BUDGET: OSBORNE IS WARNED AGAINST 'SENSELESS' CUTS

First Published by: BBC

The Budget is likely to prove a crucial moment for the government

The coalition government has been warned against making "senseless" cuts in spending ahead of Tuesday's Budget. Unions said harsh action was not needed, while Labour accused the Tories of cutting for ideological reasons and using the Lib Dem partners as "cover". 

But Deputy Prime Minister Nick Clegg said cuts were needed as the economic situation in Europe had got a lot worse in recent months. These would be "difficult" but done "with care", he insisted. In an e-mail to party members, the Lib Dem leader acknowledged that the Budget - expected to be dominated by announcements of spending cuts and tax rises - was likely to be "controversial".

But he said the "mountain of debt" that the coalition had inherited from Labour needed to be dealt with. "Without action on the deficit, we will carry on racking up unaffordable debts our children will have to pay off," he said. "And we will undermine the economic growth needed to create jobs and opportunities for all of us. There is nothing fair, liberal or progressive about any of that." 

The problem facing George Osborne is that he knows where we're spending all our money - public sector pay, pensions and benefits - but getting much of it back any time soon is going to be incredibly difficult. Take welfare. Yes, there are potentially huge savings but welfare reform is a long, slow slog. 

All the evidence from the United States, where they've already gone down this road, is that in the short term welfare reform actually costs money. Why? Because you have to provide more support, advice, training, childcare and so on to move people off benefits and back into work. Similarly with pension reform - Yes, you can reform the system for the future, but there's not much you can do about those already receiving what Nick Clegg called "gold-plated pension pots."

So while the coalition is keen to press ahead with pension and welfare reform, it isn't going to solve our immediate budget crisis. The bad news is that can only mean - in the short term - steeper cuts and tax rises elsewhere. Chancellor Mr Osborne has said the Budget will lay out "tough" but necessary plans to bring down borrowing - set to total £155bn this year - over the next four years. 

The opposition, unions and employer groups have all expressed their concerns ahead of the chancellor's statement at 1230 BST (1130 GMT), as speculation continues that it could contain a rise in VAT and a public sector pay freeze beyond the one year already proposed. Other measures expected to be included in the Budget are a levy on banks and an increase in non-business capital gains tax.

Mr Osborne has refused to say whether there will be a multi-year freeze on public sector pay, or confirm newspaper reports that welfare payments may be frozen although he has ordered a review of public sector pensions.

Prime Minister David Cameron has already suggested public sector pay and pensions will be hit, saying the deficit could not be dealt with by "just hitting either the rich or the welfare scrounger". Updating MPs on Monday on the outcome of last week's EU summit, Mr Cameron said there was "unanimity" among European leaders about the need for prompt action on cutting national deficits, saying any delay would entail "major risks" to economic recovery.

All EU countries were having to take "painful action" to cut borrowing but it was the "right thing to do" for future confidence and prosperity. And Mr Clegg insisted that while "cuts must come", they were born out of economic necessity not driven by political dogma. He said the economic situation in Europe had deteriorated significantly in recent months and accused Labour of both making unfunded spending promises and "covering" up details of post-election cuts they were planning.

"We have taken the difficult decisions with care and with fairness at their heart," he said. "But nonetheless, it will be controversial. This is one of the hardest things we will every have to do." One Liberal Democrat MP, Bob Russell, has already said he will vote against any package of measures which risks leaving children worse off.

The BBC's political editor, Nick Robinson, said Mr Clegg's attempts at reassurance reflected the fact that this Budget would be a "bigger test" for his party than the Conservatives. It is very, very important indeed that voices are raised against... unfair cuts that endanger not just our society but our economy as well” Shadow chancellor Alistair Darling said the Conservatives were "using the current circumstances" as an excuse to make "ideologically driven" cuts they had planned anyway and said they were "using" the Lib Dems "as cover". And Mr Miliband, one of the contenders to be Labour leader, said the coalition cuts risked turning Britain into a "slow-growth economy". 

