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House of Lords

Tuesday, 16 October 2012.

2.30 pm

Prayers—read by the Lord Bishop of Manchester.

Unemployment: Older Women


2.36 pm

Asked By Baroness Thornton

To ask Her Majesty’s Government what steps they are taking to address unemployment among older women.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): 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.

Baroness Thornton: I thank the Minister for that reply. Indeed, this Question is by way of my 60th birthday present to myself—

Noble Lords: Hear, hear.

Baroness Thornton:—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?

Lord Freud: 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.

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Baroness Brinton: 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?

Lord Freud: 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.

Baroness Greengross: 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?

Lord Freud: 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.

Baroness Turner of Camden: 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?

Lord Freud: 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.

Baroness Afshar: 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.

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Lord Freud: 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.

Lord Wigley: 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?

Lord Freud: 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


2.45 pm

Asked By Lord Foulkes of Cumnock

To ask Her Majesty’s Government what trade and investment successes were achieved as a result of contacts with representatives of Governments attending the Olympic and Paralympic Games.

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Marland): 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.

Lord Foulkes of Cumnock: 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

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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?

Lord Marland: 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.

Lord Razzall: 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?

Lord Marland: 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.

Noble Lords: Oh!

Lord Marland: I am just trying to keep the sun tan up. My noble friend Lord Green is in Europe as we speak, and everything that the Prime Minister does when he goes abroad is with the aim of incentivising trade.

Lord Hughes of Woodside: 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.

Lord Marland: 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

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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.

Lord Forsyth of Drumlean: My Lords, in view of the enormous success brought by the Olympics and the fantastic advert around the world for Britain, is my noble friend not surprised that we have had such churlish supplementaries in response to his excellent Answer?

Lord Marland: I shall be bathing in sunshine tomorrow and I am now bathing in sunshine here, so I thank the noble Lord for that kind remark.

Lord Jones of Birmingham: 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?

Lord Marland: 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.

Lord Stevenson of Balmacara: 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?

Lord Marland: 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.

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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


2.53 pm

Asked by Baroness Tyler of Enfield

To ask Her Majesty’s Government what plans they have to take forward the recommendations of the Riots, Communities and Victims Panel on building character and personal resilience.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): 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.

Baroness Tyler of Enfield: 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?

Baroness Hanham: 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.

Baroness Sherlock: 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

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underspend but by raiding £1.6 billion over three years from the early intervention grant, thus putting Sure Start intervention at risk?

Baroness Hanham: 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.

Lord Elton: 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?

Baroness Hanham: 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.

The Lord Bishop of Ripon and Leeds: 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?

Baroness Hanham: 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.

Lord Northbourne: Is the noble Baroness satisfied that maintained secondary schools—and all secondary schools—are doing as much as should be done to

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stimulate character and resilience in pupils, which they have the opportunity to do when the pupils are at school?

Baroness Hanham: 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.

Energy: Costs


3 pm

Asked By Lord Kennedy of Southwark

To ask Her Majesty’s Government, in the light of the announcement of price rises by British Gas, what action they will take to protect consumers from rising energy costs.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma): 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.

Lord Kennedy of Southwark: 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?

Baroness Verma: 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.

Lord Teverson: 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

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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?

Baroness Verma: 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.

Lord Willoughby de Broke: 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.

Baroness Verma: 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.

Lord Geddes: 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?

Baroness Verma: My noble friend raises a very important point. I need to direct it to the department to which his question belongs.

Lord Grantchester: 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?

Baroness Verma: 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

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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.

Lord Cormack: My Lords, can we go back to these ghastly wind farms? They produce indeterminate amounts of energy, they cost a great deal of money and they shut down when the wind blows too hard. What real justification is there for onshore wind farms?

Baroness Verma: 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.

Lord West of Spithead: 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?

Baroness Verma: My Lords, that is a very important question to which I know the noble Lord will want a fuller answer.


3.07 pm

Baroness Royall of Blaisdon: 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

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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.

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): 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

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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.

Lord Laming: 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.

Baroness Hollis of Heigham: 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.

3.15 pm

Lord Strathclyde: 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

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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.

Baroness Royall of Blaisdon: 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

First Reading

3.16 pm

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

Moved By Lord De Mauley

That the draft Welfare of Wild Animals in Travelling Circuses (England) Regulations 2012 be referred to a Grand Committee.

Motion agreed.



3.17 pm

The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach): 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

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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

16 Oct 2012 : Column 1375

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.

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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.

3.28 pm

Baroness Smith of Basildon: 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

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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.

3.33 pm

Lord Taylor of Holbeach: I thank the noble Baroness, who has been very generous in her welcome for this Statement. Indeed, I welcome her support on a number

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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.

