HL Deb 07 May 1998 vol 589 cc803-10

7.47 p.m.

Earl Russell

rose to move, That an humble Address be presented to Her Majesty praying that the regulations (S.I. 1998/911), laid before the House on 30th March, be annulled.

The noble Earl said: My Lords, the House will, I am sure, understand that praying against regulations does not necessarily imply that one wishes to object to the regulations. Under the conventions of the House, it is the only way in which one can bring about a debate on regulations.

These regulations announce a concession to my honourable friends in another place. That concession is, of course, welcome, and I welcome it warmly. It is the duty of anyone on this side of the House to be thankful for small mercies. If the Government have climbed down, we are glad that they have done so. However, I also want to say that this climbdown does not obey the first law of climbdowns—you must reach the ground.

Perhaps I may explain something of the background. We have two consecutive sets of regulations. The first set restricted council tax benefit to the rate for band E. Therefore, if one was in one of the higher bands, one received a council tax benefit which was short of the council tax that had to be paid. That caused a good deal of concern, not least to my honourable friends.

We now have new regulations which introduce a transitional protection for existing claimants combined with the 12-week linking rule. Those are, of course, extremely valuable concessions. But there is no relief from the regulations for any new claimants hereafter. Therefore, it is an extremely limited concession. It means that the council tax benefit will in those cases fall short of the council tax. That is the problem to which I wish to draw attention because, although it is put off, it is still coming. Claimants have been granted only the privilege granted by Polyphemus to Odysseus of being the last devoured.

It means that local authorities will have to deal with the bureaucratic burden of levying immense numbers of small debts. We know about that from collecting arrears of the community charge. It is a back breaking business. It will involve bailiffs, disputes, and questions about bailiffs exceeding their powers, which is a subject to which we may need to return on another day.

It will also involve discrimination against those areas of the country which have particularly expensive housing. For example, in Hampstead before the concession I found that this was becoming quite a powerful issue in local elections. On the other hand, when I raised the matter on a visit to Colchester I was told that it applied only to 12 people in the whole constituency. There is a very clear discriminatory effect here. London already has enough to put up with; I do not think that it needed this.

Moreover, it will involve an element of discrimination against extended families. I remember the debate on the shared residence requirements for housing benefit. It was then the Government's view—I do not know whether it still is—that they wished to reverse the trend towards smaller households. For bureaucratic reasons, I can see why they might want to do so; but, for human reasons, it is quite a different issue. It seems to me extremely foolish, if the Government have even been thinking in that way, to introduce discrimination against extended families. Can the Minister say whether those involved in the review of care in the community have been consulted about the regulations? It is obviously for the convenience of many people, not excluding the Treasury, that families should be able, when they choose, to live in a large group with relations in the house, sharing care between them when needed. The regulations will make that more difficult. I believe that the Treasury may, in its usual fashion, be cutting off its nose to spite its face.

We have been told—the Minister said this in another place—that the original regulations were brought in because of the determination to stick to government spending limits. I have asked the Minister before why the Government have that determination, but I have not yet received a clear answer. The Minister said that it was because it was in the manifesto. But that is not an explanation. Things do not get into the manifesto because they fall from the sky like a thunderbolt—at least, I hope that they do not. Indeed, one would like to think that there was some reason why this Government put certain things in their manifesto. But if there is such a reason I have yet to hear it. I do not expect to receive an answer this evening. Nevertheless, I warn the Minister and give her notice that I shall ask that question again.

However, perhaps the most important point is the fact that this takes up again the issues raised a short while ago by the noble Lord, Lord Newton of Braintree, in an extremely interesting intervention. We reach the point where benefit does not cover the costs and where some of the costs are meant to be met out of income support because, in many cases, it can mean nothing else. I had understood, as indeed had the noble Lord, Lord Newton, that income support was not meant to meet housing costs. I had understood that it was not meant to meet council tax costs. With local residents' rent, and other things, we have had some quite harrowing cases of people trying to pay housing costs out of their income support.