"It is very, very important indeed that voices are raised against senseless cuts, unfair cuts that endanger not just our society but our economy as well." General secretary of the TUC, Brendan Barber, said the chancellor's approach was "based on a series of myths". "Deep urgent cuts are not needed, and run the risk of the double dip [recession] - especially now much of Europe has signed up to the same deficit fetishism," he said. The TUC also warned against a VAT rise, saying such a move would be "deeply regressive" and those on low incomes would "barely be able to absorb" the cost. 

Council Tax freeze:

Local authorities said they would face "very, very difficult decisions" in the future as central funding was reduced. "It makes things very difficult in terms of how we prioritise our services," Sir Steve Bullock, chairman of Local Government Employers, said. In a move intended to partly soften the anticipated blow of cuts and tax rises, it is understood the government will press ahead with plans to encourage a Council Tax freeze in England next year.

The Conservative manifesto proposed a two-year Council Tax freeze paid for "by reducing spending on government consultants and advertising". That plan involved providing extra funding to councils who proposed only small Council Tax increases, so they could then freeze them. It is not entirely clear yet how the coalition government's plans would work, or how much it will cost. 

But as well as the Council Tax freeze - and the decision to axe Labour's plan to raise more money from a National Insurance increase - the Budget will also provide a partial National Insurance exemption for new firms based outside the south-east of England.

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COUNCIL TAX SUPPORT TO BE PROTECTED

First Published By: The Scottish Government

Over half a million Scots will be protected from UK Government cuts to Council Tax benefit.

The UK Government will abolish the existing Council Tax Benefit in April 2013 and cut the successor budget by 10 per cent. The Scottish Government and COSLA have now agreed to cover the £40 million cost of the cuts in 2013-14 - the Scottish Government will provide £23 million and COSLA will provide £17 million.

558,000 people in Scotland on the lowest incomes currently receive Council Tax benefit, including the unemployed, pensioners, those who cannot work because of disability, carers and people who receive tax credits. We will not allow them to be victims of UK cuts - we will work to protect them.

Working closely together, the Scottish Government and councils will now cover the £40 million cost of the Council Tax benefit cut in 2013-14 to protect vulnerable individuals, a unique approach across Great Britain.  In the coming months we will establish a national schedule of reductions to Council Tax, so that anyone currently receiving Council Tax benefit will not have to pay more Council Tax in the next financial year.

The Scottish Government is looking after household budgets, with a Council Tax freeze, free prescriptions, concessionary travel, and our abolition of road tolls and tuition fees. It is right that we take action to protect the thousands of pensioners and families who would have been affected. Only through this decisive action by the Scottish Government and COSLA can vulnerable people in Scottish society be protected.

We have challenged the UK Government on their cuts to Scotland and their attack on the least well off. We will put in place measures that reflect the compassion and fairness of Scotland in line with our Council Tax freeze.

COSLA President Councillor Pat Watters said: “Scottish local government has a long and proud history of standing up for and protecting the most vulnerable in society. “In taking this decisive action to cover the cost of Council Tax benefit, together with the Scottish Government, we will once again be protecting the most vulnerable in society.

Can I be clear that we are talking here about the real victims of this particular cut and that is why Scottish local government firmly believes it is the right and proper thing to do and why we are willing to put in our share of the £40 million needed to protect them from the reality of such a harsh cut.”

David Manion, Chief Executive of Age Scotland, said:

“It is reassuring to see the Scottish Government and COSLA working together to ameliorate some of the pain that older, vulnerable people will feel and Age Scotland welcomes the decision to allocate £40 million to help them with their Council Tax bills.

Council Tax benefit is a hugely important benefit for older people on low incomes and we are delighted that following the move to devolve responsibility for this entitlement to Scotland, the Scottish Government and COSLA are ensuring that it is retained. “Westminster’s 10 per cent reduction in funds would lead to a significant drop in support and additional financial pressures for some people who are already struggling on low incomes and we are confident that older people below pension age who are on low wages, or are unemployed and have long-term health problems will greatly benefit from this additional support.”

