Getting out of a pickle

Hollispatricia4x3.jpgPatricia Hollis sets out a cross-party opportunity to rein in ill-thought through plans for Council Tax Benefit

The Local Government Finance Bill has its Third Reading in the Lords today. To remind ourselves, it removes Council Tax Benefit (CTB) from our country’s national social security system where it is fully funded to meet individual need, wherever that person lives. It will be replaced in 5 months time by a rebate scheme with 10% less cash in it, i.e. £500m, based on local discretion, with each council inventing its own version.

However, such local versions will depend not on the council’s unique local insight into local need, but on its prosperity, its reserves and its property values, its demography and pensioner numbers, its benefit claimant numbers, its second homes and empty property. In short, anything and everything bar the particular need of the particular individual irrespective of where in the country they live.

Worried that many local authorities will require benefit claimants to pay 20% or 30% of their council tax for the first time (say £5 or £7 a week, and coming on top of a loss of housing benefit for many), the government has at the last moment introduced a one year transitional grant worth £100m, so that no one on benefit should pay more than 8.5% of their council tax (perhaps £1.50 per week).

But that, it is feared, will generate Poll Tax mark II. Councils will simply not be able to collect small sums of money at high cost, from two million reluctant people. Treasurers doubt that they can collect 35p in the £. Local authorities, in other words, will have three different schemes in as many years: the existing scheme, the one year transitional grant scheme, and the scheme without grant. Eric Pickles' Bill is nothing short of a shambles.

Concerns have been expressed all around the Lords about these proposals.

We believe that they are not effective because they will not meet local need; and they will damage the work incentives of the very low paid. They are not efficient, because the upheaval of three schemes in as many years and the Poll Tax ‘can’t pay, won’t pay’ threats will undermine local authority finance. They are not fair, because two blind people with identical needs living in neighbouring authorities will be required to make very different contributions to their council tax, anything from nil to 30%. And they are not transparent because no one will know what they should get, and the result will be that many will fail to claim what is rightfully theirs.

So an Amendment to be debated today, backed by myself for Labour, Lord Shipley for the Liberal Democrats and Crossbench Peer Lord Best will ask for an independent Review of the new CTB measures within three years of the Act coming into effect.

We hope the government will accept it. If their proposals are sensible, the Review will confirm it. If they are not, the Review can make appropriate recommendations for change.

The cost is negligible so it does not involve financial privilege. But when the Commons passed the Bill, MPs could not know what scheme their local authorities might introduce, nor could they have known about the transitional grant announced only last week. This Amendment therefore would allow MPs to think again about this Bill, and whether its proposals need further assurances.

Baroness Patricia Hollis of Heigham is a backbench Labour Peer and a former Work & Pensions Minister

Published 22nd October 2012


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