As we go on into the review of housing benefit, which may take up quite a lot of time, I should like the Government to consider the view that we cannot really expect people to meet housing costs (in which I include council tax costs and, for my purposes, that is a relevant inclusion) on present levels of income support. If the Government were going to do that, they would have to produce really substantial increases in levels of income support. That is something which I do not see in prospect at present. If it is not in prospect, I believe that the Government may start wondering whether they have breached a dike with these regulations which they may at some stage wish they could build up again. Of course, it is much harder to build up dikes than it is to make holes in them.

Moved, That an humble Address be presented to Her Majesty praying that the regulations (S.I.1998/911), laid before the House on 30th March, be annulled.—(Earl Russell.)

Lord Higgins

My Lords, anyone who had not followed the history of these regulations might be rather puzzled by the noble Earl's initial remarks which referred to the fact that, although he was praying against them, that did not necessarily mean that he was against them. The extraordinary aspect about the debate in the other place on 29th April was that the Minister seemed to think that you never prayed against anything unless you were totally opposed to it. The idea that you might do so simply to promote a debate seemed to him to be a rather strange idea.

Although I seldom read the preamble to statutory instruments, I was rather intrigued to note that this one is phrased in rather marvellous language which may well reflect the introduction ceremony to this House. However, if one looks at the more relevant parts of it, which appear after the first part, it will be seen that the preamble refers to the regulations being exercised after consultation with organisations appearing to be representative of the authorities concerned. Therefore, perhaps I may ask the Minister what consultations have taken place. While no doubt local authorities and others appreciated the change which is being made, can the Minister say whether they were in fact in favour of going a great deal further than the Government have now gone?

I turn now to the second point in the preamble, which refers to the fact that it appears to the Secretary of State for Social Security for reasons of urgency to be inexpedient to refer the proposals in the regulations to the Social Security Advisory Committee. Can the Minister tell us what is so urgent about the proposals, which, if I understand them correctly, simply reverse what the Government were previously doing? However, if that is not so, perhaps the noble Baroness will tell us. At all events, why is it so urgent to do something about this particular measure?

The noble Earl referred to the transitional protection and the introduction of a 12-week linking rule, which clearly is something that we welcome. Indeed, it will do something to ameliorate the effect of the previous regulations. However, as has been pointed out, it will do nothing to help new claimants; they will still suffer. Therefore, it is relevant to ask what the savings will now be. As I understand it, in order to comply with the manifesto commitment—the provenance of which, as the noble Earl explained, is not entirely clear—the original regulation produced a saving of some £15 million a year. Can the Minister say how much will now be saved as a result of these regulations which will amend what was previously proposed?

Clearly these transitional arrangements and the linking rule are important, but they will be even more important if people actually know about them. Can the Minister say what proposals there are for ensuring that local authorities make such information available to those who are affected by these regulations?

Baroness Hollis of Heigham

My Lords, these regulations protect all council tax benefit recipients on 31st March 1998 from the changes to council tax benefit which came into force on 1st April 1998. Perhaps I may, therefore, respond to the noble Lord's question as to why this is so urgent. I should point out to him that those changes came into effect on 1st April and it is now 6th May. Had we gone through the Social Security Advisory Committee, that would have further delayed the process and local authorities would have had to come back to this either half-way through the year with rebates or, alternatively, they would have lost a year and had to introduce the proposals the following year. That is the reason for the urgency. In terms of consultation, local authorities have known about this for some time given the fact that it has been coming through the system and was obviously discussed in the other place. Therefore, the expectation is that the new bills will take this into account.

The protection means that the restriction will not apply to those claimants in bands F, G or H who were entitled to council tax benefit on 31st March 1998. It will continue for as long as they remain at that same address and do not have a break in their council tax benefit entitlement of longer than 12 weeks. Therefore, I am pleased to have this opportunity to explain the Government's actions to your Lordships.

As noble Lords will be aware, the restriction of council tax benefit for properties in bands F, G and H was one of a number of measures inherited from the previous administration. That administration gave no indication that it intended to include transitional protection and, therefore, presumably planned to affect all council tax benefit recipients in the top three council tax bands.