558,000 people receive Council Tax Benefit (CTB) in Scotland, which is worth £387 million to Scotland. Eligibility is based on a number of factors, including income, savings, receipt of other benefits and financial status of partners. 

Certain people are automatically considered for Council Tax benefit if they receive other benefits though a system of ‘passported benefits’, such as income support, Pension credits or Job Seeker’s Allowance. CTB is administered by local authorities on behalf of the Department of Work & Pensions (DWP), who meet the costs of benefits and the administration of the system. 

Council Tax Benefit is paid to Local Authorities, not to individuals. Individuals in receipt of CTB receive a Council Tax bill net of the benefit paid by DWP. Councils handle applications, calculations and any initial appeals against awards and provide the public face of support to applicants.

The UK Government’s Welfare Reform Act will abolish CTB from April 2013 and the UK Government will then ‘localise’ support for Council Tax to individual Councils in England.  Reduced funding - current CTB levels minus 10 per cent - will pass to the Scottish Government which will be responsible for assisting individuals to meet their Council Tax liabilities from April 2013.

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LOCALISM BILL: IN PURSUIT OF LITTLE PLATOONS, PICKLES UPROOTS THE STATE

First Published By: The Guardian

'Let local people decide!' sounds fine in rhetoric but reeks in reality. The consequence is services sold out or gone forever

Eric Pickles ... the powers he is conferring on ministers makes them into latterday Henry VIIIs.  Here is a great example of what pollsters call the public's "cognitive polyphasia". In plain language it means we want impossibly contradictory things. As the localism bill returns to the Commons for report stage today, the government should be warned that while people love the Ambridge sound of localism, they deplore the postcode lottery it brings.

Brave would be the politician these days who refused to pay lip service to the localist idea: who could be against local people taking making local choices, until you ask what and how? Labour in power was utterly conflicted, pouring out initiatives for community action while raining down centralised diktats.

Now here comes Eric Pickles, not conflicted but deceiving. Tory devolution hands down responsibility for failing to finance local services, devolving the blame for cuts. His bill squares the problem: if the money doesn't cover all that councils are obliged to do, this bill gives him the power to revoke any inconvenient duty on councils. Parliament has painstakingly passed laws obliging councils to do things we regard as essential to civilisation, but this gives ministers Henry VIII powers to strike any of them out at a stroke.

There may be daft regulations on the statute book, but this includes everything from the duty to protect children at risk to providing libraries, free parking for the disabled or enforcing food safety laws – all lumped together as "burdens" that ministers could scrap without further debate. From protecting ancient monuments, wildlife and hedgerows to the mental health act, child poverty act, homelessness act, adoption and children act, the chronically sick and disabled act – hundreds of laws will become open to summary removal.

Labour has no chance of winning its Commons amendment to stop this legislative vandalism, but the Lords may yet rebel. If you find it hard to believe how much of the fabric of social protection could be snuffed out at the whim of ministers, pause to scrutinise the official list of "burdens", listed on the Communities and Local Government website.

This act is a powerful mechanism for shrinking government, amid Pickles' ritual abuse of "bureaucrats" and "town hall busybodies". Let local people decide! Let them vote for councils that provide whatever services they want. That sounds fine in rhetoric but reeks in reality. Recent local elections show that council elections are mainly a barometer of national, not local, politics. If people rarely vote on local issues, they certainly don't get much involved: Ipsos Mori finds one in five people claim they might get involved – but only 2% do, no change, despite years of Labour's community efforts by Hazel Blears and others. 

Of course participation could and should be better, but people know well that most funds – and most cuts – come from Westminster, where blame usually lies for shortfalls in local services. Pickles stopped reform of Council Tax and George Osborne capped it, while the Lib Dems gave up on local income tax. In polls people say they want services to be fair. Equality always trumps local autonomy. Mori's Ben Page says "Fairness is a strong British value. 

