House of Lords
Tuesday, 16 October 2012.
Prayers—read by the Lord Bishop of Manchester.
Unemployment: Older Women
My Lords, the Government, through universal credit, the Work Programme and Jobcentre Plus flexibilities, are reforming the welfare system to improve incentives and provide more effective support to those without work. Advisers now have the flexibility to offer all claimants, including older women, a comprehensive menu of help which includes skills provision and job search support. All claimants who are long-term unemployed can access the tailored, back-to-work support on offer from the Work Programme.
—asking the Government what they intend to do about the fact that older women are losing their jobs at a much faster rate than men. Indeed, unemployment rocketed by 27% last year. This is further evidence that this Government really do not understand the issues which are important to women. Does the Minister acknowledge the disproportionate and negative impact that the austerity agenda is having on the lives and employment of all women, but particularly older women?
My Lords, I must congratulate the noble Baroness on her birthday. However, I must also commiserate with her as she has been completely bamboozled by her colleagues in another place. I have never seen a more misleading use of data for years, not since the 1970s when Denis Healey discussed inflation. If you take a very small figure and add 27% to it, you will find that it is still a very small figure. The actual level of unemployment of women in the 50 to 64 age group is 3.9%. That is the lowest rate of unemployment of any group of women. It is the lowest rate of unemployment of any group of women or men. Therefore, I do not think that the noble Baroness has pinpointed a particular point of concern in terms of unemployment.
My Lords, one of the major challenges facing many older women in preparing for their retirement is the current complexity of the pension and pension credit system, which puts women at a disadvantage. Figures suggest that some women on average receive £40 a week less state pension than men as a result of changes. What is the department doing to simplify the system and give clarity to women as to what level of state pension they will receive?
My Lords, as my noble friend will know, we are making big strides on pension provision. We have introduced the triple lock and we are talking about introducing a single tier of pensions, which will massively simplify the overcomplex pension provision in this country.
My Lords, have Her Majesty’s Government looked at not just the salaries of those older women who are in work but at the terms and conditions of their employment—for example, the use of zero-hour contracts? Is there full recognition among government inspectors and so on that for many this is the primary, not secondary, source of income in the family?
My Lords, the crude facts of the matter are that more older women are employed than ever before—3.5 million—and the rate of employment is also at an all-time high of 60.6%. Older women are doing extraordinarily well in the workforce and the reason for that is that they are very valuable employees. Even the BBC seems to have got round to recognising that.
My Lords, does the Minister not appreciate that many older women have not only the job of going out and trying to build up the family income but a valuable role as carers in many families? What can be done to assist women who have this double responsibility, both of working to boost the family income and providing much-needed carers in the family?
My Lords, this is clearly of great concern to this Government and all Governments. We are taking significant steps to help carers. About one in six of older women who are inactive are inactive because they have caring responsibilities. Creating a far more flexible carer’s allowance and a universal credit element is one of the ways in which we are looking at that issue. We are also introducing flexibility in our conditionality regime at Jobcentre Plus.
My Lords, is the Minister aware that a large number of minority older women do not register as unemployed but get employed in the black market and so do not have a pension from the jobs they have done? They are the people who are most unlikely to be employed in the formal labour market because, although they have extensive experience, they do not have the necessary paper qualifications. They are submerged in the data that are being presented.
Noble Lords will all be aware of our concern to reduce the level of inactivity in the economy and the level of unemployment is only one way of looking at the figures. The most important thing is how many people are employed and what is happening to the level of inactivity. I am pleased to say that the level of inactivity for this group is going down quite sharply. Since the election, 110,000 fewer people are inactive, and that is something we are continuing to drive.
My Lords, is there not a danger of being a little complacent in this matter? Does the Minister accept that between August 2011 and August 2012, there was, over the UK as a whole, an increase of 7% in the unemployment rate for women over 50, but in Wales the increase was 14%, which is quite worrying? Does he accept that there is cause for concern and that we should take steps to minimise those figures?
My Lords, when you have scarce resources, you must direct them efficiently. When you look at other groups with high rates of unemployment—the rate is 16% for women in the 18 to 24 age group while in this group the rate is 3.9%—you have to consider where you can most efficiently direct support. Do not forget that in the time we are talking about pension age has been increasing. The element of the impact of the increase is very small on a figure of unemployment that across the economy as a whole is probably below the rate of frictional unemployment.
Olympic and Paralympic Games 2012: Trade and Investment
My Lords, during the 2012 Games, UK Trade and Investment ran an extensive business programme at the British Business Embassy at Lancaster House. The programme specifically targeted UK and international companies and is expected to deliver £1 billion of additional sales to the UK companies that attended the British Business Embassy. We will report progress in April 2013. The Olympics also gave an opportunity for Ministers to build good relationships intergovernmentally with our cross-party people to benefit trade.
My Lords, that is a very welcome and encouraging response. However, does the Minister share my concern and alarm at reports today that the consulate in Basra is to be closed? It is a centre of British influence that is vital for British investment. Will he inform the House whether these reports are true and, if they are, will he seek to have that very unwise decision reversed as quickly as possible?
I can confirm that reports about that decision are true. The decision was made after a lot of business plan reviews, which one would expect from any government organisation. Things have improved dramatically out there. It used to take 48 hours to get from Baghdad to Basra; it now takes an hour by plane, so it is much easier to get to. As regards the future in that part of the world, we believe that we should have an office in Erbil for the Kurdistan region and boost our office in Baghdad. This is being done with great consideration and I think that the noble Lord will be able to see the effects of it later.
My Lords, bearing in mind the criticism generated against the department that the noble Lord has recently joined, will the Minister take the opportunity to explain to the House the efforts that he and others have been making to improve trade and investment?
I am very grateful for that question because it opens up an extremely nice opportunity. Bringing this matter back to the Olympics, the Prime Minister, the Deputy Prime Minister, my noble friend Lord Green and even I have been to Rio. We have also all been to Qatar, and two or three people have been to Russia to ensure that we fully benefit from the wonderful warm glow of the Olympics. I myself am catching a plane to sub-Saharan Africa tonight.
My Lords, is there not a case for a coherent policy? Much has been done in terms of the Olympics and the follow-up to them, yet we are now closing the office in Basra. Surely the Minister must realise that it is ease and quickness of access that gets business, not waiting for somebody to phone the office in Baghdad and say, “Can you get on a plane and come and see us?”. The Chinese are not going to do that.
The noble Lord provokes a couple of questions. The first is: what did the Olympics do for British business? I believe it is true that it showed Britain to be safe and secure, it showed us to be an engaging nation and it showed us to be a nation capable of delivery, of which we should be proud. Having been in business all my life, I can say that those are three criteria that are attractive for businesses. If we add to that the rule of law, transparency, our place in the global world and the fact that we speak English, to my mind that makes Britain an absolute global centre. How will we benefit from it? In relation to the noble Lord’s question about the office in Basra being closed, we have announced that a new visa entry programme will be enhanced out there to allow Iraqi people to come to Britain, whereas before they would have had to get their visas from places such as Jordan. A lot of prosperity initiatives are going on and that is just one of them.
I declare an interest as a chairman and an adviser to many of the exporters who benefited from UK Trade and Investment at Lancaster House during the Olympics. I start by congratulating Her Majesty’s Government on a very good business programme linked to the Olympic Games. Can the Minister give three assurances? First, will the business club, started at the Commonwealth Games in Manchester in 2002 and promulgated through Lancaster House during the Olympics and Paralympics, be continued in Glasgow in 2014, notwithstanding all the efforts of certain people who might think to the contrary? Secondly, will the Minister, as all Ministers and parliamentarians of all parties should, fly the flag around the world to generate jobs and tax-generating profit in this nation? Thirdly, will the Minister follow up on all the contacts made at Lancaster House with taxpayers’ money to generate jobs?
I am very grateful to the noble Lord for his supplementary on his supplementary on his supplementary question. Time will allow me to deal with only one of them, but I thank him for everything that he did, and of course I thank people for everything that they did cross-party to promote British business. I am leading something called the GREAT campaign, which I hope has been well advertised in this country and abroad. That is a good platform for showing people our great country.
My Lords, there has been welcome news and we on this side congratulate all those concerned. Will the Minister please give us some facts? What proportion of the sales or trade that took place at those meetings is arms-related? Will he also give a sense of what proportion of what was left went to SMEs in this country?
The noble Lord will know that arms-related sales do not happen overnight. There are long congestion periods. If we look at the activity on Typhoon, decisions about such huge amounts of money are not made quickly. Clearly, we have a remarkable defence industry, of which we are proud and which is at the cutting edge of world technology. I have no doubt that it will be making sales throughout the world. On the defence front, I can say that I was privileged to lead a mission advising people on cybersecurity around the Middle East and orders are coming in thick and fast.
Riots, Communities and Victims Panel
My Lords, many aspects of the panel’s report chime with the Government’s ambitions on reform. The panel’s focus on character is reflected in the Government’s Positive for Youth statement, which stresses the importance of personal and social development and the building of resilience. An accompanying outcomes framework is aimed at supporting local practitioners working with young people, including schools, and it sets out the capabilities that together help foster character and how that might be measured.
My Lords, I thank the Minister for her response. Given that the report of the Riots, Communities and Victims Panel, which I thought was extremely good, contains nine specific recommendations to help build character and enhance the personal resilience of young people relevant to schools, youth services and local organisations such as scouts and guides, does the Minister share my disappointment that there was no mention of whether or how these would be taken forward in the Secretary of State’s Statement back in July? Will she confirm that there will be a further Statement from the Secretary of State explaining what has happened to those recommendations, and when might that Statement be made?
My Lords, as I said previously when I answered a question about the riots, there will be a further response in due course. The Government are already taking quite a lot of action that chimes with the report. We are already funding cadets, summer schools, the National Citizen Service, and Myplace, which is a national programme to build world-class youth centres. All of those will contribute to helping young people develop their resilience and character.
My Lords, in their response to the riots panel report—I declare an interest as a panel member—the Government were kind enough to agree with us that when it comes to children, early intervention is crucial. Given that, will the Minister reassure the House of the inaccuracy of the reports that are abroad that the Government’s plans to fund nursery places for deprived two year-olds are to be funded not from an underspend but by raiding £1.6 billion over three years from the early intervention grant, thus putting Sure Start intervention at risk?
My Lords, I am not in a position to confirm that. However, it is worth saying that one thing that the Government are doing is to provide and support parenting courses. One aspect of this is that young children need a family background; they need the support of parents; and they need nursery education. All of that will start to build the resilience mentioned over and over again in the report, to help them resist things later in life when they may be faced with problems such as riots.
Do the Government recognise, as the panel did, the importance of providing support to young people at weekends and in the school holidays? Has the Minister picked up on the enormous importance of volunteers in providing this cover, and in monitoring during school terms as well? If so, will the Government undertake some means of supporting the employer volunteering encouragement schemes that produce the people to do this at minimum cost and maximum efficiency?
My Lords, I endorse entirely what my noble friend said about volunteering. The more volunteers we have, the more we can do. The volunteers at the Olympic Games showed how valuable they can be. We already support summer schools where young people have an opportunity to develop. We also support the National Citizen Service, which will be supported by volunteers as well. There is plenty going on. The Myplace scheme for developing youth clubs will also need volunteers to help with it. I hope that my noble friend will understand that this is an area where there is room for expansion.
My Lords, have the Government noted the way in which youth workers from churches, voluntary organisations and local authorities helped prevent riots in so many places? What plans do they have to ensure that funding for such youth services does not decline in future, thereby increasing the possibility of a repeat of the riots?
My Lords, as I indicated, we are supporting the creation of new youth centres through Myplace money. I emphasised that it was absolutely vital that people who were responsible for young people and had an effect on them should help them build resilience and character. That is a major part of the report to which the noble Baroness, Lady Sherlock, and my noble friend Lady Tyler referred. It demonstrates that even within the same school there are some children who can develop that character, leadership and resilience against actions such as the riots, and some who cannot. I accept the point of the right reverend Prelate about the need to have youth services. We are funding them.
My Lords, the aim of the Department for Education is that all schools should create a framework to enable teachers to take control of a classroom. That includes taking control of the behaviour of young people and being able to influence how they grow up, against a framework and parameters. I mentioned the parenting classes that are being set up. The noble Lord, with all his experience, will understand that that is a great step forward for the future.
My Lords, protecting consumers from rising energy costs is a priority for this Government. Programmes such as the Carbon Emissions Reduction Target, Warm Front, Green Deal and the Energy Company Obligation make or will make homes more energy efficient. The Warm Home discount provides £1.1 billion of support until 2015 and helps around 2 million low-income and vulnerable households. The Government have also instigated the Big Energy Saving Week, to be held the week of 22 October, when there will be up to 400 events across the country providing direct advice on reducing energy bills.
Whenever energy companies announce their price hikes they always blame wholesale price increases. However, when wholesale prices fall, customers rarely see their bills fall. When are the Government going to stand up for hard-working families, the grafters and people struggling to make ends meet who are suffering at the hands of these companies?
My Lords, this Government do stand up for hard-working families, the grafters and the strivers. What we cannot do, of course, is tell big energy companies what prices they should set. Artificially reducing retail prices to levels below competitive levels would be unsustainable and discourage investment in new infrastructure. We need to make sure that energy companies are doing more by making them make their bills easier for consumers to understand and, where they can, by directing consumers to cheaper tariffs.
My Lords, between 2003 and 2011 the retail price index went up 30 per cent but the index relating to the energy price per household went up 120 per cent—four times more. Over that time, from 2003 to 2010, the number of households in poverty went up from 2 million to 5 million. Can the Minister explain how this Government are tackling that blemish on our society, inherited by us from the previous Government?
I thank my noble friend for affording me the opportunity to show our commitment in helping low-income and vulnerable households to keep their homes warm at an affordable cost. We have in place a strong package of measures to help the most vulnerable through the Warm Home discount scheme, which I have mentioned, which will help 2 million households receive support during 2012-13. This will include more than 1 million of the poorest pensioners, who will receive an automatic discount of £130 off their electricity bills by December this year.
My Lords, would not the simple way to reduce consumers’ electricity costs be to stop paying huge subsidies to wind farms? The cost of those subsidies falls directly on to the consumer, particularly, as the noble Lord, Lord Teverson, mentioned, those in fuel poverty.
My Lords, this country needs a mix of different energy sources. Wind happens to be one of them and is carbon free. However, we recognise that we need to look at all sources and the subsidies we are providing to them, and we have taken it upon ourselves to reduce wind subsidies by 10 per cent.
My Lords, as regards the excellent house insulation scheme, can my noble friend persuade the department concerned to inform those who are installing the insulation that they are allowed to go up portable ladders and not to claim health and safety regulations to refuse?
I congratulate the noble Baroness on her new ministerial position. I am sure that she will be able to keep her boots dry and need neither wellies nor huskies. Against last year’s downward trend in wholesale prices between 2011 and 2012, the energy companies are passing on price rises over a two-year period, claiming that that is when they last purchased their supplies. If a company makes a mistake on its forward buying policy, why is it that the consumer suffers and not the company? Does this look like a competitive market to the noble Baroness, especially when all energy companies seem to coalesce around similar price hikes and coincide with the timing of price rises?
My Lords, the noble Lord raises an important point, but in anticipation of someone asking this question, I have looked at the net margins of energy companies. By and large, their net margins have remained at around 3.4%, so they are not working with huge margins. Perhaps I may say once again that I want energy companies to direct people towards better tariffs if they are available or make it much easier for consumers to change suppliers. That gives consumers choice and puts energy companies in competition.
My Lords, I know that my noble friend is greatly concerned about wind farms, but perhaps I can reassure him that on 20 September last we called for evidence to see how well we are doing in terms of our targets on wind farms. I can also assure him that, by and large, we have reached our capacity for onshore farms through what we have already done and what is in the pipeline. My noble friend can rest assured that there will not be a burst of wind farms across the landscape. We are taking wind farms as part of the energy mix that this country needs.
My Lords, I am sure that the noble Baroness would agree that surety of supply of gas is an important part of keeping costs down. Some 14% of our energy comes from Qatar through to Milford Haven, and that is set to rise to 30%. Does she further agree that 19 destroyers and frigates might be a little too few to ensure the security of that supply?
My Lords, I rise to intervene on two separate points rather than make two separate interventions. The first is on the conduct of Members of your Lordships’ House and the second is on the Local Government Finance Bill, which the House is about to consider this afternoon.
On the first issue, allegations have been made in the media about a number of former senior service personnel and their readiness to lobby current Ministers and officials in the Ministry of Defence about defence procurement—in other words, paid advocacy. Two of those named are Members of your Lordships’ House. When similar allegations were made in January 2009 by the same newspaper, the Sunday Times, about a number of other Peers, the House took action against those individuals and toughened up our Code of Conduct in relation to paid advocacy. I wrote to the Leader of the House on this matter yesterday, asking him to make a statement.
These are serious matters. They were when we suspended Members of this House previously and they are now. The reputation of this House and Members of this House, and the conduct of Members of this House, is again being called into question. Experience of these matters shows that the best way to consider and resolve these issues is through the improved mechanism that we now have available, including the Lords Commissioner for Standards. I believe that Members of your Lordships’ House should be kept informed about issues such as these, and that is why I am raising this matter now.
The second issue is the Local Government Finance Bill. Based on a briefing given to Peers yesterday by the noble Baroness, Lady Hanham, we understand that the Government propose to make an announcement in this House this afternoon on transitional funding in connection with council tax support schemes. We do not yet know the detail, but it is clear that the changes to the Bill, at this late stage, will be material. I understand that there was a Written Statement yesterday, but today represents the first opportunity for Members of this House to debate these issues. Accordingly, yesterday we wrote to the Leader of the House asking for assurances that at Third Reading, which is due next week, all Members of your Lordships’ House, including the Opposition, will be able to table and, if necessary, vote on amendments—new and substantive amendments —driven by the Government’s announcement today. We received a reply from the Leader of the House rejecting such an easement of usual procedure, with the result that Members of this House will not be able to table such amendments following today’s announcement by the Government. We do not believe that this is correct. We do not believe that such an insistence is to the benefit either of Members of this House or of this House carrying out its role of properly scrutinising this Bill. Accordingly, we ask the Leader of the House to reconsider his response and provide Members of this House with the opportunity to carry out their constitutional role.
I apologise for having to intervene in this way, and on two separate points, but I believe that both are important matters which are of concern to this House.
My Lords, I am surprised by the intervention of the Leader of the Opposition, particularly on the first question. These are enormously serious allegations that have been made against Members of this House. I happen to know that the noble Baroness asked the Lord Speaker for a PNQ on this matter and the request was turned down. I think that it is discourteous of the noble Baroness to have raised this issue because our rules do not provide for the second-guessing of a ruling on a PNQ by the Lord Speaker.
Since the noble Baroness was Leader of the House, this House has created a new code of practice and a new independent Commissioner for Standards. We should allow the new independent Commissioner for Standards to do his job, given his responsibilities, and to carry out any inquiries that he sees fit.
Secondly, on the Bill that we are dealing with today, it is completely standard practice for Governments to react to suggestions that have been made, to amendments that have been put down and debated in this House, in an attempt to be helpful to the House. That was the reply that I gave the noble Baroness. It is much better for the Report stage of this Bill to continue and for my noble friend the Minister to make whatever case she wishes to make as to why the Government have made this statement, and for the amendments to be taken in the order in which they were put down.
My Lords, I am disappointed that the noble Baroness raised the first point, because she knows that the matter has been referred to the independent Commissioner for Standards. It is absolutely right, and in fairness to my colleagues involved in this, that the matter is handled in accordance with the procedures agreed by this House and away from the Floor of the House. I hope that all Members of the House will respect that.
My Lords, perhaps I might comment on the second part of the noble Lord’s reply to my noble friend the Leader of the Opposition, on the Local Government Finance Bill.
Yesterday afternoon we learnt from the noble Baroness, Lady Hanham, that the Government were making available £100 million. It was courteous of her to give us a briefing session; we were very pleased that she did so and we are grateful for that. However, a number of the amendments today were based on the assumption that no such transitional moneys would be forthcoming. Because they are, it raises serious issues; for example, about whether local authorities that have already gone out to consultation on their schemes, which the Bill says they must do, would now be required to go out or possibly face judicial review.
Secondly, with the benefit of that grant, we are now talking about collecting extremely small sums of money from reluctant and sometimes recalcitrant payers, of £1.50 or £1.75 a week, and in many cases the cost of collection will exceed the money collected. I for one wish to get guidance and steer from legal and finance officers of local authorities so that we can have a proper, informed, sensible and cool debate, while being respectful of and grateful for the additional moneys coming to local authorities. But we cannot do that overnight. As a result, I shall be withdrawing at least one if not two amendments in my name because I cannot argue them until I have got the information we now need in light of these changed circumstances.
In previous times, when many of us have been Ministers, we have made arrangements perhaps to go from Report back to Committee or from Third Reading back to Report, because this is a self-regulating House. All that my noble friend is asking—and we were given assurances by the noble Baroness, Lady Hanham, yesterday that this would happen—is that we have the flexibility at Third Reading to table amendments that may introduce new material, because new material was introduced by the Government yesterday.
My Lords, I think that what the noble Baroness is saying is that if the Government had not made a statement yesterday or this morning we would not have had this little debate at all, because we would have carried on with the amendments as they were. The Government are trying to be helpful. Surely the right time for this debate to continue is when we move into the Report stage. My noble friend can then make her position utterly clear and the House can take a view.
My Lords, I rise to speak on both issues again. On the first point, these are of course deeply serious allegations, which is why I believe that the House should be informed. The process that we have now is absolutely correct; I am delighted that the procedure was changed; and I have the utmost confidence in the Commissioner for Standards. I just think that it is important that the House knows what is happening. I am glad that the noble Lord the Convenor of the Cross Benches was able to tell us what he has done; I am sure that the House is glad to know what has happened. We need to be open and transparent on these issues for the sake of the reputation of this House and its Members.
On the second point, I was merely being courteous in alerting the noble Lord to the fact that we would wish to table amendments at Third Reading and vote on them. I think that that is what the majority in the House would wish to do, which is why I wrote the letter yesterday.
Infrastructure (Financial Assistance) Bill
The Bill was brought from the Commons, endorsed as a money Bill, and read a first time.
Welfare of Wild Animals in Travelling Circuses (England) Regulations 2012
Motion to Refer to Grand Committee
My Lords, with the leave of the House, I shall repeat a Statement made earlier today by my right honourable friend the Home Secretary. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement about the case of Gary McKinnon and the Government’s response to Sir Scott Baker’s review of our extradition arrangements.
I will turn first to Mr McKinnon’s case. I should explain to the House that the statutory process under the Extradition Act 2003 has long ended. Since I came into office, the sole issue on which I have been required to make a decision is whether Mr McKinnon’s extradition to the United States would breach his human rights.
Mr McKinnon is accused of serious crimes, but there is also no doubt that he is seriously ill. He has Asperger’s syndrome and suffers from depressive illness. The legal question before me now is whether the extent of that illness is sufficient to preclude extradition.
As the House would expect, I have very carefully considered the representations made on Mr McKinnon’s behalf, including from a number of clinicians. I have obtained my own medical advice from practitioners recommended to me by the Chief Medical Officer. And I have taken extensive legal advice.
After careful consideration of all of the relevant material, I have concluded that Mr McKinnon’s extradition would give rise to such a high risk of him ending his life that a decision to extradite would be incompatible with Mr McKinnon’s human rights. I have therefore withdrawn the extradition order against Mr McKinnon. It will now be for the Director of Public Prosecutions to decide whether Mr McKinnon has a case to answer in a UK court. This has been a difficult and exceptional case and I pay tribute to all the Home Office officials and lawyers who have worked on this case over the years.
Extradition is a vital tool. In a world where criminals and crimes can easily cross borders, it is vital, in the interests of justice and public protection, that criminals cannot avoid justice simply by sheltering behind a border. But concerns about the working of our extradition law have grown over recent years. There has been public concern about the extradition regime operating in the European Union—the European arrest warrant—and about the extradition arrangements outside the EU, principally with the United States. That is why in September 2010 I commissioned a review into our extradition arrangements. That review was undertaken by Sir Scott Baker—a former judge in the Court of Appeal—and a distinguished and expert panel including David Perry QC and Anand Doobay. I am extremely grateful to them for the professional and thorough way they went about their work. Nobody who has read their near 500-page report can be anything but impressed by the depth and clarity of its analysis. At the same time, there has been considerable parliamentary interest in extradition. In a debate last December, Parliament agreed unanimously that it believed there were problems with both our US and EU extradition arrangements. In coming to a decision on how the Government should respond to the Baker review I have taken full account of the review’s recommendations as well as the views of Parliament.