When the measure to restrict council tax benefit was debated in the other place last December, we made it clear that we would be closely monitoring the implementation of the measure to introduce it without any transitional protection. But we went further. As a result of those debates, local government made representations to us about their assessment of the restriction. We took note of what they said and we looked carefully at the information that became available. We decided to act at once, before the regulations took effect. We decided that, as an integral part of the implementation of this policy, no existing recipient of council tax benefit should lose at the point of change. That is a transitional protection which is normally the rule in social security matters; namely, that existing recipients are protected. If, for example, a local authority moved from one standard spending assessment to another, there is normally transitional protection in that case.

We are grateful to the local authority associations and individual authorities who provided information on the effects of the change in specific areas. In particular we are grateful to the Association of London Government, which provided comprehensive information on the effects on individual London boroughs.

One of the principal issues to emerge from our discussions and from all the cumulative information we received was that there was considerable anxiety about the effects of the change on current council tax benefit recipients. We accept that this anxiety was justified. We therefore decided that we did not want those currently receiving council tax benefit—perhaps for years—to be faced with having to meet a bill which they had not expected or anticipated. We therefore considered carefully how we could best deal with this concern when implementing the measure and we decided that the best and surest way to protect all of those currently receiving council tax benefit was to introduce transitional protection. As I said, that has a perfectly good track record in social security policy.

I do not suggest to your Lordships that the local authority associations would not have preferred a complete revocation of the measure. But the associations' primary concern was to ensure that vulnerable groups such as the elderly were protected, and they welcomed the introduction of transitional protection which protects these groups—and indeed all other existing claimants—from the point of change.

Once we were satisfied that transitional protection was needed, we acted swiftly. We ensured that the regulations were in place before the change came into force and at the same time we issued comprehensive guidance to local authorities. In this way, we have been able to introduce transitional protection as an integral part of the implementation of the change in council tax benefit. This means that all existing claimants on 31st March, who would have been affected by the change, have been protected from day 1. This was the result of our approach of listening to local government and of working in partnership with them.

The regulations that we are debating today go beyond simply protecting those in receipt of council tax benefit on 31st March 1998. We have provided additional safeguards. The simplest form of transitional protection would have been to end it once a person's council tax benefit entitlement stopped. Given the short implementation timescale, this might have been the easiest form for the local authorities to deal with. But we rejected this because we felt it could have discouraged people who wanted to move into work, as they might have been concerned that they would lose benefit if for any reason the job did not last. The only way of completely avoiding this risk would have been to provide transitional protection to people no matter how long the break between claims might be. But we felt that this would have created unacceptable administrative complexity for local authorities.

Consequently, we decided that a 12-week linking rule would strike a sensible balance between these two extremes. This means that individuals will have an acceptable degree of security against the possibility that their job might end prematurely. Local authorities will find a 12-week rule relatively easy to administer. We have also taken steps to protect people whose household circumstances change—for example, new widows whose partners' claim was protected at the point of change. The regulations provide that if the main claimant leaves the home, or dies, the remaining partner can continue to receive council tax benefit without restriction, as long as they, too, were living in the home on 31st March 1998. This means in effect that widows will inherit their partners' protection. Neither will the single person's discount of 25 per cent. be affected.

We have revised our estimates to take into account the latest data, and forecasts of council tax benefit for 1998/9. Our new estimates suggest that at the point of change some 66,000 council tax benefit recipients will have been protected from the restriction. Previously we thought that 65,000 people would have been protected from the restriction.

Transitional protection means that only new council tax benefit claimants, or those claiming council tax benefit after a break of more than 12 weeks, or moving to properties in bands F, G and H will be affected by the restriction. Normally an elderly person will remain in his or her home until he becomes frail and moves into a considerably smaller property. That brings that person into the lower bands. That means that he will then receive the full protection. That would apply in any case if he was on income support.

An important feature of transitional protection is that it helps the more elderly population. All existing claimants are protected at the point of change and the elderly are much less likely to experience fluctuations in their income which would move them on or off council tax benefit than are those of working age. It is also the case that they are much less likely to move home than other people. But I do understand noble Lords' concerns for those who will be affected by the restriction. Let me assure your Lordships that transitional protection does not alter our commitment to monitoring the effects of the restriction. We will continue to work closely with local government to keep a watch on this policy as it develops. We have already shown that we are a government which listens to representations made to us which we think are well founded.