They say state provision should be the same everywhere – and the buck always stops at the top with ministers." How extreme is their wish for equal services? Mori found 91% thought the grass in public parks should be cut with equal regularity everywhere. This country thinks nationally when it comes to rights to services.

Unpicking all those laws that protect the weak and ensure citizens can trust the food they eat, the water they drink and the air they breathe goes against the grain in a country where these are part of the natural history of social progress. Francis Maude says centralism never did away with local variation, but just see how extreme his postcode lottery becomes. Remember all this happens while the government massively redistributes council funds from poorer to richer areas. The cuts hit the poorest councils hardest – Liverpool worst – and the richest like Dorset are barely touched. Pickles' plan to let councils keep their business rates will make the rich very much richer at the expense of poor areas.

Currently business rates are centrally collected and handed out according to need. Once keeping their own business taxes, the City of London gains £517m, Westminster and Chelsea gain £1.6m each while the great losers are Birmingham, cut by £175m, Hackney by £116m and Liverpool by another £104m. When the government lets councils decide how much – if any – Council Tax credit to pay poorer households, what will rich areas do? Without geographical sharing we stop being a nation in any meaningful sense. But that is the logic of localism: the little platoons all thriving or struggling on their own.

There is more danger in this bill: Sir Robin Wales, the mayor of Newham, also worries the bill will be a charter for the planning corruption it took so long to stamp out. Developers can get up a small local group to front their plan, with unseen backhanders. Meanwhile the bill lets nimbys stop plans for necessary social housing or unpopular services on their doorsteps.

There is more: any small group can call for public services to be put out to tender. Naturally, this is dressed up in "big society" disguise, promising local people can run their community centre or take over their library and leisure centre. The reality is that the door to everything is being opened to "any willing provider", as David Cameron revealed in a recent speech.

Yesterday the head of Capita, the outsourcing company, told the Financial Times he had been assured by Francis Maude that the "big society" would not get in the way of large firms taking the lion's share of contracts. Eyeing one giant £2.6bn contract, he came away saying: "There is absolutely no way on the planet that is going to be let to a charity or a small- or medium-sized enterprise ... the voluntary sector will not be a massive player as they simply don't have the scale and can't bear the risk.

" Exactly that happened with the Department for Work and Pensions DWP welfare to work contracts: 38 of the 40 contracts went to a handful of big firms with success records worse than the jobcentres. So much is being torn up in a whirlwind, with uprooted services outsourced or gone forever. This government is making sure it leaves behind ineradicable change. As Margaret Thatcher disposed of utilities, David Cameron is disposing of the state.

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COUNCILS DEFEND 'FAT CAT' PAYMENT FIGURES UP 13%

First Published by: Burton Mail

COUNCILS have defended their top executives’ pay after they appeared in a list of ‘local government fat cats’ produced by a low-taxation pressure group.

The Taxpayers’ Alliance (TPA) claimed executive pay in UK town halls was ‘isolated from economic reality’ but the figures in its annual Town Hall Rich List were questioned by councils in the Mail’s circulation area and a union chief. 

Matthew Elliott, TPA chief executive, said: “Taxpayers will be astonished so many council employees are still getting such a generous deal while everyone else in the public sector is facing a pay freeze. “Council executives must ensure they have the moral authority to lead necessary spending cuts and in many cases that will mean taking a pay cut themselves.”

East Staffordshire Borough Council chief executive Andy O’Brien was among 658 council employees across the UK to have received remunerations of between £150,000 and £249,999 in the 2010-11 financial year, the last for which figures are available.

But the figure of £151,439, a 17.82 per cent increase from the £128,535 he received in 2009-10, included £15,551 ‘relocation expenses’ to fund his family’s move to the area, a sum which has previously been disclosed. Julia Jessel, the council’s deputy leader, said the TPA figures failed to state that the authority had ‘deleted’ six chief officer positions following a departmental restructure in October 2010, which would save £2.5 million during the current Parliament. 