Yesterday, I announced that the Government’s current thinking is that we will opt out of all pre-Lisbon treaty police and criminal justice measures. The Government will give very careful consideration to these measures, including the European arrest warrant, and will then seek to opt back into those individual measures where it is in our national interest. The European arrest warrant has had some success in streamlining the extradition process within the EU but there have also been problems. There are concerns in particular about the disproportionate use of the European arrest warrant for trivial offences and for actions that are not considered to be crimes in the UK. There are also issues around the lengthy pre-trial detention of some British citizens overseas. We know these concerns are shared by other member states. We will therefore work with the European Commission and with other member states to consider what changes can be made to improve the EAW’s operation. I believe this is necessary to ensure that the EAW provides the protections that our citizens demand.
There are also concerns about our extradition arrangements with countries outside Europe. A key reason for the loss of public and parliamentary confidence in our extradition arrangements has been the perceived lack of transparency in the process. I believe extradition decisions must not only be fair, they must be seen to be fair and they must be made in open court where decisions can be challenged and explained. That is why I have decided to introduce a forum bar. This will mean that, where prosecution is possible in both the UK and in another state, the British courts will be able to bar prosecution overseas if they believe it is in the interests of justice to do so.
I have been conscious, however, of Sir Scott Baker’s concern that the introduction of the existing forum legislation would lead to delays and satellite litigation. So, rather than commence the existing provisions, as soon as parliamentary time allows I will bring forward a new forum bar which will be carefully designed to minimise delays. In parallel, the Director of Public Prosecutions will independently publish draft prosecutors’ guidance for cases of concurrent jurisdiction, and a bilateral protocol governing the approach of investigators and prosecutors in the UK and the US is being updated alongside this guidance.
Turning to the United States/United Kingdom extradition treaty, I agree with the Baker review that our arrangements are broadly sound and that the treaty brings benefits to both of our countries. Less than two weeks ago, for example, we saw the extradition to America of Abu Hamza and four other terror suspects. Although there is a perception that the evidence tests used by the US and the UK—probable cause and reasonable suspicion respectively—are unbalanced, Sir Scott Baker found that there is no significant difference between those two tests.
I have also accepted the Baker review’s recommendations that a prima facie evidence test should not be reintroduced for those countries where it is not currently required. The courts are already able to subject requests from all countries to sufficient scrutiny to identify and address injustice or oppression. Reintroducing prima facie evidence would be likely to lead to further delays. It is absurd to propose that we should require prima facie evidence from countries such as the United States, Canada and Australia when we do not require such evidence from other countries with far less mature judicial systems.
I also agree with the Baker review’s recommendation that the breadth of the Home Secretary’s involvement in extradition cases should be reduced. Matters such as representations on human rights grounds should in future be considered by the High Court, rather than by the Home Secretary. This change, which will significantly reduce delays in certain cases, will require primary legislation.
Finally, I propose to reduce delays in the extradition system in the light of the recent extradition of terrorist suspects to the United States. In addition to the measures that I have just announced, the Government will look further at proposals in the Baker review to introduce a permission stage for appeals to the UK courts. We will work closely with the European Court of Human Rights on a programme to reduce the wholly unacceptable delays which have occurred there. We have also been considering how we can reduce delays in the deportation of foreign nationals who pose a threat to our national security. There is scope for reforming rights of appeal, streamlining the stages, expediting cases through the court and looking again at the provision of legal aid for terrorist suspects.
As Sir John Thomas, the judge in the Abu Hamza case, said, it is in the overwhelming public interest that our extradition arrangements function properly. They must also be fair. We must balance strong safeguards for those accused of cross-border crimes with assurance that justice will be done. That is the Government’s aim, that is what our proposals will produce and I commend this Statement to the House”.
My Lords, that concludes the Statement.
My Lords, I thank the Minister for repeating the Statement. I do not think that I have had the opportunity to welcome him to his new position; I do so and look forward to working with him.
I entirely concur with our shadow Home Secretary, the right honourable Yvette Cooper, when she said in the other place that this was a serious decision and, as the Home Secretary explained, had to be based solely on the judgment as to whether Gary McKinnon’s extradition to the US would breach his human rights. It is testament to how serious a decision this is that the Home Secretary has taken two years to reach it. Within that time, she has commissioned further medical and legal advice. Can the Minister clarify whether the most recent psychiatric report commissioned by the Government was a separate and new medical opinion of Gary McKinnon or a review of the existing medical reports?
I focus on three specific issues in the Statement today: the Home Secretary’s announcement following Sir Scott Baker’s review; the implications that the Home Secretary’s decision may have for outstanding and future cases; and the European arrest warrant.
On the Baker review, it is clearly unacceptable that any case can be delayed for over 10 years pending a decision on extradition. I cannot overstate the difficulties and stress within this case but it is also a terrible burden on the victims and families; neither does it serve justice. We accept and agree with the conclusions of Sir Scott Baker’s review: that removing the role of the Home Secretary from human rights decisions in future will prevent cases languishing without decision for so long again.
In relation to the Government’s announcement of their intention to introduce the new forum bar the Minister will be aware that, when in government, we included the option for a forum bar in the Extradition Act. That has never been introduced. We understand and share Sir Scott Baker’s concerns over introducing further delays in the process, with the risk of endless satellite legislation. We will therefore be happy to work in co-operation with the Government on future legislation to resolve some of the outstanding practical concerns. We know that the expertise of your Lordships’ House will be especially important in that process. However, there is a wider problem that the Government have not addressed and I would be grateful if the Minister could help me on it. We are all becoming increasingly aware of cybercrime—a crime that can occur across several jurisdictions at the same time. As the legislation stands, a forum bar would not make any difference in dealing with the difficult decisions about whether extradition should take place. What efforts are the Government therefore making to work with the US, and other countries where we have existing extradition arrangements, on the development of new arrangements to deal with these emerging crimes?
I know that the Minister will also be aware of the case of Richard O’Dwyer, whose extradition was approved following charges brought in the US for conspiracy to commit copyright infringement and criminal copyright infringement following his creation of a website. Not being particularly technical myself, I understand that the site included links to other websites where the copyright infringement was alleged to have taken place. In Richard O’Dwyer’s case, it has been noted that had the forum bar been applied at the time his extradition may not have been approved. Does the Minister feel that the proposals announced by the Home Secretary today fully address the issues raised by the O’Dwyer case, including when offences may have been committed in the UK at the same time as in another jurisdiction?
I have just one further point, which comes back to the discussion we had yesterday about the European arrest warrant. I understand the concerns that have been raised but I also understand and appreciate that this is incredibly valued, as I highlighted yesterday and as law enforcement agencies in this country have highlighted as well. I worry about losing those powers without having anything immediately in their place. The Minister said in repeating the Statement that the Government wanted to work with other European countries to seek changes to the European arrest warrant. Is he aware that work is already ongoing to make changes to and review the operation of that warrant? Does he know what contribution the UK Government are making to those discussions and deliberations at present? My fear is that when other European countries see that we want to withdraw from the European arrest warrant, it will make our power to influence discussion and deliberation of that issue at this time more difficult. If we decide to opt out and then try to opt back in, we may lose the opportunity to influence the changes that—there is some acceptance of this—need to be made. I hope that the Minister is able to address some of the questions I have raised.
I thank the noble Baroness, who has been very generous in her welcome for this Statement. Indeed, I welcome her support on a number of the issues that she refers to. Perhaps I can help her on those specific questions that she asked me. The latest medical report that the Home Secretary received, which enabled her to come to this decision, was a review of other reports. It was not a report on or an examination of Mr McKinnon but a fresh report on the evidence that was available to the Home Secretary. I hope that that helps the noble Baroness.
I am very grateful on a number of issues. The Baker review recognised that one of the most difficult issues facing Governments on extradition was the delay in the process. Much of what the Government are seeking to do with the new arrangements on extradition that we intend to negotiate and put into place is meant to reduce delay. On the forum bar, for example, we know that it is going to be a different arrangement from that laid down in the 2006 Act, which was introduced by the previous Government but actually promoted by opposition Benches at the time. Clearly, that will not be fit for purpose for what we now see as the important issue of ensuring that the process is both fair and speedy. If I may say so, it would be good—I know that the Home Secretary welcomed this in the other place—to have cross-party co-operation on the construction of new arrangements for the forum bar.
The question of cybercrime was also raised in another place. I reassure the House that the Government are working with other countries on cybercrime; it is an international crime and clearly fits in closely with issues of extradition and the forum for the hearing of cases so that justice can be done and this insidious crime can be dealt with properly, in both the national and international interest.
On the European arrest warrant, yes, there is an ongoing review, as the noble Baroness implied. There are aspects of that warrant that are extremely useful, and none of us in government wishes to suggest otherwise. However, the previous Government made arrangements whereby we could deal with some of these matters by a withdrawal from the pre-Lisbon sections involving these things to enable us to renegotiate the details. We intend to do that in parallel with a number of other countries that share these concerns, and we do not see this as being a negative process at all. It is about making the European arrest warrant much more fit for purpose, introducing some proportionality into the issue, trying to avoid triviality and ensuring that there is no unnecessary delay in the process.
My Lords, I am grateful to the clerk for not starting the Clock so I do not eat into any of the precious time available to noble Lords on the Statement today. I know that there will be great demand to contribute today and that my noble friend will want to respond to as many noble Lords as possible. Because of that, I am sure that the House will find helpful if I remind noble Lords how the Companion guides us on Statements. The point that it makes is that this is an occasion for brief comments and questions.
My Lords, I must express some surprise that this seems to be the first occasion on which the Government have expressed gratitude in any public way for the excellent report by Sir Scott Baker on the subject of extradition. Perhaps the Minister might remind us of the date of that report.
Like opting out of pre-Lisbon police and criminal justice matters, which we discussed yesterday, extradition is a subject that has been surrounded by myths. I had hoped and indeed thought that those myths had been dispelled by Sir Scott Baker’s report. I am therefore particularly glad that the Government have at long last accepted his view about the alleged inequality between United Kingdom and United States extraterritorial arrangements, so I hope that we will hear no more about that particular canard. However, I am disappointed that the Government are differing from Sir Scott Baker on the question of a forum power. Does the Minister not agree that if a suspect can be prosecuted in two or more countries, the essential question is where he can best be prosecuted—that is, where he is most likely to be convicted if guilty? In almost every case, that depends on where the bulk of the evidence is. Does the Minister not agree that that is a question that is best decided by the prosecuting authorities in the two countries involved, not by Parliament?
I thank the noble and learned Lord for his reinforcement of the esteem with which Sir Scott Baker’s report was received. As the noble and learned Lord will know, it was presented a year ago in 2011. I think it is right that an issue as complex as extradition is properly considered, and I think that if the Government disagree with Sir Scott Baker, they have done so because they have considered the issues that the report raised. The noble and learned Lord implied that perhaps the most important thing is the place in which there is the maximum chance of a conviction being achieved. There is also a matter of justice. Justice requires that people are tried where justice may be seen to be done. It will be for the courts to judge this matter. A Home Secretary will not deal with this matter. I believe the courts in this country are quite capable of determining that.
My Lords, this is a welcome Statement. Does my noble friend agree that it is welcome in part because it confirms the importance and relevance of human rights in our law, and that they are not something foreign that is nothing to do with us? The Minister referred to the interests of justice in the question of the forum. Does he agree that that may also raise questions about the burden of proof and prima facie evidence, which were somewhat contentious with regard to the Baker report? Can he confirm that he will use all the expertise of this House, notably on the Cross Benches, as well as in the parties? The Minister referred to parties, but I hope he will agree that in this House “parties” means all sides of the House because there is a lot to contribute on this very difficult issue.
I thank my noble friend for that very important reminder that this House has an enormous asset in the Cross-Bench contributions, particularly from the noble and learned Lords who sit on them. Nobody, not even the Government, is going pass up the opportunity of free legal advice. I am sure that noble Lords will be very carefully listened to on the matters that have been raised. The Government recognise the complexities of the issue, but we feel that there is now an opportunity to change the arrangement and rebuild public confidence that extradition is properly and transparently conducted. It has been troubling the wider electorate, and this is an opportunity to put it right.
My Lords, I refer to my interests in autism listed in the Members’ register. I welcome this Statement today about Gary McKinnon, but will my noble friend agree that the Home Secretary had the advantage of seeing medical reports from psychiatrists who have a working knowledge of Asperger’s syndrome, which made an enormous difference to the decision that she has made today? Over the past few years, I have had the privilege of reading Gary McKinnon’s medical reports. On moving decision-making from the Home Secretary to the High Court, will my noble friend discuss with his colleagues in the Ministry of Justice the need also for courts to be much more particular about where they source and commission such medical reports? The difference between a generalist psychiatrist assessing Asperger’s syndrome and those who have a working knowledge of it is the difference between justice and injustice.
I thank my noble friend for raising Asperger’s and autism in general, conditions which are extremely complex and difficult. She has been prominent in bringing that to the attention of Parliament. I am only too grateful to take her advice and recommendation, and to pass that on to colleagues in the Ministry of Justice.
I welcome the reduced involvement of the Home Secretary in human rights cases and in the kind of case with which we are dealing. It is usually a sound step, and the perception as well as the reality of political involvement is reduced. Hence, I welcome it. However, will the Minister indicate what is meant by a significant reduction in “delays in certain cases” by transferring these matters from the Minister to the courts?
I thank the noble and learned Lord for that question. It is quite overt that in a number of instances, there have been considerable delays. The main thrust of our changes will be to try to expedite the legal process. The process will be speeded up by retaining cases within the legal system and not bringing them back into the political system. I hope that I have been able to answer him.
Does the Minister accept that delays have been caused primarily by Strasbourg rather than London? Will he express agreement with the views of the Lord Chief Justice last month that these delays would make any reasonable person furious? Will the Minister share with the House the communications that the Government have had with the European Court in Strasbourg, expressing concern as to those delays? I should also declare an interest in that I was counsel for Mr McKinnon during an appeal to the Appellate Committee of this House.
I thank the noble Lord. The question from the noble and learned Lord, Lord Morris, was about delays in the normal process and not about delays in the European Court of Human Rights in Strasbourg. I hope that I understood that correctly. Perhaps I may inquire about correspondence with this Government to see whether it is possible to release any of that for the noble Lord. If so, I will place a copy in the Library.
My Lords, I need to begin by declaring an interest as a trustee of Fair Trials International. I congratulate my noble friend and the Government on having introduced a forum bar. It will end the unattractive process of forum shopping, which is a search for judicial procedures that offer the greatest chance of conviction and the highest possible penalties. When the Government come to examine and review extradition arrangements, could they make sure that they include opportunities for common bail procedures and access to interpretation? Very often people operating overseas are unable to understand of what they are being accused, and access to interpretation is a critical part of their access to justice.
An important point was made by my noble friend on the Front Bench that goes to a matter of elementary competence. Have not the Government put themselves in a quite ridiculous position, announcing that they wish to renegotiate the regime for the European arrest warrant and almost in the same breath that they intend to withdraw from the whole structure of justice and home affairs in the European Union? You do not have any influence on the rules of a club if you have announced in advance that you intend to leave it. As for opting back in, we should then be asking our EU partners to do us a favour. In that position we would have no leverage at all in changing the rules. Is that really the Government’s best idea of how to conduct an international negotiation?
I am not sure whether the noble Lord was in the Government or the Opposition when the then Government introduced this provision within our statute law. It provides us with an ideal opportunity to work alongside our European partners and with the Commission to seek a change in the European arrest warrant, which we are not alone in seeing as very useful and important but none the less deficient. The procedure for doing that is to give notice that you intend to withdraw and then to seek to reapply on the terms of the revised arrangements. That is perfectly straightforward. It was discussed yesterday after the Statement repeated by my noble friend Lord McNally, and I do not see any difficulty whatever. I am surprised that the noble Lord makes the point that he does.
My Lords, I thank the noble Lord for having repeated the Statement in this House. He will recall the almost innumerable times that I have raised the issue about Gary McKinnon. Despite the fact that we have had a good outcome today, it is quite concerning that it has taken 10 years to get to this stage; and the best that we can get now that we have decided we are not going to extradite him is that at some undefined stage in the future this matter may come before our courts. What does that mean? Is that going to be another 10 years for this young man who suffers from Asperger’s syndrome, the autism spectrum disorder? I chaired an independent review of autism services in Northern Ireland, and I know the strain with which not just the sufferers of the autism syndrome but their families have to live. I implore the Minister to ensure that on top of this Statement this House gets an early indication of the final outcome.
Finally, I note that in line with the Baker review, the Home Secretary’s involvement in extradition cases should be reduced. On a general principle, this suggests to me that we are moving more and more towards government by caucus. There are some 600 Back-Benchers in the other House and some 800 noble Lords in this House. We want to have direct access to government, not access by proxy to some delegated power that we cannot identify.
The noble Lord will know that separation of powers is an important part of our constitution. The Home Secretary is saying that this particular power belongs more properly in the judicial process. I think the sentiment around the House suggests that she has that issue right. On the question of Mr McKinnon and what happens to him now, he will be able to apply for release from his bail conditions but it will be for the Director of Public Prosecutions to decide whether he should be tried in the UK. That is not a matter for government.
Will the Minister shed some light on an aspect of the Statement? I am not a learned Lord but I was a practising lawyer for 20 years and I was always taught that one is innocent until proven guilty and should be treated as such. I refer to extradition to the United States on a whim whereby a businessman or businesswoman can now languish in a jail in America without transparent evidence having been provided. They are then pressurised to enter into a plea bargain on the basis that the case will go all the way to trial. They are not granted bail as they are treated as a security flight risk because they had the temerity to fight extradition. They are in a cell and are told, “All this can go away. All you have to do is plead guilty. You can get two years, two years at home in an open prison after that and this can all go away. Or you can sit here in a jail in America while we get the case together over something like two to three years. You will get no costs for your defence. If you are found guilty, you will go down for 30 years and you will never see home again”. The person concerned has had no evidence presented against him that has been tested in any way, shape or form in a transparent open court of law on either side of the Atlantic. I would welcome the Minister shedding some light this afternoon on how that situation is the pursuit of justice of which he speaks.
I am not in a position to comment on the judicial procedure in the United States. It is a sovereign country and makes its own laws and conducts its own affairs. Having said that, the noble Lord will appreciate that this country has good and close relations with the United States; indeed, its legal system is founded on our common law. Therefore, we have a shared purpose. Scott Baker managed to show that there was no substantial difference between the test that was applied in a US court for extradition to this country and that which was applied in a UK court for extradition to the United States. He came to the conclusion that it was a reasonable arrangement that fitted with the legal processes in both countries. We are not aware of any extradition cases in the United States where somebody has waited three years for their case to come to trial.
Local Government Finance Bill
Report (2nd Day)
Relevant documents: 4th and 7th Reports from the Delegated Powers Committee.
Schedule 1 : Local retention of non-domestic rates
Amendment 71 not moved.
72: Schedule 1, page 47, line 14, at end insert—
“Estimates of amounts to be disregarded39A (1) The Secretary of State may by regulations make provision for—
(a) calculations of a kind mentioned in paragraph 37(1)(d) or 38(1)(d) to be made on the basis of an estimate of an amount or proportion that is to be disregarded under regulations under that paragraph; (b) for the making of a payment by the Secretary of State to a billing authority or vice versa where it is subsequently determined that the amount or proportion to be disregarded is more or less than the amount of the estimate. (2) Regulations under this paragraph may make provision about the administration of payments under the regulations, including as to—
(a) the time and manner in which a payment is to be made, and(b) the consequences of non-payment.”
Amendment 72 agreed.
Amendment 73 not moved.
Amendments 74 to 77
74: Schedule 1, page 47, line 19, after “Schedule” insert “or Part 6 (funds) so far as applying to non-domestic rates”
75: Schedule 1, page 47, line 26, leave out “audited” and insert “certified”
76: Schedule 1, page 47, line 37, leave out “by an audit”
77: Schedule 1, page 48, line 5, at end insert—
“Regulations about calculations and supply of information40A The Secretary of State may by regulations—
(a) make any provision that could be made by a direction under paragraph 40;(b) make provision for the Secretary of State to give a direction that could be given under that paragraph;(c) make any provision made by that paragraph in relation to a direction under it—(i) in relation to provision made by regulations under this paragraph, or(ii) in relation to a direction given by the Secretary of State under regulations under this paragraph.”
Amendments 74 to 77 agreed.
Amendments 78 and 79 not moved.
Amendment 80 had been retabled as Amendment 4A.
Amendments 81 and 82 not moved.
Schedule 3 : Local retention of non-domestic rates: further amendments
Amendments 83 to 97
83: Schedule 3, page 56, line 5, at end insert—
“( ) In subsection (1)(b), after “major precepting authority” insert “or the Secretary of State”.”
84: Schedule 3, page 56, line 27, at end insert—
“( ) under provision made by regulations under paragraph 9A of that Schedule (regulations about payments by billing authorities to major precepting authorities out of deductions from the central share),”
85: Schedule 3, page 56, line 35, after “authorities),” insert—
“( ) under provision made by regulations under paragraph 39A of that Schedule (payments by Secretary of State following estimates of amounts relating to designated areas or classes),”
86: Schedule 3, page 56, line 35, at end insert—
“( ) In subsection (2)(b), after “major precepting authority” insert “or the Secretary of State”.”
87: Schedule 3, page 57, line 11, at end insert—
“( ) under provision made by regulations under paragraph 9A of that Schedule (regulations about payments by billing authorities to major precepting authorities out of deductions from the central share),”
88: Schedule 3, page 57, line 19, at end insert—
“( ) under provision made by regulations under paragraph 39A of that Schedule (payments to Secretary of State following estimates of amounts relating to designated areas or classes),”.”
89: Schedule 3, page 57, line 31, at end insert—
“(2B) The Secretary of State may by regulations make provision requiring a billing authority to transfer from its general fund to its collection fund such amounts as may be specified in or determined in accordance with the regulations by reference to sums received by the authority in respect of non-domestic rates under this Act.””
90: Schedule 3, page 57, line 34, leave out ““, (3) or (4A)” substitute “or (3)”” and insert ““97(1), (3) or (4A) above” substitute “97(1) or (3) or regulations under section 97(2A) above””
91: Schedule 3, page 57, line 34, at end insert—
( ) In subsection (1)(c), after “97(2) or (4) above” insert “or regulations under section 97(2B) above”.
( ) In subsection (3)—
(a) in paragraph (b)(i), for “major precepting authorities” substitute “one or more relevant authorities”,(b) in paragraph (c), for “any major precepting authorities” substitute “prescribed relevant authorities”,(c) in each of paragraphs (d) and (f), for “major precepting authority” substitute “relevant authority”.”
92: Schedule 3, page 57, line 35, at end insert—
“( ) Before subsection (4) insert—
“(3C) In subsection (3) “relevant authority” means—
(a) a major precepting authority, or(b) the Secretary of State.(3D) Regulations under subsection (3) may make separate provision in relation to council tax and non-domestic rates, with the effect that—
(a) more than one estimate is to be made by a billing authority of whether there is a deficit or surplus in its collection fund for a financial year and, if so, of the amount of the deficit or surplus,(b) each estimate takes into account different amounts to be paid into or met from that fund, and(c) each estimate has different consequences as to the payments to be made, or other functions to be exercised, by the billing authority, major precepting authorities or the Secretary of State.””
93: Schedule 3, page 57, line 42, at end insert ““regulations under section 99(3) above,”
94: Schedule 3, page 57, line 46, after “Schedule,” insert “regulations made under paragraph 39A of that Schedule,”
95: Schedule 3, page 58, line 1, at end insert ““regulations under section 99(3) above,”
96: Schedule 3, page 58, line 5, after “Schedule,” insert “regulations made under paragraph 39A of that Schedule,”
97: Schedule 3, page 58, line 14, leave out from “etc)” to end of line 21 and insert “—
( ) at the end of paragraph (b) insert “or”, and( ) omit paragraph (c) and the “or” at the end of that paragraph (which provides for certification of calculations under Schedule 8 to the LGFA 1988).”
Amendments 83 to 97 agreed.
Amendment 98 had been withdrawn from the Marshalled List.
Amendment 98A (In substitution for Amendment 98)
98A: Before Clause 9, insert the following new Clause—
“Council tax benefit scheme
Nothing in this Act shall prevent billing authorities retaining the provisions of the existing national council tax benefit scheme, such schemes to be fully funded by the Secretary of State.”
