Local Government Finance Bill: Lords third reading

23 October 2012

Members of the House of Lords completed third reading of the Local Government Finance Bill, the final chance for detailed scrutiny, yesterday (Monday 22 October). There were two divisions (votes) in the chamber

The debate began with discussion of Amendment 1, a new clause which calls for an independent review of council tax reduction schemes within three years of their introduction. Baroness Hollis of Heigham (Labour) tabled the proposal and described it as a ‘modest, cost-free, evidence-seeking amendment’.

She raised concerns over the ‘effectiveness, efficiency, fairness and transparency’ of the new system and argued that these concerns alone justified a review: ‘Only an independent review will tell us if these schemes are robust, stable, well-researched and fully claimed.’

Lord Best (Crossbench) spoke in favour of the amendment, emphasising the need to ask important questions about the impact of the new schemes on both households and local authorities: ‘What has been the cost in extracting these new taxes? What has happened to those who could not pay?’

Responding on behalf of the government, Baroness Hanham (Conservative) reiterated the view that it is the local authorities themselves who should be responsible for keeping the schemes under review.

‘Local authorities are closest to their local communities and therefore are closest to those who need the council tax support. Therefore, they will be in the best position to decide how they set their council tax in future, bearing in mind the needs of their population.’

She confirmed that the government 'will continue to keep this policy under review and make adjustments as they see fit to ensure their objectives are delivered.’ Baroness Hollis thanked her for her reply, but put her amendment to a vote.

The division resulted in a government defeat with 203 members voting 'for' and 165 'against' the suggested new clause.

The second division took place over Amendment 2 which proposed a new clause that would give local authorities discretion to change the single occupier council tax discount. Lord Tope (Liberal Democrat), who tabled the amendment along with Lord Shipley (Liberal Democrat) and Lord Jenkin of Roding (Conservative), began by confirming that the amendment had been drafted by the Local Government Association (LGA) and had the support of all four of the LGA’s political groups.

‘The Local Government Association calculates that if this limited discretion were given to local authorities, all but 14 local authorities would be able to meet the funding gap fully without making any charge on claimants.’

Lord Smith of Leigh (Labour) confirmed he would support the amendment with some reservations: ‘As I said last week, it will be a help, but it will not save the day, because the gap between what my authority needs to raise to meet the shortfall in the council tax benefit scheme could not be raised under this particular text.’

Baroness Hanham confirmed the government’s opposition to any change in the single person discount on the basis that it would result in a tax increase: ‘People losing their single-person discount under this amendment may ultimately find themselves in greater need of help with their council tax. This would mean curtailing the impact of any additional resources, putting more people in need of council tax support and creating unintended pressures on councils.'

The division resulted in a government victory with 64 members voting 'for' and 299 'against' the amendment.

All other amendments were withdrawn as the Local Government Finance Bill completed its passage through the House of Lords. The bill will be reprinted with the Lords amendments and returned to the House of Commons for consideration of amendments – ping pong. 

What is consideration of amendments/ping pong?

Once the bill has completed its passage through the second chamber the bill will return to the Commons where they will consider the amendments made.

Both Houses need to agree to the exact wording of the bill and the bill may 'ping pong' between both houses until this happens.

When the exact wording of the bill has been agreed by both Houses the bill is ready for royal assent. Once a bill receives royal assent it becomes an Act of Parliament (proposals in the bill become law).

About the Local Government Finance Bill

The bill continues its journey through the Lords after completing report stage on 16 October.

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

Further information

Image: iStockphoto

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