COALITION UNDER FIRE FOR COUNCIL TAX BENEFIT CHANGES

FIRST PUBLISHED BY: LABOUR MATTERS.

10% CUT IN EACH COUNCIL’S COUNCIL TAX BENEFIT

Coalition Minister Andrew Stunnell came under fire from MPs of all parties about the Government’s proposals for a 10% cut in each council’s Council Tax benefit budget in a Westminster Hall debate this week. Clive Betts, Labour MP for Sheffield South East and Chair of the All-Party Communities and Local Government Select Committee, said: “It appears that Eric Pickles, the Conservative Secretary of State, doesn’t care about the concerns, and that his Liberal Democrat Under-Secretary of State doesn’t understand them.”

Under the Government’s proposals, the Council Tax benefit budget of each council is to be cut by 10% from 2013 and each council is meant to design a local scheme to achieve that reduction. As the Government is exempting pensioners and the single-person discount from any reduction, the cuts will inevitably fall hardest on low-income working families. Thus, the biggest cuts in Council Tax benefit will be felt by low-income working families in those areas which have the highest proportion of pensioners.

MPs from all parties challenged the Minister about the Government’s proposals:

The biggest cuts will hit working-families in the poorest economic areas harder than in wealthier areas. In areas with a high proportion of pensioners and single-person households, low-income working-families could face a 30%+ cut in Council Tax benefit. The IT software providers to local authorities have consistently said that it will not be possible to have new schemes in place to meet an April 2013 start, because the Government itself is unable to provide the detailed regulations.

Because the Government is centralising housing benefit (under the Universal Credit) but localising different council-tax benefit schemes. This means that for any income changes, people will now have to notify – and provide the necessary evidence to – the council and the Job Centre (or online) separately. Big cuts to council-tax benefit will create work dis-incentives at the very time when Government says it wants to make work pay. 

Clive Betts said: “As each day passes, it is becoming clearer to MPs from all parties that the Government simply hasn’t thought things through. “Eric Pickles is relying on local councils taking the blame for cuts and administrative shambles, which are entirely of his making.

“Ministers can’t even answer these three simple but crucial questions: Will universal credit be counted as income in the means test for Council Tax benefit? Will local authorities have access to universal credit data when calculating people’s Council Tax benefit? Do you accept that councils will not be in a position to implement any new system in time for April next year, because the Government is unable to specify the regulations in time?”

Clive Betts continued: “I am really concerned about the way the Government is just moving on and failing to listen. “I just think back to 1999 when Sheffield City Council (then Liberal Democrat controlled) privatised the housing benefit service and transferred it to Capita in a rushed and botched way. “I remember my constituents, often elderly, coming to my surgeries in tears; not because they had done anything wrong, but because the administration of their benefits was in chaos and, as a result, the arrears on their Council Tax and rent had risen. They were distraught because they had never been in arrears in their lives. 

“I am really worried that we will end up in a similar situation next year.”

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


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WAS IT COINCIDENCE THAT I GOT A MESSAGE FROM A FIRM I OWE MONEY SOON AFTER I MISSED MY COUNCIL TAX PAYMENT?

FIRST PUBLISHED BY:   THIS IS MONEY

TIMELY TEXT: WAS IT A COINCIDENCE THAT I GOT A TEXT MESSAGE FROM A CREDITOR URGING ME TO GET IN TOUCH A WEEK AFTER I MISSED A COUNCIL PAYMENT?

I had a text on my mobile phone out of the blue from a creditor urging me to get in touch if I was experiencing financially difficulties just a week after missing a Council Tax payment. Do banks/mortgage lenders or even the councils send out advisories as to who might be struggling financially? If so isn’t this a breach of confidentially? It doesn’t feel like a coincidence as I have never missed a payment and the creditor has a secured loan i.e a second charge on my property.  

Linda Mckay of This is Money replies: Struggling borrowers such as yourself who are juggling many different debts including a mortgage, second charge or credit cards may have trouble in meeting all the demands of creditors. Can creditors spot financial difficulty and if so how? I asked experts in the field for you. Joanna Elson OBE, chief executive of the Money Advice Trust replies: The crucial issue here is whether or not this is a creditor through which you pay your Council Tax. If they are not, then something may be amiss and a breach of confidentiality under the Data Protection Act is worth exploring. 