She said: “This and other efficiency savings have allowed the council to freeze and reduce Council Tax over the last three years.” South Derbyshire District Council, whose chief executive, Frank McArdle, received £133,835 in salary, fees and allowances and pension contributions, disputed figures which appeared to show increases in the cash received by its senior officers.

A spokesman for the authority said the figures in the TPA document related to ‘the creation of a radically reduced management structure’ in April last year when 12 senior posts were reduced to six, saving £2.2 million over five years, while it was ‘not known’ where TPA figures citing unnamed directors — who received £112,500 and £122,500 — had been produced from.

A North West Leicestershire District Council spokesman said the 2.45 per cent increase in remunerations for its chief executive, Christine Fisher, who received £145,856, was accounted for by additional payments she received in her role as returning officer during last year’s elections, and that all its staff were subject to a pay freeze.

Meanwhile, its former head of street management’s 69 per cent increase in payments was due to redundancy costs due to the post being axed as part of a review of its senior management structure, which saw it make savings of £470,000. 

Ravi Subramanian, West Midlands regional secretary for the public sector union Unison, said the Taxpayers’ Alliance had taken ‘a far too simplistic look at a complex issue’ and that councils had to pay the going rate to attract ‘the best calibre’ of senior officers.

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AXE COUNCIL TAX BREAKS ON SECOND HOMES, SAYS HOUSING CHARITY SHELTER

First Published By: TheGuardian

Scrapping discount for second home owners could raise £42m a year to tackle housing crisis, claims report

Council Tax breaks for second home-owners should be scrapped and the money ploughed into tackling the UK's housing crisis, according to a leading charity. Councils can currently reduce Council Tax for second homeowners by up to 50%, an option offered by one in five local authorities. Four in five offer the minimum discount of 10%.

Taking Stock, a report by Shelter, claims that ending the discount for the UK's 252,000 second homes would raise up to £42m a year. 

Second home ownership has grown dramatically since the 1990s, particularly in rural and coastal areas such as Cornwall, Norfolk and Cumbria, where some claim it pushes up house prices, making property unaffordable for local people. 

"The Council Tax discount is effectively a tax break for people with second homes which often lie empty for large parts of the year," said Shelter's chief executive, Campbell Robb. "Enabling councils to charge the full rate of Council Tax, or higher, would mean they could raise vital revenue that could be used to deliver affordable housing for local people." 

The report also proposes that councils are given powers to set Council Tax higher than the standard rate for properties that are rarely in use. Shelter's call to abolish tax breaks for second homes has received enthusiastic support from some MPs. "We shouldn't be subsidising the richer people on the Council Tax tree," said Tim Farron, Lib Dem spokesman on rural affairs. "Those people who can afford to have a second home should pay the same amount of tax." 

The call may also strike a chord with the government. Business secretary Vince Cable recently floated the idea of a "mansion tax" on properties valued above a certain amount.

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COALITION HYPOCRISY LIES BEHIND THIS WAR ON MOTORISTS

First Published by: The Guardian

Capped and cut back, local councils can't raise money by any other means, so it's no surprise they pick on car drivers

A Westminster warden. For most of the last decade Westminster has raised more from parking than it has from Council Tax. I do not live in Westminster, but I declare an interest in its parking policy. At evenings and weekend I drive to the gilded city regularly, regarding the libertarian freedom to park as a boon and a blessing to life in London. 

It is an asset alike to West End businesses, visitors and those who work unsocial hours. It leads to no noticeable gridlock. It causes no harm. As of next January the policy is dead – and for reasons of greed, hypocrisy and fiscal distortion reaching far beyond the boundaries of that city. Single yellow lines will be effectively doubled at all hours. 

