to happen. The Government have not done the work needed for local government to do the work that it needs to do. I say this to Ministers: take a leaf out of the Health Secretary’s book, pause, listen, and be prepared to put back the start of this scheme from April next year to April 2014.

Helen Jones: It is a pleasure to follow my right hon. Friend the Member for Wentworth and Dearne (John Healey), whose speech was not only very passionate but extremely well informed.

Nothing could illustrate better what a shambles of a Bill this is than the seriousness of the new clauses and amendments that the Government have tabled at this late stage. It is, frankly, a gross discourtesy to the House

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to bring these issues before us with little notification and little opportunity to discuss them. Because we have not been allowed to take evidence on the Bill, we have had no evidence on the new clauses. We would have benefited from evidence on them, particularly from legal experts. Although the Minister assures us that the new clauses replicate powers that are already in existence, that is debatable. He could not answer a number of the questions that were put to him about how inaccuracy in data records could be challenged, which electronic records could be accessed under the powers, and how the powers would relate to a person’s personal electronic data that are held on their own PC.

Every council will, of course, need the right system in place to tackle fraud—nobody would argue otherwise. However, it is interesting that we have heard nothing from the Government in this debate about the reductions in council staff, which are making it much more difficult to tackle fraud, or their desire to abolish the Audit Commission, which is the very body that searches out fraud and assists local councils in tackling it.

I am concerned about some of the measures in the new clauses. Some of them do indeed replicate those in the Social Security Administration Act 1992. However, the Minister cannot explain how one can commit an offence other than dishonestly and he cannot explain the offence of

“allowing a person to fail to notify”

something. What on earth does that mean? Does one have to be under duress, or not? What is the definition of the word “allowing”? What kind of proof is required? Above all, what will the defence against those offences be? That is not clear from what is before us. I want to see dishonest people banged up in prison or fined, but I want people who have made an honest mistake to have a proper defence for any charges that are brought against them. It is a great shame that we were not allowed to discuss the new clauses in Committee.

I want to concentrate on new clause 5, which I tabled with my right hon. and hon. Friends. The Government’s plans for council tax and what we have heard from them today clearly demonstrate how remote they are from the realities of life for many people in this country. They propose to take money away from some of the poorest people, including, as my right hon. and hon. Friends have said, people who go to work every day to earn their poverty. People with disabilities and families with children will pay the price for the incompetence of the Government. Many of them will already have lost tax credits or disability living allowance, which is being cut by £2.7 billion. It is estimated that about 400,000 disabled people will lose employment and support allowance when it is time-limited to one year for people who have paid national insurance contributions. Those very people will be hit again by the Government’s plans.

The Government consultation document said that they would

“seek to ensure that the most vulnerable in society, in particular low income pensioners, are protected”.

Pensioners are indeed protected from the cuts, and we do not disagree with that. However, coupled with the 10% cut in the amount that is available, that means that other people, many of whom are equally vulnerable, will face council tax increases. That is something that the Liberal Democrats do not seem to understand, but it is simple mathematics.

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The Government’s default scheme in their so-called statement of intent replicates the current scheme and gives protection to many more vulnerable groups. The intent, I suppose, is to penalise councils financially. However, it is difficult to argue that we should protect vulnerable groups in the default scheme, but not legislate for that protection elsewhere.

There is no protection for people with disabilities—not even for those who are placed in the support group for ESA. Those people are, by definition, unable to seek work, even if it was available, which is not likely given the current flatlining economy. There is no protection for people placed in the work-related activity group, who are not expected to

“seek paid employment to increase their income”.

They are asked to take steps to increase their employability, but they are not yet expected to seek work. That shows how spurious is the Government’s claim that they are doing this to spur on local councils to get people into work. That is nonsense.

6.45 pm

There is no protection for carers, as defined in the regulations on national insurance credits. That means people who provide care for at least 20 hours a week to one or more disabled person who is in receipt of certain benefits. Those people carry burdens that most of us cannot manage, and yet they do it every day. They save this country millions of pounds that would otherwise be spent on residential care.

Mr Raynsford: My hon. Friend is making an extremely important point. The Government are introducing this Bill at the same time as they are making a number of other changes. That will have a large cumulative impact on certain households. What is deeply shocking is that the Government are not aware of what that cumulative impact will be, nor of the extent to which what they propose this evening will aggravate an already disastrous situation for people who are suffering other losses of the sort that she has identified.

Helen Jones: I could not agree with my right hon. Friend more. The Government simply have no idea of the pressures on people on very low incomes.

The Prime Minister said that carers were the

“unsung heroes of our society”.

He went on to say:

“We should all support, recognize and celebrate the incredible work that carers do”.

That was in 2010, and times have changed. Now he wants not to support them, but to increase their council tax—another broken promise.

The Government also do not want us to talk about those who are receiving council tax benefit and are in work. The Minister for Housing and Local Government, who is not here this evening, likes to pretend that those people do not exist. He told the Communities and Local Government Committee that

“if somebody is in work they will not be receiving the benefit because they will not need to.”

That is another example of why he is tipped for promotion: it shows his incisive grasp of complex issues. Only

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someone as wilfully blind as him could come out with that, and only someone with no experience of what it is like to live on a low wage.

Andrew Gwynne: My hon. Friend is coming to the crunch. A substantial number of people in receipt of council tax benefit are in work. It is an in-work benefit, not just an out-of-work benefit as some Government Members would like to portray it. Given that the Government’s statement of intent states:

“Local schemes should support work incentives, and in particular avoid disincentives to move into work”,

can my hon. Friend fathom the thought processes of those who are bringing in this scheme, which will clobber the working poor?

Helen Jones: My hon. Friend is correct and I will come on to some examples of what he says in a moment.

I received a parliamentary answer from the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), which said that in 2010-11, the last year for which we have the figures, 743,660 non-passported council tax benefit recipients were in work. There were 2,860 such people in Stockport, which is the area that the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) represents. That is more than 743,000 people who the Minister for Housing and Local Government does not think exist. They do not go to Tory fundraisers, I suppose, or attend the black and white ball. All the time, his implication has been that council tax benefit goes only to those not in work. The further implication, of course, is that they are deliberately not in work, which is what underlies most of what he says. Coming from a Government who preside over unemployment of 2.6 million, that is breathtaking arrogance.

Mr Kevan Jones: Does my hon. Friend agree that the people who will be affected are the same group who will be affected by the crazy bedroom tax? If they have an unoccupied bedroom in their house they will lose housing benefit, which is another in-work benefit.

Helen Jones: My hon. Friend is right. The same group of people is being hit again and again. Whatever the Government tell us, we are not all in it together.

Andrew Gwynne: My hon. Friend mentioned in passing the borough of Stockport. I will leave the Minister to speak for the people of Hazel Grove, but I assure her that I am acutely aware that a substantial number of my constituents in the Reddish part of Stockport are in work and qualify for council tax benefit.

Helen Jones: My hon. Friend is quite right. We can go through every local authority in England and find a number of such people.

It is not just people in work and on low wages who will be affected but disabled people deemed unable to seek work, carers, and part-time workers who do not even show up in the figures. An increasing number of people are being forced to seek part-time employment, and they will pay the price of the Government’s cuts.