Local Government Finance Bill: Lords report stage day two

17 October 2012

The Local Government Finance Bill received further line by line examination in the Lords when report stage concluded on Tuesday 16 October

Ahead of the debate the government made a written statement announcing that it proposed to make available £100 million in transitional funding for council tax support schemes.

When the debate began, members discussed amendments covering the bill's framework for the localisation of support for council tax in England.

The first division took place over amendment 98A, concerning the insertion of a clause stating that nothing in the Act should prevent billing authorities retaining the provisions of the existing national council tax benefit scheme, fully funded by central government.

Lord McKenzie of Luton (Labour), a former council leader and opposition spokesperson for communities and local government, tabled the amendment. He spoke of the impact of cuts to council tax benefit funding, particularly in poorer local authorities. The additional transitional funding announced earlier in the week, he said, is not enough.

'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.'

The current leader of Richmond-upon-Thames council Lord True (Conservative) spoke against the amendment, emphasising the need for local government savings as part of the wider deficit reduction programme: '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.'

The division resulted in a government win with 201 members voting 'for' and 242 'against' the suggested new clause.

The second division concerned amendment 103ZA. Moved by Baroness Meacher (Crossbench), it provided for a 100 per cent council tax rebate, funded by central government, for those claiming JSA or receiving the universal credit maximum award.

Citing the fact that two million households already fail to pay council tax and are often then pursued through the courts, she argued that the amendment would not cost money: 'The amendment would therefore not increase public spending, and that is before we consider the subsequent costs that the government would have to pick up when these poor households failed.'

Baroness Hanham (Conservative), spokesperson for communities and local government, responded on behalf of the government. She rejected the basis for the amendment saying it  'completely undermines the strengthened incentive for local growth. Making councils financially responsible for providing support brings incentives to get back to work.'

The division resulted in a government win with 139 members voting 'for' and 185 'against' the suggested new clause. Report stage has now concluded and the bill moves on to third reading, which has yet to be scheduled.

About the Local Government Finance Bill

The bill supports the government’s commitment to delivering economic growth, decentralising control over finance and reducing the deficit.

It will introduce a rates retention scheme, enabling local authorities to retain a proportion of the business rates generated in their area. This will give local authorities a strong financial incentive to promote local economic growth.

The bill will also provide a framework for the localisation of support for council tax in England. This, alongside other council tax measures, will give councils increased financial autonomy and a greater stake in the economic future of their local area and provide council tax support for the most vulnerable in society, including pensioners.

The Local Government Finance Bill so far

What is report stage?

Report stage gives all members of the Lords further opportunity to examine and make changes, known as amendments, to a bill.

Report stage usually starts 14 days after committee stage. It can be spread over several days (but usually fewer days than at committee stage).

Before report stage starts, all member's amendments are recorded and published. The day before a report stage debate the amendments are grouped into related subjects and placed in order - a marshalled list.

During report stage detailed line by line examination of the bill continues. Any member of the Lords can take part and votes can take place.

After report stage the bill is reprinted to include all the agreed amendments. The bill then moves to third reading for the final chance for the Lords to debate and amend the bill.

Further information

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