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Lord Mackay of Ardbrecknish: My Lords, the Government's policies on housing assistance and child benefit for asylum seekers and certain other persons subject to immigration control will reduce pressure on public expenditure overall. I would reassure your Lordships that we have addressed the impact of these measures on local authorities responsible for providing social services, and that we will continue to do so in the future.

Officials of the Department of Health and of the Department of the Environment have met representatives of the local authority associations to discuss possible costs on several occasions and will continue to liaise with them on this subject as necessary. This is in addition to the regular programme of meetings between central and local government that consider all aspects of local government finance.

I have already dealt with the question of thresholds when I pointed out to the noble Earl that thresholds are not new in central-to-local government financial aid and I quoted the Bellwin formula for disasters as one example of where there are thresholds.

Earl Russell: My Lords, the Minister is quite right to quote the Bellwin formula. But is he also aware that that is why the Bellwin formula is no use?

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Lord Mackay of Ardbrecknish: No, my Lords, I am not aware of that and I do not agree with the noble Earl. I was going on to explain why there are thresholds. There are thresholds because frankly, central government have a general reluctance to pay 100 per cent. grant for anything because it does not encourage financial prudence on the part of the local authority which has absolutely no interest in the cost outcomes of whatever it is doing. Therefore there is a very good case for thresholds and they will certainly be used in this example.

Baroness Hollis of Heigham: My Lords, the Minister said that the reason for not meeting the full cost was to encourage financial prudence on the part of local authorities. The Government do not seem to understand that there is a straight transfer of central government expenditure to local government expenditure except that, having done so, central government refuse to pick up the tab. That is not analogous with the normal argument for ensuring that local taxpayers contribute in order to keep down costs. It is not a question of value for money here. It is a straight transfer. The Government are exporting their costs--they are churning--and it is unreasonable to expect local taxpayers to pick up the bill for the Government's savings.

Lord Mackay of Ardbrecknish: My Lords, I am sorry to say that I do not agree with the noble Baroness. Indeed, if one followed her argument there would be no incentive for a local authority to be financially prudent, so far as concerns this expenditure. It would simply see such expenditure as a free gift in respect of which it could push up the price which would be met by Whitehall and Westminster.

In any case, if the noble Baroness is really worried about this issue she should be supportive of the Government in their desire to reduce the number of people coming to this country under the guise of being asylum seekers when they are really economic migrants. The noble Baroness has heard all the arguments before and has seen all the figures showing the way in which the number of asylum seekers has increased in this country, in contrast with most of the rest of Europe where it has declined. Indeed, she is well aware of how that growth has been particularly prevalent in the past two or three years. The way to deal with the problem as regards local authorities--and, indeed, as regards the UK taxpayer who is seldom, if ever, mentioned by the parties opposite--is to ensure that the people who come here seeking asylum are much more likely to be genuine asylum seekers than is frankly the case at present.

I turn now to the idea that all asylum seekers will virtually present themselves before local authorities under the Children Act, or whatever it is. I have a table of figures in front of me which gives me the breakdown of the principal applicants. It shows that 88 per cent. of them have no dependants--none. Therefore, I do not see them presenting themselves in that way. The other 12 per cent. do have dependants, but not all of them will need to present themselves. Indeed, some of them may actually be able to find a way to fulfil the undertaking that they gave; namely, that they would not

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be a burden on the UK's public purse and on the UK taxpayer. Only a minority of people will actually fall to be supported either under the homelessness legislation or the Children Act.

So far as concerns community care grants, the costs and duties under the legislation are not affected at all by the asylum seekers' regulations. Therefore, the question of a change in any direction in that respect simply does not arise. I give way to the noble Baroness.

Baroness Hollis of Heigham: My Lords, is the Minister saying that any costs incurred under the community care Act 1990 will be reimbursed in the same way?

Lord Mackay of Ardbrecknish: My Lords, I am saying that the costs under the community care Act that we have at the moment as regards asylum seekers--and I doubt that there will be very many of them--will not be affected one way or the other by the asylum seekers' regulations. I know that the noble Baroness likes to pretend that virtually all the world, bar "thee and me", I suppose, is in need of some kind of help or is traumatised and so on. However, the great majority of those people will never need the application of the community care legislation. As I said, it will not change or be affected by the asylum seekers' regulations at all. That is perfectly clear.

Therefore, if there are one or two people--and it is hard to envisage very many because the age profile of the people who come here asylum seeking tends to show that they are fairly young, male and pretty active--I do not believe that many of them will end up needing the kind of services provided by community care. However, those who do need them in the future will be treated in the same way as applies at present; in other words, they will be treated under the community care Act. They will not be excluded by virtue of the asylum seekers' regulations. It is not a case of our not paying for them at the moment and of our shifting the expense to local government. I do not understand the argument of the noble Baroness regarding the community care Act.

On 6th June we laid a special grant report before Parliament containing our proposals for a special grant to reimburse local authorities for their additional costs in social services and in providing services to asylum seekers denied benefit under the provisions of the benefits regulations made in February. Of course, in the light of the Court of Appeal judgment which found that the social security regulations which withdraw benefit are unlawful, we are considering the position further. But, clearly, there is likely to be some continuing burden on local authorities for the cost of social services functions. Our commitment given earlier in the year to provide assistance with those costs remains unchanged. The terms of the grant are likely to be similar to those set out in the report which was laid before Parliament on 6th June.

In addition, our decision to propose the grant demonstrates our more general concern to ensure that local authorities have the resources that they require to discharge their statutory functions. With that explanation and assurance, I hope that the noble Baroness will feel able to withdraw her amendment.

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11.45 p.m.

Baroness Hollis of Heigham: My Lords, I found that reply disappointing. I do not think the Minister answered any of the questions I asked. Perhaps the questions were obscure or maybe he will write to me. He made the point that thresholds were not new and were a way of being financially prudent. We have already argued that. The Minister is simply failing to acknowledge that the Government are seeking to cut £200 million in asylum seekers' benefits by exporting some of the costs onto local authorities. This morning local authorities estimated that about £100 million would fall on them. I do not know whether that figure is correct; I merely repeat it for what it is worth. Having exported their costs, the Government are failing to pick up the tab for so doing. That is different from the traditional arguments about financial prudence.

The Government consistently underestimate the degree of responsibility that will fall on local authorities. The Minister said that 88 per cent. of the principal applicants have no children. The Minister must correct me if I am wrong, but I understand that 25 per cent. of all asylum seekers are children and will come within the terms of the Children Act 1989. Of those who are not--those who are single--a proportion of them (I would not like to say how many) will have come to this country precisely because they have suffered extreme distress, stress and possibly even physical torture. They will come within the provisions of the community care Act. That will be an additional responsibility for local authorities with no reimbursement from central government. Again the Minister has not helped us on that. I asked a specific question about the housing grant and the refunding of moneys spent out of the housing revenue account as opposed to the housing general account. I believe the Minister did not reply to that point. Perhaps he can help us on that.

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