In this case the first thing to do is to write to the creditor and ask what information they used to identify your supposed financial difficulty. A missed Council Tax payment may show on your credit file, and so a creditor could possibly spot this while carrying out a genuine check on your file. However, if this is the case you should ask the creditor to justify why they were looking at your file, as creditors can’t simply do so on a whim. Alternatively it may have been a phishing text with coincidental timing.

However, if this is a creditor through which you pay your Council Tax, then there has been no breach. Indeed we encourage creditors to proactively contact customers they identify as being at risk of financial difficulty.  Of course much of our support for such practices depends on the nature of how the creditor contacts such an individual and what advice they provide. 

For example if a creditor notices an individual frequently incurring charges for dipping into an unauthorised overdraft and they then contact that person to signpost them to relevant sources of free debt advice, such as National Debtline, My Money Steps or Citizens Advice, the person may be able to resolve their financial situation more quickly and less painfully than might have been the case had the creditor simply ignored the issue and continued collecting overdraft fees and charges.

We conducted research into the merits of proactive contact with struggling borrowers last year, and found that the results of these practices were overwhelmingly positive, with people resolving their financial problems before they became particularly serious. Anyone who is struggling with their finances is likely to find a far better outcome the earlier they start to deal with their problem, and the first step is to seek free, independent advice.

James Jones, of leading credit agency Experian replies: Councils do not share data about Council Tax payments with lenders through the credit reference agencies (CRAs), so the text from your mobile phone provider will not be because you missed a Council Tax payment. Many lenders that do share credit data through the CRAs do get your permission to consult it on a regular basis. If, while doing this, they spot a missed payment elsewhere or simply that your overall financial situation is deteriorating, they may take action such as getting in touch to offer help.

If you’re concerned about the information on your credit report, it’s easy to get hold of a copy. If you do this and find a mistake you can make sure it is corrected. You can also use a ‘notice of correction’ to explain the reasons for any correct missed payments or other adverse information in the past.

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

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COUNCIL TAX BILLS COULD LEAP TO FUND £54BN PENSION DEFICIT 'TICKING TIMEBOMB'

FIRST PUBLISHED BY: THIS IS MONEY

EXPERTS WARN COUNCIL BILLS WILL HAVE TO RISE SHARPLY IN THE FUTURE TO PAY FOR PENSIONS PAID TO COUNCIL WORKERS, FROM BIN MEN TO TOWN HALL STAFF. 

Warning: Council tax bills will have to rise sharply
 to pay for council workers' pensions, experts believe

Britain is sitting on ‘a ticking time bomb’ created by the generous pensions enjoyed by council workers, the report warns today. The shocking analysis reveals councils across the UK have a pensions deficit of £54billion – amid warnings it could get even bigger. Warning: Council Tax bills will have to rise sharply to pay for council workers' pensions, experts believe. The equivalent of around £1 in every £5 of Council Tax is already spent on local authorities’ contributions to their workers’ pension scheme, according to the report by campaign group the TaxPayers’ Alliance.

The average pension paid to a council worker is around £4,200 a year, which covers all council workers, many of whom are on very low pay. But more than 2,700 scoop pensions worth at least £37,000 a year and more than 35,000 get at least £17,000 a year, according to official figures. By comparison, most private sector workers do not have a pension – and it is worth only £1,400 a year to those who do.

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IMF warns Britain may need to raise retirement age faster to avoid a debt spiral. Pensioners who saved diligently for years to see payout income slashed by up to 60% Matthew Sinclair, a director of the TaxPayers’ Alliance, said: ‘The deficit remains a ticking time bomb that is being left for future generations of taxpayers to deal with. ‘With an ageing population and a crisis in public finance, generous final salary schemes, like the Local Government Pension Scheme, are inflexible and too expensive and need urgent reform.’ The report, based on official council figures, says the local government pension scheme has assets of £132billion. But the scheme has made pension promises, known as liabilities, of £186billion to its members – leaving the £54billion deficit, according to the 2010/11 figures.

The biggest culprit is Birmingham City Council, with a deficit of £1.33billion – equal to nearly £1,300 for every resident. Overall, the report says there are 165 local authorities with a deficit of more than £100million. Dr Ros Altmann, director general of Saga and a leading pension expert, said: ‘Taxpayers underwrite the deficit. If it does not come down, they will foot the bill. Future taxpayers – our children and our grandchildren – will be on the hook.’ Tom McPhail, head of pensions research at financial advisers Hargreaves Lansdown, said: ‘Local authorities are going to come under pressure to raise Council Tax to fund these pensions. ‘They are going to have to go to taxpayers, who do not have good pensions of their own, to meet their very generous pension promises. That is not going to go down well with people.’