My Lords, I did not know whether we were going to get a quasi-statement from the Minister at the start of our proceedings, but perhaps I may comment on the Written Statement we received yesterday and then move directly to my amendment.
We should thank the noble Baroness for her Written Statement, if not the entirety of its content. This is an astonishing state of affairs. Just 24 hours before we are due to commence our final day on Report, we are told that there is, after all, just a little more funding for local council tax support schemes. Of course we should welcome any new money for councils, even if it is just a fraction of the endless cuts they have endured, added to by an extra £1.1 billion cut in formula grant that has emerged from recent edicts. The extra money, £100 million, comes with strings. Yesterday’s Written Statement said that it was about “best practice” and that the money,
“will be available to councils … who choose to design their local schemes”,
according to certain criteria.
However, the design of the schemes has been going on for months. They have been consulted on by local authorities up and down the country. Councils have been agonising over the impossible choices with which many of them have been faced, trying to juggle the near impossibility of protecting the most vulnerable and maintaining vital services. The Government have been sitting back and watching all this happen, denying that the councils needed more time, refusing to accept that there was insufficient funding in the system for all councils to produce decent schemes, and letting them go through the agony. However, this announcement is not, even at this late hour, really about protecting vulnerable people or having good work incentives. The cynical reality is that this is about the Government trying to get political cover as the consequences of their policies strike home.
What does this mean for local councils who wish to access this funding? Some may not have to change their proposed schemes to access the pot, presumably but not necessarily including those who have opted for the default scheme. Some may have to make considerable changes, although they do not yet know how the pot is to be distributed and how this relates to the cost of any changes they may have to make. Some richer councils, through the use of increased flexibility from the empty properties and second homes provisions of the Bill, are in a position to have already funded a compliant scheme and will get a windfall from it.
Minor changes to draft proposals consulted on may not require reconsultation, but more substantial changes might, and we need proper advice and the opportunity to research this. Councils will have to grapple with the sustainability of all this. The funding is for one year only. Using this money to fund improvements in year one and for what would otherwise be affordable for the council may just mean reverting to the original scheme in year two. However, of course, the risk is that political blame will be visited on the council rather than the Government.
Quite apart from the content of the Written Statement, the process has been a disgrace. Springing this on our deliberations at the last moment does not make for a considered legislative process. Perhaps we should not be surprised, because the record shows that the Government have failed to live up to commitments to have full information, including draft regulations available, in good time.
As for our business today and as already mentioned, we have a number of amendments that affect vulnerable people and relate to tapers and work incentives that, in addition to this announcement, need to be considered fully in the context of schemes already consulted on by councils. We need to consider whether to push these today or at Third Reading. We would be grateful if we could have a clear statement from the Minister on the approach that will be taken to Third Reading and whether what we took to be the Minister’s position from our meeting on Monday will become the reality.
For us, of course, this approach is irksome and inconvenient but councils are having to deal with the practicalities of it now. This is not a good way for government to do business. Ultimately, it is abundantly clear that, even after this 12th-hour panic measure, the Government are still not prepared to insist that all the most vulnerable, including those currently passported to full council tax benefit, should be fully protected. It is to their shame that they eschew this responsibility.
I now turn specifically to the amendment, which requires the Government to fund local council tax support schemes up to the level of the proposed default scheme—that is, as now. In seeking agreement to this, we reject the notion that the Government’s newly announced transitional funding is an adequate response to the challenges that local councils face in creating local schemes. I acknowledge up front that the amendment would deny the Government the savings that they are seeking—some £400 million—but, when they are so minded, the Government have a happy knack of finding resources for a council tax freeze, bin collections and even tax cuts for millionaires.
We have made it clear that we consider the move away from a national scheme to be wholly misguided and, ultimately, not sustainable. However, in the interim, the underfunding of the task given to local government has put many councils in an impossible position—one which the transitional funding does not fully address. Even with this transitional funding, which is to last but one year, millions of people around the country will face rises in their council tax from April next year. At the very time when the Secretary of State is lecturing councillors that they have a duty not to increase council tax bills, his own actions are forcing up the bills to be paid by people on the lowest incomes. The Secretary of State is delegating the responsibility of providing council tax support but with 10% less funding than the cost of the current national council tax benefit scheme. As my noble friend Lord Beecham said at Second Reading, it is passing the buck without passing the bucks. However, as we know, the 10% cut in funding is greater because it assumes that claimant numbers for council tax benefit will fall when they are rising, and it will not protect councils to the extent that the benefit is attributable to council tax increases.
Of course, because councils have properly to keep the benefit to pensioners whole and are cynically reminded by the Government of their duty under equalities legislation and—would you believe it from this Government?—child poverty legislation, the burden of the cut has to fall on others: the working-age poor. This awful dilemma is being presented to councils at the same time as they face unprecedented cuts in their funding—bigger than the cuts imposed on any government department. The latest cuts facing local government are significantly higher than those anticipated in the 2010 spending review.
As things stand, we know that some councils are being pushed to financial collapse by all this, and the cuts in council tax benefit funding will hit the poorest areas the hardest. Those that have already endured the largest cuts will suffer the greatest reductions in council tax benefit funding: Manchester will lose £5 million; Liverpool, £6 million; Birmingham, £10 million; and the City of London, to which we gave special consideration just last week, £27,000.
Through the consultations that local authorities are undertaking, we have a glimpse of how, before the one-year transitional money, they are seeking to address these challenges. The LGA tells us that of some 200 councils surveyed, nearly 90% are looking to require a minimum from all working-age claimants. Half will seek a minimum payment of 20%. The transitional funding may impact favourably on this for one year, but this permits—even encourages, one might say—a minimum payment of 8.5%.
Of course, we acknowledge that the Bill presents some councils with additional revenue-raising possibilities from empty properties and second homes but these are not equally spread across authorities. There are not many second homes in Luton. Securing maximum revenue from these sources will not always be possible anyway. According to the LGA, if half the additional potential revenue could be garnered, it would still leave some 307 councils needing to reduce council tax discounts. One way or another we are faced with the prospect of hundreds of thousands of citizens who do not currently have to pay council tax having to do so. Whatever amelioration comes from some one-year funding, it will not dramatically change that. These, of course, will be the poorest citizens. They are likely also to be those most likely to suffer other cuts, especially those in receipt of housing benefit. The Government have seemingly still not woken up to the problem of collecting a relatively small amount of council tax from poor people who have not previously been required to pay. The amounts may be smaller for one year as a result of the extra funding but it potentially makes the problem worse. It seems that the lessons of the poll tax have been forgotten.
There are other admirable amendments before us today, which one way or another seek to lessen the harm that the Bill will inevitably inflict. In our view they do not go far enough. This amendment would require the Government to fund as now, without the 10% cut. We have seen time and again proposals that have a profound impact on the lives of our fellow citizens. We are instructed that they have to be accepted because the deficit must be addressed. The impact is invariably measured on a stand-alone basis without the accumulative consequences being laid out. The alternative is invariably measured in a narrow juxtaposition and not across the whole sweep of what government can really do. It is time to say no. The 10% cut is too far and it is time for us to stand up for poor people. I beg to move.
My Lords, I take pleasure in seconding the amendment. What do Westminster and West Oxfordshire District Council have in common? Not much you might think. One is a prosperous inner-city London borough and the other is a prosperous leafy, rural district council, although admittedly the Prime Minister lives in both of them. However, they are very different local authorities. If the localism agenda means anything at all, one might expect two very different schemes in two such very different councils—Westminster and West Oxfordshire.
Both councils are going for the same scheme—the identical scheme and existing national default scheme. Is that because their local needs are the same? Hardly. Is it because they have identical insights into their locality? Unlikely. Is it because they have a similar demographic make-up? Doubtful. Is it because they have similar economies? Of course not. So what then? What they have in common is that they are both prosperous. As they are prosperous they can afford the existing scheme. That is welcome news for their poorer residents, but elsewhere, as my noble friend has said, councils are leaving the existing national default scheme not because they want to but because they have to—not because of vacuous and deeply cynical mantras of localism but because of the reality of the cuts.
These authorities tend to be the poorer authorities, which do not have the pretty second homes to levy or the comfortable reserves to cover their funding gap. Poorer authorities, with poorer residents, will be cutting their council tax benefit, and those with second homes or deep comfortable reserves who can afford not to choose not to. Some of the poorer authorities may try to revise their schemes for one year, but if they do in the light of the transitional grant, and if it is legal to do so, it will mean that their residents will have three different schemes in three years: this year’s scheme, next year’s scheme at 8.5%, and the third year at 20%.
Local authorities did not want to cut their money for their poorer citizens. Councillors of whatever political complexion did not come into local government to make the poor poorer. Not many want to spend hours, unless they are anoraks, fiddling with various models of tapers, capital limits and contribution levels. Nor—and I am certain of this—do they want to undermine the work incentives of the Welfare Reform Act, as some of these local schemes undoubtedly do, as my noble friend Lady Donaghy will explore. That is why Mr Cameron’s West Oxfordshire District Council, for example, has denounced the Pickles plan as damaging to work incentives, and was absolutely right to do so.
Every time we asked the Minister in Committee which vulnerable people should be protected in the 240 or so schemes that lay ahead, or where the cuts should fall, or how we could protect work incentives, the reply was always the same: that it was for local authorities to make that decision in the light of their assessment of local needs, and that this was the essence of localism. That is why it is so interesting that the borough of which the noble Baroness was such a distinguished leader—Kensington and Chelsea—has ignored localism, and any wish to invent its own locally tailored scheme to meet locally accessed Kensington and Chelsea needs, because it can afford to do so. Obviously I am pleased for it.
Other councils—more than 40, I have so far calculated —that are keeping the national scheme tend, like Kensington and Chelsea, to have many second-home owners in their patch. They include the Lake District councils, some of which have the highest percentage of second homes in the country; the local authorities of Oxfordshire and Gloucestershire as well as Hammersmith and Fulham, Wandsworth and Westminster. All are staying with the national scheme, even though their local needs are completely different. Why? Because they can afford to.
However, at a time when local authorities face 30% cuts, which cannot be made good from a council tax that has been frozen yet again, and when reserves in many local authorities have been virtually wiped out in consequence, poor authorities, especially in the north, with low rateable values and high numbers of council tax benefit claimants, are asked to make choices that they now do not want to make, nor should have to make: to cut financial support to the self-same poor who will simultaneously experience cuts in their housing benefit.
Some councils that are not affluent are struggling to continue the default scheme for this one year. They include Luton, which was mentioned by my noble friend; Coventry; Norwich, my former authority: and Dudley. The aim is to avoid the uncertainties of collection, legal challenge and, as the New Policy Institute has noted, the re-emergence of a “can’t pay, won’t pay” culture, which in the name of localism will alienate local people, take thousands off the electoral register and undermine local government. Above all, the councils I named wish to protect their poorest citizens.
We are the seventh richest country in the world, and we are knowingly sending our homeless families into bed and breakfast, and our benefit claimants to food banks. Given that council treasurers doubt that they will collect even 40p in the pound, we risk a repeat of the poll tax, which sent 5,000 people to prison. This is Britain in 2012.
Councils will not be able to collect £2 or £1.50 from benefit claimants, and the following year, when that £2 becomes £5, will local government be able to re-establish the reliability of payment that has always been such an important part of the effectiveness of council tax? That is why I support the amendment. It does not say that councils “must” adopt the national default scheme if they do not wish to. If they believe that they must adjust it in the name of localism, they may do so; it remains a local choice, just as the LGA has argued. What the amendment does say is that councils that do want to maintain the existing scheme but cannot afford to do so—poor authorities in the Midlands and the north, for example—should be able, like their richer neighbours, to do so on behalf of their poorer residents. That is fair and decent, but it needs full funding.
Why does this matter? Because these council tax proposals are deeply damaging to our neighbours. They damage the young autistic man trying to live independently, of whom we heard so much earlier today; the 50 year-old widow, whose income has died with her husband; the carer who is sacrificing her health looking after her elderly parent; and the lone parent who has just started work and now fears that work will not pay. They are the claimants of council tax benefit and the people whose benefit will be cut.
Ever since Beveridge, income support in whatever form has been the responsibility of all of us as citizens and taxpayers. It is not been divvied up and parcelled out as handouts from local authorities, as though they were the new Poor Law unions. We have responded to need—demand-led, in other words—not reduced and capped. If you cap it, the more people who come to claim council tax benefit, the less there is for everyone else to claim. It matters because it is not fair or decent that a disabled person’s council tax benefit should depend not on their disability or their poverty but on the accident of where they live and how many other people in their borough are also claiming council tax benefit and may be ahead of them in the queue for a limited resource.
Why should a carer in Wokingham and a carer in Wigan, or a lone parent in Putney and another one in Preston with the same income and needs face totally different council tax rebates because one council has second homes and the other does not? It is nothing to do with the disabled person himself, nothing to do with the carer herself, nothing to do with the lone parent but everything to do with how many pensioners there are, how many other claimants there are, how deep the reserves are and how many second homes there are in each local authority. It has nothing to do with local need.
As the much missed Lord Newton of Braintree said in October 2011—and he knew a thing or two about benefits:
“Is it sane? … I can hardly believe my ears”.—[Official Report, 6/10/2011; col. GC377.]
It is not sane, it is not decent, it is not fair, it is not localism based on local need—it is a lottery based on local poverty. Authorities that can afford it know it and are keeping the national scheme. The amendment, as my noble friend Lord McKenzie argued, would allow all other local authorities who wish to but cannot afford to—the poorest of us—to make the same choices for their citizens as well.
I say to the House, and to Members opposite if I may, that this really is a red line, and I ask each of us which side of that red line we stand.
My Lords, I support my noble friend’s amendment. I remind colleagues that I am a serving leader of a council and it is therefore my job to introduce a council tax support scheme. We have sent out our consultation, which contains things I can hardly believe I am supporting. We have a gap of £4 million in the amount we can raise through the council tax adjustments. We are already facing £30 million of cuts in our budget, and if I was to put more cuts into the system it would impact only on the same people because it is the poor who rely on our services.
In introducing our scheme for council tax benefits, we tried to work on principles—it was sometimes difficult but we tried to do that—and clearly we wanted to use what we could of any technical changes. We wanted to protect vulnerable groups, but that is not possible in total, and we wanted to make sure that we did not undermine incentives to work. However, that is very difficult with this scheme. I have also set up a discretionary hardship fund because we know that, however we design the system, some people will slip through and I want to be able to do something about it.
Despite the protestations of the Government that they want to help people get back into work, the Bill is an attack on the working poor; it is an attack on people who take low-paid jobs—not because they want to take low-paid jobs but because often they are the only jobs available. If you have low skills or poor education attainment, if you live in areas where pay levels are low or work in industries where profitability is difficult, you are in a low-paid situation. I thought this House wanted to keep people in those jobs and support them.
With apologies to my noble friend Lord Beecham, I wonder sometimes whether the coalition, like Newcastle United, is being sponsored by Wonga.com. The impact of this and the other changes that are taking place is to drive the poor in our community towards payday lenders. It is a growth industry in our country and we ought to be ashamed that a legal lender can charge rates of 4,000% a year on an annualised basis when the bank rate is 0.5%. How can we justify that when it is the poorest who have to pay that amount of money? It is a tragic situation. This change to council tax benefit will force many hard-working, decent families who are trying to do the best for themselves by taking jobs and doing what they thought the Government wanted them to do into the hands of those payday lenders. There are, of course, other lenders in Wigan, Newcastle and Luton who are not legal and whose collection methods are somewhat different. Even so, people go to them.
In Wigan, the average increase in council tax benefit is £3 a week. To noble Lords that sum may represent a glass of champagne in a bar so it is not significant, but if you are among the poor in places like Wigan, it is. It can tip people who are able to survive financially over the edge, and poor families will be put in that position. I should remind noble Lords that the low paid are already suffering under the Government because of the impact of inflation. Since the coalition came to power, the rate of inflation has been 7.1% for the average person. However, food prices have risen by 8.5% and household costs including fuel by 11%, and now even more with what British Gas and the others are up to. When we look at household budgets, we can see that the poor spend disproportionately more on food and household items. The average percentage of income spent on food is 13.2%, but the poorest 10% spend 16% of their income on food, while the richest 10% spend under 10%. The average spend on household items is 19.1%, but for the poor it is 25%—and that on items which are going up by 11%. Again, that is a further squeeze on a low budget. The rich only spend under 10% on household items. It is clear that the working poor are already suffering, and we ought to be helping them more, not targeting them with this increase in council tax benefit.
From my perspective, as my noble friend said, we have already put our consultation out only to discover suddenly at this stage that the Government have found in their back pocket or behind the sofa £100 million that can be put into the system. That is cynical politics and it will not work, because I will make sure that the people who I represent know who is causing this problem and know whose fault it is. We are not going to let them get away with it.
My Lords, the reference to cynical politics has finally brought me to my feet. Remarkably, we are now on the second to last day of your Lordships’ consideration of this Bill, but we are in fact having a Second Reading debate. I want to give us a bit of a reality check because those listening who have not been part of the proceedings of the Bill through Second Reading, the Committee stage and so on will have much sympathy with all that has been said. I certainly do.
The 10% reduction, which most of us recognise in reality is actually going to be more than 10%, is not part of this Bill. It was one of the deficit reduction measures announced some time ago. It certainly sets the context for the Bill, but it is not a provision of the Bill. The noble Baroness, Lady Hollis, has said many times that she would prefer a national scheme and for council tax support to be part of universal credit. I said at Second Reading, “so would I”, because I believe that that is the sensible way forward. But Parliament has decided otherwise and it has passed the Welfare Reform Act. It may be that in years to come a future Government will change that, but it is not going to happen during the passage of this Bill. That is the reality check I am talking about. We have to deal with the situation as it is, not as we might wish it to be.
We all share the concerns that have been expressed by the speakers to this amendment. I would just say that, recognising where we are rather than where we wish to be, the next amendment we are going to debate provides a very much better solution to all problems that have been described by every speaker thus far. I look forward to the debate, and I particularly look forward to support for that amendment from all sides of the House.
My Lords, I associate myself with my noble friend’s remarks, although perhaps not his final point. Those who have heard me take part in these debates will know that I, too, regret very much that the benefit was not included in the universal credit. I think there is very wide agreement in the House on that but, as my noble friend has pointed out, that is not what Parliament has determined, and we must address the situation that we find ourselves in.
As my noble friend Lord Tope also said, there is an expectation for local authorities to deliver reductions in public spending. As I have often said in your Lordships’ House, the state is overspending by roughly £14 million an hour and it is legitimate to ask local authorities to consider playing a part in addressing that problem. We are doing so and, as I have said before in these debates, I would have preferred the Bill to not be too prescriptive in this area.
I agree with the first part of this amendment, that:
“Nothing … shall prevent billing authorities retaining the provisions of the … council tax benefit scheme”.
My problem with the amendment is that it asks your Lordships’ House to make a frontal assault on the principle of deficit reduction. The second part of the amendment effectively gives a put option to any local authority in this country, including the prosperous, leafy authorities that the noble Baroness, Lady Hollis, referred to, such as West Oxfordshire, Westminster and the Royal Borough of Kensington and Chelsea.
If the House passed this amendment, the Government would suddenly have to pick up the costs of Westminster, West Oxfordshire and the royal borough, which are prepared to sustain the existing scheme out of their own resources. This amendment says that your Lordships’ House should ask Her Majesty’s Treasury to pick up those costs, which those boroughs are prepared to meet. Similarly, any local authority in this country, rich or poor, would be able to ask for resources from the Treasury, and the whole effect of seeking to make a reduction in the welfare budget in this area could be negated. That is the fatal flaw in this amendment.
I am puzzled by the noble Lord’s remark. He says that if this amendment were carried, it would mean that prosperous authorities such as Gloucestershire, Oxfordshire and some of the inner London boroughs we have mentioned—Wandsworth, Westminster and so on—would be getting moneys from the national scheme that they do not need because they are ready to fund it themselves. Of course, given the council tax rebate scheme, they could still fund it themselves from the 90% grant, but is it not the case that under the transitional arrangements they will be entitled to apply for money they do not need, which they will no doubt keep and which will go to their reserves? In fact, the very thing that he is deploring about this amendment is going to be embodied in the transitional grant arrangements.
The noble Baroness presents another possible wrong to defend the particular wrong that I am addressing.
I am sorry that I was slow coming into the Chamber when the noble Lord, Lord McKenzie, started his speech; I heard it on the monitor and I agreed with many of the things he said about the timing of this announcement, which is also implicit in what the noble Baroness has said. But I return to the fundamental point that if your Lordships pass this amendment, the Royal Borough of Kensington and Chelsea can ask the Treasury to go on funding the scheme as it now is. The noble Baroness thought it was absurd that those leafy boroughs should be funded, and I rather agree.
The other thing one has to accept is that surely there is somewhere between no saving from council tax benefit, which is the potential position if this amendment were passed and every local authority put that upon the Treasury, and the extent of saving, the problems of which we have heard described; there must be some amount that can be saved under this heading, because I believe—I do not have the figures before me—that spending on council tax benefit doubled during the Administration of the party opposite. I do not accept that there cannot be reductions. Therefore, because of the technical flaw in the second part of the amendment and because I think that there is scope for making reductions, I cannot support the amendment if it is put to a Division.
My Lords, I thank everybody for their contributions and the noble Lord, Lord McKenzie, for the way in which he moved the amendment, which was rather through gritted teeth.
We listened carefully in Committee to what was said about the implementation of this council tax scheme. During the Recess—noble Lords will recall that we have been back in this House for only one week—we looked at whether there was any amelioration that we could offer to local authorities to help them through the first year of the new scheme. That arose from discussions in this House, so, rather than being traduced for that, perhaps people would recognise that we have taken some notice and are setting about trying to help. I grant that the transitional scheme is for one year, but, during that one year, we would expect local authorities to have a much better idea of how they might “smooth in” the scheme.
We were also told that many local authorities were looking to charge people who have 100% benefit at the moment anything up to 30%. Noble Lords have spoken about the difficulty involved in collecting sums of money, but that is just an absurd way of looking at this scheme. We have therefore limited the amount that can be charged to people who are on 100% benefit to 8.5% and effectively enabled local authorities to do that by helping them with a grant along the way.
Local authorities do not have to collect 8.5%; they do not have to charge it. They can accept that it will cost more to collect it than to say, “We will let that go for this year while we look further into our schemes for the future”. That is quite correct. As has already been said, some local authorities will not implement that aspect that all.
However, it is pretty rich of noble Lords opposite to suggest that this is somehow an absolutely dreadful imposition. We are giving money to local authorities to help them through a first year which we have recognised may not be very easy to handle. Rather than noble Lords opposite gasping and continuing to tell us that this is just awful, perhaps they might have given us a little bit of credit for listening and trying to help.
The deficit is serious. The increase in council tax benefit during the past 10 years has been enormous, being, as my noble friend Lord True said, well over 100%. That is just ridiculous. We cannot go on like that and we have to make some room for bringing that down. There are a number of ways of doing it, as noble Lords have pointed out.
I have given the House a Written Statement. I have given the broad outlines of how the scheme will operate. It is not very difficult. It is being made very easy for local authorities to fulfil the criteria and to claim the money. I have already said that we will give fuller details on the amount of money that local authorities are likely to be able to retrieve. I hope to do that this week or, if not, at the beginning of next week.
I do not accept that all the grumbles here are justified. I do accept that local authorities are having quite a difficult time. I also accept that the country is having a more-than-difficult time with its finances and the economy. That is why, as my noble friend Lord True said, everybody, sadly, is having to play a part. I just add that to what has been said. I am sure that this will come in again in other amendments that are on the way. This is not an amendment to the Bill but a transitional relief to the council tax scheme.
Those councils which have already consulted on the scheme or are consulting at the moment will need to decide, when they see about this grant, whether they wish to reconsult. It is very unlikely that that will be necessary because they will have a scheme that is slightly better than the one they were looking at, but it is up to them. If they want to do that, they need to take legal advice on whether the changes to their scheme justify them consulting again in any way, even on part of the scheme. That is up to them. We are giving them a helping hand. We hope that that will at least ameliorate for some of them the concerns expressed here today. As I said, I gave the Written Ministerial Statement at a time when I could really do nothing much about the change because there was not the ability to lay it. This has not been going on for months; we have not been considering it for months. We have considered it ever since we were in Committee in this House.
Amendment 98A would make it explicit that billing authorities can run a local scheme along the same lines as the existing council tax benefit scheme. It is not necessary for this amendment to do that or to put it in the Bill. If a local authority wants to have the default scheme, it may base its local scheme on that, retaining the criteria and allowance of the council tax benefit regime. Of course, it will do that against the background of the 10% reduction, so nobody will make up that 10% if they do that. The amendment would also require central government to continue funding council tax support schemes to the same levels as the existing council tax benefit scheme. As I said, that would be minus the 10% and would not be funded to the full amount.