Car-borne visitors and workers in restaurants and theatre land must pay at a meter or find an off-street car park. Westminster has lost some £10m in fines from the advent of its admirable meter texting service, and wants to recoup it somehow.

Parking fines are big money. For most of the past decade Westminster has raised more from parking on its streets than it has from Council Tax. It is a parking corporation (privatised to a company called NSL) with a local council attached. Its home guard is composed of traffic wardens, who outnumber police on the streets. Its eyes are hundreds of CCTV cameras, marking every illegal U-turn or lane violation. And since the tap can be turned on without any by-your-leave from Whitehall, the temptation to raise ever more money is irresistible, especially as in Westminster most of the victims are unlikely to be residents or voters. 

Many residents hanker after the days when theirs was a quiet, salubrious court suburb. Anything that drives away outsiders, especially tourists, is fine by them. So far, so selfish. City centres depend increasingly on out-of-hours leisure business, and even in London this is now walking a fine line between solvency and collapse. It is hard to imagine a better route to collapse than to load restaurants and entertainments with new labour costs and inconvenience. 

Westminster may be rich, but its businesses and their workers are not, nor are all its visitors, even those who come by car. There is no way that meters and off-street parking can make up for the loss of thousands of single-yellow line spaces. A cardinal reason for Westminster's action is that cars in some shape or form are the chief source of its surplus revenue, indeed almost the only one unregulated by the government. 

The reason is that parking charges are supposedly to relieve congestion, not to raise general revenue. Yet today charges and fines cover almost a third of the city's annual £250m expenditure and are the one area of income not governed by government capping and regulation.

Cuts in central grants to meet national budget targets would, in most countries, be partly eased by local taxation. Local voters might choose to be taxed locally to keep their libraries, school visits, swimming pools and sports grounds. Successive cabinets have sought to court political gain by "capping" such taxes, whatever voters want. Central tax and spend can rise inexorably (and still does) but local taxes are held down by order. Local tax capping is the "fiscal union" that George Osborne wants to see Brussels impose on the eurozone states.

There is one quarry for which the fiscal hunting season is always open, and that is parking – and councils have been unable to resist. Drivers in the capital have come to regard the fining regime as licensed mugging. A two-minute overstays incurs a fine of between £40 and £60, and tow-away charges start at some £350, swiftly rising to the point where recovering a car after a week's holiday can cost more than the holiday. The reason is simple. For local councils this is easy money, with no accountability to electors.

Now for the hypocrisy. The coalition transport minister, Norman Baker, this week attacked Westminster for a "vindictive" attitude to parking charges and for its "war on motorists". The charges, he said, were "less about controlling parking and more about raising money for the council". His colleague Vince Cable added his pennyworth by demanding local councils act in a "business friendly" way towards firms struggling with recession. Eric Pickles, the local government secretary, has also been putting pressure on Westminster to abandon its plan.

These are exactly the ministers who are imposing cuts on local councils and yet refusing to let them increase local taxes to alleviate the pain. They know perfectly well that parking is the one domain remaining to local discretion. Paying to occupy a few metres of urban streets is a tax by any other name, but unlike taxes on occupied property it is not restricted by the Treasury.

Such a craze for central control is seriously distorting public finance. Local taxes in Britain are among the lowest in the world, both in number and scale and, because capped, are steadily shrinking. Government's obsession with seeking credit for stopping them going up leads to the absurdity that rich Westminster's top tax band this year is £1,375, while the equivalent rate in Gwynedd, Wales, is £2,900. Property taxes in New York vary with property values at the top end, and can be 10 times as much.

When there is supposedly a housing shortage, it is ridiculous not to allow the tax system to act as an incentive to use living space efficiently. London has the most graceful, some might say lavish, residential property in Europe. Westminster's wealthy residents, thousands of whom pay little or no income tax, pay no more than nominal property tax on what is famously the most easily taxable of assets – their houses. Any house worth more than £320,000 is charged the same. Huge sums of possible revenue are simply going begging by the failure to revalue the top bands.