The average Band D Council Tax bill in England is currently £1,444, one of the biggest monthly costs facing most families after their mortgage or rent and food bill. Bob Neill, the minister for local government, said: ‘These pension bills are costing over £300 a year to every family and pensioner paying Council Tax, diverting funds from emptying bins, cleaning the streets and keeping Council Tax down. ‘Hard-pressed taxpayers simply cannot afford to foot an ever-growing bill.’

Local government workers currently get a final salary scheme, retire at 65 and contribute only between 5.5 per cent and 7.5 per cent of their salary. The Government is currently negotiating changes with unions, including a switch to a career average pension and to link retirement age to the rising State pension age. Sir Steve Bullock, chairman of the Local Government Association’s workforce board, said: ‘Presenting a one-day snapshot is a spurious way of gauging the viability of a pension scheme and this year-old figure has no relevance to the actual cost of local government pensions. ‘Councils have taken steps to ensure the schemes, which are significantly funded by contributions from employees, are affordable for taxpayers, fair to workers and viable in the long-term.’

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


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TREASURY LOOKS AT 'SUPER COUNCIL TAX' TO FORCE MULTI-MILLIONAIRES PAY MORE FOR THEIR PROPERTIES

FIRST PUBLISHED BY: THIS IS MONEY  

THE CHANCELLOR COULD IMPOSE SUPER COUNCIL TAX BANDS ABOVE BAND H TO FORCE THE WEALTHIEST TO PAY MORE FOR THEIR PROPERTIES.

The Chancellor could impose super Council Tax bands

The Chancellor is considering slapping taxes on expensive houses in a deal with Lib Dems that would also relax employment laws for small business. George Osborne is examining proposals to impose super Council Tax bands above the current band H in order to force the wealthiest to pay more for their properties. The plans, which are being discussed by the Quad of ministers drawing up the Budget, would be a victory for the Liberal Democrats, who have campaigned for a mansion tax on properties worth more than £2million.

But in return, Nick Clegg and his party have indicated they are prepared to sanction Tory plans to tear up some employment rights in order to encourage firms to hire staff. Senior Lib Dem sources say the Deputy Prime Minister will back proposals in the Beecroft Report on regulation which would give greater freedoms to micro-firms employing fewer than ten people. Under the plans, small companies employing people under the age of 25 would not have to give them full employment rights for a fixed period of time.

Tories, including Local Government Secretary Eric Pickles, have opposed any change in Council Tax bands because they feared it would lead to an expensive and controversial revaluation of all homes in Britain. But some Conservatives now believe that would not be necessary and that bands I and J – designed to hit multi-millionaires in London – could be imposed on homes based on the last valuation in April 1991.

Mr Clegg argued last month that it is wrong that someone with a house in Band H – which kicks in at properties worth £320,000 in 1991 – pays the same as someone with a home worth several million pounds. A Government source said: ‘Treasury orthodoxy favours taxing assets that cannot be hidden or moved. Even the best accountant in the world cannot hide a house from the tax man.’

Deputy Prime Minister Nick Clegg has argued that new tax bands I and J would hit multi-millionaires in London. The Beecroft Report, drawn up by venture capitalist Adrian Beecroft last autumn, has never been published after the Lib Dems condemned its call for ‘fire at will’ legislation that would have allowed bosses to sack staff without an industrial tribunal. Mr Clegg’s party is prepared to help get its way on property taxes after Mr Osborne came under pressure from backbenchers to back supply side reforms to boost business and jobs.

Former Cabinet minister Liam Fox yesterday stepped up that campaign, saying: ‘Political objections must be put aside. ‘It is too difficult to hire and fire and too expensive to take on new employees.’ Asked if the Lib Dems would support plans to suspend some workplace rights for under 25s – to encourage the hiring young unemployed people – a source said: ‘The devil is in the detail but it’s not something where the starting point of view is hostile.’

Lib Dems point out Business Secretary Vince Cable has doubled to two years the length of time someone must work before they are entitled to basic rights. A Treasury spokesman said the issue of mansion tax ‘comes up every year and it is speculation’.