The reforms we are making provide a vital contribution to our deficit reduction. To requote the figures, council tax benefit expenditure in England increased from £2 billion in 1997-98 to £4.3 billion in 2010-11. It might be interesting for noble Lords to hear and take note of the fact that in 2010-11, we spent more on welfare than on education, defence and health combined. Our reforms give councils stronger incentives to support local firms, promote local enterprise, cut fraud—there is plenty of that within the system—and get people back into work. I heard what the noble Lord, Lord Smith, said, that when people start working they can progress if they wish and are able to. On the noble Lord’s question, I slightly challenge what he said about inflation. My understanding is that inflation fell to 2.29%. I think the noble Lord said that it was 11%. Our reforms give councils stronger incentives to promote local enterprise and help people into work. We are moving on that basis.
From now on, local authorities will have real control over how they design their council tax support scheme for people of working age, enabling them to offer council tax reductions that match local circumstances and funding. This amendment potentially removes any saving and as such would constitute a spending commitment. I am not sure whether noble Lords opposite have cleared that with their Front Bench in the other place. If so, it might be helpful to know that. Local authorities already have choices and levers to design and manage their schemes, making their essential contribution to this deficit reduction.
As I think noble Lords will understand from that, I cannot accept the amendment, though I have listened to the concerns raised—as I did in the past. One reason that we have a transitional scheme today is that we as a Government have listened.
The noble Lord, Lord McKenzie, asked how we were going to manage the handling of the transitional scheme. The answer, as I understand it, is that given by my noble friend Lord Strathclyde. There are very precise ways to come back at Third Reading. I do not think that bringing this issue back at Third Reading would constitute one of them. Noble Lords must take that into consideration. I hope that the noble Lord will feel able to withdraw his amendment.
Before the noble Baroness sits down, perhaps I can clarify what I said. I was using cumulative figures of inflation to show the impact on different items. We heard from the noble Lord, Lord True, and the Minister that the problem was that council tax benefit doubled under the previous Government, and, in a financial sense, it did. However, underlying those figures is the fact that the number of claimants did not rise; it fell between 1997 and 2002 and then began to rise, reflecting the changes in the economy, as one would expect. If we look again at the figures for the difference in council tax—if we smooth out the increase in council tax—there was a decrease in payment on council tax benefit, not an increase, so the problem is not council tax benefit, it is council tax.
My Lords, I am grateful to all noble Lords who have spoken in the debate on the amendment. I am particularly grateful to my noble friend Lord Smith for his interjection on some of the data.
As for procedure at Third Reading, I was not suggesting that we would necessarily consider bringing back this amendment at Third Reading. I was referring to some of our other amendments—on issues such as tapers and vulnerable people, for example—which are affected by a greater understanding of the transitional funding that has just been announced. From the briefing session that we had on Monday we very much took it that there would be some flexibility because of the timing of the announcement. If the noble Baroness is saying that that is not the position then we will have to take account of that as we proceed later today.
It may help the noble Lord if I repeat what my noble friend Lord Strathclyde said. As the noble Lord knows, it is my noble friend and the Whips who guide business in this House, as well as the Companion. The Companion states:
“The principal purposes of amendments on third reading are: to clarify any remaining uncertainties; to improve the drafting; and to enable the government to fulfil undertakings given at earlier stages of the bill”.
Those are the three purposes for coming back with amendments.
Well, my Lords, it seems that clarifying remaining uncertainties could keep us going for a month of Sundays, given what is outstanding on the Bill and the tardiness with which some of its provisions have been made available.
The noble Baroness talked about the 8.5% maximum that would be required for people to access the scheme. She referred to it meeting the cost. What we do not know is the extent to which it will cover the costs for councils which move from the existing scheme on which they have consulted to the new arrangements. We do not yet even know how it is to be allocated and apportioned. We may know that later in the week; we may not.
The noble Baroness said that it is easy to fulfil the criteria of the new scheme. It may be easy to identify what those criteria are, but how you move from where you are on the scheme on which you have consulted to that position is a completely different matter. There will be a whole variety of arrangements on which people have consulted. I doubt whether the Government have done any analysis on how practical or easy it will be or how costly it will be for people to move from where they are to where the Government want them to be. In any event, even if that were accomplished, that does not deal with the issue of what will happen in year two. I do not see the connection between knowing that this is available in year one and having a better idea of how councils can smooth it in for subsequent years if the plug is to be pulled on the transitional funding.
The noble Lord, Lord True, went on about the deficit and of course the deficit has to be addressed. Our point is: why does this have to be a component of it? Does every line in the government accounts have to cough up some sort of proportion? Why this one? Surely it is right that the Government have to evaluate the consequences of each cut that they are trying to make—and not only each cut. What the Government have singularly failed to do is to look at the cumulative effect of cuts on people. My noble friend Lady Hollis made the point about housing benefit and council tax benefits. We know that those two things often go together and that some people will get dramatic reductions in housing benefit because of underoccupancy provisions: an average of £14 a week. My noble friend Lord Smith referred to the importance of £3 a week for people in some of the poorer areas for which he has responsibility. How are those judgments made? The reality is that they are not, which is why we are justified in bringing forward an amendment on this basis.
The noble Lord, Lord Tope, said that this really was not something for the Bill but if we want to constrain the Government and cause them not to create the upset that they are going to cause by this legislation, what other mechanism do we have? He referred to the amendment of the noble Lord, Lord Best, which we will come on to in due course. We believe that this amendment is a better way of dealing with the situation. The noble Lord, Lord Tope, may disagree but, at the end of the day, the root problem that we are trying to deal with here is the so-called localising of council tax benefit and the massive cut that goes with that process. So long as the colleagues of the noble Lord, Lord Tope, support that approach, they cannot challenge us on where we end up on these issues.
When we heard from my noble friend Lord Smith, your Lordships heard then the voice of somebody who has to deal with these issues on a day-to-day basis and in challenging circumstances. It is not only about the council tax costs that people are suffering and the increases that this will bring but about housing benefit, about what is happening on food prices and about inflation generally. As my noble friend put it, there is also the growth of payday loans and worse forms of lending. That is the authentic voice of someone who is dealing with the chaos that these measures are creating. As he put it, there are no more cuts that can be made in the system and the Government should recognise their responsibility for that. My noble friend Lady Hollis spoke with her usual passion and the great analytical approach that she has to things. Again, that is the authentic voice of someone who is dealing with housing on the ground and knows local government through and through.
We do not have a meeting of minds on this. We see this as a very important issue—
Before the noble Lord sits down, will he answer the central point that I put to him? I accept all his strictures about wishing to reduce spending on welfare. However, the effect of his amendment on every council in this country, including my own, is to have responsibility for this decision transferred from where it has been decided—in the other place and in the Cabinet room in Downing Street—to cabinet rooms and town halls up and down the country. If this were passed, I might well say to the Chancellor of the Exchequer, “Right, you pay for it, mate”. I do not think that your Lordships’ House should give the power to local authorities to take those decisions away from the Chancellor of the Exchequer. Is that not the effect of this amendment? Will the noble Lord answer that point?
Does the noble Lord think that the House should have the opportunity to say to some councils, “You have the right to slash people’s council tax benefit and put them into further poverty”? Does he think that that is the right equation? Of course there are consequences if you have a scheme that covers all councils, just as you would have the same consequences if you went back to a unified system through universal credit or otherwise. However, I would put the obverse to the noble Lord, who seems to be arguing that because some councils should not benefit, we have to hit the poorer councils to stop that. I do not think we can have a meeting of minds on this. To us this is a line in the sand, as my noble friend said, and I would like to test the opinion of the House.
Amendment 98B (in substitution for Amendment 107)
98B: Before Clause 9, insert the following new Clause—
“Power to make discounts discretionary
(1) Section 11 of the Local Government Finance Act 1992 (discounts) is amended as follows.
(2) In subsection (3) leave out from “or” to the end and insert “such other percentage as the billing authority may determine”.
(3) Omit subsection (4).”
My Lords, I declare my interest as president of the Local Government Association, which has formulated this amendment, and I pay tribute to the LGA and its leadership for its commitment to progressing this important issue. Noble Lords may have seen the letter from the group leaders of all the political parties at the LGA urging the Secretary of State to give local authorities the discretionary powers which this amendment would provide.
Amendment 98B is in my name and that of the noble Lords, Lord Jenkin of Roding and Lord Tope. I am extremely grateful to those two supporters and their colleagues on the Conservative and Lib Dem Benches who have given invaluable backing to the amendment. It is my strong impression that this is an example of your Lordships’ House drawing the attention of the Government and all Members in the other place to a matter that, earlier in the life of the Bill, did not have the recognition that it deserves.
I have been thrown a bit by the Minister’s announcement of a new transitional grant, to which I shall return. However, ignoring it for the moment, the situation can be set out quite simply. In localising the council tax benefit scheme, the Government will reduce by 10% the amount they currently pay to fund support for poorer households. This will contribute some £460 million towards deficit reduction in England. However, no changes are to apply to those in receipt of council tax benefit who are pensioners, which means that if the overall 10% cut has to be paid for by non-pensioners, they will face a reduction in their support not of 10% but of an average of nearly 20%, and up to 30% in areas where very many recipients of the benefit are currently pensioners. This payment of tax, which is equivalent on average to 20% of the local council tax, from around £3 per week to more than £5 per week, will have to come out of the very low wages or benefits calculated to be barely sufficient to cover people’s food, heating, clothing, et cetera.
The Bill gives local authorities discretion to raise council tax, which could compensate for this loss of their income by reducing the discounts currently available for empty properties and second homes. In some cases, these sources of additional income will raise much of the lost funding, particularly in more affluent areas where there may be many second homes and relatively few people receiving council tax benefit. For example, we heard earlier that the Royal Borough of Kensington and Chelsea, where the Minister was a distinguished leader, will be able to leave the council tax position alone and raise enough money from other sources to cover this loss of central government support.
In the vast majority of places, however, using discretion to vary discounts for empty and second homes will not raise enough to balance the books if councils wish to preserve the level of council tax support currently going to the poorest households. Many local authorities will therefore find themselves having to tax those on very low incomes. Quite apart from their concern for those households struggling with rising food and fuel bills, as the noble Lord, Lord Smith of Leigh, spelt out, those local authorities are deeply worried that this new requirement imposed on them raises enormous difficulties in extracting taxes from people who do not have the money to pay. It is true that local authorities have the powers to go to the courts and send in the bailiffs, but chasing the poorest households for small sums of money each week is a nasty business that is fraught with administrative and moral hazards.
I am delighted that pensioners are to be protected from this new benefit cut. I want to see the same support continuing for people with disabilities who are dependent on benefits, those working on the lowest wages, those on jobseeker’s allowance looking for work, and single parents with young children, all of whom are trying to get by through difficult times. A number of these households are already facing reductions in the support that they receive for their housing costs; and many hundreds of thousands will be charged the new bedroom tax—averaging £14 per week for those deemed to have one spare bedroom and £25 per week for those deemed to have two—from the same day, 1 April 2013, on which they could have to start to pay council tax for the first time.
The lesson we learnt clearly when this House expressed concerns over the similar issue of that bedroom tax was that there was no point in simply opposing a benefits cut since the other place would immediately claim financial privilege and throw out the offending amendment, even where your Lordships’ passed an amendment with a very large majority, as it did before Christmas when there were two iterations of amendments to diminish the impact of that other measure. The amendments were not even considered in the other place because of their financial implications. Amendment 98B, therefore, is not intended to have any cost implications for central government. It is cost-neutral.
The saving of £460 million in England will still be achieved. As I understand it, this actually represents a better contribution to deficit reduction than would now be the case next year following the Government’s new announcement of the transitional £100 million grant for 2013-14. However, this amendment would enable local authorities to raise the funds to bridge the gap in their funding without having to pursue those on the very lowest incomes. How can this saving be achieved? The amendment would give local authorities the discretionary power to vary the single person discount, currently fixed at a standard 25%, which goes to all single person households, including some who may be in this House. Indeed, this discount gives proportionately more to those living in the most valuable homes. The amendment provides local authorities with the flexibility to raise the money needed but to do so without taxing those who currently receive the council tax benefit.
The Bill already gives councils the discretion to reduce discounts for empty properties and second homes. This amendment would also give them the discretion to vary the single person discounts. If across the piece these SPDs were to be reduced from 25% to 20%, those single person households would still get four-fifths of the discount they currently receive, and the extra revenue for councils would almost exactly compensate for the loss of £460 million of central government grant and would enable local authorities to maintain support with the council tax at current levels for all households. In fact, because councils will be able to raise extra revenues from their other discretionary powers in respect of second homes and empty properties, the LGA’s calculations show that pensioner single households at all income levels could continue to receive their full single person discount. That includes some Members of this House, I mention again. A reduction in the SPD for non-pensioners from 25% to 20% would still raise enough—some £313 million—to balance the books.
How tough would this switch be in the burden from the poorest for those on rather higher incomes? Single person households on the very lowest council tax bands would pay on average around 85p per week more, while those in the most valuable property in the highest bands could face an extra charge of a little over £2 per week. I suggest that the very modest sacrifice required of these households to save the poorest would not be resented by many.
We have heard today how the position is to be improved for many councils next year with a special grant of £100 million that was announced yesterday. This special transitional fund will support councils that agree to limit the imposition of council tax on those currently getting this paid by benefit to 8.5% or less of the council tax rather than the 20% which looked to be the reality in so many local authority areas. This will certainly moderate the hardship caused in year one. It might take some of the heat out of the debate when the measure kicks in next April, but it is very definitely for one year only, and thereafter the position reverts to the one I have described.
Our amendment would give local authorities a flexibility that would last for some years to come. Moreover, although the £100 million may mean that it is easier to raise a tax from those who have not paid local taxes before because it need be only perhaps £1.50 per week to £2.30 per week rather than well over twice this amount, nevertheless the cost of securing these low levels of council tax could be disproportionate to the small sums raised. Rather oddly, the new grant could be banked by councils that have already very properly decided not to cut council tax benefits because they do not need to raise more revenue from this source, in contrast to authorities unable to raise funds that will have a serious shortfall if they charge only the 8.5% council tax, which will be a condition of this new grant as I understand it.
I am grateful to the Minister and her colleagues for finding the extra money, but the Local Government Association and the councils themselves want a long-term sustainable arrangement, which is what this amendment would achieve. Giving local authorities discretion over the single person discount is an opportunity to respond to the differing local circumstances that each faces. Some areas have a high proportion of older people living in low-value properties. Some have a high proportion of people in expensive houses. Some areas are particularly hit by the recession and contain a greater number of younger households struggling on very low incomes. Some can raise more money from second homes, while others have virtually no opportunities in that respect. The localist approach of giving councils the discretion to vary the single person discount would enable them to avoid taxation of the poorest through different formulae in different places.
I know that some people believe that constraints should be put on this new discretionary power for councils. I understand that some would wish to preserve current discounts for older people at all income levels. Others would wish to confine the reduction of the discount to those living in the higher priced properties—those in the upper bands for council tax—although this would require much more substantial reductions in the discount for these single people in order to raise the sum equivalent to that which can be achieved by spreading the burden over a larger population. Some would find the amendment more acceptable if the extent of the reduction in the discount was limited—for example, if the discount never fell below 20%. That would still represent a great step forward. Any increase in flexibility to enable local authorities to balance the books without hurting the most vulnerable will be welcome, even though my instinct would be to trust councils to use their discretion creatively and sensibly, and keep this more open-ended.
At a presentation to Cross-Bench Peers last week, the chairman of the Special Interest Group of Metropolitan Authorities, Councillor Stephen Houghton, who is the leader of Barnsley Council, told us that the amendment was a no-brainer. He said that his local authority and the other metropolitan authorities desperately needed the flexibility that it would bring to balance their budgets next year and avoid further cuts in services that hit the most disadvantaged hardest. The very last thing that these councils want to do is to pursue the most impoverished households in their area to collect a few pounds each week from people who may be in debt and who are already finding it difficult to make ends meet. There is of course no compulsion for more affluent local authorities to use the flexibility that the amendment would provide. It would be purely a matter for their discretion as to whether they took advantage of this opportunity, or whether through other measures they filled the gap left behind by this latest cut.
I hope that I am right in sensing support from all parts of your Lordships’ House for a measure that does not seek to prevent central government making the savings it believes are necessary, and does not raise additional taxes but redistributes the burden for the same taxes from the very poorest in society to three times as many households, all of which are a bit better off—the single person households from which a smaller contribution would be required. Should your Lordships support the amendment and the proposition then receives consideration in the other place, there seems to be a reasonable prospect of it finding acceptance there too. I hope I can ask noble Lords to join me and the noble Lords, Lord Jenkin and Lord Tope, to say to the Government, “Please look again at this opportunity to let councils raise the funds needed to satisfy the Treasury requirements of them, but without having to pursue those who would suffer serious hardship if this opportunity is rejected”. I beg to move.
My Lords, the noble Lord, Lord Best, has made an extremely good case and has made it very clearly. It is a case which, when he first put it to me, attracted me. Although there are disadvantages—and we shall no doubt hear some of them during this debate—I took some heart from what the noble Lord, Lord McKenzie, said in the first debate this afternoon: this could be one way to address the problem to which the noble Lord, Lord Best, referred and was identified in that debate.
As he said, we need to address the problem of councils seeking to extract small sums from large numbers of people who have never paid council tax before. That seems to be at the heart of what we have to address. I say this with some awareness of the past. I was the Secretary of State who, with my colleagues, the noble Lords, Lord Baker and Lord Waldegrave, devised what became known in the press and by everyone as the poll tax. We called it the community charge. For various reasons, one of which was that we never effectively had the support of the Treasury, it had a lot of very rough edges. However, one thing that it did was to ask councils to collect very small sums from large numbers of people who had never before paid a local tax—they had always had the benefit of the relief. Of course, then it was the rates but the principle is the same.
We all know how that ended—with riots across the major cities and particularly here in London. I am in no doubt whatever that one of the major causes of the distress that provoked the riots was councils trying to collect what were inevitably small sums of money from large numbers of very poor families who had never before paid rates. I think that my noble friends in government are running the same risk with the current situation.
Of course, there are other ways that one could address this problem. One was proposed by the Front Bench opposite in the previous debate but the House clearly disapproved of it. However, of any proposal that I have heard, this solution put forward by the noble Lord, Lord Best, seems to come the nearest to avoiding having to go to large numbers of people who have never paid council tax before and trying to extract money from them. I have heard it suggested that if councils find that they have to collect one or two pounds a week from families, they will not bother. To my mind, that is a counsel of despair. I see that an article in today’s Guardian suggests that a very large number of councils will be asking themselves whether it is worth the cost of collection. We cannot put local authorities in that position.
The amendment of the noble Lord, Lord Best, to which the noble Lord, Lord Tope, and I have put our names, proposes giving councils an extra discretion which they can use in appropriate circumstances, subject to local conditions, to help to close the gap which would otherwise have to be closed by removing council tax relief from people who would find it very difficult to pay, by putting up council tax generally or by cutting expenditure. Of course, one knows that if local authorities cut expenditure, that often affects the poorest people, whereas the proposal here is for a discount. It is a discount that has existed for many years and one understands the logic of it—that single people impose fewer burdens on local authorities and therefore it is not unreasonable that they should pay a lower council tax. It is not going to be all taken away but, even if a reduction from 25% to 20% were adopted across the board, that would go a very long way to closing the gap that we are talking about.
The other argument that I have heard is that the discount has been part of the system from the beginning and it is not the same as applies to second homes or empty properties and so on. However, it is still a discount. It is exactly the same as where local authorities give relief under certain circumstances but in this case it is for single households.
I totally agree with those who say that we have to look at the situation we are in and not the one that we might want to be in, but this is the problem that we face. If the measure as set out in the Bill goes ahead, then I am afraid we shall be heading—I am not saying that we shall have riots in Grosvenor Square—to many of the problems that provoked those earlier riots. The benefit of experience is that you learn from it. I think that those of us who lived through those years will not forget the problem. I am not proud of having launched the community charge—the poll tax. It is not one of the more lambent chapters of the book that I will never write but nevertheless it is there and there are lessons to be learnt. To support this amendment would be to learn those lessons and avoid making the same mistake twice.
My Lords, my name is also added to this amendment. The noble Lord, Lord Best, has introduced the amendment characteristically fully, clearly and precisely. Equally characteristically, the noble Lord, Lord Jenkin, has once again confessed to his errors of the past, but more particularly, pleaded with us eloquently to learn from experience. That is so important.
Our discussions on this part of the Bill through all its previous stages have been characterised by the number of speeches that have begun by people saying, “I don’t know anything about local government finance, but”. We will probably hear quite a number of figures quoted and quite a number of complex issues will be raised. It is a complex issue. None of us who has had a lifetime in local government will pretend that local government finance is anything but complex. But what we face today is a very simple and basic question. There is a shortfall. Many councils are facing a shortfall in having to introduce the council tax reduction scheme. Is it fair that the shortfall is met by those who can least afford it in our community, such as those on benefit? As has been explained, they will be affected even more because, quite rightly, pensioners and the most vulnerable, however defined, are excluded from this. They will face a huge disadvantage in terms of their income. Is it fairer that they should meet the shortfall or should it fall on the wider community? I think that everyone here would agree that it is fair and right that that shortfall should be met by the wider community. It is a complex issue but it is a simple question that is at the heart of the debate today.
I was a little surprised at the rather churlish response from the Opposition to the, albeit very late, announcement from the Minister on the transitional funding. I can well understand that there are many questions and difficulties about that, but I would much rather have Ministers coming forward at a late stage saying, “We have been listening and we want to try and help so this is a change”. From that point of view I welcome this move, but is it a solution? Well, £100 million is always welcome to local government. It will help but it will help for one year only. It is not a solution to the problem, as the noble Lord, Lord Best, has rightly said. It will help perhaps for one year. There are a lot of complexities. We will get further details about it later this week or, as I think I heard the Minister say, maybe next week. I hope that it will be here by Monday morning as we certainly need it in time for Third Reading. I hope that it will be this week, otherwise what will be doing next weekend?
The transitional relief will not solve the problem. The amendment, as explained very clearly by the noble Lord, Lord Best, will give local authorities the discretion—it is not a requirement—in the light of their local circumstances, priorities and demographic make-up. In all of those things it will give them the discretion to vary the single-person discount. That will be different across the country. That is the nature of localism. I said earlier that I might have preferred still to have a national scheme with universal credit, but that is not what we will have. We have a localisation of council tax. What could be more in keeping with localism than giving local authorities the discretion and the power to produce a scheme that best suits their local circumstances? That is what this would do. As the noble Lord, Lord Best, said, some may wish to put limits on that discretion. The Liberal Democrats would certainly support a limit on the 20%—no lower than 20% on the single-person discount—so there would be a variation of between 20% and 25%. That alone would solve the problem that most local authorities are facing. Some may feel that pensioners should be exempted. All that is possible but it is only possible if there is some movement and some negotiation on the issue.
One of the surprises is that the Government have thus far been unwilling to negotiate at all on the single-person discount. The Secretary of State has firmly set his mind against any change. That contrasts starkly with the Localism Bill that we spent so many happy hours on in your Lordships’ House last year when we managed to achieve 440 amendments by agreement, albeit on rather a bigger Bill than we are discussing today. Not one of those amendments needed to be carried on a vote. Therefore, I am very disappointed that this year we cannot even negotiate on finding a solution to this issue.
If this amendment is carried today, as I very much hope it will be, obviously it will go to the other place and those negotiations will have to take place before it comes back to this House. I regret that we will have to come right at the end of this to force negotiations in this way, but if that is how it has to be done then so be it. The noble Lord, Lord Best, made this point and I want to stress that this amendment and the relaxation on single-person discount is strongly supported by every political group in the Local Government Association. I stress that that includes the independent group—I am never quite sure whether it is a political group or not, but the party leaders of all four groups have signed a letter to the Secretary of State urging him to accept it. It has all-party support. Nowhere is that support stronger than in the Labour group and on the Labour councils which are facing the real pain of this. It is inexplicable to me, after a lifetime in local government, that the Labour Benches have been unwilling to sign up to this amendment or even to discuss the wording to make it more acceptable to them. That is genuinely quite inexplicable. I hope even at this late hour, having made their stand on the previous amendment, and the House having decided on it, they will reflect on that and recognise that if we can pass this amendment today we can negotiate on it when it eventually comes back to our House.
