700,000 Overcharged Great Council-tax Cover-Up

Publish by the Mail Online:

A million homeowners have paid the wrong council tax for years in a funding scandal ministers tried to cover up. New documents have shown that more than 700,000 households may have been overcharged to the tune of tens of millions. Ministers and officials have known since at least 2005 that many homes were in the wrong tax bands.

But instead of solving the problem, they tried to keep it secret because coming clean would have embarrassed the Government and reduced its tax take from homeowners.

Refunds are not automatic in cases where evaluations are found to be wrong. Householders have to suspect they are being overcharged and lodge an appeal.

The cover-up was exposed after ministers were forced to reveal the minutes of a Whitehall meeting in 2005. The papers were handed to the House of Commons library with some sections blacked out.

But a blunder by officials left the text still legible beneath the blacking.

Whitehall's council tax inspectors have already been forced to correct the council tax bands of a quarter of a million homes across England and Wales following appeals by householders since the last general election. But hundreds of thousands of others still have no idea that they are being ripped off.

MP Caroline Spelman: Government 'conspires to overcharge the public'

Tory spokesman Caroline Spelman said: 'The Government has been caught red-handed fiddling council tax to make families pay more.

'The whole moral basis of our tax system is undermined if the state conspires to overcharge the public.

'This just shows that ministers only want to reform the council tax system if it rakes in extra cash for Gordon Brown's coffers.' The documents which revealed the cover-up said the Treasury would lose money and have to pay tax refunds if the errors were admitted.

One official asked 'what action should be taken?' about houses in the wrong bands. The minutes read: 'Concern was expressed about the possible knock-on implications for billing authorities and adverse press coverage this could generate in the current climate.'

Local Government minister John Healey has admitted that ministers were aware of the cover-up as part of 'ongoing feedback from staff'.

Matthew Elliott, of the Taxpayers' Alliance, called for the Government to pay back the money - with interest. He said: 'With the Government's fiscal position looking so dire, they are trying to grab every last penny from taxpayers to stop the UK's debt rising even higher.

'But this is no excuse for them to effectively allow council tax to be overcharged on households who are already suffering financial pain. The Government's actions are completely underhand.'

The new figures show that in England,190,000 homes have had their council tax band changed between 2006 and 2008, with 133,985 found to have paid too much. Areas which have been hit include St Helens, Leeds, Kirklees, the Wirral, Bristol, Calderdale, Manchester and Bradford.

In Wales, there have been around 60,000 mistakes, bringing the total in England and Wales to nearly 250,000. In Wales some 47,227 homes moved down a band and only 12,547 moved up. The full total of victims will be much higher, however.

In Wales, a wholesale revaluation in 2005 put one home in 20 in the wrong band. If that is repeated in England - which has 22million homes a million would be in the wrong band, with more than 700,000 paying too much. 

One victim was taxi driver Mike Linsky, 58, from Milton Keynes, who calculated he was paying 23 per cent too much for his four-bedroom detached house. He challenged the valuation and won a £2,600 refund.

Mr Linsky said last night: 'The whole thing's a rip- off. I've had people in the back of the cab with the same problem. I tell them they should challenge it.' Being placed in the wrong tax band can have a huge impact on low and medium income households.

A band E house pays 22 per cent a year more than a band D house, an extra £315 for a typical home in England. Council tax bills have risen from an average of £564 a year in 1997 to £1,078 in 2007, a rise of 51 per cent while inflation rose by only 31 per cent over the same period.

The Department of Communities and Local Government said last night: 'These projections are entirely speculative. 'Over the past three years the number of homes whose council tax banding has changed represent fewer than 0.1 percent of all properties. 'Of course not every single property was put in the right band in 1993 when council tax was first introduced but the system allows for that. 'We have always made clear that anyone who thinks their band is incorrect can contact their local valuation office and ask for it to be reviewed.

'Where it is able the valuation office has always amended bandings where evidence comes to light that they are wrong.'

A Treasury spokesman did not dispute that the mistake could have cost tens of millions of pounds, but said passages in the documents had been blacked out because they referred to 'ongoing policy issues'