The Prime Minister made clear that it would not be practicable to use the welfare review as a means of reversing the council tax benefit changes. But this is a separate issue from the consideration of council tax benefit policy as a whole, which will, of course, be considered within the reviews currently taking place. We cannot, and should not, ignore the role of council tax benefit within the reviews.

With the Department of the Environment, Transport and the Regions, we are reviewing housing policy and housing benefit to address the weaknesses of the current regime. It is important that the benefit system as a whole works in a way which is in line with our overall objectives for welfare reform and works with the grain of housing policy. We have no intention of repeating the mistakes of the previous administration which allowed housing policy under the DoE to go in one direction and benefit policy under the DSS to go in another, thus increasing benefit dependency and housing poverty. Instead we will develop coherent and sustainable policies which we believe strike the right balance between tenants' rights and responsibilities.

On 30th March my honourable friend Hilary Armstrong published a consultation paper on improving local financial accountability as part of our review of local government finance. This paper discusses the council tax system, including the role of council tax benefit.

The consultation paper itself is concerned with the management of local government finance. It does not propose any radical changes to the council tax structure, nor changes to entitlement to council tax benefit, but it seeks consultees' views. We will listen carefully to these views and consider the implications for council tax benefit before setting out any proposals for reform.

Council tax benefit policy is continually under review. The noble Lord mentioned his worry in regard to any subversion of community care policies. This is a matter that we shall obviously want to address. We will make sure that the structure of council tax benefit fulfils the principles for social security set out in our Green Paper. We will make sure that council tax benefit functions as an integral part of local government finance and an integral part of housing policy. We will also ensure that the particular measure to restrict council tax benefit for those in the highest value properties is kept under close scrutiny, as we do with all our policy changes.

I believe that the transitional protection regulations demonstrate that this Government have paid attention to legitimate concerns, have protected the disabled, pensioners and the elderly and existing claimants in large houses who have large numbers of children. We have acted quickly to modify and improve policy as a result. I hope that your Lordships will accept these regulations.

Earl Russell

My Lords, I thank the Minister for that reply. I have never before observed her use of a careful and defensive straight bat. Normally the Minister enjoys playing shots. This was an absolutely straightforward, defensive exercise. If it is axiomatic that the Government must climb halfway down, I think she gave an effective, convincing defence as to why they should come to rest on this ledge rather than another. But why they should not reach the ground, I did not hear. I think there is sense in Hilaire Belloc's advice that if you were born to walk the ground, remain there, and do not fool around. If I may say so to the noble Lord, Lord Higgins, one other reason matters might not be referred to the Social Security Advisory Committee is if the changes are wholly beneficial. As regards these regulations, that would have been justified under that principle as well as the other.

Lord Higgins

My Lords, I am most grateful to the noble Lord for those comments. I take that point. However, from time to time views on what is beneficial may vary between the two sides of the House, or even between noble Lords on this side of the House. As regards urgency, I am puzzled about a matter. Is it not the case that if the Government had carried out the consultation previously these measures would have been incorporated in the original provisions and it would not be necessary now to treat them as a matter of urgency?

Earl Russell

My Lords, I take that point. There is something of a mystery about why the Government changed their mind when they did. My honourable friends obviously had a big part in that. I suspect also that they spotted, as I and others in my party did, that these matters were becoming quite a big issue in the London local elections. However, we shall have to wait a few hours before we return to that issue.

The important point relates to the review. I was pleased to observe the Minister nod on the point that income support is not meant to meet housing costs. That is an important principle. However, I also noted her statement that the Prime Minister said that it is not practicable to use the review to reverse the cut. I do not understand exactly how those principles sit together. If the cut is not reversed the principle that income support is not being used to meet housing costs is at least brought into question. That principle is of considerable importance in social security policy.

As the housing benefit review progresses, we shall undoubtedly have to return to that point. I do not think that we can pursue it with profit any further tonight. I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.

House adjourned at ten minutes past eight o'clock.