To summarise, the amendment is fair. It is a far more equitable solution to the problem that local authorities are facing. That is why every local authority of every political complexion that I know of strongly supports it. It is localist, and this is supposed to be about the localisation of council tax benefit. It trusts local authorities and gives them some discretion—perhaps limited—on how to devise the scheme to face what we are legislating for. Above all, it is practical. It can be implemented quite easily even at this late hour. Local authorities have to publish their draft scheme by the end of January although it does not come in until April. They can do that now. Councils choose to vary the single-person’s discount which will be collecting very small sums of money. The figure being quoted by the Local Government Association is 30p a week from people who are already paying council tax and who are already on record, rather than larger sums of money from people who can much less afford it and who in many cases are not paying council tax at all because their income does not justify it.
In our debate on the previous amendment, the noble Baroness, Lady Hollis, referred to a red-line moment. That was perhaps a red-line moment in an unreal world; this is the real red line. It is perhaps an appropriate colour. It is the real red line in the real world and I urge noble Lords on all sides of the House—perhaps particularly those on the Labour side of the House—to support the amendment, as I do.
My Lords, I support the amendment and declare an interest as a vice-president of the Local Government Association, as many of us are. I support it for two very simple reasons. First, in the light of the previous vote, this is perhaps the last opportunity to offer some help to protect the most vulnerable in our communities, who stand to suffer most from the proposed legislation if it is passed as drafted. Like the noble Lord, Lord Tope, I implore all noble Lords who I know have a passion to protect the interests of the most vulnerable in our society to support the amendment. I suggest that this is not the time for political tactics. Nor could a vote for the amendment be taken as supporting in any way the policy in the Bill. It should and would be taken as a practical way of helping those most in need when they need it most.
The second reason is that I support the cause of localism and devolution, which is after all a key priority of the coalition Government. For me, devolution always involves the devolution of power. It is not just about the devolution of responsibility or, on occasion, of the right to be blamed. The devolution of power is what the amendment moved by the noble Lord, Lord Best, offers.
Devolution is also about devolving choice, and giving local authorities the chance to make a choice about where money is spent and what their priorities are. Once again, that is what the amendment is about. It gives local authorities the chance to make a judgment, taking into account their local knowledge, about what their priorities are and where their money should be spent. For those two simple reasons I implore the House to support the amendment.
My Lords, I was pleased to hear the noble Lord, Lord McKenzie, say in debate on the previous amendment that we must stand up for poor people. That is what I, in supporting the amendment of the noble Lord, Lord Best, ask noble Lords to do today. I hope that noble Lords from all sides of the House will do that.
Like other noble Lords, I welcome the £100 million. It is good, but it is transitional. It is good for this year, but it is not the solution for the future.
Points were made about the collection of small sums from people who could least afford it. Comparisons were made with the suggestion that a single-person discount should be varied if the local authority concerned wished to do so. Perhaps noble Lords should look at the simple arithmetic. Let us say that someone who is paying council tax lives in an authority where the council tax is £1,000 per annum. I will keep the figures simple. With a 25% discount, the single person will have a bill for only £750. If the local authority changed the 25% to 20%, instead of having a bill for £750, the council tax payer would have a bill for £800.
If their house was more valuable and highly rated, for example at £2,000, the council tax payer who got a 25% discount would pay £1,500. Under the 20% solution of the noble Lord, Lord Best, they would pay £1,600. One does not have to break one’s brain to see that they would accept this. They would probably not even look at the calculation. They would see that on a bill of £1,000 they were paying £750 and now have a bill for £800. Perhaps they would realise that they had a bill for an extra £50. However, they are used to paying council tax, which does not normally stay the same every year. On £2,000 the bill would be £1,600 rather than £1,500.
This is money that local authorities such as my own, Barnet, would find pretty easy to collect. They collect it from those who are used to paying council tax. They may not like council tax—who likes it?—but they know that they have to pay it. Let us compare that with people who have not paid council tax. My noble friend Lord Jenkin said the situation was rather like that of the old community charge and poll tax. These people will suddenly get a bill because they will not get the whole of their discount. The bill could be £1 or £5 per week. How difficult will it be for any local authority to collect the small sums—and how will that be, in the words of the noble Lord, Lord McKenzie, standing up for poor people if those poor people have to pay that sum of money in what is already a hard society at the moment?
We have yet to hear from noble Lords on the Labour Benches. The noble Lord, Lord Best, suggested that they were against this change. My noble friend Lord Tope said that it would be inexplicable if they were. I try to see why they might have that attitude—if indeed they do. I hope that the noble Lord, Lord McKenzie, has changed his mind. If they do have that attitude, I ask why. The only solution I came up with—perhaps it is cynical—is that they want it to fail, and poor people to suffer. I cannot believe there should be a political motive to make people suffer to make a political point when the aim of the amendment moved by the noble Lord, Lord Best, is to protect poor people. I support the amendment.
My Lords, I first declare my interest as a vice-president of the Local Government Association. This is a helpful debate. I agree entirely with the noble Lord, Lord Bichard, that this is not a time for political tactics. That is because it is a time to help those most in need.
Last week the Deputy Prime Minister stated that as we have to tighten our belts and,
“as we have to make more savings as a country … you start at the top and work your way down, not the other way round”.
I agree with him that those who are poor should be protected. The reason I give my full support to the noble Lord, Lord Best, is that his amendment does that: it protects the poor far better than the Bill does.
We are about to enter the third year of a council tax freeze for most councils, amounting to a 9% reduction in real terms over that period. The Government have paid more than £2 billion to keep council tax bills down. Rightly, this has been widely welcomed by council tax payers—but it is causing higher cuts now because the sums granted to local councils this year and next are for one year only. The baseline is not built up. Crucially, this has meant that those with high incomes, living in a high-band property, have benefited in cash terms much more than others.
Today, around 750,000 people work but get council tax benefit. They get it because their income is low. However, in future a very large number of them could have to pay between £3 and £5 a week because of benefit loss, while higher earners will have no increase at all. As proposed, this will be a regressive step on the working-age poor and it has to be wrong. The amendment of the noble Lord, Lord Best, provides a solution.
We have heard that the £100 million transitional grant is welcome, but it is also the case that the 8.5% cap is underfunded for some councils, which will have to make other cuts to deliver it—and it is only one-year money. We have heard about empty and second homes and that the Government have argued that a 100% levy on empty and second homes could meet the 10% cut they have imposed—except that, with rising demand, it is not a 10% cut but nearer 12.5%. The truth is that whereas some councils can make up the difference on empty and second homes, many councils simply do not have enough empty and second homes to make up the loss, even if they do charge 100%.
The evidence collected by the Local Government Association demonstrates this. More than 100 councils are now in this position and the vast majority of schemes propose to introduce a minimum payment for working-age claimants. Half propose to set the minimum payment at 20% or more, about another quarter propose to set it between 10% and 20%, and the £100 million announced yesterday will make little practical difference because of rising demand.
A deliverable, fair solution is needed which can be introduced with minimum loss to any individual. That solution is to give councils the option to reduce the single-person discount from 25% to 20% while maintaining a pensioner’s current entitlement. It costs the Government nothing. It costs single people very little: just £1 per week for those in bands A and B and just over £2 per week for those in the top two bands. Given the council tax freeze over the past three years, for most of these people these sums seem modest.
The noble Lord, Lord Bichard, raised an issue of principle about localism. Despite ostensibly being localist—having passed the Localism Act and decided that council tax benefit would not be part of universal credit but would be devolved to councils—surely it should follow that policy on exemptions to discounts should be localised too. Too often the Government seem to want to prescribe and proscribe when localism means giving away power and responsibility. We are ending up with part localism, whereby the Government choose some bits that they want to regulate but not others and leave crucial issues unresolved, such as a definition of “vulnerability”.
We have heard that local government is united: all parties on the Local Government Association have signed up to this amendment. The chair of the Local Government Association, Sir Merrick Cockell, said in June:
“The poorest regions and the most vulnerable people will be hardest hit by this cut unless the Government offers councils more flexibility over all forms of council tax discount. It is the only way that councils can ensure that the greatly reduced funding for council tax benefit is targeted at the local people who need it most”.
Would single parents be better off or worse off under the amendment of the noble Lord, Lord Best? They would be better off. Seventy per cent of lone parents are in the bottom two income deciles. They could lose a little from the reduction in the discount to 20% but they would lose far more if they have to pay 20% of the overall charge, albeit 8.5% in year one.
There will be a clear impact on child poverty. In a letter to the noble Lord, Lord McKenzie, in July, the Minister said:
“Local authorities should design localised council tax schemes in a way that best suits local circumstances and consideration should be given to child poverty in the local area”.
I agree entirely with the Minister that council tax schemes should be designed in a way that best suits local circumstances, but it begs the question of how the impact on child poverty should be considered. The noble Lord, Lord Best, has produced the answer. His amendment would require a modest reduction in the single person’s discount for non-pensioners and would then prevent a further, larger burden being placed on the poor.
My final point relates to income tax gain and council tax loss. The Government have done excellent work in removing low-income earners from income tax by raising the threshold before tax needs to be paid, and another tranche of this will occur in April next year. I am still puzzled as to why they are proposing that some of the very same low earners should have to pay more council tax as a consequence of the Bill. From the perspective of the recipient, it amounts to giving with one hand and taking away with the other.
I hope the amendment will pass. It is fair, deliverable and prevents the introduction of a regressive tax. It reflects the experience from the poll tax days. As I have said, all parties on the LGA are signed up to this amendment and I hope that all in your Lordships’ House will be signed up to it too.
My Lords, I declare an interest: I am not a vice-president of the Local Government Association, and after the remarks that I am about to make, I am unlikely to be invited to become one because I intend to challenge the unanimity that we have had so far on the amendment.
I pay tribute to the Local Government Association for the work that it has done on the Bill. On this issue, however, I think that it is wrong. I also disagree with a considerable number of my fellow council leaders, including Conservative council leaders, who see this proposal as a kind of 5th Cavalry which is coming over the hill to deal with a problem that, as I have repeatedly said in the House from Second Reading onwards, should not have arisen in the first place. I have lately been described by people inside the Government—or my authority has been described—as a “serial offender”, so I am sure that my noble friend on the Front Bench will be surprised to hear me speaking in this way. I am part of the serial offences, but I also think that, in policy terms, the construction of this Bill is unwise
My old grandmother always told me that two wrongs, as noble Lords know, do not make a right. What is proposed here is effectively a new tax—a broadening of the tax base and an increase in council tax. The amendment proposes that to address a problem which should be addressed, we should challenge the central structure of the council tax as it was first conceived. I can go down memory lane as well, because I was deputy head of the policy unit in No. 10 when John Major formed his Government. At that time, one of the things that we had to do was wrestle with the legacy of the community charge, the poll tax. We had another legacy in our minds at that time—the rates. I have not heard the word “rates” mentioned in this debate but the existence of the rates was thought by many to be a profound injustice. That is how the Government of Margaret Thatcher got into conceiving the solution of the community charge.
One of the central principles agreed across the political spectrum when council tax was created was that the perceived injustice in the rates—that everyone paid the same; that single persons had to pay the same as everyone else—should be addressed. Masquerading under the guise of flexibility, this proposal detracts from that central principle. There is nothing in the amendment about 20% or saying that some can do it, or whatever. As Amendment 98B is written, it is a licence to tax. It is a licence for any local authority. My noble friend Lord Tope said that it is an opening shot in a negotiation. If my noble friends on the Lib Dem Back Benches want to propose a further property tax—in effect, an increase in council tax for every person and household in the country—then, given the time interval in the transitional arrangements, we can have that debate inside the coalition and inside the country. However, I do not know of any public debate about the principle of removing the single-person discount.
It was right that the anomaly in the rates should have been addressed, and addressed well, in the council tax, and I would defend the principle—and it should be defended centrally—that was established in 1992. If we pass the amendment, it will mean a broadening of the tax base. We have heard that this tax is easy to collect. My goodness, yes, of course it is—and I am afraid that some local authorities will think they are quids in. The figures from my finance director show that if we were allowed to get rid of the discount in my local authority, we could cash in £8.5 million. I would not do it but, given the powers in this amendment, will every local authority say, “No, we will restrain ourselves. We will take only the little bit needed to offset the other elements in the Bill that the Government have brought forward”? No, single-person households across the country could suddenly find themselves facing an increase in council tax which no party ever put to them in a manifesto, and no party ever put to them as a point of principle. Perhaps it is because I was involved in the original design of council tax that I do not think we can resile from this principle so lightly.
I do not wish to trespass too much on the time of noble Lords but I am the first person to put the opposing case in reply to five other noble Lords. There has been talk about helping the poor but, as I understand it, the single-person discount goes primarily to low-band households, those in bands A to D. From memory, I think that the percentage might be as high as 90%. I have no doubt that the Minister has the figures. It is not a question of the Rolls-Royce classes suddenly having to stump up an extra bob; council tax increases will be experienced by many. If the discount was abolished in band D in my own authority, it would cost those who are affected £6.40 a week. We are a high-tax authority because we are poorly funded centrally. Even at 20%, however, it would be £1 a week. That is not a negligible sum. Even in my leafy authority, of the 23,000-plus people who would lose the discount as the amendment threatens, 14,000 live in households in bands A to D—and we are rather heavy on higher band households. I would counsel against the easy view that adopting this amendment would help the poor. We might find instead that it hits them.
I may be wrong or I may be right, but taking away a central core of the structure of council tax is a major switch in tax policy. In effect, it would represent a return to the old rates system without public debate. For my part, I could not support that principle without much further and deeper debate than the remaining stages of the Bill will allow.
My Lords, I rise to speak in support of this amendment. I do not have any function in the Local Government Association, but I am the president of the National Association of Local Councils, which is the parent body of parish and town councils. However, that is not a particular interest here because they are not billing authorities.
I believe that flexibility is desirable within certain rules. A large number of issues come into play here: wholesale reductions in local authority funding, a reorganisation of the benefits regime, moving the process away from central government to local government and, perhaps I may say, a considerable increase in the complexity that attends us in relation to the measures in this Bill. There is an increased risk of turmoil, uncertainty and unpredictability of revenues and indeed of benefits, and how the reliefs are going to apply.
Like the noble Lord, Lord Jenkin, my memory goes back to the unified system of general rates—and, yes, I can fulfil the desire of the noble Lord, Lord True, by mentioning the rates. He very appropriately drew attention to the fact that they had not yet been mentioned. As I say, there was a unified system under the General Rate Act 1967, but of course that has now been split asunder. However, the tax base that represents council tax on the one hand and business rates on the other has never been subject to the care, maintenance, management and upgrading that is necessary. In short, it is an outdated tax base, and we are using it as the basis for implementing this ostensibly desirable change as the financial expression of localism and a reduction in centralist government. I support that move in terms of localism, and the implicit re-engagement of local people and businesses with local tax raising, so I take it as read. However, I question the use of some seriously worn out components as part of the process.
I am grateful to the noble Baroness’s department for allowing me to take some fellow professionals to meet with officials, but I am bound to say that I had the impression that the issues I have been raising are not ones for this particular Bill. I do not want to rehearse that again because I get the message and I have taken it on board. None the less, that has implications for what we are trying to do in the context of this Bill. It seems that the coalition wants to have its cake and eat it. It wants to hand things over to the billing authorities but not to relinquish the levers of control. The noble Lord, Lord Shipley, mentioned this point and I certainly relate to it. It does not seem to be true localism. It perpetuates what I see as an essential incoherence in top-down government in this particular area of endeavour.
I understand the messages of the past, some of which were mentioned by the noble Lord, Lord True. It predated my existence on the planet, but in the 1930s a well-known south coast local authority paraded itself as having the lowest rates in the country while conspiring to achieve the highest level of property values. That was part of the reason why, for the general rates, which then covered both residential and non-residential property, the assessment of property values was taken out of the hands of local government.
I can also well remember the arguments about the community charge, the poll tax, on which I made my maiden speech in this House. I recall the many issues around trying to attach a tax to a highly mobile group of individuals and the problems that that would incur. I recall the discussions on council tax when it came in, particularly in connection with banding and the defined relationship between the top and the bottom band. There was the case of a single person rattling around in the former family home or a single person living on their own in a smaller or, indeed, a larger property, but either with greater means or, more particularly, using the services of local government to a much greater extent. I understand the issues, and we have not plumbed the depths of how to approach local taxation, although it is part of where these arguments seem to be coming from. Is it for services supplied by local government or is it a tax according to the value of a property? We still have not worked out what we are going to do. We are trying to set up a unified system, whether it be for residential properties in terms of council tax or the business rate, which is the non-domestic rating system, but we are trying to look in two directions at once. We have not rationalised how to deal with the contradictions.
Here I depart a little bit from the views of the noble Lord, Lord True. I well remember the rates being paraded as the unjust and unfair system. In a sense it was but it was highly efficient and nothing else that we have produced since would have survived to this day were it not for the information technology that now enables us to manage a highly complex system. I do not think that it has become any fairer, for all that complexity.
Only central government has the power to resolve the contradiction between a tax on property values and a tax for services provided, and that resolution still eludes us. The reality is that neither council tax nor business rates achieves either of those objectives particularly effectively.
So what do we do? I have tried, in the context of this Bill, to suggest that something needs to be done about the management of the tax base. I accept that I am not going to get a comprehensive review of either business rates or council tax this side of this Bill coming into force and being implemented. I am not expecting any concession on that at all, but it seems to me that the only thing that this House can deliver is to give some sort of discretion and flexibility in how these things are organised. If we are to rejuvenate business, if we are to re-engage the electorate, we have to have some sort of local flavour to that. Otherwise, it is simply central control of the type that we have had for many years.
This piece of legislation is going to bring into sharp focus bills as against benefits. I do not put that forward as a mantra of any sort; I just feel that that is what is going to happen. If we are going to see this justified locally, we have to remove some of the stranglehold of the past and allow issues such as poverty, deprivation and need not to be laid down from on high but assessed locally. I see no option but to do that, and it is for that reason that I support this amendment.
My Lords, I was not going to speak to this amendment but I have been provoked into doing so by the debate. I will be very brief because I know that noble Lords are anxious to move on.
I want to lay down a couple of markers, having been prompted by the reference to lone parents. As many noble Lords will know, I spent some time as the chief executive of the National Council for One Parent Families, and I have very strong memories of more than one lone parent coming to me and saying, “The toughest thing is that my husband walked out and overnight our income dropped but my bills did not go down by a single per cent. The rent stayed the same, the electricity bills stayed the same and we didn’t need a smaller house, but one of the very few things that at least made some allowance for the fact that there was only one adult in the house was the single person discount for council tax”.
I understand that the distribution of single parents tends towards the bottom, but the reality is that if the council tax liability for a single parent rises, the minute she moves into work, especially with what is happening to tapers around the country, she will find it very hard to be better off in work. At a time when the Government are forcing more and more lone parents into work, the reality is that the very, very poorest may not benefit from this, but these people are still very poor and this does not seem to be the way forward.
Finally, we had a debate some time ago about child benefit and whether or not people in the higher income group should have child benefit taken away from them. That was advocated as being justice, but it is a very narrow view of justice, which sees justice as being only between the rich as a group and the poor as a group. Of course, child benefit is actually a horizontal redistribution, a transfer from the population as a whole to those who have children because society recognises that their costs are higher. Any simplistic view of the tax system that takes no account of anything other than income seems to be heading for difficulty. If we are going to revisit the whole basis of council tax, which of course was meant to take account of individuals as well as property, we need to do so in a much more systematic way than this debate will allow us to do.
My Lords, I think I should make a contribution on this as well. I declare my interest as a vice-president of the LGA and, in view of the remarks made by the noble Lord, Lord Best, about the discussion he had with the chairman, I should say that I am also the vice-chairman of SIGOMA.
As I said in the debate on the previous amendment, I am having to make some very practical decisions on this matter, and I still think that it ill behoves Members opposite to say that Members on this side are not interested in poverty issues, when they voted Not Content on the previous amendment. Putting that to one side, I found the contributions really interesting. It has been confession time. One noble Lord confessed to being the author of the poll tax and another to being the author of the council tax. Had we time, I am sure that we could debate those issues to a great extent.
However, I agreed with the noble Lord, Lord Jenkin, when he said that one issue about what is being proposed here is that local authorities are going to have the agonies of collection that we had under the poll tax. In fact, before coming down this morning, I spoke to the North West Legal Consortium, which is a group of local authority lawyers. I said I was coming down to your Lordships’ House to participate in this Bill and I assured them that while one outcome may well be that it creates more poverty, it will also create more work for lawyers.
We are getting round to the fact, as I said earlier, that this is actually the poll tax mark 2. We are now in a situation where we are going to take money from the poorest, and to collect it will be very expensive. Local authorities will have that dilemma of whether and how to collect very small sums, when the cost of collection will outweigh the amount of money they will get. But we will have to make those decisions.
I would not have thought that an adjustment in the single person discount would be something that I would be able to support, except in the most exceptional circumstances. I have to tell your Lordships that these are those most exceptional circumstances. This is not a panacea by any means. In Wigan, the shortfall in the council tax support scheme is about £4 million. About a third of households receive the single person discount, just under 50,000 properties, and they get the benefit of about £10.4 million. In my area, a band D property is regarded as something that is not a poor household, but it obviously depends on where you live. The vast majority are in bands A and B, which are poor properties. If I was to try to raise the £4 million simply out of the single person discount, I would be reducing the single person discount by a very significant amount, which would be far more than I could do. So it is not a panacea to the problems that authorities like my own face.
However, and this is probably where I part company with some on my own side, we have already got our hands tied behind our backs because we cannot do anything about pensioner discounts, and we are now having them further tied behind our backs in the sense that we are not allowed to look at flexibilities in other areas. I am having to make really tough decisions about the working poor. Some of the decisions that I might make, such as reducing the single person discount, would not have as great an impact on the poor people of the borough and I would like the flexibility to do so.
As the noble Earl, Lord Lytton, said, there is an interesting contradiction here, where, on the one hand, the Government want to support a single person discount, which allows people to be rattling around in properties that are perhaps too big for their actual needs but, on the other hand, we have agreed to a system where if you are on housing benefit you have to pay bedroom tax. If you want the privilege of that, you actually pay more for living in a property that is deemed too big for you, and here we are giving people money to support them doing that. That seems to be a lack of coherence in policy.
We should trust local authorities. If we believe in localism, local authorities should be trusted to implement the scheme in a way that best meets the needs of all the people in their area. I would not want to reduce the single person discount by a significant amount, but it would help me make more palatable some of the cuts that I shall have to make in council tax benefit.
My Lords, we have heard from the noble Lord, Lord Best, an authoritative case. As ever, he approaches the issue from the point of view of protecting the poorest in our society. I guess that that makes my task slightly more difficult than it otherwise would have been, because, to be clear, we are not convinced that the proposition is the best solution to the problem that local authorities face. I can understand—my noble friend Lord Smith has just emphasised the point—that local authorities, desperate for some source of funding, could see it as a ready means of getting that, but, as my noble friend Lady Sherlock and the noble Lord, Lord True, said, to change the structure of a tax system just for that reason without a broader approach and analysis is not the right thing to do.
We are concerned that the wording of the amendment does not exclude pensioners. It gives local authorities the discretion to exclude pensioners but does not of itself exclude them. It does not exclude a reduction in the single person discount which is greater than 5%; it would be up to local authorities to do that.
We broadly accept, on the basis of numbers that we have seen and the LGA analysis in particular, which picks up some of the IFS data, that the proposition would in comparison to what is in the Bill produce a generally better redistribution outcome, particularly for poor people. However, if you look at that outcome in the context of the debate that we have just had and the adverse decision that we now face, you see that it is not so favourable. I have not seen from the data that have come across my desk how the proposition works at individual authority level. I concede that, when you look at things in aggregate, you have a less regressive, or perhaps a more positive, redistribution, but what is the impact down at individual authority level? If an authority has lots of second homes and is very rich, it is more likely than a poorer authority to be in a position where it does not have to change the single person discount. In terms of redistribution, that is going in the wrong direction. I accept that the proposition would result in a redistribution that is better than is in the Bill, but it is not as good as we can get and where we should leave it.