Baroness Stowell of Beeston: 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.

3.38 pm

Lord Lloyd of Berwick: My Lords, I must express some surprise that this seems to be the first occasion on which the Government have expressed gratitude in

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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?

Lord Taylor of Holbeach: 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.

Baroness Hamwee: 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.

Lord Taylor of Holbeach: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

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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.

Baroness Browning: My Lords—

Lord Morris of Aberavon: My Lords—

Baroness Stowell of Beeston: The only group we have not yet heard from is the Conservative group.

Baroness Browning: 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.

Lord Taylor of Holbeach: 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.

Lord Morris of Aberavon: 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?

Lord Taylor of Holbeach: 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.

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Lord Pannick: 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.

Lord Taylor of Holbeach: 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.

Lord Hodgson of Astley Abbotts: 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.

Lord Taylor of Holbeach: I am not in a position to comment in detail on those particular points, but I thank my noble friend for those suggestions. They will be borne in mind as we undertake a review of the process.

Lord Davies of Stamford: 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?

Lord Taylor of Holbeach: 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

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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.

Lord Maginnis of Drumglass: 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.

Lord Taylor of Holbeach: 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.

Lord Jones of Birmingham: 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

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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.

Lord Taylor of Holbeach: 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

Bill Main Page

Report (2nd Day)

3.58 pm

Relevant documents: 4th and 7th Reports from the Delegated Powers Committee.

Schedule 1 : Local retention of non-domestic rates

Amendment 71 not moved.

Amendment 72

Moved by Baroness Hanham

72: Schedule 1, page 47, line 14, at end insert—

“Estimates of amounts to be disregarded

39A (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.

16 Oct 2012 : Column 1384

(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

Moved by Baroness Hanham

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 information

40A 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

Moved by Baroness Hanham

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”.”

16 Oct 2012 : Column 1385

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.

16 Oct 2012 : Column 1386

Amendment 98A (In substitution for Amendment 98)

Moved by Lord McKenzie of Luton

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.”

Lord McKenzie of Luton: 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

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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

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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.

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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.

Baroness Hollis of Heigham: 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

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West Oxfordshire District Council, for example, has denounced the Pickles plan as damaging to work incentives, and was absolutely right to do so.

4.15 pm

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

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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.

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Lord Smith of Leigh: 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

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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.

Lord Tope: 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.

4.30 pm

Lord True: 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

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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.

Baroness Hollis of Heigham: 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.

Lord True: 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

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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.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): 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

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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

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£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.

4.45 pm

Lord Smith of Leigh: 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.

Lord McKenzie of Luton: 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.

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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.

Baroness Hanham: 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.

Lord McKenzie of Luton: 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

16 Oct 2012 : Column 1399

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—

Lord True: 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?

16 Oct 2012 : Column 1400

Lord McKenzie of Luton: 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.

4.55 pm

Division on Amendment 98A

Contents 201; Not-Contents 242.

Amendment 98A disagreed.

Division No.  1


Adams of Craigielea, B.

Adonis, L.

Alton of Liverpool, L.

Anderson of Swansea, L.

Andrews, B.

Armstrong of Hill Top, B.

Bach, L.

Bakewell, B.

Barnett, L.

Bassam of Brighton, L. [Teller]

Beecham, L.

Best, L.

Bilston, L.

Blood, B.

Boateng, L.

Boothroyd, B.

Borrie, L.

Bradley, L.

Bragg, L.

Brennan, L.

Brooke of Alverthorpe, L.

Brookman, L.

Browne of Ladyton, L.

Campbell-Savours, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clinton-Davis, L.

Cohen of Pimlico, B.

Condon, L.

Corston, B.

Coussins, B.

Crawley, B.

Crisp, L.

Davidson of Glen Clova, L.

Davies of Abersoch, L.

Davies of Coity, L.

Davies of Oldham, L.

Davies of Stamford, L.

Deech, B.

Desai, L.

Donaghy, B.

Donoughue, L.

Drayson, L.

Dubs, L.

Eames, L.

Elder, L.

Elystan-Morgan, L.

Evans of Parkside, L.

Evans of Temple Guiting, L.

Falkland, V.

Faulkner of Worcester, L.

Filkin, L.

Ford, B.

Foulkes of Cumnock, L.

Gale, B.

Gibson of Market Rasen, B.

Gilbert, L.

Glasman, L.

Golding, B.

Gordon of Strathblane, L.

Goudie, B.

Gould of Potternewton, B.

Graham of Edmonton, L.

Grantchester, L.

Grenfell, L.

Griffiths of Burry Port, L.

Grocott, L.

Hall of Birkenhead, L.

Hannay of Chiswick, L.

Hanworth, V.

Harries of Pentregarth, L.

