Labour blocks move to limit council tax benefit cuts
Labour peers have come under fire for refusing to back an amendment which would have spared thousands of benefit claimants from welfare cuts.
The Local Government Finance Bill, currently going through parliament, will see council tax benefit scrapped and replaced with grants which only cover 90 per cent of the cost.
Councils will be able to choose how to make up the 10 per cent cut but cannot reduce benefit for pensioners. This means in some areas councils will have to cut benefit for working age council tax claimants by as much as 20 per cent.
Crossbench peer Lord Richard Best yesterday tabled an amendment to the bill which would allow councils to cut the single person’s discount, currently set at 25 per cent. This, argued Lord Best, would enable the Treasury to receive its £500 million savings without hitting the poorest people.
Lord Best said a cut in the discount from 25 to 20 per cent would equate to an 85 pence per week reduction in discount for single people living in the lowest council tax band and £2 per week in the highest band.
He said: ‘I suggest that the very modest sacrifice required of these households to save the poorest would not be resented by many.’
Lord Best’s amendment was backed by Conservative peer Lord Patrick Jenkin, who likened the government’s plans to the poll tax, as councils would be forced to chase large amounts of people for small sums.
Liberal Democrat peer Lord Graham Tope also backed the amendment. Lord Tope said: ‘Is it fair that the shortfall is met by those who can least afford it in our community?’
However, Labour peer Lord William McKenzie said he could not support the amendment. He said: ‘It does not exclude a reduction in the single person’s discount which is greater than 5 per cent.’
He also said Lord Best’s proposal would not exclude pensioners, and said it was unclear what the impact would be at local authority level in terms of redistribution.
Labour’s position was described as ‘inexplicable’ by Lord Tope, while Lord Palmer accused the party of ‘wanting poor people to suffer’ as a result of political incentives.
Baroness Joan Hanham, parliamentary under-secretary of state at the Communities and Local Government department, said Lord Best’s plan would be ‘a potential tax increase on over eight million people’ and said many poor single people pay council tax.
Lord Best withdrew the amendment as a result of the Labour peers’ lack of support and said he will try to alter the bill at its third reading.
Baroness Hanham announced a £100 million transition grant for councils which restrict council tax benefit cuts for claimants to no more than 8.5 per cent. The grant was welcomed by Lord Best, but he said it is not a solution as it is only available for one year.