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


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TOWN HALL STAFF PENSIONS COST HOUSEHOLDS £400 EACH IN COUNCIL TAX - OR 28% OF TOTAL BILL

FIRST PUBLISHED BY: THIS IS MONEY

GIGANTIC: 

Government Cover Up on Council Tax Bills

The plans set out by Eric Pickles's Department for Communities and Local Government that would see council staff paying bigger contributions to their own pensions would save the taxpayer £900million a year. The cost to Council Tax payers of town hall pensions went up by 3 per cent last year - at a time when local authorities were imposing cuts in services, such as bin collections and meals on wheels to reduce costs.

Families paid almost £400 from their Council Tax bills in the financial year that ended in March, to subsidise the gold-plated pensions of town hall staff, it was revealed yesterday.  Taxpayers had to find almost £6billion to maintain the pensions official accounts show a sum that swallowed up nearly 28 per cent of the Council Tax collected. 

The amount town halls paid as ‘employer contributions’ to make sure their workers get full pensions was £5,947,000,000 – four times the cost to taxpayers of council pensions. It means that every Council Tax payer is paying roughly the cost of a satellite TV and broadband subscription to subsidise the pensions of council staff. For a benchmark band D taxpayer, who paid Council Tax averaging £1,439 in England last year, the contribution came to more than £396, or £33 a month. A person with the average English Council Tax bill of £1,195, meanwhile, contributed £330, or £27.50 a month.

The remorseless rise of the cost of the pensions comes as unions threaten strikes over an attempt to make council staff pay bigger pension contributions to cut the bill to the taxpayer. The plans set out by Eric Pickles’s Department for Communities and Local Government would save the taxpayer £900million a year, or less than a fifth of the pensions bill to the public. Ministers said yesterday that the town hall pensions bill is on course to top £6billion this year and that fairness demands the workers who benefit from the Local Government Pension Scheme pay a bigger share. At present, contributions from council workers to their own pensions come to less than £2billion a year – a third of what taxpayers put in. 

Remorseless: Taxpayers paid almost £400 from their Council Tax bills last year to subsidise the gold-plated pensions of staff who work at town halls such as Portsmouth town hall in Hampshire Local government minister Bob Neill said: ‘Since, the cost of town hall pensions in England to taxpayers has risen four-fold. 'Taxpayers are now paying out more than £6billion a year to bankroll this scheme, and the cost is continuing to rise, putting pressure on front-line services and Council Tax.’ Mr Neill added: ‘The Government’s proposed reforms will save the taxpayer £900million over the next three years, whilst protecting low earners in local government.’Ministers produced a report earlier this year calling on public sector workers to pay higher contributions for keeping their lucrative pension schemes. 

Pay out: Ministers produced a report earlier this year calling on public sector workers to pay higher contributions for keeping their lucrative pension schemes It followed concern over public sector pensions, which offer much better deals than almost all that can be obtained by people working in private business and industry. Nine out of ten public sector workers have final salary deals which guarantee pensions linked to their pay packets when they retire. 

Final salary pensions have almost disappeared from the private sector. Unlike most public sector workers, local government workers do pay contributions into a genuine fund which in turn pays their pensions. But this is far short of meeting the full cost of pensions. The plan for increased worker contributions would mean that nobody who earns less than £15,000 a year would pay more for their pension. There would be a 1.5 per cent rise for workers who earn between £15,000 and £21,000, and progressively higher contributions for those earning more.  Even fat cats on more than £150,000 would not be expected to pay contributions higher than 12.5 per cent of their pay when the full contribution increases come into effect in 2015.

Unions have called strike ballots over increased contributions among more than a million public sector workers, including council staff, and plan a one-day stoppage.

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


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MORE TOWN HALLS DEFY GOVERNMENT WITH COUNCIL TAX INCREASES ... SO IS YOURS ABOUT TO RISE?

FIRST PUBLISHED BY:   THIS IS MONEY

REFUSING TO BUDGE

Councils are forcing through Council Tax rises despite a funding boost from Central Government that was supposed to help them freeze the local tax.  The number of councils in England that have confirmed they will raise Council Tax in defiance of a Government-ordered freeze has risen to 35. Councils have until the middle of March to set their Council Tax rates for the coming year and increasing numbers have confirmed they will take more from households.