Harris of Haringey, L.

Harrison, L.

Hart of Chilton, L.

Haskel, L.

Haskins, L.

Haworth, L.

Hayman, B.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Henig, B.

Hollick, L.

Hollis of Heigham, B.

Howarth of Newport, L.

Howells of St Davids, B.

Howie of Troon, L.

Hoyle, L.

16 Oct 2012 : Column 1401

Hughes of Stretford, B.

Hughes of Woodside, L.

Hunt of Chesterton, L.

Hunt of Kings Heath, L.

Hylton, L.

Irvine of Lairg, L.

Janner of Braunstone, L.

Jay of Ewelme, L.

Jay of Paddington, B.

Jones of Whitchurch, B.

Kennedy of Southwark, L.

Kerr of Kinlochard, L.

Kestenbaum, L.

Kidron, B.

King of Bow, B.

King of West Bromwich, L.

Kirkhill, L.

Knight of Weymouth, L.

Krebs, L.

Laird, L.

Lea of Crondall, L.

Liddell of Coatdyke, B.

Liddle, L.

Lipsey, L.

Lister of Burtersett, B.

Low of Dalston, L.

McAvoy, L.

McConnell of Glenscorrodale, L.

Macdonald of Tradeston, L.

McFall of Alcluith, L.

McIntosh of Hudnall, B.

MacKenzie of Culkein, L.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Mallalieu, B.

Manchester, Bp.

Martin of Springburn, L.

Massey of Darwen, B.

Maxton, L.

Meacher, B.

Mitchell, L.

Monks, L.

Moonie, L.

Morgan of Drefelin, B.

Morgan of Ely, B.

Morris of Aberavon, L.

Morris of Handsworth, L.

Nye, B.

O'Neill of Clackmannan, L.

Ouseley, L.

Parekh, L.

Patel of Bradford, L.

Pendry, L.

Pitkeathley, B.

Ponsonby of Shulbrede, L.

Prosser, B.

Puttnam, L.

Radice, L.

Ramsay of Cartvale, B.

Rea, L.

Reid of Cardowan, L.

Rendell of Babergh, B.

Richard, L.

Ripon and Leeds, Bp.

Rogan, L.

Rooker, L.

Rosser, L.

Rowlands, L.

Royall of Blaisdon, B.

Sawyer, L.

Scotland of Asthal, B.

Sherlock, B.

Simon, V.

Smith of Basildon, B.

Smith of Finsbury, L.

Smith of Leigh, L.

Snape, L.

Soley, L.

Stern, B.

Stevenson of Balmacara, L.

Stoddart of Swindon, L.

Stone of Blackheath, L.

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

Taylor of Bolton, B.

Temple-Morris, L.

Thornton, B.

Tomlinson, L.

Tonge, B.

Touhig, L.

Triesman, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Turner of Camden, B.

Uddin, B.

Warner, L.

Watson of Invergowrie, L.

West of Spithead, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Wilkins, B.

Williams of Baglan, L.

Williams of Elvel, L.

Williamson of Horton, L.

Wills, L.

Wood of Anfield, L.

Worthington, B.

Wright of Richmond, L.

Young of Hornsey, B.

Young of Norwood Green, L.


Aberdare, L.

Addington, L.

Ahmad of Wimbledon, L.

Alderdice, L.

Allenby of Megiddo, V.

Anelay of St Johns, B. [Teller]

Armstrong of Ilminster, L.

Arran, E.

Ashdown of Norton-sub-Hamdon, L.

Ashton of Hyde, L.

Astor of Hever, L.

Attlee, E.

Avebury, L.

Baker of Dorking, L.

Barker, B.

Bates, L.

Bell, L.

Benjamin, B.

Berridge, B.

Bichard, L.

Black of Brentwood, L.

Blencathra, L.

Bonham-Carter of Yarnbury, B.

Brabazon of Tara, L.

Bradshaw, L.

Bridgeman, V.

Brinton, B.

Brittan of Spennithorne, L.

Brooke of Sutton Mandeville, L.

Brougham and Vaux, L.

Browne of Belmont, L.

Browning, B.

Buscombe, B.

16 Oct 2012 : Column 1402

Cathcart, E.

Chalker of Wallasey, B.

Chidgey, L.

Clement-Jones, L.

Coe, L.

Colwyn, L.

Cope of Berkeley, L.

Cormack, L.

Cotter, L.

Courtown, E.

Craig of Radley, L.

Craigavon, V.

Crickhowell, L.

Cumberlege, B.

De Mauley, L.

Dear, L.

Deben, L.

Denham, L.

Dholakia, L.

Dixon-Smith, L.

Dobbs, L.

Doocey, B.

Dykes, L.