Government turns instead to motorists. Drivers are fit for Morton's fork: anyone who can afford to drive is assumed to be able to pay ever more. Petrol taxes no longer bear any relation – as once – to road-building but are treated by the Treasury as like cigarette taxes, as a punishment for evil-doing. The rationing of road space is by congestion. Predicting and then meeting forecasts of need may guide policy on railways or airports, houses or hospitals, but not roads. 

They are treated as a sinful luxury, and driving and parking cars on them even more so. Ministers allow councils to levy charges on them with impunity, and then attack those who do so. Hypocrisy.

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WEALTHY TO LOSE COUNCIL TAX BREAKS ON SECOND HOMES

First Published By: The Guardian

Government targets second-home owners to raise funds and reduce number of empty properties

Cornwall has the most second homes in the country because of the popularity of towns such as Padstow. Tax breaks for second home owners are to be scrapped under proposals to raise more funds from the most wealthy.

Councils are now legally obliged to provide a Council Tax discount of 10% to 50% on owners' second properties. Ministers plan to end this benefit in a move that would affect nearly a quarter of a million people, forcing them each to pay hundreds of pounds more a year in Council Tax.

Councils will have the option to offer discounts to second home owners, but it is understood that local authorities across the political divide have been lobbying for the change and ministers believe it is unlikely many would forgo the chance of a new revenue stream. The policy is part of a crackdown on underused homes announced by the Liberal Democrat local government minister, Andrew Stunell, at the party's conference in September. 

The move has also been championed by Lib Dem chairman Tim Farron and is understood to be widely supported by senior Tories, including the prime minister, who faced accusations of betraying the middle classes when he admitted second homes were not "splendid" for the economy.

A Whitehall source said: "These homes distort the housing market and make it harder for local people to get on the housing ladder. Second homes currently receive a discount of up to 50% on their Council Tax bill, leaving local people struggling to pay the bills in their solitary home subsidising the bills of people wealthy enough to own two homes. Secondary homes tax breaks have cost councils almost £90m since April 2010."

The proposal is, however, likely to face a backlash from some in the Conservative party who claim that those who will be hit hardest are not the most wealthy but the middle classes who have saved to buy a holiday home. Second home ownership has grown sharply since the 1990s, particularly in rural and coastal areas such as Cornwall, Norfolk and Cumbria. Savers have turned to second homes as safer investments, particularly because of the risky returns in the stock market and low interest rates on Isas and bank accounts.

But Lib Dems have argued in government that the explosion of second home owners has priced local people out of the market. The local authorities with the most second homes are Cornwall (14,095), Westminster (7,152), Kensington and Chelsea (6,737), Birmingham (6,431), North Norfolk (4,763), Camden (4,120), South Hams, Devon (4,115), Tower Hamlets (4,074), Scarborough (3,979) and South Lakeland (3,845).

Other proposals to be announced include scrapping the mandatory Council Tax discounts for empty homes – now as high as 100% for the first six months a property is not used. However, this change would not affect owners who have moved out because of ill health or the relatives of people who have died, leaving their home empty. It is understood that if all the long- term empty properties were brought back into use as affordable housing, waiting lists could be cut by a sixth. The largest numbers of empty homes are in Leeds (14,057), Birmingham (13,155) and Manchester (12,300).

The Whitehall source said: "Allowing councils to charge full Council Tax on second homes and empty homes could be worth up to £100m in extra funding each year, which could be used to protect local services and keep Council Tax bills down for other people. On top of this, the empty homes premium could generate up to £50m each year to bring more empty properties back into use." 

The government also plans to allow a Council Tax empty homes premium of up to 50% on any home left vacant for two years or longer. In future, councils will also be able to spread Council Tax charges over 12 months, instead of 10 months now, to make it easier to pay. A source said the plan was to give taxpayers more "flexibility" and "ensure that their monthly payments will be somewhat smaller".

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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