The noble Lord, Lord Palmer, charged that we want poor people to suffer. If I may say so, that is a disgraceful thing to say. If he were to look at the record of this side of the Chamber, the propositions that we have advanced, what we have voted for and what we have voted against, I hope that he would see that that is not true. We have just tried to stand up for poor people more positively and more strongly than the noble Lord is seeking to do now. The noble Lord, Lord Tope, said that it was quite inexplicable that we could not put our name to the amendment and engage in the wording. We find it quite inexplicable that the Lib Dems, who have in many ways a proud tradition of liberal thinking and action, should allow the Government to put in place a system that leads to the problem that we are trying to ameliorate with the amendment. That is the fundamental problem that we face. As the noble Lord said, we know that the Government are not going to move on the single person discount. We seemingly know that the Government are not going to move on the 10% cut, so where do we go? This amendment seeks one route to break that logjam; we have tried another which would have a better outcome. That is why we have some concerns with this approach. I accept the strong intent behind it and I accept that there are circumstances where it could lead to a better outcome because the pain is being spread over more people, but that pain would still be spread to some who are fairly low down the income scale, which is not the right thing to do.
I agree with the noble Lord, Lord Jenkin, about collection issues, as I think does pretty much every noble Lord who has addressed this issue. That will be a real problem with the system that we face. Dealing with the single person discount might change that a bit at the margins, but it, and certainly the transitional funding, do not change the problem fundamentally—arguably, they make it worse, because authorities are encouraged to reduce council tax benefit by 8.5% rather than 20% or 30%. They therefore have a smaller sum to collect with at least the same, and arguably greater, costs because of the problems with collection. That is the real issue which I hope will cause the Government to wake up and say that we should deal with this differently.
It is a pity that we did not pursue the issue of a report on the tax base, a theme returned to by the noble Earl, Lord Lytton, and how it would operate in practice, because it would have served us well in due course. The noble Lord, Lord Shipley, talked about child poverty. I simply make the point again: if the noble Lord and his colleagues are seriously concerned about child poverty in our country, they will know that there have been plenty of opportunities during the past couple of years for them to stand up and address that issue in a far more positive way than just supporting this amendment would do. The Lib Dems need to think strategically about where they are going on this rather than pick at something which I accept is very well intentioned and would ameliorate the problem to a certain extent but which in the wider scheme of things is just a sticking plaster on the problem when we need to address the problem itself. We cannot alone cause the Government to change their mind. We and the Lib Dems, with help from Cross- Benchers, arguably could, so that ball is in the noble Lord’s court.
I always hesitate to disagree with the noble Lord, Lord Best, because my colleagues and I have been shoulder to shoulder with him on many important issues where we have challenged and overturned the Government’s wishes even if they have subsequently been pushed back to us. I know that he raises this issue with the best intent, but there are some technical problems, if none other, with his approach which mean that this amendment cannot be supported. It is with some regret that I say that.
My Lords, I thank the noble Lord, Lord Best, for introducing this amendment. I do not like not agreeing with him either—he is someone whom I think everyone admires in this Chamber and whom I have known for a long time—but disagreement there is going to be. I note that the noble Lord opposite said the same thing.
I start by declaring an interest in that I receive a single person discount, and very welcome it is, too, but I am not starting out from that basis today. The amendment is about the local authority’s discretion to change the rate of council tax to a single person, which it can discount by 25% at the moment. The noble Lord suggests that that could go down to 20%. As has been pointed out, that is not what the amendment says. It says that you could remove the discount. Local authorities could be left going from 25% to 0% on the back of it. There is nothing in it at all to limit this to a reduction to 20%. If the noble Lord did that, I am absolutely certain that there would be objections from all around that that was not localism, it was restrictive, and that if we wanted to go further down this discount route the right thing would be to have the full range. We have to be very careful about this.
It is also true, as my noble friend Lord True said, that we have never consulted on reducing council tax discounts. This is a tax and there has been no consultation on that at all. In effect, even if we accepted that the discount would go down to 20%, it would be a potential tax increase for over 8 million people who at present receive the single person discount. It would hit them. There has been some sort of idea all through this debate that this would have no effect on people who are poor. That is ridiculous. Lots of people who are poor pay council tax. They are in a position of being in property, having to pay council tax and getting suitable benefits for that. They might be single parents, lone pensioners or—there was an aside about this—people living in a big house. People live in big houses because they start in them. They do not particularly want to sell that house, and would probably get to the state where they do not know how to because it is so complicated. Why should they move? Why should they not be entitled to that single person discount? That does not mean that they are rolling in money. They are not. We have to dispel the idea that everyone who receives a single person discount can afford to give it up. That is a false impression and we cannot allow it to go on.
To reinforce that, over three-quarters of the claimants of the single person discount live in bands A to C, with over a third living in band A. Only 10% of claimants live in properties that are band E or above. This is not a tax that can be reduced just for the rich. It is very much a tax borne by people who are not particularly well off. However much we might say that they “only” have to lose a certain amount of money, they would only have to lose, as other people would, money that they cannot afford.
The amendment would undermine the fundamental principle behind council tax. I was fascinated by how the noble Earl, Lord Lytton, trailed through all the forms of property and council tax that there have been. Rates were certainly not popular. The principle behind council tax is that it is part property and part personal tax, and is based on two people in occupation. It is clearly defined. The discount reflects the fact that there is only one person in the property, where it is clear that one person does not make as much use of services as a family would. It also has a wide range of support. It is clear and easy, and people understand that it is a relief just for a single person. As my noble friend Lord True and I said, the Government did not consult on changing this discount, as it is a tax, in the consultation on technical reforms to council tax and have no plans to change that.
Noble Lords have previously commented on the amount of revenue that might be raised by reducing the rate of discount. I sound a note of caution on that. People losing the single person discount under this amendment, such as single pensioners and lone parents, might ultimately find themselves in greater need of help to pay their council tax. They might need benefit, so that would not be very helpful. This would mean curtailing the impact of any additional resources, putting more people in need of state support and creating unintended pressures on councils. I am sure the House would agree that that is not quite the hoped for consequence of the amendment.
The technical reforms to council tax in the Bill change the way empty properties are treated with a view to bringing them more quickly back into use. That may also generate welcome additional revenue for local authorities. However, as I said, changing the single person discount would lead to a significant hike in tax on a very large number of people. The amendment would also affect the operation of council tax discounts for empty dwellings. The default discount that applies where there is no resident of a dwelling could be varied by the billing authority. This change is not necessary as the Government already plan to extend authorities’ discretion over discounts for empty dwellings. We discussed that in Committee.
I understand that noble Lords have concerns about local authorities’ ability to make savings and to raise revenue from the flexibilities in the system at the moment. We have offered transitional support, which has been sneered at a bit today. I hope that with a little more time and consideration noble Lords and local authorities might appreciate that that is a helping hand, even if it is for a year at this stage. It is important that we recognise that the Government have made a significant move here. As a result of what I and other noble Lords have said, and the fact that this is a government initiative—so the coalition is wrapped up in it—I cannot support the amendment of my friend the noble Lord, Lord Best. I am sad about that because I normally like to do so. I hope he will withdraw the amendment.
My Lords, I am enormously grateful to all noble Lords who have participated in this debate. I will pick up on one or two points that have been made. I am deeply grateful to the noble Lord, Lord Jenkin, who reminded us of the poll tax riots and told us to learn from experience. Those were wise words. I am extremely grateful to the noble Lord, Lord Tope, who made the point that there is a shortfall that must be met. Can it not be met by people other than the poorest? I was grateful to my noble friend Lord Bichard, who felt that this was a practical way of helping those in most need and was a last chance to do something. My noble friend Lord Palmer had done the arithmetic and made the point that it would be very easy to collect a reduction in the single person discount as opposed to the incredible difficulty of trying to collect from people who have never paid tax before. The noble Lord, Lord Shipley, made the point that with no increase in council tax because of the freezes, the better off will be paying no more tax next year, but the poorest, rather paradoxically, will pay for the first time. He emphasised the value of localism.
The noble Lord, Lord True, was the first voice contrary to the mood of the House at that stage that this amendment was well worth pursuing. His comments were reflected in some of what the Minister said. I will take those points together. The noble Lord made the specific point about Richmond that if the single person discount was abolished altogether, people would face a council tax increase of £6 per week. He pointed out that that would clearly be significant. However, he mentioned that if the reduction was confined to a reduction from 25% to 20%, the worst situation for those people would be nearer to a £1 a week rise, which does not sound as bad. That was certainly the intention behind the amendment.
The noble Earl, Lord Lytton, gave us a wonderful history lesson and supported the whole essence of localism that is built into the arrangements that we would be extending with flexibility under the amendment. The noble Lord, Lord Smith of Leigh, with some reluctance, felt it important to support the amendment. There are better ways, but we have to be careful that we do not go for the best and drive out the good. This is our best shot to make a significant difference. The noble Lords explained that the amendment would be very helpful to places such as Wigan, even if it is not a panacea that would solve all the problems there.
I turn to the noble Lord, Lord McKenzie. I fully recognise that without the support of the opposition Benches, the arithmetic of this House means that it is impossible for me to carry an amendment tonight. I am sorry that political differences came into play outside the scope of Cross-Benchers. The noble Lord makes the point that a broader approach is needed. No one would disagree with that. He makes the same point as the noble Lord, Lord True, and the noble Baroness that the amendment could mean more than a reduction from 25% to 20%. Because it is an open amendment, it could mean abolishing the single person discount altogether. That could be painful to people on lower incomes. He makes the point that the amendment does not exclude pensioners. Many would argue that, at whatever income level, they should be removed from the equation. He is not sure about how the distribution from council to council would work. Richer local authorities may do better, and we need some more work on that. However, the better amendment proposed from the noble Lord’s Benches has failed to get support. Therefore, I hope that something lesser might find acceptance on his Benches. It has not so far.
The Minister also made the point that some restriction on such an amendment, so that it could not lead to the single person discount being removed altogether, is important. She points out that the single person discount has a justification and a purpose. The noble Lord, Lord True, also mentioned that. It is hard to argue that a 25% reduction for single people equates with any precision to the difference between the services required by a single person household and a household with more than one person. Indeed, as pensioners are included, single pensioners require a lot of services which a household with two pensioners does not require, because those people look after each other. It does not follow that if you are on your own you necessarily cost less. If you are a single parent with several children, you may be costing the local authority a good deal. It does not follow that a single person household necessarily uses fewer services from the council.
As a general principle, I do not argue that the single person discount does not have some merit, but a reduction from 25% to 20% can be argued just as easily as the retention of a 25% line. Any amendment that would find favour in your Lordships’ House is likely to be more precise about that. It is likely to state that the level of discount should never be less than X—perhaps 20%. There should continue to be such a discount. Perhaps it should state that pensioners should be excluded. As the Minister pointed out, that would reduce the amount of localism in the amendment, but perhaps an amendment that contains such an element would be more likely to find favour with your Lordships. My colleagues and I need more time to see how the £100 million transition plays into that. Every little helps, and I know that local government is grateful for that amelioration, relatively modest as it is.
This is not the time for me to press the amendment. I, and I hope others, have learnt that different forms of an amendment might find favour across the House, and I reserve the right to return with a different amendment at Third Reading. At this stage, I beg leave to withdraw the amendment.
Amendment 98B withdrawn.
99: Clause 9, page 5, line 28, at end insert—
“( ) The Secretary of State shall issue guidance to local authorities as to what persons or category of persons shall be deemed to be vulnerable.”
Amendment 99 not moved.
100: Clause 9, page 5, line 28, at end insert—
“( ) Any dwelling which receives a band reduction in its council tax by reason of disability adaptations (or in the case of Band A properties, the relevant discount), shall not be deemed to be under-occupied for the purposes of housing benefit.”
My Lords, I will be brief. Many years ago, as a Norfolk and Norwich councillor, I found that the then MAFF, the Ministry of Agriculture, Fisheries and Food, was giving grants to Norfolk farmers to drain the Broads wetlands and that the then DoE was at the same time giving the same farmers grants not to take up the grants. We have a similar problem here in the interaction of the Bill with the Welfare Reform Act. That is not helped because the interaction between the two departments, at least on this issue, is clearly fraught. That is most obvious over housing benefit, which came up in our previous debate.
DCLG has a more appropriate definition of bedrooms to families than has DWP. DWP’s new HB rules penalise couples where one has a moderate disability—asthma or arthritis—and needs a separate bedroom but will receive HB not for the two bedrooms that they currently have and need but for a one-bedroom flat, if they or their social landlord can find one. Middle-aged couples, one with disturbed and disturbing sleep, but who are reduced to a one-bedroom flat, will be sofa-surfing in their new home if they cannot afford to take the benefit cut that they would face if they stayed put. Someone with asthma or emphysema, sofa-surfing at 55 in their own home—it is awful.
We could perhaps help one small group of disabled people with more severe needs. They are those disabled people whose socially rented property has an extra bedroom and would normally be in a higher band—say, band C—but, because of their disability needs, have had their council tax banding dropped from C to B. However, for housing benefit purposes, they may well be judged to be underoccupying and have their benefit cut. The amendment states simply that anybody who has had a band reduction by DCLG should not thereby be caught by DWP’s underoccupation rules for housing benefit purposes; they should be exempt.
We are not talking about large sums here. Sam Lister from the Chartered Institute of Housing has kindly produced for me an estimate of those affected, based on top-down departmental statistics, for which I am most grateful. It is an estimate, but it accords with my own hunch work, bottom-up from several authorities and grossing up those figures. There are 125,000 properties in England with a band discount, usually on grounds of disability. Leaving aside band A, which would not normally be overoccupied, that gives 110,000 people in discounted properties. Excluding owner-occupiers, whom HB would not affect, and pensioners, who would not be affected by HB, we estimate that the number of households affected across England—and, perhaps, Wales—would be between 2,200 and 3,000. The cost of protecting their current HB levels so that they are not hit by an underoccupation charge would, including Wales, come to between £1.8 million and £2.1 million.
In some cases, their properties may have been adapted for them by the social landlord, and DWP has allowed that it would be a false economy to shuffle them into somewhere smaller and then have to readapt the new property. However, many such couples—perhaps most—are simply in large properties, such as the middle-aged couple who need all three bedrooms of their flat or bungalow, one each for sleeping and the small, third bedroom for equipment. Anyone who has cared for a disabled person, as many in this Chamber today have, knows how much equipment can be needed: the wheelchair, the oxygen tanks, the nearly new mattress that has been temporarily replaced by a water mattress, the commodes, the tray tables, the cradles, the backrests and the banana boards. I could go on.
Under the new HB rules, those 2,500 disabled families with a reduced CTB because, according to DCLG, they need that extra space, could still be hit by the bedroom tax contrived by DWP, which says that they do not need that extra space, at a cost to them of between £15 and £20 or more. This amendment would simply allow those with a reduced band by virtue of their disability, as recognised by one part of government, to be exempt from the bedroom tax imposed by another part of government. This would bring consistency between the two departments and would be the right thing to do for families who are usually poor and certainly disabled. It seems self-evidently just. It may be that the Government propose to protect such families and I very much hope that the Minister can say that they will do so, in the same way as she was helpful in Committee in telling us that council tax band reductions would continue. If not, I hope that your Lordships will support this amendment. I beg to move.
My Lords, I have put my name to this amendment as well. As a long-time campaigner on the famous bedroom tax, I am very supportive of this amendment, which I think affects only between 2,000 and 3,000 households. For them, however, it would be very important and to have a double whammy would be disastrous for that group. I support the amendment.
My Lords, we discussed this in Committee and, while I appreciate and understand the intention behind the amendment, the trouble is that this would reopen debates that I know have already been had on what is now the Welfare Reform Act. The Government do not plan to revisit what is in that Act. Blanket exemptions for specific groups, including for disabled people and those living in adapted accommodation, were extensively discussed then. I appreciate that the noble Baroness has now reduced this exemption to thousands of people rather than tens of thousands, but the fact of the matter is that it reopens something which I do not think we can reopen here.
Blanket exemptions can also be an inefficient and complex way of targeting resources, so the Government favour discretionary housing payments to help meet any shortfalls between a person’s rent and a housing benefit award. Noble Lords will recall that we announced that an additional £30 million would be added to the discretionary housing payments fund from 2013-14. This is aimed specifically at two groups: disabled people living in significantly adapted accommodation and foster carers. Local councils make the decisions on them on their individual circumstances. However, I assure the House and the noble Baroness that the Government have no intention of changing the long-standing council tax disabled band reduction scheme and that anyone in receipt of a reduction will not lose it as a result of the underoccupation measure. As I say, I cannot support this amendment and I hope that the noble Baroness will feel able to withdraw it.
My Lords, I am extremely disappointed by the Minister’s reply. She has made two points: first, basically, that we cannot reopen something that has already been discussed. Forgive me, but that is precisely the point of the Report stage on this Bill. We are opening up issues on housing, particularly disabled persons’ right to housing support. After all, council tax benefit is part of the housing support that families receive. They pay rent and council tax, and in the past those two have been brigaded. To say that while DCLG recognises their need and reduces their council tax bands, the department’s colleagues a few stones’ throw away are perfectly able to penalise them for the very same discount that they are receiving from DCLG is really quite shocking.
The Minister said, secondly, that they could go to discretionary housing payments. By my calculations, that money has already been spent about three times over, given the number of families who will be capped and the like. I know that we are running very late for all sorts of reasons. I would dearly like to test the opinion of the House but I may leave this to Third Reading. I beg leave to withdraw the amendment.
Amendment 100 withdrawn.
Amendment 101 had been withdrawn from the Marshalled List.
101A: Clause 9, page 5, line 28, at end insert—
“( ) No council tax reduction scheme shall, taking account of withdrawal of other benefits, have a taper which produces an overall withdrawal rate greater than that which would result from the application of the default scheme.”
My Lords, I do not propose to move this amendment. I would like the opportunity to revisit the analysis that underpins it in the light of the impact on tapers of yesterday’s announcement on transitional support and in the hope that I might get sight of the treatment of tapers in the revised regulations for universal credit in the new default scheme.
Amendment 101A not moved.
102: Clause 9, page 5, line 34, at end insert—
“( ) In exercising its powers under subsection (2)(b), the authority must have regard to the impact of the scheme on carers in the area.”
My Lords, the purpose of this amendment is to ensure that carers are included in the list of classes of persons considered to be in financial need for the purposes of drawing up council tax discount schemes. They were described as vulnerable people in the guidance issued by DCLG in May 2012, Localising Support for Council Tax: Vulnerable People—Key Local Authority Duties. That document states:
“The Government has been clear that, in developing local council tax reduction schemes, vulnerable groups should be protected”.
The impact assessment, as one would expect, refers to carers as one of these vulnerable groups, yet the guidance on vulnerable people does not mention them.
When I raised this issue in Grand Committee, I was not able to get a satisfactory explanation for this discrepancy and for why a group with special needs that is currently recognised in the council tax benefit scheme is now being ignored. In our first exchanges on the issue, the noble Earl, Lord Attlee, simply said:
“The guidance is not exhaustive”,
and that a,
“competent local authority will take the needs of carers into account. Why would a local authority not? That is part of its duties”.
The whole point is that the guidance does not currently spell that out as part of its duties. I quite accept that the guidance will not be exhaustive but I am sure that noble Lords will agree that it is strange to exclude this important group who, as that Minister himself accepted,
“provide a vital role in society”.—[Official Report, 16/7/12; cols. GC 38-39.]
Given the financial pressures that local authorities will be under, is it realistic to think that having worked their way through the vulnerable groups listed—if indeed they do that—many local authorities will then say, “Let’s see if there are any other vulnerable groups we should be taking into account”? Carers UK has pointed out that in Hertfordshire, for example, of the 10 district councils there only one is proposing specifically to protect carers. It says:
“Our existing experience of councils recognising carers around Council Tax discounts and reductions is also not good”.
That does not exactly inspire confidence.
When we came back to it in Grand Committee the noble Baroness, Lady Hanham, responded:
“The difficulty is that once you include carers, you have to include a whole lot of other people, which reduces the discretion”.—[Official Report, 19/7/12; col. GC 177.]
Leaving aside the fact that the whole guidance is discretionary anyway, a whole lot of other groups are already included and I am not aware of any calls for any further groups to be added to the list. Having made no progress in Committee, I subsequently e-mailed the noble Baroness to point out that the draft care and support Bill, which had been published while the Grand Committee was sitting, will place a new duty on local authorities to meet carers’ eligible needs for support. The Care Minister has been quoted as explaining that the care and support Bill puts carers,
“right at the heart of the system”.
Well, they are currently right at the margins of the council tax discount scheme.
In a letter in response to my e-mail, the noble Baroness said that she would now discuss the issue with the Department of Health, suggesting that,
“we could, perhaps, draw local authorities’ attention to this Bill (though not as an existing statutory duty)”.
I am grateful to the noble Baroness for her helpful response. This is really a probing amendment, designed to elicit what progress has been made and to reinforce the case for ensuring that carers’ needs are properly taken into account under the localisation of council tax support. As noble Lords will be aware, these needs are significant. To take just one recent survey carried out by YouGov for the Carers Trust, as reported in the Independent:
“Britain’s army of unpaid carers are isolated, depressed, physically exhausted and broke as they struggle to cope with caring for sick and disabled relatives without adequate support”.
Some 60% of those polled reported,
“mental health problems due to the strain of caring and juggling other responsibilities”.
I fear that if they now have to find money for their council tax, that could be the straw that breaks the carers’ backs. I hope therefore that the Minister will be able to bring positive news about the outcome of her discussions with the Department of Health. I beg to move.
My Lords, I acknowledge immediately that carers play a vital role in society. We all know of people who have provided enormous support and care to their families and others, and I accept exactly what the noble Baroness says in that some of them must feel very isolated and find things very difficult.
The Government expect local authorities to consider what provision to make for carers as part of their broader responsibilities to those with protected characteristics under the public sector equality duty. In exercising that duty under the Equality Act with regard to the design of their council tax reduction schemes, local authorities should have regard to the treatment of carers associated with those who are, for example, disabled or older people, given their general duty to eliminate discrimination. I am happy to clarify this point for the record and to bring it to the attention of local authorities that they have that responsibility.
County council tax benefit makes provision for people who are carers through a specific income disregard and a premium towards their applicable amount. Local authorities will be free to do the same under localised council tax support. To facilitate this further, the Department for Communities and Local Government, as I said last time, is working with the Department for Work and Pensions to ensure that local authorities will continue to receive data on current benefits and the universal credit. I cannot give the noble Baroness the news that I think she is asking for, but as soon as those consultations are in position I will make sure that she is made aware of them.
As I have said, local authorities already have an existing framework of statutory responsibilities in relation to individuals who are vulnerable, and I do not think it necessary to create new guidance or highlight specific groups, which would risk cutting across this. I reiterate that the introduction of the transitional grant will give those authorities that undertake to avoid significant cuts to awards in the first year time to find other, more helpful ways of managing the reduction.
Amendment 107ZD would remove the powers to make regulations creating criminal offences in new Section 14B of the Local Government Finance Act. The noble Baroness is looking slightly puzzled. Have we not got to Amendment 107ZD?
I apologise; I noticed the noble Baroness’s face and was getting a bit alarmed.
We have been asked about how we are talking to local authorities about this and other recent legislation. We are regularly communicating with them and will use this regular communication to bring to their attention recent legislation relating to carers. I think that we had some guidance, which I am also happy to discuss with the noble Baroness and, if necessary, reissue.
I apologise to the House for not realising that Amendment 107ZD had not been moved. I hope that the noble Baroness will feel satisfied with my response and will withdraw her amendment.
My Lords, I thank the Minister for moving perhaps an inch further along, even if it is not quite as far as I would have hoped. We have heard that the transitional grant is for only a year and has all sorts of strings attached to it. It does not provide an answer but it will at least provide some authorities with a breathing space. Could the Minister keep this issue on the agenda and not lose sight of the needs of carers? As the scheme develops over the next year, perhaps this could be returned to. I beg leave to withdraw the amendment.
Amendment 102 withdrawn.
Amendment 103 not moved.
Amendment 103ZA, in substitution for the amendment printed on sheet HL Bill 39—1(b)
103ZA: Clause 9, page 5, line 34, at end insert—
“(2A) Schemes under subsection (2) shall include 100% council tax rebate fully and additionally funded by central government for persons in receipt of—
(a) less than the income support applicable amount;(b) the universal credit maximum award under section 1(3) of the Welfare Reform Act 2012.”
My Lords, I shall speak briefly in view of the hour; I am sure that the Minister and everyone else would like to get away shortly. The amendment provides for a 100% council tax rebate, fully funded by central government, for people with out-of-work incomes at the income support or JSA level, or when the universal credit is implemented, at the maximum award level under Section 3 of the Welfare Reform Act 2012. I should say that the noble and right reverend Lord, Lord Harries of Pentregarth, had planned to speak to this amendment but at this time he has had to go to an appointment.