Eccles, V.

Eccles of Moulton, B.

Eden of Winton, L.

Edmiston, L.

Elton, L.

Empey, L.

Falkner of Margravine, B.

Faulks, L.

Fearn, L.

Feldman, L.

Feldman of Elstree, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Fraser of Carmyllie, L.

Freeman, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Geddes, L.

German, L.

Glasgow, E.

Glenarthur, L.

Glendonbrook, L.

Goodlad, L.

Greenway, L.

Hamwee, B.

Hanham, B.

Hanningfield, L.

Harris of Peckham, L.

Henley, L.

Heyhoe Flint, B.

Higgins, L.

Hill of Oareford, L.

Hodgson of Astley Abbotts, L.

Hooper, B.

Howard of Rising, L.

Howe, E.

Howe of Idlicote, B.

Howell of Guildford, L.

Hunt of Wirral, L.

Hussain, L.

Hussein-Ece, B.

Inglewood, L.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jones of Cheltenham, L.

Jopling, L.

Kakkar, L.

Kilclooney, L.

Kirkham, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Kramer, B.

Laming, L.

Lang of Monkton, L.

Lawson of Blaby, L.

Lee of Trafford, L.

Lester of Herne Hill, L.

Lexden, L.

Lindsay, E.

Lingfield, L.

Linklater of Butterstone, B.

Liverpool, E.

Loomba, L.

Lucas, L.

Luce, L.

Luke, L.

Lyell, L.

Lytton, E.

McColl of Dulwich, L.

MacGregor of Pulham Market, L.

Mackay of Clashfern, L.

Maclennan of Rogart, L.

McNally, L.

Maddock, B.

Magan of Castletown, L.

Maginnis of Drumglass, L.

Mancroft, L.

Mar and Kellie, E.

Marlesford, L.

Mawhinney, L.

Mawson, L.

Methuen, L.

Miller of Chilthorne Domer, B.

Miller of Hendon, B.

Moore of Lower Marsh, L.

Morris of Bolton, B.

Moynihan, L.

Murphy, B.

Naseby, L.

Neville-Jones, B.

Newby, L. [Teller]

Newlove, B.

Noakes, B.

Northbrook, L.

Northover, B.

Norton of Louth, L.

Oakeshott of Seagrove Bay, L.

O'Loan, B.

Oppenheim-Barnes, B.

Palmer, L.

Palmer of Childs Hill, L.

Pannick, L.

Parminter, B.

Patel, L.

Perry of Southwark, B.

Plumb, L.

Popat, L.

Quirk, L.

Randerson, B.

Rawlings, B.

Redesdale, L.

Rennard, L.

Renton of Mount Harry, L.

Risby, L.

Roberts of Conwy, L.

Roberts of Llandudno, L.

Rodgers of Quarry Bank, L.

Roper, L.

Rowe-Beddoe, L.

Ryder of Wensum, L.

Saatchi, L.

St John of Bletso, L.

Sassoon, L.

Scott of Needham Market, B.

Seccombe, B.

16 Oct 2012 : Column 1403

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Shackleton of Belgravia, B.

Sharkey, L.

Sharman, L.

Sharp of Guildford, B.

Sharples, B.

Shaw of Northstead, L.

Shephard of Northwold, B.

Shipley, L.

Shrewsbury, E.

Shutt of Greetland, L.

Skelmersdale, L.

Slim, V.

Smith of Clifton, L.

Spicer, L.

Stedman-Scott, B.

Steel of Aikwood, L.

Stewartby, L.

Stoneham of Droxford, L.

Stowell of Beeston, B.

Strasburger, L.

Strathclyde, L.

Sutherland of Houndwood, L.

Taverne, L.

Taylor of Goss Moor, L.

Taylor of Holbeach, L.

Tenby, V.

Teverson, L.

Thomas of Gresford, L.

Tope, L.

Tordoff, L.

Trefgarne, L.

Trenchard, V.

Trimble, L.

True, L.

Tugendhat, L.

Tyler, L.

Tyler of Enfield, B.

Ullswater, V.

Vallance of Tummel, L.

Verma, B.

Waddington, L.

Wade of Chorlton, L.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Warnock, B.

Wasserman, L.

Wheatcroft, B.

Wilcox, B.

Willis of Knaresborough, L.

Willoughby de Broke, L.

Younger of Leckie, V.

5.08 pm

Amendment 98B (in substitution for Amendment 107)

Moved by Lord Best

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).”

Lord Best: 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

16 Oct 2012 : Column 1404

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

16 Oct 2012 : Column 1405

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.

5.15 pm

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

16 Oct 2012 : Column 1406

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

16 Oct 2012 : Column 1407

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.

Lord Jenkin of Roding: 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.