Nine are proposing a hike of 3.5 per cent - the highest increase possible before councils must secure backing for the rise via a local referendum. Under rules introduced last year, any authority trying to push through a hike of more than 3.5 per cent must have it approved by voters. A rise at this level would add £42 to the average annual Council Tax bill of £1,200. The nine include Preston, Stockton-On-Tees, Darlington, Chesterfield, Middlesbrough, Leicester City and Huntingdonshire. Huntingdonshire District Council is the first Conservative council to choose the maximum amount.

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Households face Council Tax hikes of 3.5% as 'cynical' town halls avoid triggering vote Loopholes: Can you challenge your Council Tax band and cut your bill? Communities Secretary Eric Pickles has led criticism of the practice, accusing councilors of 'cynically' setting rises at levels just below the referendum trigger point. The majority of local authorities have chosen to freeze rates but some, like the Royal Borough of Windsor and Maidenhead, are cutting rates.

Scarborough borough council and Taunton Deane borough council both previously proposed to raise Council Tax but have now publicly stated that they intend to freeze it.

It is the second year running that local authorities have been asked to freeze Council Tax. Last year almost every council observed the freeze. The coalition government raised funding to councils by 2.5 per cent to help them cope. Around 30 councils have yet to declare their intentions and have only a fortnight to do so.

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HOUSEHOLDS FACE COUNCIL TAX HIKES OF 3.5% AS 'CYNICAL' TOWN HALLS AVOID TRIGGERING VOTE

FIRST PUBLISHED BY: THIS IS MONEY.

STRUGGLE

A cynical move by Councils to raise tax by 3.49 per cent means that many families will need to find £50 extra to pay their bill as the move will not trigger a local vote on proposals. Dozens of town halls are planning a ‘cynical’ rise in their Council Tax bills this year in defiance of the Government. Many of the planned rises are being pitched at levels just below a new trigger for a local referendum.

Under rules brought in at the end of last year, any authority trying to push through a hike of more than 3.5 per cent must have it approved by voters. Most households will have to find an extra £40 to £50 on top of the average £1,200 a year bill in England. 

Communities Secretary Eric Pickles said: ‘We are seeing a number of councils acting as referendum dodgers who quite cynically are raising Council Tax by 3.49 per cent in a naked move to dodge the public vote. ‘These councils are treating the electorate with contempt. They should have the courage to put their hikes to the vote and justify the tax rises. Instead they are running for cover. ‘Councillors have a moral duty to sign up to keep down the cost of living. Anything less is a kick in the teeth to hard-working, decent taxpayers.’

Last year virtually every authority observed a freeze in Council Tax demanded by the Coalition government as it started its austerity drive. They have been asked to do the same again next year, and have once again been offered extra Treasury funds, this time of £650million. Several councils look set to return to the same practices that saw the average Council Tax bill almost double in the preceding decade. 

Among those planning 3.5 per cent increases are Green-led Brighton and Hove and Labour councils in Chesterfield, Darlington, Leicester, Middlesbrough, Preston, Redcar & Cleveland and Stockton-on-Tees. Stoke-on-Trent is proposing a 3.49 per cent rise. A number of Tory-led authorities are also planning increases close to the referendum threshold.

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Local authorities set to defy Cameron demand and raise Council Tax this year

The six-figure council house tenants: 6,000 who earn more than £100,000 can stay in home 'if they pay market rent' Surrey is aiming for 2.99 per cent while Cambridgeshire county council and the district councils of East Cambridgeshire and Peterborough are looking for 2.95 per cent.

So far 18 councils have said they want increases up to the referendum threshold. Some 181 have so far signed up to Mr Pickles’s pledge of a Council Tax freeze. The remaining councils – half of the national total – are yet to declare. Councils must set their bills by the middle of next month in time to land on doormats at the beginning of April. Many are struggling following the Council Tax freeze last year and insist the £650million on offer is too little.

But Emma Boon of the TaxPayers’ Alliance said: ‘It is astonishing that some local authorities have the cheek not only to hike Council Tax, but to do it just below the threshold at which they will need to hold a referendum. ‘With the Government  offering financial help to councils to freeze the rates this  year there is no excuse for these town hall tyrants to put extra pressure on already struggling households.’

However, Sir Merrick Cockell, chairman of the Local Government Association, the umbrella body for councils, said: ‘Times are tough and councils across the country want to help families by keeping Council Tax down. ‘All local authorities froze Council Tax in this financial year and the vast majority plan to freeze it again next year. ‘The extra government support will help them do that, but this is a one-off grant that won’t be there in 2013 or beyond.’

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


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