The Government may argue that this is a “money” amendment that would increase government spending, but I would refute that suggestion. The basic income of people depending on JSA, for example, as your Lordships will know, is £71 per week for a single person and £111.45 per week for a couple. This is some £20 per week below the Joseph Rowntree assessment of income required to cover the basic costs of food, heating and travel, and one has only to think that there will be a few more costs than that to realise that these people are in dire trouble and need. Such households cannot and will not pay a tax on their home out of that tiny income. I understand that already 2 million households are failing to pay their council tax, a number which will put 2010-11 in the record books for the level of council tax default—that is £1 billion lost to taxpayers, a very large sum—while 3 million liability orders are being sought annually by local authorities through the courts, a 37% increase between 2000 and 2007. The poorest citizens will simply swell these numbers. The amendment would therefore not increase public spending, and that is before we consider the subsequent costs that the Government would have to pick up when these poor households failed.
The Government’s statement refers to transitional council tax benefits between 0% and 8.5%, which to me suggests a positive number. Whatever the number, though, it will be only for a limited period and therefore, as I hope the Minister will appreciate, does not in any way address the concerns that I and others have. I know that she does not really like to be reminded that this is the poll tax mark two, but that is what it will be unless this amendment is accepted by the Government, who could then bring forward their own amendment. I suppose you could say that we are trying to rescue the Government from themselves.
The New Policy Institute refers in its recent report to the return of one of the principles of the poll tax: that every household will pay. It was surely that principle that lay at the heart of the revulsion of the country against the poll tax and which brought down the Prime Minister of the day—Mrs Thatcher, as she was then. It is not surprising, then, that John Major promised Parliament that the council tax would provide up to 100% benefit for the unemployed and those on low incomes. Council tax benefit was expected to protect the poorest in the community, particularly from enforcement action in the courts. I cannot imagine anything more distressing, when you have no money and cannot buy any food, than spending your time going to court to defend yourself.
Now, however, the principle of the DCLG seems to be that instead of a 100% council tax benefit for the poorest, all shall pay something, and the favoured minimum has been 20%. My feeling is that once the transitional plans and arrangements are over, that is the sort of figure that we will probably return to, which means something like £5 per week for these very poor households to find out of income that I believe none of us in this House could survive on. Why issue demands if it is any less than that? Why issue a demand for £1 or £2 a week when even those sums cannot and will not be paid by these people on the lowest of incomes? Already these households will be losing benefit as a result of the move from RPI to CPI as the index used to upgrade benefits. Also many will lose from the housing benefit cap, as my noble friend Lord Best always argues so eloquently. There are disability benefit cuts and lots of other cuts. It is difficult to imagine how they are going to cope.
When these poorest households default, as they will, a liability order will be issued adding £120 to the liability. Then the unregulated bailiffs will turn up with a further cost to the household of £75 or £210 depending on whether they have to make a visit. These costs are piled upon council debt of, let us say, £1 to £2 a week or perhaps £4 to £5 a week. I am sure the Minister can see the nonsense of all this. We can call it nonsense, but for the family or household at the other end, it is not nonsense. It must be absolutely terrifying. People who owe small amounts of money at the beginning can find themselves owing thousands of pounds in a relatively short period. I welcome the Government’s statement, but I ask the Minister to assure the House today that she does not want to introduce poll tax mark two and that the Government will provide a 100% council tax benefit for those at the very bottom of the heap. That is what we are asking today. As other noble Lords have said, these very poorest people are not the right target for the cuts that, as we all know, were made necessary by the banks of this country.
My Lords, coming in to listen is fatal. I was very taken by what the noble Baroness, Lady Meacher, said. As somebody who did not support the introduction of the poll tax in Scotland and voted against it on every conceivable occasion thereafter, I would hate to think that we are in any sense moving in that direction. I say briefly, but with great feeling, that I hope the Minister, for whom I have genuinely high regard, will be able to give us some comfort in her response, either now or on Third Reading, because the problems that the noble Baroness sketched are for us theoretical, but for those who suffer, they can make the difference between a life and an existence.
My Lords, we fully support the amendment moved by the noble Baroness. It touches the issues of justice and of practicality. The noble Lord, Lord Cormack, has just emphasised the challenges of collecting small amounts and revisiting the poll tax. This is, in part, genuinely saving the Government from themselves. I hope the Minister will not pray in aid the transitional funding because that simply does not address the problem. It might ameliorate it at the margins, but it does not deal fully with the very substantial issue that the noble Baroness has raised.
I could do that, but I notice the words of the noble Lord and for the moment I will leave out the transitional arrangements because what the noble Baroness is asking for is not transitional but permanent. I am afraid that again I am not going to be able to accept the amendment.
The noble Baroness will be aware that we have consistently made clear that local authorities must take into account the needs of vulnerable groups in designing their schemes. Our draft regulations set out how the default scheme will take universal credit into account. Local authorities may wish to take this into account as they finalise their schemes in relation to people of working age. Under our proposals for the default scheme, universal credit income will be assessed as part of the means test for council tax support. Therefore the level of income, whether from universal credit or earnings, will be calculated in the means test determining the level of award. It is open to local authorities to take a similar approach in their own schemes.
The amendment would require that central government provides sufficient additional funding for councils to cover them to provide 100% support for the groups the noble Baroness was speaking about. As I explained earlier in relation to the set of amendments on funding, the saving from localisation is an essential contribution to tackling the deficit. The amendment also completely undermines the strengthened incentive for local growth. Making councils financially responsible for providing support brings incentives to get back to work.
I note what the noble Baroness said about the small amounts that potentially have to be collected from vulnerable people. I reiterate that we have drawn vulnerable people to local authorities’ attention and indicated that we think they must be taken very much into account. These proposals leave this in the hands of local authorities, and we are not prepared to change that for this group. Therefore, I hope the noble Baroness will withdraw her amendment.
I thank the Minister for her response. The difficulty we have is that local authorities are squeezed to pieces. I have been very close to local authorities until very recently. They are cutting CAMHS services. They are cutting all sorts of things such as care homes and support for elderly people in their homes. They are desperate. Therefore, they are not going to be able to be generous to people in the situation we are talking about today. It is only at central government level that one can make rational decisions about where the pain should strike. The argument of this amendment is that it should not strike the very poorest people any more. They have already been pinched a very great deal. On that basis, I want to test the opinion of the House.
My Lords, I beg to move that further consideration on Report be now adjourned so that the House may take its well deserved dinner break business on the Motion in the name of the noble Lord, Lord Hunt of Kings Heath. In doing so, I suggest that Report stage should begin again not earlier than 8.29 pm. In suggesting that time, I am in no sense suggesting a time limit on the debate on the Motion tabled by the noble Lord, Lord Hunt, but am assuring those working on the Bill that the dinner break will be at least an hour.
Consideration on Report adjourned until not before 8.29 pm.
National Health Service (Clinical Commissioning Groups) Regulations 2012
Motion of Regret
That this House deplores the fact that the National Health Service (Clinical Commissioning Groups) Regulations 2012 (SI 2012/1631) involve the exclusion from membership of a Clinical Commissioning Group of (1) a member of a local authority, and (2) a registered nurse or a secondary care specialist if employed by a body which provides any relevant service to a person for whom the Clinical Commissioning Group has responsibilities.
My Lords, I refer noble Lords to the Register of Lords’ Interests and specifically to my chairmanship of the Heart of England NHS Foundation Trust. At the core of the Government’s changes to the National Health Service are the clinical commissioning groups to which a significant part of the NHS budget is to be allocated from the next financial year.
Those clinical commissioning groups face formidable challenges. They need to be authorised and established. They take office at a time when the NHS is attempting to cope with the £20 billion Nicholson challenge. They will face major reconfiguration challenges as the health service seeks to become more efficient in the use of its services. They also will come under great pressure to encourage integration across health and social care but will face also the almost conflicting pressure of increasing the marketisation of the NHS and coping with the bringing in of competition law to a much greater extent. Whatever one’s views about the changes to the National Health Service—I am one who does not take a particularly positive view, as the noble Earl will know—what is not in doubt is that clinical commissioning groups are at the heart of those changes and that the challenge that CCGs face, as we have come to know and love them, is formidable.
These clinical commissioning groups are a curious body. They ostensibly are public bodies to be given £60 billion of public money. They also can be seen as a federation of primary care providers which are given huge financial and commissioning muscle and from which members of the primary care federation can gain considerably. Given that, and given the obvious potential conflict of interest that surrounds clinical commissioning groups, it is clear that they should have the strongest possible corporate governance and effective boards. The regulations before us are therefore of considerable importance.
As the Explanatory Memorandum points out, the regulations set out,
“requirements on CCGs in terms of their establishment and governance”,
requirements in relation to the make-up of the board and requirements in relation to,
“the initial procedure for establishing CCGs and any changes to CCG membership and geographic area thereafter”.
The statutory instrument sets out that membership must include a registered nurse, a secondary care specialist and two lay people.
As I said during our endless debates on the Health and Social Care Bill, I find the very limited lay representation to be very disappointing. It is surely contrary to all good practice in public body appointments that lay people are in such a minority on public bodies to which so much resource has been expended. I doubt that it would pass the Nolan test. I well recall the failures that we have seen in boards over the past two or three decades where it has become clear that the non-executives have failed to discharge their challenge duty. After all, that surely is one of the main lessons of mid-Staffordshire. To have only two lay people who could represent the public interest on those boards seems to me to be a vital error.
I also say to the noble Earl that he failed to respond effectively to our debates on conflict of interest. I am sure that when he seeks to defend the drafting of this statutory instrument, he will talk about conflict of interest. However, the biggest conflict of interest is the fact that GPs will be in a majority on those boards, and GPs can gain financially from the decisions of clinical commissioning groups. That is why this whole structure is flawed.
My concern about the statutory instrument—one of the most peculiarly drafted that I have ever come across—is that people with local expertise are excluded from the clinical commissioning board. Because a registered nurse or a secondary care specialist have intimate local knowledge and provide services to patients in the area of a CCG, they are not to be welcomed; they are to be excluded. That is quite a remarkable decision. For a registered nurse or a secondary care specialist to become a member of a CCG they either have to be retired and therefore completely out of date or they have to live miles away and know nothing of the local area. What a remarkably stupid decision that is. It is compounded by Schedule 4 of the regulations, which excludes a local authority member from being appointed as a lay member of a clinical commissioning group. Why? What on earth is the justification for that?
Given the issue of accountability of clinical commissioning groups, surely having an elected member of a local authority on the board of each CCG would be to the advantage of that CCG. I have yet to hear any convincing explanation as to why they are excluded. Indeed, it is so ridiculous that if you are a GP who happens to be a local councillor, you are excluded from serving on the CCG board. I have had brought to my attention the case of one GP who has been a leading light in the development of his own clinical commissioning group only to be told that he is now ineligible to become a member of the CCG board. Today I met a local authority councillor from east Cheshire who has just been appointed a lay member of a CCG, but she has now been told that because she is a local authority member she can no longer serve on the board.
There are some inconsistencies in the statutory instrument. It looks as though Members of your Lordships’ House can serve on the clinical commissioning group governing bodies, as opposed to MPs and members of local authorities. From my reading it would seem that an elected police commissioner may also serve. That seems to me a trifle inconsistent, and I would be grateful if the noble Earl could clarify that for me.
In the Explanatory Memorandum, when it comes to consultation, we are told that the proposed framework for the established governance and authorisation of clinical commissioning groups was tested with a wide range of stakeholders. Can the noble Earl say a little more about that? Who, in fact, were consulted? I had not realised until I received a briefing that the Foundation Trust Network was not consulted on the details of the regulations. We all read with great interest in Pulse magazine of 24 July that Sir David Nicholson, chief executive of the NHS, said that he was open to relaxing the restrictions that I have mentioned. Was he consulted?
Why did the department not listen to the concerns of the Royal College of Physicians, which believes that the CCG boards should always include specialist doctors who work within the area covered by a CCG in order to help the integration of services across primary and secondary care? Indeed, why did it not listen to the BMA, which feels that the regulations are restrictive and are hampering effective secondary care clinician recruitment to CCG boards? Why did it not listen to the Royal College of Nursing, which says that the guidance makes an assumption that GPs from practices in a CCG should be allowed to sit on the CCG governing body, but automatically excludes any nurses employed by any significant local provider or member in general practice? The college says that that will make it difficult to appoint nurses with the necessary skills and expertise who have sufficient knowledge of the local challenges. The Royal College of Surgeons is also concerned.
I have another concern. Again, when I read the regulations, I had not noticed that, as the Foundation Trust Network has pointed out, if you are a member of a foundation trust you are ineligible to serve on the board of a clinical commissioning group. I believe that the total membership of foundation trusts is more than 2 million. My own trust has 100,000 members in its patch, and they are all excluded from serving on the board of a clinical commissioning group. That is a bizarre decision. I really do not understand how the department could have allowed that to creep into this statutory instrument.
I believe that the regulations are badly thought out and badly constructed. Essentially they will ensure that the board of a clinical commissioning group will be bereft of members coming from the local authority, hospitals or the nursing profession who have any intimate knowledge of the patch in which they serve. I urge the noble Earl to reflect on this. It would be much better if these regulations were withdrawn and new ones brought before your Lordships’ House. I beg to move.
My Lords, I begin by congratulating the Minister on surviving the ministerial defenestration at Richmond House over the summer. I recall that some years ago a younger Bruce Willis played the title role in the film “Last Man Standing”. I welcome the Minister to his new role as an action hero. However, today’s regulations do not live up to this star billing.
My noble friend’s Motion of Regret contains many important reservations and I wholly endorse his remarks but there are other concerns as well. I will not repeat my noble friend’s remarks on the inconsistency of the CCG membership provisions but I would like to supplement them briefly. It seems bizarre to me to allow GPs with acknowledged conflicts of interest in a CCG area to serve on the CCG, though with appropriate safeguards and sanctions for failing to acknowledge those conflicts—sanctions which we discussed extensively during the Bill’s passage through this House—but not to allow specialist doctors to do exactly the same. This seems to me not to be in the best interests of patients because it appears to be punishing expertise of a specialist nature in terms of the development of services by commissioners in a particular local area.
My second point, which I want to dwell on a little longer, concerns the issues relating to accountable officers, which to a great extent, to my reasonably tutored eye, look remarkably similar to the roles of chief executives in PCTs. Has the Minister seen the information about CCG accountable officers in the Health Service Journal of 11 October? This reveals that 72% of the emerging 211 CCGs have chosen managers and not GPs as their accountable officers. Only 22% of the accountable officers are GPs—a drop in the 38% expected as recently as March 2012. This is because the job of the accountable officer looks remarkably like the job of a PCT chief executive and simply does not appeal to GPs. As I recall, the Government, when pushing for this legislation and these reforms, made much of the fact that they wanted to see GPs in a leadership role driving clinical commissioning in a reformed NHS. We seem to have ended up with a situation in which GPs as a whole are walking away from a leadership role in commissioning. That leaves the Government’s strategy of increasing clinical involvement in commissioning services, which I wholly support, in a very weakened state. It suggests that after all the upheaval of the poorly constructed Bill, which we spent months discussing, we will end up with more than 200 CCGs replacing 150 PCTs, but still with about 150 PCT chief executive equivalents running the show within CCGs. This is a bizarre outcome from the time we spent on the Bill. Did we really labour through the Bill for many months to achieve that outcome? Can the Minister confirm that the Health Service Journal data are correct? What proportion of the £60 billion a year going to clinical commissioning groups will come under accountable officers who are not GPs or doctors?
I have a few questions about service integration and CCG mergers. The new Health Secretary seems very enthusiastic about integration of health and social care and that is a jolly good thing. Can the Minister explain how excluding local authority personnel—both members and officers, such as a director of adult services—from a CCG board can facilitate joint commissioning of health and social care and the pooling of health and social care budgets, which seems to be attracting increasing support? How will such an arrangement incentivise CCG accountable officers to use resources for adult social care from the national Commissioning Board in such a way as to save the NHS money and provide a better service to patients? Indeed, can the Minister confirm that CCG accountable officers will not be criticised if they use NHS resources wisely to purchase social care that better serves the needs of patients when appropriate?
As the Minister knows, I am deeply sceptical about the need for and viability of having more than 200 CCGs, particularly given the likely service reconfigurations needed over the rest of this decade. I am therefore pleased that there is some provision in the regulations for mergers to take place. However—there is always a “however”—the list of factors to be taken into account before a merger can proceed, in paragraph 2 of Schedule 1, is extraordinarily daunting. There is a page and a bit of factors that have to be taken into account before a CCG—which may find pretty quickly that it is unviable—can move towards merger. They do not encourage CCGs to face up to financial realities and speedily reduce their number when needs must. Should the Government not be cutting this list of factors substantially rather than providing for a slow CCG death, as Schedule 1 seems to do?
I understand that the Minister may not want to answer all these questions tonight but perhaps he could write to me on some of these issues. I certainly support my noble friend’s suggestion that these regulations should be taken back, rethought through and re-presented to Parliament.
The noble Lord, Lord Hunt of Kings Heath, has done us a major service by bringing forward a full debate on these regulations. We have discussed at length the problem of secondary care representation. Indeed, the fact that there will be secondary care representation and nurse representation on clinical commissioning groups is welcome. However, the principle of integration seems to be blown apart by the way in which these regulations are written. The Royal College of General Practitioners and the Royal College of Physicians—I declare an interest as a fellow of both—and the Royal College of Paediatrics and Child Health produced a document entitled Teams without Walls about involving generalists and specialists to ensure a better, more seamless journey for patients.
In an area—and we are trying to have more localism and more local involvement in decision-making—the very clinicians on half of this pathway are now excluded from involvement in the planning and decision-making for those services yet they are the clinicians who have an in-depth knowledge and experience of the health economy, integrated working and, indeed, of the deficits in standards. That is where I wish to focus my remarks for a moment. The Francis inquiry has not yet reported but I understand that the Government have given a commitment to implement the findings when they come out. I do not understand why the Government have not left this matter completely open at the moment. If the Francis inquiry considers that there is not enough integration between secondary and primary care in decision-making, planning of services and so on, then allowing a secondary care clinician from the local area to be on the clinical commissioning group would provide the flexibility that Teams without Walls refers to.
The clinical governance of an area and its problems will be known to the local secondary care services, and they will know it across the board. There has been concern about conflicts of interest, yet a medical director in a trust represents a range of different specialties, and that has not been a problem. Clinicians have learnt how to do it. The Royal College of Physicians has produced guidance. It will produce guidance on a competitive appointment process whereby the best person for the job gets the job, and it has produced a clinical commissioning hub as a support for secondary care in its involvement in clinical commissioning groups. You could say that the basic rule of physics pertains—two negatives make a positive. It is difficult to understand why the conflict of interest that the GPs will experience, where they may be providing part of secondary care services themselves, does not matter in this, and yet it is completely prohibited to have a secondary care person who might understand how that interface between primary care and secondary care will work better at a local level. That person is excluded. It seems to work particularly against rural areas.
The last point I should like to make—apart from reminding the Government that the absolute reverse principle has been in place with the local education and training boards, where local people are involved in the very processes of commissioning the education—is about the people who will come forward. We already know that, to date, there is underrepresentation of secondary care. A clinician who is going to apply to be on a board and leave their clinical service, travel long distances and be involved elsewhere is not going to be the clinician who is completely dedicated to their local NHS service. The clinician who is dedicated to their local service and driving up care for patients is going to be the very person who will be most motivated to work with the clinical commissioning group to improve the services and the seamlessness across the piece. Excluding local clinicians seems unnecessarily to be closing down flexibility.
My Lords, this is a debate about conflicts of interest and getting the right person for the job. During the passage of the Bill, my noble friend Lady Barker led the call for conflicts to be declared where a board member has connections with a provider, where GPs can provide secondary services from their practices and where there are connections with commissioning support organisations. This was deemed right and proper, and was incorporated into the Bill.
It is important that the right people sit on clinical commissioning group boards and there are clear guidelines about competence, as well as protocols about conflicts of interest. This piece of secondary legislation puts restrictions on a clinical commissioning group in the choice of its members, irrespective of their competence, in two areas. One restricts councillors from being on the board and the other restricts the clinicians to those who work for providers from whom the clinical commissioning group does not commission services.
Time restricts me from addressing both issues so my noble friend Lady Williams will address the area of clinicians. In nearly 10 years as a member of an NHS trust board, I have sat with members of all political parties and none, some of whom were councillors. Where we had conflicts, they were declared. In that time, everyone left their party allegiances at the door. They were clear that they were there to look after the interests of the NHS in their patch, and had the skills and competences required for that role. It has been like this all over the country for years. It is worth mentioning that the work of Torbay Care Trust, which has been referred to frequently, depended on both NHS non-executive directors and councillors being on the board and working together.
Clinical commissioning groups want the right person for the role. They advertise, interview and appoint. It might be that the right person is a councillor, or not. This SI restricts their choice. Councillors know the community and, furthermore, particularly in the beginning, could have given useful guidance on the workings of the council because that is an area where GPs have generally not ventured—unless of course they are a councillor and a GP. This legislation has an unintended consequence for both doctors and indeed a nurse appointed as one of the two clinicians. The LGA wrote to the then Secretary of State as soon as the SI was published. The letter was signed by Councillor David Rogers, who is chair of the LGA Community Wellbeing Board and the only councillor member of the NHS Future Forum. He wrote:
“We do not accept the case for barring councillors from the governing body who hold professional roles within the NHS, as the reason for the appointment would be their professional experience within the health service—such as the GP … The Government, if it does not listen, is in danger of creating an unintended consequence of both discouraging experienced health service personnel from getting involved in their clinical commissioning group and from discouraging them from getting involved with their local authority”.
Councillor Rogers adds:
“I know that you are fully aware that all councils have standing orders that address conflicts of interest. We expect all public bodies, including clinical commissioning groups, to have equivalent rules regarding membership of their governing bodies but the proposed statutory instrument is far too wide-reaching and disproportionate. It will not only affect GP councillors serving on the governing bodies of clinical commissioning groups but any health professional group that a clinical commissioning group decides it wants represented on the governing body”.
I also received an email from a councillor GP who had been told that he had to make his mind up. Did he want to sit on the clinical commissioning group or did he want to remain a councillor? This level of restriction was not mentioned during the passage of the Bill. He asks:
“What are the justifications for this action which makes clinical commissioning groups the most politically restricted Public Body within the UK ? Where is the evidence”—
we spent a lot of time during the passage of the Bill trying to ensure that things were evidence-based—
“that this is in the public interest? Will GPs be banned from holding political office as Councillors on the basis that they could influence Health and Well Being Boards?”.
I should like the Minister, in summing up, to reassure the House that this was indeed an unintended consequence, and that when the implementation of the Bill is reviewed in 2014, clinical commissioning group governance will indeed be part of that review. Also, for those councillors who would have wished to become engaged in the commissioning of services, will he indicate how the clinical commissioning group might still involve them, so that their skills and competences are not lost?
My Lords, I declare an interest, which is in the Register of Lords’ Interests. I want briefly to address two points. The first regards the wording that the noble Lord, Lord Hunt, has tabled for the debate, which concerns the prohibition of,
“a registered nurse or secondary care specialist if employed by a body which provides any relevant service to a person for whom the Clinical Commissioning Group has responsibilities”.
My second point is simply about local authority members being members of clinical commissioning groups.
In the past two months, I have had in-depth discussions with four CCGs in different parts of the country. I will be visiting a fifth tomorrow. The impression that I get, quite understandably, is that they are very variable. Some are only just getting established and hardly have their membership in place, and others are well under way. We expect that. It is a new architecture. CCGs have a lot to do, as the noble Lord, Lord Hunt of Kings Heath, said, and some are quicker than others. We would expect that.
However, in one of the London CCGs, the consultant from a well known and respected London teaching hospital, which is outside the CCG area and its commissioning remit, is clearly playing an important part in advising the CCG—as is the very impressive nurse. Neither has any conflict of interest within the CCG because they are people from outside, but they are using their experience, as the noble Baroness, Lady Finlay, said, to explain clearly the implications of some of the decisions that could be taken in future. I thought that the CCG was getting really good advice and I could see how that was going to inform it in the future.
If the regulations are amended to allow local trust employees to take part in the commissioning arrangements, I think that there will be a real conflict of interest. In rural areas such as Cumbria, virtually all the patients are treated in one local hospital. There, the consultant and the nurse would have to declare an interest for nearly every contract placed, and they would hardly ever be in the room—they would always have an interest. In other areas where there is a huge choice of hospitals to go to, I can foresee that if the CCG does not incorporate a clinical consultant and a nurse from every hospital or every acute service, others will feel disfranchised if they are not part of that body. The alternative is an enormous CCG. We know that small boards are much more effective than very large ones. At the moment, the regulations suggest a membership of 12. As I said, my experience of visiting CCGs is that that works very well. I do not want to see a change in the regulations, as I think that there would be too many vested interests and there could be problems with the board getting decisions made.
