§ The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)
I am pleased to report to the House the outcome of our review of how we fund local authorities for the cost of paying housing benefit and council tax benefit. This forms part of our overall programme of housing benefit reform.
My right hon. Friend the Minister for Local Government, Regional Governance and Fire, reported to the House on 19 November, Official Report, columns 787–89, that we had agreed with local government that it would be sensible to rationalise the funding of housing and council tax benefit subsidy. He went on to say that in implementing that transfer of responsibility we had ensured that all properly made claims will be fully funded.
The outcome of the subsidy review, and the associated transfers of funding, is that the Department for Work and Pensions will from April 2004 be responsible for funding local authorities for the payments of housing benefit and council tax benefit they make, replacing a complex set of arrangements whereby funding came from various different sources.
The Local Government Act 2003 provides for the funding of rent rebates to be taken out of the housing revenue account. As a result, we will transfer responsibility for payment of rent rebate subsidy from the Office of the Deputy Prime Minister and National Assembly for Wales to the Department for Work and Pensions from 2004–05. This Department is already responsible for rent rebate subsidy in Scotland.
The Department will also take responsibility from April 2004 for those residual elements of rent allowance and council tax benefit subsidy currently paid to local authorities by the Office of the Deputy Prime Minister, the Welsh Assembly and the Scottish Executive.
Bringing all these disparate funding streams together has provided the opportunity for a full review of the subsidy system. The aims of the review were to achieve greater simplification and rationalisation, reduce burdens on local authorities, achieve fairer incentives for performance, and achieve a cost-neutral streamlined system.
As a result, I am pleased to report to the House that, for all payments of housing benefit and council tax benefit across Great Britain,100 per cent. subsidy will be paid for all correctly paid benefit, and the subsidy rate for properly backdated claims will increase from 50 per cent. to 100 per cent.48WS
In addition, we will introduce a new performance-related way of funding local authorities for specified overpayments, linked to an authority's achievements against thresholds set by DWP. Local authorities will also be paid a contribution towards the cost of discretionary local schemes in respect of war pensions disregards.
A transitional protection scheme will also apply, designed to cushion the impact on local authorities of implementing the subsidy reform package.
Finally, we are planning to produce a new subsidy claim form combining all subsidy claims.
We are confident that these reforms will bring welcome rationalisation of the highly complex arrangements inherited by this Government.