We know that a lot of change is going to be needed in the NHS and this will require a lot of skill and some very tough decisions. My concern is that, if we put councillors on the boards, we will have even less opportunity to make the changes that the King’s Fund and the Nuffield Trust, for example, are telling us that we need. We have to ensure that there is more care in the community and less in hospitals. We know that that is what the majority of people want if the services in primary care are really good, and we should be working towards that.
I was a parish, a district and a county councillor concurrently. Then, the Secretary of State, Norman Fowler—now my noble friend Lord Fowler—appointed me to chair Brighton Health Authority. I tried to carry out those dual roles for a year or two but in the end I resigned my position as a county councillor because I had a conflict of interest. It was very difficult to really represent my electorate and to be an effective member of the health authority.
There are many good things in the Bill but there is one that I think is very good. As many of your Lordships know, I have fought over many years to get politics out of the day-to-day running of the NHS, and I have a real fear about bringing in councillors. After all, councillors are there to be voted for. For a councillor, every adult has a vote and that is really important. In the NHS, we cherish looking to evidence—it is a gold standard. I have also been working with health and well-being boards. My experience is that on the whole councillors are more interested in what individual voters want than in clinical evidence, and I think that bringing them on board in these bodies would be a great mistake. Where they should come together—and a lot has been said about integration—is on health and well-being boards. I have seen some really exciting developments in those bodies. That is where local government and the NHS meet. The director of adult services is on the health and well-being board. There is also Healthwatch, as well as other organisations, and that is where the strategy should and will be established, especially regarding public health. However, I do not think that councillors, who are expanding the role that they have and are doing so very diligently, should be involved in the detailed contractual arrangements for individuals within the population.
Strategy is with the health and well-being boards, where it should be, and I fear that if we bring in councillors we will undo some of the good work that we have done in getting the politics out of the NHS and reinstating it at a local level. That will be very damaging. We have seen MPs fight for their hospitals. These changes are very necessary if the NHS is to be strengthened and survive, but councillors will not want to vote for closures. They will want to keep everything open as it is now, because we know that that is where the pressure lies. Therefore, unsurprisingly, I shall be voting against the proposition of the noble Lord, Lord Hunt.
My Lords, I declare an interest as a vice-president of the Local Government Association and as an adviser to KPMG, which I understand also advises on health matters, although I do not advise it on those matters.
In this debate we are perhaps being asked to suspend our disbelief that the governance arrangements for the clinical commissioning groups make sense. We are being asked to suspend our belief on the question of whether pigs may fly. However, the extraordinary statement from the noble Baroness, Lady Cumberlege, that somehow locally elected councillors are incapable of making decisions which affect the livelihoods of the populations that elect them is disgraceful.
I understand that. My point is that the noble Baroness does not seem to understand that today, all over the country, locally elected councillors are making decisions about closures because they are having to balance the reductions in budgets that this Government are forcing on them and on their local communities. They are making those decisions on behalf of the people whom they represent. Why is it being said that somehow they have a conflict of interest which means that they are incapable of making decisions along with colleagues about health matters?
There are issues of principle here and issues of sheer practicality. The issue of principle concerns conflict of interest. The noble Baroness, Lady Cumberlege, has talked about conflict of interest. Perhaps we will also hear about that from the noble Earl in a minute. However, the biggest conflict of interest will be the fact that the primary care practitioners are key elements of the boards of CCGs’ governing bodies. They are not being excluded; it is just everyone else who is being excluded. Let us be clear about who is being excluded. It is not simply elected members but any employee not just of the local authority in the CCG’s area but of any local authority in the country. Therefore, any person who, under paragraph (4) of Regulation 12, the CCG feels has knowledge about the area and who does not have the misfortune of being an elected councillor but does have the misfortune of being a part-time employee of a neighbouring local authority is exempt.
When the Minister replies, I should like him to explain to us why every single employee of every single local authority in the country is being excluded from participation in CCGs. While he is about it and we are talking about conflicts of interest, we have already heard the point made by my noble friend Lord Hunt of Kings Heath that any person who has been public-spirited enough to decide to become—and frankly it is a fairly meaningless undertaking—a member of a local foundation trust or a local NHS trust is also excluded from membership of a CCG. Again, what is the point of that? It is being said that any person who is public-spirited enough already to have had some engagement with the local NHS is not allowed to sit on the board of the CCG.
This is frankly fatuous. You have ended up with a situation in which you have enshrined one set of conflicts of interest and excluded from the membership of the CCG all sorts of other people who could make a valuable and useful contribution. I am afraid that for the first time in our considerations I agree with 99% of what the noble Baroness, Lady Jolly, said. The 1% with which I disagreed was that we should allow this instrument to go through and review it again in two years’ time. It is so flawed and riddled with poorly thought-out considerations of what would work at local level, and so dismissive of the best judgment of local people to decide who is best to be part of the board, that frankly we should endorse my noble friend’s Motion. I urge the Minister to withdraw the regulations and bring forward revised, more sensible regulations.
I have some sympathy with what has been said, but I want to raise a slightly different issue, which arose from what was said by the noble Baroness, Lady Finlay, and the noble Lord, Lord Warner. I remember well during our long debates on the Health and Social Care Bill that one of the central issues that was brought out time and again both in the broad debates and in the amendments that were tabled were two guiding principles. One was the integration of health services that are absolutely crucial to the changes that need to be made if we are to get through the period of the Nicholson challenge and provide a better experience for patients. The second, alongside integration, was the concept all the way through of bringing together the different professions in a common approach on to how to deal with health services. In Clauses 13 and 14 of the original Bill, now an Act of Parliament, these two themes are pressed, insisted upon and underlined over and over again. Another issue was localisation and the need to try to devolve decisions about health down to a lower level.
What troubles me is that we are now seeing CCGs not as microcosms of that integration and an attempt to try to bring health services together but as being out on their own, essentially as a way of managing the general practitioner contribution to the health service. The noble Lord, Lord Warner, to whom I always listen very closely, was not wholly correct on one point. There is a section of general practitioners who have gone into commissioning. The sad thing is that the 4% or so who have done so are among the very best in the profession. GPs are losing their very best and most experienced leaders to commissioning, which may be essential but means that they are no longer able to give the same leadership to GPs that used to be the case. That is rather serious.
How does one offset that loss of leadership quality of the finest GPs? The noble Baroness, Lady Finlay, is absolutely right that it can be offset only to some extent by secondary care consultants and registered nurses to try to bring the understanding that was rather deliciously and beautifully described by Sir David Nicholson as being the element of compassion, concern and patient involvement required if one is to have CCGs become not businesses but in effect beacons of what was a great public service and that could continue to be a great public service. One cannot get that if one excludes secondary care consultants and a whole group of registered nurses from serving anywhere except on their own patch.
I hope that the Minister can tell us that the wise advice offered by Mister Nicholson—sorry, I know that he is Sir Someone Nicholson—to him and the Department of Health that there ought to be recognition of a more relaxed attitude, which should be taken on board. How does one take it on board? By recognising that the very tough conflicts of interest legislation that was put through this House with the support of all parties is strong enough to deal with people who have come from the same patch but in any way misuse or abuse that position by trying to gain financial advantage for themselves.
The regulations are amazingly strong on financial accountability—I recognise that they have to be, given the scale of the Nicholson challenge—but they are extraordinarily weak in indicating the crucial nature of quality and of quality being maintained in the service. There is one reference in the regulations to quality that is a subsection of a subsection. Yet when we look to see whether GPs are performing their roles seriously, we see that they have to be responsible for the quality of the service being offered. Frankly, in the light of some recent events, including Mid Staffs, it is critical that GPs and consultants see themselves, along with nurses, as having a common responsibility for maintaining the quality of the health service that we provide.
The other point that I want to make really quickly is that I believe that there is another area we have not talked about so far in the regulations and which worries me deeply. Maybe the Minister can say something about this. Regulation 16 refers on two major occasions to the board of the CCG being able to decide that reviewing either the papers discussed at the CCG meetings or, even more seriously, information about fees, remuneration and allowances may not be published if,
“it would not be in the public interest”.
I worry very much about that. The wording is troubling. Anyone who has lived through the experience of Mid Staffs, let alone others, will know that one of the really dangerous developments would be to try to prevent the public from knowing about things that are going wrong. We cannot do that any more. That world has gone. Even the medical profession must recognise that. I say with great respect to the profession that one cannot maintain the argument that the opposite of transparency is somehow in the public interest. I hope that the Minister, for whom all of us have the greatest possible respect, will look at those three issues. The first issue is whether people should not be allowed to serve in their own area, which they know and which they understand how to integrate in a way that people from outside the area simply cannot understand in the same way.
The second is how we deal with allowing people to serve on CCGs, even though at the moment it looks as though it might be very difficult for them to do so. Related to that is whether nurses can be chairs on CCGs as well as simply members. The final issue is that of transparency and where the regulations should be rewritten in order to show that there should be an assumption of transparency unless there are overwhelming reasons why there should not be: where it is not so much not in the public interest as directly against the interests of patients—that is a better way to put it.
I am afraid that my message tonight will be rather familiar. Although I listened carefully to the noble Baroness, Lady Cumberlege, whom I respect enormously for her experience, I am afraid that I cannot agree with her. Commissioning services in the NHS is an extremely complex activity. For CCGs to make rational decisions, they need the best data and information available about their populations and how to meet their needs.
I understand that economists talk about perfect and imperfect markets. Perfect markets exist where both the purchaser and provider know exactly what they are getting and giving. This is particularly important when we talk, for example, about packages of integrated care, especially care across the hospital community divide. Who better to provide the data and information that CCGs need than those working locally in our hospitals? CCGs should not only understand the needs of their populations; they also need to know something about what can realistically be provided locally to meet those needs. Relevant questions might include whether the local hospital provider has the relevant orthopaedic surgeons who can do specialised and complicated knee or hand surgery, whether it has the oncologists and haematologists to deal with all cancers or only some, and whether it has the relevant up-to-date scanning facilities. There will be a dozen other questions that only local knowledge can answer.
It seems obvious to many in the field that local specialists and nurses from the local trust are in much the best position to provide the answers, and to engage constructively with GPs in the provision of services. The idea that there is a conflict of interest appears to me to be nonsense. Of course there is local interest. Local consultants and nurses are there to provide local knowledge and information. The idea that consultants and nurses from elsewhere can be parachuted in to provide local information is asking too much, quite apart from the problem of whether another trust will be willing to allow its staff time off to travel around the country.
We do not want or need disinterested clinicians in the CCGs; we need interested clinicians. I hope that the noble Earl will listen if not to my noble friend Lord Hunt then to the royal colleges, which are very strongly in favour of local input from the secondary sector.
My Lords, I begin by thanking the noble Lord, Lord Hunt, for tabling this Motion, which provides a welcome opportunity to clarify the Government’s intentions in making these regulations on clinical commissioning groups—an opportunity that I feel is rather necessary in the light of some of the speeches that we heard this evening.
The regulations set out the legal requirements on the size and membership of a CCG’s governing body. Together with amendments made to the National Health Service Act 2006 by the Health and Social Care Act 2012, they provide a clear legal framework within which CCGs can appoint their governing body and develop appropriate governance arrangements. CCGs will be different from previous commissioning organisations. They will be built on the GP practices that together make up the membership of the CCG. These member practices must decide, through developing their constitution, how the CCGs will operate. They must ensure that they are led and governed in an open and transparent way that allows them to serve their patients and population. It is vital that CCGs are clinically led, with the ownership and engagement of their member practices, so that they can bring together advice, as noble Lords emphasised, from the broadest range of healthcare professionals to influence patterns of care and to focus on patients’ needs.
That is a necessary preface to the subject that has been the focus of much of tonight’s debate: the role of the governing body of the CCG. Following the NHS Future Forum, we introduced measures in the then Health and Social Care Bill to strengthen governance arrangements for CCGs, primarily through the requirement for each CCG to have a governing body that would have responsibility for ensuring that the CCG operates effectively, efficiently and economically, and does so with good governance. As we discussed during the passage of the Bill, our intention was to provide the public with greater confidence that CCGs would have suitable governance arrangements in place, including independent views and strong leadership, and would have proper checks and balances for the stewardship of public money. CCGs will be the guardians of significant amounts of taxpayers’ money. It is therefore only right that there are strict requirements in relation to governance, probity and transparency of decision-making. We must balance the benefits of the clinical autonomy of doctors with a robust management of potential or actual conflicts of interest. It is essential to get this right, and that means a proportionate and reasonable approach.
The Health and Social Care Act already provides real safeguards against conflicts of interest. The CCG must make arrangements in its constitution for managing conflicts and ensuring the transparency of its decision-making process, and it must have appropriate governance arrangements, including a governing body with lay members and other health professionals. These arrangements will be scrutinised by the NHS Commissioning Board as part of the process of ensuring that a CCG is fit to be established as a commissioner.
The requirements in relation to the secondary care doctor and registered nurse are therefore part of an overall package of requirements to ensure that they operate with good governance. We made clear in the Government’s response to the NHS Future Forum in June last year that neither the secondary care doctor nor the registered nurse should be from a local provider in order to prevent any potential conflicts of interest. We did that because a conflict of that nature would be a constant issue for a secondary care provider, given that CCGs will be responsible for commissioning the vast majority of hospital services. In contrast, CCGs will not commission primary care—that will be the responsibility of the NHS Commissioning Board. Therefore, for the most part, GPs on the governing body do not have a conflict of interests, and in any case GPs will not necessarily be in the majority on a CCG governing body.
On any occasion where CCGs consider commissioning local community services, arrangements must be made to manage both actual and potential conflicts of interest in such a way as to ensure that they neither affect the integrity of the CCG’s decision-making process nor appear to do so. The NHS Commissioning Board has issued guidance and a code of conduct for CCGs to deal with that set of circumstances.
What then is the role of the secondary care doctor and registered nurse on a CCG governing body? Their primary role, along with other members of the CCG governing body, will be to ensure that the governing body exercises its functions effectively and with propriety and absolute fairness. However, each member of a governing body will be expected to bring additional perspectives to underpin the work of a CCG. For the specialist doctor and the registered nurse, this perspective will be to provide a view beyond primary care and a broader understanding of health and social care issues—specifically patient care in a secondary care setting for the specialist doctor and, for the nurse, the contribution of nursing to patient care.
That is different from the role of clinicians in commissioning. Involving clinicians in commissioning has been one of the primary goals of our healthcare reform. I need to underline that as it is very much separate from the specific role of the CCG governing body. The detailed work on service design will not be done by the governing body of a CCG: rather, it will be done by the CCG itself, working with clinical networks and other multiprofessional groups. The governing body will have oversight of the governance of this decision-making process.
CCGs have a legal duty to obtain advice from people with a broad range of professional expertise when carrying out their commissioning responsibilities. My noble friend Lady Williams was absolutely right in saying what she did on that score. This could involve, for example, a CCG employing or retaining healthcare professionals to advise the CCG on commissioning decisions. Local knowledge and an in-depth understanding of local health issues will come not only from local GPs and their member practices but from other local clinicians, including local secondary care clinicians, who will work with CCGs to review local health needs and design local services. So the arguments presented by the noble Lord, Lord Hunt, and others around excluding local secondary care clinicians from the governing body as affecting the quality of the CCGs commissioning are wholly misplaced.
As to the restrictions placed on councillors preventing them from serving on CCG governing bodies, I start with a point of principle. We have been very keen from the outset of our reform programme to limit political interference in the day-to-day activities of the NHS. We have always been clear about that. Consequently, in addition to local authority members, we are also excluding MPs, MEPs and London Assembly Members from serving on a CCG governing body. However, our proposals do not mean that councillors are excluded from CCGs. A local councillor may still serve as a member of a committee or sub-committee of a CCG governing body, with the exception of the remuneration committee, as long as a CCG has set out the arrangements for such a committee in its constitution. A councillor falls within the description of an individual “specified in the constitution” as being eligible for membership of a committee. A CCG may provide in its constitution for any function of the governing to be exercised on its behalf by a committee or a sub-committee of the governing body, or by any individual of a description specified in the constitution. These arrangements could therefore allow for a local councillor to play a pivotal role in the CCG’s decision-making without formally being on the governing body.
Let me make it clear that we all fully appreciate the substantial contribution that local councillors make to commissioning. However, we decided that the most appropriate and effective way for councillors to influence NHS commissioning was through health and well-being boards, as my noble friend Lady Cumberlege rightly pointed out. This approach, if I may say to my noble friend Lady Jolly, gives councillors and local authorities a significant opportunity to influence NHS decision-making at a strategic level, working in partnership with CCGs and other community partners to identify local needs and agree health and well-being strategies. It avoids, however, confusing lines of statutory accountability by having them sit on the governing body of organisations that are accountable for the use of NHS funds allocated by the Secretary of State and the NHS Commissioning Board.
The NHS Future Forum concluded that health and well-being boards should be the focal point for decision-making about health and well-being. This will enable local authorities to work in partnership with CCGs and other community partners to identify local needs and agree the strategies I have referred to. CCGs must involve health and well-being boards from the start in developing their commissioning plan, so there is no question of separating councillors from the business of setting local priorities and strategies for an area. By involving local councillors, the representatives of people using services through local Healthwatch and through wider engagement with local communities, health and well-being boards will strengthen the local democratic legitimacy of health services and increase the influence of local people.
Perhaps I may turn briefly to a few of the questions, although I am happy to follow up in writing those that I do not answer. The noble Lord, Lord Hunt, asked why we have excluded NHS foundation trust members from serving on CCG governing bodies. I need to clarify that NHS foundation trust members are not excluded from serving on CCG governing bodies. It will be possible for a CCG to appoint an NHSFT member to its governing body if it has made provision for this in its constitution. However, they will be excluded from performing either of the two mandatory lay roles. I think that that is where the misunderstanding about the officers of a local authority, such as directors of adult social services, has arisen. They can sit on the governing body of a CCG but they may not be one of the lay members.
My Lords, the question I was asked was about the officers of local authorities, and I hope I have clarified that. A member of a local authority is an elected councillor, of course, and is debarred from a governing body, as we have discussed. If the noble Lord, Lord Harris, will allow me, I will write to him on the point.
They may be excluded from being a lay member, but one of the lay members is defined as someone who has,
“knowledge of the local area”.
However, if by chance they happen to be a part-time employee of any local authority in the country, they are excluded, and I want to know why that is. Why not leave it to the good judgment of the local people?
Before the noble Earl leaves the issue of lay members, I have a question about having only two lay members—I am sorry that I did not jump up in time to ask it before he started summing up. The noble Earl and I sat opposite each other for several years discussing regulatory reform of the NHS, and one thing that I think we agreed on was that for all the new regulatory bodies that are now appointing lay members, 50:50 was the right balance to ensure proper regulation and accountability. Why is that not the case with the CCGs? What is different here? We felt that it was safer to have 50% in the regulatory reform of the NHS. Why do we not have 50% on the CCGs?
My Lords, it will be up to local CCGs to determine their own constitutions, as I have said. What we are attempting to do in these regulations is simply to set down the bare minima. As we discussed during the passage of the Act—these provisions were well rehearsed—providing there are two lay members, a secondary care clinician, a nurse and an accountable officer, that is the extent of the prescriptiveness that we feel is appropriate from the centre. Otherwise, it looks very much like the Government dictating the governance arrangements. The Future Forum’s recommendations were very clear that we should not go down that path.
It was suggested that CCGs were experiencing difficulties in appointing secondary clinicians or a registered nurse. I understand the concerns that noble Lords have raised on that score but I have recently spoken to the NHS Commissioning Board, which has started the process of considering applications from emerging CCGs. The news I have is that CCGs have so far successfully recruited to these roles. In addition, the medical and nursing royal colleges have offered to help CCGs in sourcing appropriate candidates, which is very welcome.
The noble Lord, Lord Warner, referred to the HSJ article of 11 October. I will clarify my answer when I write to him, which I will be happy to do. We are very pleased not only that so many clinicians have chosen to apply for leadership roles, which they have, but that so many first-rate clinicians have done so, whether as clinical chairs or clinical officers in CCGs. What is important is that there is a good mix of expertise in the broader leadership team of clinicians and managers, to help the CCG discharge its responsibilities effectively, and that is what we are now seeing.
I have a number of examples of where the drive towards integration is really taking shape on the ground. My noble friend Lady Jolly mentioned South Devon and Torbay; this is a service designed by secondary care doctors and GPs working together in a clinical pathway group for urology, and the whole impetus of the CCG is to improve collaboration and get over the gulf between primary and secondary care. There is another excellent example of integrated services in Wokingham, which again I would be happy to write about.
The noble Lord, Lord Hunt, asked whether police commissioners and Peers could be members of a CCG governing body. Yes, they can. He also asked who was consulted over these regulations. As I have indicated, the proposals were developed in response to the NHS Future Forum, the listening exercise that set out requirements around the secondary care doctor and registered nurse. The proposals were further discussed with emerging CCGs, primary care organisations, the medical royal colleges and, yes, colleagues in the NHS Commissioning Board Authority.
The regulations discussed today provide a fair and transparent rules-based framework to complement the provisions in the Health and Social Care Act around the establishment of CCGs. Creating a responsible and accountable CCG with good governance is essential for good management, good performance, good stewardship of public money, good public engagement and—our ultimate goal—good outcomes for patients. I commend the regulations to the House.
My Lords, I shall be brief. I thank the noble Earl, Lord Howe. He started by referring to the importance of clinical leadership and I would not disagree with him, but he has not really answered the point that the biggest potential conflict of interest is if GPs are in a majority on the boards—and I would hazard a guess that, in most places, they will be. They do not commission primary care, but their decisions can shift resources into primary and community care services. That is the essential conflict of interest.
The Government’s legitimisation of what must be some of the worst drafted regulations that I have ever come across would stand up in relation to conflicts of interest in other professions if one had any inkling at all that they recognised that CCGs carry a huge risk in relation to the GPs’ own position. The Minister said that the CCGs are about clinical leadership. As my noble friend Lord Warner pointed out, you are not even getting that, because only 20% or so of the accountable officers of those CCGs are to be GPs. The remainder are to be managers. Let us be clear: the accountable officer will in effect be the chief executive. The noble Baroness, Lady Finlay, said that the exclusion of local consultants and nurses from CCGs would mean that, in large parts of the country, the people appointed would have no local knowledge whatever. I agree that, in London, it may be more practical; in most of the rest of the country, it will not be.
I agree with all the points raised by the noble Baronesses, Lady Jolly and Lady Williams, but it is not sufficient to say that there will be a review in 2014. At this late stage, I invite them to join us in the Lobbies tonight. I could not disagree with anything that either noble Baroness has said. They tore apart the regulations. Will they not join us tonight?
I was amazed by the remarks of the noble Baroness, Lady Cumberlege. She came to the health service, as did I, through local government. Local government is having to take some immensely tough decisions. Having a local authority councillor around the board table of a CCG would help legitimise its decisions and help tie in the local authority with difficult decisions that have to be made. Excluding them is a huge mistake. I do not understand—clearly, the department forgot them—why elected police commissioners are deemed worthy of service on a CCG board when elected MPs and councillors are not. When my noble friend Lord Prescott is duly elected a police commissioner in a few weeks’ time, as one hopes, he will be eligible to serve on the whole clinical commissioning group, but no MP and no councillor. These are some of the most nonsensical regulations that I have ever seen.
The Minister said that we should not worry because local authority councillors, local doctors and local nurses can serve on the committees of a CCG—no conflict of interest there—but they cannot serve on the board. However, the board is the sovereign decision-making body of the CCG. I would have thought that most clinical commissioning groups would have wanted to have local expertise, whether it is local authority representation, a doctor or a nurse.
The Minister then said that these are only minimum requirements. Well, Schedule 4 states:
“Individuals excluded from being lay members of CCG governing bodies … An employee of a local authority in England and Wales or of any equivalent body in Scotland or Northern Ireland … A chairman, director, governor, member or employee of an NHS foundation trust”.
Excluding a chairman, director or governor of a foundation trust is fair enough, but a member? My trust has 100,000 members. Patients are automatically enrolled in membership of my trust unless they decide to opt out. We are talking about 100,000 people living in the catchment area of my hospital who are not allowed to be lay members of a CCG. Surely they are the very people you would want to be lay members of a CCG.